UNITED STATES
                  SECURITIES AND EXCHANGE COMMISSION
                         Washington, DC 20549

                               FORM 10-K
|X|   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
      For the fiscal year ended December 31, 1997 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
subsidiaries  and  other  affiliates  (including  Colonial  Properties  Services
Limited  Partnership  and  Colonial  VRS L.L.C.) or, as the context may require,
Colonial  Realty Limited  Partnership  only. As used herein,  the term "Company"
includes Colonial Properties Trust, an Alabama real estate investment trust, and
one or  more  of its  subsidiaries  and  other  affiliates  (including  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.

      This  annual  report  on  Form  10-K  contains  certain   "forward-looking
statements"  within the meaning of Section 27A of the Securities Act of 1933, as
amended,  and Section 21E of the  Securities  Exchange Act of 1934,  as amended,
including  but  not  limited  to  anticipated   timetables   for   acquisitions,
developments  and expansions,  expected  economic  growth in geographic  markets
where CRLP owns or expects to own  properties,  and plans for continuing  CRLP's
diversified strategy.  These statements involve risks and uncertainties that may
cause  actual  results  to  be  materially  different  from  those  anticipated.
Prospective  investors should  specifically  consider,  in connection with these
forward-looking  statements, the various factors identified herein and in CRLP's
filings  with the SEC which  could  cause  actual  results to differ,  including
downturns in local or national economies,  competitive factors, the availability
of suitable  properties  for  acquisition at favorable  prices,  and other risks
inherent in the real estate business.

      CRLP is  managed  by the  Company,  through  Colonial  Properties  Holding
Company,  Inc.  ("CPHC"),  the general  partner of CRLP. (The Company intends to
dissolve  CPHC  during  the first  half of 1998 and  thereby  become  the direct
general  partner of CRLP.) CRLP is the  Operating  Partnership  of the  Company,
which is one of the largest  owners,  developers  and operators of  multifamily,
retail and office properties in the Sunbelt region of the United States. It is a
fully-integrated  real estate company,  whose activities  include ownership of a
diversified  portfolio of 93  properties  as of December  31,  1997,  located in
Alabama,  Florida,  Georgia,   Mississippi,   North  Carolina,  South  Carolina,
Tennessee and Virginia,  development of new properties,  acquisition of existing
properties, build-to-suit development, and the provision of management, leasing,
and brokerage services for commercial real estate. As of December 31, 1997, CRLP
owns 43 multifamily apartment communities containing a total of 13,759 apartment
units (the "Multifamily Properties"), 37 retail properties containing a total of
approximately   10.6   million   square  feet  of  retail   space  (the  "Retail
Properties"),  13 office  properties  containing  a total of  approximately  1.9
million  square  feet of office  space (the  "Office  Properties"),  and certain
parcels of land adjacent to or near five 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, 1997,
the Multifamily  Properties that had achieved stabilized  occupancy,  the Retail
Properties,  and the  Office  Properties  were  93.8%,  93.3% and 95.5%  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.

                                       2
<PAGE>

      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  CPHC  to the  Operating  Partnership,  in  exchange  for
8,480,000  units of limited  partnership  interest in the Operating  Partnership
("OP Units"), (iv) the Operating Partnership repaid approximately $150.2 million
of indebtedness and prepayment penalties associated therewith secured by certain
of the Properties, and (v) the Operating Partnership established a $35.0 million
line of credit with  SouthTrust  Bank,  which has since been increased to $200.0
million,  to fund  development  activities  and  property  acquisitions  and for
general corporate  purposes  (collectively,  the "Formation  Transactions").  On
October 28, 1993, the underwriters of the IPO exercised an over-allotment option
to purchase an additional 686,200 shares.


Recent Developments

      Since the Company's IPO, CRLP has significantly  expanded its portfolio of
Properties and its operating businesses.  Acquisitions by CRLP of new properties
represent a total  investment of over $1.0 billion.  CRLP has also completed the
expansion of six multifamily  properties since the Company's IPO, adding a total
of 1,088  units to its  multifamily  portfolio.  CRLP  currently  has 11  active
expansion  and  development  projects in  progress  for  Multifamily  Properties
(including additional phases of six existing Multifamily  Properties).  CRLP has
also disposed of six Multifamily  Properties  representing 2,464 apartment units
and one Office Property representing 25,000 square feet of office space.

      The  following  is a  summary  of  CRLP's  acquisition,  disposition,  and
development activity in 1997.

Acquisition and Disposition Activity

      CRLP acquired nine retail shopping centers,  including one in Alabama, two
in Georgia, one in Florida,  three in North Carolina, one in Virginia and one in
Tennessee containing  approximately 1.1 million leasable square feet for a total
purchase  price of $70.0  million.  CRLP also  acquired  seven  regional  malls,
including  one in Alabama,  three in Georgia,  two in North  Carolina and one in
Virginia  containing  approximately 3.2 million leasable square feet for a total
purchase price of $180.6 million.

      CRLP acquired five Multifamily  Properties,  including one in Alabama, one
in  Florida,  one in  Georgia,  one in  Mississippi  and one in  South  Carolina
containing  1,434  units  for a  total  purchase  price  of  $82.7  million.  In
connection with a regional mall  acquisition in Alabama,  CRLP disposed of in an
exchange transaction,  two multifamily  properties located in Florida containing
368 apartment units and having a net book value of $14.0 million.  In connection
with the acquisitions of three malls in Georgia, CRLP sold to a third party four
multifamily  properties in Alabama  containing a total of 2,096  apartment units
for a total sale price of $54.8  million,  which  resulted in a net gain of $2.6
million.  The  purchaser of the  multifamily  properties  paid the sale price by
assuming an existing mortgage of $10 million and paying the remainder in cash.

      CRLP also acquired four Office Properties,  including three in Alabama and
one in Georgia containing  approximately 1.0 million square feet of office space
for a total  purchase  price of $97.1  million.  In  connection  with an  office
acquisition  in Alabama,  CRLP  disposed of in an exchange  transaction a 25,000
square foot office  building  located in Alabama having a net book value of $2.0
million.

      The  acquisition  agreements for three of the properties  acquired in 1997
provide for CRLP to make additional  payments to the sellers if certain lease-up
conditions  are  satisfied.  CRLP  expects to make  additional  payments  to the
sellers of $8.3 million in 1998 pursuant to these provisions.

      Also in 1997,  CRLP  purchased a 62.5% interest that it did already own in
two multi-tenant office buildings at an office park in Birmingham.  The purchase
of these outside interests made CRLP the sole owner of the two buildings,  which
total 93,000 square feet. At the same time, CRLP sold its 25 percent interest in
a 129,000 square foot building in the same office complex. CRLP also purchased a
50% interest in a 168,000 square foot office building in Birmingham,  increasing
CRLP's ownership to 100%.


                                       3
<PAGE>

Development Activity

      During  1997  CRLP   constructed   1,172  new  apartment  units  in  seven
multifamily  communities  (two of which  were  completed  during  the  year) and
acquired land on which it intends to develop additional multifamily  communities
during 1998. The aggregate  cost of this  multifamily  development  activity was
$50.5 million. As of December 31, 1997, CRLP had 1,170 apartment units in eleven
multifamily communities under development and expansion.  Management anticipates
that four of the multifamily projects will be completed during the first half of
1998 and four others will be completed  during the second half of the year.  The
remaining  multifamily  projects are  expected to be completed  during the first
half of 1999.  Management  expects to invest  approximately  $64.2  million over
these periods to complete these projects.

      During 1997 CRLP also  completed its 422,000  square foot expansion of its
regional mall in Macon, Georgia and completed a 239,000 square foot expansion of
a community shopping center in Montgomery,  Alabama.  The aggregate cost of this
retail development activity was $28.6 million.

      The table below provides an overview of CRLP's acquisition and development
activity during 1997:



















                                       4
<PAGE>
<TABLE>

                                 Summary of 1997
                           Acquisition and Development
                                    Activity
<CAPTION>

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

Acquisitions:
<S>                 <C>                                      <C>                       <C>   <C>          <C>
    1st Qtr 97 ..   Riverchase Center                        Birmingham, AL            O     306,000      $  24,200
    1st Qtr 97 ..   Heatherbrooke Center                     Birmingham, AL            R      28,000          3,000
    1st Qtr 97 ..   Beechwood Shopping Center                Athens, GA                R     336,000         22,200
    2nd Qtr 97 ..   CV at Trussville                         Birmingham, AL            M         376         20,500
    2nd Qtr 97 ..   Brookwood Village                        Birmingham, AL            R     694,000         32,500
    2nd Qtr 97 ..   Lakeside Office Park                     Huntsville, AL            O     121,000          8,800
    2nd Qtr 97 ..   Progress Center                          Huntsville, AL            O     225,000         15,600
    3rd Qtr 97 ..   CV at Timothy Woods                      Athens, GA                M         204         12,800
    3rd Qtr 97 ..   CV at Oakleigh                           Pensacola, FL             M         176         10,500
    3rd Qtr 97 ..   Mansell Office Park                      Atlanta, GA               O     352,000         48,500
    3rd Qtr 97 ..   CG at Natchez Trace                      Jackson, MS               M         328         17,600
    4th Qtr 97 ..   Lakewood Plaza                           Jacksonville, FL          R     195,000         14,400
    4th Qtr 97 ..   CV at Caledon Wood                       Greenville, SC            M         350         21,300
    4th Qtr 97 ..   Georgia Malls Portfolio (3 Properties)   Brunswick, Gainesville,   R   1,428,200         97,000
                                                               and Valdosta, GA
    4th Qtr 97 ..   Retail Portfolio (8 Properties)          NC/VA/TN                  R   1,490,500         78,500
    4th Qtr 97 ..   Village at Roswell Summit                Atlanta, GA               R      25,000          3,000
Developments:
    1st Qtr 97 ..   CG at Heathrow                           Orlando, FL               M         312         20,500
    1st Qtr 97 ..   CG at Bayshore                           Bradenton, FL             M         212         11,600
    4th Qtr 97 ..   CV at River Hills (expansion)            Tampa, FL                 M         276         14,900
    4th Qtr 97 ..   CV at Inverness (expansion)              Birmingham, AL            M          84          6,700
    4th Qtr 97 ..   CG at Bayshore II (expansion)            Bradenton, FL             M         164          9,300
    4th Qtr 97 ..   CG at Wesleyan                           Macon, GA                 M         240         13,500
    2nd Qtr 98 ..   CG at Hunter's Creek                     Orlando, FL               M         496         33,300
    3rd Qtr 98 ..   CG at Inverness Lakes (expansion)        Mobile, AL                M         132          8,000
    4th Qtr 98 ..   CG at Wesleyan II (expansion)            Macon, GA                 M          88          6,200
    4th Qtr 98 ..   CG at Edgewater (expansion)              Huntsville, AL            M         192         11,500
    1st Qtr 99 ..   CV at Citrus Park                        Tampa, FL                 M         176         12,300
    1st Qtr 99 ..   CG at Cypress Crossing                   Orlando, FL               M         250         20,000
    2nd Qtr 99 ..   CG at Lakewood Ranch                     Sarasota, FL              M         288         20,300
    1st Qtr 97 ..   Macon Mall (expansion)                   Macon, GA                 R     422,000         52,000
    4th Qtr 97 ..   Montgomery Promenade (expansion)         Montgomery, AL            R     239,000          7,000
                                                                                                          ---------
                                                                                                 Total    $ 677,500
                                                                                                          =========

<FN>

(1)In the  listing  of  Multifamily  Property  names,  CG has  been  used  as an
   abbreviation  for Colonial Grand and CV has been used as an abbreviation  for
   Colonial Village.
(2)M refers to  Multifamily  Properties,  R refers to Retail  Properties,  and O
   refers to Office Properties.
(3)Units (in this table  only)  refers to  multifamily  apartment  units and GLA
   refers to gross leasable area of retail and office space.
(4)         Amounts in thousands.
(5)Includes 249,000 square feet of GLA and 173,000 square feet of space owned by
   an anchor.
(6)Includes 109,000 square feet of GLA and 130,000 square feet of space owned by
   an anchor.
</FN>
</TABLE>

                                       5
<PAGE>

Multifamily Property Acquisitions

      Colonial Village at  Trussville--On  April 1, 1997, CRLP acquired Colonial
 Village at Trussville, a 376-unit multifamily community in Birmingham, Alabama.
 The $20.5 million purchase price was financed through the issuance of 57,072 OP
 Units,  valued at $1.6  million,  and an  advance on CRLP's  unsecured  line of
 credit.  Colonial  Village at Trussville was  constructed in 1996 and 1997. The
 development  consists  of 20 two-  and  three-story  buildings  and a  separate
 clubhouse on  approximately  28 acres of land.  Amenities  include two swimming
 pools and a wading pool, a car care center, a fitness center,  tennis courts, a
 playground, and leasable garages. The community was in lease up at December 31,
 1997.  Colonial  Village at Trussville was purchased  from a partnership  whose
 partners included a director of Colonial Properties Holding Company, Inc.

      Colonial  Village  at  Timothy  Woods--On  July 11,  1997,  CRLP  acquired
Colonial Village at Timothy Woods, a 204-unit  multifamily  community in Athens,
Georgia.  The purchase price of $12.8 million was financed  through the issuance
of 27,275 OP Units, valued at $800,000,  and an advance on CRLP's unsecured line
of credit.  The  community  was developed in 1996 and was 89% leased at December
31,  1997.  Amenities  include a  swimming  pool,  a fitness  center,  car wash,
garages, and two tennis courts.  Colonial Village at Timothy Woods was purchased
from a  corporation  whose  shareholders  included  two  directors  of  Colonial
Properties Holding Company, Inc.

      Colonial  Village at Oakleigh--On  July 14, 1997,  CRLP acquired  Colonial
Village at Oakleigh, a 176-unit multifamily community in Pensacola, Florida. The
purchase  price of $10.5 million was financed  through the issuance of 35,522 OP
Units,  valued at $1.0  million,  and an  advance  on CRLP's  unsecured  line of
credit.  The  community was developed in 1997 and was 95% leased at December 31,
1997. Amenities include a swimming pool, a fitness center, car wash, garages and
covered parking, and alarm systems.

      Colonial  Grand at  Natchez  Trace--On  August  29,  1997,  CRLP  acquired
Colonial Grand at Natchez Trace,  a 328-unit  multifamily  community in Jackson,
Mississippi.  The community  was  constructed  in three phases  between 1995 and
1997,  and was 99% leased at December  31,  1997.  The  purchase  price of $17.6
million was financed  through the  assumption  of two mortgages  totaling  $11.0
million with a weighted average interest rate of 8.09%, and an advance on CRLP's
unsecured line of credit. Amenities include a swimming pool, a clubhouse with an
exercise room, and three lighted tennis courts.

      Colonial  Village at Caledon  Wood--On  October 31,  1997,  CRLP  acquired
Colonial  Village  at  Caledon  Wood,  a  350-unit   multifamily   community  in
Greenville,  South  Carolina.  The 25-acre  community  was developed in 1995 and
1996,  and was 86% leased at December  31,  1997.  The  purchase  price of $21.3
million  was  financed  through an advance on CRLP's  unsecured  line of credit.
Amenities  include two swimming pools,  two clubhouses with recreation  rooms, a
fitness center, and lighted tennis courts.

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

Completed Multifamily Expansion and Development Activity

      Colonial  Grand at  Heathrow--CRLP  completed  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  development  is located
adjacent to Heathrow  International  Business Center and Heathrow  Country Club.
The apartment  community  offers 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,  totaled $20.5 million and were funded through
advances  on CRLP's line of credit.  CRLP  completed  construction  in the first
quarter of 1997 and completed lease-up during the third quarter of 1997.

                                       6
<PAGE>

      Colonial  Grand at  Bayshore--CRLP  completed  construction  on a 212-unit
development  located in Bradenton,  Florida.  The community  offers a variety of
amenities,   including  a  clubhouse,   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,  totaled $11.6 million and were funded  through  advances on
CRLP's line of credit. CRLP completed construction in the second quarter of 1997
and completed lease-up during the third quarter of 1997.

Continuing Multifamily Expansion and Development Activity

      Colonial Village at River Hills--CRLP completed construction on a 276-unit
expansion  of Colonial  Village at River Hills  located in Tampa,  Florida.  The
community amenities include a clubhouse, a swimming pool, an exercise center, an
air-conditioned  racquetball  court,  tennis  courts,  and  laundry  facilities.
Project  development  costs,  including land  acquisition  costs,  totaled $14.9
million  and were  funded  through  advances  on  CRLP's  line of  credit.  CRLP
completed  construction  in the fourth  quarter of 1997 and  expects to complete
lease-up during the second quarter of 1998.

      Colonial Village at Inverness--CRLP  completed  construction on an 84-unit
expansion  of Colonial  Village at  Inverness  located in  Birmingham,  Alabama.
Project  development  costs,  including  land  acquisition  costs,  totaled $6.7
million  and were  funded  through  advances  on  CRLP's  line of  credit.  CRLP
completed  construction  in the fourth  quarter of 1997 and  expects to complete
lease-up in the first quarter of 1998.

      Colonial Grand at Bayshore II--CRLP  completed  construction on a 164-unit
expansion to this development located in Bradenton,  Florida.  CRLP acquired the
land (12.5  acres) at a cost of $1.0 million  pursuant to an option  acquired at
the time CRLP  purchased  the land for the existing  Colonial  Grand at Bayshore
development in November 1995.  This expansion phase offers the same amenities as
the existing community.  Project  development costs,  including land acquisition
costs,  totaled $9.3 million and were funded through  advances on CRLP's line of
credit. CRLP completed construction in the fourth quarter of 1997 and expects to
complete lease-up during the second quarter of 1998.

      Colonial  Grand at  Wesleyan--CRLP  completed  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  offers 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,  totaled $13.5 million and were funded  through  advances on
CRLP's line of credit. CRLP completed construction in the fourth quarter of 1997
and expects to complete lease-up during the second quarter of 1998.

      Colonial  Grand  at  Hunter's  Creek--CRLP  continued  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 $33.3 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.

New Multifamily Expansion and Development Activity

      Colonial  Grand  at  Inverness  Lakes  II--CRLP  began  construction  on a
132-unit  expansion  of Colonial  Grand at  Inverness  Lakes  located in Mobile,
Alabama during the third quarter of 1997. Project  development costs,  including
land  acquisition  costs,  are expected to total $8.0 million and will be funded
through advances on CRLP's line of credit. CRLP expects to complete construction
in the third quarter of 1998 and to complete  lease-up  during the third quarter
of 1999.

                                       7
<PAGE>

      Colonial  Grand at Edgewater  II--CRLP  began  construction  on a 192-unit
expansion of Colonial Grand at Edgewater in Huntsville, Alabama during the third
quarter of 1997. Project  development  costs,  including land acquisition costs,
are  expected to total  $11.5  million  and will be funded  through  advances on
CRLP's  line of credit.  CRLP  expects to  complete  construction  in the fourth
quarter of 1998 and to complete lease-up during the third quarter of 1999.

      Colonial  Grand at  Wesleyan  II--CRLP  began  construction  on an 88-unit
expansion of Colonial  Grand at Wesleyan  located in Macon,  Georgia  during the
third quarter of 1997.  Project  development  costs,  including land acquisition
costs, are expected to total $6.2 million and will be funded through advances on
CRLP's  line of credit.  CRLP  expects to  complete  construction  in the fourth
quarter of 1998 and to complete lease-up during the fourth quarter of 1998.

      Colonial  Village at Citrus  Park--CRLP  began  construction on a 176-unit
development located in Tampa, Florida during the fourth quarter of 1997. The new
apartment  community  will offer a variety of  amenities,  including  a swimming
pool, fitness center, resident business center,  garages,  covered parking and a
gated entry.  Project  development costs,  including land acquisition costs, are
expected to total $12.3  million and will be funded  through  advances on CRLP's
line of credit.  CRLP expects to complete  construction  in the first quarter of
1999 and to complete lease-up during the second quarter of 1999.

      Colonial Grand at Lakewood  Ranch--CRLP  began  construction on a 288-unit
development located in Sarasota,  Florida during the fourth quarter of 1997. The
new apartments will feature numerous luxuries that include crown molding,  tiled
floors, chair railings,  intrusion alarms, fireplaces and screened patios on all
first floor units.  Amenities  will  include a swimming  pool,  fitness  center,
tennis  courts and a gated entry.  Project  development  costs,  including  land
acquisition  costs,  are  expected  to total  $20.3  million  and will be funded
through advances on CRLP's line of credit. CRLP expects to complete construction
in the second quarter of 1999 and to complete lease-up during the second quarter
of 2000.

      Colonial Grand at Cypress Crossing-- CRLP began construction on a 250-unit
development  located in Orlando,  Florida during the fourth quarter of 1997. The
new apartment community will offer a variety of amenities,  including a swimming
pool, fitness center, resident business center,  garages,  covered parking and a
gated entry.  Project  development costs,  including land acquisition costs, are
expected to total $20.0  million and will be funded  through  advances on CRLP's
line of credit.  CRLP expects to complete  construction  in the first quarter of
1999 and to complete lease-up during the fourth quarter of 1999.

Retail Property Acquisitions

      Beechwood  Shopping  Center--On  March 24, 1997,  CRLP acquired  Beechwood
 Shopping  Center,  a 336,000 square foot community  shopping  center in Athens,
 Georgia.  The  purchase  price  of  $22.2  million  was  financed  through  the
 assumption  of debt totaling  $11.9 million and an advance on CRLP's  unsecured
 line of credit.  The center  includes a 34,000  square  foot  Harris-Teeter,  a
 29,000 square foot Rhodes  Furniture,  a 10,000 square foot  CVS/Pharmacy,  and
 39,000  square feet  occupied by the U.S.  Post Office.  The center,  which was
 built in 1963 and renovated in 1992, was 98% leased at December 31, 1997.

      Heatherbrooke  Center--Also on March 24, 1997, CRLP acquired Heatherbrooke
 Center, a 28,000 square foot community shopping center in Birmingham,  Alabama.
 The $3.0 million purchase price of the center was financed through the issuance
 of 16,303 OP Units, valued at $0.5 million,  and an advance on CRLP's unsecured
 line of credit. AMI-Brookwood Medical Center occupies 18,000 square feet in the
 center.  Heatherbrooke Center was built in 1984 and was 100% leased at December
 31, 1997.

                                       8
<PAGE>

      Brookwood  Village--On May 13, 1997, CRLP acquired  Brookwood  Village,  a
694,000 square foot regional mall and convenience center in Birmingham, Alabama,
for a purchase price of $32.5  million.  The mall includes a 232,000 square foot
Rich's and a 106,000  square foot  McRae's.  The mall was  constructed  in 1973,
renovated  in 1991 and was 86% leased at  December  31,  1997.  CRLP  funded the
acquisition through the exchange of two multifamily properties in Florida and an
advance on CRLP's unsecured line of credit.

      Lakewood  Plaza--On  October 14, 1997,  CRLP acquired  Lakewood  Plaza,  a
195,000 square foot community shopping center located in southwest Jacksonville,
Florida,  for a purchase  price of $14.4 million.  The center  includes a 48,000
square foot Winn Dixie and a 10,000 square foot Beall's  Department  Store.  The
center was  refurbished  in 1995 and was 89% leased at December  31,  1997.  The
purchase  price was funded  through the  issuance of 74,709 OP Units,  valued at
$2.1 million, and an advance on CRLP's unsecured line of credit. The acquisition
agreement  provides  for CRLP to make an  additional  payment  to the  seller if
certain  lease-up  conditions are satisfied.  CRLP expects to make an additional
payment of approximately $400,000 during 1998 pursuant to this provision.

      Georgia Malls Portfolio--On November 4, 1997, CRLP acquired three enclosed
shopping  malls in Georgia  (including  Glynn Place Mall in Brunswick,  Georgia,
Lakeshore Mall in Gainesville,  Georgia, and Valdosta Mall in Valdosta, Georgia)
for an aggregate purchase price of $97.0 million. The portfolio contains a total
of 1.4 million  square  feet of gross  leasable  area.  In  connection  with the
acquisition,  which was structured as a tax-deferred,  like-kind exchange,  CRLP
agreed to sell to a third party four  multifamily  properties  for an  aggregate
sales price of $54.8 million,  which the third-party  purchaser paid by assuming
an existing  mortgage of $10.0  million and paying $44.8  million in cash.  CRLP
used the cash  portion of the sales  price,  together  with an advance on CRLP's
line of credit in the approximate  amount of $52.2 million,  to pay the purchase
price of the three malls.  The three  properties  have anchor tenants  including
Sears,  Belk, JC Penney, and Kmart, and collectively were 91% leased at December
31, 1997.

      Retail  Portfolio--On  December  5,  1997,  and  January  20,  1998,  CRLP
completed  the  acquisition  of  eight  retail  properties  consisting  of three
enclosed  malls  located in Staunton,  Virginia and  Burlington  and Mount Airy,
North  Carolina  and  five  community  shopping  centers  located  in  Abingdon,
Virginia,  Greensboro,  Locust, and Yadkinville, North Carolina and Chattanooga,
Tennessee.  The portfolio  contains a total of 1.5 million  square feet of gross
leasable area and was acquired for a total purchase price of $78.5 million.  The
purchase  price was funded  through the issuance of 661,517 OP Units,  valued at
$19.5 million, the assumption of $5.7 million of debt , and an advance on CRLP's
unsecured line of credit.  The eight properties  collectively were 97% leased at
December 31, 1997. The acquisition agreement for the mall in Staunton,  Virginia
provides  for  CRLP to make an  additional  payment  to the  seller  if  certain
lease-up conditions are satisfied. CRLP expects to make an additional payment of
approximately $1.8 million pursuant to this provision.

      Village at Roswell  Summit--On  December 31, 1997,  CRLP acquired  through
merger the Village at Roswell  Summit,  a 25,000 square foot community  shopping
center in Atlanta,  Georgia,  for a purchase price of $3.0 million. The purchase
price was funded through the assumption of $1.7 million of debt with an interest
rate of 8.93%, and an advance on CRLP's unsecured line of credit. The center was
90% leased at December 31, 1997.  Village at Roswell Summit was purchased from a
partnership  whose partners included a director of Colonial  Properties  Holding
Company, Inc.

Retail Expansion Activity

      Macon  Mall--During  the first quarter of 1997, CRLP completed its 422,000
square foot  expansion  of Macon Mall, a super  regional  mall located in Macon,
Georgia.  The mall  expansion  includes 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
1,439,000  square feet of retail  shopping  space.  The project  expansion costs
totaled $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.

                                       9
<PAGE>

      Montgomery  Promenade--During  the fourth quarter of 1997,  CRLP completed
the 239,000  square foot  expansion  of  Montgomery  Promenade,  a power  center
containing approximately 209,000 square feet located in Montgomery, Alabama. The
expansion,  which is known as Montgomery Promenade North, increases the shopping
center to 448,000  square feet of leasable  area and  includes 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  totaled  $8.1  million  and were funded
through  advances on CRLP's line of credit.  CRLP  expects to complete  lease-up
during the first quarter of 1998.

Office Property Acquisitions

      Riverchase  Center--In two  transactions on January 1 and January 8, 1997,
 CRLP acquired Riverchase Center 2100 and a 73.05% interest in Riverchase Center
 2200/2300.  Riverchase  Center is an office park  comprised of eight  one-level
 buildings in Birmingham,  Alabama. Major tenants include AT & T, BellSouth, and
 Hewlett  Packard.  The  purchase  price  of $20.8  million  was  funded  by the
 assumption of $8.7 million in mortgage  debt,  the issuance of 25,163 OP Units,
 valued  at  $700,000,  and an  advance  on  CRLP's  unsecured  line of  credit.
 Effective November 1, 1997, CRLP purchased the remaining 26.95% interest in the
 property by issuing 114,798 OP Units.  Riverchase Center was built between 1984
 and 1988 and was 87% leased at December 31, 1997.

      Lakeside Office Park--On May 22, 1997, CRLP acquired Lakeside Office Park,
 an office  park  comprised  of two  three-story  brick  and glass  multi-tenant
 buildings in Huntsville, Alabama totaling 121,000 square feet of leasable area.
 Major tenants include Lockheed Martin,  Accugraph,  and IBM. The purchase price
 of $8.8  million was funded by an advance on CRLP's  unsecured  line of credit.
 Lakeside  Office  Park was  built  during  1989 and 1990 and was 96%  leased at
 December 31, 1997.

      Progress  Center--On  June 26, 1997,  CRLP acquired  Progress  Center,  an
 office park comprised of five one-story  multi-tenant  buildings in Huntsville,
 Alabama  totaling  225,000 square feet of leasable area.  Major tenants include
 McDonnell  Douglas,  ADTRAN,  Nichols  Research  Corporation,  IKON,  and Telos
 Engineering.  The  purchase  price of $15.6  million  was  funded  through  the
 exchange of CRLP's 25,000 square foot  Whitesburg  office  building,  which was
 also in  Huntsville,  and by an  advance  on CRLP's  unsecured  line of credit.
 Progress  Center  was built in phases  from 1983 to 1991 and was 96%  leased at
 December 31, 1997.

      Mansell  Office  Park--On  July 31, 1997,  CRLP  acquired  through  merger
Mansell  Office Park in Atlanta,  Georgia,  comprised of six buildings  totaling
352,000  square  feet,  for a purchase  price of $48.5  million.  Major  tenants
include Compdent,  Electronic Data Services (EDS),  Motorola,  NationsBank,  and
Xerox.  The  purchase  price was funded by the  assumption  of $31.7  million in
mortgage debt, the issuance of 540,235 OP Units, valued at $15.7 million, and an
advance  on CRLP's  unsecured  line of  credit.  Mansell  Office  Park was built
between 1987 and 1996 and was 100% leased at December  31, 1997.  As a result of
this transaction,  the seller,  William M. Johnson, was elected as a director of
Colonial Properties Holding Company,  Inc. In connection with its acquisition of
this  property,  CRLP also  agreed to  acquire  an  additional  office  property
consisting of 163,000 square feet of net rentable area and an additional  retail
property  containing  21,000 square feet of gross  leasable  area.  The purchase
price of the  additional  properties,  which are  located in or near the Mansell
Office Park, is expected to be approximately  $24.3 million (subject to increase
if certain  lease-up  conditions are satisfied),  which will be paid through the
issuance of OP Units,  the assumption of debt and an advance on CRLP's unsecured
line of credit. CRLP expects to acquire the additional  properties by the end of
the second quarter of 1998.






                                       10
<PAGE>

Financing Activity

      CRLP funded a large portion of its acquisitions  and developments  through
the issuance of debt securities and through cash  contributions from the Company
through the  issuance  of its common and  preferred  shares.  During  1997,  the
Company and CRLP completed the following equity and debt transactions:


                      Common Share Offerings
                                        (in thousands)
                                   -------------------------
            Number of    Price      Gross   Offering  Net
   Date     Common       Per                Costs    Proceeds
             Shares       Share    Proceeds
-----------------------  --------  -------- -------  -------
January     1,500,000  $ 29.8750 $  44,812  $ 1,457 $ 43,355
July        1,700,000  $ 30.9375 $  52,594  $ 2,945 $ 49,649
December      165,632  $ 30.1875 $   5,000  $   330 $  4,670

                     Preferred Share Offering
                                        (in thousands)
                                   -------------------------
            Number of     Price
   Date     Preferred      Per       Gross  Offering   Net
             Shares       Share    Proceeds   Costs  Proceeds
-----------------------  --------  -------- -------  -------
November    5,000,000  $ 25.0000 $ 125,000  $ 4,451 $ 120,549

                          Debt Offerings
                                                                     Gross
                     Type of                                        Proceeds
      Date             Note            Maturity       Rate       (in thousands)
----------------- ---------------  --------------------------   ----------------
January           Medium-term      January, 2003     7.16%   $            50,000
July              Medium-term      July, 2004        6.96%   $            75,000
August            Medium-term      August, 2005      6.96%   $            25,000
September         Medium-term      September, 2005   6.98%   $            25,000

                                 
On July 10, 1997, CRLP increased the borrowing capacity under its unsecured line
of credit from $125 million to $200 million. The credit facility,  which is used
by CRLP primarily to finance additional property investments,  bears interest at
a rate  ranging  between 100 and 150 basis  points  above LIBOR and is renewable
annually.  As of December 31, 1997,  the balance  outstanding  on CRLP's line of
credit was $117.1 million,  bearing interest at a rate of 110 basis points above
LIBOR.


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

                                       11
<PAGE>
Financing Strategy

      CRLP  intends  to  maintain  a ratio of  long-term  debt to  total  market
capitalization  (i.e.,  the total debt divided by the market value of issued and
outstanding Common Shares and Units plus total debt) in the range of 30% to 45%.
CRLP's total market  capitalization  as of December 31, 1997,  was $1.8 billion,
and its ratio of debt to total market  capitalization was 39.8%. At December 31,
1997, CRLP's total debt included  fixed-rate debt of $531.3 million, or 75.7% of
total debt, and  floating-rate  debt of $170.7 million,  or 24.3% of total debt.
CRLP  has  obtained   interest  rate   protection   for  $67.8  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 43  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.  The
multifamily division has regional offices in Birmingham,  Mobile and Montgomery,
Alabama, Orlando and Tampa, Florida, and Stockbridge, Georgia.

      Retail  Division--CRLP's retail division is responsible for all aspects of
CRLP's retail  operations,  including  the  provision of management  and leasing
services  for  the  37  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 Birmingham, Alabama, Orlando, Florida, Macon, Georgia and Burlington,
North Carolina.

      Office  Division--CRLP's office division is responsible for all aspects of
CRLP's commercial office  operations,  including the provision of management and
leasing  services for the 13 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.  The office  division  has a
regional office in Atlanta, Georgia.


                                       12
<PAGE>

Employees

      CRLP  employs  approximately  800  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.













                                       13
<PAGE>

Item 2.    Properties.


General

      CRLP acquired 36 properties in connection with the Formation Transactions,
and acquired or developed 19 additional properties and an additional phase of an
existing  property in 1994,  six  additional  properties  in 1995, 11 additional
properties in 1996,  and 25 additional  properties in 1997.  Since the Company's
initial public offering ("IPO"), CRLP has developed four additional  Multifamily
Properties  and has  disposed of eight  properties,  all  through  tax-deferred,
like-kind  exchanges.  The 93  Properties  owned by CRLP at December  31,  1997,
consisted of 43  Multifamily  Properties,  37 Retail  Properties,  and 13 Office
Properties, as described in more detail below.

                             Summary of Properties

                                        Total 1997   Percent of      Percentage
                             Units/      Property    Total 1997     Occupancy at
 Type of        Number of     GLA/      Revenue (2)   Property     Dec. 31, 1997
 Property      Properties    NRA (1)  (in thousands) Revenue (2)         (3)
------------  -----------  --------  --------------  ------------   ------------

Multifamily       43        13,759   $    95,503         51.8%          93.8%
Retail ....       37    10,558,000        71,179         38.6%          93.3%
Office ....       13     1,859,000        17,761          9.6%          95.5%
                                     -----------        -----
    Total .       93                 $   184,443        100.0%
                                     ===========        =====


(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,
     1997.
(2)  Includes CRLP's proportionate share of revenue from those Office Properties
     accounted for under the equity  method,  and CRLP's share of the properties
     disposed of in 1997.
(3)  Excludes  1,972 units of expansion  phases of five  Multifamily  Properties
     that had not achieved stabilized occupancy as of December 31, 1997.


Multifamily Properties

      The 43 Multifamily  Properties owned by CRLP at December 31, 1997, contain
a total of 13,759  garden-style  apartments  and range in size from 104 to 1,080
apartment units. Fourteen of the Multifamily Properties were acquired by CRLP in
connection  with the Formation  Transactions,  13 Properties  and one additional
phase of an existing  Property were acquired during 1994,  seven Properties were
acquired during 1996 and five Properties were acquired during 1997.  Also, since
the Company's IPO CRLP has developed  four  additional  Multifamily  Properties.
Twenty Multifamily  Properties (containing a total of 6,985 apartment units) are
located in  Alabama,  13  Multifamily  Properties  (containing  a total of 4,502
apartment  units)  are  located  in  Florida,   eight   Multifamily   Properties
(containing  a total of 1,594  apartments  units) are  located in  Georgia,  one
Multifamily  Property  (containing a total of 328 apartment units) is located in
Mississippi,  and one Multifamily  Property (containing a total of 350 apartment
units) is located  in South  Carolina.  Each of the  Multifamily  Properties  is
established in its local market and provides residents with numerous  amenities,
which may include a swimming pool,  exercise room, jacuzzi,  clubhouse,  laundry
room, tennis court(s),  and/or a playground.  All of the Multifamily  Properties
are managed by CRLP.





                                       14
<PAGE>
The following table sets forth certain  additional  information  relating to the
Multifamily Properties as of and for the year ended December 31, 1997.

<TABLE>
                             Multifamily Properties
<CAPTION>
                                                                                             Average Total Multifamily Percent of
                                               Year       Number     Approximate              Rental    Property       Total 1997
 Multifamily                                Completed       of      Rentable Area  Percent     Rate    Revenue for      Property
 Property (1)                Location          (2)        Units (3) (Square Feet) Occupied   Per Unit    1997          Revenue (4)
-----------------------   ---------------   ----------- ----------  ------------  --------   --------  ---------    -------------
Alabama:
<S>                          <C>                  <C>       <C>        <C>          <C>    <C>       <C>                 <C>
CV at Ashford Place ......   Mobile               1983      168        139,000      95.8%  $  488    $ 1,007,257         0.5%
CV at Rocky Ridge ........   Birmingham           1984      226        259,000      92.0%     598      1,491,752         0.8%
Colony Park ..............   Mobile               1975      201        130,000      92.5%     387        879,268         0.5%
CG at Galleria Woods .....   Birmingham           1994      244        261,000      92.6%     656      1,710,598         0.9%
CG at Mountain Brook .....   Birmingham        1987/91      392        393,000      89.5%     679      2,679,375         1.5%
CV at Trussville .........   Birmingham        1996/97      376        410,000      (7)       674      1,424,920         0.8%
CV at Cahaba Heights .....   Birmingham           1992      125        131,000      92.0%     701        923,694         0.5%
CG at Edgewater ..........   Huntsville           1990      308        323,000      98.4%     571      2,153,980         1.2%
CV at Inverness ..........   Birmingham     1986/87/90      586        395,000      90.8%     540      2,955,040         1.6%
CV at Huntleigh Woods ....   Mobile               1978      233        199,000      99.6%     433      1,250,658         0.7%
CG/CV at Inverness
     Lakes  Mobile ......                      1983/96      366        362,000      96.8%     572      2,837,271         1.5%
CV at McGehee Place ......   Montgomery        1986/95      468        404,000      92.5%     539      2,526,700         1.4%
CV at Monte D'Oro ........   Birmingham           1977      200        296,000      97.5%     650      1,531,823         0.8%
Patio ....................   Auburn         1966/83/84      240        179,000      95.8%     411      1,118,992         0.6%
CV at Hillcrest ..........   Mobile               1981      104        114,000     100.0%     590        740,351         0.4%
CG at Galleria ...........   Birmingham        1986/96    1,080      1,195,000      92.3%     614      6,095,519         3.3%
CG at Research Park ......   Huntsville        1987/94      736        809,000      97.0%     555      5,282,727         2.9%
CG at Riverchase .........   Birmingham        1984/91      468        746,000      94.2%     746      3,888,784         2.1%
Ski Lodge Tuscaloosa .....   Tuscaloosa        1976/92      304        273,000      94.1%     406      1,402,641         0.8%
CV at Hillwood ...........   Montgomery           1984      160        151,000      95.6%     550        959,472         0.5%
    Other ................                                                                             9,773,474         5.3%
                                                       --------    -----------     -----    -------    -----------      ----
    Subtotal - Alabama (20 Properties) ...                6,985      7,169,000      94.1%     582     52,634,296        28.6%
                                                       --------    -----------     -----    -------    -----------      ----
Florida:
CG at Kirkman ...............Orlando              1991      370        337,000      92.2%     759      3,361,931         1.8%
CG at Carrollwood ...........Tampa                1966      244        286,000      96.3%     803      2,224,130         1.2%
CG at Bayshore ..............Bradenton            1997      332        369,000      (7)       722      1,364,051         0.7%
CG at Heathrow ..............Orlando              1997      312        370,000      95.5%     817      2,984,876         1.6%
CG at Hunter's Creek ........Orlando              1997      496        624,000      (7)       833      1,968,151         1.1%
CG at Palma Sola ............Bradenton            1992      340        292,000      91.2%     689      2,341,892         1.3%
CG at Palm Aire .............Sarasota             1991      248        252,000      99.2%     785      2,219,046         1.2%
CG at Gainesville ...........Gainesville    1989/93/94      560        489,000      93.6%     720      4,551,652         2.5%
CG at Ponte Vedra ...........Jacksonville         1988      240        212,000      95.4%     666      1,723,195         0.9%
CV at Oakleigh ..............Pensacola            1997      176        186,000      94.7%     683        751,218         0.4%
CV at River Hills ...........Tampa             1991/97      528        465,000      (7)       614      2,519,441         1.4%
CV at Lake Mary .............Orlando           1991/95      504        431,000      98.0%     628      3,764,405         2.0%
CV at Cordova ...............Pensacola            1983      152        116,000      98.7%     497        896,927         0.5%
    Other ...................                                                                            972,311         0.5%
                                                       --------    -----------     -----     ------    -----------      ----
    Subtotal - Florida (13 Properties) ...                4,502      4,429,000      95.2%     714     31,643,226        17.1%
                                                       --------    -----------     -----     ------    -----------      ----
Georgia:
CG at Barrington ............Macon                1996      176        201,000      80.1%     658      1,249,780         0.7%
CG at Wesleyan ..............Macon                1997      240        240,000      (7)       621        600,453         0.3%
North Ingle Villas ..........Macon                1983      140        133,000      82.1%     550        732,141         0.4%
CV at White Bluff ...........Savannah             1986      120        108,000      91.7%     631        871,295         0.5%
CV at Vernon Marsh ..........Savannah          1986/87      178        151,000      95.5%     610      1,264,803         0.7%
CG at Spring Creek ..........Macon             1992/94      296        328,000      91.6%     618      2,104,184         1.1%
CV at Stockbridge ...........Stockbridge       1993/94      240        253,000      96.3%     672      1,790,655         1.0%
CV at Timothy Woods .........Athens               1996      204        211,000      89.2%     740        825,338         0.4%
                                                        -------    -----------     -----     ------    -----------      ----
    Subtotal - Georgia (8 Properties) ....                1,594      1,625,000      90.1%     641      9,438,649         5.1%
                                                        -------    -----------     -----     ------    -----------      ----
  Mississippi:
CG at Natchez Trace .........Jackson           1995/97      328        343,000      99.0%     637      1,025,654         0.6%
                                                        -------    -----------     -----     ------    -----------      ----
    Subtotal - Mississippi (1 Property) ..                  328        343,000      99.0%     637      1,025,654         0.6%
                                                        -------    -----------     -----     ------    -----------      ----
South Carolina:
CV at Caledon Wood ..........Greenville        1995/96      350        367,000      86.0%     727        761,142         0.4%
                                                        -------    -----------     -----     ------    -----------      ----
    Subtotal - South Carolina (1 Property)                  350        367,000      86.0%     727        761,142         0.4%
                                                        -------    -----------     -----     ------    -----------      ----

    TOTAL (43 Properties) ................               13,759     13,933,000      93.8%    $ 631 (5) $95,502,967      51.8%
                                                        =======    ===========     =====     ========  ===========      ====

(footnotes on next page)

                                       15
<PAGE>
<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, 1997.
(4)Percent of Total 1997 Property Revenue represents the Multifamily  Property's
   proportionate  share of all revenue from the 93 Properties and the Properties
   disposed of in 1997.
(5)Represents  weighted  average  rental  rate  per  unit of the 43  Multifamily
   Properties at December 31, 1997.
(6)Represents  revenues from the date of CRLP's  acquisition of this Property in
   1997 through December 31, 1997.
(7) Expanded or newly developed  property  currently  undergoing  lease-up.  (8)
Represents revenues from the Properties disposed of in 1997.
</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, 1997         13,759             93.8%        $631
            December 31, 1996         13,617             94.8%        $579
            December 31, 1995         11,239             95.7%        $552
            December 31, 1994         10,972             96.0%        $531
            December 31, 1993          3,618             96.7%        $510

<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>
Retail Properties

      The 37 Retail  Properties  owned by CRLP at December 31,  1997,  contain a
total of approximately 10.6 million square feet (including space owned by anchor
tenants). Ten of the Retail Properties are located in Alabama, 11 are located in
Florida,  seven are located in Georgia, five are located in North Carolina,  one
is  located in South  Carolina,  one is  located  in  Tennessee,  and two Retail
Properties are located in Virginia. The Retail Properties consist of 12 enclosed
regional malls (Briarcliffe Mall,  Brookwood Village,  Gadsden Mall, Glynn Place
Mall,  Holly Hill Mall,  Lakeshore Mall,  Macon Mall,  Mayberry Mall, River Oaks
Center,  Staunton Mall, Valdosta Mall, and Village Mall), two power centers, and
23  neighborhood  shopping  centers.  Nine  of the  37  Retail  Properties  were
originally  developed by CRLP,  two were acquired in 1994,  six were acquired in
1995,  four were  acquired in 1996,  and 16 were  acquired  in 1997.  All of the
Retail Properties are managed by CRLP.



                                       16
<PAGE>

The  following  table  sets forth  certain  information  relating  to the Retail
Properties as of and for the year ended December 31, 1997.
<TABLE>
                               Retail Properties
<CAPTION>
                                                                                          Average
                                                                                            Base
                                                 Gross                                      Rent
                                                Leasable                                    Per      Total Retail    Percent of
                                     Year         Area    Number                Total      Leased      Property      Total 1997
 Retail                            Completed    (Square     Of     Percent    Annualized   Square     Revenue for     Property
 Property (1)        Location         (2)      Feet) (3)  Stores  Leased (3)  Base Rent    Foot (4)      1997        Revenue (5)
---------------------------------------------------------------------------------------------------------------------------------

Alabama:
<S>                   <C>           <C>         <C>            <C>    <C>     <C>         <C>        <C>                 <C>
River Oaks ...........Decatur       1979/89     494,000        58     88.3%   $3,293,000  $ 14.90    $ 4,828,318         2.6%
                                                 81,000(6)
Brookwood Village ....Birmingham    1973/91     463,000        69     86.3%    3,836,000    12.74      3,631,284 (7)     2.0%
                                                231,000(6)
Gadsden Mall .........Gadsden       1974/91     492,000        61     96.9%    2,705,000    14.14      4,500,473         2.4%
Village Mall .........Auburn     1973/84/89     399,000        63     93.5%    2,606,000    14.44      4,026,642         2.2%
Montgomery Promenade .Montgomery    1990/97     274,000        31     98.3%    1,679,000    14.80      2,214,901         1.2%
                                                174,000(6)
McGehee Place ........Montgomery       1986      55,000        13     86.3%      526,000    11.51        691,375         0.4%
                                                 50,000(6)
Bellwood .............Montgomery       1988      37,000        15     86.1%      401,000    10.91        500,703         0.3%
                                                 50,000(6)
Old Springville ......Birmingham       1982      64,000        14    100.0%      405,000     8.39        500,277         0.3%
Heatherbrooke Center .Birmingham       1984      28,000         5    100.0%      393,000    11.85        370,728 (7)     0.2%
Olde Town ............Montgomery    1978/90      39,000        15     95.3%      336,000     9.66        427,795         0.2%
                                             ----------   -------    -----    ----------    -----    -----------        -----
    Subtotal-Alabama (10 Properties) .....    2,931,000       344     92.0%   16,180,000    13.36     21,692,496        11.8%
                                             ----------   -------    -----    ----------    -----    -----------        -----
Florida:
University Park ......Orlando       1986/89     399,000        41     94.6%    2,763,000    13.65      3,668,053         2.0%
Country Lake .........Orlando          1990     217,000        28     97.3%    1,063,000    10.57      1,716,094         0.9%
Burnt Store Square ...Punta Gorda      1990     199,000        21     90.2%    1,241,000    11.64      1,549,115         0.8%
Winter Haven .........Orlando          1986     197,000        24     89.4%    1,292,000    11.50      1,440,257         0.8%
Northdale Court ......Tampa            1988     193,000        27     81.5%    1,322,000     9.50      1,949,345         1.1%
                                                 55,000(6)
Bear Lake ............Orlando          1990     125,000        20     85.8%      839,000    12.97      1,117,744         0.6%
Paddock Park .........Ocala            1988      87,000        20     97.6%      663,000    11.89        859,833         0.5%
Bardmoor Village .....St. Petersburg   1981     158,000        27     98.1%    1,355,000    15.45      1,772,679         1.0%
Island Walk ..........Orlando       1993/95     222,000        24     98.2%    1,914,000    15.00      2,262,172         1.2%
Wekiva Riverwalk .....Orlando          1990     209,000        26     82.7%    1,950,000    18.61      2,457,767         1.3%
Lakewood Plaza .......Jacksonville     1995     195,000        39     88.9%    1,366,000     9.30        470,071 (7)     0.3%
                                             ----------   -------    -----    ----------    -----    -----------        -----
    Subtotal-Florida (11 Properties) .....    2,256,000       297     91.5%   15,768,000    12.40     19,263,130        10.4%
                                             ----------   -------    -----    ----------    -----    -----------        -----
Georgia:
Macon Mall ...........Macon      1975/88/97     757,000       158      (8)     9,778,000    22.59     15,903,335         8.6%
                                                682,000(6)
Beechwood Center .....Athens        1963/92     336,000        51     98.1%    2,404,000    10.29      2,329,786 (7)     1.3%
Britt David ..........Columbus         1990     110,000        10    100.0%      746,000    12.48        936,002         0.5%
Lakeshore Mall .......Gainesville   1984-97     518,000        64     93.6%    3,358,000    16.45        850,449 (7)     0.5%
Valdosta Mall ........Valdosta      1982-85     325,000        53     93.7%    2,831,000    15.93        844,207 (7)     0.5%
                                                 74,000(6)
Glynn Place Mall .....Brunswick        1986     285,000        54     84.7%    2,581,000    15.22        620,856 (7)     0.3%
                                                226,000(6)
Village at Roswell Summit..Atlanta     1988      25,000        11     90.0%      320,000    14.77              - (7)     0.0%
                                             ----------   -------    -----    ----------    -----    -----------        -----
    Subtotal-Georgia (7 Properties) ......    3,338,000       401     93.4%   22,018,000    17.93     21,484,635        11.7%
                                             ----------   -------    -----    ----------    -----    -----------        -----
North Carolina:
Holly Hill Mall ...... Burlington 1969/86/94    422,000        57     98.8%    2,591,000    13.94        820,231 (7)     0.4%
Mayberry Mall ........ Mount Airy    1968/86    150,000        19     95.4%      712,000    10.37        163,627 (7)     0.1%
                                                 55,000(6)
Quaker Village ....... Greensboro 1968/88/97    114,000        32    100.0%    1,028,000    10.02        202,015 (7)     0.1%
Yadkin Plaza ......... Yadkinville   1971/97     94,000        13    100.0%      651,000     6.20         59,046 (7)     0.0%
Stanly Plaza ......... Locust        1987/96     47,000         7    100.0%      249,000     7.27         44,373 (7)     0.0%
                                             ----------   -------    -----    ----------    -----    -----------        -----
    Subtotal-North Carolina (5 Properties)      882,000       128     98.6%    5,231,000    10.71      1,289,292         0.7%
                                             ----------   -------    -----    ----------    -----    -----------        -----
South Carolina:
Briarcliffe Mall .....Myrtle Beach     1986     488,000        78     96.7%    4,066,000    15.55      6,725,317         3.6%
                                             ----------   -------    -----    ----------    -----    -----------        -----
    Subtotal-South Carolina (1 Property) .      488,000        78     96.7%    4,066,000    15.55      6,725,317         3.6%
                                             ----------   -------    -----    ----------    -----    -----------        -----
Tennessee:
Rivermont Shopping Center..Chattanooga 1986/97   75,000         8     95.4%      366,000     6.57         75,381         0.0%
                                             ----------   -------    -----    ----------    -----    -----------        -----
     Subtotal-Tennessee (1 Property) ......      75,000         8     95.4%      366,000     6.57         75,381         0.0%
                                             ----------   -------    -----    ----------    -----    -----------        -----
Virginia:
Staunton Mall ........Staunton   1969/86/97     422,000        46     93.2%    1,841,000     9.92        467,986         0.3%
Abingdon Towne Centre ..Abingdon    1987/96     166,000        19    100.0%    1,001,000     9.81        180,352         0.1%
                                             ----------   -------    -----    ----------    -----    -----------        -----
    Subtotal-Virginia (2 Properties) .....      588,000        65     95.1%    2,842,000     9.81        648,338         0.4%
                                            ----------   -------    -----    ----------    -----    -----------        -----

    Total (37 Properties) ................   10,558,000     1,321     93.3%  $66,471,000  $ 14.38   $ 71,178,589        38.6%
                                             ==========   =======    =====    ==========    =====    ===========        =====

(footnotes on next page)



                                       17
<PAGE>

<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  1997  Property  Revenue  represents  the Retail  Property's
   proportionate share of all revenue from the 93 Properties.
(6) Represents space owned by anchor tenants.
(7)Represents  revenues from the date of CRLP's  acquisitions of the Property in
   1997 through December 31, 1997.
(8) Expanded or newly developed property currently undergoing lease-up.
</FN>
</TABLE>


      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) (1)  Leased  Leased Square Foot(2)
        <S>                   <C>             <C>           <C>
        December 31, 1997     8,880,000       93.3%         $14.38
        December 31, 1996     4,856,000       93.8%         $14.66
        December 31, 1995     3,758,000       93.1%         $13.23
        December 31, 1994     2,467,000       95.8%         $12.61
        December 31, 1993     2,158,000       95.0%         $12.27

<FN>

(1)         Excludes 1,678,000 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, 1997, for the Retail Properties:
<TABLE>

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

<S>               <C>          <C>            <C>                   <C>
  1998            280          872,122        $ 8,928,000           13.5%
  1999            220          702,133          6,984,000           10.1%
  2000            205          938,119          8,148,000           12.3%
  2001            119          530,314          4,577,000            6.9%
  2002            130          513,252          5,230,000            7.9%
  2003             56          272,291          2,944,000            4.4%
  2004             52          530,403          3,541,000            5.4%
  2005             60          220,151          3,380,000            5.1%
  2006             57          614,853          4,825,000            7.3%
  2007             82          544,787          5,427,000            8.2%
  2008-2015        60        2,353,575         12,488,000           18.9%
            ----------     ------------     --------------    -----------
                1,321        8,092,000       $ 66,472,000          100.0%
            ==========     ============     ==============    ===========
<FN>

(1)Excludes  1,678,000  square feet of space owned by anchor tenants and 788,000
   square feet of space not leased as of December 31, 1997.
(2) Annualized base rent is calculated using base rents as of December 31, 1997.
</FN>
</TABLE>

                                       18
<PAGE>

Office Properties

      The 13 Office  Properties  owned by CRLP at December 31,  1997,  contain a
total of approximately  1.9 million  rentable square feet.  Eleven of the Office
Properties are located in Alabama  (representing  77% of the office  portfolio's
net  rentable  square  feet) , one is located  in  Atlanta,  Georgia  and one is
located  in  Orlando,   Florida.  The  Office  Properties  range  in  size  from
approximately  30,000  square feet to 352,000  square  feet.  Four of the Office
Properties  were developed by Colonial,  five of the Properties were acquired at
various times between 1980 and 1990, and four of the Properties were acquired in
1997. All of the Office Properties are managed by CRLP.

The following table sets forth certain  additional  information  relating to the
Office Properties as of and for the year ended December 31, 1997.

<TABLE>

                               Office Properties
<CAPTION>

                                                                                            Average
                                                                                             Base
                                                      Net                                    Rent
                                                    Rentable                                  Per       Total Office   Percent of
                                       Year           Area                     Total        Leased      Property      Total 1997
 Office                              Completed       Square       Percent      Annualized     Square     Revenue for     Property
 Property (1)           Location        (2)           Feet        Leased      Base Rent       Foot      1997 (3)        Revenue (4)
--------------------  ------------  -----------   ------------  ---------   ------------   ---------  ------------    ----------

Alabama:
<S>                   <C>          <C>              <C>            <C>      <C>            <C>         <C>                <C>
Interstate Park ......Montgomery   1982-85/89       227,000        95.0%    $ 2,717,000    $ 12.76     $ 2,987,935        1.5%
Riverchase Center ....Birmingham      1984-88       306,000        87.2%      2,779,000       9.95       2,673,025 (7)    1.3%
International Park ...Birmingham      1987/89        93,000       100.0%      1,119,000      14.23       1,283,943 (8)    0.7%
Colonial Plaza .......Birmingham         1982       168,000       100.0%      2,410,000      14.66       1,784,666 (8)    1.0%
Progress Center ......Huntsville      1983-91       225,000        96.1%      1,732,000       8.26       1,031,030 (7)    0.6%
Lakeside Office Park .Huntsville      1989/90       121,000        96.0%      1,330,000      11.40         858,403 (7)    0.5%
AmSouth Center .......Huntsville         1990       157,000        92.6%      2,489,000      17.64       2,878,541        1.6%
P&S Building .........Gadsden      1946/76/91        40,000       100.0%        178,000       4.50         178,020        0.1%
250 Commerce St ......Montgomery      1904/81        35,000       100.0%        297,000       8.44         373,764        0.2%
Anderson Block (5) ...Montgomery      1981/83        34,000        96.1%        188,000       5.83         116,484        0.1%
Land Title Bldg ......Birmingham         1975        30,000       100.0%        383,000      12.85         142,583        0.1%
Other ................                                                                                     110,266 (6)    0.1%
                                               ------------      ------     ------------   -------     ------------       ---
    Subtotal-Alabama (11 Properties)              1,436,000        94.6%     15,622,000     11.66       14,418,660        7.8%
                                               ------------      ------     ------------   -------     ------------       ---
Florida:
University Park Plaza ..Orlando          1985        71,000        92.0%        813,000     14.37          871,548        0.5%
                                               ------------      ------     ------------   -------     ------------       ---
    Subtotal-Florida (1 Property) ..                 71,000        92.0%        813,000     14.37          871,548        0.5%
                                               ------------      ------     ------------   -------     ------------       ---
Georgia:
Mansell Office Park ..Atlanta      1987/96/97       352,000       100.0%      4,200,000     12.45        2,471,239 (7)    1.3%
                                               ------------      ------     ------------   -------     ------------       ---
    Subtotal-Georgia (1 Property) ..                352,000       100.0%      4,200,000     12.45        2,471,239        1.3%
                                               ------------      ------     ------------   -------     ------------       ---
    TOTAL (13 Properties) ..........              1,859,000        95.5%   $ 20,635,000   $ 12.18     $ 17,761,447        9.6%
                                               ============      ======     ============   =======     ============       ===

<FN>

(1)All Office  Properties are 100% owned by CRLP with the exceptions of Anderson
   Block and Land Title Building, which are each 33.33% owned by CRLP.
(2)Year initially completed and, where applicable, most recent year in which the
   Property was  substantially  renovated or in which an additional phase of the
   Property was completed.
(3)Total 1997 Office  Property  revenue is CRLP's share (based on its percentage
   ownership of the property) of total Office Property revenue, unless otherwise
   noted.
(4)Percent of Total  1997  Property  Revenue  represents  the Office  Property's
   proportionate  share of all revenue from the 93 Properties and the Properties
   disposed of in 1997.
(5)CRLP has a leasehold interest in this Property.
(6)Represents  revenues  from the Property  disposed of in 1997.
(7)Represents  revenues  from  the  date of CRLP's  acquisition  of this
   Property in 1997 through December 31, 1997.
(8)Represents  CRLP's  percentage of 1997 revenues prior to CRLP's
   purchase  of the  remaining  interests  in this  Property,  and  CRLP's  100%
   interest  in  1997  revenues  subsequent  to the  purchase  of the  remaining
   interest in this Property.

</FN>
</TABLE>

                                       19
<PAGE>

     The following table sets out a schedule of the lease expirations for leases
in place as of December 31, 1997, for the Office Properties (including all lease
expirations for partially-owned Properties): <TABLE>

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

<S>               <C>          <C>            <C>                   <C>
  1998            101          599,000        $ 6,497,000           31.5%
  1999             69          296,000          3,467,000           16.8%
  2000             57          283,000          3,426,000           16.6%
  2001             26          204,000          2,371,000           11.5%
  2002             16           68,000            820,000            4.0%
  2003              4           87,000          1,314,000            6.4%
  2004              2           23,000            254,000            1.2%
  2005              3           66,000          1,170,000            5.7%
  2006              4          108,000          1,204,000            5.8%
  2007              1            6,000            112,000            0.5%
              ----------     ------------     --------------    -----------
                  283        1,740,000       $ 20,635,000          100.0%
              ==========     ============     ==============    ===========
<FN>

(1)  Excludes  119,000  square feet of space not leased as of December 31, 1997.
(2) Annualized base rent is calculated using base rents as of December 31, 1997.
</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, 1997    1,859,000         95.5%           $12.18
December 31, 1996    1,009,000         97.4%           $13.80
December 31, 1995    1,009,000         94.0%           $13.52
December 31, 1994    1,009,000         95.0%           $12.99
December 31, 1993    1,007,000         93.7%           $13.05

<FN>
-----------------
(1)Average base rent per leased square foot is calculated using base rents as of
   December 31 for each respective year.
</FN>
</TABLE>

Undeveloped Land

      CRLP owns eight undeveloped land parcels consisting of approximately 103.2
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 seven such parcels.

                                       20
<PAGE>
      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>

Site Name                         Location     Proposed Use           Acres
<S>                            <C>             <C>                     <C>
North Macon (Wimbleton Forest).Macon, GA       Retail/Multifamily      38.1
Osprey (Sarasota)  ............Sarasota, FL    Mixed Use               73.9
Interstate Park................Montgomery, AL  Office                  11.3
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, 1997.

<TABLE>
                     Geographic Concentration of Properties
<CAPTION>
                                                                        Percent
                                                                       Of Total
                  Units                                      Total       1997
                 (Multifamily)  GLA            NRA       1997 Property Property
    State          (1)       (Retail) (2)   (Office)(3)     Revenue     Revenue
-------------   ---------   ------------   -----------   -------------  --------

<S>                <C>        <C>           <C>          <C>               <C>
 Alabama           6,985      2,931,000     1,436,000    $ 88,745,452      48.2%
 Florida           4,502      2,256,000        71,000      51,777,904      28.0%
 Georgia           1,594      3,338,000       352,000      33,394,523      18.1%
 Mississippi         328             -0-           -0-      1,025,654       0.6%
 North Carolina       -0-       882,000            -0-      1,289,292       0.7%
 South Carolina      350        488,000            -0-      7,486,459       4.0%
 Tennessee            -0-        75,000            -0-         75,381       0.0%
 Virginia             -0-       588,000            -0-        648,338       0.4%
                ---------   ------------   -----------   -------------   -------
     Total        13,759     10,558,000     1,859,000    $ 184,443,003    100.0%
                =========   ============   ===========   =============   =======
<FN>

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

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



                                       21
<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, 1997, of  approximately  $702.0  million
carrying  a  weighted  average  interest  rate of 7.23% and a  weighted  average
maturity  of 7.3  years.  The  mortgage  indebtedness  on the  Properties  as of
December 31, 1997, is set forth in the table below:

<TABLE>

                        Mortgage Debt and Notes Payable
<CAPTION>

                                                              Anticipated
                                                              Annual Debt
                                               Principal         Service                     Estimated
                                 Interest     Balance (as of    (1/1/98-      Maturity      Balance Due
 Property (1)                       Rate       12/31/97)        12/31/98)     Date (2)      on Maturity
-------------------------------  ----------  -------------    -------------  ----------    --------------

 Multifamily Properties:
<S>                               <C>       <C>                <C>            <C>          <C>
     CG at Carrollwood            8.870%    $ 6,230,000        $ 552,601      03/05/05     $ 6,230,000
     CG at Natchez Trace          7.950%      6,859,693          577,803      09/01/35          47,813
                                  8.000%      4,081,678          351,254      02/01/37          29,071
     CV at Rocky Ridge            5.900%      6,000,000          354,000      08/01/02(3)    6,000,000
                                  7.625%      1,335,000          188,648      08/01/02(3)      841,667
     CG at Galleria Woods         6.875%      7,253,376          645,715      07/15/99       7,035,235
     CG at Mountain Brook         8.000%     12,101,956        1,134,426      01/10/00      11,742,632
     CV at Cahaba Heights         8.060%      3,696,965          376,726      05/10/00       3,502,055
     CG at Edgewater              7.500%      9,811,501       10,481,759      11/15/98       9,685,749
     CV at Inverness              5.96%(4)    9,900,000          347,490      06/15/26(5)    9,900,000
     CV at Huntleigh Woods        9.500%      2,992,056 (8)       21,280 (8)  05/01/02       2,992,056 (8)
     CV at Inverness Lakes        5.900%      4,000,000          236,000      07/31/02(6)    4,000,000
                                  7.625%      1,663,333          204,037      07/31/02(7)    1,234,167
     CG at Galleria               4.540%     22,400,000          786,240      06/15/26(5)   22,400,000
     CG at Research Park          4.800%     12,775,000          448,403      06/15/26(5)   12,775,000
     CG at Riverchase             7.150%      9,081,348        9,134,047      12/31/98       8,967,396
     Ski Lodge-Tuscaloosa         9.500%      4,779,642 (8)       33,994 (8)  05/01/02       4,779,642 (8)
     CV at Vernon Marsh           5.96%(4)    4,500,000          157,950      06/15/26(5)    4,500,000
     CV at White Bluff            5.96%(4)    3,400,000          119,340      06/15/26(5)    3,400,000
     CV at Hillwood               5.900%      3,330,000          196,470      07/31/02(6)    3,330,000
                                  7.625%      1,593,333          197,203      07/31/02(7)    1,179,167

 Retail Properties:
     Bellwood                    10.125%      2,973,419          324,825      01/01/99       2,948,518
     Island Walk                  8.800%     10,253,337        1,059,766      10/01/01       9,578,044
     Mayberry Mall                9.220%      3,401,032          362,787      10/01/01       3,237,064
     Montgomery Promenade         9.250%     10,810,000          999,925      07/01/00      10,810,000
     Rivermont Shopping Center   10.125%      1,789,378          270,656      09/01/08          52,091
     University Park Plaza        8.870%     14,445,000        1,281,272      03/05/05      14,445,000
     Village at Roswell Summit    8.930%      1,652,438          168,057      09/01/05       1,401,860

 Office Properties:
     International Park           8.650%      2,011,911          216,795      10/01/99       1,931,425
     Interstate Park              8.500%      4,481,137          643,443      08/01/03       2,648,144
     Riverchase Center            7.880%      8,479,599          897,960      12/01/00       7,766,043
     Mansell Office Park          8.250%     17,571,480        1,595,700      01/10/08      15,285,811
                                  8.625%     14,007,994        1,333,754      06/01/00      13,682,324

 Other debt:
     Land Loan                    7.010%        668,364          712,178      09/30/98         649,897
     Line of Credit,
          incl. Comp. Bid         6.756%(9) 117,086,000        7,910,330      07/(10)8     117,086,000
     Unsecured Senior Notes       7.500%     64,886,337        4,875,000      07/15/01      65,000,000
     Unsecured Senior Notes       8.050%     64,741,683        5,232,500      07/15/06      65,000,000
     Medium Term Notes            7.050%     50,000,000        3,525,000      12/15/03      50,000,000
     Medium Term Notes            7.160%     50,000,000        3,580,000      01/17/03      50,000,000
     Medium Term Notes            6.690%     75,000,000        5,017,500      07/26/04      75,000,000
     Medium Term Notes            6.960%     25,000,000        1,740,000      08/01/05      25,000,000
     Medium Term Notes            6.980%     25,000,000        1,745,000      09/26/05      25,000,000
                                          -------------    -------------                --------------
 TOTAL                                    $ 702,043,990     $ 70,037,834                 $ 681,093,871
                                          =============    =============                ==============

       (footnotes presented on the next page)

                                       22
<PAGE>
<FN>
(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  CV at  Rocky  Ridge,  CV at  Inverness  Lakes,  CV at
   Hillwood, and CG at Natchez Trace, 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 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, 1997, was 3.80% 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 3.87% at December 31, 1997.
(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 February
   1998  through  advances  on CRLP's  unsecured  line of  credit.  The  amounts
   presented for  anticipated  annual debt service for these loans represent the
   principal  and  interest  paid during  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
   February 1998.
(9)This line of credit  facility  bears  interest at a variable  rate,  based on
   LIBOR plus a spread that ranges from 100 to 150 basis points. At December 31,
   1997,  line of credit  facility  bore  interest at a rate of 110 basis points
   above LIBOR. The facility also includes a competitive bid feature that allows
   CRLP to convert up to $100 million  under the line of credit to a fixed rate,
   for a fixed term not to exceed 90 days. At December 31, 1997, $45 million was
   outstanding  under a  competitive  bid loan which bore interest at a weighted
   average rate of 6.60%.
(10) This  credit  facility  has a term of one year  beginning  in July 1997 and
   provides for a two-year amortization in the event of non-renewal.
</FN>
</TABLE>

      In addition to the foregoing  mortgage debt, the two Office  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,
1997, was $1,057,000 which carried a weighted average interest rate of 9.3%. The
maturity  dates of these loans range from May 31, 1998 to July 17, 2000,  and as
of December 31, 1997, the loans had a weighted average maturity of 1.8 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 1997.






                                       23
<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
9, 1998, there were 69 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
$2.20 per Unit ($.55 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:

           Calendar Period    Distribution

      1998:
       First Quarter...........$   .55
      1997:
       First Quarter...........$   .52
       Second Quarter..........$   .52
       Third Quarter...........$   .52
       Fourth Quarter..........$   .52
      1996:
       First Quarter...........$   .50
       Second Quarter..........$   .50
       Third Quarter...........$   .50
       Fourth Quarter..........$   .50











                                       24
<PAGE>

Item 6.    Selected Financial Data.

      The  following   table  sets  forth   selected   financial  and  operating
information  on a  historical  basis for CRLP for each of the five  years  ended
December 31, 1997. 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 interests 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.

Dollar amounts in thousands,      1997    1996    1995    1994    1993
except unit data
-----------------------------------------------------------------------
OPERATING DATA
Total revenue                 $184,126 134,881 111,437  63,958  42,629
Expenses:
   Depreciation and             33,278  23,533  20,615  13,060   7,874
   amortization
   Other operating expenses     63,581  46,819  42,282  24,011  16,777
Income from operations          87,267  64,529  48,540  26,887  17,978
Interest expense                40,496  24,584  23,972  10,820  12,772
Other income (expense), net      3,069   1,104     674     582 (1,697)
Income before extraordinary     49,840  41,049  25,242  16,650   3,509
items
Dividends to preferred           1,671       -       -       -       -
unitholders
Net income (loss) available     44,519  40,538  25,242  16,650 (3,775)
to common unitholders
Per unit - basic and diluted:
   Net income                     1.55    1.58    1.28    1.17       -
   Distributions                  2.08    2.00    1.90    1.73       -
-----------------------------------------------------------------------
BALANCE SHEET DATA
Land, buildings, and
equipment, net               $ 1,268,430 801,798 624,514 555,577 236,058
Total assets                   1,396,660 947,947 681,297 603,135 290,925
Total debt                       702,044 506,435 354,100 344,234 110,432
-----------------------------------------------------------------------
OTHER DATA
Total properties (at end of         93      73      61      55      36
period)








                                       25
<PAGE>

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

GENERAL

Colonial  Realty  Limited  Partnership  (CRLP or the Operating  Partnership),  a
Delaware  limited  partnership,   is  the  operating   partnership  of  Colonial
Properties  Trust, an Alabama real estate investment trust (the "Company") whose
shares are listed on the New York Stock Exchange.  The Company is engaged in the
ownership,  development,  management,  and leasing of  multifamily  communities,
retail malls and shopping centers,  and office  buildings.  The Company owns and
operates properties in eight states in the Southern region of the United States.
As  of  December  31,  1997,  CRLP's  real  estate  portfolio  consisted  of  43
multifamily communities, 37 retail properties, and 13 office properties.

CRLP manages its business with three separate and distinct operating  divisions:
Multifamily,  Retail, and Office.  Each division has an Executive Vice President
that oversees  growth and operations and has a separate  management team that is
responsible  for  acquiring,  developing,  and  leasing  properties  within each
division. This structure allows CRLP to utilize specialized management personnel
for each operating division. Although these divisions operate independently from
one another, constant communication among the Executive Vice Presidents provides
CRLP with synergy  allowing  CRLP to take  advantage of a variety of  investment
opportunities.

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

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


Results of Operations--1997  vs. 1996

In 1997, CRLP experienced growth in revenues, operating expenses, and net income
available  to  common  unitholders  which  resulted  from  the  acquisition  and
development  of  43  properties  during  1997  and  1996.  As a  result  of  the
acquisitions and  developments,  CRLP's net income before dividends to preferred
unitholders increased by $5.0 million, or 18.0%, for 1997 when compared to 1996.
On a per unit basis, net income  available to commone  unitholders was $1.55 for
1997, a 3.2%  decrease,  compared to $1.58 for 1996.  The decrease in net income
available to common unitholders,  on a per unit basis, is directly  attributable
to the  extraordinary  loss from early  extinguishment of debt and the dividends
paid to the preferred unitholders.

Revenues--Total  revenues increased by $49.2 million, or 36.5%, during 1997 when
compared to 1996. Of this increase,  $43.4 million relates to revenues generated
by  properties  that were  acquired  or  developed  during  1997 and  1996.  The
remaining  increase  primarily  relates to increases in rental rates at existing
properties.

                                       26
<PAGE>

Operating  Expenses--Total  operating  expenses  increased by $26.5 million,  or
37.7%,  during 1997 when compared to 1996. The majority of this increase,  $21.5
million,  relates to additional  operating  expenses  associated with properties
that were acquired or developed  during 1997 and 1996.  Depreciation  expense at
existing properties  increased by $1.8 million during 1997 when compare to 1996.
The  remaining  increase  primarily  relates  to the  resolution  of prior  year
reserves  for certain tax  contingencies,  increases  in  operating  expenses at
existing  properties,  and overall increases in corporate overhead and personnel
costs associated with CRLP's continued growth.

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

Results of Operations--1996 vs. 1995

In 1996,  CRLP  experienced  growth in revenues  and  operating  expenses  which
resulted from the acquisition  and development of 22 properties  during 1996 and
1995. As a result of the acquisitions and developments, CRLP's net income before
dividends to preferred  shareholders  increased by $12.6 million,  or 84.2%, for
1996 when compared to 1995. On a per share basis, net income was $1.58 for 1996,
a 22.5% increase, compared to $1.29 for 1995.

Revenues--Total  revenues increased by $24.0 million, or 21.6%, during 1996 when
compared to 1995. Of this increase,  $21.7 million relates to revenues generated
by  properties  that were  acquired  or  developed  during  1996 and  1995.  The
remaining  increase  primarily  relates to increases in rental rates at existing
properties.

Operating  Expenses--Total  operating  expenses  increased by $8.1  million,  or
13.0%,  during 1996 when  compared to 1995.  The change is due to an increase of
$9.4 million related to additional operating expenses associated with properties
that were  acquired  or  developed  during  1997 and 1996 and a decrease of $1.9
million due to the resolution of certain state tax contingencies.

Other Income and Expenses--Interest  expense increased by $0.5 million, or 2.2%,
during 1996 when compared to 1995.  The change in interest  expense is primarily
attributable to an increase in indebtedness incurred to finance acquisitions and
developments,  which  was  offset  by the  repayment  of two  mortgages  and one
revolving  credit  agreement and an increase in capitalized  interest during the
year.

LIQUIDITY AND CAPITAL RESOURCES

During 1997,  CRLP invested $523 million in the  acquisition  and development of
properties.   This  acquisition  and  development   activity   increased  CRLP's
multifamily,  retail,  and office  property  holdings.  CRLP financed the growth
through  proceeds from public offerings of equity and debt totaling $403 million
during  1997,  advances  on its bank line of  credit,  the  issuance  of limited
partnership  units in CRLP,  and cash from  operations.  In connection  with the
acquisition activity,  CRLP sold or exchanged six multifamily properties and one
office property. CRLP also used these sources of funds, along with exchanging or
selling properties, to repay or transfer $120 million on 17 mortgage loans.

Acquisition and Development Activities

Multifamily  Properties--During  1997,  CRLP added 1,434 apartment units through
the  acquisition  of five  multifamily  communities  at an aggregate cost of $84
million.  In a  continuing  effort  to  diversify  its  portfolio,  CRLP sold or
exchanged six multifamily communities, which had a net book value of $68 million
and consisted of 2,464 apartment units. CRLP also completed development of 1,172


                                       27
<PAGE>

apartment units in seven multifamily  communities  during 1997 and acquired land
on which it intends to develop additional  multifamily  communities during 1998.
The aggregate  investment in the multifamily  developments during 1997 was $50.5
million.  As of  December  31,  1997,  CRLP has 1,170  apartment  units in seven
multifamily  communities under development or expansion.  Management anticipates
that the seven multifamily  projects will be completed during 1998 and the first
half of 1999. Management estimates that it will invest an additional $63 million
to complete these multifamily communities.

Retail  Properties--During  1997,  CRLP added 4.9 million  square feet of retail
shopping space through the  acquisition of nine community  shopping  centers and
seven enclosed malls at an aggregate cost of $250.6 million. CRLP also completed
the 422,000 square foot  expansion of a regional mall in Macon,  Georgia and the
239,000  square foot  expansion of a community  shopping  center in  Montgomery,
Alabama at an aggregate cost during 1997 of $28.6 million.

Office  Properties--During  1997,  CRLP  increased  its office  portfolio by one
million  square  feet with the  acquisition  of four office  properties  and the
purchase of additional interest in two joint ventures. The office properties are
located in Alabama and Georgia and were purchased at an aggregate cost of $104.5
million.  In connection with one of the  acquisitions,  CRLP exchanged an office
property  which had a net book value of $2.0  million  and  consisted  of 25,000
square feet.

In an effort to take advantage of current market  conditions  CRLP both develops
and acquires  rental  properties.  CRLP contracts the services of two affiliated
construction firms for its development activities.  The owners of the affiliated
firms serve on  Colonial's  Board of Trustees  and have vested  interests in the
continued  improvement of Colonial's real estate portfolio.  Management believes
that  this  relationship  affords  CRLP a  competitive  advantage  in  terms  of
construction quality and identification of development opportunities.

Financing Activities

CRLP funded a large portion of its  acquisitions  and  developments  through the
issuance of debt  securities  and through  cash  contributions  from the Company
through the  issuance  of its common and  preferred  shares.  During  1997,  the
Company and CRLP completed the following equity and debt transactions:
<TABLE>

                             Common Share Offerings
<CAPTION>
                                         (in thousands)
            Number of    Price Per   Gross   Offering      Net
  Date     Common Shares  Share     Proceeds   Costs     Proceeds
-------------------------------------------------------------------
<S>        <C>            <C>       <C>        <C>        <C>
January    1,500,000      $29.8750  $44,812    $1,457     $43,355
July       1,700,000      $30.9375  $52,594    $2,945     $49,649
December     165,632      $30.1875  $ 5,000    $  330(1) $  4,670
(1) Includes $90,000 in shelf registration fees paid to the Securities and
Exchange Commission.
</TABLE>
<TABLE>

                            Preferred Share Offering
<CAPTION>
                                         (in thousands)
            Number of    Price Per  Gross    Offering      Net
  Date   Preferred Shares  Share    Proceeds   Costs     Proceeds
-------------------------------------------------------------------
<S>        <C>           <C>       <C>        <C>       <C>
November   5,000,000     $25.0000  $125,000   $4,451    $120,549
</TABLE>
<TABLE>
                                 Debt Offerings
<CAPTION>
                                                      Gross
               Type of                               Proceeds
  Date          Note      Maturity        Rate    (in thousands)
-------------------------------------------------------------------
<S>        <C>            <C>             <C>          <C>
January    Medium-term    January, 2003   7.16%        $50,000
July       Medium-term    July, 2004      6.96%        $75,000
August     Medium-term    August, 2005    6.96%        $25,000
September  Medium-term    September, 2005 6.98%        $25,000
</TABLE>

                                       28
<PAGE>

On July 10, 1997, CRLP increased the borrowing capacity under its unsecured line
of credit from $125 million to $200 million. The credit facility,  which is used
by CRLP primarily to finance additional property investments,  bears interest at
a rate  ranging  between 100 and 150 basis  points  above LIBOR and is renewable
annually.  As of December 31, 1997,  the balance  outstanding  on CRLP's line of
credit was $117.1 million.

At December 31, 1997,  CRLP's total outstanding debt balance was $702.0 million.
The outstanding  balance  includes fixed rate debt of $531.3 million,  or 75.7%,
and floating-rate  debt of $170.7 million,  or 24.3%. CRLP has obtained interest
rate  protection  for  $67.8  million  of  the  floating-rate   debt  under  two
agreements.  One agreement,  for $17.8  million,  limits the debt to an interest
rate of 5.96% through  September 30, 1998,  and the other  agreement,  for $50.0
million,  limits  the debt to an  interest  rate of 8.00%  through  May 2, 2000.
CRLP's total market capitalization as of December 31, 1997 was $1.76 billion and
its  ratio  of debt to total  market  capitalization  was  39.8%.  Certain  loan
agreements  of CRLP contain  restrictive  covenants  which,  among other things,
require  maintenance of various financial ratios. At December 31, 1997, CRLP was
in compliance with these covenants.

Outlook

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

In addition  to the  issuance of equity and debt,  management  is  investigating
alternate  financing  methods  and  sources  to raise  future  capital.  Private
placements,  joint ventures,  and non-traditional  equity and debt offerings are
some of the  alternatives  CRLP is  contemplating.  Colonial  continues  to work
diligently to improve its credit rating,  in order to reduce its cost of raising
future capital.

Cash  and  equivalents   increased  by  $1.2  million  during  1997.  Management
anticipates  that its net cash  provided by  operations  and its  existing  cash
balances  will provide the  necessary  funds on a short- and long- term basis to
cover its operating  expenses,  interest  expense on  outstanding  indebtedness,
recurring capital expenditures, and dividends to shareholders in accordance with
Internal Revenue Code requirements applicable to real estate investment trusts.

CRLP is aware of the potential  issues  associated  with the data conversion and
system  upgrades  necessary for its computer  systems to be year 2000 compliant.
Management is also currently in the process of addressing the operational impact
the year 2000 issue will have on the properties  owned by CRLP.  CRLP expects to
incur  internal  staff  costs as well as other  expenses  related to  facilities
enhancements  necessary to prepare the systems for the year 2000. CRLP currently
believes that, with  modifications  to existing  software at the corporate level
and upgrading  operational  systems at the property  level,  the year 2000 issue
will not have a material  impact on the  operations  of CRLP.  However,  if such
modifications  or upgrades  are not  completed  timely or if  software  vendors,
suppliers, or other companies upon whose systems Colonial relies in the ordinary
course of business have failed to  appropriately  address the conversion  issue,
then the year 2000 issue may have a material  impact on the  operations of CRLP.
At the current time,  CRLP has not determined  the cost that will  ultimately be
incurred to be year 2000 compliant.

                                       29
<PAGE>

Recently Issued Accounting Standard

Statement of Financial Accounting Standard No. 131 (SFAS 131), Disclosures about
Segments of an Enterprise and Related  Information,  establishes  new disclosure
guidelines for reporting  financial  information  related to operating segments.
Under SFAS 131,  CRLP will be required to disclose  operating  results and other
financial information related to its multifamily,  retail, and office divisions.
CRLP is required to adopt SFAS 131 for fiscal year ending December 31, 1998.

Inflation

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










                                       30
<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, 1997 and 1996

Consolidated  Statements  of Income  for the years  ended  December
31, 1997, 1996, and 1995

Consolidated  Statements  of Partners'  Capital for the years ended
December 31, 1997, 1996, and 1995

Consolidated   Statements   of  Cash  Flows  for  the  years  ended
December 31, 1997, 1996, and 1995

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,  1997 and  1996 and the  consolidated
statements of income,  partners'  capital,  and cash flows for each of the three
years in the period ended December 31, 1997. 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,  1997 and  1996 and the  consolidated
results of its  operations and its cash flows for each of the three years in the
period ended December 31, 1997 in conformity with generally accepted  accounting
principles.


/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
January 19, 1998, except for Note 13, as to which the date is February
17, 1998









                                       31
<PAGE>
<TABLE>
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
<CAPTION>

December 31, 1997 and 1996
---------------------------------------------------------------
                                               1997       1996
---------------------------------------------------------------
ASSETS
<S>                                      <C>         <C>      
Land, buildings, & equipment, net        $1,268,430  $ 801,798
Undeveloped land and construction in         98,555    113,689
progress
Cash and equivalents                          4,534      3,340
Restricted cash                               2,665      2,450
Accounts receivable, net                      7,174      4,779
Prepaid expenses                              3,038      4,468
Notes receivable                                575        584
Deferred debt and lease costs                 7,031      6,288
Investment in partnerships                     (28)      5,028
Other assets                                  4,686      5,523
---------------------------------------------------------------
                                        $ 1,396,660 $  947,947
---------------------------------------------------------------

LIABILITIES AND PARTNERS' CAPITAL
Notes and mortgages payable               $ 702,044  $ 506,435
Accounts payable                             11,913      7,451
Accounts payable to affiliates                2,320      9,973
Accrued interest                              6,526      5,465
Accrued expenses                              2,700      1,585
Tenant deposits                               3,715      2,926
Unearned rent                                 2,253        924
---------------------------------------------------------------
   Total liabilities                        731,471    534,759
---------------------------------------------------------------

Redeemable units, at redemption value       299,492    256,098
---------------------------------------------------------------
Partners' capital, excluding                365,697    157,090
redeemable units
---------------------------------------------------------------
                                        $ 1,396,660  $ 947,947
---------------------------------------------------------------
<FN>

The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>

                                       32
<PAGE>
<TABLE>

COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except Per
Unit Data)
<CAPTION>
For the Years Ended December 31,
1997, 1996, 1995
-----------------------------------------------------------------------
                                               1997      1996     1995
-----------------------------------------------------------------------
Revenue:
<S>                                       <C>         <C>       <C>   
   Base rent                              $ 154,063   115,174   94,835
   Base rent from affiliates                    879       758      836
   Percentage rent                            2,161     1,841    1,782
   Tenant recoveries                         17,349    10,717    7,621
   Other                                      9,674     6,391    5,816
-----------------------------------------------------------------------
     Total revenue                          184,126   134,881  110,890
-----------------------------------------------------------------------
Property operating expenses:
   General operating expenses                12,603     9,530    8,355
   Salaries and benefits                     10,283     8,606    7,363
   Repairs and maintenance                   18,669    13,073   10,890
   Taxes, licenses, and insurance            15,578    11,538    9,617
General and administrative                    6,448     4,071    5,547
Depreciation                                 31,956    22,025   18,044
Amortization                                  1,322     1,509    2,446
-----------------------------------------------------------------------
     Total operating expenses                96,859    70,352   62,262
-----------------------------------------------------------------------
     Income from operations                  87,267    64,529   48,628
-----------------------------------------------------------------------
Other income (expense):
   Interest expense                         (40,496)  (24,584) (24,060)
   Income from partnerships                     502       635      499
   Gains from sales of property               2,567       469      175
-----------------------------------------------------------------------
     Total other expense                    (37,427)  (23,480) (23,386)
-----------------------------------------------------------------------
     Income before extraordinary items       49,840    41,049   25,242
Extraordinary loss from early                (3,650)     (511)      -0-
extinguishment of debt
-----------------------------------------------------------------------
     Net income                           $  46,190  $ 40,538 $ 25,242
Dividends to preferred unitholders           (1,671)       -0-      -0-
-----------------------------------------------------------------------
     Net income available to common
     unitholders                          $  44,519  $ 40,538 $ 25,242
-----------------------------------------------------------------------

Basic and Diluted net income per unit:
-----------------------------------------
     Income before extraordinary items   $     1.64  $   1.60 $   1.28
     Extraordinary loss from early
     extinguishment of debt                   (0.09)    (0.02)      -0-
-----------------------------------------------------------------------
     Net income per common unit          $     1.55  $   1.58 $   1.28
-----------------------------------------------------------------------
Weighted average common units
outstanding                                  28,719    25,703   19,694
-----------------------------------------------------------------------
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
                                       33
<PAGE>
<TABLE>
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
(Amounts in Thousands)
<CAPTION>
For the Years Ended December 31, 1997, 1996, 1995
--------------------------------------------------------------
                                                     Total
                                                   Partners'
                                                    Capital
--------------------------------------------------------------

<S>                                              <C>         
Balance, December 31, 1994                       $     63,641

    Cash contributions                                 73,742
    Distributions                                    (35,222)
    Net income                                         25,242
    Issuance of limited                                 1,630
    partnership units
    Allocations to redeemable units                  (26,017)
    Other                                                (17)
--------------------------------------------------------------
Balance, December 31, 1995                            102,999

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

    Cash contributions                                101,324
    Cash contributions related to                     120,549
    preferred units
    Distributions                                    (59,471)
    Net income                                         44,519
    Issuance of limited                                45,079
    partnership units
    Allocations to redeemable units                  (43,393)
--------------------------------------------------------------
Balance, December 31, 1997                         $ 365,697
--------------------------------------------------------------
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>

                                       34
<PAGE>
<TABLE>
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
<CAPTION>
For the Years Ended December 31,
1997, 1996, 1995
------------------------------------------------------------------
                                           1997     1996     1995
------------------------------------------------------------------
Cash flows from operating activities:
<S>                                     <C>         <C>      <C>   
   Net  income                          $ 44,519    40,538   25,242
   Adjustments to reconcile net
   income to net cash
     provided by operating
     activities:
     Depreciation and amortization        33,278    23,533   20,615
     Income from partnerships               (502)     (635)    (499)
     Gains from sales of property         (2,567)      468      175
     Other, net                            4,204        90     (214)
     Decrease (increase) in:
       Restricted cash                      (215)     (371)    (933)
       Accounts and notes receivable      (2,620)   (3,246)     218
       Prepaid expenses                      879      (248)    (173)
       Other assets                          424    (1,187)  (1,855)
     Increase (decrease) in:
       Accounts payable                   (3,191)       10    4,583
       Accrued interest                    1,061     3,570      139
       Accrued expenses and other         (5,421)      404     (131)
------------------------------------------------------------------
       Net cash provided by               69,849    62,926   47,167
       operating activities
------------------------------------------------------------------
Cash flows from investing activities:
   Acquisition of properties            (301,931) (125,926) (67,581)
   Development expenditures              (37,589)  (22,168)  (3,741)
   Development expenditures paid to      (46,481)  (70,414) (21,646)
   an affiliate
   Tenant improvements                    (2,792)   (1,029)  (1,061)
   Capital expenditures                  (12,325)   (6,825)  (2,804)
   Proceeds from sales of property,       54,092     1,254      328
   net of selling costs
   Distributions from partnerships           719       984      998
   Capital contributions to                 (320)      (14)    (230)
   partnerships
------------------------------------------------------------------
       Net cash used in investing       (346,627) (224,138) (95,737)
       activities
------------------------------------------------------------------
Cash flows from financing activities:
   Principal reductions of debt         (122,880)  (45,798) (19,232)
   Proceeds from additional              175,246   179,540   62,220
   borrowings
   Net change in revolving credit         68,271   (21,877) (33,206)
   balances
   Cash contributions                    101,324   106,847   73,742
   Cash contributions from the           120,549      -0-      -0-
   issuance of preferred units
   Capital distributions                 (59,471)  (51,819) (35,222)
   Capital distributions to               (1,671)      -0-      -0-
   preferred unitholders
   Payment of mortgage financing cost     (1,417)   (3,416)    (945)
   Other, net                             (3,650)     (510)      -0-
------------------------------------------------------------------
       Net cash provided by              277,972   162,967   47,357
       financing activities
------------------------------------------------------------------
       Increase (decrease) in cash         1,194     1,755   (1,213)
       and equivalents
Cash and equivalents, beginning of         3,340     1,585    2,798
period
------------------------------------------------------------------
Cash and equivalents, end of period      $ 4,534     3,340    1,585
------------------------------------------------------------------

Supplemental disclosures of cash flow information:
   Cash paid during the year for
   interest                            $  39,435    20,077   23,609
------------------------------------------------------------------
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>

                                       35
<PAGE>
                COLONIAL REALTY LIMITED PARTNERSHIP
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1.  Organization and Basis of Presentation
      Organization--Colonial   Realty  Limited   Partnership   (The   "Operating
 Partnership")(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), Equity Partners Joint Venture,  and 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 (collectively  referred to as the Colonial Group for purposes of
 these  financial  statements).  CRLP is the operating  partnership  of Colonial
 Properties Trust, an Alabama real estate investment trust (the "Company") whose
 shares are  listed on the New York  Stock  Exchange  ("NYSE").  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.
      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.  Repairs  and  maintenance  are  charged to expense as
incurred. Replacements and improvements are capitalized and depreciated over the
estimated remaining useful lives of the assets.  When items of land,  buildings,
or equipment are sold or retired, the related cost and accumulated  depreciation
are removed from the accounts and any gain or loss is included in the results of
operations.
      Undeveloped  Land  and  Construction  in  Progress--Undeveloped  land  and
construction in progress is stated at the lower of cost or net realizable value.
CRLP  capitalizes  all  costs   associated  with  land   development   including
construction period interest and property taxes.
      Capitalization  of Interest--CRLP  capitalizes  interest during periods in
which  property is undergoing  development  activities  necessary to prepare the
asset for its intended use.
      Cash and  Equivalents--CRLP  includes highly liquid marketable  securities
and debt  instruments  purchased with a maturity of three months or less in cash
equivalents.
      Restricted  Cash--Cash  which is  legally  restricted  as to use  consists
primarily of tenant deposits.
      Deferred Debt and Lease  Costs--Amortization of 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.


                                       36
<PAGE>
      Derivatives--CRLP  has only limited involvement with derivative  financial
instruments  and  does  not use them for  trading  purposes.  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.
      Net Income Per  Unit--Basic  net income per unit is calculated by dividing
the net income  available to common  unitholders by the weighted average numbers
of common units outstanding  during the periods.  Diluted net income per unit is
calculated  by dividing the net income  available to common  unitholders  by the
weighted  average  numbers  of common  units  outstanding  during  the  periods,
adjusted for the assumed conversion of all potentially dilutive securities.
      Use of  Estimates--The  preparation of financial  statements in conformity
with  generally  accepted  accounting  principles  requires  management  to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and the reported  amounts of revenues and expenses.  Actual results
could differ from those estimates.
      Recently Issued  Accounting  Standard--Statement  of Financial  Accounting
Standards No. 131 (SFAS 131),  Disclosures  about  Segments of an Enterprise and
Related  Information,   establishes  new  disclosure  guidelines  for  reporting
financial  information related to operating segments.  Under SFAS 131, CRLP will
be required  to  disclose  operating  results  and other  financial  information
related to its  multifamily,  retail and office  divisions.  CRLP is required to
adopt SFAS 131 for fiscal year ending December 31, 1998.
      Reclassifications--Certain  immaterial reclassifications have been made to
the 1995 and 1996  financial  statements  in order to  conform  them to the 1997
financial statement presentation.

3.  Property Acquisitions and Dispositions
      CRLP acquired 25 properties  during 1997, 11 properties  during 1996,  and
six properties during 1995 at aggregate costs of $430.6 million, $173.7 million,
and $68.4  million,  respectively.  CRLP  funded  these  acquisitions  with cash
proceeds from its public offerings of equity (see Note 8) and debt (see Note 7),
advances on bank lines of credit,  the issuance of limited  partnership units in
CRLP,  the  exchange of certain  properties,  proceeds  from the sale of certain
properties,  and cash from operations.  The acquisition  agreements for three of
the properties  acquired in 1997 provide for CRLP to make additional payments if
certain  lease-up  conditions  are  satisfied.  CRLP expects to make  additional
payments to the sellers of $8.3 million in 1998 pursuant to these provisions.

      In connection with the Brookwood Village acquisition, which was structured
as a tax-deferred, like-kind exchange, CRLP exchanged two multifamily properties
in  Florida  containing  368  apartment  units  with a net  book  value of $14.0
million.  In connection  with the Progress  Center  acquisition,  which was also
structured as a tax-deferred, like-kind exchange, CRLP exchanged a 25,000 square
foot  office  building  in  Alabama  with a net book value of $2.0  million.  In
connection  with  the  acquisitions  of Glynn  Place  Mall,  Lakeshore  Mall and
Valdosta Mall, CRLP sold to a third party four multifamily properties in Alabama
containing  a total of 2,096  apartment  units for a total  sale  price of $54.8
million,  which resulted in a net gain of $2.6 million.  In connection with this
sale, the purchaser of these multifamily properties assumed an existing mortgage
of $10 million and paid the remainder in cash.




                                       37
<PAGE>
The properties acquired during 1997, 1996, and 1995 are listed below:

                                                     Effective
                                                    Acquisition
                               Location                Date
--------------------------------------------------------------------
Retail Properties:
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
Northdale  Court              Tampa,  FL          October 1, 1995
Paddock Park                  Ocala, FL           November  16, 1995
Briarcliffe  Mall             Myrtle  Beach,  SC  July 1, 1996
Wekiva Riverwalk              Orlando,  FL        October 1, 1996
Bardmoor  Village             St.  Petersburg, FL October 1, 1996
Island Walk                   Orlando,  FL        October 1, 1996
Heatherbrooke  Center         Birmingham, AL      March 24, 1997
Beechwood Shopping Center     Athens, GA          March 27, 1997
Brookwood Village             Birmingham,  AL     May 13, 1997
Lakewood Plaza                Jacksonville,  FL   October 1, 1997
Glynn Place Mall              Brunswick,  GA      November 1, 1997
Lakeshore Mall                Gainesville,  GA    November  1, 1997
Valdosta  Mall                Valdosta,  GA       November 1, 1997
Holly Hill Mall               Burlington,  NC     November 1, 1997
Mayberry  Mall                Mount Airy, NC      November 1, 1997
Quaker  Village               Greensboro,  NC     November 1, 1997
Yadkin  Plaza                 Yadkinville,  NC    November  1,  1997
Stanly  Plaza                 Locust,  NC         November  1,  1997
Rivermont  Shopping  Center   Chattanooga,  TN    November  1, 1997
Staunton  Mall                Staunton, VA        November 1, 1997
Abingdon Town Centre          Abingdon, VA        November 1, 1997
Village at Roswell Summit     Atlanta, GA         December 31, 1997

                                    Effective
                                   Acquisition
                                        Location                Date
-----------------------------------------------------------------------------
Multifamily Properties:
Colonial Village at Ashford Place       Mobile, AL          April 1, 1996
Colonial Village at Hillcrest           Mobile, AL          April 1, 1996
Colonial Grand at Spring Creek          Macon, GA           April 1, 1996
Colonial Grand at Galleria Woods        Birmingham, AL      April 15, 1996
Colonial Grand at Mountain Brook        Birmingham, AL      May 10, 1996
Colonial Village at Cahaba Heights      Birmingham, AL      May 10, 1996
Colonial Grand at Barrington            Macon, GA           September 13, 1996
Colonial Village at Trussville          Birmingham, AL      April 1, 1997
Colonial Village at Timothy Woods       Athens, GA          July 1, 1997
Colonial Grand at Oakleigh              Pensacola, FL       July 1, 1997
Colonial Grand at Natchez Trace         Jackson, MS         August 1, 1997
Colonial Village at Caledon Wood        Greenville, SC      October 1, 1997

Office Properties:
Riverchase  Center                      Birmingham,   AL    January  1,  1997
Lakeside  Office  Park                  Huntsville, AL      May 23, 1997
Progress Center                         Huntsville, AL      June 24, 1997
Mansell Business Park                   Atlanta, GA         July 31, 1997

      Also in 1997,  CRLP  purchased  the 62.5%  interests  in two  multi-tenant
office  buildings at  International  Park in  Birmingham.  The purchase of these
outside  interests  increased  CRLP's  ownership  from a 37.5%  interest to full
ownership in the two buildings  containing 93,000 square feet. At the same time,
CRLP sold its 25% interest in a 129,000  square foot building in the same office
complex. CRLP also purchased the remaining 50% interest in a 168,000 square foot
office building in Birmingham. This purchase increased CRLP's ownership from 50%
to 100%.

      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 1997, 1996, and 1995 are comprised of the
following:

<TABLE>

(in thousands)                               1997           1996            1995
--------------------------------------------------------------------------------
Assets purchased:
<S>                                       <C>            <C>            <C>
      Land, buildings, and equipment      $430,614       $173,277       $68,322
      Other assets                               4            455            43
--------------------------------------------------------------------------------
                                           430,618        173,732        68,365
Notes and mortgages assumed                (74,910)       (40,444)          -0-
Other liabilities assumed or recorded       (8,716)        (1,774)         (784)
Issuance of limited partnership units of
  Colonial Realty Limited Partnership      (45,061)        (5,587)          -0-
--------------------------------------------------------------------------------
Cash paid                                 $301,931       $125,927       $67,581
================================================================================
</TABLE>

                                       38
<PAGE>

The properties disposed during 1997 are listed below:

                                                        Effective
                                                       Disposition
                                   Location               Date
--------------------------------------------------------------------------------
Multifamily Properties:
Sunchase                           Bradenton,  FL      May 13, 1997
Polos West                         Orlando,  FL        May 13, 1997
Ski Lodge I                        Birmingham,  AL     November 1, 1997
Ski Lodge II                       Birmingham, AL      November 1, 1997
Ski Lodge III                      Birmingham,  AL     November 1, 1997
Vieux Carre                        Montgomery,  AL     November 1, 1997

Office Property:
Whitesburg Building                Huntsville, AL      June 24, 1997

      CRLP's   unaudited  pro  forma  results  of  operations,   assuming  these
acquisitions  and  dispositions  had been  effected  by CRLP prior to January 1,
1995, are as follows: <TABLE>

                    For the Year Ended  For the Year Ended   For the Year Ended
                    December 31, 1997   December 31, 1996    December 31, 1995
(in thousands)           (unaudited)       (unaudited)         (unaudited)
--------------------------------------------------------------------------------
<S>                      <C>                  <C>                 <C>
Revenues                 $214,712             $184,712            $160,721
================================================================================
Income before minority
  interest              $  65,980            $  66,234           $  59,310
================================================================================
Net income available to
  common shareholders   $  33,913            $  34,070           $  29,365
================================================================================
Net income per share -
  basic and diluted    $     1.60           $     1.61          $     1.39
================================================================================
</TABLE>

      On January 9, 1998, CRLP acquired Perimeter Corporate Park, an office park
comprised of two multi-tenant buildings in Huntsville,  Alabama totaling 233,000
square feet of leasable  area.  The total  purchase  price of $19.5  million was
funded by the  assumption  of $5.5  million in  mortgage  debt and an advance on
CRLP's bank line of credit  agreement.  On January 15, 1998,  CRLP also acquired
Independence  Plaza,  a 106,000  square  foot  multi-level  office  building  in
Birmingham, Alabama. The total purchase price of $7.9 million was funded through
an  advance  on CRLP's  bank  line of credit  agreement.  The  effects  of these
acquisitions  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,
1997 and 1996:
<TABLE>

(in thousands)                                    1997                1996
--------------------------------------------------------------------------------
<S>                                          <C>                 <C>
Buildings                                    $1,140,504          $ 736,621
Furniture and fixtures                           30,145             23,443
Equipment                                         3,087              2,569
Land improvements                                27,343             18,328
Tenant improvements                              15,273             11,969
--------------------------------------------------------------------------------
                                              1,216,352            792,930
Accumulated depreciation                       (124,254)          (101,549)
--------------------------------------------------------------------------------
                                              1,092,098            691,381
Land                                            176,332            110,417
--------------------------------------------------------------------------------
                                             $1,268,430          $ 801,798
================================================================================
</TABLE>


                                       39
<PAGE>
5.    Undeveloped  Land and  Construction in Progress

During 1997 CRLP completed the construction of two
multifamily expansion projects at a combined total cost of $32.1 million and two
retail  expansion  projects  at a  combined  total  cost of $67.6  million.  The
multifamily  expansion  projects  produced  524 new  apartment  units (428 units
completed during 1996 and 96 units completed during 1997), 312 units at Colonial
Grand at  Heathrow  in  Orlando,  Florida,  and 212 units at  Colonial  Grand at
Bayshore in Bradenton,  Florida.  The retail expansion projects produced 661,000
square  feet of leasable  space.  CRLP  currently  has 11 active  expansion  and
development  projects in  progress  and various  parcels of land  available  for
expansion,  construction,  or sale.  During 1997 CRLP completed  construction on
1,172 apartment units  (including the 96 units in completed  projects  mentioned
above), and CRLP has an additional 1,170 apartment units in progress at December
31,  1997.  Undeveloped  land and  construction  in progress is comprised of the
following at December 31, 1997:

<TABLE>

                                                  Total                                       Costs
                                                  Units/                   Estimated       Capitalized
                                                  Square    Estimated      Total Costs       To Date
                                                   Feet     Completion   (in thousands)   (in thousands)
--------------------------------------------------------------------------------------------------------
Multifamily Projects:
<S>                                                 <C>          <C>       <C>                 <C>
Colonial Village at Inverness (expansion)           84           1998      $    6,700          $  6,624
Colonial Village at Riverchase (expansion)         276           1998          14,900            14,181
Colonial Grand at Inverness Lakes (expansion)      132           1998           8,000             2,956
Colonial Grand at Edgewater (expansion)            192           1998          11,500             3,871
Colonial Grand at Bayshore II (expansion)          164           1998           9,300             9,213
Colonial Grand at Wesleyan II (expansion)           88           1998           6,200               789
Colonial Grand at Wesleyan                         240           1998          13,500            13,480
Colonial Grand at HunterOs Creek                   496           1998          33,300            33,257
Colonial Village at Citrus Park                    176           1999          12,300             1,324
Colonial Grand at Lakewood Ranch                   288           1999          20,300             2,320
Colonial Grand at Cypress Crossing                 250           1999          20,000             4,333
--------------------------------------------------------------------------------------------------------
                                                 2,386                        156,000            92,348

Other Projects and Undeveloped Land                                                               6,207
--------------------------------------------------------------------------------------------------------
                                                                             $156,000           $98,555
========================================================================================================
</TABLE>

Interest capitalized on construction in progress during 1997, 1996, and 1995 was
$4.1 million, $3.7 million and $868,000, respectively.

6.  Investment in Partnerships
      Investment in  partnerships  at December 31, 1997 and 1996 consists of the
following:
<TABLE>
                                 (in thousands)
                                             Percent
                                              Owned         1997      1996
--------------------------------------------------------------------------------
Office:
<S>                                           <C>         <C>           <C>
600  Building  Partnership,  Birmingham,  AL  33.34%      $  (8)        5
Anderson  Block Properties, Montgomery, AL    33.33%        (38)      (53)
Hoar/Colonial/Polar-BEK  Partnership I,
  Birmingham,  AL                             37.50%         -0-     (430)
Hoar/Colonial/Polar-BEK  Partnership  II,
  Birmingham, AL                              37.50%         -0-      (35)
Polar-Bek/Colonial  Partnership I,
  Birmingham, AL                              50.00%         -0-    5,000
Polar-BEK/Rubaiyat/Colonial  Partnership,
  Birmingham, AL                              25.00%         -0-      506
--------------------------------------------------------------------------------
                                                            (46)    4,993
--------------------------------------------------------------------------------


                                       40
<PAGE>

Other:
Colonial/Polar-BEK Management Company,
  Birmingham, AL                              50.00%         18        35
--------------------------------------------------------------------------------
                                                             18        35
--------------------------------------------------------------------------------
                                                           $(28)    5,028
================================================================================
</TABLE>

7.  Notes and Mortgages Payable
      Notes and  mortgages  payable at December 31, 1997 and 1996 consist of the
following:
<TABLE>

                                                                  (in thousands)
                                                           1997           1996
--------------------------------------------------------------------------------
<S>                                                      <C>          <C>
Revolving credit agreement                               $117,086     $  48,815
Mortgages and other notes:
      4.50% to 6.00%                                       66,305        76,605
      6.01% to 7.50%                                      316,701       154,179
      7.51% to 9.00%                                      175,207       180,081
      9.01% to 10.25%                                      26,745        46,755
--------------------------------------------------------------------------------
                                                         $702,044      $506,435
================================================================================
</TABLE>

      As of  December  31,  1997,  CRLP has one  unsecured  bank  line of credit
providing  for  total  borrowings  of up to $200  million.  This  line of credit
agreement  bears  interest at LIBOR plus 100 to 150 basis  points,  is renewable
annually and provides for a two-year  amortization  in the case of  non-renewal.
The agreement  evidencing the line of credit  includes a competitive bid feature
that will allow CRLP to convert up to $100 million under the line of credit to a
fixed  rate,  for a fixed  term not to exceed 90 days.  The credit  facility  is
primarily used by CRLP to finance property  acquisitions and development and had
an  outstanding  balance at December 31, 1997, of $117.1  million.  The weighted
average interest rate of this short-term  borrowing facility was 6.70% and 6.81%
at December 31, 1997 and 1996, respectively.

      During 1997 and 1996,  CRLP completed  five public  offerings of unsecured
medium term debt securities totaling $225 million. In July 1996 CRLP completed a
public offering of senior,  unsecured debt securities totaling $130 million. The
securities  were issued in two series of $65 million each requiring  semi-annual
payments of interest  only.  The  proceeds  of the  offerings  were used to fund
acquisitions and development expenditures,  repay balances outstanding on CRLP's
revolving credit agreement,  repay certain notes and mortgages payable,  and for
general  corporate  purposes.  Details  relating to these debt  offerings are as
follows: <TABLE>

                                                                        Gross
                         Type of                                      Proceeds
      Date                Note          Maturity            Rate  (in thousands)
--------------------------------------------------------------------------------
<S>                      <C>            <C>                 <C>       <C>
July, 1996               Senior         July, 2001          7.50%     $65,000
July, 1996               Senior         July, 2006          8.05%     $65,000
December, 1996           Medium-term    December, 2003      7.05%     $50,000
January, 1997            Medium-term    January,  2003      7.16%     $50,000
July, 1997               Medium-term    July,  2004         6.96%     $75,000
August, 1997             Medium-term    August, 2005        6.96%     $25,000
September,  1997         Medium-term    September, 2005     6.98%     $25,000
</TABLE>

      CRLP has entered into  interest  rate cap  agreements  which limit debt of
$17.8 million to an interest rate of 5.96% through  September 30, 1998 and limit
debt of $50 million to an interest rate of 8.00% through May 2, 2000.  CRLP paid
$602,000 for the interest rate caps, which are being amortized over the lives of


                                       41
<PAGE>

the  agreements.  In December 1997 and January 1998 CRLP entered into two 90-day
treasury lock agreements. The agreements are for notional amounts of $25 million
each with interest rates of 5.859% and 5.567%, respectively.  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  minimal
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.  The interest rate risk related to commitments to enter treasury
lock agreements at December 31, 1997 is immaterial to CRLP.

      At December 31, 1997,  CRLP had $472.1  million in unsecured  indebtedness
including  balances  outstanding  on its bank line of credit and  certain  other
notes  payable.  The  remainder  of  CRLP's  notes  and  mortgages  payable  are
collateralized  by the assignment of rents and leases of certain  properties and
assets with an aggregate net book value of $370.5 million at December 31, 1997.

      The aggregate  maturities  of notes and mortgages  payable at December 31,
1997, are as follows:

<TABLE>

                                        (in thousands)
--------------------------------------------------------------------------------
<S>                                     <C>
1998                                    $138,622
1999                                      13,927
2000                                      49,150
2001                                      79,031
2002                                       8,557
Thereafter                               412,757
--------------------------------------------------------------------------------
                                        $702,044
================================================================================
</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 loan agreements of CRLP contain restrictive covenants which, among
other things,  require  maintenance of various financial ratios. At December 31,
1997, CRLP was in compliance with these covenants.
      Certain  partners of CRLP have  guaranteed  indebtedness  of CRLP totaling
$32.8 million at December 31, 1997.

     8. Cash Contributions 
     During 1997, 1996 and 1995, the Company  completed six public  offerings of
common stock totaling  11,415,632  common shares of beneficial  interest (Common
Shares).  In November 1997 the Company  completed  its first public  offering of
preferred  stock  totaling  5,000,000  preferred  shares of beneficial  interest
(Preferred  Shares).  The Series A Preferred Shares pay a quarterly  dividend at
8.75% per annum and may be called by the  Company on or after  November 6, 2002.
The  Preferred  Shares  have no  stated  maturity,  sinking  fund  or  mandatory
redemption and are not convertible into any other securities of the Company.  In
connection with the offering of Preferred  Shares,  CRLP issued a like amount of
preferred units to the Company  (through  Colonial  Properties  Holding Company,
Inc.) in exchange for the Company's  proceeds from its preferred share offering.
The proceeds of the  offerings  were used to fund  acquisition  and  development
expenditures,  repay balances  outstanding on CRLP's revolving credit agreement,
repay certain notes and mortgages payable,  and for general corporate  purposes.
Details relating to these equity offerings are as follows:


                                       42
<PAGE>

<TABLE>

                                                                      (in thousands)
               Type of        Number of      Price Per       Gross        Offering     Net
Date           Offering       Shares         Share          Proceeds       Costs    Proceeds
----------------------------------------------------------------------------------------------
<S>  <C>                      <C>            <C>            <C>            <C>       <C>
May, 1995       Common        3,450,000      $22.7500       $  78,488      $4,832    $ 73,656
January, 1996   Common        4,600,000      $24.6250       $ 113,275      $6,632    $106,643
January, 1997   Common        1,500,000      $29.8750       $  44,812      $1,457    $ 43,355
July, 1997      Common        1,700,000      $30.9375       $  52,594      $2,945    $ 49,649
November, 1997  Preferred     5,000,000      $25.0000       $ 125,000      $4,451    $120,549
December, 1997  Common        165,632        $30.1875       $   5,000      $  330(1) $  4,670
<FN>

(1)  Includes  $90,000 in shelf  registration  fees paid to the  Securities  and
Exchange Commission.
</FN>
</TABLE>

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

      The table below  presents a summary of pension  plan status as of December
31, 1997 and 1996, as it relates to the employees of CRLP and CPSI.
<TABLE>

(Amounts in thousands)                                      1997           1996
--------------------------------------------------------------------------------
<S>                                                       <C>           <C>
Actuarial present value of accumulated benefit
  obligation including vested benefits
  of $828 and $528 at December 31, 1997 and 1996,
  respectively                                            $  961        $  587
Actuarial present value of projected benefit obligations
  at year end                                             $1,957        $1,439
Fair value of assets at year end                          $  861        $  644
Accrued pension cost                                      $  536        $  274
Net pension cost for the year                             $  310        $  337
</TABLE>

     Actuarial  assumptions  used in determining the actuarial  present value of
projected benefit obligations at January 1, 1997 and 1996 are as follows:
<TABLE>

                                                       1997           1996
--------------------------------------------------------------------------------
<S>                                                    <C>            <C>
Weighted-average interest rate                         7.25%          7.75%
--------------------------------------------------------------------------------
Increase in future compensation levels                 4.25%          4.50%
</TABLE>

      CRLP and  CPSI  participate  in a salary  reduction  profit  sharing  plan
covering  substantially  all  employees.   This  plan  provides,   with  certain
restrictions,  that  employees may  contribute a portion of their  earnings with
CRLP and CPSI matching one-half of such contributions, solely at CRLP and CPSI's
discretion.  Contributions by CRLP and CPSI were $159,000, $164,000 and $155,000
for the years ended December 31, 1997, 1996 and 1995, respectively.



                                       43
<PAGE>

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, 1997, are as follows:

<TABLE>

                                                        (in thousands)
      -------------------------------------------------------------------------
      <S>                                                   <C>
      1998                                                  $  76,458
      1999                                                     64,230
      2000                                                     54,693
      2001                                                     47,253
      2002                                                     40,626
      Thereafter                                              177,486
      -------------------------------------------------------------------------
                                                            $ 460,746
      =========================================================================
</TABLE>

      The noncancelable leases are with tenants engaged in retail and commercial
operations  in  Alabama,  Georgia,  Florida,  North  Carolina,  South  Carolina,
Tennessee,  and Virginia.  Performance in accordance  with the lease terms is in
part  dependent  upon  the  economic  conditions  of the  respective  areas.  No
additional  credit risk  exposure  relating to the leasing  arrangements  exists
beyond the accounts  receivable  amounts  shown in the December 31, 1997 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 1997,  1996, and 1995 includes  contingent  rent of $2.2
million,  $1.8 million, and $1.8 million,  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 $41.3 million,  $42.6 million, and
$16.1 million for property  development  costs to Lowder  Construction  Company,
Inc., a construction company owned by The Colonial Company ("TCC") (an affiliate
of certain  shareholders and minority interest holders),  during the years ended
December  31,  1997,  1996,  and  1995,   respectively.   CRLP  had  outstanding
construction invoices and retainage payable to Lowder Construction Company, Inc.
totaling  $2.3  million  and  $6.7  million  at  December  31,  1997  and  1996,
respectively.  CRLP also paid $5.2 million,  $27.9 million, and $5.5 million for
property development costs to two construction companies owned by three trustees
during the years ended December 31, 1997, 1996, and 1995, respectively. CRLP had
outstanding  construction  invoices and retainage payable to these  construction
companies  totaling $3.2 million at December 31, 1996. There were no outstanding
construction  invoices and retainage payable to these construction  companies at
December 31, 1997.
      Colonial Commercial Investments, Inc. ("CCI"), which is owned by directors
James K. Lowder and Thomas H. Lowder has guaranteed  indebtedness  totaling $1.4
million  at  December  31,  1997  for  Anderson  Block  Properties,  which  is a
partnership  accounted for by CRLP under the equity  method  (listed in Note 6).
CRLP has indemnified CCI from its guarantees of this indebtedness.
      In connection  with the  Riverchase  Center  acquisition,  CRLP  initially
acquired a 73% interest in a portion of the office complex.  Effective  November
1, 1997,  CRLP  purchased  the remaining 27% interest in the property by issuing
114,798  limited  partnership  units in CRLP ("CRLP  Units") to the seller.  The
seller is also a director of Colonial Properties Holding Company, Inc..
      In  November  1997,  CRLP  purchased  Polar  BEK's 50%  interest  in Polar
BEK/Colonial  Partnership I (a  partnership  previously  accounted for under the
equity method of  accounting),  a partnership  which owned a 168,000 square foot
office building in Birmingham for $7.4 million.  This purchase  increased CRLP's
ownership from 50% to 100%.

      Following is a summary of property  acquisitions  from  entities for which
directors of Colonial Properties Holding Company, Inc. are involved as a partner
or shareholder:
<TABLE>

    Date                 Property and Land  Acquired             Purchase  Price
----------------------------------------------------------------------------------------------------------------------
<S>                      <C>                                     <C>
March 1997               Heatherbrooke Center                    $3.0  million  including  16,303  CRLP Units and debt
April 1997               Colonial Village at Trussville          $20.5 million  including  57,072 CRLP Units and debt
July 1997                Colonial Village at Timothy Woods       $12.8 million including 27,275 CRLP Units and debt
August 1997              Mobile,  Alabama  Land                  $475,000  including 10,822 CRLP Units and debt
December 1997            Village at Roswell Summit               $3.0 million  including  34,777 CRLP Units and debt
July 1996                Macon,  Georgia Land                    $1.4 million including 58,466 CRLP Units and debt
</TABLE>

                                       44
<PAGE>

      At December 31, 1997, CRLP had options  outstanding in the amount of $10.5
million to acquire land from a related party. During 1997 and 1996 CRLP, through
CPSI,   exercised   options  in  the  amount  of  $366,000  and  $2.4   million,
respectively. In December 1997, CPSI acquired a parcel of land from CCI and sold
the land, along with an adjoining parcel of land, to an unaffiliated third party
for a net gain of $60,000. Also in December 1997, CPSI sold a separate parcel of
land to CCI, which resulted in a net gain of $120,000.
      CRLP  and its  subsidiaries  provided  certain  services  to and  received
certain  services from related  entities which resulted in the following  income
(expense) included in the accompanying statements of income:
<TABLE>

                                             (Amounts in thousands)
                                              1997      1996      1995
--------------------------------------------------------------------------------
<S>                                          <C>       <C>       <C>
Rental income                                $ 879     $ 758     $ 836
Management/leasing fee income                  368       356       321
Insurance brokerage expense                   (182)     (187)     (168)
Rental expense                                (156)     (211)     (209)
</TABLE>

12.  Net Income Per Unit
           The following  table sets forth the  computation of basic and diluted
earnings per unit:
<TABLE>

                                   (Amounts in thousands, except per unit data)
                                                  1997      1996      1995
--------------------------------------------------------------------------------
<S>                                           <C>       <C>        <C>
Numerator:
   Numerator for basic and diluted net
     income per unit - net income available
     to common unitholders                    $44,519   $40,538    $25,242
================================================================================
Denominator:
   Denominator for basic and diluted net income per unit -
      weighted average common units            28,719    25,703     19,694
================================================================================
   Basic and Diluted net income per unit     $   1.53  $   1.58   $   1.29
================================================================================
</TABLE>

13.  Subsequent Events
      On January 24, 1998, the directors of Colonial Properties Holding Company,
Inc.  declared a cash distribution to partners of CRLP in the amount of $.55 per
partnership unit, totaling $16.9 million.  The distribution was made to partners
of record as of February 4, 1998, and was paid on February 11, 1998.

      On February 17, 1998,  the Company  issued  375,540  Common Shares through
participation with 10 other REITs in a registered unit investment trust. The net
proceeds of $10.7 million were  contributed  to CRLP and used to repay a portion
of the outstanding balance on CRLP's unsecured line of credit.










                                       45
<PAGE>


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

      None.



















                                       46
<PAGE>

                             PART III

Item 10.   Directors and Executive Officers of the Registrant.

      CRLP is  managed  by the  Company,  through  Colonial  Properties  Holding
Company, Inc. ("CPHC"), the general partner of CRLP. The directors and executive
officers of the Company are as follows:

                     Directors of the Company

      Thomas H. Lowder, 48, has been chairman of the board,  president and chief
executive  officer of the  Company  and CPHC,  a trustee of the  Company,  and a
director of CPHC since 1993. Mr. Lowder became President of Colonial Properties,
Inc., the Company's  predecessor,  in 1976 and since that time has been actively
engaged  in the  acquisition,  development,  management,  leasing  and  sale  of
multifamily,  retail and office  properties  for the  Company.  Mr.  Lowder is a
member and past president of the Alabama  Chapter of the  Commercial  Investment
Real  Estate  Institute.  Mr.  Lowder is a former  state  Chairman  of the Young
Presidents'  Organization  and is a  member  of the  Birmingham  Area  Board  of
Realtors, the National Association of Industrial Office Parks, the International
Council  of  Shopping  Centers  and the  National  Association  of  Real  Estate
Investment Trusts (NAREIT).  He serves on the Board of Directors of, among other
companies,  the Children's  Hospital of Alabama,  American Red Cross -Birmingham
Area Chapter and the United Way of Central  Alabama.  Mr.  Lowder is a member of
the  Executive  Committee  of the Board of Trustees,  a member of the  executive
committee  of the  board of  directors  of CPHC,  and a member  of the  board of
directors of Colonial Properties Services, Inc. (the "Management  Corporation"),
which  conducts the  Company's  third-party  management,  leasing and  brokerage
operations.

     Carl F.  Bailey,  67, 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.  Mr. Bailey serves on the
board of trustees of Birmingham Southern College.  Mr. Bailey is a member of the
Executive  Committee  and is  chairman  of the Audit  Committee  of the Board of
Trustees.  He also is a  member  of the  executive  committee  of the  board  of
directors of CPHC.

      M. Miller Gorrie,  62, is a trustee of the Company and a director of CPHC.
Mr. Gorrie is chairman of the board and chief  executive  officer of Brasfield &
Gorrie,  L.L.C., a general contracting firm located in Birmingham,  Alabama that
is ranked consistently among ENR's "Top 100 Contractors." He serves on the board
of  directors  of,  among  other  organizations,  American  Cast  Iron Pipe Co.,
Winsloew  Furniture Co. and the  Metropolitan  Development  Board.  He is a past
director of AmSouth  Bank of  Alabama,  the  Southern  Research  Institute,  the
Alabama Chamber of Commerce,  the Associated General  Contractors,  the Building
Science Advisory Board of Auburn University, the Business Council of Alabama and
the United Way of Alabama. Mr. Gorrie is chairman of the Executive Committee and
is a member of the Executive Compensation Committee of the Board of Trustees. He
also is  chairman  of the  executive  committee  and a member  of the  executive
compensation committee of the board of directors of CPHC, and is a member of the
executive  compensation  committee of the board of  directors of the  Management
Corporation.

                                       47
<PAGE>

      William M.  Johnson,  51, is a trustee of the  Company  and a director  of
CPHC.  Mr.  Johnson  is  president  and  chief  executive   officer  of  Johnson
Development Company, a real estate development, construction and management firm
which  he  founded  in  1978.  As  chief  executive  officer,  he  directed  the
development  of 1.2 million square feet of office,  warehouse,  retail and hotel
space  having a value in excess  of $117  million.  In July  1997,  the  Company
acquired from Mr. Johnson, by merger, six office buildings  representing 352,000
square feet in Mansell 400 Business  Center,  the largest  Class-A  multi-tenant
office  park in the North  Fulton  (Atlanta,  Georgia)  area.  Mr.  Johnson  was
appointed  a trustee of the  Company in  connection  with the  transaction.  The
Company  expects to complete  the merger in June 1998,  after which Mr.  Johnson
will have  contributed  to the Company a total of 560,600 square feet of Class A
office and retail  space.  Mr.  Johnson has been an active member of the Roswell
United  Methodist  Church  and the North  Fulton  Chamber of  Commerce,  was the
founding chairman of the board of the Coalition for Drug-Free North Fulton,  and
is a member  of the  board  of  directors  and the  executive  committee  of the
American  Tract  Society  Ministry.  Mr.  Johnson  is a member of the  Executive
Compensation  Committee of the Board of Trustees  and a member of the  executive
compensation committee of the board of directors of CPHC.

     James K. Lowder,  48, has been a trustee of the Company since its formation
in July 1993 and is a director of CPHC. Mr. Lowder is also chairman of the board
and chief executive  officer of The Colonial  Company,  chairman of the board of
Lowder Construction Company, Inc. and chairman of the board of Lowder New Homes,
Inc.  and  Lowder  Realty  Company,  Inc.  He also is a  member  of the  Alabama
Association  of Realtors,  the Montgomery  Board of Realtors,  the Home Builders
Association of Alabama,  and the Greater  Montgomery Home Builders  Association,
and is a member of the board of directors of Alabama Power  Company.  Mr. Lowder
is a member of the Executive Compensation Committee of the Board of Trustees and
the  executive  compensation  committee of the board of  directors of CPHC.  Mr.
Lowder is the brother of Thomas H. Lowder,  the  president  and chief  executive
officer of the Company and the chairman of the Board of Trustees.

      Herbert A.  Meisler,  70, 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 of the Community  Foundation of South
Alabama and the Mobile Airport  Authority.  He is a past director of the Alabama
Eye and Tissue Bank and past  president of the Mobile Jewish  Welfare Fund.  Mr.
Meisler is a member of the Executive Compensation Committee (and its Option Plan
Subcommittee)  and the Audit  Committee of the Board of  Trustees.  He also is a
member of the  executive  compensation  committee  of the board of  directors of
CPHC.

      Claude B. Nielsen, 47, has been a trustee of the Company and a director of
CPHC since  September  1993.  Since  1990,  Mr.  Nielsen has been  president  of
Coca-Cola Bottling Company United, Inc.,  headquartered in Birmingham,  Alabama,
serving also as chief operating officer from 1990 to 1991 and as chief executive
officer since 1991. Prior to 1990, Mr. Nielsen served as president of Birmingham
Coca-Cola Bottling Company.  Mr. Nielsen is on the board of directors of AmSouth
Bancorporation.  He also  currently  serves as a board member of the  Birmingham
Civil Rights Institute and the Birmingham  Airport  Authority and as chairman of
the 1998 United Way Campaign for Central Alabama. Mr. Nielsen is chairman of the
Executive Compensation Committee of the Board of Trustees and is chairman of its
Option  Plan  Subcommittee.  Mr.  Nielsen  also  is  chairman  of the  executive
compensation committee of the board of directors of CPHC.

      Harold W.  Ripps,  59, is a trustee of the Company and a director of CPHC.
Together  with Mr.  Meisler,  they  formed  The Rime  Companies,  a real  estate
development, construction and management firm specializing in the development of
multifamily properties.  In December 1994, the Company purchased ten multifamily
properties from partners associated with The Rime Companies. While with The Rime
Companies,  Mr. Ripps oversaw the development and  construction of approximately
15,000  multifamily  apartment units in the southeastern  United States. He is a
member of the  executive  committee of the  Birmingham  Council of Boy Scouts of
America,  the President's  Advisory Committee of Birmingham Southern College and
the President's Council of the University of Alabama in Birmingham. Mr. Ripps is
a member  of the  Executive  Committee  of the Board of  Trustees.  He also is a
member of the  executive  committee  of the board of  directors of CPHC and is a
member of the board of directors and the executive compensation committee of the
Management Corporation.

                                       48
<PAGE>

      Donald T. Senterfitt, 78, 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. Mr. Senterfitt is a member of the Audit Committee of the Board
of Trustees.

                 Executive Officers of the Company

      Thomas H. Lowder, 48, has been chairman of the board,  president and chief
executive  officer of the  Company  and CPHC,  a trustee of the  Company,  and a
director of CPHC since 1993. Mr. Lowder became President of Colonial Properties,
Inc., the Company's  predecessor,  in 1976 and since that time has been actively
engaged  in the  acquisition,  development,  management,  leasing  and  sale  of
multifamily,  retail and office  properties  for the  Company.  Mr.  Lowder is a
member and past president of the Alabama  Chapter of the  Commercial  Investment
Real  Estate  Institute.  Mr.  Lowder is a former  state  Chairman  of the Young
Presidents'  Organization  and is a  member  of the  Birmingham  Area  Board  of
Realtors, the National Association of Industrial Office Parks, the International
Council  of  Shopping  Centers  and the  National  Association  of  Real  Estate
Investment Trusts (NAREIT).  He serves on the Board of Directors of, among other
companies,  the Children's  Hospital of Alabama,  American Red Cross -Birmingham
Area Chapter and the United Way of Central  Alabama.  Mr.  Lowder is a member of
the  Executive  Committee  of the Board of Trustees,  a member of the  executive
committee  of the  board of  directors  of CPHC,  and a member  of the  board of
directors of Colonial Properties Services, Inc. (the "Management  Corporation"),
which  conducts the  Company's  third-party  management,  leasing and  brokerage
operations.

      Howard B. Nelson, Jr., 50, has been Chief Financial Officer of the Company
and CPHC, with general  responsibility for financing matters since May 1997. Mr.
Nelson was Senior Vice President and Chief Operating  Officer of the Company and
CPHC, with  responsibility  for the day-to-day  management of the Company,  from
September  1993 to May 1997. He joined  Colonial in 1984 as a vice president and
became  Senior  Vice  President-Finance  in  1987.  Mr.  Nelson  has  served  as
treasurer, vice president, president, and board member of the Birmingham Chapter
of the  National  Association  of  Industrial  and Office  Parks as well as vice
president and board member of the Building  Owners and Managers  Association  of
Metropolitan  Birmingham.  He also  serves  on the  Board  of  Directors  of the
Children's  Harbor Family Center and the College of Business Advisory Council of
Auburn University. He holds a Bachelor of Science Degree from Auburn University.

      Paul F. Earle, 40, has been Executive  Vice-President-Multifamily Division
of CPHC, with responsibility for management of all multifamily  properties owned
and/or  managed by the Company,  since May 1997. He joined  Colonial in 1991 and
has   served   as  Vice   President-Acquisitions,   as  well  as   Senior   Vice
President--Multifamily  Division.  Mr.  Earle  serves as Chairman of the Alabama
Multifamily   Council  and  is  an  active  member  of  the  National  Apartment
Association.  He also  serves  on the  Board  of  Directors  of Big  Brother/Big
Sisters.  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, 38, has been Executive Vice  President-Retail  Division of
CPHC, with  responsibility for all retail properties owned and/or managed by the
Company,  since May 1997. He joined Colonial in 1982 and assumed  responsibility
for an  increasing  number of shopping  centers until being named to Senior Vice
President-Retail  Division  of  Colonial  in  1991.  Mr.  Hughey  served  as the
Alabama/Mississippi  State Operations Chairman for the International  Council of
Shopping  Centers  from  1993-1995.  He holds a Bachelor of Science  Degree from
Auburn University.

                                       49
<PAGE>

      Charles  A.  McGehee,   52,  has  been   Executive   Vice   President-Land
Acquisitions,  Brokerage and Dispositions of CPHC, with  responsibility  for the
Company's  acquisitions and  dispositions  and the sales brokerage  departments,
since  May  1997.   Mr.   McGehee   was   Senior   Vice   President--Multifamily
Acquisitions/Development  from  September  1993  to May  1997  and  Senior  Vice
President--Office  Division  from  January  1990 to  September  1993.  He joined
Colonial in 1976 as vice  president of retail  leasing and was  responsible  for
leasing all retail  space owned  and/or  managed by  Colonial.  Mr.  McGehee has
served as president and a board member of the National Association of Industrial
and Office Parks as well as a member of the board of directors of the Birmingham
Area Board of  Realtors.  He holds a  Bachelor  of Science  Degree  from  Auburn
University.

      C. Reynolds Thompson,  III, 35, has been Executive Vice  President--Office
Division of CPHC, with  responsibility  for management of all office  properties
owned  and/or  managed  by the  Company,  since May 1997.  Mr.  Thompson  joined
Colonial 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 south.  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.

      Douglas B. Nunnelley,  55, has been Senior Vice President and Secretary of
the Company and CPHC, with general  responsibility  for regulatory,  accounting,
management information systems, and insurance matters, since May 1997. He joined
Colonial in 1993 as Senior Vice President and Chief Financial Officer. 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.

      Kenneth E.  Howell,  48,  has been Vice  President,  Controller  and Chief
Accounting Officer of the Company and CPHC, with general  responsibility for the
supervision  of  accounting,  management  information  systems,  and payroll and
benefits for all of the properties  owned and/or  managed by the Company,  since
1981.  He joined  Colonial  in 1981 and holds a Bachelor  of  Science  Degree in
business administration from Auburn University.


     SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

      Section 16(a) of the Securities Exchange of 1934 requires CRLP's directors
and executive  officers to file reports with the SEC on Forms 3, 4 and 5 for the
purpose of reporting their ownership of and transactions in Units.  During 1997,
each of the directors and executive  officers of CRLP  identified  above filed a
late Form 3. In addition,  each of Messrs. Gorrie, Nelson, and Ripps was late in
filing  one Form 4 to report  an  acquisition  of  Units,  and each of Thomas H.
Lowder and James K.  Lowder  was late in filing  three  Forms 4 to report  three
acquisitions of Units.




                                       50
<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                                              Long-Term Compensation
                                                                                          Restricted     Securities     All
                                                                           Other Annual   Share          Underlying     Other
Name and Principal Position        Year      Salary ($)     Bonus ($)      Compensation   Awards($)(1)   Options (#) Compensation(2)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>       <C>            <C>                           <C>            <C>            <C>   
Thomas H. Lowder                   1997      $295,000       $225,000           --         $89,250        16,000         $3,453
  Chairman of the Board,           1996       285,000         30,000           --          68,950        16,000          4,500
  President and Chief Executive    1995       285,000        110,000           --          62,775        15,835          4,500
  Officer

Howard B. Nelson, Jr.              1997       198,000        120,000           --          51,000        10,000          3,453
  Chief Financial Officer          1996       171,726         23,000           --          34,475         8,500          4,500
                                   1995       145,000         68,000           --          26,100         6,450          4,159

Paul F. Earle...                   1997       125,000         75,000           --          19,125         3,500          3,453
  Executive Vice President -       1996(3)    107,006         21,006           --            --             --           3,841
  Multifamily Division

John N. Hughey..                   1997       120,000         75,000           --          19,125         3,500          3,453
  Executive Vice President -       1996       104,998         50,000           --          14,775         3,500          3,145
  Retail Division                  1995        95,000         62,000           --          13,388         3,295          3,088

Charles A. McGehee                 1997       125,000         75,000           --          19,125         3,500          3,453
  Executive Vice President -       1996       120,000         20,000           --          17,238         4,000          4,500
  Land, Brokerage and              1995       110,000         63,000           --          15,413         3,815          3,276
  Dispositions

<FN>
(1)   The  number and value of  restricted  shares  held by the Named  Executive
      Officers as of  December  31,  1997 were as  follows:  Mr.  Lowder - 6,156
      shares  ($185,450);  Mr. Nelson - 3,184 shares ($95,918);  Mr. Earle - 600
      shares ($18,075);  Mr. Hughey - 1,316 shares ($39,705);  and Mr. McGehee -
      1,984 shares  ($59,768).  Dividends are paid on  restricted  shares at the
      same rate paid to all other holders of Common Shares.
(2)   All Other  Compensation  consists solely of employer  contributions to the
      Company's 401(k) Plan.
(3) Mr. Earle became an executive officer of the Company in 1996.
</FN>
</TABLE>
      The following table sets forth certain  information  concerning  exercised
and  unexercised  options held by the Named  Executive  Officers at December 31,
1997:
<TABLE>
    Aggregated Option Exercises in Last Fiscal Year and Fiscal
                      Year-End Option Values
<CAPTION>
                                                             Number of               Value of Unexercised
                         Shares                             Securities Underlying    In-the-Money
                         Acquired            Value          Unexercised Options      Options
Name                     on Exercise(#)      Realized($)    at December 31, 1997     at December 31, 1997(1)
--------------------------------------------------------------------------------------------------------------
                                                          Exercisable Unexercisable  Exercisable Unexercisable
--------------------------------------------------------------------------------------------------------------
<S>                                                          <C>            <C>        <C>          <C>    
Thomas H. Lowder          --                      --         31,890         31,945     $218,550     $96,274

Howard B. Nelson, Jr.     --                      --         10,593         17,817       70,873      46,485

Paul F. Earle             --                      --            833          5,167        4,583       9,167

John N. Hughey            --                      --          6,193          6,932       41,591      20,659

Charles A. McGehee        --                      --          6,977          7,438       47,542      23,727
------------------------
<FN>
(1)Based on the closing  price of $30.125 per Common Share on December 31, 1997,
   as reported by the New York Stock Exchange.
</FN>
</TABLE>
                                       51
<PAGE>
      The following table sets for the certain  information  relating to options
to purchase Common Shares granted to the Named Executive Officers during 1997:
<TABLE>
                 Option Grants in Last Fiscal Year
<CAPTION>

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

<S>                    <C>         <C>            <C>            <C>            <C>      <C>     
Thomas H. Lowder       16,000      20.25%         $31.875        1/22/07        $320,736 $812,809

Howard B. Nelson, Jr.  10,000      12.66%          31.875        1/22/07         200,460  508,005

Paul F. Earle           3,500       4.43%          31.875        1/22/07          70,161  177,802

John N. Hughey          3,500       4.43%          31.875        1/22/07          70,161  177,802

Charles A. McGehee      3,500       4.43%          31.875        1/22/07          70,161  177,802
</TABLE>

      All options  granted in 1997  become  exercisable  in three  equal  annual
installments  beginning on the first anniversary of the date of grant and have a
term of ten years.

Defined Benefit Plan

      The  Company  maintains  a  Retirement  Plan (the  "Plan")  for all of the
employees of the Company and its subsidiaries. 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
------------

<S>           <C>        <C>       <C>        <C>      <C>    
$100,000      $ 7,600    $15,200   $22,800    $30,400  $38,000
125,000       $ 9,500    $19,000   $28,500    $38,000  $47,500
150,000       $11,400    $22,800   $34,200    $45,600  $57,000
$160,000 or   $12,160    $24,320   $36,480    $48,640  $60,800
over
</TABLE>


                                       52
<PAGE>

      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 1998.  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 23 years of covered service under the Plan, Howard
B. Nelson, Jr. has 13 years of service,  Paul F. Earle has six years of service,
John N. Hughey has 15 years of service,  and Charles A.  McGehee has 17 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.

          EXECUTIVE COMPENSATION COMMITTEE INTERLOCKS AND
                       INSIDER PARTICIPATION

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


      On March 24, 1997, the Company acquired Inverness Family Medical Center, a
28,000  square foot  community  shopping  center,  from a  partnership  in which
Messrs.  Gorrie and J. Lowder,  among other, owned interests,  for approximately
$3.0  million.  The Company  paid the  purchase  price with  approximately  $1.5
million  in cash  and  16,303  units  of  limited  partnership  interest  in the
Operating Partnership ("Units"). In connection with the transaction,  Mr. Gorrie
received 369 Units, and Equity Partner Joint Venture ("EPJV"),  a partnership in
which each of Messrs. J. Lowder, T. Lowder and Robert E. Lowder owns a one-third
interest,  received  12,244  Units.  In  addition,  Howard B.  Nelson,  Jr., the
Company's chief financial officer, received 369 Units in the transaction.

     On April 1, 1997, the Company acquired  Colonial  Village at Trussville,  a
multi-family  property located in Birmingham,  Alabama,  from an entity owned in
part by Mr. Ripps.  The Company paid a total purchase price of $20.5 million for
the property, including the issuance of 57,072 Units to Mr. Ripps.

                                       53
<PAGE>

     On July 11, 1997, the Company acquired Colonial Village at Timothy Woods, a
multi-family  property  located in Athens,  Georgia,  from  Colonial  Commercial
Investments,  Inc.  ("CCI"),  a  corporation  owned by Messrs.  J. Lowder and T.
Lowder. The Company paid a total purchase price of $12.8 million,  including the
issuance of 27,275 Units.

      On July 31, 1997, the Company acquired through merger from Mr. Johnson six
office  buildings  located in the Mansell 400 Office Center for a purchase price
of $48.5  million.  The Company paid the purchase  price through the issuance of
540,235 Units, the assumption of indebtedness in the amount of $31.7 million and
the payment of $1.1 million in cash. In  connection  with the  acquisition,  the
Company also agreed to acquire certain adjacent or nearby properties for a total
purchase price of approximately $27.3 million. The Company acquired one of these
properties,   the  Village  at  Roswell   Summit,   on  December  31,  1997  for
approximately  $3.0  million,  including  the issuance to Mr.  Johnson of 34,777
Units. The Company expects to acquire the remaining properties during 1998.

     On August 8, 1997, the Company  purchased from Messrs. J. Lowder, T. Lowder
and Robert E. Lowder certain  undeveloped land located in Mobile,  Alabama for a
purchase  price of $475,000.  The Company paid the  purchase  price  through the
issuance  of 5,411  Units to each of Messrs.  J.  Lowder  and T.  Lowder and the
payment of $158,333 in cash to Robert E. Lowder.

      On  November  1,  1997,  the  Company  purchased  from Mr.  Gorrie his 27%
interest in the Riverchase  Center,  an office  property  located in Birmingham,
Alabama in which the Company owned the remaining 73% interest.  The Company paid
the purchase price of $3.4 million through the issuance of 114,798 Units.

      Brasfield & Gorrie General  Contractors,  Inc.  ("B&G"),  a corporation of
which Mr. Gorrie is a shareholder and chairman of the board,  was engaged during
1995 to construct the expansion of the  Company's  Macon Mall.  The Company paid
B&G a total of $5.2 million ($5.0 million of which was then paid to unaffiliated
subcontractors) during 1997 pursuant to this engagement.

      CCI has  guaranteed  indebtedness  of a  partnership  accounted for by the
Company  under the equity method in the  aggregate  amount of $1.4 million.  The
Company  has  indemnified  CCI  against  any  liability  it may incur under this
guarantee.

      The Management Corporation provided management and leasing services during
1997 to certain  entities in which Mr. J. Lowder and his  brothers T. Lowder and
Robert E.  Lowder have an  interest.  The  aggregate  amount of fees paid to the
Management Corporation by such entities during 1997 was approximately $368,000.



                                       54
<PAGE>

      Colonial Insurance  Company, a corporation  indirectly owned by the Lowder
family,  provided insurance  brokerage services for the Company during 1997. The
aggregate  amount paid by the Company to  Colonial  Insurance  Company for these
services for the year ended December 31, 1997, was approximately $182,000.

      The Company  leased space to certain  entities in which the Lowder  family
has an interest and received  rent from these  entities  totaling  approximately
$879,000 during 1997.

     The Company  engaged  Lowder  Construction  Company,  Inc., of which Mr. J.
Lowder serves as chairman of the board and which is  indirectly  owned by Mr. J.
Lowder and T.  Lowder,  to serve as  construction  manager  for ten  multifamily
development  and  expansion  projects  during 1997.  The Company paid a total of
$41.3  million   ($39.8   million  of  which  was  then  paid  to   unaffiliated
subcontractors) for the construction of these development and expansion projects
during 1997.


Item 12.   Security  Ownership  of  Certain  Beneficial  Owners and
           Management

      The  following  table  sets forth  information  regarding  the  beneficial
ownership of Units as of March 9, 1998,  for (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 9, 1998,  is set
forth in  Colonial's  Proxy  Statement  dated March 24, 1998,  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
Colonial 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, Inc.)               21,289,507  (2)    67.3%

 Thomas H. Lowder                        2,836,759  (3)     9.0%

 James K. Lowder                         2,836,759  (4)     9.0%
 2000 Interstate Parkway
 Suite 400
 Montgomery, Alabama  36104

 Robert E. Lowder                        1,750,177  (5)     5.5%
 One Commerce Street
 Montgomery, Alabama  36104

 Carl F. Bailey                                -0-             *

 M. Miller Gorrie                          115,167          0.4%

                                       55
<PAGE>

William M. Johnson                         575,012  (6)     1.8%

 Herbert A. Meisler                        526,934  (7)     1.7%

 Claude B. Nielsen                             -0-             *

 Harold W. Ripps                         1,908,380          6.0%

 Donald T. Senterfitt                          -0-             *

 John N. Hughey                                -0-             *

 Charles A. McGehee                            -0-             *

 Paul F. Earle                                 -0-             *

 Howard B. Nelson, Jr.                         369             *

 All executive officers and
  trustees as a group (16 persons)       8,153,856  (8)    25.8%

 *   Less than 1%
<FN>
------------------------------------
(1)   The number of Units outstanding as of March 9, 1998, was 31,635,251.
(2)   Does not include  316,353  units of general  partnership  interest held by
      CPHC, representing a one percent equity interest in CRLP.
(3)   Includes  538,211 Units owned by Thomas Lowder,  1,285,572  Units owned by
      Colonial Commercial Investments, Inc. ("CCI"), a corporation owned equally
      by Thomas and James Lowder,  and 1,012,976  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 538,211 Units owned by James Lowder, 1,285,572 Units owned by CCI
      and 1,012,976 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
      1,012,976 Units owned by EPJV.
(6)   Includes 561,958 Units owned by Mr. Johnson,  348 Units owned by VRS Corp.
      I, a corporation  wholly owned by Mr.  Johnson,  and 12,706 Units owned by
      Mr. Johnson's wife.
(7)   Includes  526,934 Units owned by Meisler  Enterprises,  L.L.C.,  a limited
      liability company of which Mr. Meisler and his wife are the sole members.
(8) 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.


                                       56
<PAGE>

                              Part IV

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

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

  Index to Financial Statements and Financial Statement Schedules

Financial Statements:

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

      Report of Independent Accountants

      Consolidated Balance Sheets as of December 31, 1997 and 1996

      Consolidated   Statements  of  Income  for  the  years  ended
      December 31, 1997, 1996, and 1995

      Consolidated  Statements  of Partners'  Capital for the years
      ended December 31, 1997, 1996, and 1995

      Consolidated  Statements  of Cash  Flows for the years  ended
      December 31, 1997, 1996, and 1995

      Notes to Consolidated Financial Statements

Financial Statement Schedules:

      Schedule IIIReal Estate and Accumulated Depreciation

      Report of Independent Accountants

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

14(a)(3)   Exhibits

          *3.1     Declaration of Trust of Company.
          *3.2     Bylaws of the Company.
         **10.1    Second Amended and Restated Agreement of
                   Limited Partnership of the Operating
                   Partnership, as amended.
          +10.2.1  Registration Rights and Lock-Up Agreement dated September 29,
                   1993, among the Company and the persons named therein.
           10.2.2  Registration Rights and Lock-Up Agreement
                   dated March 25, 1997, among the Company and
                   the persons named therein. (EDGAR Version Only)
           10.2.3  Registration Rights and Lock-Up Agreement
                   dated November 4, 1994, among the Company and
                   the persons named therein. (EDGAR Version Only)
           10.2.4  Registration Rights and Lock-Up Agreement
                   dated August 20, 1997, among the Company and
                   the persons named therein. (EDGAR Version Only)
           10.2.5  Registration Rights and Lock-Up Agreement
                   dated November 1, 1997, among the Company and
                   the persons named therein. (EDGAR Version Only)


                                       57
<PAGE>

           10.2.6  Registration Rights and Lock-Up Agreement
                   dated July 1, 1997, among the Company and the
                   persons named therein. (EDGAR Version Only)
           10.2.7  Registration Rights and Lock-Up Agreement
                   dated July 1, 1996, among the Company and the
                   persons named therein. (EDGAR Version Only)
       (PI)10.3.1  First Amended and Restated Employee Share
         ++         Option and Restricted Share Plan.
          +/-10.3.2  Non-employee Trustee Share Option Plan.
         ++
         +/-+/-10.3.3  Non-employee Trustee Share Plan.
         ++
    (OMEGA)10.3.4  Employee Share Purchase 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 Colonial Realty
                   Limited Partnership and SouthTrust Bank,
                   National Association, AmSouth Bank, N.A.,
                   Wells Fargo Bank, National Association,
                   Wachovia Bank, N.A., First National Bank of
                   Commerce, N.A., and PNC Bank, Ohio, National
                   Association dated July 10, 1997 and related
                   promissory notes.
          +10.16 ++ 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.  (EDGAR  Version  Only)  
           23.1  Consent of Coopers & Lybrand L.L.P.
                27 Financial Data Schedules (EDGAR Version Only)
--------------------

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

                                       58
<PAGE>

14(b) Reports on Form 8-K

      Reports on Form 8-K filed during the last quarter of 1997:  Form 8-K dated
      December 10, 1997,  reported  certain  property  acquisitions  during 1997
      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.
















                                       59
<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
20, 1998.

                                    COLONIAL REALTY LIMITED PARTNERSHIP
                                    a Delaware limited partnership

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


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

      Pursuant to the  requirements  of the Securities  Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and the capacities indicated on March 20, 1998.

          Signature

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

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

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

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

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

      /s/  William M. Johnson   Director
------------------------------
       William M. Johnson

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

      /s/  Herbert A. Meisler   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


                                       60
<PAGE>

<TABLE>

                                  SCHEDULE III
                            COLONIAL REALTY LIMITED PARTNERSHIP
              REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
                                December 31, 1997
<CAPTION>


                                                        Initial Cost to            Cost                 Gross Amount at Which
                                                            Company             Capitalized           Carried at Close of Period
                                                               Buildings and   Subsequent to                Buildings and
              Description           Encumbrances      Land     Improvements    Acquisition       Land       Improvements      Total
------------------------------------------------------------------------------------------------------------------------------------
        Multifamily:
<S>                                       <C>      <C>         <C>               <C>         <C>          <C>            <C>
          CG at Barrington                $ -0-    $ 880,000   $ 8,605,143       $ 63,036    $ 880,000    $ 8,668,179    $ 9,548,179
          CG at Bayshore                    -0-    1,265,561    10,196,833        132,179    1,265,561     10,329,012     11,594,573
          CG at Carrollwood          6,230,000     1,464,000    10,657,840        748,737    1,464,000     11,406,577     12,870,577
          CG at Edgewater            9,811,501     1,540,000    12,671,606        126,285    1,540,000     12,797,891     14,337,891
          CG at Gainesville                 -0-    3,360,000    24,173,649      2,614,403    3,361,850     26,786,202     30,148,052
          CG at Galleria            22,400,000     4,600,000    39,078,925      1,070,959    4,600,000     40,149,884     44,749,884
          CG at Galleria II                 -0-      758,439     7,902,382         16,387      758,439      7,918,769      8,677,208
          CG at Galleria Woods       7,253,376     1,220,000    12,480,949        103,462    1,220,000     12,584,411     13,804,411
          CG at Heathrow                    -0-    2,560,661    17,612,990        339,580    2,560,661     17,952,570     20,513,231
          CG at Inverness Lakes             -0-      641,334     8,873,906        197,150      641,334      9,071,056      9,712,390
          CG at Kirkman                     -0-    2,220,000    21,747,240        591,752    2,220,000     22,338,992     24,558,992
          CG at Mountain Brook      12,101,956     1,960,000    21,181,118        188,669    1,960,000     21,369,787     23,329,787
          CG at Natchez Trace       10,941,371     1,312,000    16,568,050         23,741    1,312,000     16,591,791     17,903,791
          CG at Palm Aire                   -0-    1,488,000    13,515,075        192,548    1,489,500     13,706,123     15,195,623
          CG at Palma Sola                  -0-    1,479,352            -0-    12,352,103    1,479,352     12,352,103     13,831,455
          CG at Ponte Vedra                 -0-    1,440,000    10,038,593        413,749    1,440,000     10,452,342     11,892,342
          CG at Research Park       12,775,000     3,680,000    31,686,621     (1,814,626)   3,680,000     29,871,995     33,551,995
          CG at Riverchase           9,081,348     2,340,000    25,248,548        536,523    2,340,000     25,785,071     28,125,071
          CG at Spring Creek                -0-    1,184,000    13,243,975        164,251    1,184,000     13,408,226     14,592,226
          CG at Wesleyan                    -0-      720,000    12,760,587          5,448      720,000     12,766,035     13,486,035
          Colony Park                       -0-      409,401     4,345,599        301,264      409,406      4,646,859      5,056,264
          CV at Ashford Place               -0-      537,600     5,839,838         59,784      537,600      5,899,622      6,437,222
          CV at Cahaba Heights       3,696,965       625,000     6,548,683        142,591      625,000      6,691,274      7,316,274
          CV at Caledon Wood                -0-    2,100,000    19,482,210             -0-   2,100,000     19,482,210     21,582,210
          CV at Cordova                     -0-      134,000     3,986,304        295,277      134,000      4,281,581      4,415,581
          CV at Hillcrest                   -0-      332,800     4,310,671         53,392      332,800      4,364,063      4,696,863
          CV at Hillwood             4,923,333       511,700     5,508,300        174,256      511,700      5,682,556      6,194,256
          CV at Huntleigh Woods      2,992,056       745,600     4,908,990        555,874      745,600      5,464,864      6,210,464
          CV at Inverness            9,900,000     1,713,668    10,352,151      7,941,736    1,713,668     18,293,887     20,007,555
          CV at Inverness Lakes      5,663,333       735,080     7,254,920        278,424      735,080      7,533,344      8,268,424
          CV at Lake Mary                   -0-    2,145,480            -0-    19,068,913    3,634,094     17,580,299     21,214,393
          CV at McGehee Place               -0-      795,627            -0-    16,657,470      842,321     16,610,776     17,453,097
          CV at Monte D'Oro                 -0-    1,000,000     6,994,227        881,623    1,000,000      7,875,850      8,875,850
          CV at Oakleigh                    -0-      880,000     9,685,518        151,072    1,024,334      9,692,256     10,716,590
          CV at River Hills II              -0-      857,080            -0-     8,976,348      857,079      8,976,349      9,833,428
          CV at Rocky Ridge          7,335,000       644,943     8,325,057        154,091      644,943      8,479,148      9,124,091
          CV at Stockbridge                 -0-      960,000    11,975,947        185,421      960,000     12,161,368     13,121,368
          CV at Timothy Woods               -0-    1,020,000    11,910,546         27,892    1,020,000     11,938,438     12,958,438
          CV at Trussville                  -0-    1,504,000    18,800,253        589,448    1,504,000     19,389,701     20,893,701
          CV at Vernon Marsh         3,400,000       960,984     3,511,596      3,067,840      960,984      6,579,436      7,540,420
          CV at White Bluff          4,500,000       699,128     4,920,872        251,830      699,128      5,172,702      5,871,830
          North Ingle Villas                -0-      497,574     4,122,426        334,401      497,574      4,456,827      4,954,401
          Patio I, II & III                 -0-      249,876     3,305,124      1,918,124      366,717      5,106,407      5,473,124
          Ski Lodge - Tuscaloosa     4,779,642     1,064,000     6,636,685        385,614    1,064,000      7,022,299      8,086,299

S-1
<PAGE>

        Retail:
          Abingdon Town Centre              -0-    2,051,250     6,687,616             -0-   2,051,250      6,687,616      8,738,866
          Bardmoor Village                  -0-    2,143,152     9,746,573         14,481    2,143,152      9,761,054     11,904,206
          Bear Lake Village                 -0-    2,134,440     6,551,683         61,109    2,134,440      6,612,792      8,747,232
          Beechwood Shopping Center         -0-    2,565,550    19,647,875        214,717    2,565,550     19,862,592     22,428,142
          Bellwood                   2,973,419       330,000            -0-     3,138,776      330,000      3,138,776      3,468,776
          Briarcliffe Mall                  -0-    9,099,972    33,663,654        733,323    9,099,972     34,396,977     43,496,949
          Britt David                       -0-    1,755,000     4,951,852             -0-   1,755,000      4,951,852      6,706,852
          Brookwood Village                 -0-    8,136,700    24,435,002        815,382    8,136,700     25,250,384     33,387,084
          Burnt Store Square                -0-    3,750,000     8,198,677         39,806    3,750,000      8,238,483     11,988,483
          Country Lake Village              -0-    3,659,040     6,783,697         46,259    3,659,040      6,829,956     10,488,996
          Gadsden Mall                      -0-      639,577            -0-    18,815,847      639,577     18,815,847     19,455,424
          Glynn Place Mall                  -0-    3,588,178    22,514,121         20,711    3,588,178     22,534,832     26,123,010
          Heatherbrooke Center              -0-    1,680,000     1,387,055         79,264    1,680,000      1,466,319      3,146,319
          Holly Hill Mall                   -0-    4,120,000    25,632,587         30,396    4,120,000     25,662,983     29,782,983
          Island Walk               10,253,337     4,181,760    13,023,401         51,966    4,181,760     13,075,367     17,257,127
          Lakeshore Mall                    -0-    4,646,300    30,973,239         21,226    4,646,300     30,994,465     35,640,765
          Lakewood Plaza                    -0-    2,984,522    11,482,512         11,138    2,984,522     11,493,650     14,478,172
          Macon Mall                        -0-    1,021,733            -0-    89,406,602    4,928,601     85,499,734     90,428,335
          Mayberry Mall              3,401,032       862,500     3,778,590          8,290      862,500      3,786,880      4,649,380
          McGehee Place                     -0-      197,152            -0-     3,799,891      197,152      3,799,891      3,997,043
          Montgomery Promenade      10,810,000     3,788,913    11,346,754        990,022    4,332,432     11,793,257     16,125,689
          Montgomery Promenade North        -0-    2,400,000     5,664,858             -0-   2,400,000      5,664,858      8,064,858
          Northdale Court                   -0-    3,059,760     8,054,090         22,871    3,059,760      8,076,961     11,136,721
          Old Springville                   -0-      272,594            -0-     3,340,930      277,975      3,335,549      3,613,524
          Olde Town                         -0-      343,325            -0-     2,445,304      343,325      2,445,304      2,788,629
          Paddock Park                      -0-    1,532,520     3,754,879         66,765    1,532,520      3,821,644      5,354,164
          Quaker Village                    -0-      931,000     7,901,874             -0-     931,000      7,901,874      8,832,874
          River Oaks                        -0-    3,262,800    23,636,229        576,083    3,262,800     24,212,312     27,475,112
          Rivermont Shopping Center  1,789,378       515,250     2,332,486          7,240      515,250      2,339,726      2,854,976
          Stanly Plaza                      -0-      450,000     1,657,870             -0-     450,000      1,657,870      2,107,870
          Staunton Mall                     -0-    2,895,000    15,083,542             -0-   2,895,000     15,083,542     17,978,542
          University Park Plaza     14,445,000     6,946,785    20,104,517        269,075    6,946,785     20,373,592     27,320,377
          Valdosta Mall                     -0-    5,377,000    30,239,796         20,832    5,377,000     30,260,628     35,637,628
          Village at Roswell Summit  1,652,438       450,000     2,563,642             -0-     450,000      2,563,642      3,013,642
          Village Mall                      -0-      103,480            -0-    14,381,208      319,528     14,165,160     14,484,688
          Wekiva Riverwalk                  -0-    2,817,788    15,302,375         43,924    2,817,788     15,346,299     18,164,087
          Winter Haven Village              -0-    1,768,586     3,928,903      4,338,922    4,045,045      5,991,366     10,036,411
          Yadkin Plaza                      -0-    1,080,000     1,224,136             -0-   1,080,000      1,224,136      2,304,136

S-2
<PAGE>

        Office:
          250 Commerce Street               -0-       25,000       200,200      2,252,870       25,000      2,453,070      2,478,070
          AmSouth Center                    -0-      764,961            -0-    16,594,852      764,961     16,594,852     17,359,813
          Colonial Plaza                    -0-    1,001,375    12,381,023         13,638    1,001,375     12,394,661     13,396,036
          International Park         2,011,911     1,279,355     5,668,186         99,830    1,279,355      5,768,016      7,047,371
          Interstate Park            4,481,137     1,125,990     7,113,558      8,663,186    1,125,988     15,776,746     16,902,734
          Lakeside Office Park              -0-      423,451     8,313,291        121,822      423,451      8,435,113      8,858,564
          Mansell Office Park       31,579,474     4,540,000    44,012,971        337,397    4,540,000     44,350,368     48,890,368
          P&S Building                      -0-      104,089            -0-       773,576      104,089        773,576        877,665
          Progress Center                   -0-      521,037    14,710,851        356,689      521,037     15,067,540     15,588,577
          Riverchase Center          8,479,597     1,916,727    22,091,651        151,889    1,916,727     22,243,540     24,160,267
          University Park                   -0-      396,960            -0-     4,305,866      396,960      4,305,866      4,702,826
        Active Development Projects:
          CG at Bayshore II                 -0-    9,213,320            -0-            -0-     984,000      8,229,320      9,213,320
          CG at Cypress Crossing            -0-    4,332,601            -0-            -0-   1,909,932      2,422,669      4,332,601
          CG at Edgewater II                -0-    3,871,062            -0-            -0-     999,221      2,871,841      3,871,062
          CG at Hunter's Creek              -0-   33,264,022            -0-            -0-   4,725,936     28,538,086     33,264,022
          CG at Inverness Lakes II          -0-    2,956,482            -0-            -0-     477,259      2,479,223      2,956,482
          CG at Lakewood Ranch              -0-    2,320,442            -0-            -0-   1,816,934        503,508      2,320,442
          CG at Research Park II            -0-        3,538            -0-            -0-       3,538             -0-         3,538
          CG at Wesleyan II                 -0-      788,868            -0-            -0-     720,000         68,868        788,868
          CV at Citrus Park                 -0-    1,323,593            -0-            -0-   1,199,760        123,833      1,323,593
          CV at Inverness IV                -0-    6,710,610            -0-            -0-     630,858      6,079,752      6,710,610
          CV at McGehee Place               -0-       90,733            -0-            -0-      58,549         32,184         90,733
          CV at River Hills III             -0-   14,462,674            -0-            -0-   1,694,075     12,768,599     14,462,674
          Other Miscellaneous Projects      -0-      185,914            -0-            -0-          -0-       185,914        185,914
        Unimproved Land:
          Macon Mall Outparcels             -0-      663,142            -0-            -0-     663,142             -0-       663,142
          McGehee Place Land           668,364       439,471            -0-            -0-     439,471             -0-       439,471
          North Heathrow Land               -0-    5,487,137            -0-            -0-   5,487,137             -0-     5,487,137
          Village Mall                      -0-      404,187            -0-            -0-     404,187             -0-       404,187
       -----------------------------------------------------------------------------------------------------------------------------
                                 $ 230,329,968 $ 253,395,256 $ 977,715,763  $ 258,002,996 $197,839,569 $1,291,274,447 $1,489,114,015
                                 ===================================================================================================
</TABLE>

S-3
<PAGE>
<TABLE>

(INFORMATION CONTINUED FROM PREVIOUS TABLE)

                             SCHEDULE III, CONTINUED
                            COLONIAL REALTY LIMITED PARTNERSHIP
              REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
                                December 31, 1997
<CAPTION>


                                                                     Date
                                                                   Acquired/
                                         Accumulated     Date     Placed in   Depreciable
              Description                Depreciation  Completed  Service     Lives-Year
-----------------------------------------------------------------------------------------
        Multifamily:
<S>                                      <C>           <C>        <C>        <C>
          CG at Barrington               $ 431,389     1996       1996       7-40 Years
          CG at Bayshore                   443,040     1997     1985/97      7-40 Years
          CG at Carrollwood              1,594,539     1966       1994       7-40 Years
          CG at Edgewater                1,807,397     1990       1994       7-40 Years
          CG at Gainesville              3,284,411   1989/93/94   1994       7-40 Years
          CG at Galleria                 3,102,045     1986       1994       7-40 Years
          CG at Galleria II                395,443     1996       1996       7-40 Years
          CG at Galleria Woods             757,786     1994       1996       7-40 Years
          CG at Heathrow                   905,027     1997     1994/97      7-40 Years
          CG at Inverness Lakes            603,138     1996       1996       7-40 Years
          CG at Kirkman                  2,504,039     1991       1994       7-40 Years
          CG at Mountain Brook             954,956   1987/91      1996       7-40 Years
          CG at Natchez Trace              248,598   1995/97      1997       7-40 Years
          CG at Palm Aire                1,741,412     1991       1994       7-40 Years
          CG at Palma Sola               3,347,872     1992       1992       7-40 Years
          CG at Ponte Vedra              1,027,570     1988       1994       7-40 Years
          CG at Research Park            2,813,761   1987/94      1994       7-40 Years
          CG at Riverchase               2,249,290   1984/91      1994       7-40 Years
          CG at Spring Creek               790,076   1992/94      1996       7-40 Years
          CG at Wesleyan                   150,044     1997     1996/97      7-40 Years
          Colony Park                      504,066     1975       1993       7-40 Years
          CV at Ashford Place              258,255     1983       1996       7-40 Years
          CV at Cahaba Heights             342,207     1992       1996       7-40 Years
          CV at Caledon Wood               166,624   1995/96      1997       7-40 Years
          CV at Cordova                  2,181,133     1983       1983       7-40 Years
          CV at Hillcrest                  191,353     1981       1996       7-40 Years
          CV at Hillwood                   634,492     1984       1993       7-40 Years
          CV at Huntleigh Woods            447,971     1978       1994       7-40 Years
          CV at Inverness                3,695,685   1986/87/90 1986/87/90   7-40 Years
          CV at Inverness Lakes            815,481   1983/96      1993       7-40 Years
          CV at Lake Mary                3,580,282   1991/95    1991/95      7-40 Years
          CV at McGehee Place            3,677,362   1986/95    1986/95      7-40 Years
          CV at Monte D'Oro                615,354     1977       1994       7-40 Years
          CV at Oakleigh                   176,590     1997       1997       7-40 Years
          CV at River Hills II           2,404,003     1991       1991       7-40 Years
          CV at Rocky Ridge                905,670     1984       1993       7-40 Years
          CV at Stockbridge              1,348,362   1993/94      1994       7-40 Years
          CV at Timothy Woods              211,292     1996       1997       7-40 Years
          CV at Trussville                 528,574   1996/97      1997       7-40 Years
          CV at Vernon Marsh             1,504,331   1986/87    1986/93      7-40 Years
          CV at White Bluff                556,169     1986       1993       7-40 Years
          North Ingle Villas               496,783     1983       1983       7-40 Years
          Patio I, II & III                553,002   1966/83/84 1994/93/93   7-40 Years
          Ski Lodge - Tuscaloosa           601,280   1976/92      1994       7-40 Years

S-1
<PAGE>

        Retail:
          Abingdon Town Centre              27,865   1987/96      1997       7-40 Years
          Bardmoor Village                 332,165     1981       1996       7-40 Years
          Bear Lake Village                425,571     1990       1995       7-40 Years
          Beechwood Shopping Center        371,483   1963/92      1997       7-40 Years
          Bellwood                         898,419     1988       1988       7-40 Years
          Briarcliffe Mall               1,006,829     1986       1996       7-40 Years
          Britt David                      392,021     1990       1994       7-40 Years
          Brookwood Village                380,641   1973/91      1997       7-40 Years
          Burnt Store Square               721,350     1990       1994       7-40 Years
          Country Lake Village             432,573     1990       1995       7-40 Years
          Gadsden Mall                   8,036,149   1974/91      1974       7-40 Years
          Glynn Place Mall                  93,750     1986       1997       7-40 Years
          Heatherbrooke Center              27,698     1984       1997       7-40 Years
          Holly Hill Mall                  106,782   1969/86/94   1997       7-40 Years
          Island Walk                      459,924   1993/95      1996       7-40 Years
          Lakeshore Mall                   129,174   1984-87      1997       7-40 Years
          Lakewood Plaza                    47,840     1995       1997       7-40 Years
          Macon Mall                    15,677,827   1975/88/97 1975/88      7-40 Years
          Mayberry Mall                     15,742   1968/86      1997       7-40 Years
          McGehee Place                  1,134,760     1986       1986       7-40 Years
          Montgomery Promenade           2,088,214     1990       1993       7-40 Years
          Montgomery Promenade North            -0-    1997       1995       7-40 Years
          Northdale Court                  438,674     1988       1995       7-40 Years
          Old Springville                2,558,418     1982       1982       7-40 Years
          Olde Town                        620,383   1978/90    1978/90      7-40 Years
          Paddock Park                     202,862     1988       1995       7-40 Years
          Quaker Village                    32,924   1968/88/97   1997       7-40 Years
          River Oaks                     1,463,231   1979/89      1993       7-40 Years
          Rivermont Shopping Center          9,682   1986/97      1997       7-40 Years
          Stanly Plaza                       6,908   1987/96      1997       7-40 Years
          Staunton Mall                     62,834   1969/86/97   1997       7-40 Years
          University Park Plaza          5,709,782   1986/89      1993       7-40 Years
          Valdosta Mall                    125,950   1982-85      1997       7-40 Years
          Village at Roswell Summit             -0-    1988       1997       7-40 Years
          Village Mall                   7,742,483   1973/84/89 1973/84/89   7-40 Years
          Wekiva Riverwalk                 520,755     1990       1996       7-40 Years
          Winter Haven Village             319,706     1986       1995       7-40 Years
          Yadkin Plaza                       5,101   1971/97      1997       7-40 Years

S-2
<PAGE>

        Office:
          250 Commerce Street            2,286,805   1904/81      1980       7-40 Years
          AmSouth Center                 5,384,009     1990       1990       7-40 Years
          Colonial Plaza                    25,980     1982       1997       7-40 Years
          International Park                95,529   1987/89      1997       7-40 Years
          Interstate Park                4,228,248   1982-85/89 1982-85/89   7-40 Years
          Lakeside Office Park             122,464   1989/90      1997       7-40 Years
          Mansell Office Park              457,529   1987/96/97   1997       7-40 Years
          P&S Building                     393,176   1946/76/91   1974       7-40 Years
          Progress Center                  185,392   1983-91      1997       7-40 Years
          Riverchase Center                510,103   1984-88      1997       7-40 Years
          University Park                1,600,448     1985       1985       7-40 Years
        Active Development Projects:
          CG at Bayshore II                 54,217     N/A        1985        N/A
          CG at Cypress Crossing                -0-    N/A        1997        N/A
          CG at Edgewater II                    -0-    N/A        1997        N/A
          CG at Hunter's Creek             320,071     N/A        1996        N/A
          CG at Inverness Lakes II              -0-    N/A        1994        N/A
          CG at Lakewood Ranch                  -0-    N/A        1997        N/A
          CG at Research Park II                -0-    N/A        1985        N/A
          CG at Wesleyan II                     -0-    N/A        1996        N/A
          CV at Citrus Park                     -0-    N/A        1997        N/A
          CV at Inverness IV                35,227     N/A        1985        N/A
          CV at McGehee Place                   -0-    N/A        1987        N/A
          CV at River Hills III            362,235     N/A        1985        N/A
          Other Miscellaneous Projects          -0-    N/A        1993        N/A
        Unimproved Land:
          Macon Mall Outparcels                 -0-    N/A        1987        N/A
          McGehee Place Land                    -0-    N/A        1981        N/A
          North Heathrow Land                   -0-    N/A        1997        N/A
          Village Mall                          -0-    N/A        1981        N/A
       -----------------------------------------------------------------------------
                                     $ 124,236,057
                                 ===================================================
</TABLE>

S-3
<PAGE>


                              NOTES TO SCHEDULE III
                            COLONIAL REALTY LIMITED PARTNERSHIP
                               December 31, 1997


(1)  The  aggregate  cost for  Federal  Income Tax  purposes  was  approximately
     $1,151,629,000 at December 31, 1997.

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

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

<TABLE>

                                      Reconciliation of Real Estate
<CAPTION>

                                                         1997              1996             1995
                                                    ---------------   ---------------   -------------
      Real estate investments:
<S>                                                 <C>                <C>              <C>
         Balance at beginning of year               $ 1,017,009,315    $ 736,937,703    $ 640,680,718
            Acquisitions of new property               451,256,964       173,276,789      67,326,328
            Improvements and development                97,564,705       107,834,251      29,121,438
            Dispositions of property                   (76,716,969)       (1,039,428)       (190,781)
                                                    ---------------   ---------------   -------------

         Balance at end of year                     $ 1,489,114,015   $ 1,017,009,315   $ 736,937,703
                                                    ===============   ===============   =============
</TABLE>
<TABLE>


                                Reconciliation of Accumulated Depreciation
<CAPTION>

                                                         1997              1996             1995
                                                    ---------------   ---------------   -------------
      Accumulated depreciation:
<S>                                                   <C>                <C>             <C>
         Balance at beginning of year                 $101,541,658       $79,780,292     $61,773,344
            Depreciation                                31,945,960        22,015,054      18,044,446
            Depreciation of disposition of property     (9,251,561)         (253,688)        (37,498)
                                                    ---------------   ---------------   -------------

         Balance at end of year                       $124,236,057      $101,541,658     $79,780,292
                                                    ===============   ===============   =============

</TABLE>

                                S-4
<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 19, 1998