SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-KFOR ANNUAL AND TRANSITION REPORTS

 PURSUANT TO SECTIONS 13 OR 15(d) 

OF THE SECURITIES EXCHANGE ACT OF 1934

[ X]
      ANNUAL
        REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
        SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended December 31,
        2002[    ]
      TRANSITION REPORT PURSUANT
        TO SECTION 13 OR 15 (d) OF THE 
        SECURITIES EXCHANGE ACT OF 1934


Commission File Number: 000-22683GABLES REALTY LIMITED PARTNERSHIP(Exact name of Registrant as
specified in its charter)

---

|Delaware(State or other jurisdiction
      of incorporation or
      organization) |                 | 58-2077966(I.R.S. employer identification no.)
|---------------------------------------------------------------------------------- | --------------- | ----------------------------------------------
|                                                                                  
|777 Yamato Road, Suite 510
      Boca Raton,  FL                                  
|                                                                                   | 33431(Zip
Code)
|(Address of principal executive
      offices)                                     |                

Registrant's telephone number, including area code:
(561) 997-9700

---

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

Securities registered pursuant to Section 12(g) of the Act: Common Units of Limited Partnership Interest
(Title of Class)

Indicate by check mark whether the
Registrant: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

(1) Yes [X]
      No [   ](2) 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.  X
      Indicate by check mark whether the registrant is an
accelerated filer (as defined in Exchange Act Rule 12b-2).   Yes X   No _______As
of June 28, 2002, the aggregate market value of the 4,660,686 common units of
limited partnership ("Units") held by non-affiliates of the Registrant
was $148,815,704 based upon the closing price of $31.93 on the New York Stock
Exchange composite tape on such date of the common shares of beneficial
interest, par value $.01 per share, of Gables Residential Trust (the
"Trust"), a Maryland real estate investment trust and the 100% owner
of Gables GP, Inc., the sole general partner of the Registrant into which Units
are redeemable under certain circumstances at the election of the Trust.
(For this computation, the Registrant has excluded the market value of all Units
reported as beneficially owned by the Trust and by executive officers and
directors of the Registrant; such exclusion shall not be deemed to constitute an
admission that any such person is an "affiliate" of the Registrant.)

DOCUMENTS INCORPORATED BY REFERENCEInformation contained in Gables Residential
Trust's Proxy
Statement relating to its Annual Meeting of Shareholders to be held May 13,
2003 is incorporated by reference in Part III, Items 10, 11, 12 and 13.

FORM 10-K ANNUAL REPORTFISCAL YEAR ENDED DECEMBER 31,
2002TABLE OF CONTENTS

|ItemNo. |  |                                                                                                                 | PageNo.                    
|------- |  | --------------------------------------------------------------------------------------------------------------- | ---------------------------
|PART I  | 
|        | 
|1.      |  | Business                                                                                                        | 3                          
|2.      |  | Properties                                                                                                      | 15                         
|3.      |  | Legal Proceedings                                                                                               | 19                         
|4.      |  | Submission of Matters
      to a Vote of Security Holders                                                       | 19                         
|        | 
|        | 
|PARTII  | 
|        |  |                                                                                                                 |                            
|        |  |                                                                                                                 |                            
|5.      |  | Market for Registrant's
      Common Equity and Related Shareholder Matters                                     | 20                         
|6.      |  | Selected
    Financial and Operating Information                                                                | 20                         
|7.      |  | Management's
    Discussion and Analysis of Financial Condition and Results of Operations                       | 23                         
|7A.     |  | Quantitative and
    Qualitative Disclosures About Market Risk                                                  | 40                         
|8.      |  | Financial
    Statements and Supplementary Data                                                                 | 41                         
|9.      |  | Changes in and
      Disagreements with Accountants on Accounting and Financial Disclosure                      | 41                         
|        |  |                                                                                                                 |                            
|        | 
|PARTIII | 
|        |  |                                                                                                                 |                            
|        |  |                                                                                                                 |                            
|10.     |  | Directors and Executive
      Officers of the Registrant                                                        | 42                         
|11.     |  | Executive Compensation                                                                                          | 42                         
|12.     |  | Security Ownership of
      Certain Beneficial Owners and Management                                            | 42                         
|13.     |  | Certain Relationships
      and Related Transactions                                                            | 42                         
|14.     |  | Controls and
    Procedures                                                                                     | 43                         
|        | 
|PARTIV  | 
|        |  |                                                                                                                 |                            
|        |  |                                                                                                                 |                            
|15.     |  | Exhibits,
      Financial Statements and Schedule and Reports on Form 8-K
      Signatures
      Certifications | 44
      46
      
      47







PART I

ITEM
  1.  BUSINESS
  Introduction
     
       Gables Realty Limited Partnership (the
"Operating Partnership") is the entity through which Gables
Residential Trust (the "Trust"), a real estate investment trust (a
"REIT"), conducts substantially all of its business and owns, either
directly or indirectly through subsidiaries, substantially all of its assets.
In 1993, the Trust was formed under Maryland law and the Operating Partnership
was organized as a Delaware limited partnership to continue and expand the
multifamily apartment community management, development, construction,
acquisition and disposition operations of its privately owned predecessor
organization. The Trust completed its initial public offering on January
26, 1994 (the "IPO") and its common shares are listed on the NYSE
under the symbol GBP.
       At December 31, 2002, the Trust was an
80.8% economic owner of the common equity of the Operating Partnership.
The Trust controls the Operating Partnership through Gables GP, Inc.
("Gables GP"), a wholly-owned subsidiary and the sole general partner
of the Operating Partnership. This structure is commonly referred to as an
umbrella partnership REIT or UPREIT. The board of directors of Gables GP,
the members of which are the same as the members of the board of trustees of the
Trust, manages the affairs of the Operating Partnership by directing the affairs
of Gables GP. The Trust's limited partner and indirect general partner
interests in the Operating Partnership entitle it to share in cash distributions
from, and in the profits and losses of, the Operating Partnership in proportion
to its ownership interest therein and entitles the Trust to vote on all matters
requiring a vote of the limited partners.
       Generally, the other limited partners of
the Operating Partnership are persons who contributed their direct or indirect
interests in certain real estate assets to the Operating Partnership primarily
in connection with the IPO and the acquisition of Trammell Crow Residential
South Florida. The Operating Partnership is obligated to redeem each common unit
of limited partnership interest ("Unit") held by a person other than
the Trust, at the request of the holder, for an amount equal to the fair market
value of a common share at the time of such redemption, provided that the Trust,
at its option, may elect to acquire any such Unit presented for redemption for
one common share or cash. With each redemption, the Trust's percentage
ownership interest in the Operating Partnership will increase. In
addition, whenever the Trust issues common shares or preferred shares, it is
obligated to contribute any net proceeds to the Operating Partnership and the
Operating Partnership is obligated to issue an equivalent number of common or
preferred Units with substantially identical rights as the common or preferred
shares, as applicable, to the Trust.
       The Operating Partnership may issue
additional Units to acquire land parcels for the development of apartment
communities or operating apartment communities in transactions that in certain
circumstances defer some or all of the seller's tax consequences. The
Operating Partnership believes that many potential sellers of multifamily
residential properties have a low tax basis in their properties and would be
more willing to sell the properties in transactions that defer federal income
taxes. Offering Units instead of cash for properties may provide potential
sellers partial federal income tax deferral.
    Unless the context otherwise
requires, all references to "we," "our" or "us" refer collectively to the Trust and the Operating Partnership.Business Objective and Strategies

Our objective is to increase
shareholder value by producing consistent high quality earnings to sustain
dividends and annual total returns that exceed the multifamily sector average.
We use the National Association of Real Estate Investment Trusts
("NAREIT") Equity Residential REIT Total Return Index (the
"NAREIT Apartment Index") as the benchmark for the multifamily sector
average.  To
achieve our objective, we employ a number of business strategies which are
outlined below:

Investment Strategy. Our investment strategy is research-driven. In order to outperform
the sector index, we seek to (1) invest in markets that have growth potential that
exceeds the national average and (2) select markets that have
complementary economic drivers so that our portfolio has less volatility than
the national average. We believe that the success of a real estate investment is predicated on three basic factors:
(1) macro-market fundamentals, (2) specific sub-market dynamics and
(3) product decisions.

Our objective is to own a portfolio of
high-quality assets in strategically selected markets that are
complementary through economic diversity and characterized by high job growth
and resiliency to national economic downturns. We believe such a portfolio will
provide predictable operating cash flow performance that exceeds the national
average on a sustainable basis.

Real estate is a cyclical business and, as a long-term owner and operator of apartment communities, we believe it is
important to evaluate performance potential throughout various economic cycles.
We also believe that job creation and household formation are key components of demand for apartment communities. Research has shown that certain
markets in the United States create more jobs and are more resilient to national
economic downturns than others. In addition, we believe that the industrial job base of various
markets can provide economic diversity through portfolio allocation that, in
turn, can reduce volatility in performance. These factors, along with other
macro-demographic characteristics, have led us to identify markets in which to
make real estate investments.

We believe that within a macro-market
environment, apartment communities located in different sub-markets can have
different economic performance, and that specific sub-market locations are the
primary factor in determining the potential for investment returns to exceed
macro-market results. Factors that differentiate specific sub-markets within a macro-market include,
among other items, proximity to employment centers, entertainment and shopping,
quality of education systems, availability of land that could be used to
introduce new apartment communities and the local entitlement process. It is
our belief that apartment communities located in close proximity to these areas
and areas with high barriers to entry through lack of available land and/or
difficult entitlement processes should produce economic performance that exceeds
that of apartment communities in locations without those characteristics. We refer to our desired locations as
Established Premium NeighborhoodsTM, or EPNs, as compared to suburban locations that lack many of these
differentiating characteristics. A key component used to identify EPNs is the average cost per square foot for
single family housing. We believe that the single family housing market is very
efficient in pricing the quality of housing and the proximity of neighborhoods
to employment centers, entertainment, shopping, and quality education systems. By identifying these highly desirable
neighborhoods where people are spending the most on a per square foot basis to live, and targeting
them for investment, we believe we can achieve economic performance from our apartment communities that exceeds macro-market results.

The third component of our investment
strategy is product specific. Our target resident is the affluent
renter-by-choice who desires a high quality apartment community in which to
live. We perform and commission extensive market research in an
effort to design apartment communities that meet the current and future desires
of our target customers. In addition, we invest for the long term by acquiring
and developing apartment communities with high quality construction materials
and amenities. We believe that long-term maintenance and capital expenditure
requirements are reduced by investing additional capital up front in apartment
communities built with quality construction materials. This strategy reduces the volatility associated with our cash flow streams relative to our
competitors. The timeless design and high quality of the product targeted to the affluent renter-by-choice also gives
us a competitive advantage over many other apartment owners through our ability
to sell assets to condominium converters at prices in excess of apartment
valuations. We have received numerous local and national awards and recognition
for the quality of our apartment communities.

In order to execute our investment
strategy, we believe it is important to maintain a strong local presence in each
of our markets. Through our local expertise, we stay abreast of current market
conditions and can proactively adjust tactics in anticipation of changes in
market fundamentals. In addition, we believe we have a competitive advantage
over many other apartment community owners through the vertical integration of
our organization. We have expertise in all facets of apartment community
investment, including the disciplines of development, construction, acquisition
and disposition. Since 1982, we have been involved in the development and
construction,
acquisition and disposition of approximately 35,000, 20,000 and 29,000 apartment
homes, respectively.

Operating Strategy. We adhere
to a strategy of owning and operating high quality, class AA/A apartment
communities under the Gables brand. We believe that such communities, when
located in EPNs and supplemented with high quality service and amenities, attract the affluent renter-by-choice who is willing to
pay a premium for location preference, superior service and high quality
communities. The resulting portfolio should maintain high occupancy levels and rental rates relative to
overall market conditions. This, coupled with more predictable operating expenses and
reduced capital expenditure requirements associated with high quality
construction materials, should lead to operating margins that exceed national
averages for the apartment sector and sustainable growth in operating cash flow.

We are continuing to pursue a
long-standing strategy of brand name development by linking the "Gables" name to
our communities. This strategy is intended to reinforce our reputation for
excellent service and build recognition of our multifamily communities as a high
quality, recognizable brand. We believe that increased consumer recognition of
the "Gables" brand name in each of our markets enhances our ability to attract
new residents, increases the markets' perception of our communities as high
quality residential developments and enhances our relationships with local
authorities.

We operate our communities to maximize
sustainable cash flow growth and create long-term real estate value. This
strategy is achieved by proactive marketing and leasing of apartment homes, providing the best possible
resident service, generating economies of scale to lower expenses and
maintaining our communities to the highest standards. We believe that excellent
service and branding thereof will distinguish us from our competitors, retain
current residents and attract new prospects.

We employ a number of operating
strategies based on market fundamentals and prediction models in order to generate sustainable operating cash flow that exceeds the macro-market and our
competitors. Our innovative web-based property management system provides
real-time financial and marketing information for all of our communities, and
effectively summarizes operating and marketing data critical for making accurate
daily decisions. The system also compiles demographic profile information on
prospective and current residents, allowing us to effectively target our
customer base through our branding efforts. We also utilize the Internet
extensively as a marketing tool to attract new customers through our
award-winning web site at www.gables.com. All of our communities have high-speed internet access. Capturing and analyzing macro-market
and EPN sub-market data through our sophisticated operating systems allows us to
perform analyses via our proprietary prediction models. As a result of these
analyses, we may choose an operating tactic for a particular market aimed at
maximizing rental rate growth while increasing short-term vacancy exposure. In
other scenarios, a focus on maximizing occupancy at the expense of rental rate
growth may deliver the best operating cash flow results. We may also utilize
different operating tactics for assets that are targeted for disposition in
order to maximize the sales price based on current market underwriting conditions. These and other operating
tactics are employed to maximize sustainable cash flow growth and create long-term real
estate value for shareholders relative to our competitors.

Human Resources Strategy.
Our aim is to be the employer of choice within the industry, with a mission of Taking Care of the Way People Live® . A cornerstone of our strategy
involves innovative human resource practices that we believe will attract and
retain the highest caliber associates. Because of our long-established presence
as a fully integrated multifamily apartment management, development, construction,
acquisition and disposition company within our markets, we have the ability to
offer multi-faceted career opportunities among the various disciplines within
the industry. Approximately 10% of our associates have tenure in excess of
10 years. Average tenure for executive officers, vice presidents and
regional managers, and property managers is over 12 years, 10 years and 5 years, respectively. We believe the experience, expertise and depth of our
bench strength is a competitive advantage.

We believe our success with human
resource strategies is primarily due to our empowerment of associates and our
career development and training. The results of our business operations are ultimately
based on a series of local decisions. As a result, we believe the best way to run
our business is to equip
the most qualified people to make the best possible decisions. By empowering
associates to make decisions at a local level, we increase customer and
associate satisfaction. We operate each of our apartment communities as a
business unit. Property managers and other on-site associates are responsible for achieving economic goals associated with revenues, occupancy and
expenses relative to their macro-market, in addition to maintaining assets to a high standard in order to ensure long-term
success potential. Empowering associates with responsibility and encouraging
decision making requires hiring the highest caliber associate and allocating
extensive resources to training and career development.

We are committed to training at all
levels within our organization, from newly hired associates to senior
management. This commitment is aimed at ensuring the competitive advantage
inherent in the expertise of our associates and deep bench strength, which
facilitates succession planning at all levels. Our service-oriented philosophy
is branded and reinforced through our college of career development, Gables
University. This comprehensive training system established for our employees is overseen by
full-time training coordinators and offers classes in a variety of different
schools, such as the School of Leasing, the School of People Resources and the School of
Maintenance Development. Additionally, there are "degree" programs which are
completed with graduation ceremonies. Service is also reinforced with quarterly
"I Made a Difference" recognition ceremonies, where personal achievement by
associates is acknowledged by senior management in each of our markets. We believe recognition programs reinforce our culture and branding
philosophy.

A key component to achieving our
objectives is the alignment of interests between associates and shareholders. Share
ownership is prevalent throughout our organization and includes property and maintenance managers as well as members of the board
of trustees. Approximately 40% of our associates have equity ownership in
Gables, and therefore have their interests aligned with all other shareholders.

Capital Strategy.Real
estate investments are capital intensive. As a result, capital allocation
decisions significantly impact total return to shareholders. Our objective
is to produce unleveraged internal rates of return ("IRRs") during our investment
hold period that exceed our long-term weighted average cost of capital. An integral part of our capital strategy involves maintaining financial flexibility
via a conservative balance sheet that is investment grade. We have investment
grade, senior unsecured debt ratings from Moody's Investors Service and Standard
and Poor's of Baa2 and BBB, respectively. The Trust's Series C Preferred
Shares are also
investment grade rated by those firms at baa3 and BBB-, respectively. We believe
our conservative credit profile provides security for shareholders and is a
competitive advantage over companies without the financial flexibility
associated with investment grade balance sheets.

Our attention to return on invested
capital manifests itself through a very focused approach to managing our capital
structure. We are able to recycle existing capital through asset dispositions,
which allows us to re-deploy capital into investments with higher return
potential. In certain situations, we may also capitalize on the arbitrage that
exists between the private market valuation of our assets and a discounted
public market valuation of our common shares by selling assets and repurchasing
stock. We have access to capital through a variety of sources, including debt
financing and borrowing, common
equity, preferred equity and private equity via direct investment, in addition
to internally generated equity through asset dispositions and retained cash
flow.

Ancillary Business
Strategy.We are involved in ancillary business lines which include third-party property
management, development and construction
services, corporate rental housing and asset disposition brokerage services. Our expertise in these areas
stems from our core competencies. In addition, we are innovative in identifying
and capitalizing on new services desired by our residents that provide for
increases in earnings and high returns on invested capital. Regular feedback
from residents and our clients provides avenues for enhanced service
and earnings potential.

As of December 31,
2002, we managed 83 multifamily communities for third parties and unconsolidated
joint ventures, comprising approximately
24,052
apartment homes. These fee management contracts are maintained with a total of
approximately 50 owners. In addition to contributing to earnings, engaging in fee management
allows us to create economies of scale by leveraging our management operations
costs and providing access to development and acquisition opportunities, as well
as providing additional market knowledge.
       2002 Significant Events.
Apartment fundamentals on a national basis deteriorated during 2002 as a result
of the economic recession and associated job losses, coupled with low mortgage rates which
resulted in an increase in home purchases by apartment residents.
Reduced interest rates also contributed to a decline in the capitalization
rates ("cap rates") used by investors to acquire apartments. These
reduced cap rates resulted in very attractive asset disposition prices for
apartments. We sold approximately $196 million of assets in 2002 including gross
sales prices of $104 million for assets owned by joint ventures. Our share of
the proceeds from these
sales exceeded $100 million and generated gains to us of approximately $31 million or
$1.01 per diluted Unit.
       Due to deteriorating fundamentals and
relatively high asset valuations we did not acquire any operating apartment communities in
2002. In addition, we significantly scaled back our development
activities. We only commenced construction on one new development in 2002; the second phase
of a joint venture community in Tampa, in which we own a 20% interest.
Our capital commitment to this venture for such development is less than $3 million.
       During 2002, we refinanced approximately $308 million
of indebtedness and preferred capital in a series of transactions that served to
reduce our weighted average cost of this capital by approximately 1.0%.
       Effective with the fourth quarter of 2002,
we adopted a policy of a monthly distribution on our common Units instead of a quarterly payment. This was
done in anticipation of the demographic shift associated with the aging of the
Baby Boomer generation. This change improves our relative total return, as
well as aligns the timing of cash flow from dividends with the cash flow needs
of investors who have monthly, not quarterly, expense obligations.
 

      Apartment Portfolio.As of December  31, 2002, we owned 74 stabilized multifamily apartment communities
comprising 20,422 apartment homes, an indirect 25% interest in one stabilized
apartment community comprising 345 apartment homes, an indirect 20% interest
in two stabilized apartment communities comprising 621 apartment homes, and
an indirect 8.3% interest in three stabilized apartment communities comprising
1,118 apartment homes. We also owned nine multifamily apartment communities
under development or in lease-up at December 31, 2002 that are expected to
comprise 2,410 apartment homes upon completion and an indirect 20% interest in
four apartment communities under development or in lease-up at December 31, 2002 that are expected to
comprise 967 apartment homes upon
completion. In addition, as of December 31, 2002, we owned a parcel of land
on which we intend to develop an apartment community that we currently
expect will comprise an estimated 450 apartment homes. We also have rights to
acquire additional parcels of land on which we believe we could develop
communities. Any future development is subject to permits and other governmental
approvals, as well as our ongoing business review, and may not be undertaken or
completed.

Our apartment communities generate rental
revenue and other income through the leasing of apartment homes to a diverse
base of residents. We evaluate the performance of each of our apartment
communities on an individual basis. However, because each of our apartment
communities has similar economic characteristics, residents, and products and
services, they have been aggregated into one reportable segment which comprises
  93% of our total revenues for each of the three years in the period ended
  December 31, 2002.

Management Structure.We have
been responsible for the development or acquisition of approximately 55,000
apartment homes since 1982 and our senior management team has, on average, in
excess of 12 years experience in the multifamily industry. We provide a
full range of integrated real estate services through a team of approximately
1,315 associates who have expertise in property operations, development,
construction, acquisition and disposition. We maintain offices in Atlanta,
Austin, Boca Raton, Dallas, Houston, Tampa and Washington, D.C., each with its own fully integrated organization,
including experienced in-house management, development, construction,
acquisition and
disposition teams with specific knowledge of the particular markets served. We
believe that our competitive strength and growth potential lie in our in-depth
knowledge of the changing opportunities available in each local market and in
our locally focused management structure, which empowers highly experienced
development, acquisition, and disposition personnel to pursue opportunities in
each market and highly experienced on-site managers to make the day-to-day
decisions needed to maximize the performance of our existing properties. Our
finance and accounting functions are controlled by a central
staff located in Atlanta.

Competitive Advantages.We
believe that we have several competitive advantages that will assist us in
achieving our
objective of producing total returns that exceed the NAREIT Apartment Index. These advantages include:

| |  | A fully integrated organization:a fully integrated
      organization with a track record of approximately 20 years in all
      phases of real estate property management, development, construction,
      rehabilitation, acquisition, disposition, rehabilitation, financing and marketing.                                                                                             
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Strategic portfolio diversification:a
      research-driven strategy that has identified major markets for investment that are geographically
      independent, rely on diverse economic foundations, have generated and are
      projected to continue to generate job
      growth substantially above national averages and have shown resiliency to national
      economic downturns.
| |  |                                                                                                                                                                                                                                                                                                                                                                                             
| |  | Product focus:a portfolio concentration of
      class AA/A apartment communities that are located primarily in
      Established Premium NeighborhoodsTM and are targeted toward the
      affluent renter-by-choice, and include garden, townhome and higher
      density apartment communities.                                                                                          
|
| |  | Local presence in multiple markets:an established local
      presence in each of our markets, which we serve through an experienced
      team of associates with superior knowledge of local markets and a culture based on
      empowerment which provides incentives for outstanding performance at all levels.                                                                        
| |  |                                                                                                                                                                                                                                                                                                                                                                                             
| |  | Technologically savvy:a
      sophisticated information technology system that is web-based and provides
      real-time information that leads to better decision making through
      extensive use of proprietary prediction models.                                                                                                                                                     
|
| |  | Brand recognition:a service-oriented philosophy which
      focuses on offering extensive resident amenities and services in high
      quality apartment homes to increase occupancy, rental rates and net
      operating income.                                                                                                                                                         

The Management Company

Our fee management operations are
conducted through Gables Residential Services, Inc., a wholly-owned subsidiary of the
Operating Partnership. Gables Residential Services also provides other services
to third parties, including construction, corporate rental housing and brokerage. A portion of these services are, or may also be, provided by the
Operating Partnership directly, to the extent consistent with the gross income
requirements for REITs under the Internal Revenue Code (the
"Code").

Competition

All of our communities are located in
developed areas that include other apartment communities. The number of
competitive multifamily communities in a particular area could have a material
effect on our ability to lease apartment homes at our present communities or any
newly developed or acquired community, as well as on the rents charged. We may
be competing for development and acquisition opportunities with others that have
greater resources than we do, including other REITs. In addition, our
communities must compete for residents against new and existing homes and
condominiums. The home affordability index in all of our markets is above the
national average. This competitive environment is partially offset by the
propensity to rent for households in our markets which in all cases exceeds the
national average.

The fee management business is highly
competitive, and we face competition from a variety of local, regional and
national firms. We compete against these firms by stressing the quality and
experience of our employees, the services provided by us, and the market
presence and experience we have developed over the past 20 years. We may
nevertheless lose some of our third party management business, particularly when
such properties are sold.
Environmental and Related Matters

Under various federal, state and local
environmental laws, ordinances and regulations, a current or previous owner or
operator of real estate may be required, regardless of knowledge or
responsibility, to investigate and remediate the effects of hazardous
or toxic substances or petroleum product releases at such property, and may be
held liable to a governmental entity or to third parties for property damage and
for investigation and remediation costs incurred by such parties as a result of the contamination.
The cost of
investigation, remediation or removal of such substances may be substantial, and
the presence of such substances, or the failure to properly remediate the
contamination on such property, may adversely affect the owner's ability to
borrow against, sell
or rent such property. In addition, some environmental laws create a lien on
the contaminated site in favor of the government for damages and costs it incurs
as a result of the contamination. Finally, the owner or operator of a site
may be subject to common law claims by third parties based on damages and costs
resulting from environmental contamination emanating from a site. In connection
with the ownership, operation, management and development of our communities and
other real estate assets, we may be potentially liable for such damages and costs.

Certain federal, state and local laws,
ordinances and regulations govern the removal, encapsulation and disturbance of
asbestos-containing materials ("ACMs") when such materials are in poor condition
or in the event of reconstruction, remodeling, renovation or demolition of a
building. Such laws, ordinances and regulations may impose liability for release
of ACMs and may provide for third parties to seek recovery from owners or
operators of real estate assets for personal injury associated with exposure to ACMs. In
connection with the ownership, operation, management and development of our
communities and other real estate assets, we may be potentially liable for such
costs.

In addition, studies have linked
radon, a naturally-occurring substance, to increased risks of lung cancer. While
there are currently no state or federal requirements regarding the monitoring
for, presence of, or exposure to radon in indoor air, the U.S. Environmental
Protection Agency ("EPA") and the Surgeon General recommend testing residences for the
presence of radon in indoor air, and the EPA further recommends that
concentrations of radon in indoor air be limited to less than 4 picocuries per
liter of air (the "Recommended Action Level").  The presence of radon in concentrations equal to or greater than the Recommended
Action Level in a community may adversely affect our ability to rent apartment homes in that
community and the market value of the community.Finally, federal
legislation requires owners and landlords of residential housing
constructed prior to 1978 to disclose to potential residents or purchasers any
known lead-paint hazards and will impose treble damages for failure to so
notify. In addition, lead-based paint in any of our communities may result in
lead poisoning in children residing in that community if chips or particles of
such lead-based paint are ingested, and we may be held liable under state laws
for any such injuries caused by ingestion of lead-based paint by children living
at our communities.
      Our assessments of our communities have
not revealed, and we are not otherwise aware of, any environmental conditions that we believe would have a material
adverse effect on our business, assets, financial condition or results of
  operations. Nevertheless, it is possible
that our assessments do not reveal all environmental liabilities or that there
are material environmental liabilities of which we are unaware. Moreover, there
can be no assurance that (1) future laws, ordinances or regulations will
not impose any material environmental liability, or (2) the current
environmental condition of our communities will not be affected by residents, the
condition of land or operations in the vicinity of the properties, such as the
presence of underground storage tanks, or the actions of third parties unrelated
to us.

We believe that no ACMs were used in
connection with the construction of our communities or will be used in
connection with future construction. Our environmental assessments have revealed
the presence of  "potentially friable" ACMs at two of our communities. We have
programs in place to maintain and monitor ACMs. We believe our communities are
in compliance in all material respects with all federal, state and local laws,
ordinances and regulations regarding hazardous or toxic substances or petroleum
products. We have not been notified by any governmental authority and are not
otherwise aware of any material non-compliance, liability or claim relating to
hazardous or toxic substances or petroleum products in connection with any of
our present properties that would involve substantial expenditure, and we do not
believe that compliance with applicable environmental laws or regulations will
have an adverse material effect on us, our financial condition or results of
operations.
       Mold growth may occur when excessive
moisture accumulates in buildings or on building materials, particularly if the
moisture issue remains undiscovered or is not addressed over a period of
time.  Although the occurrence of mold at multifamily and other structures,
and the need to remediate such mold, is not uncommon, there has been
increased awareness in recent years that certain molds may, in some instances,
lead to adverse health effects, including allergic or other reactions.  To
help limit mold growth, we educate residents about the importance of adequate
ventilation and request or require that they notify us when they see mold or
excessive moisture.  We have established procedures for promptly
addressing and remediating mold or excessive moisture from apartment homes when
we become aware of its presence regardless of whether we or the resident believe
a health risk is presented.  However, we cannot assure that mold or
excessive moisture will be detected and remediated in a timely manner.  If
a significant mold problem arises at one of our communities, we could be
required to undertake a costly remediation program to contain or remove the mold
from the affected community and could be exposed to other liabilities.
Costs of Compliance with Americans with Disabilities Act and
Similar Laws

Under the Americans with Disabilities Act
of 1990 (the "ADA"), all places of public accommodation are required to meet
certain federal requirements related to access and use by disabled persons.
These requirements became effective in 1992. We believe that our communities are
substantially in compliance with present requirements of the ADA as they apply
to multifamily dwellings. A number of additional federal, state and local laws
exist which also may require modifications to our communities or regulate
certain further renovations with respect to access by disabled persons. For
example, the Fair Housing Amendments Act of 1988 (the "FHAA") requires apartment
communities first occupied after March 13, 1990 to be accessible to the
handicapped. Non-compliance with the FHAA could result in the imposition of
fines or an award of damages to private litigants. We believe that our
communities that are subject to the FHAA are substantially in compliance with
this law.

Additional legislation may impose further
burdens or restrictions on owners with respect to access by disabled persons.
The ultimate amount of the cost of compliance with the ADA or related
legislation is not currently ascertainable, and while these costs are not
expected to have a material effect on us, they could be substantial. Limitations
or restrictions on the completion of certain renovations may limit application
of our investment strategy in certain instances or reduce overall returns on our
investments.

Insurance

We carry comprehensive liability, fire,
extended coverage and rental loss insurance with respect to all of our completed
communities, with policy specifications, insured limits and deductibles
customarily carried for similar properties. We carry similar insurance with
respect to our development properties, but with certain appropriate exceptions
given the undeveloped nature of these properties. There are, however, certain
types of losses, such as losses arising from acts of war, that are not generally
insured because they are either uninsurable or not economically insurable.
Should an uninsured loss or a loss in excess of insured limits occur, we could
lose our capital invested in a particular property as well as the anticipated
future revenues from the property and would continue to be obligated on any
mortgage indebtedness or other obligations related to the property. Any
uninsured loss or loss in excess of insured limits would adversely affect us.
       We cannot assure that we will have full
coverage under our existing policies for property damage or liabilities to third
parties arising as a result of exposure to mold or a claim of exposure to mold at
a particular property.  See the discussion under
"Environmental and Related Matters" above.Employees

We provide a full range of real estate
services through a staff of approximately 1,315 employees, including an
experienced management team. There are no collective bargaining agreements with
any of our employees. We believe relations with our employees are excellent.

Tax Matters

The Trust has elected to be taxed as a REIT
under the Code. To qualify as a REIT, the Trust must meet a number of
organizational and operational requirements, including a requirement that it
currently distribute at least 90% of its ordinary taxable income to
shareholders. It is the Trust's current intention to adhere to these requirements
and maintain its REIT status. As a REIT, we generally will not be subject
to federal income tax on distributed taxable income. Even if we qualify as
a REIT, we may be subject to certain state and local taxes on our income and
real estate assets, and to federal income and excise taxes on our undistributed
taxable income.
       We utilize Gables Residential Services, a
taxable REIT subsidiary, to provide management and other services to third
parties that a REIT may be prohibited from providing. Taxable REIT subsidiaries
are subject to federal, state and local income taxes.

Policies with Respect to Significant Business Activities

The following is a discussion of our
investment, financing and other significant policies. These policies have been
established by our board of trustees and may be amended or revised from time to
time by the board of trustees without a vote of the shareholders, except that
(1) we cannot change our policy of holding assets and conducting business
only through the Operating Partnership, Gables Residential Services and other
permitted subsidiaries without the consent of the holders of Units as provided
in the partnership agreement of the Operating Partnership, (2) changes in
policies with respect to conflicts of interest must be consistent with legal
requirements, and (3) we cannot take any action intended to terminate our
qualification as a REIT without the approval of the holders of two-thirds of our
common shares.
      Investment Policies.We conduct all of our investment activities through the Operating Partnership and
its subsidiaries. Our investment objectives are to provide monthly cash
distributions and achieve long-term capital appreciation through increases in
our value. We may purchase income-producing multifamily apartments or other
types of properties for long-term investment, expand and improve the communities
presently owned or other properties purchased, or sell communities or other
properties, in whole or in part, when circumstances warrant. We may also
participate with third parties in apartment community ownership through joint
ventures or other types of co-ownership. Equity investments may be subject to
existing mortgage financing and other indebtedness or financing or indebtedness
incurred in connection with acquiring or refinancing these investments. Debt
service on such financing or indebtedness will have a priority over common
shares and any distributions thereon.
      While we emphasize equity real estate
investments in multifamily apartment communities, we may, at the discretion of
the board of trustees, invest in other types of equity real estate investments
and mortgages, including participating or convertible mortgages and other real
estate interests. We currently intend to invest in apartment communities in
specifically identified markets. However, future development or investment
activities will not be limited to any geographic area or product type or to a
specified percentage of our assets. We will not have any limit on the amount or
percent of our assets invested in one property. Subject to certain customary
covenants associated with our unsecured debt financing and the percentage of
ownership limitations and gross income and asset tests necessary for REIT
qualification, we may also invest in securities of other REITs, other entities
engaged in real estate activities or which provide services to the real estate
industry, or securities of other issuers, including for the purpose of
exercising control over such entities. We may enter into joint ventures or
partnerships for the purpose of obtaining an equity interest in a particular
property in accordance with our investment policies. These investments may
permit us to own interests in larger assets without unduly restricting
diversification and, therefore, add flexibility in structuring our portfolio. We
will not enter into a joint venture or partnership to make an investment that
would not otherwise meet our investment policies. Investment in these securities
is also subject to our policy not to be treated as an investment company under
the Investment Company Act of 1940.

Financing Policies. Our debt
to total market capitalization ratio, defined as our total consolidated debt as
a percentage of the December 31, 2002 market value of our outstanding
common shares and Units plus total consolidated debt and preferred shares and
Units at liquidation value, was 53.0% at December 31, 2002.
Excluding construction-related indebtedness, this ratio was 49.4% at
December 31, 2002. This ratio will fluctuate with changes in the market price of
our common shares and the number of outstanding common shares and Units or other forms of
shares or Units of beneficial interest, and differs from the debt-to-book capitalization
ratio, which is based upon book values. This percentage will increase as we use
financing to continue construction of our development communities and acquire
additional multifamily apartment communities. As the debt-to-book capitalization
ratio may not reflect the current income potential of a company's assets and
operations, we believe that, in most circumstances, the debt to fair market
value ratio may provide an alternate indication of leverage for a
company whose assets are primarily income-producing real estate and should be
evaluated along with the debt service coverage and underlying components of indebtedness.
Estimates of the fair market value of our assets are not always readily
available through public channels due to the inherent complexity associated
with valuing each of our assets. During time periods when the public
valuation of equity securities is in-line with the private valuation of real
estate assets, the debt to total market capitalization ratio may provide an
alternative indication of leverage for a company whose assets are primarily
income-producing real estate and could be evaluated along with the debt service
coverage and underlying components of indebtedness.
      We currently have a policy of incurring
debt only if the ratio of debt to total market capitalization (assuming total
market capitalization and fair market value of our assets are in-line) would be 60% or
less. Our declaration of trust and bylaws do not, however, limit the amount or
percentage of indebtedness that we may incur. In addition, we may from time to
time modify our debt policy in light of current economic conditions, relative
costs of debt and equity capital, market values of our communities, general
conditions in the market for debt and equity securities, fluctuations in the
market price of common shares, growth opportunities and other factors.
Accordingly, we may increase our debt to total market capitalization ratio
beyond the limits described above. To the extent that the board of trustees
decides to obtain additional capital, we may raise capital through asset
dispositions, additional equity offerings, debt financings or retention of cash
flow as allowable under the Code in order to maintain REIT tax
status, or a combination of these methods. We presently anticipate that any
additional borrowings would be made through the Operating Partnership, although
we might incur indebtedness, the proceeds of which would be loaned to the
Operating Partnership. Borrowings may be unsecured or may be secured by any or
all of our assets, the Operating Partnership or any existing or new property
owning partnership, and may have full or limited recourse to all or any portion
of our assets, the Operating Partnership or any existing or new property owning
partnership. Indebtedness incurred by us may be in the form of bank borrowings,
tax-exempt bonds, purchase money obligations to sellers of apartment communities
or other properties, publicly or privately placed debt instruments or financing
from institutional investors or other lenders. The proceeds from any of our
borrowings may be used for working capital to refinance existing indebtedness
and to finance acquisitions, expansions or development of new communities and
other properties, and for the payment of distributions. We have not established
any limit on the number or amount of mortgages that may be placed on any single
property or on our portfolio as a whole.
     We currently have a senior
unsecured debt rating of BBB from Standard and Poor's and Baa2 from Moody's
Investors Service.  The Trust's Series C Preferred Shares currently have a rating of BBB-
from Standard and Poor's and baa3 from Moody's Investors Service.  We intend to adhere to financing policies that will allow us to maintain these
investment grade credit ratings.

Conflict of Interest Policies.As part of their employment agreements, each of Chris Wheeler
(Chairman, President and Chief Executive Officer), Marvin Banks (Senior Vice
President and Chief Financial Officer), David Fitch (Senior Vice President and
Chief Investment Officer) and Mike Hefley (Senior Vice President and Chief Operating
Officer) is bound by a non-competition covenant. These
non-competition covenants provide that, during the term of employment and for a
period of one year following termination of employment, under certain
circumstances, each individual is prohibited from directly or indirectly
competing with us with respect to any multifamily apartment community management, development, construction, acquisition or
disposition activities undertaken or being considered by us. These employment
agreements also contain certain non-solicitation covenants wherein each
individual subject to the agreement is prohibited, during the term of employment
and for a period of one year following employment, from directly or indirectly
(1) soliciting or inducing any of our present or future employees to accept
employment with such individual or any person or entity associated with such
individual, (2) employing, or causing any person or entity associated with
such individual to employ, any of our present or future employees without
providing us prior written notice of such proposed employment, or (3) either for himself or for any other person or entity, competing for or
soliciting the third party owners with whom we have an existing property
management agreement. The employment agreements for Mr. Wheeler, Mr. Banks and Mr. Hefley terminate on January 1,
2004, and the employment agreement for Mr. Fitch terminates in February 2004. These agreements are automatically extended for additional one-year periods unless
notice is given by us or the employee three months prior to the agreement's
expiration that the agreement will not be renewed.

In addition, members of
our board of trustees as well as officers
("Senior Management") are bound by a conflict of interest policy which narrowly
focuses on business activities of Senior Management which may compete directly
with our business in the multifamily sector. Under this policy, Senior
Management must refrain from engaging in activities such as serving as a
director, trustee, officer, employee, partner, consultant, agent, investor,
lender, or a significant financial stakeholder in an enterprise that engages, or
proposes to engage in the acquisition, development, management, ownership,
operation or disposition of multifamily apartment communities in any
market in which we are currently present or contemplating entering.

Senior Management may engage in certain
permissible competitive activities, although potentially competitive with us.
These activities which are similar to the activities described in the preceding
paragraph, include any proposed activity that is fully disclosed to and approved
by the chairman of the board, any proposed activity which involves either fewer
than 30 residential units or a total value of less than $3.0 million, and
relates to a property that is not located within a five mile radius of our
existing or proposed properties, and any activity by a trustee, if such activity
is an incidental or non-recurring part of the regular duties and
responsibilities associated with his or her employment.

We have adopted a policy that, without
the approval of a majority of our board of trustees who are neither officers nor
affiliated with us, we will not (1) acquire from or sell to any trustee, officer
or employee or any entity in which a trustee, officer or employee of our company
beneficially owns more than a 1% interest, or acquire from or sell to any
affiliate of any of the foregoing, any of our assets or other property,
(2) make any loan to or borrow from any of the foregoing persons, or
(3) engage in any other transaction with any of the foregoing persons.Other Information     The Trust's annual reports on Form 10-K, the
Trust's quarterly reports on Form 10-Q, the Trust's current reports on Form 8-K,
including exhibits, and amendments to those reports filed or furnished pursuant
to the Securities Exchange Act of 1934, are available free of charge in the
"SEC Filings" section of our website located at www.Gables.com
as soon as reasonably practicable after the reports are filed with or furnished
to the Securities and Exchange Commission; and therefore, we do not make the
Operating Partnership's reports available here.  You can obtain the
Operating Partnership's reports by accessing the EDGAR database at the
Securities and Exchange Commission's website at www.sec.gov,
or we will furnish an electronic
or paper copy of these reports free of charge upon
request.  Please direct such requests as follows:

Director of Investor Relations
Gables Residential Trust
2859 Paces Ferry Road
Suite 1450
Atlanta,  Georgia   30339

Risk Factors

Before you invest in our securities,
you should be aware that there are various risks, including those described
below. You should consider carefully these risk factors together with all of the
information included or incorporated by reference in this document before you
decide to purchase our securities. This section includes certain forward-looking
statements.    Development and construction risks could impact our profitability.We intend to continue to develop and construct multifamily
  apartment communities. Our development activities may be exposed to the following risks:
We may be unable to obtain, or face
      delays in obtaining, necessary zoning, land-use, building, occupancy, and
      other required governmental permits and authorizations, which could result
      in increased costs and could require us to abandon our activities entirely
      with respect to the project for which we are unable to obtain permits or
      authorizations;
  We may abandon development
      opportunities that we have already begun to explore and as a result we may
      fail to recover expenses already incurred in connection with exploring
      such development opportunities;
    We may incur construction costs for
      a community which exceed our original estimates due to increased
      materials, labor or other costs, which could make completion of the
      community uneconomical and we may not be able to increase rents to
      compensate for the increase in construction costs;

Occupancy rates and rents at a
      newly completed development community may fluctuate depending on a number of
      factors, including market and economic conditions, and may result in the
      community not being profitable;

We may not be able to obtain financing with favorable terms
    for the development of a community, which may make us unable to proceed with
    its development; and

We may be unable to complete
      construction and lease-up of a community on schedule, resulting in
      increased debt service expense and construction
costs.

Acquisitions may not yield anticipated
results.We intend to continue to acquire multifamily apartment
communities on a select basis. Our acquisition activities and their success may
be exposed to the following risks:

- The acquired community
      may fail to perform as we expected in analyzing our investment;
    and
- Our estimate of the costs of any necessary repositioning or
      redeveloping the acquired community may prove inaccurate.

Policy of limiting debt level may be
changed.While our current policy is not to incur debt that would make
our ratio of debt to total market capitalization greater than 60% (assuming total
  market capitalization and fair market value of our assets are in-line), our
  declaration of trust and bylaws do not contain any such limitations. Our ratio
of debt to total market capitalization as of December 31, 2002 was 53%.
Because we do not have any debt incurrence restrictions in our declaration of
trust or bylaws, we could increase the amount of outstanding debt at any time.
In the event that the price of our common shares increases, we could incur
additional debt without increasing the ratio of debt to total market
capitalization and without a concurrent increase in our ability to service such
additional debt.Incurrence of additional debt and
related issuance of equity may be dilutive to shareholders.Future issuance
of equity may dilute the interest of existing shareholders. To the extent that
additional equity securities are issued to finance future developments and
acquisitions instead of incurring additional debt, the interests of our existing
shareholders could be diluted. Our ability to execute our business strategy
depends on our access to an appropriate blend of debt financing, including
unsecured lines of credit and other forms of secured and unsecured debt, and
equity financing, including common and preferred equity.Insufficient cash flow could affect
our debt financing and create refinancing risk.We are subject to the risks
normally associated with debt financing, including the risk that our cash flow
will be insufficient to meet required payments of principal and interest. We
anticipate that only a small portion of the principal of our debt will be repaid
prior to maturity. Although we may be able to use cash flow to make future
principal payments, we cannot assure you that sufficient cash flow will be
available to make all required principal payments. Therefore, we are likely to
need to refinance at least a portion of our outstanding debt as it matures.
There is a risk that we may not be able to refinance existing debt or that the
terms of any refinancing will not be as favorable as the terms of the existing
debt.Rising interest rates would increase
interest costs and could affect the market price of our securities.We
expect to incur variable-rate debt under credit facilities and other interim
financing vehicles in connection with
the acquisition, construction and renovation of multifamily apartment
communities in the future, as well as for other purposes. In addition, we have tax-exempt bonds, as described more fully below, that
  bear interest at a variable rate.  Accordingly, if
interest rates increase, so will our interest costs to the extent the variable
rate increase is not hedged effectively. In addition, an increase in market
interest rates may lead purchasers of our securities to demand a higher annual
yield, which could adversely affect the market price of our outstanding
securities.Interest rate hedging contracts may
involve material changes and may not provide adequate protection.From time
to time, when we anticipate offerings of debt securities, we may seek to decrease
our exposure to fluctuations in interest rates during the period prior to the
pricing of the securities by entering into interest rate hedging contracts. We
may do so to increase the predictability of our financing costs. Also, from time
to time, we rely on interest rate hedging contracts to offset our exposure to
moving interest rates with respect to debt financing arrangements at variable
interest rates. The settlement of interest rate hedging contracts has in the
past and may in the future involve charges to earnings that may be material in
amount. Such charges are typically driven by the extent and timing of
fluctuations in interest rates. Despite our efforts to minimize our exposure to
interest rate fluctuations, there is no guarantee that we will be able to
maintain our hedging contracts at their existing levels of coverage or that the
amount of coverage maintained will cover all of our outstanding indebtedness at
any such time. If our efforts are unsuccessful, we may not meet our objective of
reducing the extent of our exposure to interest rate fluctuations.Bond compliance requirements could
limit income and restrict use of communities and cause favorable financing to
become unavailable.Some of our multifamily apartment communities are
financed with obligations issued by various local government agencies or
instrumentalities, the interest on which is exempt from federal income taxation.
These obligations are commonly referred to as "tax-exempt bonds." The bond
compliance requirements for our current tax-exempt bonds, and the requirements
of any future tax-exempt bond financing, may have the effect of limiting our
income from communities subject to such financing. Under the terms of our
tax-exempt bonds, we must comply with various restrictions on the use of the
communities financed by such bonds, including a requirement that a percentage of
apartments be made available to low and middle income households. In addition,
some of our tax-exempt bond financing documents require that a financial
institution guarantee payment of the principal of, and interest on, the bonds.
The guarantee may take the form of a letter of credit, surety bond, guarantee
agreement or other additional collateral. If the financial institution defaults
in its guarantee obligations, or we are unable to renew the applicable guarantee
or otherwise post satisfactory collateral, a default will occur under the
applicable tax-exempt bonds and the community could be foreclosed upon.Failure to generate sufficient revenue
could limit cash flow available for distributions to shareholders.If our
communities do not generate revenues sufficient to meet our operating expenses,
including debt service and capital expenditures, our cash flow and ability to
pay distributions to our shareholders will be adversely affected. The following
factors, among others, may adversely affect the revenues generated by our
apartment communities:the national
      and local economic climates;
    local real
      estate market conditions, such as oversupply of apartment homes;
    the
      perceptions by prospective residents of the safety, convenience and
      attractiveness of our communities and the neighborhoods where they are
      located;
    our ability
      to provide adequate management, maintenance and insurance; and
    increased
      operating costs including real estate taxes and insurance.Significant expenditures associated with
each investment such as debt service payments, if any, real estate taxes,
insurance and maintenance costs are generally not reduced when circumstances
cause a reduction in income from a community. For example, if we mortgage a
community to secure payment of debt and are unable to meet the mortgage
payments, we could sustain a loss as a result of foreclosure on the community or
the exercise of other remedies by the mortgagee.Unfavorable changes in market and
economic conditions could hurt occupancy or rental rates.The market and
economic conditions in metropolitan areas of our current markets in the United
States may significantly affect apartment home occupancy or rental rates.
Occupancy and rental rates in those markets, in turn, may significantly affect
our profitability and our ability to satisfy our financial obligations. The
risks that may affect conditions in those markets include the following:the economic climate which may be
      adversely impacted by plant closings, industry slowdowns and other
      factors;
    real estate conditions such as an
      oversupply of, or a reduced demand for, apartment homes;
    decline in household formation
      that adversely affects occupancy or rental rates;
    the inability or unwillingness of
      residents to pay rent increases;
    the potential effect of rent
      control or rent stabilization laws, or other laws regulating housing, on
      any of our communities, which could prevent us from raising rents to
      offset increases in operating costs; and
    the rental market which may limit
      the extent to which rents may be increased to meet increased expenses
      without decreasing occupancy rates.Any of these risks could adversely affect
our ability to achieve our desired yields on our communities and to make
expected distributions to shareholders. Difficulty of selling apartment
communities could limit flexibility.Real estate in metropolitan areas of
the United States can be hard to sell, especially if market conditions are poor.
This may limit our ability to change our portfolio promptly in response to
changes in economic or other conditions. In addition, federal tax laws limit our
ability to sell communities that we have owned for fewer than four years, and
this may affect our ability to sell communities without adversely affecting
returns to our shareholders.Increased competition
and low mortgage interest rates could limit our
ability to lease apartment homes or increase or maintain rents.Our
apartment communities in metropolitan areas compete with numerous housing
alternatives in attracting residents, including other rental apartments and
single-family homes that are available for rent, as well as new and existing
single-family homes for sale. Competitive residential housing in a particular
area or housing alternatives that are made competitive by a low mortgage
interest rate environment could adversely affect our ability to lease apartment homes and to increase
or maintain rents.
       Significant new operations and
acquired communities under management require integration with the existing
business and, if not properly integrated, could create inefficiencies.Our
ability to manage growth effectively will require us, among other things, to
successfully apply our experience in managing our existing portfolio of
multifamily apartment communities to a larger number of assets. In addition,
we must be able to successfully manage the integration of new management and
operations personnel as our organization grows in size and complexity.
      Failure to succeed in new markets may
limit growth.We may make selected acquisitions outside of our current
market areas from time to time, if appropriate opportunities arise. Our
historical experience in our current markets located in the United States does
not ensure that we will be able to operate successfully in other market areas
new to us. We may be exposed to a variety of risks if we choose to enter into
new markets. These risks include, among others:a lack of market knowledge and understanding of
      the local economies;
    an inability to obtain land for development or
      to identify acquisition opportunities;
    an inability to obtain construction
      tradespeople; and
    an unfamiliarity with local governmental and
      permitting procedures.Decrease of fee management business
would result in decrease in revenues.We manage multifamily apartment
communities owned by third
parties for a fee. Most of our management contracts are terminable upon 30-days
notice. There is a risk that the management contracts will be terminated and/or
that the rental revenues upon which management fees are based will decline and
management fee income will decrease accordingly.      Share ownership limit may prevent
takeovers beneficial to shareholders.For us to maintain our qualification
as a REIT for federal income tax purposes, not more than 50% in value of our
outstanding shares of beneficial interest may be owned, directly or indirectly,
by five or fewer individuals. As defined for federal income tax purposes, the
term "individuals" includes a number of specified entities. Our declaration of
trust includes restrictions regarding transfers of our shares of beneficial
interest and ownership limits that are intended to assist us in satisfying such
limitations. The ownership limit may have the effect of delaying, deferring or
preventing someone from taking control of us, even though such a change of
control could involve a premium price for our shareholders or otherwise could be
in our shareholders' best interests.
      Limits on changes in control may
discourage takeover attempts beneficial to shareholders.The Trust's declaration of
trust, our bylaws and Maryland law may have the effect of discouraging a third
party from attempting to acquire us which makes a change in control more
unlikely. The result may be a limitation on the opportunity for shareholders to
receive a premium for their common shares over then-prevailing market prices.
      Compliance or failure to comply with
Americans with Disabilities Act and other similar laws could result in
substantial costs.The ADA generally requires that public accommodations,
including office buildings and hotels be made accessible to disabled persons.
Noncompliance could result in imposition of fines by the federal government or
the award of damages to private litigants. If, pursuant to the ADA, we are
required to make substantial alterations and capital expenditures in one or more
of our properties, including the removal of access barriers, it could adversely
affect our financial condition and results of operations, as well as the amount
of cash available for distribution to our shareholders.
      A number of additional federal, state and
local laws exist that impact our communities with respect to access thereto by
disabled persons. For example, the FHAA requires that apartment communities
first occupied after March 13, 1990 be accessible to the handicapped.
Noncompliance with the FHAA could result in the imposition of fines or an award
of damages to private litigants.
      We cannot predict the ultimate cost of
compliance with the ADA or other similar legislation. The costs could be
substantial.
      Failure to qualify as a REIT would
cause us to be taxed as a corporation which would significantly lower cash
available for distributions to shareholders.If we fail to qualify as a REIT
for federal income tax purposes, we will be taxed as a corporation. We believe
that we are organized and qualified as a REIT and intend to operate in a manner
that will allow us to continue to qualify. However, we cannot assure you that we
are qualified as such, or that we will remain qualified as such in the future.
This is because qualification as a REIT involves the application of highly
technical and complex provisions of the Code as to which there are only limited
judicial and administrative interpretations, and involves the determination of
various factual matters and circumstances not entirely within our control. In
addition, future legislation, new regulations, administrative interpretations or
court decisions may significantly change the tax laws or the application of the
tax laws with respect to qualification as a REIT for federal income tax purposes
or the federal income tax consequences of such qualification.
        If, in any taxable year, we fail to
qualify as a REIT, we will be subject to federal income tax on our taxable
income at regular corporate rates, plus any applicable alternative minimum tax.
In addition, unless we are entitled to relief under applicable statutory
provisions, we would be disqualified from treatment as a REIT for the four
taxable years following the year in which we lose our qualification. The
additional tax liability resulting from the failure to qualify as a REIT would
significantly reduce or eliminate the amount of cash available for distributions
to our shareholders. Furthermore, we would no longer be required to make
distributions to our shareholders.
      Potential liability for environmental contamination
and related matters could result in substantial costs.We are in the business of acquiring, owning, operating and developing real estate
assets. From time to
time we will sell to third parties some of our assets. Under various
federal, state and local environmental laws, we may be required, often
regardless of our knowledge or responsibility but solely because of our current
or previous ownership or operation of real estate, to investigate and remediate
the effects of hazardous or toxic substances or petroleum product releases at
those properties. We may also be held liable to a governmental entity or to
third parties for property damage and for investigation and clean-up costs
incurred by us in connection with any contamination. These costs could be substantial. The presence of such substances or the failure to properly
remediate the contamination may materially and adversely affect our ability to borrow
against, sell or rent the affected asset. In addition, applicable
environmental laws create liens on contaminated sites in favor of the government
for damages and costs it incurs in connection with the contamination.Finally, when excessive moisture
accumulates in buildings or on building materials, mold growth will often occur,
particularly if the moisture problem remains undiscovered or is not
addressed. Some molds are known to produce potent toxins or
irritants. Concern about indoor exposure to mold has been increasing as
exposure to mold can cause a variety of health effects and symptoms in certain
individuals, including severe allergic or other reactions. As a result, the presence of mold at a
community we own could require us to undertake a costly remediation program to
contain or remove the mold from the affected community. Such a remediation
program could necessitate the temporary relocation of some or all of the community's
residents or the complete rehabilitation of the community.Potential liability for losses not covered by insurance could result in
substantial costs.We may incur casualty losses that are not covered
by insurance. We carry insurance coverage on our properties of types and
in amounts that we believe are in line with coverage customarily obtained by
owners of similar properties. We believe all of our properties are
adequately insured. The community insurance that we maintain for our
properties has historically been on an "all risk" basis, including
losses covered by acts of terrorism. However, following the terrorist activity of September 11, 2001, and in light of the resulting
uncertainty in the insurance market, our "all risk" insurance coverage in place
for the current policy year contains specific exclusions for losses attributable
to acts of terrorism. The cost and limited availability of specific third
party insurance coverage for losses from acts of terrorism have made it
commercially unreasonable for us to secure such coverage. Further, there are other types of losses, such as from wars or catastrophic acts
of nature, for which we cannot obtain insurance at all or at a reasonable
cost. In the event of an uninsured loss or a loss in excess of our
insurance limits, we could lose both the revenues generated from the affected community
and the capital we have invested in the affected community; depending on the
specific circumstances of the affected community it is possible that we could be
liable for any mortgage indebtedness or other obligations related to the community. Any such loss could materially and adversely affect our business
and financial condition and results of operations.ITEM 2. 
PROPERTIESAs of December 31,
2002, we owned or
had an interest in 80 stabilized communities consisting of 22,506 apartment
homes, and owned or had an interest in 13 development/lease-up communities
consisting of 3,377 apartment homes. The communities, comprising a total of
25,883 apartment homes, are located in Texas, Georgia, Florida,
Tennessee and Washington, D.C.   The following table shows the locations of the communities and the number of
apartment homes in each metropolitan area:Number of Communities
    
    Number of
      Apartment HomesMetropolitan
        Area
    Stabilized
    Development/Leaseup
    Total
    Stabilized
    Development/Leaseup
    Total
    Percent
       of Total 
      ApartmentHomes
Atlanta, GA (a)
      19
      3
      22
      
      5,568
      587
      6,155
      23.8%Houston, TX (b)
      18
      1
      19
      
      5,416
      312
      5,728
      22.1%South FL
      17
      1
      18
      
      4,729
      311
      5,040
      19.5%Dallas, TX
      8
      2
      10
      
      1,600
      535
      2,135
      8.3%Austin, TX
      7
      1
      8
      
      1,677
      458
      2,135
      8.2%Memphis, TN (c)
      3
      -
      3
      
      1,309
      -
      1,309
      5.1%Orlando, FL
      3
      1
      4
      
      959
      315
      1,274
      4.9%Nashville,  TN (d)
      4
      -
      4
      
      1,166
      -
      1,166
      4.5%Tampa, FL (e)
      -
      4
      4
      
      -
      859
      859
      3.3%Washington, D.C.
      1
      -
      1
      
      82
      -
      82
      0.3%Totals
      80
      13
      93
      
      22,506
      3,377
      25,883
      100.0%

|(a) |  | Includes a stabilized community comprising 435 apartment
      homes and a development/lease-up community comprising 274 apartment homes
      in which we have a 20% interest.                         
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) |  | Includes a stabilized community comprising
      186
      apartment homes in which we have a 20% interest.                                                                                             
|(c) |  | Includes a stabilized community comprising 345 apartment
      homes in which we have a 25% interest and a stabilized community
      comprising 500 apartment homes in which we have an 8.26% interest.
|(d) |  | Includes two stabilized communities comprising 618
      apartment homes in which we have an 8.26%
interest.                                                                                            
|(e) |  | Includes three development/lease-up communities
      comprising 693 apartment homes in which we have a 20% interest.                                                                                   

Stabilized Communities. We
developed 39 communities consisting of 11,128 apartment homes and acquired 41
communities consisting of 11,378 apartment homes. We manage and operate all of
the stabilized communities, which are typically two and three-story garden
apartments, townhomes and higher-density apartments. As of December 31, 2002, the communities had an average scheduled monthly rental rate per apartment
home of $976 or $0.96 per square foot and a physical occupancy rate of
94%. The
average age of the communities is approximately twelve years.
       Most of our communities offer many
attractive features designed to enhance their market appeal, such as vaulted
ceilings, fireplaces, dishwashers, disposals, washer/dryer connections,
ice-makers, patios and decks. Recreational facilities include swimming pools,
fitness facilities, playgrounds, picnic areas and tennis and racquetball courts.
In many communities, we make amenities and services such as aerobic classes,
resident social events, dry cleaning pickup and delivery, and the use of fax,
computer and copy equipment available to residents.  All of our communities
have high-speed internet access.  In-depth market research,
including periodic focus groups with residents and feedback from on-site
management personnel, is used to refine and enhance management services and
community design. Additional information regarding our stabilized communities at
December 31, 2002 follows:

Stabilized
Community Features as of December 31,  2002

Community   (a)
      
      No. of 
        Apt.Homes
      Approx.
        RentableSq. Ft.(b)
      Total Acreage
      Year
        Constructed/Renovated
      Year Acquired
      Average 
        Unit Size(Sq. Ft.)
      Occupancy
        at12/31/02
      Scheduled
        Rentat 12/31/02 Per
        Unit         Sq. Ft.


Atlanta, GA
        Briarcliff
        Gables
        Buckhead Gables
        Gables Cityscape
        Gables Metropolitan I (d)
        Gables Mill
        Gables Montclair
        Gables Northcliff
        Gables
        Rock Springs I
        Gables Vinings (e)
        Gables Walk
        Gables Wood Arbor (e)
        Gables Wood Crossing (e)
        Gables Wood Glen 
        Gables Wood Knoll 
        Lakes at Indian Creek (e), (f)
        Roswell Gables I (e)
        Roswell Gables II (e)
        Spalding Gables (e)
        Wildwood Gables (e), (f)
        Totals/AveragesHouston, 
        TX
        Gables
        Austin Colony (e)
        Gables Bradford Place 
        Gables Bradford Pointe
        Gables Cityscape (e)
        Gables Citywalk/
          Waterford Sq. (e)
        Gables Edgewater
        Gables Lions Head (e)
        Gables Metropolitan Uptown
        Gables Meyer Park I
        Gables Meyer Park II 
        Gables of First Colony
        Gables Piney Point (e)
        Gables Pin Oak Green
        Gables Pin Oak Park
        Gables
        Rivercrest I 
        Gables
        Rivercrest II (e)
        Gables
        Windmill
           Landing (e)
        Gables White Oak (d)
        Totals/AveragesSouth FLCotton Bay (e)
        Gables Boca Place (e)
        Gables Boynton Beach I
        Gables Boynton Beach II
        Gables Kings Colony (e)
        Gables Mizner on the Green
        Gables Palma Vista 
        Gables
        San Michele I
        Gables
        San Michele II 
        Gables San Remo
        Gables Town Colony (e), (f)
        Gables Town Place (e)
        Gables Wellington
        Hampton Lakes (e)
        Hampton Place
        Mahogany Bay (e)
        
        Vinings at Hampton
           Village (e)
        Totals/ Averages
      104
        162
        182
        435
        438
        183
        82
        188
        315
        310
        140
        268
        380
        312
        603
        384
        284
        2525465,568
        237
        372
        360
        252
        317
        292
        277
        318
        345
        296
        324
        246
        581
        474
        140
        140
        2591865,416444
        180
        252
        296
        480
        246
        189
        249
        343
        180
        172
        312
        222
        300
        368
        3281684,729
      128,976
        122,548
        150,610
        487,472
        406,676
        280,701
        127,990
        209,745
        336,735
        367,226
        127,540
        257,012
        377,340
        311,064
        552,384
        417,288
        334,268
        249,333619,7105,864,618
        231,621
        320,322
        276,417
        214,824
        255,823
        257,339
        233,796
        290,141
        297,054
        294,908
        321,848
        227,880
        592,709
        483,740
        118,020
        118,020
        224,689162,5524,921,703436,460
        175,812
        302,148
        357,653
        426,590
        311,176
        273,606
        332,683
        475,506
        329,978
        147,724
        260,192
        297,138
        317,004
        352,528
        330,459202,7525,329,409
      5.2
        3.5
        5.5
        15.0
        36.1
        9.9
        12.7
        28.7
        15.2
        19.7
        9.9
        22.3
        23.8
        19.6
        49.8
        28.3
        28.3
        11.237.9382.6
        11.0
        13.3
        13.5
        6.8
        8.7
        12.2
        10.3
        8.9
        11.0
        7.7
        13.3
        7.5
        14.4
        11.9
        5.1
        5.0
        9.86.1176.537.6
        9.4
        18.0
        15.9
        18.8
        8.9
        12.0
        32.4
        32.4
        11.8
        10.0
        13.0
        12.7
        11.0
        14.1
        25.48.6292.0
      1995
        1994
        1989
        2000
        1988
        2002
        1978
        1945-92
        1997
        1996-97
        1987
        1985-86
        1983
        1984
        1969-72
        1995
        1997
        1995
        1992-93
        1984
        1991
        1990
        1991
        1990/
        1985
        1990
        1983
        1995
        1993
        2002
        1996
        1994
        1990
        1992
        1982
        1983
        1984
            2002
        1986
        1984
        1996
        1997
        1986
        1996
        2000
        1998
        2000
        1995
        1985
        1987
        1998
        1986
        1985
        1986
        1988
      (c)
        (c)
      --
        1994
        1994
        --
        1997
        --
        1997
        1997
        --
        1997
        --
        --
        --
        --
        1993
        --
        --
        --
        1991
        1998
        --
        --
        --
        --/
        1992
        --
        1998
        --
        --
        --
        1997
        --
        1996
        1996
        1987
        1998
        1998
        --
        1998
        1998
        1998
        1998
        1998
        1998
        --
        1998
        --
        1998
        1998
        1998
        1998
        1998
        1998
        1998
        1998
      1,240
        756
        827
        1,121
        928
        1,534
        1,561
        1,018
        1,069
        1,185
        911
        959
        993
        997
        916
        1,087
        1,177
        9891,135
        1,053
        977
        861
        768
        852
        807
        881
        844
        912
        861
        996
        993
        926
        1,020
        1,020
        843
        843
        868874909983
        977
        1,199
        1,208
        889
        1,265
        1,448
        1,336
        1,386
        1,833
        859
        834
        1,338
        1,057
        958
        1,0071,2071,127
      96%
        93%
        95%
        90%
        93%
        93%
        96%
        94%
        93%
        94%
        89%
        91%
        96%
        91%
        90%
        95%
        95%
        94%92%
        93%
        95%
        97%
        95%
        96%
        97%
        94%
        97%
        95%
        91%
        91%
        98%
        97%
        95%
        95%
        94%
        97%
        94%94%95%95%
        91%
        95%
        97%
        97%
        89%
        95%
        93%
        93%
        95%
        72%
        95%
        98%
        95%
        97%
        95%98%
        94%
      $1,165
        869
        937
        1,217
        883
        1,489
        1,263
        995
        1,062
        1,140
        772
        754
        693
        753
        679
        920
        920
        960845
        $ 922$ 993
        772
        682
        984
        967
        926
        779
        1,114
        899
        1,008
        1,021
        944
        1,140
        1,138
        799
        783
        719967$ 946$763
         1,069
        940
        951
        899
        1,631
        1,628
        1,516
        1,491
        1,320
        987
        871
        1,053
        831
        795
        803877$1,045
      $0.94
        1.15
        1.13
        1.09
        0.95
        0.97
        0.81
        0.89
        0.99
        0.96
        0.85
        0.79
        0.70
        0.76
        0.74
        0.85
        0.78
        0.97
           0.74
        $0.88
        $1.02
        0.90
        0.89
        1.15
        1.20
        1.05
        0.92
        1.22
        1.04
        1.01
        1.03
        1.02
        1.12
        1.11
        0.95
        0.93
        0.831.11$1.04$0.78
        1.09
        0.78
        0.79
        1.01
        1.29
        1.12
        1.13
        1.08
        0.72
        1.15
        1.04
        0.79
        0.79
        0.83
        0.800.73$0.93


Stabilized
Community Features as of December 31,  2002

Community (a)
      
      No. of 
        Apt.Homes
      Approx.
        RentableSq. Ft.(b)
      Total Acreage
      Year
        Constructed/Renovated
      Year Acquired
      Average 
        Unit Size(Sq. Ft.)
      Occupancy
        at12/31/02
      Scheduled
        Rentat 12/31/02 Per
        Unit         Sq. Ft.


Austin, TXGables
        at the Terrace
        Gables Barton Creek (e)
        Gables Bluffstone
        Gables Central Park
        Gables Great Hills
        Gables Park Mesa
        Gables Town LakeTotals/AveragesDallas, TX
        Gables at Pearl Street
        Gables CityPlace 
        Gables Green Oaks (g)
        Gables Mirabella
        Gables Spring Park
        Gables State Thomas
            Townshomes
        Gables Turtle Creek
        Gables Valley Ranch (e)Totals/AveragesMemphis, TNArbors
        of Harbortown (h)
        Gables Cordova
        Gables Stonebridge (i)Totals/AveragesNashville, TNBrentwood Gables (i)
        Gables Hendersonville (i)
        Gables Hickory Hollow I (e)
        Gables Hickory Hollow II (e)Totals/AveragesOrlando, FLGables
        Celebration
        Gables Chatham Square (j)
        The Commons at Little Lake
            Bryan (j)Totals/AveragesWashington D.C.Gables Dupont CircleTotals/Averages
      308
        160
        256
        273
        276
        1482561,677108
        232
        300
        126
        188
        177
        1503191,600345
        4645001,309254
        364
        2722761,166231
        4482809598282
      292,292
        185,846
        251,909
        257,043
        228,930
        161,540239,2641,616,824117,688
        244,056
        286,740
        114,902
        198,178
        264,728
        150,930325,5341,702,756341,258
        434,461439,6461,215,365287,594
        342,982
        247,322259,7041,137,602267,417
        503,263289,4361,060,11679,89579,895
      18.6
        11.6
        32.7
        6.9
        23.7
        24.312.0129.83.6
        7.1
        12.8
        1.4
        12.3
        7.1
        
        3.114.862.215.0
        32.234.081.214.5
        21.0
        19.018.072.58.8
        29.616.554.90.50.5
      1998
        1998
        1998
        1997
        1993
        1992
        1996
        1995
        1995
        1996
        1996
        1996
        20021995
        1994
        1991
        1986
        1993-96
        1996
        1991
        1988
        1987
        1999
        2001
        1998
        1998
      1998
        2000
        --
        --
        --
        1997
        --
        --
        1997
        --
        1997
        --
        --
        1996
        --
        --
        --
        1996
        --
        --
        --
        ----
        --
        --
        2001
      949
        1,162
        984
        942
        829
        1,0919359641,090
        1,052
        956
        912
        1,054
        1,496
        1,0061,0201,064989
        9368799281,132
        942
        9099419761,158
        1,1231,0341,105974974
      96%
        93%
        91%
        93%
        95%
        93%94%94%94%
        96%
        90%
        93%
        95%
        93%
        99%93%94%95%
        94%85%91%85%
        88%
        88%89%88%90%
        100%100%98%100%100%
      $1,083
        1,374
        1,012
        1,363
        839
        1,1711,328$1,151$1,344
        1,381
        827
        1,214
        950
        1,811
        1,176929$1,149$879
        691694$742$911
        688
        655649$719$1,116
        ----$1,116$2,665
        $2,665
      $1.14
        1.18
        1.03
        1.45
        1.01
        1.071.42$1.19$1.23
        1.31
        0.86
        1.33
        0.90
        1.21
        1.170.91$1.08$0.89
        0.740.79$0.80$0.80
        0.73
        0.730.69$0.74$0.96
        ----$0.96$2.74$2.74Grand Totals/Averages
      22,506
      22,928,288
      1,252.2
      
      
      983
      94%
      $976
      $0.96


|(a)
      (b)
      (c)
      (d)
      (e)
      (f)
      (g)
      (h)
      (i)
      (j) |  | Except as noted in notes
      (d), (h), and (i), we hold fee
      simple title to each of the communities. Except as noted in notes (d),
      (e), (h) and (i), the communities are unencumbered.
      In the Atlanta and Tennessee markets, rentable area is
      measured including any patio or balcony. In the Texas markets, rentable
      area is measured using only the heated area. In the Florida markets,
      rentable area is measured using only the air conditioned area.
      Year renovated; these communities were originally
      constructed as follows: Buckhead Gables: 1964 and Wildwood Gables:
  1972. 
      We hold an indirect 20% interest in these communities.
      These communities secure indebtedness totaling $32.7 million at
      December 31, 2002.
      The denoted communities secure
      indebtedness totaling $329.1 million as of December 31, 2002.
      These communities are in renovation;
      therefore, occupancy is based on units available for lease.
      This community was sold in February 2003.
      We hold an indirect 25% interest in this
      community. This community secures indebtedness of $16.4 million at
      December 31, 2002.
      We hold an indirect 8.26% interest in these communities.
      These communities secure indebtedness totaling $52.1 million at
      December 31, 2002.
      These communities
      are leased to a single user group pursuant
      to a triple net master lease. Accordingly, scheduled rent data is not
      reflected.
|--------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Development and Lease-up Communities.The development communities have been designed to
generally resemble the stabilized communities we developed previously and to
offer similar amenities. The development communities and recently completed
communities reflect our continuing research of consumer preferences for upscale
multifamily rental housing and incorporate and emphasize garage parking,
increased privacy, high quality interiors, high speed internet access, and
private telephone and television systems. Additional information regarding our
development and lease-up communities at December 31, 2002 follows:

Percent at
      December
      31, 2002
  

Actual or Estimated Quarter ofMarket
  Community
    No. of
      Apt.Homes
    Total
      BudgetedCost
  
  Cost to Complete
  Complete
  Leased
  Occupied
  
  Constr-
    uctionStart
    InitialOccu-pancy.
  Constr-
    uctionEnd
  Stab-
    ilizedOccupancy(millions)
    (millions)
    
    
    
    
    
    
    (a)


Wholly-Owned
        Development/Lease-up Communities:Atlanta, GA
  Gables
  Rock  
         Springs II (b)
    
  233
  $ 25
  $ 18
  35%
  --
  --
  2 Q
    2002
  3 Q
    2003
  3 Q
    2004
  4 Q
    2004Austin, TX
    Gables Grandview (c)
    458
    55
    41
    --
    --
    --
  1 Q
    2003
  1 Q
    2004
  4 Q
    2004
  2 Q
    2005Dallas, TX
    Gables Ellis
      Street
    245
    46
    6
    87%
    34%
    26%
    3 Q
      2001
    3 Q
      2002
    3 Q
      2003
    1 Q
      2004Dallas, TX
    Gables State
      Thomas
          Ravello
    290
    48
    8
    86%
    --
    --
    4 Q
      2001
    1 Q
      2003
    3 Q
      2003
    3 Q
      2004Houston, TX
  Gables
  
    Augusta (c)
  312
  33
  26
  --
  --
  --
  1 Q
    2003
  1 Q
    2004
  4 Q
    2004
  2 Q
    2005South FL
    Gables Jupiter
    311
    38
    31
    --
    --
    --
  1 Q
    2003
  1 Q
    2004
  4 Q
    2004
  2 Q
    2005Tampa, FL
    Gables Beach Park
    166
    22
    17
    --
    --
    --
  1 Q
    2003
  4 Q
    2003
  2 Q
    2004
  3 Q
    2004Subtotals
    2,015
    $267
    $147Co-Investment Development/Lease-up Communities
  (d):
  Tampa,
      FL
  Gables
      West Park
  Village II
    297
    $ 27
  $ 13
  48%
  --
  --
  2 Q
    2002
  1 Q
    2003
  4 Q
    2003
  2
    Q 2004Tampa,
      FL
  Gables
      West Park
  Village III
    76
    10
  9
  --
  --
  --
  3 Q
    2003
  2 Q
    2004
  4 Q
    2004
  1
    Q 2005Subtotals
    373
    $37
    $ 22
    (e)Wholly-Owned
      Completed Communities in Lease-up:Atlanta, GA
    Gables Paces
    80
    $ 23
    
    100%
    74%
    69%
    3 Q
      2000
    1 Q
      2002
    2 Q
      2002
    2 Q
      2003Orlando, FL
    Gables North
      Village
    
    315
    44
  
  100%
  85%
  81%
  4 Q
    1999
  4 Q 2000
  2 Q
    2002
  2 Q
    2003Subtotals
    395
    $67Co-Investment
      Completed Communities in Lease-up (d):Atlanta
    Gables
      Metropolitan II
    274
    $ 32
  
  
  100%
  69%
  63%
  1 Q 2001
  2
    Q 2002
  4 Q
    2002
  3 Q 2003Tampa,
      FL
    Gables
      West Park
      Village I (f)
    320
    35
    
    100%
    92%
    88%
    4 Q 2000
    3 Q
      2001
    
    2 Q 2002
    1 Q
      2003Subtotals
    594
    $67Grand total
    3,377


(a) Stabilized occupancy is defined as the earlier to occur of
(i) 93% occupancy or (ii) one year after completion of construction.
(b) This community represents the reconstruction of 100 apartment homes
previously owned and operated by us into 233 apartment homes.
(c) These communities secure indebtedness totaling $4.4 million as of December
31, 2002.
(d) These communities are owned by the GRAP JV Two, in which we hold an indirect
20% interest. These communities secure indebtedness of $45.4 million
      as of December 31, 2002.
(e)  Construction loan proceeds are expected to fund $13 million of these costs
to complete at December 31, 2002. The remaining costs will be funded
by 
      capital contributions to the venture from our venture
partner and us in a funding ratio of 80% and 20%, respectively.
(f)  This development community includes 40,000 square feet of commercial space which was
100% leased at December 31, 2002.Acquisition
Right.In February 2003, we acquired an apartment community located
in Austin comprising 239 apartment homes and 7,366 square feet of retail space.    Undeveloped Sites.As of
December 31, 2002, we owned one undeveloped site in South Florida on which
we intend to develop a multifamily community in the future consisting of an
estimated 450 apartment homes.  In addition, we owned an adjacent site in
South Florida which we intend to develop in the future for sale to a
single-family home builder once the related land development is complete. We also owned additional sites at December 31, 2002; however, we do not currently intend to develop apartment communities on
these sites in the foreseeable future.  Instead, we intend to sell these
land parcels on an as-is basis. There can be no assurance of when or if
our undeveloped sites will be developed or sold.Development Rights.As of
December 31, 2002, we had three development rights.Development Rights

Metropolitan
  Area
  Estimated
  Number
  of ApartmentHomesGables City View
          Gables Stuart
          Gables Rothbury Square
               Total
        Washington, D.C.
          South Florida
          Washington, D.C.
  

        369
          318203890
There can be no assurance of when
or if our development rights will be exercised.The following is a "Safe Harbor"
Statement under the Private Securities Litigation Reform Act of 1995 and
Section 21E of the Securities Exchange Act of 1934, as amended. The
projections contained in the tables above under the captions "Development and
Lease-up Communities," "Undeveloped Sites" and "Development Rights" are
forward-looking statements. These forward-looking statements involve risks and
uncertainties, and actual results may differ materially from those projected in
the forward-looking statements. Risks associated with our development,
construction and land acquisition activities, which could impact the
forward-looking statements made, include: development and acquisition
opportunities may be abandoned; construction costs of a community may exceed
original estimates, possibly making the community uneconomical; and construction
and lease-up may not be completed on schedule, resulting in increased debt
service and construction costs. Development of the undeveloped sites and
development rights is subject to permits and other governmental approvals as
well as our ongoing business review of the underlying real estate fundamentals
and the impact on our capital structure. There can be no assurance that we will
decide or be able to develop or sell the undeveloped sites, complete development of all
or any of the communities subject to the development rights, or complete the
number of apartment homes shown above.ITEM 3. LEGAL PROCEEDINGS     Neither we nor any of our
communities are presently subject to any material litigation or, to our knowledge, is any
litigation threatened against us or any of our communities other than routine
actions for negligence or other claims and administrative proceedings arising in
the ordinary course of business, some of which are expected to be covered by
liability insurance and all of which collectively are not expected to have a
material adverse effect on our business or financial condition.ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      Not applicable.

PART IIITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
There
is no established public trading market for the Operating Partnership's Units.
As of March 14, 2003, there were 92 holders of records of Units.       The following table sets forth the
quarterly distributions per Unit to holders of Units for the periods indicated.Quarter Ended
      DistributionDeclaredMarch 31, 2001
        June 30, 2001
        September 30, 2001
        December 31, 2001
        March 31, 2002
        June 30, 2002
        September 30, 2002
        December 31, 2002
        March 31, 2003
    
    $0.5675
        0.5675
        0.6025
        0.6025
        0.6025
      0.6025
      0.6025
      0.6025
      0.6025
    (a)
      (b)(a) Declared and paid
        monthly at a rate of $0.200833 per Unit for each month
        (b) Declared and paid monthly at a rate of $0.200833 per Unit for each
        of
             January and February and $0.200834 per Unit for
        March
The Operating Partnership currently intends
to make monthly distributions to holders of its Units. Distributions are
declared at the discretion of the board of directors of Gables GP,Inc.the general
partner of the Operating Partnership, and will depend on our financial liquidity
from cash provided by recurring real estate activities that include both
operating activities and asset disposition activities, our financial condition,
capital requirements, annual distribution requirements under the REIT provisions
of the Code, and other factors the board of directors may deem relevant. The
board of directors may modify the Operating Partnership's distribution policy
from time to time.Certain of our debt agreements contain customary
representations, covenants and events of default, including covenants which
restrict the ability of the Operating Partnership to make distributions in
excess of stated amounts, which in turn restricts the Trust's discretion to
declare and pay dividends. In general, during any fiscal year, the Operating
Partnership may only distribute up to 100% of its consolidated income available
for distribution (as defined in the related agreement). The applicable debt
agreements contain exceptions to these limitations to allow the Operating
Partnership to make any distributions necessary to (1) allow the Trust to
maintain its status as a REIT or (2) distribute 100% of the Trust's taxable
income. We do not anticipate that this provision will adversely affect the
ability of the Operating Partnership to make distributions or the Trust's
ability to declare dividends under our current dividend policy.Each time the Trust issues shares of
beneficial interest, it contributes the proceeds of such issuance to the
Operating Partnership in return for a like number of Units with rights and
preferences analogous to the shares issued. During the period commencing on
October 1, 2002 and ending on December 31, 2002, in connection with issuances of
common shares by the Trust during that time period, the Operating Partnership
issued an aggregate 2,940 Units to the Trust. Such Units were issued in reliance
on an exemption from registration under Section 4(2) of the Securities Act and
the rules and regulations promulgated thereunder.
On September 27, 2002,
the Trust sold 1,600,000 shares of 7.875% Series C Cumulative Redeemable
Preferred Shares (for an aggregate amount of approximately $40,000,000) to an
institutional investor in reliance on an exemption from registration under
Section 4(2) of the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.ITEM 6. SELECTED FINANCIAL AND OPERATING INFORMATION
       The following table sets forth selected
financial and operating information. The following information should be read in
conjunction with our consolidated financial statements and notes thereto and
Management's Discussion and Analysis of Financial Condition and Results of
Operations included elsewhere in this report.GABLES REALTY LIMITED PARTNERSHIP 
        SELECTED FINANCIAL AND OPERATING INFORMATION(Amounts in Thousands, Except Property and Per Unit Data)2002
      
      2001
      
      2000
      
      1999
      
      1998Operating
        Information:
        Rental revenues
        Other property revenues
             Total property revenues
        Other revenues
             Total revenues
        Property operating and maintenance
           (exclusive of items shown separately below)
        Depreciation and amortization
        Property management (owned and third party)
        Ancillary services 
        Interest expense and credit enhancement fees
        Amortization of deferred financing costs
        General and administrative
        Unusual items (a)
             Total expenses
        Income from continuing operations before equity in income
             of joint ventures and gain on sale
        Equity in income of joint ventures
        Gain on sale of previously depreciated operating real estate assets
        Gain (loss) on sale of land and development rights
        Income from continuing operations
        Income from discontinued operations
        Income before extraordinary loss
        Extraordinary loss from early extinguishment of debt
        Net income
        Distributions to preferred unitholders
        Net income available to common unitholders
        Weighted average common Units outstanding - basic
        Weighted average common Units outstanding - dilutedPer Common Unit Information:Income from continuing operations (net of preferred distributions) -
        basic
        Income from discontinued operations - basic
        Income before extraordinary loss (net of preferred distributions) -
        basic
        Net income available to common unitholders - basic
        Income from continuing operations (net of preferred distributions) -
        diluted
        Income from discontinued operations - diluted
        Income before extraordinary loss (net of preferred distributions) 
        - diluted
        Net income available to common unitholders - diluted
        Distributions declared and paid Other Information:
        Cash flows provided by operating activities
        Cash flows (used in) provided by investing activities
        Cash flows (used in) provided by financing activities
        Funds from operations (b)
        Average monthly revenue per apartment home (c)
        Average physical occupancy for stabilized communities
        Gross operating margin (d)
        Completed communities at year-end
        Apartment homes in completed communities at year-end
        Total return to Gables Residential Trust shareholders (e)
        NAREIT Equity Residential REIT Total Return Index (f)Balance Sheet Information:
        Real estate assets, before accumulated depreciation
        Total assets
        Notes payable
        Partners' capital and partners' capital interestFunds From Operations Reconciliation:
        Net income available to common unitholders
        Real estate asset depreciation and amortization (g), (h)
        Extraordinary loss
        Gain on sale of previously depreciated operating real estate assets (g),
        (h)
        Funds from operations$210,513
          11,906
        222,41916,704
          239,123
        79,512
        48,815
        12,897
        5,236
        43,984
         1,336
        7,377
         -199,15739,966
        2,900
         17,9062,10062,87210,693 73,565(1,68771,878(11,131$60,74730,571
        30,684
        $1.69
        0.35
        2.04
        1.99
        1.69
        0.35
        2.03
        1.98
        2.41
        $104,960
        (  17,361
        (  85,549
        81,488
        910
        93.5%
        64.3%
        84
        23,495
        (  8.3%
        (  6.1%
        $1,794,407
        1,583,934
        958,574
        562,859
        $60,747
        49,400
        1,687
         ( 30,346$81,488
      )
        )
        )
        )
        )
        )
        )
      $216,24012,173228,41316,066
          244,47975,285
        47,060
        11,137
          5,806
        43,966
        1,038
        7,209
           8,847
         200,34844,131
        242
        34,1103,22081,7031,70383,406
              -83,406(14,083$69,323
        30,153
        30,314
        $2.24
        0.06
        2.30
        2.30
        2.23
        0.06
        2.29
        2.29
        2.34
        $100,551
        (  123,405
        22,833
        84,526
        880
        94.6%
        67.0%
        85
        24,374
        14.5%
        8.6%
        $1,760,803
        1,589,206
        877,231
        654,284
        $69,323
        49,313
        - ( 34,110$84,526
      )
        )
        )
      $211,74811,970223,71816,821
          240,53973,101
        43,190
        10,007
        4,916
        44,788
        895
        7,154
                 -
        184,05156,488
        399
        28,62284586,3541,667
        88,021-88,021(14,083$73,938
        30,365
        30,439
        $2.38
        0.05
        2.43
        2.43
        2.37
        0.05
        2.43
        2.43
        2.20
        $105,885
        18,871
        (  128,467
        90,605
        830
        95.3%
        67.3%
        84
        25,094
        27.1%
        35.5%
        $1,598,170
        1,453,020
        765,927
        638,898
        $73,938
        45,289
         - ( 28,622$90,605
      )
        )
        )
      $216,23311,773228,00619,377
          247,38376,266
        44,811
        8,893
        8,068
        43,544
        919
        5,7962,800
        191,09756,286
        478
        9,116(25265,6281,40467,032-67,032(14,083$52,949
        32,277
        32,796
        $1.60
        0.04
        1.64
        1.64
        1.59
        0.04
        1.64
        1.64
        2.08
        $105,029
        80,928
        (  185,048
        89,775
        810
        94.3%
        66.6%
        81
        23,941
        13.2%
        10.7%
        $1,601,208
        1,471,364
        755,485
        660,261
        $52,949
        45,942
        - 
          ( 9,116$89,775
      )
        )
        )
        )
      $194,9209,713204,63310,459
          215,09268,870
        39,741
        7,977
        2,698
        39,472
        984
        6,2425,637
        171,62143,471
        359
                 --43,8301,60445,434-45,434(10,252$35,182
        30,212
        30,340
        $1.11
        0.05
        1.16
        1.16
        1.11
        0.05
        1.16
        1.16
        2.02
        $90,555
        (  359,263
        272,583
        75,494
        780
        94.1%
        66.3%
        86
        25,288
        (  9.3%
        (  8.8%
        $1,682,122
        1,586,317
        812,788
        718,573
        $35,182
        40,312
        - 
         -$75,494
      )
        )
        )
        )
NOTES TO SELECTED FINANCIAL AND OPERATING INFORMATION(Amounts in Thousands, Except Property and Per Unit
Data)(a) Unusual items of $8,847 in 2001 are comprised
of (1) a $5,006 charge associated with the write-off of building components at
Gables State Thomas Ravello that are being replaced in connection with a
remediation program, (2) $2,200 of severance charges, (3) $920 in reserves
associated with certain technology investments and (4) $721 of abandoned real
estate pursuit costs as a result of September 2001 events which impacted the
U.S. economy. Unusual items of $2,800 in 1999 relate to severance charges.
Unusual items of $5,637 in 1998 relate to loss on treasury locks resulting from
decisions not to pursue an unsecured debt financing at that time.(b) We consider funds from operations
("FFO") to be a useful performance measure of the operating
performance of an equity REIT because, together with net income and cash flows,
FFO provides investors with an additional basis to evaluate the ability of a
REIT to incur and service debt and to fund distributions and capital
expenditures. We believe that in order to facilitate a clear understanding of
our operating results, FFO should be examined in conjunction with net income as
presented in the financial statements and data included elsewhere in this
report.  FFO is determined in accordance with the principles established by
the Board of Governors of the National Association of Real Estate Investment
Trusts ("NAREIT").  FFO, as defined by NAREIT, represents net
income (loss) determined in accordance with generally accepted accounting
principles ("GAAP"), excluding extraordinary items as defined under
GAAP and gains or losses from sales of previously depreciated operating real
estate assets, plus certain non-cash items such as real estate asset
depreciation and amortization, and after adjustments for unconsolidated
partnerships and joint ventures. FFO presented herein is not necessarily
comparable to FFO presented by other real estate companies due to the fact that
not all real estate companies use the same definition. However, our FFO is
comparable to the FFO of real estate companies that use the NAREIT definition.
FFO should not be considered an alternative to net income as an indicator of our
operating performance or an alternative to cash flows as a measure of liquidity.
FFO does not measure whether cash flow is sufficient to fund all of our cash
needs, including principal amortization, capital expenditures and distributions
to unitholders. Additionally, FFO does not represent cash flows from operating,
investing or financing activities as defined by GAAP. Reference is made to
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources" for a discussion of our cash
needs and cash flows.(c)  Average monthly
revenue per apartment home is equal to the average monthly rental revenue
collected during the year presented, divided by the average monthly number of
apartment homes occupied during the year presented.
     (d)  Gross operating margin represents (1) total
property revenues less property operating and maintenance expenses (as reflected
in the table and consolidated statements of operations) as a percentage of (2)
total property revenues.
     (e)  Total return to Gables Residential Trust
shareholders is presented on an annual basis for each year presented. Such
computations assume an investment in the Trust's common shares on the first day
of the year presented and the reinvestment of dividends through the end of the
year presented.
     (f)  The NAREIT Equity Residential REIT Total
Return Index (the "NAREIT Apartment Index") is an industry index of 18
equity residential REITs, including the Trust. Total return is presented on an
annual basis for each year presented. Such computations assume an investment in
the index on the first day of the year presented and the reinvestment of
dividends through the end of the year presented.
     (g) Includes results attributable to both continuing
and discontinued operations. On January 1, 2002, we adopted SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets." The
implementation of SFAS No. 144 requires that the gains and losses from the
disposition of certain real estate assets and the related historical operating
results be reflected as discontinued operations in the consolidated statements
of operations for all periods presented. In the normal course of business, we
recycle invested capital by disposing of existing assets and redeploying the
proceeds in order to enhance total return to shareholders.
     (h) Includes our share of results of real estate
assets owned by unconsolidated joint ventures.MANAGEMENT'S DISCUSSION AND ANALYSIS
(Amounts in Thousands, Except Property and Per Unit Data)ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONSAll references to "we,"
"our" or "us" refer collectively to Gables Realty Limited
Partnership and its subsidiaries.We
are the entity through which Gables Residential Trust (the "Trust"), a
real estate investment trust (a "REIT"), conducts substantially all of
its business and owns, either directly or indirectly through subsidiaries,
substantially all of its assets. We are focused within the multifamily industry
in demand-driven markets throughout the United States that have exhibited high
job growth and resiliency to economic downturns. Our operating performance is
based predominantly on net operating income from our apartment communities. Net
operating income, which represents total property revenues less property
operating and maintenance expenses (as reflected in the consolidated statements
of operations), is affected by the demand and supply dynamics within our
markets. Our performance is also affected by the general availability and cost
of capital and our ability to develop and acquire additional apartment
communities with returns in excess of our long-term weighted average cost of
capital.Business Objective and StrategiesThe Trust's objective is to increase
shareholder value by producing consistent high quality earnings to sustain
dividends and annual total returns that exceed the NAREIT Apartment Index. To
achieve that objective, we employ a number of business strategies. First, our
long-term investment strategy is research-driven, with the objective of creating
a portfolio of high quality assets in strategically selected markets that are
complementary through economic diversity and characterized by high job growth
and resiliency to national economic downturns. We believe such a portfolio will
provide predictable operating cash flow performance that exceeds the national
average on a sustainable basis. Second, we adhere to a strategy of owning and
operating high quality, class AA/A apartment communities under the Gables brand
in Established Premium NeighborhoodsTM , or EPNs. EPNs are generally
characterized as areas with the highest prices for single-family homes on a per
square foot basis. We believe that communities, when located in EPNs and
supplemented with high quality service and amenities, attract the affluent
renter-by-choice who is willing to pay a premium for location preference,
superior service and high quality communities. The resulting portfolio should
maintain high levels of occupancy and rental rates relative to overall market
conditions. This, coupled with more predictable operating expenses and reduced
capital expenditure requirements associated with high quality construction
materials, should lead to operating margins that exceed national averages for
the apartment sector and sustainable growth in operating cash flow. Third, our
aim is to be recognized as the employer of choice within the industry. Our
mission of Taking Care of the Way People Live® involves innovative human
resource practices that we believe will attract and retain the highest caliber
associates. Because of our long-established presence as a fully integrated
apartment management, development, construction, acquisition and disposition
company within our markets, we have the ability to offer multi-faceted career
opportunities among the various disciplines within the industry. Finally, our
capital strategy is to generate a return on invested capital that exceeds our
long-term weighted average cost of capital while maintaining financial
flexibility through a conservative, investment grade credit profile. We
judiciously manage our capital and are able to recycle existing capital through
asset dispositions.
      We believe we are well positioned to continue
achieving our objectives because (1) the markets we have selected for investment
are projected to continue to experience job growth that exceed national
averages, (2) our EPN locations are expected to outperform local market results
and (3) national demand for apartments is expected to increase during the next
ten to fifteen years as the demographic group referred to as the Echo Boomer
generation begins to form new households.
      Portfolio-wide occupancy levels and rental
rates have declined slightly as a result of national economic weakness, coupled
with low mortgage rates which have resulted in an increase in home purchases by
apartment residents. We expect portfolio-wide property operating and maintenance
expenses for 2003 to increase over 2002 at a rate ahead of inflation due
primarily to increases in insurance costs and property taxes. In addition, we
expect total property revenues on a same-store basis in 2003 to be consistent
with, or slightly lower than, 2002 results. We expect that operating
fundamentals for our business will improve as job growth improves in our
markets. The job growth prospects for our markets are partially related to
national economic conditions. It is uncertain whether, and to what extent, the
national economy and related job growth will improve in 2003.
       Our ongoing evaluation of the fair market
value for a specific asset may result in a determination to dispose of the
asset. The net proceeds from any such sale may be used to invest in new assets
expected to have better growth prospects, reduce indebtedness, repurchase
outstanding common shares under our common equity repurchase program, or fund
other liquidity needs. We maintain staffing levels sufficient to meet our
existing development, construction, acquisition and property operating
activities. When market conditions warrant, we adjust staffing levels in an
attempt to mitigate a negative impact on our results of operations.MANAGEMENT'S DISCUSSION AND ANALYSIS
(Amounts in Thousands, Except Property and Per Unit Data)Forward-Looking StatementsThis report contains 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.
Actual results or developments could differ materially from those projected in
such statements as a result of the risk factors set forth in the relevant
paragraphs of "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and elsewhere in this report. The following
discussion and analysis of our financial condition and results of operations
should be read in conjunction with our accompanying consolidated financial
statements and notes thereto.Common and Preferred Equity ActivitySecondary Common Share OfferingsSince the initial public
offering in January 1994, the Trust has issued a total of 14,831 common shares
in eight offerings, generating $347.8 million in net proceeds which were
generally used (1) to reduce outstanding indebtedness under interim financing
vehicles utilized to fund our development and acquisition activities and (2) for
general working capital purposes, including funding of future development and
acquisition activities.Preferred Share OfferingsOn September 27, 2002, the Trust issued 1,600 shares of 7.875% Series C
Cumulative Redeemable Preferred Shares (liquidation preference $25.00 per share)
in a private placement to an institutional investor. The net proceeds from this
issuance of $39.8 million, together with the net proceeds of $39.8 million from
the concurrent issuance of $40 million of senior unsecured notes, were used to
retire approximately $82.5 million of unsecured indebtedness at an interest rate
of 8.3% that was scheduled to mature in December 2002. The Series C Preferred
Shares may be redeemed at the Trust's option at $25.00 per share plus accrued
and unpaid dividends on or after September 30, 2006. The Series C Preferred
Shares are not subject to any sinking fund or convertible into any other
securities of the Trust.
         On June 18, 1998, the Trust
issued 180 shares of 5.0% Series Z Cumulative Redeemable Preferred Shares
(liquidation preference $25.00 per share) in connection with the acquisition of
a parcel of land for future development. The Series Z Preferred Shares, which
are subject to mandatory redemption on June 18, 2018, may be redeemed at any
time for $25.00 per share plus accrued and unpaid dividends. The Series Z
Preferred Shares are not subject to any sinking fund or convertible into any
other securities of the Trust.
         On July 24, 1997, the Trust
issued 4,600 shares of 8.30% Series A Cumulative Redeemable Preferred Shares
(liquidation preference $25.00 per share). The net proceeds from this offering
of $111 million were used to reduce outstanding indebtedness under interim
financing vehicles. The Trust redeemed all outstanding Series A Preferred Shares
for $115 million on August 9, 2002 with the proceeds from our $180 million
senior unsecured note issuance on July 8, 2002.Issuances of Common Operating Partnership
UnitsSince the IPO, we have
issued a total of 4,421 common units of limited partnership interest
("Units") in connection with the 1998 acquisition of the real estate
assets and operations of Trammell Crow Residential South Florida, the
acquisition of other operating apartment communities and the acquisition of a
parcel of land for future development.Issuance of Preferred Operating Partnership
UnitsOn November 12, 1998, we
issued 2,000 of our 8.625% Series B Preferred Units to an institutional
investor. The net proceeds from this issuance of $48.7 million were used to
reduce outstanding indebtedness under interim financing vehicles.  The
Trust has the option to redeem the Series B Preferred Units after November 14,
2003. These Units are exchangeable by the holder into 8.625% Series B Cumulative
Redeemable Preferred Shares of the Trust on a one-for-one basis; however, this
exchange right is generally not exercisable until after November 14, 2008. The
Series B Preferred Units have no stated maturity, sinking fund or mandatory
redemption.Common Equity Repurchase ProgramWe have a common equity repurchase program
pursuant to which the Trust is authorized to purchase up to $200 million of its
outstanding common shares or Units. The Trust has repurchased shares from time
to time in open market and privately negotiated transactions, depending on
market prices and other conditions, using proceeds from sales of selected
assets. Whenever the TrustMANAGEMENT'S DISCUSSION AND ANALYSIS
(Amounts in Thousands, Except Property and Per Unit Data)repurchases common shares from shareholders, we
are required to redeem from the Trust an equivalent number of Units on the same terms
and for the same aggregate price. After redemption, the Units redeemed by us are
no longer deemed outstanding. Units have also been repurchased for cash upon
their presentation for redemption by unitholders. As of December 31, 2002, we
had redeemed 4,806 Units, including 4,506 Units redeemed by the Trust, for a
total of $116.0 million, including $0.2 million in related commissions.Shelf Registration StatementWe have an effective shelf
registration statement on file with the Securities and Exchange Commission that
currently provides $500 million of equity capacity. The debt portion of this
shelf registration statement has been fully utilized as a result of our February
2001 and July 2002 senior unsecured note offerings.Portfolio and Other Financing ActivityCommunity Dispositions Subject to Discontinued Operations Reporting       During 2002, we sold two apartment
communities located in Houston comprising 660 apartment homes. The net proceeds
from these sales were $43.2 million and were used to paydown outstanding
borrowings under our interim financing vehicles and purchase common shares and
Units under the Trust's common equity repurchase program. The aggregate gain
from the sale of these two communities was $9.8 million.
       Historical operating results and gains are
reflected as discontinued operations in our consolidated statements of
operations. See Notes 4 and 5 to the accompanying consolidated financial
statements for further discussion.Community and Land Dispositions Not Subject to Discontinued Operations ReportingDuring 2002, we sold a 13.3 acre parcel
of land in Houston that was adjacent to an apartment community sold, an
apartment community located in Houston comprising 246 apartment homes and an
apartment community located in Atlanta comprising 311 apartment homes. The net
proceeds from these sales were $46.8 million and were used to paydown
outstanding borrowings under our interim financing vehicles and purchase common
shares and Units under the Trust's common equity repurchase program. The gain
from the land sale was $0.8 million and the aggregate gain from the sale of the
two communities was $17.9 million.  In addition, we recognized $1.3 million
of deferred gain during the year ended December 31, 2002 associated with prior
year sale transactions.
       During 2002, the Gables Residential
Apartment Portfolio JV (the "GRAP JV") sold two apartment communities
located in South Florida comprising 610 apartment homes, an apartment community
in Dallas comprising 222 apartment homes and an apartment community located in
Houston comprising 382 apartment homes. Our share of the net sales proceeds
after repayment of construction loan indebtedness of $46.7 million was $10.7
million, resulting in a gain of $2.6 million.During 2001, we sold an apartment
community located in Atlanta comprising 386 apartment homes, an apartment
community located in Houston comprising 776 apartment homes, an apartment
community located in Dallas comprising 536 apartment homes and a 2.5 acre parcel
of land adjacent to one of our development communities located in Atlanta. The
net proceeds from these sales totaled $93.6 million, $9 million of which was
deposited into an escrow account and was used to fund acquisition activities.
The balance of the net proceeds was used to repay a $16 million note assumed in
connection with our September 2001 acquisition of the Gables State Thomas
Ravello community and to paydown outstanding borrowings under interim financing
vehicles. The gain from the land sale was $0.9 million and the aggregate gain
from the sale of previously depreciated operating real estate assets was $34.1
million, all of which was recognized in 2001. In addition, we recognized $0.7
million of deferred gain associated with a parcel of land we sold in 2000 during
the year ended December 31, 2001.
       During 2001, we contributed our interest in
certain land and development rights to the Gables Residential Apartment
Portfolio JV Two (the "GRAP JV Two") in return for (1) cash of $18.5
million and (2) capital account credit of $4.6 million. The $2.8 million of gain
associated with this contribution was recognized when earned using the
percentage of completion method since we serve as the developer and general
contractor for the joint venture. We recognized $1.2 million and $1.6 million of
this gain during the years ended December 31, 2002 and 2001, respectively.
       During 2000, we sold an apartment community
located in Dallas comprising 126 apartment homes, an apartment community located
in Houston comprising 228 apartment homes, two apartment communities located in
San Antonio comprising 544 apartment homes and a parcel of land adjacent to an
existing apartment community located in Atlanta. In addition, on December 28,
2000, we sold substantially all of our interests in three apartment communities
located in Nashville and Memphis, comprising 1,118 apartment homes, to the CMS
Tennessee Multifamily JV. The net proceeds from these sales totaled $142.0
million, $30.2 million of which wasMANAGEMENT'S DISCUSSION AND ANALYSIS
(Amounts in Thousands, Except Property and Per Unit Data)deposited into an escrow account and was used to fund
development and acquisition activities. The balance of the net proceeds was used
to (1) repay an $18.6 million note that encumbered one of the assets sold, (2)
paydown outstanding borrowings under interim financing vehicles and (3) purchase
common shares and Units under the Trust's common equity repurchase program. The
aggregate gain from the sale of previously depreciated operating real estate
assets was $28.6 million, all of which was recognized in 2000. The gain from the
land sale was $1.6 million, of which $0.8 million was recognized in 2000. Gain
of $0.8 million associated with the land sale was deferred at December 31, 2000
and was recognized when earned during 2001 and 2002 using the percentage of
completion method because we served as the general contractor for the
construction of an apartment community on the parcel of land sold.
      Historical operating results and gains are
included in continuing operations in our consolidated statements of operations.
See Notes 4 and 5 to the accompanying consolidated financial statements for
further discussion.Community AcquisitionsOn September 28, 2001, we acquired the
80% membership interest of our venture partner in the GRAP JV in the Gables
State Thomas Ravello apartment community located in Dallas comprising 290
apartment homes. In consideration for the interest in such community, we paid
$12 million in cash and assumed a $16 million secured variable-rate note. This
consideration was based on a valuation of the asset of $31 million and is net of
our $3 million share of the venture distribution. We recorded a $5 million
charge to unusual items in 2001 associated with the write-off of building
components that are being replaced in connection with a remediation program to
address water infiltration issues affecting the asset.On August 28, 2001, we acquired an
apartment community located in Washington, D.C. comprising 82 apartment homes
for approximately $25 million in cash.On August 1, 2001, we acquired the 75%
interest of our venture partner in the Gables Metropolitan Uptown apartment
community located in Houston comprising 318 apartment homes with cash. The asset
was valued at approximately $27 million.
       On March 30, 2001, we acquired the 80%
membership interests of our venture partner in the GRAP JV in the Gables Palma
Vista and Gables San Michelle II apartment communities located in South Florida
comprising 532 apartment homes for $66 million. This cash consideration was
based on a valuation of the assets of $75 million and is net of our $9 million
share of the venture distribution.
      On September 1, 2000, we acquired an
apartment community located in Austin comprising 160 apartment homes. In
consideration for such community, we paid $6 million in cash and assumed a $14
million secured fixed-rate note.
      The cash portion of the consideration for each
denoted acquisition was funded with advances under our interim financing
vehicles.Other AcquisitionIn May 2001, we acquired a property
management company based in Washington, D.C. that managed approximately 3,600
units in 24 multifamily apartment communities located in Washington, D.C. and
the surrounding area (the "D.C. Management Co."). Our total investment
of approximately $1.6 million was structured to be paid in three installments
based on results of the acquired business operations.  As of December 31,
2002, we had funded $1.1 million of the $1.6 million total investment.  The
final installment of $0.5 million is expected to be paid in 2003.Senior Unsecured Note IssuanceOn September 27, 2002, we issued $40
million of senior unsecured notes in two series in a private placement to an
institutional investor: $30 million at an interest rate of 5.86% maturing in
September 2009 and $10 million at an interest rate of 6.10% maturing in
September 2010. The net proceeds of $39.8 million, together with the net
proceeds of $39.8 million from the concurrent issuance by the Trust of the
7.875% Series C Cumulative Redeemable Preferred Shares, were used to retire
approximately $82.5 million of senior unsecured notes at an interest rate of
8.3% that were scheduled to mature in December 2002. We did not incur any
prepayment costs in connection with the early debt retirement.On July 8, 2002, we issued $180 million
of senior unsecured notes which bear interest at a rate of 5.75%, were priced to
yield 5.81% and mature in July 2007. The net proceeds of $178 million were used
to redeem all outstanding shares of the 8.3% Series A Cumulative Redeemable
Preferred Shares totaling $115 million on August 9, 2002 and to reduce
borrowings under our interim financing vehicles.MANAGEMENT'S DISCUSSION AND ANALYSIS
(Amounts in Thousands, Except Property and Per Unit Data)On February 22,
2001, we issued $150 million of senior unsecured notes which bear interest at a
rate of 7.25%, were priced to yield 7.29% and mature in February 2006. The net
proceeds of $148.5 million were used to reduce borrowings under our unsecured
credit facilities and repay our $40 million term loan, which had a November 2001
maturity date.Debt Refinancing       In May 2002, we called $48.4 million of
secured tax-exempt bond indebtedness with an interest rate of 6.375% and
reissued the bonds on an unsecured basis at a fixed interest rate of 4.75%. In
connection with the early extinguishment of the debt, we incurred a prepayment
penalty of $1,451 and wrote-off unamortized deferred financing costs of $236.
Such charges totaling $1,687 are reflected as an extraordinary loss in our
consolidated statements of operations. The called bonds required monthly
principal amortization payments that were retained in an escrow account and were
not applied to reduce the outstanding principal balance of the loan. Such
principal payments held in escrow totaling $4,121 were released in May 2002.
This refinancing transaction allowed us to improve our debt constant by 2.75%,
unencumber six communities comprising 2,028 apartment homes and achieve a
positive net present value result.Critical Accounting Policies and Recent Accounting PronouncementsOur financial statements are prepared in
accordance with accounting principles generally accepted in the United States of
America ("GAAP") and a summary of our significant accounting policies
is included in Notes 4 and 6 to the accompanying consolidated financial
statements. Notes 4 and 5 to the accompanying consolidated financial statements
include a summary of recent accounting pronouncements and their actual or
expected impact on our consolidated financial statements. Our preparation of the
financial statements requires us to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of contingent assets
and liabilities at the date of our financial statements, and the reported
amounts of revenue and expenses during the reporting period. Our actual results
may differ from these estimates. As an owner, operator and developer of
apartment communities, our critical accounting policies relate to revenue
recognition, cost capitalization and asset impairment evaluation.Revenue Recognition      Rental: We lease our
residential properties under operating leases with terms generally equal to one
year or less. Rental income is recognized when earned, which materially
approximates revenue recognition on a straight-line basis.
      Property management: We provide
property management services to third parties and unconsolidated joint ventures.
Property management fees are recognized when earned.
      Ancillary services: We provide
development and construction, corporate rental housing and brokerage services to
third parties and unconsolidated joint ventures. Development and construction
services are typically provided under "cost plus a fee" contracts.
Because our clients are obligated to fund the costs that are incurred on their
behalf pursuant to the related contract, we net the reimbursement of these costs
against the billings for such costs.  Development and construction fees are
recognized when earned using the percentage of completion method. During the
years ended December 31, 2002, 2001 and 2000, we recognized $2.4 million, $3.1
million and $4.9 million, respectively, in development and construction fees
under related contracts with gross billings of $43.9 million, $81.1 million and
$83.2 million, respectively. Corporate rental housing revenues and brokerage
commissions are recognized when earned.Gains on sales of real estate assets:
Gains on sales of real estate assets are recognized pursuant to the provisions
of SFAS No. 66, "Accounting for Sales of Real Estate."  The
specific timing of the recognition of the sale and the related gain is measured
against the various criteria in SFAS No. 66 related to the terms of the
transactions and any continuing involvement associated with the assets sold. 
To the extent the sales criteria are not met, we defer gain recognition until
the sales criteria are met.Cost Capitalization 
      As a vertically integrated real estate company,
we have in-house investment professionals involved in the development,
construction and acquisition of apartment communities. Direct internal costs
associated with development and construction activities for wholly-owned assets
are included in the capitalized development cost of such assets. Direct internal
costs associated with development and construction activities for third parties
and unconsolidated joint ventures are reflected in ancillary services expense as
the related services are being rendered. As required by GAAP, we expense all
internal costs associated with the acquisition of operating apartment
communities to general and administrative expense in the period such costs are
incurred. We maintain staffing levels sufficient to meet our existing
development, construction and acquisition activities. When market conditions
warrant, we adjust staffing levels in an attempt to mitigate a negative impact
on our results of operations.MANAGEMENT'S DISCUSSION AND ANALYSIS
(Amounts in Thousands, Except Property and Per Unit Data)Our real estate
development pursuits are subject to obtaining permits and other governmental
approvals, as well as our ongoing business review of the underlying real estate
fundamentals and the impact on our capital structure. We do not always move
forward with development of our real estate pursuits, and therefore, we evaluate
the viability of real estate pursuits and the recoverability of capitalized
pursuit costs regularly. Based on this periodic review, we expense any costs
that are deemed unrealizable at that time to general and administrative expense.
       During the development and construction of
a new apartment community, we capitalize related interest costs, as well as
other carrying costs such as property taxes and insurance. We begin to expense
these items as the construction of the community becomes substantially complete
and the residential apartment homes become available for initial occupancy.
Accordingly, we gradually reduce the amounts we capitalize as construction is
being completed. During the lease-up period, as a community transitions from
initial occupancy to stabilized occupancy, revenues are generally insufficient
to cover interest, carrying costs and operating expenses. The size and duration
of this lease-up deficit depends on how quickly construction is completed, how
quickly the apartments available for occupancy are leased, and what rent levels
are achieved at the community.Asset Impairment Evaluation        Under GAAP, real estate assets
are stated at the lower of depreciated cost or fair value, if deemed impaired.
As noted above, the cost of buildings and improvements includes interest,
property taxes, insurance and direct internal development and construction costs
incurred during the construction period. Expenditures in excess of $1 for
purchases of a new asset with a useful life in excess of one year and for
replacements and repairs that extend the useful life of the asset are
capitalized and depreciated over their useful lives. Recurring value retention
capital expenditures are typically incurred every year during the life of a
community and include such expenditures as carpet, flooring and appliances.
Non-recurring capital expenditures are costs that are generally incurred in
connection with a major project impacting an entire community, such as roof
replacement or parking lot resurfacing. Value-enhancing capital expenditures are
costs for which an incremental value is expected to be achieved and include such
costs as amenity upgrades and additions and security gates. Recurring value
retention and non-recurring and/or value-enhancing capital expenditures do not
include costs incurred in connection with a major renovation of an apartment
community. Repairs and maintenance, such as landscaping maintenance, interior
painting and cleaning and supplies used in such activities, are expensed as
incurred.
       Depreciation is computed on a straight-line
basis over the estimated useful lives of 20 to 40 years for buildings and
improvements and 5 years for furniture, fixtures and equipment. As required by
GAAP, we periodically evaluate our real estate assets to determine if there has
been any impairment in their carrying value and record impairment losses if
there are indicators of impairment and the undiscounted cash flows estimated to
be generated by those assets are less than the assets carrying amounts. No such
impairment losses have been recognized to date.Discontinued OperationsWe adopted SFAS No. 144 effective January 1,
2002 which requires, among other things, that the operating results of certain
real estate assets which have been sold subsequent to January 1, 2002, or
otherwise qualify as held for disposition (as defined by SFAS No. 144), be
reflected as discontinued operations in our consolidated statements of
operations for all periods presented. We sold three wholly-owned operating real
estate assets during the first quarter of 2002 and one wholly-owned operating
real estate asset during the fourth quarter of 2002. We retained management of
two of the assets sold during the first quarter of 2002. Due to our continuing
involvement with the operations of the two assets sold that we are continuing to
manage, the operating results of these assets are included in continuing
operations. The operating results for the two remaining wholly-owned assets sold
during the first and fourth quarters of 2002 for which we did not retain
management are reflected as discontinued operations in our consolidated
statements of operations for all periods presented. Interest expense has been
allocated to the results of the discontinued operations in accordance with EITF
No. 87-24. We had no assets that qualified as held for disposition as defined by
SFAS No. 144 at December 31, 2002 or 2001.Results of OperationsComparison of operating results for the year ended December 31, 2002 to the
year ended December 31, 2001Our net income is generated primarily
from the operation of our apartment communities and the disposition of assets
that no longer meet our investment criteria.  For purposes of evaluating
comparative operating performance, we categorize our operating communities based
on the period each community reaches stabilized occupancy. A community is
considered to have achieved stabilized occupancy on the earlier to occur of (1)
attainment of 93% physical occupancy or (2) one year after completion of
construction. The combined operating performance for all of our wholly-owned
apartment communities that are included in continuing operations for the years
ended December 31, 2002 and 2001 is summarized as follows:
MANAGEMENT'S DISCUSSION AND ANALYSIS
(Amounts in Thousands, Except Property and Per Unit Data)Years
      Ended December 31,2002
    2001
    $
      Change
    %
      ChangeRental and other
      property revenues:Same-store communities (a)
      Communities stabilized during 2002, but not 2001 (b)
      Triple net master lease communities (c)
      Development and lease-up communities (d)
      Renovation communities (e)
      Acquired communities (f)
      Sold communities (g)
         Total property revenues
    $174,660
      -
      6,585
      10,332
      14,557
      15,387898
      $222,419
    $177,069
      -
      6,723
      3,814
      16,633
      9,255
          14,919
      $228,413
    $  (2,409)
      - 
      (   138)
      6,518 
      (2,076)
      6,132 
      (14,021)
      $( 5,994)
    (  1.4%) 
      -%  
      (  2.1%) 
      170.9%  
      (12.5%)66.3% ( 94.0%)
         (2.6%)Property
      operating and maintenance expenses(h):Same-store communities (a)
      Communities stabilized during 2002, but not 2001 (b)
      Triple net master lease communities (c)
      Development and lease-up communities (d)
      Renovation communities (e)
      Acquired communities (f)
      Sold communities (g)
         Total specified expenses
    $62,720
      -
      -
      5,444
      6,192
      4,878278
      $79,512
    $59,634
      -
      -
      1,453
      5,737
      2,7955,666$75,285
    $3,086 
      - 
      - 
      3,991 
      455 
      2,083 
       (5,388)
      $  4,227
    5.2% 
      -% 
      -% 
      274.7% 
      7.9% 
      74.5% 
      (95.1%)5.6%Revenues in excess
      of specified expenses
      Revenues in excess of  specified expenses as a 
         percentage of total property revenues
    $142,907
      64.3%
    $153,128
      67.0%
    $ (10,221)
                -
    (6.7%)(2.7%)(a)  Communities that were owned and fully stabilized
throughout both 2002 and 2001 ("same-store").
(b)  Communities that were stabilized during all of 2002, but were not
stabilized during all of 2001.
(c)  Communities that were subject to a triple net master lease agreement
throughout both 2002 and 2001.
(d)  Communities in the development and/or lease-up phase that were not
fully stabilized during all or any of 2002.
(e)  Communities that were in renovation subsequent to January 1, 2001.
(f)  Communities that were acquired subsequent to January 1, 2001.
(g)  Communities that were sold subsequent to January 1, 2001. 
(h)  Represents direct property operating and maintenance expenses as
reflected in our consolidated statements of operations and excludes property 
       management and other indirect operating
expenses, interest expense and depreciation and amortization expense.Total property revenues decreased
$5,994, or 2.6%, from $228,413 to $222,419 due to the sale of one apartment
community in the first quarter of 2001, two apartment communities in the fourth
quarter of 2001and two apartment communities in the first quarter of 2002; a
decrease in same-store performance as a result of national economic weakness;
and a decrease in the number of available apartment homes associated with
renovation activities at five of our communities. These decreases were partially
offset by an increase in the number of apartment homes resulting from the
development and acquisition of additional communities. Following is additional
data regarding the changes in total property revenues for two of the seven
community categories presented in the preceding table:
Same store communities:Market
      Number ofCommunities
      Number of
        ApartmentHomes
      Percent of
        Total
      Physical
        Occupancy During 2002
      Change
        inOccupancy
      Change
        in
          Revenues
      
      Percent
        Change in
          Revenues
Houston
          So. Florida
          Atlanta
          Austin
          Dallas
          Other
            Total
      15
        13
        14
        7
        74
         60
      4,616
        3,845
        3,613
        1,677
        1,4231,243
        16,417
      28.1%
        23.4%
        22.0%
        10.2%
        8.7%7.6%100.0%
      94.1%
        94.6%
        92.3%
        93.3%
        95.4%90.7%
        93.7%
      (1.1%)
        (0.3%)
        (1.4%)
        (0.1%)
        (0.8%)(1.7%)
        (0.8%)$1,295 
        587 
        (2,274)
        (1,266)
        (331)(420)
        $(2,409)2.9% 
        1.4% 
        (6.1%)
        (5.4%)
        (1.8%)(4.0%)
        (1.4%)
MANAGEMENT'S DISCUSSION AND ANALYSIS
(Amounts in Thousands, Except Property and Per Unit Data)Development and lease-up communities:Market
      Number ofCommunities
      Number of 
        ApartmentHomes
      Percent of
        Total
      Physical
        OccupancyDuring 2002
      Change
        inRevenues
Dallas
        Orlando
        Houston
        Atlanta
           Total
      
      2
        1
        12
        6
    
    422
      315
      296263
      1,296
    32.6%
      24.3%
      22.8%20.3%
      100.0%
    63.6%
      65.9%
      52.2%39.8%
      55.3%
    $1,140
      1,437
      1,8152,126
      $6,518
Property
management revenues increased $992, or 15.7%, from $6,317 to $7,309 due
primarily to a net increase of approximately 3,800 units managed for third
parties and unconsolidated joint ventures from an average of 20,000 in 2001 to
23,800 in 2002. This net increase in units managed is due primarily to the May
2001 acquisition of the D.C. Management Co. and an increase in business in our
existing markets and is offset in part by a decrease in business with our
unconsolidated joint ventures resulting from sale transactions.
       Ancillary services revenues decreased $116,
or 1.4%, from $8,433 to $8,317 due primarily to a decrease in development and
construction fee revenue of $736 offset in part by an increase in corporate
rental housing revenue of $695. The decrease in development and construction fee
revenue is comprised of $515 in revenue from unconsolidated joint ventures and
$221 in revenue from third parties. This decrease is due primarily to a portion
of our projects nearing completion, coupled with fewer new project starts. In
addition, a $425 reduction in the estimated development revenues from the GRAP
JV was recorded in 2001.
       Interest income decreased $369, or 49.4%,
from $747 to $378 due to a decrease in interest-bearing deposits and a decrease
in interest rates.
       Property operating and maintenance expense
(as reflected in the consolidated statements of operations) increased $4,227, or
5.6%, from $75,285 to $79,512 due to an increase in the number of apartment
homes resulting from the development and acquisition of additional communities,
as well as same-store expenses increasing 5.2%. The same-store expense increase
is at a rate ahead of inflation due to a significant increase in insurance
costs, along with higher turnover and marketing costs associated with the
current national economic conditions. This increase was offset in part by the
sale of one apartment community in the first quarter of 2001, two apartment
communities in the fourth quarter of 2001 and two apartment communities in the
first quarter of 2002.
       Real estate asset depreciation and
amortization increased $853, or 1.8%, from $46,240 to $47,093 due primarily to
the impact of the development and acquisition of additional communities and
capital improvements made to existing operating communities, offset in part by
the impact of the sale of one apartment community in the first quarter of 2001,
two apartment communities in the fourth quarter of 2001 and two apartment
communities in the first quarter of 2002, and a non-recurring correcting
adjustment recorded to depreciation in 2002 of $1.7 million.
       Property management expense for owned
communities and third-party properties on a combined basis increased $1,760, or
15.8%, from $11,137 to $12,897 due to (1) an increase of approximately 2,900
apartment homes under management from an average of 42,100 in 2001 to an average
of 45,000 in 2002, (2) software licensing fees incurred in 2002 but not in 2001,
(3) increased information technology and related support costs associated with
the January 2002 implementation of our new general ledger and web-based property
management system, eGables and (4) inflationary increases in expenses. We
allocate property management expenses to both owned communities and third-party
properties based on the proportionate share of total apartment homes owned and
units managed.
       Ancillary services expense decreased $570,
or 9.8%, from $5,806 to $5,236 due primarily to a decrease in development and
construction expenses of $682 offset in part by an increase in corporate rental
housing expenses of $127. The decrease in development and construction expenses
is related to a decrease in services rendered as the related projects near
construction completion, coupled with fewer new project starts.
      Interest expense and credit enhancement fees
remained steady with a nominal increase of $18, or 0.0%, from $43,966 to
$43,984. An increase in outstanding indebtedness associated with the redemption
of the Trust's Series A Preferred Shares and an increase in operating debt
associated with the development and acquisition of additional communities was
offset in part by a decrease in interest rates for variable-rate borrowings and
a decrease in outstanding indebtedness associated with 2002 and 2001 sale
activities. In addition, the 2002 refinancings of (1) $82.5 million of
indebtedness that bore interest at a rate of 8.3% with $40 million of the
Trust's MANAGEMENT'S DISCUSSION AND ANALYSIS
(Amounts in Thousands, Except Property and Per Unit Data)
Series C PreferredShares and $40 million of senior unsecured notes
that  bear interest at a weighted average interest rate of 5.9% and (2)
$48.4 million of indebtedness that bore interest at a rate of 6.4% with $48.4
million of indebtedness that bears interest at a rate of 4.75% have served to
reduce interest expense.
         
        Amortization of deferred financing
costs increased $298, or 28.7%, from $1,038 to $1,336 due primarily to increased
financing costs associated with the issuances of $180 million of senior
unsecured notes in July 2002 and $40 million of senior unsecured notes in
September 2002.
        General and administrative
expense increased $168, or 2.3%, from $7,209 to $7,377 due primarily to an
increase in abandoned real estate pursuit costs offset in part by a decrease in
internal acquisition costs associated with the 2001 acquisitions of operating
apartment communities and the D.C. Management Co.
       Corporate asset depreciation and
amortization increased $902, or 110.0%, from $820 to $1,722 due primarily to an
increase in amortization resulting from the depreciation of our new general
ledger and web-based property management system, eGables, beginning in January
2002, and an increase in amortization resulting from the management contracts
acquired in connection with the May 2001 acquisition of the D.C. Management Co.
       Equity in income of joint ventures
increased $2,658, or 1,098.3%, from $242 to $2,900 due primarily to the 2002
sales of four apartment communities by the GRAP JV, which resulted in the
recognition of a $2,611 gain by us in 2002.     Our share of the operating
results for the apartment communities owned by the unconsolidated joint ventures
in which we have an interest during 2002 and 2001 is as follows:
2002Stabilized(a)
    Development& Lease-up(b)
    Sales(c)
    Total
    Total2001

Our share of joint venture results:
        Rental and other revenues
        Property operating and maintenance expenses
        (exclusive of items shown separately below)
             Revenues in excess of specified expenses
        Interest expense and credit enhancement fees
        Amortization of deferred costs
        Other
             Funds from operations
        Gain on sale of real estate assets
        Real estate asset depreciation
             Equity in income of joint ventures
        Number of operating communities
        Number of units in operating communities
        Average percent occupied during the period
      $2,729( 1,181
        1,548
        (   611
         (     17(     25   895
        -(  733
        $   1625
        1,898
        92
      )
        )
        )
        )
        )
        %
      $ 1,071(  467  604
        (  184
         (    34(      8  378
        - (  408
        $   (303
        780
        47
      )
        )
        )
        )
        )
        )
        %
      $1,235(  536 699
        (   155
        (     19(      8  517
        2,611(  360
        $2,768
        4
        1,214
        94
      )
        )
        )
        )
        )
        %
      $5,035( 2,1842,851
        (  950
         (    70(    411,790
        2,611( 1,501
        $2,900
        12
        3,892
        84
      )
        )
        )
        )
        )
        %
      $6,312
         ( 2,602 3,710
        (1,708
         (     72201,950
        -  ( 1,708
        $   242
        15
        4,758
        76
      )
        )
        )
        )
        %(a)
        Communities that were owned and fully stabilized throughout 2002.
        (b) Communities in the development and/or lease-up phase that were not
        fully stabilized during all or any of 2002.
        (c) Communities that were sold subsequent to January 1, 2002.


Gain on sale of previously
depreciated operating real estate assets of $17,906 in 2002 relates to the sale
of two wholly-owned communities comprising 557 apartment homes located in
Houston and Atlanta.
       Gain on sale of land and development rights
of $2,100 in 2002 is comprised of (1) $763 associated with the 2002 sale of 13.3
acres of land in Houston, (2) recognition of $1,252 in deferred gain associated
with the 2001 contribution of land and development rights into the GRAP JV Two
and (3) recognition of $85 of deferred gain associated with a land sale in 2000.MANAGEMENT'S DISCUSSION AND ANALYSIS
(Amounts in Thousands, Except Property and Per Unit Data)

Income from discontinued
operations increased $8,990, or 527.9%, from $1,703 to $10,693 due primarily to
the $9,829 gain on disposition of discontinued operations recognized in 2002.
   
       Extraordinary loss of $1,687 in 2002
represents the write-off of unamortized deferred financing costs of $236 and a
prepayment penalty of $1,451 associated with the early retirement of $48.4
million of secured tax-exempt bond indebtedness. These bonds had an interest
rate of 6.375% which we were able to reissue on an unsecured basis at a rate of
4.75%, resulting in a positive net present value.
       Distributions to preferred unitholders
decreased $2,952, or 21.0%, from $14,083 to $11,131 due to the $115 million
redemption of the Trust's Series A Preferred Shares in August 2002, offset in
part by the $40 million issuance of the Trust's Series C Preferred Shares in
September 2002.Results of Operations

Comparison of operating results for the year
ended December 31, 2001 to the year ended December 31, 2000

Our net income is
generated primarily from the operation of our apartment communities and the
disposition of assets that no longer meet our investment criteria. For purposes
of evaluating comparative operating performance, we categorize our operating
communities based on the period each community reaches stabilized occupancy. A
community is considered to have achieved stabilized occupancy on the earlier to
occur of (1) attainment of 93% physical occupancy or (2) one year after
completion of construction. The combined operating performance for all of our
wholly-owned apartment communities that are included in continuing operations
for the years ended December 31, 2001 and 2000 is summarized as follows:

Years Ended December 31,2001
      2000
      $
        Change
      %
        ChangeRental and other property
        revenues:Same-store communities (a)
        Communities stabilized during 2001, but not 2000 (b)
        Triple net master lease communities (c)
        Development and lease-up communities (d)
        Renovation communities (e)
        Acquired communities (f)
        Sold communities (g)
           Total property revenues
      $186,290
        -
        2,776
        7,759
        10,365
        12,0029,221
        $228,413
      $181,457
        -
        2,367
        990
        10,412
        91427,578
        $223,718
      $4,833 
        - 
        409 
        6,769 
        (47)
        11,088 (18,357)$4,695
      2.7% 
        -% 
        17.3% 
        683.7% 
        (0.5%)
        1,213.1% (66.6%)2.1%Property operating and maintenance expenses(h):Same-store communities (a)
          Communities stabilized during 2001, but not 2000 (b)
          Triple net master lease communities (c)
          Development and lease-up communities (d)
          Renovation communities (e)
          Acquired communities (f)
          Sold communities (g)
             Total specified expenses
        $62,787 
          -  
          -  
          1,453  
          3,452  
          3,827  3,766  $75,285
        $59,780
          -
          -
          77
          3,229
          3239,692
          $73,101
        $ 3,007 
          -  
          -  
          1,376 
          223 
          3,504 (5,926)
          $  2,184
        5.0%
          -%
          -%
          1,787.0%
          6.9%
          1,084.8%(61.1%)
              3.0%Revenues in excess of specified
          expenses
      
      $153,128
      $150,617
      $2,511
      1.7%Revenues in excess of specified
          expenses as a 
          percentage of total property revenues
        67.0%
        67.3%
        -
        (0.3%)(a)
          Communities that were owned and fully stabilized throughout both 2001
          and 2000 ("same-store"). 
          (b) Communities that were stabilized during all of 2001, but were not
          stabilized during all of 2000. 
          (c) Communities that were subject to a triple net master lease
          agreement and fully stabilized throughout both 2001 and 2000.
          (d) Communities in the development and/or lease-up phase that were not
          fully stabilized during all or any of 2001.
          (e) Communities that were in renovation subsequent to January 1, 2000. 
          (f) Communities that were acquired subsequent to January 1, 2000.
          (g) Communities that were sold subsequent to January 1, 2000.
          (h) Represents direct property operating and maintenance expenses as
          reflected in our consolidated statements of operations and
          excludes property management
                and other indirect operating expenses,
          interest expense and depreciation and amortization expense.


MANAGEMENT'S DISCUSSION AND ANALYSIS
(Amounts in Thousands, Except Property and Per Unit Data)

---

Total property revenues increased
$4,695, or 2.1%, from $223,718 to $228,413 due primarily to an increase in the
number of apartment homes resulting from the development and acquisition of
additional communities and an increase in rental rates on same-store
communities. This increase is offset by the sale of seven apartment communities
in the second half of 2000, one apartment community during the second quarter of
2001 and two apartment communities in the fourth quarter of 2001. Following is
additional data regarding the increases in total property revenues for two of
the seven community categories presented in the preceding table:     
Same-store communities:

Market
      Number ofCommunities
      Number of
        ApartmentHomes
      Percent ofTotal
      Physical
        Occupancy During 2001
      Change
        inOccupancy
      Change
        in
          Revenues
      
      Percent
        Change in
          Revenues


Houston
          Atlanta
          So. Florida
          Austin
          Dallas
          Other
            Total
      16
        16
        14
        6
        7463
      4,862
        4,527
        4,017
        1,517
        1,4231,24317,589
      27.7%
        25.7%
        22.8%
        8.6%
        8.1%7.1%100.0%
      95.3%
        93.6%
        95.0%
        93.5%
        96.2%92.4%94.6%
      (0.3%)
        (1.5%)
        (0.1%)
        (3.5%)
        1.3% 
        (0.7%)(0.8%)$1,813 
          383 
        1,831 
        280 
        841 
        (315)$4,8333.9% 
        0.9% 
        4.3% 
        1.4% 
        4.9% 
        (2.9%)2.7%


Development and lease-up communities:

Market
      Number ofCommunities
      Number of 
        ApartmentHomes
      Percent of
        Total
      Physical
        OccupancyDuring 2001
      Change
        inRevenues


Orlando (a) Houston
        Atlanta
        Dallas
          Total
      
      2
        1
        115
    
    763
      296
      1831771,419
    53.7%
      20.9%
      12.9%12.5%100.0%
    61.4%
      4.3%
      14.1%62.0%55.6%
    $ 4,505
      65
      332,166$6,769(a) 
      One of these communities is leased to a single user group pursuant to a
      triple net master lease.


Property
management revenues increased  $1,076, or 20.5%, from $5,241 to $6,317 due
primarily to the May 2001 acquisition of the D.C. Management Co., in addition to
increased joint venture activity for which we serve as the property manager.

Ancillary services
revenues decreased $1,278, or 13.2%, from $9,711 to $8,433 due to a decrease in
development and construction fee revenue of $1,798, offset by increases in
corporate rental housing revenue of $354 and brokerage commission revenue of
$166.  The decrease in development and construction fee revenue is
comprised of $276 in revenue from unconsolidated joint ventures and $1,522 in
revenue from third parties.  This decrease is due primarily to a portion of
our projects nearing completion, coupled with fewer new project starts.  In
addition, a $425 reduction in the estimated development revenues from the GRAP
JV was recorded in 2001.  
     
       Interest income decreased $282, or 27.4%,
from $1,029 to $747 due primarily to a decrease in interest rates.
       Property operating and maintenance expense
(as reflected in the consolidated statements of operations) increased $2,184, or
3.0%, from $73,101 to $75,285 due to an increase in the number of apartment
homes resulting from the development and acquisition of additional communities,
as well as increased payroll, property taxes, insurance, utilities and
maintenance costs at our same-store communities. This increase is offset in part
by the sale of seven apartment communities in the second half of 2000, one
apartment community during the second quarter of 2001 and two apartment
communities during the fourth quarter of 2001.
      Ancillary services expense increased $890, or
18.1%, from $4,916 to $5,806 due to increases in development and construction
expenses of $392, corporate rental housing expenses of $411 and brokerage
expenses of $87. The increase in development and construction expenses is due to
an increase in the allocation of direct costs associated with such activities,
offset in part by a decrease in services rendered as certain of the related
projects near completion. The increase in corporate rental housing expenses is
due to an expansion of the business services provided.

MANAGEMENT'S DISCUSSION AND ANALYSIS
(Amounts in Thousands, Except Property and Per Unit Data)

---

Real estate asset
depreciation and amortization increased $3,721, or 8.8%, from $42,519 to $46,240
due primarily to the impact of the development and acquisition of additional
communities and capital improvements made to existing operating communities,
offset in part by the impact of the sale of seven apartment communities in the
second half of 2000, one apartment community during the second quarter of 2001
and two apartment communities during the fourth quarter of 2001.
 
      Property management expense for owned communities
and third-party properties on a combined basis increased $1,130, or 11.3%, from
$10,007 to $11,137 due primarily to the May 2001 acquisition of the D.C.
Management Co. We allocate property management expenses to both owned
communities and third-party properties based on the proportionate share of total
apartment homes owned and units managed.
      Interest expense and credit enhancement fees
decreased $822, or 1.8%, from $44,788 to $43,966 due primarily to a decrease in
interest rates and a decrease in outstanding indebtedness associated with the
sale of seven apartment communities in the second half of 2000, one apartment
community in the second quarter of 2001 and two apartment communities during the
fourth quarter of 2001.  This decrease is offset in part by an increase in
operating debt associated with the development and acquisition of additional
communities.
 
      Amortization of deferred financing costs
increased $143, or 16.0%, from $895 to $1,038 due primarily to increased
financing costs associated with the issuance of $150 million of senior unsecured
notes in February 2001.
       General and administrative expense
increased $55, or 0.8%, from $7,154 to $7,209 due primarily to an increase in
(1) internal acquisition costs associated with the 2001 acquisitions of
operating apartment communities and the D.C. Management Co., (2) long-term
compensation expense and (3) inflationary increases in expenses. Such increases
were offset in part by a decrease in abandoned real estate pursuit costs and
marketing and branding campaign costs.
       Corporate asset depreciation and
amortization increased $149, or 22.2%, from $671 to $820 due primarily to an
increase in amortization resulting from the management contracts acquired in
connection with the May 2001 acquisition of the D.C. Management Co.
       Unusual items of $8,847 in 2001 are
comprised of (1) a $5,006 charge associated with the write-off of building
components at Gables State Thomas Ravello that are being replaced in connection
with a remediation program, (2) $2,200 of severance charges associated with
organizational changes adopted in the fourth quarter of 2001, (3) $920 in
reserves associated with certain technology investments and (4) $721 of
abandoned real estate pursuit costs as a result of September 2001 events that
impacted the U.S. economy.
       Equity in income of joint ventures
decreased $157, or 39.3%, from $399 to $242 due primarily to the March 2001
acquisition of the membership interests of our venture partner in two stabilized
communities in the GRAP JV and the August 2001 acquisition of our venture
partner's 75% interest in Gables Metropolitan Uptown, a stabilized community.
This decrease is also impacted by increased property taxes at certain of the
communities and the suspension of lease-up activities at Gables State Thomas
Ravello.    
       Our share of the operating results for the
apartment communities owned by the unconsolidated joint ventures  in which
we have an interest during 2001and 2000 is as follows:

MANAGEMENT'S DISCUSSION AND ANALYSIS
(Amounts in Thousands, Except Property and Per Unit Data)

---

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 2001                                                                                                             |                                                                                                             
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Stabilized(a)                                                                                                    | Development& Lease-up (b)                                                                                   
|Our share of joint venture results:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                  |                                                                                                             
|Rental and other revenues
      Property operating and maintenance expenses
      (exclusive of items shown separately below)
         Revenues in excess of specified expenses
      Interest expense and credit enhancement fees
      Amortization of deferred costs
      Other
         Funds from operations
      Real estate asset depreciation
         Equity in income of joint ventures
      Number of operating communities
      Number of units in operating communities
      Average percent occupied during the period | $4,069 
      (1,642)2,427 
      (1,046)
      (38)151,358 
      (1,035)$  323
      7 
      2,502 
      93% | $1,137 
      (456)
       681 
      (276)
      (22)-383 
      (375)$   8
      4 
      1,116 
      41%
|(a) Communities that were owned and fully stabilized
      throughout 2001.
      (b) Communities in the development and/or lease-up phase that were not
      fully stabilized during all or any of 2001.
      (c) Communities that were sold subsequent to January 1, 2001.                                                                                                                                                                                                                                                           

Gain on sale of previously
depreciated operating real estate assets of $34,110 in 2001 relates to the sale
of an apartment community in Atlanta comprising 386 apartment homes, an
apartment community in Houston comprising 776 apartment homes and an apartment
community in Dallas comprising 536 apartment homes.Gain on sale of land and development
rights of $3,220 in 2001 is comprised of (1) $934 associated with the 2001 sale
of 2.5 acres of land in Atlanta, (2) $1,590 associated with the 2001
contribution of land and development rights into the GRAP JV Two and (3)
recognition of $696 of deferred gain associated with a land sale in 2000.
       Gain on sale of previously depreciated
operating real estate assets in 2000 of $28,622 relates to the sale of an
apartment community located in Dallas comprising 126 apartment homes, an
apartment community in Houston comprising 228 apartment homes, two apartment
communities located in San Antonio comprising 544 apartment homes, two apartment
communities located in Nashville comprising 618 apartment homes and one
apartment community in Memphis comprising 500 apartment homes.
       Gain on sale of land and development rights
of $845 in 2000 relates to the sale of a parcel of land adjacent to an existing
apartment community located in Atlanta.Liquidity and Capital Resources       Net cash provided by operating
activities from continuing operations increased from $97,483 for the year ended
December 31, 2001 to $103,290 for the year ended December 31, 2002 due to (1) a
change in other assets between periods of $10,586, (2) a change in restricted
cash between periods of $1,941 and (3) a change in other liabilities between
periods of $4,078. Such increases were offset in part by a decrease of $10,798
in income from continuing operations (a) before certain non-cash or
non-operating items, including depreciation, amortization, equity in income of
joint ventures, gain on sale of real estate assets, long-term compensation
expense, extraordinary loss, and unusual items and (b) after operating
distributions received from joint ventures. Net cash provided by operating
activities from discontinued operations decreased from $3,068 to $1,670 due to
the disposition of discontinued operations in 2002.
      We used $123,405 of net cash in investing
activities for the year ended December 31, 2001 compared to $17,361 for the year
ended December 31, 2002. During the year ended December 31, 2002, we expended
$91,281 related to acquisition, development, construction and renovation
expenditures, $13,077 related to recurring value retention capital expenditures
for operating apartment communities, $11,910 related to non-recurring and/or
value-enhancing capital expenditures for operating apartment communities, $1,093
related to our investment in joint ventures and $1,059 related to other
investments. During the year ended December 31, 2002, we received cash of (1)
$46,803 in connection with the sale of wholly-owned real estate assets, (2)
$43,227 in connection with the disposition of discontinued operations, (3)
$10,680 in connection with our share of the net proceeds from the sale of joint
venture real estate assets and (4) $349 of sale proceeds released from escrow to
fund development activities. During the year ended December 31, 2001, we
expended $215,552 related to acquisition, development, construction and
renovation expenditures, $11,797 related to recurring value retention capital
expenditures for operating apartment communities, $10,916 related to
non-recurring and/orMANAGEMENT'S DISCUSSION AND ANALYSIS
(Amounts in Thousands, Except Property and Per Unit Data)

---

value-enhancing capital expenditures for operating apartment
communities, $4,248 related to our investment in joint ventures and $954 related
to other investments. During the year ended December 31, 2001, we received cash
of (1) $18,519 in connection with our contribution of interests in certain land
and development rights to the GRAP JV Two and (2) $93,634 in connection with the
sale of wholly-owned real estate assets. In addition, during the year ended
December 31, 2001, $7,909 of sales proceeds were released from escrow to fund
development activities.
        We had $22,833 of net cash provided
by financing activities for the year ended December 31, 2001 compared to $85,549
of net cash used in financing activities for the year ended December 31, 2002.
During the year ended December 31, 2002, we expended (1) $115,000 in connection
with the Trust's redemption of its Series A Preferred Shares, (2) $84,261 in
common and preferred distributions, (3) $13,977 in connection with Unit
redemptions and Unit redemptions related to treasury share repurchases, (4)
$2,935 in deferred financing costs and (5) $1,451 for a prepayment penalty
incurred in connection with our tax-exempt debt refinancing. During the year
ended December 31, 2002, we received net proceeds of (1) $81,343 from net
borrowings, (2) $39,750 from the issuance of the Trust's Series C Preferred
Shares, (3) $7,602 from the exercise of share options and (4) $3,380 from
principal payments released from escrow, net. During the year ended December 31,
2001, we had net borrowings of $94,916 and proceeds from the exercise of share
options of $15,144. These net borrowings and share option proceeds were offset
by payments for common and preferred dividends and distributions totaling
$84,593, deferred financing costs of $1,906 and principal escrow payments
deposited into escrow, net of $728.
         As of December 31, 2002, we had
total indebtedness of $958,574, cash and cash equivalents of $6,281 and
principal escrow deposits reflected in restricted cash of $755.  Our
indebtedness has an average of four years to maturity at December 31, 2002. 
         The following information
relating to the aggregate maturities of our notes payable at December 31, 2002
is presented below on a pro forma basis to reflect the February 2003 reissuance
of the letters of credit enhancing $44,930 of tax-exempt bonds under the $252
million credit facility with a maturity date of May 2005.

Regularly 
      Scheduled
      Principal
      AmortizationPayments
    Balloon
       Principal
      Payment due at Maturity
  
  Total


|2003
      2004
      2005
      2006
      2007 
      2008 and thereafter | $1,925
    1,667
    1,735
    1,654
    1,77514,240$22,996 | $        
    - 
    76,759
    241,787
    203,240
    247,898165,894$935,578 | $    1,925
    78,426
    243,522
    204,894
    249,673180,134$958,574
|--------------------------------------------------------------------------- | ----------------------------------------------------------- | ------------------------------------------------------------------------------ | ------------------------------------------------------------------------

---

We currently have seven communities
under development that are expected to comprise 2,015 apartment homes upon
completion and an indirect 20% ownership interest in two development communities
that are expected to comprise 373 apartment homes upon completion. The estimated
costs to complete the development of these assets total $149 million at December
31, 2002, including $2 million of costs that are obligated to fund for the
co-investment development communities. These costs are expected to be initially
funded by $39 million in construction loan proceeds and $110 million in
borrowings under our credit facilities described below.$252 Million Credit Facility      At December 31, 2002, we had $40 million
in borrowings outstanding under our $225 million unsecured revolving credit
facility provided by a syndicate of banks. In February 2003, we closed a
modification to this credit facility which, among other things, increased the
committed capacity thereunder to $252 million from $225 million. We have the
option to further increase the capacity under the facility to $300 million from
$252 million to the extent banks (from the syndicate or otherwise) voluntarily
agree to provide the additional commitment. The facility currently has a
maturity date of May 2005. Borrowings under the $252 million facility currently
bear interest at our option of LIBOR plus 0.95% or prime minus 0.25%. Such
scheduled interest rates may be adjusted up or down based on changes in our
senior unsecured credit ratings and our leverage ratios. We may also enter into
competitive bid loans with participating banks for up to $126 million at rates
below the scheduled rates. In addition, we pay an annual facility fee currently
equal to 0.20% of the $252 million commitment. In February 2003, approximately
$46 million of letters of credit enhancing approximately $45 million of
tax-exempt variable rate notes payable were reissued under this facility.$75 Million Borrowing Facility       We have a $75 million unsecured
borrowing facility with a bank that currently has a maturity date of May 2005.
The interest rate and maturity date related to each advance under this facility
is agreed to by both parties prior to each advance. We had $34.7 million in
borrowings outstanding under this facility at December 31, 2002 at an interest
rate of 1.85%.$10 Million Credit FacilityAt December 31, 2002, we had $0.9
million in borrowings outstanding under our $10 million unsecured revolving
credit facility provided by a bank. The facility currently has a maturity date
of December 31, 2003 with unlimited one-year extension options. Borrowings under
this facility bear interest at the same scheduled interest rates as the $252
million credit facility.Secured Variable-Rate Construction Loans       We have committed fundings under four
construction-related financing vehicles for two wholly-owned development
communities totaling $43 million from a bank. At December 31, 2002, we had drawn
approximately $4 million under these vehicles and therefore have approximately
$39 million of remaining capacity. Borrowings under these vehicles bear interest
at a weighted average rate of 3.25% at December 31, 2002.Restrictive Covenants       Certain of our debt agreements contain
customary representations, covenants and events of default, including covenants
which restrict our ability to make distributions in excess of stated amounts,
which in turn restricts the Trust's ability to declare and pay dividends. In
general, during any fiscal year, we may only distribute up to 100% of our
consolidated income available for distribution (as defined in the related
agreement). The applicable debt agreements contain exceptions to these
limitations to allow us to make distributions necessary to (1) allow the Trust
to maintain its status as a REIT or (2) distribute 100% of the Trust's taxable
income. We do not anticipate that this provision will adversely affect our
ability to make distributions or the Trust's ability to declare dividends under
its current dividend policy.Inflation       Substantially all of the leases at our
apartment communities are for a term of one year or less.  In the event of
significant inflation, this may enable us to realize increased rents upon
renewal of existing leases or the beginning of new leases. Short-term leases
generally minimize our risk from the adverse effects of inflation, although
these leases generally permit residents to leave at the end of the lease term
without penalty and therefore expose us to the effect of a decline in market
rents. In a deflationary rent environment, as is currently being experienced in
certain of our markets, we are exposed to declining rents more quickly under
these shorter term leases.

---

Certain Factors Affecting Future Operating Results       This report contains 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. The
words "believe," "expect," "anticipate,"
"intend," "plan," "estimate," "assume"
and other similar expressions which are predictions of or indicate future events
and trends and which do not relate solely to historical matters identify
forward-looking statements. These statements include, among other things,
statements regarding our intent, belief or expectations with respect to the
following:

- the Trust's ability to increase shareholder value by
    producing consistent high quality earnings to sustain dividends and annual
    total returns that exceed the multifamily sector average;
- our ability to create a portfolio of high quality assets in
    strategically selected markets that are complementary through economic
    diversity and characterized by high job growth and resiliency to economic
    downturns;
- the ability of our portfolio to maintain high levels of
    occupancy and rental rates relative to overall market conditions;
- our ability to generate a return on invested capital that
    exceeds our long-term weighted average cost of capital while maintaining
    financial flexibility through a conservative, investment grade credit
    profile;
- our expectation that the markets we have selected for
    investment will continue to experience job growth that exceeds national
    averages, and that our EPN locations will outperform local market results;
- our ability to meet short-term liquidity requirements,
    including the payment of common and preferred distributions, through net
    cash provided by recurring real estate activities, and to meet long-term
    liquidity requirements through long-term secured and unsecured borrowings,
    the issuance of debt securities or equity securities, private equity
    investments in the form of joint ventures, or through the disposition of
    assets which, in our evaluation, may no longer meet our investment
    requirements; and
- estimated development and construction costs for our
    development and lease-up communities, and anticipated construction
    commencement, completion, lease-up and stabilization dates for these
    communities.

You should not rely on forward-looking statements
because they involve known and unknown risks, uncertainties and other factors
which are, in some cases, beyond our control and may cause our actual results,
performance or achievements to differ materially from anticipated future
results, or the performance or achievements expressed or implied by such
forward-looking statements. Factors that might cause such a difference include,
but are not limited to:

- national and local economic conditions generally, and the real estate
    market specifically, including changes in occupancy rates and market rents,
    a continued deceleration of economic conditions in our markets, and a
    failure of national and local economic conditions to rebound in a timely
    manner;
- changes in job growth, household formation and population growth in our
    markets;
- excess supply of and insufficient demand for apartment communities in our
    markets;
- competition, which could limit our ability to secure attractive investment
    opportunities, lease apartment homes or increase or maintain rents;
- the failure to sell apartment communities in a timely manner or on
    favorable terms;
- uncertainties associated with our development and construction activities,
    including the failure to obtain zoning and other approvals, actual
    development and construction costs exceeding our budgeted estimates and
    construction material defects;
- construction and lease-up may not be completed on schedule, resulting in
    increased debt service expense and construction costs and reduced rental
    revenues;
- new debt or equity financing may not be available or may not be available
    on favorable terms, and existing indebtedness may mature in an unfavorable
    credit environment, preventing such indebtedness from being refinanced or,
    if financed, causing such refinancing to occur on terms that are not as
    favorable as the terms of existing indebtedness;
- changes in interest rates;
- cash flow from recurring real estate activities may be insufficient to
    meet our short-term liquidity requirements, including the payment of common
    and preferred dividends;
- legislative, regulatory and accounting changes, including changes to laws
    governing the taxation of REITs or changes in GAAP; and
- potential liability for uninsured losses and environmental contamination.

While forward-looking statements
reflect our good faith beliefs, they are not guarantees of future performance.
We disclaim any obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or otherwise.

MANAGEMENT'S DISCUSSION AND ANALYSIS
(Amounts in Thousands, Except Property and Per Unit Data)

---

Supplemental Discussion - Funds From Operations and
Adjusted Funds From OperationsWe consider funds from
operations ("FFO") to be a useful performance measure of the operating
performance of an equity REIT because, together with net income and cash flows,
FFO provides investors with an additional basis to evaluate the ability of a
REIT to incur and service debt and to fund distributions and capital
expenditures. We believe that in order to facilitate a clear understanding of
our operating results, FFO should be examined in conjunction with net income as
presented in the financial statements and data included elsewhere in this
report.  FFO is determined in accordance with the principles established by
the Board of Governors of the National Association of Real Estate Investment
Trusts ("NAREIT").  FFO, as defined by NAREIT, represents net
income (loss) determined in accordance with GAAP, excluding extraordinary items
as defined under GAAP and gains or losses from sales of depreciable operating
property, plus certain non-cash items such as real estate asset depreciation and
amortization, and after adjustments for unconsolidated partnerships and joint
ventures. FFO presented herein is not necessarily comparable to FFO presented by
other real estate companies due to the fact that not all real estate companies
use the same definition. However, our FFO is comparable to the FFO of real
estate companies that use the NAREIT definition.  Adjusted funds from
operations ("AFFO") is defined as FFO less recurring value retention
capital expenditures. FFO and AFFO should not be considered alternatives to net
income as indicators of our operating performance or as alternatives to cash
flows as measures of liquidity. FFO does not measure whether cash flow is
sufficient to fund all of our cash needs, including principal amortization,
capital expenditures and distributions to unitholders. Additionally, FFO does
not represent cash flows from operating, investing or financing activities as
defined by GAAP. Reference is made to "Management's Discussion and Analysis
of Financial Condition and Results of Operations - Liquidity and Capital
Resources" for a discussion of our cash needs and cash flows. A
reconciliation of FFO and AFFO follows:

|                                                                                                                                                                                                                                                                                               |  | Years Ended December 31,                       
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------
|                                                                                                                                                                                                                                                                                               |  | 2002                                           
|Net income available to common unitholders                                                                                                                                                                                                                                                     |  | $ 60,747                                       
|Extraordinary loss
      Real estate asset depreciation and amortization:
           Wholly-owned real estate assets - continuing
      operations
           Wholly-owned real estate assets - discontinued
      operations
           Joint venture real estate assets 
              Total |  | 1,687
       
      47,093
      8061,50149,400
|Gain on sale of previously depreciated
      operating real estate assets:
      Wholly-owned real estate assets - continuing operations
      Wholly-owned real estate assets - discontinued operations
      Joint venture real estate assets 
             Total                            |  | (17,906
      (  9,829(  2,611
      (30,346   
|Funds from operations - basic and diluted                                                                                                                                                                                                                                                      |  | $ 81,488                                       
|Recurring value retention capital
      expenditures:
      Carpet and flooring
      Appliances
      Other additions and improvements
          Total                                                                                                                                        |  | $6,401
      8215,855
         13,077          
|Adjusted funds from operations - basic and diluted                                                                                                                                                                                                                                             |  | $ 68,411                                       
|Average Units outstanding - basic                                                                                                                                                                                                                                                              |  | 30,571                                         
|Average Units outstanding - diluted                                                                                                                                                                                                                                                            |  | 30,684                                         

MANAGEMENT'S DISCUSSION AND ANALYSIS
(Amounts in Thousands, Except Property and Per Unit Data)

---

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
       Our capital structure includes the use of
fixed-rate and variable-rate indebtedness. As such, we are exposed to the impact
of changes in interest rates. We periodically seek input from third-party
consultants regarding market interest rate and credit risk in order to evaluate
our interest rate exposure. In certain situations, we may utilize derivative
financial instruments in the form of rate caps, rate swaps or rate locks to
hedge interest rate exposure by modifying the interest rate characteristics of
related balance sheet instruments and prospective financing transactions. We do
not utilize such instruments for trading or speculative purposes. We did not
have any derivative instruments in place at December 31, 2002 or  2001.

We typically refinance
maturing debt instruments at the then-existing market interest rates and terms,
which may be more or less favorable than the interest rates and terms on the
maturing debt.

The
following table provides information about our financial instruments that are
sensitive to changes in interest rates and should be read in conjunction with
the accompanying consolidated financial statements and notes thereto. For debt
obligations, the table presents principal cash flows and related weighted
average interest rates in effect at December 31, 2002 by expected maturity
dates. The indebtedness outstanding under each of our credit facilities is
reflected in the table using the May 2005 maturity date of our $252 million
credit facility. Outstanding indebtedness for each tax-exempt bond issue is
reflected in the table using the earlier of the related bond maturity date or
the bond enhancement facility maturity date, as applicable. The table is
presented on a pro forma basis to reflect the February 2003 reissuance of the
letters of credit enhancing $44,930 of tax-exempt bonds under the $252 million
credit facility with a maturity date of May 2005. The weighted average interest
rates presented in this table are inclusive of credit enhancement fees. There
have been no substantial changes in our market risk profile from the preceding
year and the assumptions are consistent with prior year assumptions.

Expected Year of Maturity

2003
      2004
      2005
      2006
      2007
      2008 andThereafter
      2002Total
      2002Fair Value
      2001TotalDebt:Conventional fixed rate
        Average interest rate
      $1,720
        7.19%
      $20,021
        7.13%
      $108,280
        6.80%
      $178,909
        7.28%
      $207,913
        6.13%
      $121,659
        7.34%
      $638,502
        6.83%
      $692,223
        4.46%
      $504,062
        7.53%Tax-exempt fixed rate
        Average interest rate
      $2057.63%
      $58,4054.91%
      $2307.63%
      $2457.63%
      $2607.63%
      $9,7757.63%
      $69,1205.33%
      $72,1453.17%
      $69,3106.47%Total fixed-rate debt
           Average interest rate
      $1,9257.24%
      $78,4265.48%
      $108,5106.80%
      $179,1547.28%
      $208,1736.13%
      $131,4347.36%
      $707,6226.68%
      $764,3684.34%
      $573,3727.40%Tax-exempt variable rate
        Average interest rate
      -
        -
      -
        -
      $55,015
        2.47%
      $25,740
        2.45%
      $41,500
        2.35%
      $48,700
        2.36%
      $170,955
        2.41%
      $170,955
        2.41%
      $170,955
        2.47%Variable-rate credit facilities
        Average interest rate
      -
        -
      -
        -
      $75,608
        1.89%
      -
        -
      -
        -
      -
        -
      $75,608
        1.89%
      $75,608
        1.89%
      $132,904
        2.94%Variable-rate construction loans
        Average interest rate
      --
      --
      $4,3893.25%
      --
      -
          -
      --
      $4,3893.25%
      $4,3893.25%
      --Total variable-rate debt
           Average interest rate
      --
      --
      $135,0122.17%
      $25,7402.45%
      $41,5002.35%
      $48,7002.36%
      $250,9522.26%
      $250,9522.26%
      $303,8592.68%Total debt
              Average interest rate
      $1,9257.24%
      $78,4265.48%
      $243,522
          4.23%
      $204,8946.67%
      $249,6735.50%
      $180,1346.01%
      $958,5745.53%
      $1,015,3203.83%
      $877,2315.77%


The estimated fair value
of our debt at December 31, 2002 is based on a discounted cash flow
analysis using current borrowing rates for debt with similar terms and remaining
maturities. Such fair value is subject to changes in interest rates. Generally,
the fair value will increase as interest rates fall and decrease as interest
rates rise.





ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAThe financial statements and
supplementary data are listed under Item 15(a) and filed as part of this report
on the pages indicated.ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSUREAs discussed more fully in the Trust's
Proxy Statement to be filed relating to the 2003 Annual Meeting of the
Registrant's Shareholders, during 2002 we dismissed Arthur Andersen LLP and
engaged Deloitte & Touche LLP to be our independent public auditors.



































PART III

Gables GP,
Inc., the sole general partner of the Registrant, is a wholly-owned subsidiary
of Gables Residential Trust (the "Trust"). The members of the board of
directors of Gables GP, Inc. are the same as the members of the board of
trustees of the Trust. The "executive officers" of Gables GP, Inc. are
the same as the "executive officers" of the Trust. Other than the
Trust, which beneficially owns 80.9% of the Registrant's outstanding common
Units as of March 14, 2003, no person beneficially owns more than 5% of the
Registrant's outstanding common Units. All applicable information required by
this Part III with respect to the Registrant will be included in the Trust's
Proxy Statement to be filed in connection with its 2003 Annual Meeting of
Shareholders.ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTThe information concerning the Directors and
Executive Officers of the Registrant required by Item 10 shall be included in
the Trust's Proxy Statement to be filed  in connection with its 2003 Annual Meeting of Shareholders and is incorporated herein by reference.ITEM 11.  EXECUTIVE COMPENSATIONThe information concerning Executive Compensation
required by Item 11 shall be included in the Trust's Proxy Statement to be filed
in connection with its 2003 Annual Meeting of Shareholders and is
incorporated herein by reference.ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTThe Trust maintains the 1994 Share Option and
Incentive Plan pursuant to which common shares or other equity awards may be
issued or granted to eligible persons.  The following table provides
information about equity awards under the 1994 Share Option and Incentive Plan
as of December 31, 2002.
Equity Compensation
Plan InformationNumber of securities
      to be
      issued upon exercise of
      outstanding options, 
      warrants and rights
      (a)
    Weighted-average
      exercise
      price of outstanding
      options, warrants and rights
      (b)
    Number of securities
      remaining available
      for 
      future issuance under
      equity compensation plans
      (excluding securities reflected
      in column (a)) 
      (c)Plan CategoryEquity compensation plans approved by
        security holders (1)
    
    901,332
    (2)
    $25.64
    (3)
    151,645
    (4)Equity compensation plans not approved by
        security holders
    
    N/A
    
    N/A
    
    N/ATotal
    
    901,332
    
    $25.64
    
    151,645(1)  Includes information
        related to the Trust's 1994 Share Option and Incentive Plan.
        (2)  Does not include restricted shares as they have been reflected
        in the Trust's total common  shares outstanding.
        (3)  Does not include outstanding deferred share awards granted to
        members of the Trust's board of trustees as there is no associated
        exercise price.
        (4)  Certain securities may be issued in the form of unrestricted
        or restricted shares.
Additional information concerning Security
Ownership of Certain Beneficial Owners and Management required by Item 12 shall
be included in the Trust's Proxy Statement to be
filed in connection with its 2003 Annual Meeting of the Shareholders and is
incorporate herein by reference.ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSThe information concerning Certain Relationships
and Related Transactions required by Item 13 shall be included in the Trust's
Proxy Statement to be filedin connection with its2003 Annual Meeting of the Shareholders and is incorporated herein by reference.
ITEM 14.  CONTROLS AND PROCEDURES(a)  Evaluation of disclosure controls and procedures.
       As required by new Rule 13a-15 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
within the 90 days prior to the date of this report, we carried out an
evaluation under the supervision and with the participation of senior
management, including our Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of our disclosure controls and
procedures.  Based upon that evaluation, our Chief Executive Officer and
Chief Financial Officer concluded that our disclosure controls and procedures
are effective to ensure that information required to be disclosed by us in the
reports we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission's rules and forms. We continue to review and document our
disclosure controls and procedures, including our internal controls and
procedures for financial reporting, and may from time to time make changes aimed
at enhancing their effectiveness and to ensure that our systems evolve with our
business.
   (b)  Changes in internal controls
       None

PART IVITEM 15.  EXHIBITS, FINANCIAL STATEMENTS
AND SCHEDULE AND REPORTS ON FORM 8-K
   (a)   Financial Statements and ScheduleThe financial statements and schedule listed below are filed as part of this
annual report on the pages indicated.Report of Independent Public AuditorsConsolidated Balance Sheets as of December 31, 2002 and December 31,
        2001Consolidated Statements of Operations for the years ended December 31,
        2002, 2001 and 2000Consolidated Statements of Partners' Capital for the years ended
        December 31, 2002, 2001 and 2000Consolidated Statements of Cash Flows for the years ended December 31,
        2002, 2001 and 2000Notes to Consolidated Financial StatementsSchedule III - Real Estate Investments and Accumulated Depreciation as
        of December 31, 2002
      49
        50
        51
        52
        53
        54
        74
(b)   Reports on Form 8-KNone(c)   ExhibitsCertain of the exhibits required by
Item 601 of Regulation S-K have been filed with previous reports by the
Registrant, referred to herein as the Operating
Partnership (File No. 0-22683), or the Trust (File No. 1-125990) and are incorporated herein by reference to the
filing in the corresponding numbered footnote.Exhibit No.
    Description3.1
      3.2
      3.3
      3.4
      3.5
      3.6
      3.7
      3.8
      4.1
      4.2
      4.3
      4.4
      4.5
      4.6
      4.7
      4.8
      4.9
      4.10
      4.11
      4.12
      4.13
      10.1
      10.2
      10.3
      10.4
      10.5
      10.6
      10.7
      21.1
      23.1
    *
      
      *
      *
    ---
      ---
      ---
      ---
      ---
      ---
      ---
      ---
      ---
      ---
      ---
      ---
      ---
      ---
      ---
      ---
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      ---
  Fifth Amended and Restated
      Agreement of Limited Partnership of the Operating Partnership (1)
      Amended and Restated Declaration of Trust of the Trust (2)
      Articles of Amendment to the Trust's Amended and Restated Declaration of
      Trust (3)
      Articles Supplementary to the Trust's Amended and Restated Declaration of
      Trust creating the 8.30% Series A Cumulative Redeemable Preferred Shares
      (4)
      Articles Supplementary to the Trust's Amended and Restated Declaration of
      Trust creating the 5.00% Series Z Cumulative Redeemable Preferred Shares
      (3)
      Articles Supplementary to the Trust's Amended and Restated Declaration of
      Trust creating the 8.625% Series B Cumulative Redeemable Preferred Shares
      (5)
      Articles Supplementary to the Trust's Amended and Restated Declaration of
      Trust creating the 7.875% Series C Cumulative Redeemable Preferred Shares
      (1)
      Second Amended and Restated Bylaws of the Trust (6)
      Indenture, dated March 23, 1998, between the Operating Partnership and
      First Union National Bank (7)
      Supplemental Indenture No. 1, dated March 23, 1998, between the Operating
      Partnership and First Union  National Bank (7)
      The Operating Partnership 6.80% Senior Notes due 2005 (7)
      Supplemental Indenture No. 4, dated February 22, 2001, between the
      Operating Partnership and First Union National Bank (8)
      The Operating Partnership 7.25% Senior Notes due 2006 (8)
      Supplemental Indenture No. 5, dated July 8, 2002, between the Operating
      Partnership and Wachovia Bank, National Association (9)
      The Operating Partnership 5.75% Senior Notes due 2007 (9)
      Supplemental Indenture No. 6, dated September 27, 2002, between the
      Operating Partnership and Wachovia Bank, National Association (1)
      The Operating Partnership 5.86% Senior Notes due 2009 (1)
      Supplemental Indenture No. 7, dated September 27, 2002, between the
      Operating Partnership and Wachovia Bank, National Association (1)
      The Operating Partnership 6.10% Senior Notes due 2010 (1)
      Registration Rights Agreement, dated September 27, 2002, between the Trust
      and Teachers Insurance and Annuity Association of America (1)
      Registration Rights Agreement, dated September 27, 2002, between the
      Operating Partnership and Teachers Insurance and Annuity Association of
      America (1)
      Unsecured Note No. 2 for $29,681,000 dated August 13, 1997 between the
      Operating Partnership, Gables-Tennessee Properties and Teachers Insurance
      and Annuity Association of America (10)
      Securities Purchase Agreement dated September 27, 2002 between the Trust,
      Gables GP, Inc., the Operating Partnership and Teachers Insurance and
      Annuity Association of America (1)Third Amended and Restated $225,000,000 Revolving Credit Facility, dated
      May 14, 2001, by and among Gables Realty Limited Partnership and
      Gables-Tennessee Properties, L.L.C. (as the Borrowers) and Wachovia Bank,
      N.A., First Union National Bank, The Chase Manhattan Bank, AmSouth Bank,
      PNC Bank, National Association, SouthTrust Bank, and Bank of America, N.A.
      (collectively, as Lenders) and Wachovia Bank, N.A. (as agent) (11)
      Fourth Amended and Restated $225,000,000 Revolving Credit Facility dated
      June 27, 2002, by and among Gables Realty Limited Partnership and
      Gables-Tennessee Properties, L.L.C. (as the Borrowers) and Wachovia Bank,
      N.A., Wachovia Securities,  Inc., JPMorgan Chase Bank, AmSouth
      Bank, PNC Bank, National Association, SouthTrust Bank, Bank of
      America, N.A., Wells Fargo Bank, N.A., and Suntrust Bank (collectively, as
      Lenders) and Wachovia Bank, N.A. (as agent) (12)
      Fifth Amended and Restated Revolving Credit Facility dated
      February 20, 2003 (with a current committed capacity level of
      $252,000,000) by and among Gables Realty Limited Partnership and
      Gables-Tennessee Properties, L.L.C. (as the Borrowers) and Wachovia
      Securities, Inc., Wachovia Bank, National Association, JPMorgan Chase Bank, PNC Bank,
      National Association, AmSouth Bank, N.A. SouthTrust Bank, Bank of America, N.A., Wells Fargo
      Bank, N.A., and SunTrust Bank, N.A. (collectively, as Lenders) and
      Wachovia Bank, National Association (as agent)
      Contribution Agreement with an effective date of March 16, 1998 between
      Gables, the Operating Partnership and specified representatives of
      Trammell Crow Residential executed in connection with Gables' April 1,
      1998 acquisition of the real estate assets and operations of
      South Florida (13)
      Amendment No. 1 to Contribution Agreement dated April 1, 1998 (14)
      Schedule of Subsidiaries of the Operating Partnership
      Consent of Deloitte & Touche LLP
      __________________* Filed herewith(1)   The Trust's Quarterly
            Report on Form 10-Q for the quarter ended September 30, 2002 (File
            No. 1-12590).
(2)   The Trust's Registration Statement on Form S-11, as amended (File
            No. 33-70570).
(3)   The Trust's Quarterly Report on Form 10-Q for the quarter ended June
            30, 1998 (File No. 1-12590).
(4)   The Trust's Current Report on Form 8-K dated July 24, 1997 (File No.
            1-12590).
(5)   The Trust's Current Report on Form 8-K dated November 12, 1998 (File
            No. 1-12590).
(6)   The Trust's Annual Report on Form 10-K for the fiscal year ended
            December 31, 1999 (File No. 1-12590).
(7)   The Operating Partnership's Current Report on Form 8-K dated March
            23, 1998 (File No. 0-22683).
(8)   The Operating Partnership's Current Report on Form 8-K dated
            February 22, 2001 (File No.0- 22683).
(9)   The Operating Partnership's Current Report on Form 8-K dated July 8,
            2002 (File No. 0-22683).
(10) The Trust's Quarterly Report on Form 10-Q for the quarter ended
            September 30, 1997 (File No. 1-12590).
(11) The Trust's Quarterly Report on Form 10-Q for the quarter ended June
            30, 2001 (File No. 1-12590).
(12) The Trust's Quarterly Report on Form 10-Q for the quarter ended June
            30, 2002 (File No. 1-12590).
(13) The Trust's Current Report on Form 8-K dated March 16, 1998 (File
            No. 1-12590).
(14) The Trust's Current Report on Form 8-K dated April 1, 1998, as
            amended (File No. 1-12590).
The Trust's Proxy Statement is to be filed with the
Securities and Exchange Commission not later than 120 days after December 31,
2002 (the end of the fiscal year covered by this Annual Report on Form 10-K).
SIGNATURESPursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, Gables Realty Limited Partnership certifies that it
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

| |  |  |                                                                                              |  |  |                                                                                                                                        
| |  |  | -------------------------------------------------------------------------------------------- |  |  | ---------------------------------------------------------------------------------------------------------------------------------------
| |  |  | GABLES REALTY
      LIMITED PARTNERSHIP
      By: Gables GP, Inc.
      Its: General Partner
|
| |  |  | By                                                                                           |  |  | /s/ Chris D.
      Wheeler
      Chris D. Wheeler
      Chairman of the Board of Directors,
      President and Chief Executive Officer
| |  |  |                                                                                              |  | 
| |  |  |                                                                                              |  | 
| |  |  |                                                                                              |  | 
| |  |  |                                                                                              |  | 
| |  |  |                                                                                              |  |  | March 14, 2003                                                                                                                         

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on behalf of Gables
GP, Inc. as general partner of Gables Realty Limited Partnership and in the capacities and on the dates indicated.

Signatures
      Title
      Date/s/ Chris D. WheelerChris D. Wheeler/s/ Marvin R. Banks, Jr.Marvin R. Banks, Jr./s/ Dawn H. SevertDawn H. Severt/s/ Marcus E. BromleyMarcus E. Bromley/s/ C. Jordan ClarkC. Jordan Clark/s/ Lauralee E. MartinLauralee E. Martin/s/ John W. McIntyreJohn W. McIntyre/s/ Mike E. MilesMike E. Miles/s/ James D. MottaJames D. Motta
      Chairman of the Board of Directors, President and
        Chief Executive Officer 
        (Principal Executive Officer)
        Senior Vice President and Chief Financial Officer
        (Principal Financial Officer)
        Vice President and Chief Accounting Officer
        (Principal Accounting Officer)
        Director
        Director
        Director
        Director
        Director
        Director
      March 14, 2003
        March 14, 2003
        March 14, 2003
        March 14, 2003
        March 14, 2003
        March 14, 2003
        March 14, 2003
        March 14, 2003
        March 14, 2003


CERTIFICATION PURSUANT TO SECTION 302(a)
OF THE SARBANES-OXLEY ACT OF 2002

I, Chris D. Wheeler, certify that:
1. I have reviewed this annual report on Form 10-K of Gables Realty Limited
Partnership;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
          a) Designed such
disclosure controls and procedures to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this
annual report is being prepared;
          b) Evaluated the
effectiveness of the registrant's disclosure controls and procedures as of a
date within 90 days prior to the filing date of this annual report (the
"Evaluation Date"); and
          c) Presented in this
annual report our conclusions about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
function):
          a) All significant
deficiencies in the design or operation of internal controls which could
adversely affect the registrant's ability to record, process, summarize and
report financial data and have identified for the registrant's auditors any
material weaknesses in internal controls; and
          b) Any fraud, whether or
not material, that involves management or other employees who have a significant
role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: March 14, 2003

/s/ Chris D. WheelerChris D. Wheeler                                     
                                 
President and Chief Executive Officer











CERTIFICATION PURSUANT TO SECTION 302(a)
OF THE SARBANES-OXLEY ACT OF 2002

I, Marvin R. Banks, Jr., certify that:

1. I have reviewed this annual report on Form 10-K of Gables
Realty Limited Partnership;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
          a) Designed such
disclosure controls and procedures to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this annual report
is being prepared;
          b) Evaluated the
effectiveness of the registrant's disclosure controls and procedures as of a
date within 90 days prior to the filing date of this annual report (the
"Evaluation Date"); and
          c) Presented in this annual report
our conclusions about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
function):
          a) All significant
deficiencies in the design or operation of internal controls which could
adversely affect the registrant's ability to record, process, summarize and
report financial data and have identified for the registrant's auditors any
material weaknesses in internal controls; and
          b) Any fraud, whether or
not material, that involves management or other employees who have a significant
role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this annual report
whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date:  March 14, 2003

/s/ Marvin R. Banks, Jr.
Marvin R. Banks, Jr.                                
                     
Senior Vice President and Chief Financial Officer







REPORT OF INDEPENDENT PUBLIC AUDITORS

To Gables Realty Limited Partnership:

We have audited the
accompanying consolidated balance sheets of Gables Realty Limited Partnership and
subsidiaries as of December 31, 2002 and 2001 and the related consolidated
statements of operations, partners' capital and cash flows for each of the
three years in the period ended December 31, 2002. Our audits also included the financial statement schedule
listed in the Index to Financial Statements at Item 15. These financial
statements and the financial statement schedule are the responsibility of the management of Gables
Realty Limited Partnership.
Our responsibility is to express an opinion on the financial statements and the
financial statement schedule based on our audits.

We conducted our audits in
accordance with auditing standards generally accepted in the United States of
America.
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, such
financial statements present fairly, in all
material respects, the financial position of Gables Realty Limited Partnership and
subsidiaries as of December 31, 2002 and 2001 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2002 in conformity with accounting principles generally
accepted in the United States of America. Also, in our opinion, such
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects, the information set forth therein.

As
discussed in Note 5 to the consolidated financial statements, in connection with the adoption
of SFAS No. 144 effective January 1,
2002, the 2001 and 2000 results of operations and cash flows were restated in accordance with the provisions of such standard.



/s/ Deloitte & Touche  LLP

Atlanta, Georgia
March 14, 2003











GABLES REALTY LIMITED PARTNERSHIP
        CONSOLIDATED BALANCE SHEETS
        (Amounts in Thousands, Except Per Unit Data)December 31, 2002
      December 31, 2001ASSETS:Real estate assets:
           Land
           Buildings
           Furniture, fixtures and equipment
           Construction in progress
           Investment in joint ventures
           Undeveloped land
             Real estate assets before accumulated
        depreciation
           Less: accumulated depreciation
             Net real estate assets
        Cash and cash equivalents
        Restricted cash
        Deferred financing costs,  net of accumulated amortization of
        $4,903 and 
            $5,450 at December 31, 2002 and 2001, respectively
        Other assets, net
           Total assets
    
    $250,095 
      1,259,232 
      130,547 
      129,159 
      12,423 12,951 1,794,407 
       (266,139)1,528,268 
      6,281 
      7,632 
      5,555 36,198  
      
      $1,583,934
    $248,955 
      1,204,680 
      109,324 
      157,570 
      20,898 19,376 
      1,760,803 (230,118)
      1,530,685 
      4,231 
      12,013 
      4,351 37,926 $1,589,206LIABILITIES AND PARTNERS' CAPITAL:Notes payable
        Accrued interest payable
        Preferred distributions payable
        Real estate taxes payable
        Accounts payable and accrued expenses - construction
        Accounts payable and accrued expenses - operating
        Security deposits
           Total liabilities
        Limited partners' common capital interest (5,811 and 6,090 common Units
        at 
          December 31, 2002 and 2001, respectively)
        Preferred partners' capital interest (180 Series Z Preferred Units),
          at $25.00 liquidation preference
        Commitments and contingencies
        Partners' capital:
           General partner (303 and 305 common Units)   
           Limited partner (24,168 and 24,059 common Units)
           Preferred partners (2,000 Series B Preferred Units and
        1,600 Series C
                Preferred Units at December
        31, 2002; 4,600 Series A Preferred Units
                and 2,000 Series B Preferred
        Units at December 31, 2001), at
                $25.00 liquidation preference
           Total partners' capital
           Total liabilities, partners' capital interest and
        partners' capital
      $958,574 
        14,081 
        2,026 
        16,172 
        7,275 
        18,814 4,133  
        1,021,075 142,054 4,500 4,957
        321,34890,000
           416,305$1,583,934
      $877,231 
        8,384 
        1,412 
        17,065 
        9,082 
        16,914 4,834  
        934,922 
        180,467 
        4,500 
        4,766
        299,551165,000469,317$1,589,206
    See notes
      to consolidated financial statements.


|GABLES REALTY LIMITED PARTNERSHIP
      CONSOLIDATED STATEMENTS OF OPERATIONS
      (Amounts in Thousands, Except Per Unit Data)                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -----------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Years ended December 31,                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 2002                                                                                                                   
|Revenues:Rental revenues
      Other property revenues
           Total property revenues
      Property management revenues
      Ancillary services revenues
      Interest income
      Other revenues
           Total other revenues
           Total revenues                                                                                                                                                                                                                                                                                                            | $210,51311,906
      222,419
      7,309
      8,317
      37870016,704239,123                                         
|Expenses:Property operating and maintenance (exclusive of items shown separately below)
      Real estate asset depreciation and amortization
      Property management - owned
      Property management - third party
      Ancillary services
      Interest expense and credit enhancement fees
      Amortization of deferred financing costs
      General and administrative
      Corporate asset depreciation and amortization
      Unusual items
           Total expenses                                                                                          | 79,512
      47,093
      6,334
      6,563
      5,236
      43,984
      1,336
      7,377
      1,722-
      199,157
|Income from continuing operations before equity in
      income of joint ventures
         and gain on sale 
      Equity in income of joint ventures
      Gain on sale of previously depreciated operating real estate assets
      Gain on sale of land and development rights
      Income from continuing operations
      Operating income from discontinued operations
      Gain on disposition of discontinued operations
      Income from discontinued operations
      Income before extraordinary loss
      Extraordinary loss from early extinguishment of debt | 39,966
      2,900
      17,9062,100
      
        62,872
      864 9,829 
      10,693 
      73,565(  1,687         
|Net income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 71,878                                                                                                                 
|Distributions to preferred unitholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | ( 11,131                                                                                                               
|Net income available to common unitholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | $60,747                                                                                                                
|Weighted average common Units outstanding -
      basic
      Weighted average common Units outstanding - diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 30,571
      30,684                                                                                                    
|Per Common Unit
      Information - Basic:Income from continuing operations (net of preferred distributions)
      Income from discontinued operations
      Income before extraordinary loss (net of preferred distributions)
      Extraordinary loss
      Net income available to common unitholders                                                                                                                                                                                                                                                                       | $1.69
      $0.35
      $2.04
      ( $0.06
      $1.99                                                                
|Per Common Unit
      Information - Diluted:Income from continuing operations (net of preferred distributions)
      Income from discontinued operations
      Income before extraordinary loss (net of preferred distributions)
      Extraordinary loss
      Net income available to common unitholders                                                                                                                                                                                                                                                                     | $1.69
      $0.35
      $2.03
      ( $0.05
      $1.98                                                                
|See notes
      to consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                        

GABLES REALTY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
(Amounts in Thousands, Except Per Unit Data)

GeneralPartner
      LimitedPartner
      PreferredPartners
      Total
        Partners'Capital
      Limited
        Partners'
        Common
        CapitalInterest
      Preferred
        Partners'
        CapitalInterest


Balance, December 31, 1999
      $ 5,154
      
      $348,850
      
      $165,000
      
      $519,004
      
      $136,757
      
      $4,500Contributions from the Trust
        related to:
           Proceeds from the exercise of share options
           Issuance of shares for trustee compensation
           Issuance of share grants, net of forfeitures and deferred
        compensation 
        Contributions related to property acquisitions
        Redemption of Units from the Trust for treasury share purchases
        Redemption of Units for cash   
        Net income available to common unitholders
        Distributions declared and paid ($2.20 per Unit)
        Adjustment to reflect limited partners' redeemable capital at redemption
           value at balance sheet date
      47
        1
        22
        104
        (  452
        
        (   9
        739
        (  665(  374
      )
        )
        )
        )
      4,652
        57
        2,208
        (  104
        
        ( 44,773
        9
        56,840
        ( 51,244( 37,026
      )
        )
        )
        )
      -
        -
        -
        -
        -
        -
        -
        --
      
      4,699
        58
        2,230
        -
        ( 45,225
          -
        57,579
        ( 51,909( 37,400
      )
        )
        )
      -
        -
        -
        10,373
        -
        (  888
        16,359
        ( 14,63937,400
      )
        )
      -
        -
        -
          -
        -
        -
        -
        --Balance, December 31, 2000
      4,567
      
      279,469
      
      165,000
      
      449,036
      
      185,362
      
      4,500Contributions
        from the Trust related to:
           Proceeds from the
        exercise of share options
           Issuance of shares for trustee compensation
           Issuance of share grants, net of forfeitures and deferred
        compensation
        Conversion of redeemable Units to common shares
        Net income available to common unitholders
        Distributions declared and paid ($2.34 per Unit)
        Adjustment to reflect limited partners' redeemable capital at redemption
           value at balance sheet date
      151
        1
        16
        163
        
        693
        ( 707
           ( 118
      )
        )
      14,993
        87
        1,550
        16,159
        
        54,381
        ( 55,447( 11,641
      )
        )
      -
        -
        -
        -
        -
        --
      
      15,144
        88
        1,566
        16,322
        55,074
        
        ( 56,154( 11,759
      )
        )
      -
        -
        -
        ( 16,322
        14,249
        ( 14,58111,759
      )
        )
      -
        -
        -
        -
        -
        --Balance, December 31, 2001
      4,766
      
      299,551
      
      165,000
      
      469,317
      
      180,467
      
      4,500Contributions from
        (distributions to) the Trust
        related to:
           Net proceeds from issuance of Series C Preferred Shares
           Redemption of Series A Preferred Shares
           Proceeds from the exercise of share options
           Issuance of shares for trustee compensation
           Issuance of share grants, net of forfeitures and deferred
        compensation
        Redemption of Units from the Trust for treasury share purchases
        Redemption of Units for cash
        Conversion of redeemable Units to common shares
        Net income available to common unitholders
        Distributions declared and paid ($2.41 per Unit)
        Adjustment to reflect limited partners' redeemable capital at redemption
           value at balance sheet date
      (   3
        -
        76
        1
        31
        (  136
        (   4
        74
        607
        
        (  737
         282
      )
        )
        )
        )
      (  247
        -
        7,526
        113
        3,052
        ( 13,489
        4
        
        7,315
        48,286
        ( 58,66327,900
      )
        )
        )
      40,000
        ( 115,000
        -
        -
        -
        -
        -
        -
        -
        --
      )
      39,750
        ( 115,000
        7,602
        114
        3,083
        ( 13,625
        -
        7,389
        48,893
        ( 59,40028,182
      )
        )
        )
      -
        -
        -
        -
        -
        -
        (  352
        ( 7,389
         11,854
        ( 14,344
         ( 28,182
      )
        )
        
        )
        )
      -
        -
        -
        -
        -
        -
        -
        -
        -
        
        --Balance, December 31, 2002
      $  4,957
      
      $321,348
      
      $ 90,000
      
      $416,305
      
      $142,054
      
      $4,500See notes to consolidated financial statements.




|GABLES REALTY LIMITED PARTNERSHIP
      CONSOLIDATED STATEMENTS OF CASH FLOWS
      (Amounts in Thousands, Except Per Unit Data)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                         
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Years Ended December 31,2002            2001  
      2000                                                                                                                               
|CASH FLOWS FROM OPERATING ACTIVITIES:Net income
      Adjustments to reconcile net income to net cash provided 
           by operating activities of continuing operations:
           Income from discontinued operations
           Depreciation and amortization
           Equity in income of joint ventures
           Gain on sale of real estate assets
           Long-term compensation expense
           Extraordinary loss from early extinguishment of
      debt
           Unusual items
           Operating distributions received from joint
      ventures 
           Change in operating assets and liabilities:
              Restricted cash
              Other assets
              Other liabilities, net
                Net
      cash provided by operating activities from continuing operations
                Net cash provided
      by operating activities from discontinued operations 
                  Net
      cash provided by operating activities | $71,878
      (  10,693
      50,151
      (  2,900
      (  20,006
      1,230
      1,687
      -
      1,745
      649
      (   1219,670
      103,290
          1,670
      104,960
|CASH FLOWS FROM INVESTING ACTIVITIES:Acquisition, development, construction and renovation of real estate assets
      Recurring value retention capital expenditures
      Non-recurring and/or value-enhancing capital expenditures
      Restricted cash released from (held in) escrow, net
      Net proceeds from sale of wholly-owned real estate assets
      Net proceeds from disposition of discontinued operations
      Investment in joint ventures
      Net proceeds from sale of joint venture real estate assets
      Proceeds from contribution of real estate assets to joint venture
      Other
                Net cash (used in)
      provided by investing activities                                                                                                                                                                                                                                                                                                 | (  91,281
      (  13,077
      (  11,910
      349
      46,803
      43,227
      (  1,093
      10,680
      -(  1,059
        (17,361                                               
|CASH FLOWS FROM FINANCING ACTIVITIES:Contributions from (distributions to) the Trust related to:
         Net proceeds from issuance of Series C Preferred Shares
         Redemption of Series A Preferred Shares
         Proceeds from the exercise of share options
      Unit redemptions and Unit redemptions related to treasury share purchases
      Payments of deferred financing costs
      Notes payable proceeds
      Notes payable repayments
      Prepayment penalty
      Principal escrow deposits
      Preferred distributions paid
      Common distributions paid ($2.41, $2.34 and $2.20 per Unit, respectively)
             Net cash  (used in) provided by financing activities
      Net change in cash and cash equivalents
      Cash and cash equivalents, beginning of period
      Cash and cash equivalents, end of period                                                                                                                                   | 39,750
      (115,000
      7,602
      ( 13,977
      (  2,935
      224,562
      ( 143,219
      (   1,451
      3,380
      ( 10,517( 73,744 (  85,549  2,0504,231
      $  6,281   
|Supplemental disclosure of cash flow information:Cash paid for interest
         Interest capitalized
         Cash paid for interest, net of amounts capitalized                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | $45,7878,875$36,912                                                                                                                                                                     
|See notes to consolidated financial
        statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Amounts in Thousands, Except Property and Per Unit Data)

---

Unless the context otherwise requires, all references to
"we," "our" or "us" in this report refer
collectively to Gables Realty Limited Partnership and its subsidiaries.1.ORGANIZATION AND FORMATION
        Gables Realty Limited Partnership
(the "Operating Partnership") is the entity through which Gables
Residential Trust (the "Trust"), a real estate investment trust (a
"REIT"), conducts substantially all of its business and owns, either
directly or indirectly through subsidiaries, substantially all of its assets.
The Trust was formed in 1993 under Maryland law to continue and expand the
operations of its privately owned predecessor organization. The Trust
completed its initial public offering on January 26, 1994.
       We are a fully integrated real estate
company engaged in the multifamily apartment community management, development,
construction, acquisition and disposition businesses. We also provide
management, development and construction, corporate rental housing and
brokerage services to third parties and unconsolidated joint ventures. Substantially all
of our third-party management businesses are conducted through a wholly-owned
subsidiary, Gables Residential Services.
       As of December 31, 2002, the Trust was an
80.8% economic owner of our common equity. The Trust controls us through
Gables GP, Inc. ("Gables GP"), a wholly-owned subsidiary of the Trust
and our sole general partner. This structure is commonly referred to as an
umbrella partnership REIT or "UPREIT." The board of directors of
Gables GP, the members of which are the same as the members of the Trust's board
of trustees, manages our affairs by directing the affairs of Gables GP.
The Trust's limited partnership and indirect general partnership interests in us
entitle it to share in our cash distributions, and in our profits and losses in
proportion to its ownership interest therein and entitles the Trust to vote on
all matters requiring a vote of the limited partners. Generally, our other
limited partners are persons who contributed their direct or indirect interests
in certain of our real estate assets primarily in connection with the IPO and the 1998
acquisition of the real estate assets and operations of Trammell Crow
Residential South Florida ("South Florida"). We are
obligated to redeem each common unit of limited partnership interest
("Units") held by a person other than the Trust at the request of the
holder for an amount equal to the fair market value of a share of the the
Trust's common shares at the time of such redemption, provided that the Trust,
at its option, may elect to acquire each Unit presented for redemption for one
common share or cash. Such limited partners' redemption rights are
reflected in "limited partners' capital interest" in our accompanying
consolidated balance sheets at the cash redemption amount at the balance sheet
date. The Trust's percentage ownership interest in us will increase with each
redemption. In addition, whenever the Trust issues common shares or
preferred shares, it is obligated to contribute any net proceeds to us and we
are obligated to issue an equivalent number of common or preferred Units with
substantially identical rights as the common or preferred shares, as
applicable, to the Trust.
       Distributions to holders of Units are made
to enable distributions to be made to the Trust's shareholders under its
dividend policy. The Trust must currently distribute 90% of its ordinary
taxable income to its shareholders. We make distributions to the Trust to
enable it to satisfy this requirement.
      As of December 31,
2002, we managed a total of 159 multifamily apartment communities comprising
44,676 apartment homes for assets owned by us and our third-party clients.
At December 31, 2002, we owned 74 stabilized multifamily apartment communities
comprising 20,422 apartment homes, an indirect 25% interest in one stabilized
apartment community comprising 345 apartment homes, an indirect 20% interest in
two stabilized apartment communities comprising 621 apartment homes and an
indirect 8.3% interest in three stabilized apartment communities comprising
1,118 apartment homes. We also owned nine multifamily apartment communities
under development or in lease-up at December 31, 2002 that are expected to
comprise 2,410 apartment homes upon completion and an indirect 20% interest in
four apartment communities under development or in lease-up at December 31,
2002 that are expected to comprise 967 apartment homes upon completion. In
addition, as of December 31, 2002, we owned a parcel of land on which we
intend to develop an apartment community that we currently expect will
comprise an estimated 450 apartment homes. We also have rights to acquire
additional parcels of land on which we believe we could develop communities. Any
future development is subject to obtaining permits and other governmental approvals, as
well as our ongoing business review, and may not be undertaken or completed.2. COMMON AND PREFERRED EQUITY ACTIVITYSecondary Common Share OfferingsSince the IPO, the Trust has
issued a total of 14,831 common shares in eight offerings, generating $347.8
million
in net proceeds which were generally used (1) to reduce outstanding
indebtedness under interim financing vehicles utilized to fund our development
and acquisition activities and (2) for general working capital purposes,
including funding of future development and acquisition activities.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Property and Per Unit Data)

---

Preferred Share OfferingsOn
September 27, 2002, the Trust issued 1,600 shares of 7.875% Series C Cumulative
Redeemable Preferred Shares (liquidation preference $25.00 per share) in a
private placement to an institutional investor. The net proceeds from this issuance of $39.8 million,
together with the net proceeds of $39.8 million from the concurrent issuance of $40 million of
senior unsecured notes, were used to retire approximately $82.5 million of  unsecured
indebtedness at an interest rate of 8.3% that was scheduled to mature in December 2002. The Series C Preferred Shares may be
redeemed at the Trust's option at $25.00 per share plus
accrued and unpaid dividends on or after September 30, 2006. The Series C
Preferred Shares are not subject to any sinking fund or convertible into any
other securities of the Trust.
         On June 18, 1998, the Trust issued 180
shares of 5.0% Series Z Cumulative Redeemable Preferred Shares (liquidation
preference $25.00 per share) in connection with the acquisition of a parcel of
land for future development. The Series Z Preferred Shares, which are subject to
mandatory redemption on June 18, 2018, may be redeemed at any time for $25.00
per share plus accrued and unpaid dividends. The Series Z Preferred Shares are
not subject to any sinking fund or convertible into any other securities of the
Trust.
         On July 24, 1997, the Trust issued
4,600 shares of 8.30% Series A Cumulative Redeemable Preferred Shares
(liquidation preference $25.00 per share). The net proceeds from this offering
of $111.0 million were used to reduce outstanding indebtedness under interim
financing vehicles. The Trust redeemed all outstanding Series A Preferred Shares
for $115 million on August 9, 2002 with proceeds from our $180 million senior
unsecured note issuance on July 8, 2002.Issuances of Common Operating Partnership
UnitsSince the IPO, we have issued a total of 4,421 Units in connection with the
1998 acquisition of the real estate assets and operations of South Florida, the
acquisition of other operating apartment communities and the acquisition of a
parcel of land for future development. The 4,421 Units issued include 470 Units
valued at $10.4 million that were issued on January1, 2000, related to a
deferred portion of the South Florida acquisition purchase price.Issuance of Preferred Operating Partnership
UnitsOn November 12, 1998, we issued 2,000 of
our 8.625% Series B Preferred
Units to an institutional investor. The net proceeds from this issuance of $48.7 million
were used to reduce outstanding indebtedness under interim financing
vehicles.  The Trust has the option to redeem the Series B Preferred Units after November 14,
2003. These Units are exchangeable by the holder into 8.625% Series B
Cumulative Redeemable Preferred Shares of the Trust on a one-for-one basis
however, this exchange right is generally not exercisable until after November 14,
2008. The Series B Preferred Units have no stated maturity, sinking fund or
mandatory redemption.Common Equity Repurchase ProgramWe have a common equity repurchase
program pursuant to which the Trust is authorized to purchase up to $200 million
of its outstanding common shares or Units. The Trust has repurchased shares from
time to time in open market and privately negotiated transactions, depending on
market prices and other conditions, using proceeds from sales of selected
assets. Whenever the Trust repurchases common shares from shareholders, we
are required to redeem from the Trust an equivalent number of Units on the same
terms and for the same aggregate price. After redemption, the Units redeemed by
us are no longer deemed outstanding. Units have also been repurchased for
cash upon their presentation for redemption by unitholders. As of
December 31, 2002, we had redeemed 4,806 Units,
including 4,506 Units redeemed by the Trust, for a total of $116.0 million,
including $0.2 million in related commissions.

Shelf Registration StatementWe have an effective shelf
registration statement on file with the Securities and Exchange Commission
providing $500 million of equity capacity. The debt portion of this
shelf registration statement has been fully utilized as a result of our February 2001and
July 2002 senior unsecured note offerings.3.  PORTFOLIO AND OTHER FINANCING
ACTIVITYCommunity Dispositions Subject to Discontinued Operations Reporting       During 2002, we sold two apartment
communities located in Houston comprising 660 apartment homes. The net proceeds
from these sales were $43.2 million and were used to paydown outstanding
borrowings under our interim financing vehicles and purchase common shares and
Units under the Trust's common equity repurchase program.  The aggregate gain from the sale of
these two communities was $9.8 million.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Property and Per Unit Data)

---

Historical operating results and gains are
included as discontinued operations in the accompanying consolidated statements of
operations.  See Notes 4 and 5 for further
discussion.Community and Land Dispositions Not Subject to Discontinued Operations ReportingDuring 2002, we sold a 13.3 acre parcel
of land in Houston that was adjacent to an apartment community sold, an
apartment community located in Houston comprising 246 apartment homes and an
apartment community located in Atlanta comprising 311 apartment homes. The net
proceeds from these sales were $46.8 million and were used to paydown
outstanding borrowings under our interim financing vehicles and purchase
common shares and Units under the Trust's common equity repurchase program. The gain from the land sale
was $0.8 million and the aggregate gain from the sale of the two communities was
$17.9 million.  In addition, we recognized $1.3 million of deferred
gain during the year ended December 31, 2002 associated with prior year sale
transactions.
During 2002,
the Gables Residential Apartment Portfolio JV (the "GRAP JV") sold two
apartment communities located in South Florida comprising 610 apartment homes,
an apartment community in Dallas comprising 222 apartment homes and an
apartment community located in Houston comprising 382 apartment homes. Our share
of the net sales proceeds after repayment of construction loan indebtedness of
$46.7 million was $10.7 million, resulting in a gain of $2.6 million.During 2001, we sold an apartment
community located in Atlanta comprising 386 apartment homes, an apartment
community located in Houston comprising 776 apartment homes, an apartment
community located in Dallas comprising 536 apartment homes and a 2.5 acre parcel
of land adjacent to one of our development communities located in Atlanta. The
net proceeds from these sales totaled $93.6 million, $9 million of which was
deposited into an escrow account and was used to fund acquisition activities.
The balance of the net proceeds was used to repay a $16 million note assumed in
connection with our September 2001 acquisition of the Gables State Thomas
Ravello community and to paydown outstanding borrowings under interim financing
vehicles. The gain from the land sale was $0.9 million and the aggregate gain
from the sale of previously depreciated operating real estate assets was $34.1
million, all of which was recognized in 2001. In addition, we recognized $0.7
million of deferred gain associated with a parcel of land we sold in 2000 during
the year ended December 31, 2001.
       During 2001, we contributed our interest in
certain land and development rights to the Gables Residential Apartment
Portfolio JV Two (the "GRAP JV Two") in return for (1) cash of $18.5
million and (2) capital account credit of $4.6 million. The $2.8 million of gain
associated with this contribution was recognized when earned using the
percentage of completion method since we serve as the developer and general
contractor for the joint venture. We recognized $1.2 million and $1.6 million of
this gain during the years ended December 31, 2002 and 2001, respectively.
       During 2000, we sold an apartment community
located in Dallas comprising 126 apartment homes, an apartment community located
in Houston comprising 228 apartment homes, two apartment communities located in
San Antonio comprising 544 apartment homes and a parcel of land adjacent to an
existing apartment community located in Atlanta. In addition, on December 28,
2000, we sold substantially all of our interests in three apartment communities
located in Nashville and Memphis, comprising 1,118 apartment homes, to the CMS
Tennessee Multifamily JV. The net proceeds from these sales totaled $142.0
million, $30.2 million of which was deposited into an escrow account and was
used to fund development and acquisition activities. The balance of the net
proceeds was used to (1) repay an $18.6 million note that encumbered one of the
assets sold, (2) paydown outstanding borrowings under interim financing vehicles
and (3) purchase common shares and Units under the Trust's common equity repurchase
program. The aggregate gain from the sale of previously depreciated operating
real estate assets was $28.6 million, all of which was recognized in 2000. The
gain from the land sale was $1.6 million, of which $0.8 million was recognized
in 2000. Gain of $0.8 million associated with the land sale was deferred at
December 31, 2000 and was recognized when earned during 2001 and 2002 using the
percentage of completion method because we served as the general contractor for
the construction of an apartment community on the parcel of land sold.  Historical operating results and gains are
included in continuing operations in the accompanying consolidated statements
of operations.  See Notes 4 and 5 for further
discussion.Community AcquisitionsOn September 28, 2001, we acquired the
80% membership interest of our venture partner in the GRAP JV in the Gables
State Thomas Ravello apartment community located in Dallas comprising 290
apartment homes. In consideration for the interest in such community, we paid $12 million in
cash and assumed a $16 million secured variable-rate note. This consideration
was based on a valuation of the asset of $31 million and is net of our $3
million share of the venture distribution. We recorded a $5 million charge to
unusual items in 2001 associated with the write-off of building components that are
being replaced in connection with a remediation program to address water
infiltration issues affecting the asset.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Property and Per Unit Data)

---

On August 28, 2001, we acquired an
apartment community located in Washington, D.C. comprising 82 apartment homes
for approximately $25 million in cash.On August 1, 2001, we acquired the 75%
interest of our venture partner in the Gables Metropolitan Uptown apartment
community located in Houston comprising 318 apartment homes with cash. The asset was
valued at approximately $27 million.
       On March 30, 2001, we acquired the 80%
membership interests of our venture partner in the GRAP JV in the Gables Palma
Vista and Gables San Michelle II apartment communities located in South Florida
comprising 532 apartment homes for $66 million. This cash consideration was
based on a valuation of the assets of $75 million and is net of our $9 million
share of the venture distribution.
       On September 1, 2000, we
acquired an apartment community located in Austin comprising 160 apartment
homes. In consideration for such community, we paid $6 million in cash and
assumed a $14 million secured fixed-rate note.The cash portion of the consideration for each denoted acquisition was
funded with advances under our interim financing vehicles.Other AcquisitionIn May 2001, we acquired a property
management company based in Washington, D.C. that managed approximately 3,600
units in 24 multifamily apartment communities located in Washington, D.C. and
the surrounding area (the "D.C. Management Co.").  Our total investment
of approximately $1.6 million was structured to be paid in three installments
based on results of the acquired business operations.  As of December 31,
2002, we had funded $1.1 million of the $1.6 million total investment.  The
final installment of $0.5 million is expected to be paid in 2003.Senior Unsecured Note IssuanceOn September 27, 2002, we issued $40
million of senior unsecured notes in two series in a private placement to an
institutional investor: $30
million at an interest rate of 5.86% maturing in September 2009 and $10 million
at an interest rate of 6.10% maturing in September 2010. The net proceeds of $39.8
million, together with the net proceeds of $39.8 million from the concurrent issuance
by the Trust of the 7.875% Series C Cumulative Redeemable Preferred Shares, were used to retire approximately $82.5 million of senior unsecured notes at
an interest rate of 8.3% that were scheduled to mature in December 2002. We did
not incur any prepayment costs in connection with the early debt retirement.On July 8, 2002, we issued $180 million
of senior unsecured notes which bear interest at a rate of 5.75%, were
priced to yield 5.81% and mature in July 2007. The net proceeds of $178 million
were used to redeem all outstanding shares of the 8.3% Series A Cumulative
Redeemable Preferred Shares totaling $115 million on August 9, 2002 and to
reduce borrowings under our interim financing vehicles.On February 22, 2001, we issued $150
million of senior unsecured notes which bear interest at a rate of
7.25%, were priced to yield 7.29% and mature in February 2006. The net proceeds
of $148.5 million were used to reduce borrowings under our unsecured credit
facilities and repay our $40 million term loan, which had a November 2001
maturity date.4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESNature of Operations      We are a fully integrated real estate
company engaged in the multifamily apartment community management, development,
construction, acquisition and disposition businesses. We also provide
management, development and construction, corporate rental housing and
brokerage services to third parties and unconsolidated joint ventures.  Our operating performance
is based predominantly on net operating income from the multifamily apartment
communities we own, which are located in major markets in Texas, Georgia,
Florida, Washington, D.C. and Tennessee.  See Note 11.Basis of PresentationThe accompanying consolidated financial
statements are prepared in accordance with accounting principles generally
accepted in the United States of America ("GAAP") and  include the consolidated accounts of
Gables Realty Limited Partnership and its subsidiaries,
including Gables Residential Services. We
consolidate the financial statements of all entities in which we have a
controlling financial interest, as that term is defined under GAAP, through either
majority voting interest or contractual agreements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Property and Per Unit Data)

---

Our investments
in non-controlled joint ventures are accounted for
using the equity method.  Information regarding these unconsolidated joint
ventures is included in Note 6.  All significant intercompany accounts and
transactions have been eliminated in consolidation.Reclassifications
Certain amounts in the 2001 and 2000
financial statements have been reclassified to conform to the 2002 presentation.Use of EstimatesThe preparation of financial statements in
conformity with GAAP requires us to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements, and the reported
amounts of revenue and expenses during the reporting period. Actual results
could differ from those estimates.Revenue RecognitionRental: We lease our residential
properties under operating leases with terms generally equal to one year or
less. Rental income is recognized when earned, which materially approximates
revenue recognition on a straight-line basis.
      Property management: We provide
property management services to third parties and unconsolidated joint
ventures.  Property management fees are recognized when earned.
      Ancillary services: We
provide development and construction, corporate rental housing and brokerage
services
  to third parties and unconsolidated joint ventures. Development and
construction services are typically provided under "cost plus a fee"
contracts. Because our clients are obligated to fund
the costs that are incurred on their behalf pursuant to the related
contract, we net the reimbursement of these costs against the billings for such costs. 
Development and construction fees are recognized when earned using the
percentage of completion method. During the years ended December 31, 2002,
2001 and 2000, we recognized $2.4 million, $3.1 million and $4.9 million,
respectively, in development and construction fees under related contracts with
gross billings of $43.9 million, $81.1 million and $83.2 million, respectively.
Corporate rental housing revenues and
brokerage commissions are recognized when earned.  Gains on sales of real estate assets:Gains on sales of real estate assets are recognized pursuant to the
provisions of SFAS No. 66, "Accounting for Sales of Real Estate."
The specific timing of the recognition of the sale and the related gain is
measured against the various criteria in SFAS No. 66 related to the terms of the
transactions and any continuing involvement associated with the assets sold.
To the extent the sales criteria are not met, we defer gain recognition until the sales criteria are met.Cost Capitalization       As a vertically integrated real estate
company, we have in-house investment professionals involved in the development,
construction and acquisition of apartment communities. Direct internal costs associated with development and construction activities for wholly-owned
assets are included in the capitalized development cost of such assets.
Direct internal costs associated with development and construction activities
for third parties and unconsolidated joint ventures are reflected in ancillary
services expense as the related services are being rendered. As required
by GAAP, we expense all internal costs associated with the acquisition of
operating apartment communities to general and administrative expense in the
period such costs are incurred.      Our real estate development pursuits are
subject to obtaining permits and other governmental approvals, as well as our
ongoing business review of the underlying real estate fundamentals and the
impact on our capital structure. We do not always move forward with
development of our real estate pursuits, and therefore, we evaluate the
viability of real estate pursuits and the recoverability of capitalized pursuit
costs regularly. Based on this periodic review, we expense any costs that
are deemed unrealizable at that time to general and administrative expense.       During the development and construction
of a new apartment community, we capitalize related interest costs, as well as
other carrying costs such as property taxes and insurance. We begin to
expense these items as the construction of the community becomes substantially
complete and the residential apartment homes become available for initial
occupancy. Accordingly, we gradually reduce the amounts we capitalize as
construction is being completed.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Property and Per Unit Data)

---

Real Estate Assets and Depreciation
      Real estate assets are stated at depreciated cost,
which in the opinion of management is not in excess of each individual asset's
estimated undiscounted future cash flows, including estimated proceeds from
disposition. As noted above, the cost of buildings and
improvements includes interest, property taxes, insurance and direct internal
development and construction costs incurred during the construction period.
Expenditures in excess of $1 for purchases of a new asset with a useful life in excess of one year
  and for replacements and repairs that extend the useful life of the asset are
  capitalized and depreciated over their useful lives. Recurring value
  retention capital expenditures are typically incurred every year during the
  life of an apartment community and include such expenditures as carpet,
flooring and
  appliances. Non-recurring capital expenditures are costs that are
  generally incurred in connection with a major project impacting an entire
  community, such as roof replacement or parking lot resurfacing.
  Value-enhancing capital expenditures are costs for which an incremental value
  is expected to be achieved and include such costs as amenity upgrades and
additions and security gates. Recurring value retention and
  non-recurring and/or value-enhancing capital expenditures do not include costs
  incurred in connection with a major renovation of an apartment community.
Repairs and maintenance, such as landscaping maintenance, interior painting and
cleaning and supplies used in such activities, are expensed as incurred.
       Construction in progress represents total
capitalized costs incurred on our wholly-owned development communities and
incremental capitalized costs incurred on our wholly-owned communities that are
undergoing a major renovation.  A reclassification of such costs into
operating real estate assets is not made until construction or major renovation
activities are 100% complete.
       Depreciation is computed on a straight-line basis over the estimated useful
lives of 20 to 40 years for buildings and improvements and 5 years for furniture,
fixtures and equipment. We periodically evaluate our real estate assets to
determine if there has been any impairment in the carrying value of the assets
in accordance with SFAS No. 144, "Accounting for the Impairment or Disposal
of Long-Lived Assets." SFAS No. 144 requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amounts. No such impairment losses have been recognized to date.Cash and Cash EquivalentsAll investments purchased with an original maturity of three months or
less are considered to be cash equivalents.Restricted CashRestricted cash is primarily comprised of
residential security deposits, tax escrow funds, repairs and maintenance reserve
funds and principal escrow deposits for tax-exempt bonds. In certain situations, we have deposited
sales proceeds into escrow accounts to fund development and acquisition
activities.Deferred Financing Costs and AmortizationDeferred financing costs include fees and
costs incurred to obtain financing and are capitalized and amortized over the
terms of the related notes payable.Interest Rate Protection Agreements and Derivative
InstrumentsIn the ordinary course of business, we are
exposed to interest rate risks. We periodically seek input from third party
consultants regarding market interest rate and credit risk in order to evaluate
our interest rate exposure. In certain situations, we may utilize derivative
financial instruments in the form of rate caps, rate swaps or rate locks to
hedge interest rate exposure by modifying the interest rate characteristics of
related balance sheet instruments and prospective financing transactions. We do
not utilize such instruments for trading or speculative purposes. Derivatives
used as hedges must be effective at reducing the risk associated with the
exposure being hedged; correlate in notional amount, rate, and term with the
balance sheet instrument being hedged and be designated as a hedge at the
inception of the derivative contract. SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," as
amended, was effective for us beginning January 1, 2001.  This statement
establishes accounting and reporting standards requiring that every
derivative instrument, including certain derivative instruments embedded in
other contracts, be recorded in the balance sheet as either an asset or
liability measured at its fair value. SFAS No. 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the statements of operations, and requires that a company must formally
document, designate, and assess the effectiveness of transactions that receive
hedge accounting.  We had no derivative instruments in place as of January
1, 2001 and we have not put any new derivative instruments in place since then.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Property and Per Unit Data)

---

Stock Options      At December 31, 2002,
the Trust had one
stock-based employee compensation plan, which is described more fully in Note
  14.  Through December 31, 2002, we have accounted for options issued under this
plan in accordance with APB Opinion
No. 25, "Accounting for Stock Issued to Employees," under which no compensation cost has been recognized since all
options have been granted with an exercise price equal to the fair value of the
Trust's common shares on the date of grant. 
Had compensation cost been determined consistent with  SFAS No. 123, "Accounting for
Stock-Based Compensation," our net income and earnings per Unit would have
been reduced to the following pro forma amounts:

|                                                                                                                                              | 2002                                      | 2001                                      | 2000                                     
|--------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------- | ----------------------------------------- | -----------------------------------------
|Net income available to common unitholders,
      as reported                                                                                 | $60,747                                   | $69,323                                   | $73,938                                  
|Deduct: Total stock-based employee
      compensation expense
           determined under fair value based method for all
      option awards | (352)                                     | (  551)                                   | (817)                                    
|Net income available to common unitholders, pro forma                                                                                         | $60,395                                   | $68,772                                   | $73,121                                  
|Earnings Per Unit:
        Basic - as reported
        Basic - pro forma
        Diluted - as reported
        Diluted - pro forma            | $1.99
      $1.98
      $1.98
      $1.97 | $2.30
      $2.28
      $2.29
      $2.27 | $2.43
      $2.41
      $2.43
      $2.40

To date,
options have been granted with an exercise price equal to the fair value of the
Trust's common shares on the dates the options were granted.  At December 31, 2002, 893 common shares are
subject to outstanding options granted to the Trust's officers, employees and
trustees. These outstanding options have exercise prices ranging from $19.50 to
$30.20 and a weighted average remaining contractual life of 5.5 years at
December 31, 2002.

   A summary of the options
activity for the years ended December 31, 2002, 2001 and 2000 is as
follows:

2002
    
    
      2001
    
    2000Shares
      Weighted
        Average
        ExercisePrice
      
      Shares
      Weighted
        Average
        ExercisePrice
      
      Shares
      Weighted
        Average
        ExercisePriceOutstanding at
        beginning of year
        Granted
        Forfeited
        Exercised
        Outstanding at end of year
        Exercisable at end of year
      1,196 
        15 
        ( 23)(295)893628
    
    $25.64
      30.20
      26.5325.77
      $25.64$25.10
    1,794 
        13 
        (13)(598)1,196716
    $25.52
      27.95
      26.0225.34
      $25.64$25.14
    
    2,051 
      20 
      (71)(206)1,794
      1,129
    $25.29
      24.50
      26.4522.77$25.52
      $25.10


The weighted average fair
value of options granted is $4.29,  $3.18 and $2.62  for 2002, 2001 and
2000,
respectively. The fair value of each option grant as of the date of grant has
been estimated using the Black-Scholes option pricing model with the following
weighted average assumptions for grants in 2002, 2001 and 2000, respectively:
risk-free interest rates of 4.36%, 5.12% and 6.71%; expected lives of 4.67,
5.20 and 5.83; dividend yields of 7.98%,  8.62% and 9.27%; and expected volatility of
31%, 27% and 25%.Property Management Expenses
       We manage owned properties
as well as properties owned by third parties and unconsolidated joint ventures for which we provide services for a
fee. Property management expenses have been allocated between owned and
third-party properties in the accompanying statements of operations based on the
proportionate number of owned and third-party apartment homes managed by us
during the applicable periods.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Property and Per Unit Data)

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Income Taxes
         No federal or state income taxes are
  reflected in the accompanying financial statements since we are a partnership
  and our partners are required to include their respective share of profits and
  losses in their income tax returns.  We utilize Gables Residential
  Services, a taxable REIT subsidiary, to provide management and other
  services to third parties that a REIT may be prohibited from providing. 
  Taxable REIT subsidiaries are subject to federal, state and local income
  taxes. The
  tax attributes of Gables Residential Services are immaterial to the accompanying
  consolidated financial statements.Recent Accounting Pronouncements
  In June 2001, SFAS No. 141, "Business
Combinations," (effective for us July 1, 2001) and SFAS No. 142,
"Goodwill and Other Intangible Assets," (effective for us January 1,
2002) were issued. SFAS No. 141 prohibits pooling-of-interests accounting for
acquisitions. SFAS No. 142 specifies that goodwill and some intangible assets
will no longer be amortized but instead will be subject to periodic impairment
testing. We have not accounted for any of our business combinations since the
IPO using the pooling method of accounting and did not have goodwill or other
intangible assets at December 31, 2002 or 2001.  As a
result, the adoption of SFAS No. 141 and SFAS No. 142 did not have a significant
impact on our financial statements.
       In August 2001, SFAS No. 143,
"Accounting for Asset Retirement Obligations," (effective for us
January 1, 2003) was issued. SFAS No. 143 requires that entities recognize the
fair value of a liability for an asset retirement obligation in the period in
which it is incurred if a reasonable estimate of fair value can be made. We
believe that the adoption of SFAS No. 143 will not have a significant impact on
our financial statements.        In August 2001, SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets,"
(effective for us January 1, 2002) was issued. SFAS No. 144 addresses financial
accounting and reporting for the impairment of long-lived assets and for
long-lived assets to be disposed of. The statement supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," and among other factors, establishes criteria
beyond that previously specified in SFAS No. 121 to determine when a long-lived
asset is to be considered as held for sale. The impairment provisions of SFAS No. 144 are similar to SFAS No. 121 and the adoption thereof did not have a significant
  impact on our financial statements.  As discussed further in Note 5, SFAS
  No. 144 also requires that the gains and losses from the disposition of certain real estate
assets and the related historical operating results be reflected as discontinued
operations in the statements of operations for all periods presented. In
the normal course of business, we recycle invested capital by disposing of
existing assets and redeploying the proceeds in order to enhance total returns
to shareholders. Although net income is not affected, we expect to continue to reclassify results previously included in continuing operations to discontinued
operations for any future qualifying dispositions in accordance with SFAS No. 144.   
     
           In April 2002, SFAS No. 145,
"Rescission of SFAS Nos. 4, 44 and 64, Amendment of SFAS No. 13, and
Technical Corrections," was issued. SFAS No. 145 (effective for us
January 1, 2003), among other things, eliminates the requirement that all
gains and losses from the extinguishment of debt be aggregated and, if material,
classified as an extraordinary item. However, a gain or loss arising from such
an event or transaction would continue to be classified as an extraordinary item
if the event or transaction is both unusual in nature and infrequent in
occurrence per the criteria in APB No. 30, "Reporting the Results of
Operations - Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions."
As part of the transition guidance, although net income would not be affected,
gains and losses from debt extinguishment in prior periods that do not meet the
criteria in APB No. 30 must be reclassified to continuing operations for all
periods presented.  We will adopt SFAS No. 145 in the first quarter of 2003 and, as a result, will
reclassify our fiscal 2002 extraordinary loss on early extinguishment of debt of
  $1.7 million to the appropriate categories within continuing
  operations.  In
June 2002, SFAS No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities," was issued. SFAS No. 146 requires the recording of costs associated with exit or disposal activities at their fair values when a
liability has been incurred. Under previous guidance, certain exit costs
were accrued upon management's commitment to an exit plan, which is generally
before an actual liability has been incurred. Adoption of SFAS No. 146 is
to be applied prospectively to exit or disposal activities initiated after
December 31, 2002. We believe that the adoption of SFAS No. 146 will not have a significant impact on our financial statements.
           In November 2002, FIN 45, "Guarantor's
  Accounting and Disclosure Requirements for Guarantees, Including Indirect
  Guarantees of Indebtedness of Others," was issued. FIN 45
  elaborates on the disclosures to be made by a guarantor in its interim and
  annual financial statements about its obligations under certain guarantees
  that it has issued.  It also clarifies that a guarantor is required to
  recognize, at the inception of a guarantee, a liability for the fair value of
  the obligation undertaken in issuing the guarantee.  The disclosure
  requirements of FIN 45 are currently effective (see Note 6). We will
  apply the initial recognition and initial measurement provisions of FIN 45 on
  a prospective basis for any guarantees issued or modified after December 31,
  2002, but do not expect the adoption of FIN 45 to have a material impact on
  our financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Property and Per Unit Data)

---

In December 2002, SFAS No. 148,
"Accounting for Stock-Based Compensation - Transition and Disclosure,"
was issued. SFAS No. 148 amends SFAS No. 123, "Accounting for
Stock-Based Compensation," to provide alternative methods for transition
for an entity that voluntarily changes to the fair value based method of
accounting for stock-based employee compensation. It also amends the
disclosure provisions of SFAS No. 123 to require prominent disclosure about the
effects on reported net income of an entity's accounting policy decisions with
respect to stock-based employee compensation. We have adopted this
standard effective for our fiscal year ended December 31, 2002, resulting in
additional disclosures related to the Trust's stock-based compensation plan as presented
  above under "stock options." This standard had no effect on our financial position or results of
operations through December 31, 2002. We intend to expense
stock-based employee compensation under the fair value recognition provisions of
SFAS No. 123 on a prospective basis beginning January 1, 2003. Due to the
  Trust's limited use of options
as a form of compensation since 1999, we do not believe the adoption of this
accounting standard will have a significant impact on our financial statements.
         In January 2003, FIN 46,
  "Consolidation of Variable Interest Entities," was issued. In
  general, a variable interest entity ("VIE") is an entity that either
  (a) does not have equity investors with voting rights or (b) has equity
  investors that do not provide sufficient financial resources for the entity to
  support its activities. Until now, a company generally has only
  consolidated another entity in its financial statements if it controlled the
  entity through voting interests. FIN 46 changes that by requiring a VIE
  to be consolidated by a company if that company is subject to a majority of
  the risk of loss from the VIE's activities or is entitled to receive a
  majority of the entity's residual returns or both. The provisions of FIN
  46 are to be applied effective immediately for VIEs created after January 31,
  2003, and effective July 1, 2003 for VIEs created prior to February 1,
  2003. If it is reasonably possible that an enterprise will consolidate
  or disclose information about a VIE when FIN 46 becomes effective, the
  enterprise should make certain disclosures in all financial statements
  initially issued after January 31, 2003, regardless of the date on which the
  VIE was created. We do not believe that it is reasonably possible that
  the adoption of FIN 46 will result in the consolidation of any previously
  unconsolidated entities.5.  DISCONTINUED OPERATIONSWe adopted SFAS No. 144 effective
January 1, 2002 which requires, among other things, that the operating results
of certain real estate assets which have been sold subsequent to January 1,
2002, or otherwise qualify as held for disposition (as defined by SFAS No. 144),
be reflected as discontinued operations in the statements of operations for all
periods presented. We sold three wholly-owned operating real estate assets
during the first quarter of 2002 and one wholly-owned operating real estate
asset during the fourth quarter of 2002. We retained management of two of
the assets sold during the first quarter of 2002. Due to our continuing
involvement with the operations of the two assets sold that we are
continuing to manage, the operating results of these assets are included in
continuing operations. The operating results for the two remaining wholly-owned
assets sold during the first and fourth quarters of 2002 for which we did not
retain management are reflected as discontinued operations in the accompanying statements of
operations for all periods presented. Interest expense has been allocated to the
results of the discontinued operations in accordance with EITF No. 87-24.
We had no assets that qualified as held for disposition as defined by SFAS No.
144 at December 31, 2002 or 2001.
     Condensed financial
information of the results of operations for the real estate assets sold
  reflected as discontinued operations is as follows:
For the Years Ended December 31,2002
  
  2001
  
  2000Total property revenues
  
  $3,845
  
  $6,265
  $6,071Property operating and
      maintenance expense
         (exclusive of items shown separately below)
      Real estate asset depreciation and amortization
      Interest expense
         Total expenses
    1,688
        806
        487
        2,981
  
  
  2,473
      1,365724
      4,562
  
  2,343
    1,310751
      4,404Operating income from discontinued operations
      Gain on disposition of
      discontinued operations
      Income from discontinued
      operations
  8649,829$10,693
  
  1,703-$1,703
  
  1,667-$1,667
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Property and Per Unit Data)6.   INVESTMENT IN UNCONSOLIDATED JOINT VENTURESOur interests in the following unconsolidated joint ventures are
accounted for using the equity method of accounting:Ownership Interest 
        as of December 31,Joint Venture
      2002
      2001Arbors of Harbortown JV ("Harbortown
        JV")
      25.00%
      25.00%Gables Residential Apartment Portfolio JV
        ("GRAP JV")
      20.00%
      20.00%Gables Residential Apartment Portfolio JV
        Two ("GRAP JV Two")
      20.00%
      20.00%CMS Tennessee Multifamily JV ("CMS
        JV")
      8.26%
      8.26%
Condensed financial information of the
unconsolidated joint ventures is as follows:Balance Sheet Summary:
      December 31, 2002
      December 31,  2001Harbor-town
      GRAP
      GRAP Two
      CMS
      Total
      TotalReal estate assets
        Less: accumulated depreciation
          Net real estate assets
        Other assets
          Total assets
      $16,201 
           (4,734)
        11,467 3,294  $14,761
      $47,821 (5,450)
        42,371 857  
        $43,228
      $96,824 (2,155)
        94,669 1,851  $96,520
      $63,709(5,158)
        58,551 2,988 $61,539
      $224,555 (17,497)
        207,058 8,990  $216,048
      $283,883 
        (16,690)
        267,193 10,027 $277,220Mortgage debt
        Other liabilities
        Partners' capital
          Total liabilities and partners' capital
      $16,350 
        715 (2,304)
        $14,761
      $24,632 
        179 18,417 $43,228
      $53,493 
        4,104 38,923 
        $96,520
      $52,100 
        1,494 7,945 $61,539
      $146,575 
        6,492 62,981 $216,048
      $157,787 
        11,123 108,310 $277,220Our  investment in JV
      $ 500
      $4,129
      $8,070
      $ (276)
      $12,423
      $20,898
Income Statement Summary:
      
      Years Ended December 31,2002
      2001
      2000Revenues
        Property operating and maintenance expense
           (exclusive of items shown separately below)
        Interest expense
        Depreciation and amortization expense
        Other expense
             Total expenses
      $22,927 
         
        9,784 
        6,008 
        7,256 
          350 23,398
      $23,617 
        10,170 
        7,933 
        6,981 
         
        806  25,890
      $19,924
        6,886 
        6,102 
        5,011 59  
        18,058Income (loss) before gain
        on sale
        Gain on sale of real estate assets
        Income (loss) from continuing operations
        Income (loss) from discontinued operations,
            including gain on sale
        Net income
        Our equity in income of  JV
      (471)-  
              (471)
           16,920$16,449 
        $2,900
      (2,273)12,170 9,897   
         1,008   $10,905$242
      1,866 -  
        1,866 
        (407)
        $ 1,459 
        $399
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Property and Per Unit Data)Arbors of Harbortown JV       The Arbors of Harbortown JV was formed
in May 1990 to develop, own and operate the Arbors of Harbortown community
located in Memphis comprising 345 apartment homes. We have a 25% ownership
interest in this venture. The Arbors of Harbortown apartment
community is secured by a $16.4 million tax-exempt bond obligation which bears
interest at a low-floater rate. The credit enhancement for the
bond obligation is provided by our venture partner and expires in May 2006.
The maturity date of the underlying bond issue is April 2013. The bond
obligation is recourse to us up to $1.0 million. The recourse amount is fully
cash-collateralized and held by the venture. We have not recorded a
liability on our accompanying consolidated balance sheets in connection with this recourse
obligation.Gables Residential Apartment Portfolio JV       The Gables Residential Apartment
Portfolio JV was formed in March 1999 to develop, own and operate eight
multifamily apartment communities comprising 2,471 apartment homes located in
four of our markets. Our economic ownership interest in the venture was
22% for the year ended December 31, 2002 and 20% for the period from inception
to December 31, 2001. During 1999, we contributed our interest in the
land and development rights associated with these eight communities to the
venture in return for (1) cash of $65.1 million and (2) capital account credit
of $16.4 million.

We serve as the managing
member of the venture and have responsibility for all day-to-day operating
matters. We also serve as the property manager, developer and general
contractor for construction activities. The $238 million capital
budget for the development of the eight communities was funded with 50% equity
and 50% debt. The equity component was funded 80% by our venture partner
and 20% by us. Our portion of the equity was funded through contributions
of cash and property. As of December 31, 2002, we had
funded our total
equity commitment of $23.8 million to the joint venture.
       On March 30, 2001, we acquired the membership
interests of our venture partner in two of the stabilized communities comprising
532 apartment homes. In April 2001, development and lease-up activities at
Gables State Thomas Ravello comprising 290 apartment homes were suspended due to
water infiltration issues, and all residents were subsequently relocated.
On September 28, 2001, we acquired the membership interest of our venture
partner in this community.In March 2002, the venture sold an
apartment community located in South Florida comprising 320 apartment homes and
an apartment community located in Houston comprising 382 apartment homes.
In July 2002, the venture sold an apartment community located in Dallas
comprising 222 apartment homes. In September 2002, the venture sold an
apartment community located in South Florida comprising 290 apartment
homes. Our share of the net proceeds after repayment of construction loan
indebtedness of $46.7 million was $10.7 million, resulting in a gain of $2.6
million.The remaining community owned by the
venture is secured by a construction loan. The construction loan has a maturity of March 25,
2003, with a one-year extension option.
We expect the construction loan to be extended for a one-year period prior to
maturity. As of December 31, 2002, there was $24.6
million of indebtedness outstanding under this construction loan which
currently bears interest at LIBOR plus 1.5%. None of this indebtedness is
recourse to us.Gables Residential Apartment Portfolio JV Two       The Gables Residential Apartment
Portfolio JV Two was formed in March 2001 to develop, own and operate five multifamily apartment communities comprising 1,153
apartment homes, located in
three of our markets. Since inception, our economic ownership interest in
the venture has been 20%. During 2001, we contributed our interest in the
land and development rights associated with three of these communities in return for
(1) cash of $18.5 million and (2) capital account credit of $4.6 million. The
venture subsequently acquired the parcels of land for the remaining two
communities directly from the seller.
       We serve as the managing member of the
venture and have responsibility for all day-to-day operating matters. We
also serve as the property manager, developer and general contractor for
construction activities. The capital budget for the development of the
five communities is $118 million which is expected to be funded with equity of
$51 million and debt of $67 million. The equity component is being funded
80% by our venture partner and 20% by us. Our portion of the equity will
be funded through contributions of cash and property. As of December 31,
2002, we had funded $8 million of our budgeted $10 million equity commitment
to the joint venture. As of December 31, 2002, construction was complete
with respect to three of the communities and one of these completed
communities had reached a stabilized occupancy level.
      Each of the five communities owned
by the venture is secured by a construction loan. The construction loans have initial maturity
dates ranging from April 1, 2004 to June 5, 2005,
with various extension options. As of December 31, 2002, there was an aggregate
of $53.5 million of indebtedness outstanding under these construction
loans which currently bears interest at spreads over LIBORNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Property and Per Unit Data)ranging from 1.60% to
1.70%.We have a limited repayment guaranty on
two of these loans with committed fundings aggregating $21.3 million.  The portion of the outstanding indebtedness under the
loans that is recourse to us is $2.5 million at December 31, 2002 and will be
$6.4 million when the construction loans are fully funded.  We have not
recorded a liability on our accompanying consolidated balance sheets in connection with this
recourse obligation.

CMS Tennessee Multifamily JV      In December 2000, we sold substantially
all of our interests in three apartment communities located in Nashville and
Memphis, comprising 1,118 apartment homes, to the CMS Tennessee Multifamily JV
which was created to own and operate these apartment communities.  At
inception, we had a 1% general partner interest and an 8% limited partner
interest in this venture.  Our venture partner contributed additional
capital to the venture in 2001 which diluted our limited partner interest to
7.26%.  Our initial capital investment in the joint venture of $1.0 million
has been substantially offset by $1.0 million in deferred gain associated with
our minority interest ownership in the underlying assets sold.  Each of the
three apartment communities owned by the venture is secured by a conventional
fixed-rate loan with a maturity of January 2011.  As of December 31, 2002,
there was an aggregate $52.1 million of indebtedness outstanding under these
loans which bears interest at a rate of 7.22%.  None of this indebtedness
is recourse to us.Metropolitan Apartments JV       The Metropolitan Apartments JV was
formed in December 1993 to develop, own and operate the Gables Metropolitan
Uptown community located in Houston comprising 318 apartment homes.  We
held a 25% ownership interest in this venture through July 31, 2001.  On
August 1, 2001, we acquired the 75% interest of our venture partner in the
Gables Metropolitan Uptown community.Related-Party Transactions and Relevant Accounting PoliciesManagement fees for services provided
to these unconsolidated joint ventures totaled $1,090, $1,276 and $931 for the
years ended December 31, 2002, 2001 and 2000, respectively.  We provide
development and construction services to the GRAP JV and GRAP JV Two in return
for development and construction fees.  We calculate our net development
profit associated with these services based on the fees contractually owed to
us by the venture and the amount of direct internal overhead associated with the
provision of such services that will be charged against those fees.  We
then recognize into income 80% of the net development profit when earned using
the percentage of completion method.  The remaining 20% is deferred and
classified as a reduction to our investment in joint venture account.  As
general contractor, we are responsible for funding any construction cost
overruns.  As general contractor and venture partner, we are entitled to an
incentive fee on any construction cost savings.  During 1999, we had
accrued $425 in incentive fees from the GRAP JV that were reversed in 2001 as a
result of the cost overruns associated with the water infiltration issues at
Gables State Thomas Ravello.  Development  and construction fees of $1,577, $2,092 and
$2,368 for the years ended December 31, 2002, 2001
and 2000, respectively, were recognized in ancillary services revenues in the
accompanying statements of operations.
      We generated a gain of $3.5 million in connection with our contribution of land and development rights to the GRAP JV
Two.  We recognized 80% or $2.8 million of the gain into income when
earned using the percentage of completion method.  The $0.7 million in
deferred gain has been classified as a reduction to our investment in joint
venture account.  During the years ended December 31, 2002 and 2001, we recognized
$1.2 million and $1.6 million, respectively, of the $2.8 million gain.  We generated a gain of $10.9
million in connection with the sale of our real estate asset interests to the CMS
JV.  We recognized 91% or $9.9 million of the gain into income on the
December 2000 sale date.  The $1.0 million in deferred gain has been
classified as a reduction to our investment in joint venture account. 
There was no gain or loss in connection with the contribution of land and
development rights to the GRAP JV.
       We record our share of income from
unconsolidated joint ventures based on our economic ownership interest therein,
after making any necessary adjustments to conform to our accounting policies.
The gain on sale of real estate assets by the GRAP JV of $12,170 in
2001 pertains entirely to sales of real estate assets from the venture to us.  We eliminated our
share of the gain on sale in consolidation and, as a result, our equity in
income of joint ventures of $242 in 2001 excludes our share of the gain.
       Our investment in joint ventures is
based on the fair value of our cash and real estate asset contributions thereto
and includes capitalized interest on our investment account during the
construction period of the underlying real estate assets.  Deferrals of any
development and construction fees and gains, as applicable, associated with our
minority ownership interest in the joint ventures are classified as a reduction
to our investment in joint ventures.
       The initial basis in the real estate
assets we acquired from our joint ventures is equal to the purchase price paid
to the venture or venture partner, as applicable, after elimination of our share
of any underlying gain.  In addition, other outside basis differences
associated with capitalized interest and the 20% development and construction
fee deferrals are included in real estate assets.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Property and Per Unit Data)7.  NOTES PAYABLE
Notes payable consist of the following:

December 31,2002
  2001Unsecured
      senior notes payable
      Tax-exempt variable-rate notes payable
      Secured conventional fixed-rate notes payable
      Unsecured variable-rate credit facilities
      Unsecured conventional fixed-rate notes payable
      Unsecured tax-exempt fixed-rate notes payable
      Secured tax-exempt fixed-rate notes payable
      Secured variable-rate construction loans
               Total notes payable
  
  $470,000
    170,955
    137,351
    75,608
    31,151
    48,365
    20,7554,389 
    $958,574
  
  $250,000
    170,955
    139,143
    132,904
    114,919
    -  
    69,310 -  
    $877,231


Unsecured Senior Notes PayableIn March 1998, we issued $100,000 of
senior unsecured notes which bear interest at 6.80%, were priced to yield 6.84%
and mature in March 2005. In October 1998, we issued (1) $50,000 of
senior unsecured notes which bore interest at 6.55%, were priced to yield 6.59%,
and matured in October 2000 and (2) $15,000 of senior unsecured notes which bore
interest at 6.60%, were priced at par, and matured in October 2001. We
repaid the $50,000 and $15,000 notes at maturity.  In February 2001, we
issued $150,000 of senior unsecured notes which bear interest at 7.25%, were
priced to yield 7.29% and mature in February 2006.  In July 2002, we issued
$180,000 of senior unsecured notes which bear interest at 5.75%, were priced
to yield 5.81% and mature in July 2007.  In September 2002, we issued $40,000 of senior unsecured notes in two
series in a private placement to an institutional investor: $30,000 of notes which
bear interest at 5.86% and mature in September 2009 and $10,000 of notes which bear interest at 6.10% and
mature in September 2010.Tax-Exempt Variable-Rate Notes Payable Totaling $44,930        At December 31, 2002 and 2001, the
variable-rate mortgage notes payable securing tax-exempt bonds totaling $44,930
were comprised of four loans, each of which is collateralized by an apartment
community included in real estate assets. These bonds bear interest at variable
rates of interest that are adjusted weekly based upon a negotiated rate. The interest
rates in effect at both December 31, 2002 and 2001 were 1.6%. 
Effective interest rates were 1.4%, 2.7% and 4.2% for the years ended December 31,
2002, 2001 and 2000, respectively.  From October 1997 to February 2003, the
bonds were enhanced by four
letters of credit provided by a $45,820  letter of credit facility that had
a maturity date of October 2003.  The fee for the letters of credit under this facility
was 0.95% per annum. 
       In February 2003,
the $45,820 of letters of credit were reissued under our $252 million credit
facility with a maturity date of May 2005.  The fee for the letters of
credit under this facility is currently 0.95% per annum.  Three of the underlying bond issues mature in December 2007
and the fourth matures in August 2024.Tax-Exempt Variable-Rate Notes Payable Totaling
$126,025We have seven
variable-rate bond issues totaling $126,025 at December 31, 2002 and 2001 that
were assumed in connection with the South Florida acquisition.  One of
these bond issues for $10,085 was refinanced in August 2000 from a fixed rate of
4.75% to a variable rate.  Another of these bond issues for $10,800 was
refinanced in April 2001 from a fixed rate of 4.75% to a variable rate.  At
December 31, 2002 and 2001, the interest rates on these variable-rate bonds
averaged 1.4% and 1.5%,  respectively.   Effective interest rates averaged
1.4%, 2.7% and 4.2% for the years ended December 31, 2002, 2001 and 2000,
respectively.   These bond issues are enhanced by letters of credit
provided by a $138,816 letter of credit facility entered into on April 1, 1998. 
The fee for the letters of
credit under this facility is 1.0% per annum. The facility has an initial
term of ten years with three five-year extension options and is
collateralized by (1) each apartment community induced for tax-exempt financing
for which a letter of credit is issued and outstanding and (2) two
additional communities. The maturity dates of the underlying bond issues range
from December 2005 to April 2036.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Property and Per Unit Data)

---

Secured Conventional Fixed-Rate Notes Payable      At December 31, 2002 and 2001, the fixed-rate
notes payable were comprised of nine loans collateralized by 12 apartment
communities included in real estate assets.  The interest rates on these
notes payable range from 6.75% to 8.77% (weighted average of 7.72%) and the
maturity dates range from February 2004 to December 2015.  Principal
amortization payments are required for seven of the nine loans based on
amortization schedules ranging from 25 to 30 years.$252 Million Credit FacilityAt December 31, 2002 and 2001, we had
$40,000 and $80,000, respectively, of borrowings outstanding under our $225
million unsecured revolving credit facility provided by a syndicate of
banks.   These borrowings bore interest at rates of 1.91% and 3.11% at
December 31, 2002 and 2001, respectively.  In February 2003, we closed a modification to this credit facility
which, among other things, increased the committed capacity thereunder to $252 million from $225
million.  We have the option to further increase the capacity under the
facility to $300 million from $252 million to the extent banks (from the
syndicate or otherwise) agree to provide the additional commitment. The
facility currently has a maturity date of May 2005. Borrowings under the
$252 million facility currently bear interest at our
option of LIBOR plus 0.95% or prime minus 0.25%. Such scheduled interest rates
may be adjusted up or down based on changes in our senior unsecured credit
ratings and our leverage ratios. We may also enter into competitive bid loans with participating banks
for up to $126 million at rates below the scheduled rates. In addition, we
pay an annual facility fee currently equal to 0.20% of the $252 million
commitment.  In February 2003, $45,820 of letters of credit
enhancing four tax-exempt variable rate notes payable totaling $44,930
were reissued under this facility.$75 Million Borrowing FacilityWe have a $75 million
unsecured borrowing facility with a bank that currently has a maturity date of
May 2005.   The interest rate and maturity date
related to each advance under this facility is agreed to by both parties prior to each
advance.  At December 31, 2002 and 2001, we had $34,723 and $52,192,
respectively, in borrowings outstanding under this facility at an interest rate
of 1.85% and 2.7%, respectively.$10 Million Credit FacilityAt December 31, 2001, we had a $25 million
unsecured revolving credit facility with a bank.  In December 2002, the
availability under the facility was decreased to $10 million.  The facility
currently has a maturity date of December 2003 with unlimited one-year extension options.  
Borrowings under this facility bear interest at the same scheduled interest
rates as the $252 million credit facility described above.   At
December 31, 2002 and 2001, we had $885 and $712, respectively,  in
borrowings outstanding under this facility at an interest rate of 2.35% and
2.97%,
respectively.
Unsecured Conventional Fixed-Rate Notes PayableAt December 31, 2001, the unsecured
fixed-rate notes payable totaling $114,919 were comprised of four loans. 
During 2002, an $82.5 million loan that bore interest at a rate of 8.3% was
retired in connection with the
issuance of $40 million of senior unsecured notes and $40 million of Series C
Preferred Shares.  The three remaining notes payable totaling $31,151 at
December 31, 2002 have interest rates that range
from 5.25% to 8.62% (weighted average of 8.38%) and maturity dates that range
from December 2007 to November 2018. Principal amortization payments
are required based on amortization schedules ranging from 20 to 30 years.Secured and Unsecured Tax-Exempt Fixed-Rate Notes PayableAt December 31, 2002 and 2001, the
tax-exempt fixed-rate indebtedness was comprised of three loans. One loan outstanding at December 31,
2002 and 2001 represents a bond issuance with a principal balance of $48,365
that was collateralized by three communities
induced for tax-exempt financing and three additional communities through May
2002.  In May 2002, we called these bonds which had an interest rate of 6.375% and reissued the
bonds on an unsecured basis at an interest rate of 4.75% with a maturity date of
July 2004. In connection with the early extinguishment of the debt, we
incurred a prepayment penalty of $1,451 and wrote-off unamortized deferred loan
costs of $236. Such charges totaling $1,687 are reflected as an
extraordinary loss in the accompanying consolidated statements of operations. The called bonds required monthly principal amortization payments based on a 30-year amortization schedule
that were retained in an escrow account and were not applied to reduce the
outstanding principal balance of the loan. Such principal payments held in
escrow totaling $4,121 were released in May 2002. There are no required
principal amortization payments on the reissued bonds. This refinancing transaction
allowed us to improve our debt constant by 2.75%, unencumber six communities
comprising 2,028 apartment homes and achieve a net present value result. The
three underlying tax-exempt bond issues mature in July 2024.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Property and Per Unit Data)

---

The second loan, with an outstanding principal balance of
$10,930 and $11,120 as of December 31, 2002 and 2001, respectively,
represents a tax-exempt bond financing secured by one apartment community. The
bond issue, which has a maturity date of January 2025, was credit enhanced for
an annual fee of 0.60% and bears interest at a rate of 7.03%. Monthly escrow payments are
required each year based on the annual principal payment due to the bondholders.
        The third loan represents a
tax-exempt bond issue for $9,825 assumed in connection with the South Florida
acquisition that bears interest at a rate of 4.65% and is enhanced by the
$138,816 letter of credit facility described above.  The bonds have a maturity date of
February 2004 and do not require principal amortization payments.Secured Variable-Rate Construction Loans       We have committed fundings under four construction-related financing vehicles for two wholly-owned development
communities totaling $42,972 from a bank. At December 31, 2002, we had
drawn $4,389 under these vehicles and therefore have $38,583 of remaining
capacity. Borrowings under two of these vehicles with committed fundings
totaling $39,065 bear interest at
LIBOR plus 1.50% and borrowings under the remaining two vehicles with
committed fundings totaling $3,907 bear interest at
the greater of LIBOR plus 3.0% or 7.5%.  Borrowings under these secured
financing vehicles are made pari passu with each advance and bear interest at a
weighted average rate of 3.25% at December 31, 2002.
Maturities
The following information relating to the
aggregate maturities of our notes payable at December 31, 2002 is presented on  a pro forma
basis to reflect the February 2003 reissuance of the letters of credit enhancing
$44,930 of tax-exempt bonds under the $252 million credit facility with a
maturity date of May 2005.

2003
        2004
        2005
        2006
        2007 
        2008 and thereafter
           Total
    
    $1,925
      78,426
      243,522
      204,894
      249,673180,134$958,574


The indebtedness outstanding
under each of our credit facilities is reflected in the preceding table using
the May 2005 maturity date of our $252 million credit facility.  Outstanding indebtedness for each tax-exempt bond issue is
reflected in the preceding table using the earlier of the related bond maturity date or
the bond enhancement facility maturity date, as applicable.Restrictive Covenants      Certain of our debt
agreements contain customary representations, covenants and events of default,
including covenants which restrict our ability to
make distributions in excess of stated amounts, which in turn restricts the
Trust's ability to declare and pay dividends. In general, during any fiscal year,
we may only distribute up to 100% of our consolidated income
available for distribution (as defined in the related agreement). The applicable debt agreements
contain exceptions to these limitations to allow us to
make any distributions necessary to (1) allow the Trust to maintain its status as a REIT or
(2) distribute 100% of the Trust's taxable income.
We do not anticipate that this provision will adversely affect our ability to make distributions or
the Trust's ability to declare
dividends under its current dividend policy.
       The
tax-exempt bonds contain certain covenants which require a certain percentage of
the apartments in such communities to be rented to individuals based upon income
levels specified by U.S. government programs.

Pledged Assets

The aggregate net book
value at December 31, 2002 of real estate assets pledged as collateral for
indebtedness was $433,531.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Property and Per Unit Data)

---

8. COMMITMENTS AND CONTINGENCIESDevelopment and Construction Commitments       We currently have seven communities
under development that are expected to comprise 2,015 apartment homes upon
completion and an indirect 20% ownership interest in two development communities
that are expected to comprise 373 apartment homes upon completion.  The
estimated costs to complete the development of these assets total $149 million
at December 31, 2002, including $2 million of costs that we are obligated to
fund for the co-investment development communities.  These costs are
expected to be initially funded by $39 million in construction loan proceeds and
$110 million in borrowings under our credit facilities.
       We have letter of credit and performance
obligations of approximately $10.7 million related to our wholly-owned
development and construction activities.  As the related development and
construction activities are completed, such obligations will be reduced
accordingly.
       We are currently serving as general
contractor for the construction of four apartment communities for third parties
and unconsolidated joint ventures under "cost plus a fee" contracts
with guaranteed maximum prices on the costs of construction of approximately $65
million in aggregate.  The construction of these assets was 34% complete in
aggregate at December 31, 2002.  Under these contracts, we are
obligated to fund any construction cost overruns that are not recovered through
a change order.  In addition, we are entitled to a share of the savings
generated under these contracts, if any, in the form of an incentive fee.  Ground Leases      We are party to two long-term ground leases
for two apartment communities in Austin with initial terms expiring in 2044 and
2065. We have paid the ground lease rent in full for these leases through the
initial term. The prepaid lease payments, net of accumulated amortization, are
included in other assets, net in the accompanying balance sheets. We are party
to a long-term ground lease for an apartment community in Atlanta with an
initial term expiring in 2075. The payments under this lease are made on a
monthly basis. Future minimum lease payments and rent expense for these ground
leases are not material.Office Leases

We are party to operating
leases for office space with various terms. Future minimum lease payments and
rent expense for such leases are not material.ContingenciesThe entities comprising Gables Realty
Limited Partnership are subject to various legal proceedings and claims that
arose in the ordinary course of business.  We believe that these matters
are generally covered by insurance. While the resolution of these matters cannot
be predicted with certainty, we believe that the final outcome of such matters
will not have a material adverse effect on our financial statements.9.   DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTSDisclosure about the estimated fair value of
financial instruments is based on pertinent information available to us as of
December 31, 2002 and 2001.   Such amounts have not been
comprehensively revalued for purposes of these financial statements since those
dates and current estimates of fair value may differ significantly from the
amounts presented herein.
      We estimate that the fair value of our cash
and cash equivalents, restricted cash, accounts receivable, accounts payable,
accrued expenses and security deposits approximates the carrying value due to
the relatively short term nature of these instruments.
      Notes payable with an aggregate carrying value of
$958,574 and $877,231 had an estimated fair value of $1,015,320 and $906,777 at
December 31, 2002 and 2001, respectively. The estimated fair value of our notes
payable is based on a discounted cash flow analysis using current borrowing
rates for notes payable with similar terms and remaining maturities. Such fair
value is subject to changes in interest rates. Generally, the fair value will
increase as interest rates fall and decrease as interest rates rise.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Property and Per Unit Data)10.  EARNINGS PER UNIT       Basic earnings per Unit are computed
based on net income available to common unitholders and the weighted average
number of common Units outstanding.  Diluted earnings per Unit reflect
the assumed issuance of common Units under the Trust's share option and incentive plan.  The numerator and denominator used for both
basic and diluted earnings per Unit computations are as follows:
Years
      Ended December 31,Basic and diluted income
      available to common unitholders (numerator):
    
    2002
    
    
    2001
    
    
    2000Income from continuing operations (net of preferred distributions) - 
         basic and diluted
    $
  
    51,741
    
    $
    67,620
    
    $
    72,271Income from discontinued operations - basic and diluted
    $
    
    10,693
    
    
    $
    1,703
    
  
    $
    1,667Income before extraordinary loss (net of preferred distributions) - 
         basic and diluted
    $
    
    62,434
    
    $
    69,323
    
    $
    73,938Extraordinary loss from early
      extinguishment of debt -
          basic and diluted
    $
  
    (  1,687
    )
    $
    -
    
  $
    -Net income available to common unitholders -  basic and diluted
    $
  
    60,747
    
    
    $
    69,323
    
    
    $
    73,938Common Units (denominator):Average Units outstanding - basic
      Incremental Units from assumed conversions of:
         Stock options
         Other
      Average Units outstanding - diluted
    
    
  
    30,571
      1067 
      30,684
  
  
  
  30,153
    1556 
    30,314
  
  
  


  30,365
    704
    30,439Options to purchase 578 
and 1,130 shares were outstanding at December 31, 2002 and 2000,
respectively,  but were not included in the computation of diluted earnings per
Unit because
the effect was anti-dilutive.  There were no anti-dilutive options
outstanding at December 31, 2001.11. SEGMENT REPORTINGOperating segments are
defined as components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance. Our chief operating decision maker is our senior management group.
      We own, operate and
develop multifamily apartment communities in major markets located in Texas,
Georgia, Florida, Washington, D.C. and Tennessee.  Such apartment
communities generate rental revenue and other income through the leasing of
apartment homes to a diverse base of residents.  The operating performance
of each of our communities is affected by the supply and demand dynamics within
the immediate submarket or neighborhood of the major market that each community
is located in.  We evaluate the performance of
each of our apartment communities on an individual basis. However, because each
of our apartment communities has similar economic characteristics, residents,
and products and services, our apartment communities have been aggregated into one reportable
segment. This segment comprises 93% of our total revenues for each of the three
years in the period ended December 31, 2002.
     The primary financial
measure for our reportable business segment is net operating income
("NOI"), which represents total property revenues less property
operating and maintenance expenses (as reflected in the accompanying statements
of operations). Accordingly, NOI excludes certain expenses included in the
determination of net income such as property management and other indirect
operating expenses, interest expense and depreciation and amortization expense.  Current year NOI is compared to prior year
NOI and current year budgeted NOI as a measure of financial performance. The
NOI yield or return on total capitalized costs is an additional measure of
financial performance. NOI from our wholly-owned apartment communities included
in continuing operations totaled $142,907, $153,128
and $150,617 for the years ended December 31, 2002, 2001 and 2000,
respectively. All other measurements for our reportable business segment are disclosed in our consolidated
financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Property and Per Unit Data)We also provide management, development and construction, corporate apartment home and
brokerage services to
third parties and unconsolidated joint ventures. These operations, on an individual and aggregate basis, do not
meet the quantitative thresholds for segment reporting set forth in SFAS No. 131.
12.   PROFIT SHARING PLANEligible employees may
participate in a profit sharing plan pursuant to Section 401(k) of the
Internal Revenue Code. Under the plan, employees may defer a portion of their
salary on a pre-tax basis. We also make discretionary matching contributions currently equal to 50% of an employee's first 4% salary deferral
contribution. Expenses under this plan for the years ended December 31,
2002, 2001 and 2000 were not material.
      During January 1996,
we added the Gables Residential Trust Stock Fund as an investment option under the
plan. The fund is comprised of the Trust's common shares. In connection with the
addition of this fund to the plan, 100 common shares were registered for
issuance under the plan. The plan trustee will purchase the Trust's common shares
for the fund at the direction of the plan investment committee, either on the
open market or directly from the Trust.13. 1994 SHARE OPTION AND INCENTIVE PLAN AND
OTHER SHARE GRANTSThe Trust adopted the 1994 Share
Option and Incentive Plan to provide incentives to officers, employees and
non-employee trustees. The plan provides for the grant of options to purchase a
specified number of common shares and the grant of restricted or unrestricted
common shares.  The total number of shares reserved for issuance under the plan,
as amended, is the greater of 2,953 shares or 9% of the total number of
outstanding common shares and Units. At December 31, 2002, the number of
shares reserved for issuance was 2,953. The number of common shares which may be
issued as restricted or unrestricted shares is equal to 50% of the number of
shares available for issuance under the plan at such time.  We will issue a
Unit for each common share of the Trust issued under the plan. See Note 4 for
a discussion of stock options issued under the plan.
    The Trust has made the
following grants of unrestricted shares and restricted shares:GrantDate
      Unrestricted
        SharesGranted
      Restricted
        SharesGranted
      Total
      Per Share
        GrantValue
    
    General Vesting Period for Restricted Shares02-97
      02-98
      04-98
      02-99
      02-99
      04-99
      11-99
      01-00
      03-00
      03-00
      10-00
      02-01
      02-01
      10-01
      02-02
      05-02
      11-02
      11-02
      03-03
    23
      13
      3
      11
      5
      9
      2
      12
      6
      3
      2
      12
      1
      2
      24
      1
      -
      111
    46
      40
      9
      34
      9
      19
      16
      36
      20
      5
      13
      36
      2
      13
      47
      1
      1
      1236
    69
      53
      12
      45
      14
      28
      18
      48
      26
      8
      15
      48
      3
      15
      71
      2
      1
      1347
    $25.8750
      26.6875
      27.0625
      23.2500
      23.2500
      21.9375
      24.6250
      22.6250
      21.8750
      21.8750
      25.8125
      27.3000
      27.3000
      26.9500
      29.7500
      30.3000
      23.7100
      23.7100
      25.4000
    Two equal annual installments,
      beginning 1-1-98
      Three equal annual installments, beginning 1-1-99
      Three equal annual installments, beginning 4-1-99
      Three equal annual installments, beginning 1-1-00
      Two equal annual installments, beginning 1-1-00
      Two equal annual installments, beginning 4-1-00
      One installment, on 12-1-02
      Three equal annual installments, beginning 1-1-01
      Three equal annual installments, beginning 1-1-01
      Two equal annual installments, beginning 1-1-01
      One installment, on 12-1-03
      Three equal annual installments, beginning 1-1-02
      Two equal annual installments, beginning 1-1-02
      One installment, on 12-1-04
      Three equal installments, beginning 1-1-03
      Three equal installments, beginning 1-1-03
      Three equal installments, beginning 1-1-03
      One installment, on 12-1-05
      Three equal annual installments, beginning 1-1-04Total
    141
    395
    536
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Property and Per Unit Data)All of the share grants have been made under
the plan with the exception of the February 2001, February 2002 and March
2003 grants,
which were satisfied with shares acquired by the Trust pursuant to its common equity
repurchase program.The value of the
unrestricted shares granted is recorded as long-term compensation expense in the
year the related service was provided. Upon issuance of the share grants, the value of the shares issued is recorded to
partners' capital and the
value of the restricted shares is recorded as a reduction to partners' capital
as deferred compensation. Such deferred compensation is
amortized ratably over the term of the vesting period.  Long-term
compensation expense included in general and administrative expense in the
accompanying consolidated statements of operations was $1,230, $1,331 and $1,128
for the years ended December 31, 2002, 2001 and 2000, respectively.
14.  UNUSUAL ITEMSUnusual items of $8,847 in 2001 are
comprised of  (1) a $5,006 charge associated with the write-off of building
components at Gables State Thomas Ravello that are being replaced in connection
with a remediation program, (2) $2,200 of severance charges, (3) $920 in
reserves associated with certain technology investments and (4) $721 of
abandoned real estate pursuit costs resulting from September 2001 events which impacted the U.S. economy.       
       The $2,200 severance charge in 2001 is
associated with organizational changes adopted in the fourth quarter of 2001,
including (1) the departure of the chief investment officer effective January 1,
2002, who became entitled to severance benefits in accordance with the terms of
his employment agreement and (2) the departure of two senior vice presidents
effective in early 2002.  These severance costs were paid in 2002 and
included approximately $400 of deferred compensation related to the accelerated vesting
of restricted shares unvested at the effective date of separation and
approximately $730 related to the modification of certain outstanding share
options to extend the exercise period and accelerate the vesting thereof.15. RELATED-PARTY TRANSACTIONSTransactions with our unconsolidated joint
ventures are disclosed in Note 6.On September 1,
2000, we acquired an apartment community located in Austin comprising
160 apartment homes from a partnership in which our chairman, president and
chief executive officer held a 15% limited partnership interest. In
consideration for such community, we paid $5.7 million in cash and assumed a
$14.1 million secured fixed-rate note. The purchase price and other terms
of this transaction were negotiated at arms' length between us and
representatives of the seller.16.  EXTRAORDINARY LOSSExtraordinary loss of $1,687 in 2002 represents the write-off of unamortized
  deferred financing costs of $236 and a prepayment penalty of $1,451 associated
  with the early retirement of $48,365 of secured tax-exempt bond indebtedness. These bonds had an interest rate of 6.375% which we were
  able to reissue on an unsecured basis at a rate of 4.75%, resulting in a
  positive net present value.17. QUARTERLY FINANCIAL INFORMATION
(Unaudited)The operating results of two wholly-owned
real estate assets sold during the first and fourth quarters of 2002 are
reflected as discontinued operations in the statements of operations for all
periods presented in this report as further discussed in Note 5.  As a
result, we are presenting the quarterly financial information to reflect the
reclassification of the operating results of these assets to discontinued
operations, which differs from the basis of presentation in our financial
statements previously filed in our quarterly reports on Form 10-Q.
      In addition, during the first quarter of 2002, an
operating real estate asset owned by the GRAP JV (an unconsolidated joint venture described in Note 6) was sold.  Because we did not continue to
manage the asset subsequent to the sale, we reflected our share of the operating results of
the asset as discontinued operations in our financial statements previously
filed in our quarterly reports on Form 10-Q.  Upon further consideration of
the technical issues involved, during the fourth quarter of 2002, we determined
that our share of the results of operations associated with assets sold by unconsolidated joint
ventures should not be classified as discontinued operations.  Accordingly,
we are presenting the quarterly financial information to reflect our share of
the operating
results of the asset within continuing operations, which differs from the
previously reported quarterly results.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Property and Per Unit Data)Quarterly financial information for the years ended
December 31, 2002 and 2001, as revised to reflect the changes noted above is as
follows:Year
        Ended December 31, 2002FirstQuarter
    SecondQuarter
    ThirdQuarter
    FourthQuarterTotal revenues
        Gain on sale of previously depreciated operating real estate assets
        Gain on sale of land and development rights
        Income from continuing operations
        Income from discontinued operations
        Income before extraordinary loss
        Extraordinary loss
        Net income
        Net income available to common unitholders
        Net income per common Unit - basic (a)
        Net income per common Unit - diluted
      $60,528
        17,906
        1,339
        33,040
        2,526
        35,566
        -
        35,566
        32,045
        1.05
        1.04
      $58,989
        -
        462
        11,005
        221
        11,226
        1,687
        9,539
        6,019
        0.20
        0.19
      $60,011
        -
        267
        10,465
        182
        10,647
        -
        10,647
        8,478
        0.28
        0.28
      $59,595
        -
        32
        8,362
        7,764
        16,126
        -
        16,126
        14,205
        0.47
        0.47(a) 
        The total of the four quarterly amounts for net income per common Unit does
        not equal the net income per common Unit for the year ended December 31,
        2002. The difference results from the use of a weighted average to
        compute the number of common Units outstanding for each quarter and for the
        year.
Year
        Ended December 31, 2001FirstQuarter
      SecondQuarter
      ThirdQuarter
      FourthQuarterTotal revenues
        Gain on sale of previously depreciated operating real estate assets
        Gain on sale of land and development rights
        Unusual items
        Income from continuing operations
        Income from discontinued operations
        Income before extraordinary loss
        Extraordinary loss
        Net income
        Net income available to common unitholders
        Net income per common Unit - basic 
        Net income per common Unit - diluted
      $57,980
        -
        1,638
        400
        14,427
        418
        14,845
        -
        14,845
        11,324
        0.38
        0.38
      $61,330
        7,386
        580
        -
        22,016
        385
        22,401
        -
        22,401
        18,881
        0.63
        0.62
      $62,980
        -
        515
        6,247
        7,850
        426
        8,276
        -
        8,276
        4,755
        0.16
        0.16
      $62,189
        26,724
        487
        2,200
        37,410
        474
        37,884
        -
        37,884
        34,363
        1.13
        1.13
18.  SUBSEQUENT EVENTS      In February 2003, we sold
an apartment community in Dallas comprising 300 apartment homes.  The net
proceeds from
this sale were approximately $19 million and were used to paydown outstanding borrowings
under our interim financing vehicles.  The gain from this sale was approximately
$5 million.  This apartment community did not qualify as held for
disposition as defined by SFAS No. 144 at December 31, 2002.
      In February 2003, we acquired an apartment
community located in Austin that is subject to a long-term ground lease and is
comprised of 239 apartment homes and 7,366 square feet
of retail space for approximately $30
million.  The acquisition was financed through borrowings under our interim
financing vehicles.
      In February 2003, we closed a modification to our
$225 million credit facility increasing the capacity thereunder to $252 million,
among other things.  See Note 7.Gables Realty Limited PartnershipReal
  Estate Investments and Accumulated Depreciation as of December 31, 2002(Dollars in Thousands)
Schedule III
  Initial
          Costs
        Costs
          Capitalized
          SubsequentTo Acquisition
        Gross
          Amount at WhichCarried at Close of Period
        
        Year
          Original
          ConstructionCompleteProperty
          Typeand Location
        RelatedEncumbrances
        Land
        Buildings
          andImprovements
    
        Land
    Buildings
          andImprovements
        Total
        AccumulatedDepreciation
        YearAcquired
  Completed Apartment Communities:South FL
      $ 135,850
      $ 69,417
      $ 361,141
      $ 28,113
      $ 69,417
      $ 389,254
      $ 458,671
      
      $ 55,339
      1984-2000
      1998-2001Atlanta, GA
      
      78,378
      58,747
      86,145
      212,940
      58,747
      299,085
      357,832
      
      69,376
      1945-2002
      1983-1998Houston, TX
      59,339
      59,191
      139,954
      133,020
      59,191
      272,974
      332,165
      
      61,575
      1981-1998
      1987-2001Dallas, TX
      
      15,541
      25,009
      38,234
      81,958
      25,009
      120,192
      145,201
      
      22,408
      1995-2001
      1993-1998Orlando, FL
      
      -
      14,917
      -
      118,236
      14,917
      118,236
      133,153
      
      11,780
      1998-2002
      1996-1998Austin, TX
      
      13,803
      12,388
      49,878
      66,743
      12,388
      116,621
      129,009
      
      19,985
      1992-1998
      1992-2000Nashville, TN
      26,150
      2,001
      -
      27,643
      2,001
      27,643
      29,644
      
      13,525
      1987-1988
      1985Memphis, TN
      -
      1,865
      -
      27,606
      1,865
      27,606
      29,471
      
      11,349
      1986
      1985Washington, D.C.
      -
      6,560
      18,037
      131
      6,560
      18,168
      24,728
      
      671
      1988
      2001Total
      
      $ 329,061
      $ 250,095
      $ 693,389
      $ 696,390
      $ 250,095
      $ 1,389,779
      $ 1,639,874
      
      $ 266,008Apartment Communities Under Development
        and/or Lease-up:Dallas, TX
      
      $ -
      $ 15,848
      $ 22,612
      $ 42,200
      $ 15,848
      $ 64,812
      $ 80,660
      
      $ 131
      n/a
      1998-2001Austin, TX
      
      906
      11,863
      -
      2,412
      11,863
      2,412
      14,275
      
      -
      n/a
      2002South FL
      -
      4,577
      -
      2,720
      4,577
      2,720
      7,297
      
      -
      n/a
      2000Houston, TX
      3,483
      5,424
      -
      1,711
      5,424
      1,711
      7,135
      
      -
      n/a
      2002Atlanta, GA ( c)
      -
      -
      -
      6,807
      -
      6,807
      6,807
      
      -
      n/a
      1991-1998Tampa, FL
      
      -
      4,019
      -
      1,156
      4,019
      1,156
      5,175
      
      -
      n/a
      2002Total
      
      $ 4,389
      $ 41,731
      $ 22,612
      $ 57,006
      $ 41,731
      $ 79,618
      $ 121,349
      
      $ 131Apartment Communities Under Renovation
        (d):Atlanta, GA
      
      $ -
      $ -
      $ -
      $ 5,699
      $ -
      $ 5,699
      $ 5,699
      
      $ -
      n/a
      n/aSouth FL
      -
      -
      -
      2,111
      -
      2,111
      2,111
      
      -
      n/a
      n/aTotal
      
      $ -
      $ -
      $ -
      $ 7,810
      $ -
      $ 7,810
      $ 7,810
      
      $ -Undeveloped Land:South FL
      $ -
      $ 6,340
      $ -
      $ 3,516
      $ 9,856
      $ -
      $ 9,856
      
      $ -
      n/a
      2001San Antonio, TX
      -
      1,202
      -
      471
      1,673
      -
      1,673
      
      -
      n/a
      1994Dallas, TX
      
      -
      600
      -
      198
      798
      -
      798
      
      -
      n/a
      1994Memphis, TN
      -
      606
      -
      18
      624
      -
      624
      
      -
      n/a
      1996Total
      
      $ -
      $ 8,748
      $ -
      $ 4,203
      $ 12,951
      $ -
      $ 12,951
      
      $ -Grand Totals
      
      $ 333,450
      $ 300,574
      $ 716,001
      $ 765,409
      $ 304,777
      $ 1,477,207
      $ 1,781,984
      (e)
      $ 266,139(a) Depreciation of apartment communities
        is calculated on a straight-line basis over an estimated useful life
        ranging from 20 to 40 years for buildings and building
              improvements and
        an estimated useful life of 5 years for furniture, fixtures and
        equipment.(b) The year acquired represents the year
        we acquired a completed community or the year we acquired the real
        estate for the development of an apartment community.( c) Represents costs incurred to date
        associated with the reconstruction of 100 apartment homes previously owned
        and operated by us into 233 apartment homes. The
               remaining
        information applicable to this community is included in the Completed
        Apartment Communities category above.(d) Represents renovation costs incurred
        to date on two completed communities; the remaining information
        applicable to these communities is included in the Completed
             Apartment
        Communities category above.(e) Excludes our investment in joint
        ventures totaling $12,423.Schedule IIIGables Realty Limited PartnershipReal Estate Investments and Accumulated
      Depreciation as of December 31, 2002 (Dollars in Thousands)A summary of activity for real estate
      investments and accumulated depreciation is as follows:Years ended December 31,2002
    2001
    2000Real estate investments:Balance, beginning of year
    
    
    
    
    $ 1,739,905
    $ 1,573,544
    $ 1,577,737Additions:Operating apartment community acquisitions
    
    
    -
    99,206
    20,036Development, construction and renovation  costs incurred, 
            including
      related land acquisitions
    
    90,465
    128,513
    86,251Recurring value retention capital
      expenditures
    
    
    13,077
    11,797
    10,910Non-recurring and/or value-enhancing
      capital expenditures
    
    11,910
    10,916
    9,609Total additions
    
    
    
    
    115,452
    250,432
    126,806Contributions to GRAP JV Two
    
    
    
    -
    (18,020)
    -Sales
    
    
    
    
    
    (73,373)
    (66,051)
    (130,999)Balance, end of year (a)
    
    
    
    
    $ 1,781,984
    $ 1,739,905
    $ 1,573,544Accumulated depreciation:Balance, beginning of year
    
    
    
    
    $ 230,118
    $ 195,706
    $ 172,247Depreciation
    
    
    
    
    
    47,815
    47,521
    43,745Sales
    
    
    
    
    
    (11,794)
    (13,109)
    (20,286)Balance, end of year
    
    
    
    
    $ 266,139
    $ 230,118
    $ 195,706Reconciliation of depreciation above to
      consolidated statements of operations:Depreciation in rollforward of accumulated
      depreciation above
    
    $ 47,815
    $ 47,521
    $ 43,745Depreciation relating to discontinued
      operations
    
    
    (806)
    (1,365)
    (1,310)Amortization of prepaid land lease payments
      (b)
    
    
    84
    84
    84Real estate asset depreciation and
      amortization expense reflected in continuing
             operations in the
      accompanying consolidated statements of operations
    $ 47,093
    $ 46,240
    $ 42,519(a) Excludes our investment in joint
      ventures totaling $12,423, $20,898 and $24,626 at December 31, 2002, 2001 and 2000,   
            respectively.(b)We have leased two parcels of land
      pursuant to long-term ground lease agreements which required the lease payments to be
            made upfront. The prepaid
      lease payments, net of accumulated amortization, are included in other assets,
      net in the
            accompanying consolidated
      balance
      sheets.