##### Table of Contents



SECURITIES and EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

|    |  |                                                                                        
|--- |  | ---------------------------------------------------------------------------------------
|    |  | (Mark One)                                                                             
|[X] |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2001or

|     |  |                                                                                         
|---- |  | ----------------------------------------------------------------------------------------
|[  ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number 1-9997

KOGER EQUITY, INC.
(Exact name of registrant as specified in its charter)

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|FLORIDA                                                        |  | 59-2898045                          
|                                                              
|                                                              
|                                                              
|                                                              
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer Identification No.)

|                                              |  |           
|--------------------------------------------- |  | ----------
|433 PLAZA REAL, SUITE 335
BOCA RATON, FLORIDA |  | 33432     
|                                             
|                                             
|                                             
|                                             
|(Address of principal executive offices)      |  | (Zip Code)

Registrants telephone number, including area code: (561) 395-9666

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.

Yes [X] No [ ]

Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date.

|                                   |  |                                                  
|---------------------------------- |  | -------------------------------------------------
|Class
Common Stock, $.01 par value |  | Outstanding at October 31, 2001
26,811,299 shares



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|                                                   |                                                                                               |                                                                           |  |  |  |  |  | 
|-------------------------------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------- |  |  |  |  |  | 
|                                                   |                                                                                               | INDEPENDENT ACCOUNTANTS REPORT                                          
|PART I. FINANCIAL INFORMATION                     
|                                                   | Item 1. Financial Statements                                                                 
|                                                   |                                                                                               | KOGER EQUITY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
|                                                   |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                          
|                                                   |                                                                                               | CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY      
|                                                   |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                          
|                                                   |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                     
|                                                   | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                   | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|PART II. OTHER INFORMATION                        
|                                                   | Item 1. Legal Proceedings                                                                    
|                                                   | Item 5. Other Information                                                                    
|                                                   | Item 6. Exhibits and Reports on Form 8-K                                                     
|                                                   | SIGNATURES                                                                                   
|Earnings Per Share Computations                   
|Letter Re: Unaudited Interim Financial Information



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##### Table of Contents



KOGER EQUITY, INC. AND SUBSIDIARIES

INDEX

|                               |                                                                                               |                                                                                                                             |  |  |  |  |  |          |   | 
|------------------------------ | --------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  | -------- | - | 
|                               |                                                                                               |                                                                                                                             |  |  |  |  |  | PAGE NO.
|                               |                                                                                               |                                                                                                                             |  |  |  |  |  |         
|PART
I.  FINANCIAL INFORMATION |                                                                                               |                                                                                                                             |  |  |  |  |  |         
|                              
|                              
|                              
|                              
|                               |                                                                                               | Independent Accountants Report                                                                                             |  |  |  |  |  |          | 3
|                              
|                              
|                              
|                              
|                               | Item 1.
Financial Statements (Unaudited):                                                     |                                                                                                                             |  |  |  |  |  |          |  
|                              
|                              
|                              
|                              
|                               |                                                                                               | Condensed Consolidated Balance Sheets
September 30, 2001 and December 31, 2000                                              |  |  |  |  |  |          | 4
|                              
|                              
|                              
|                              
|                               |                                                                                               | Condensed Consolidated Statements of Operations
for the Three and Nine Month Periods Ended
September 30, 2001 and 2000      |  |  |  |  |  |          | 5 | 
|                              
|                              
|                              
|                              
|                               |                                                                                               | Condensed Consolidated Statement of Changes in
Shareholders Equity for the Nine Month Period
Ended September 30, 2001      |  |  |  |  |  |          | 6 | 
|                              
|                              
|                              
|                              
|                               |                                                                                               | Condensed Consolidated Statements of Cash Flows
for the Nine Month Periods Ended September 30, 2001 and 2000                |  |  |  |  |  |          | 7 | 
|                              
|                              
|                              
|                              
|                               |                                                                                               | Notes to Condensed Consolidated Financial Statements
for the Three and Nine Month Periods Ended
September 30, 2001 and 2000 |  |  |  |  |  |          | 8 | 
|                              
|                              
|                              
|                              
|                               | Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations |                                                                                                                             |  |  |  |  |  | 10       |  
|                              
|                              
|                              
|                              
|                               | Item 3. Quantitative and Qualitative Disclosures About Market Risk                            |                                                                                                                             |  |  |  |  |  | 13       |  
|                              
|                              
|                              
|                              
|PART
II.  OTHER INFORMATION    |                                                                                               |                                                                                                                             |  |  |  |  |  |         
|                              
|                              
|                              
|                              
|                               | Item 1. Legal Proceedings                                                                     |                                                                                                                             |  |  |  |  |  | 13      
|                              
|                              
|                              
|                              
|                               | Item 5. Other Information                                                                     |                                                                                                                             |  |  |  |  |  | 14       |  
|                              
|                              
|                              
|                              
|                               | Item 6. Exhibits and Reports on Form 8-K                                                      |                                                                                                                             |  |  |  |  |  | 16       |  
|                              
|                              
|                              
|                              
|                               | Signatures                                                                                    |                                                                                                                             |  |  |  |  |  | 17       |  

2



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##### Table of Contents






INDEPENDENT ACCOUNTANTS REPORT

To the Board of Directors and Shareholders of
Koger Equity, Inc.
Jacksonville, Florida

We have reviewed the accompanying condensed consolidated balance sheet of Koger
Equity, Inc. and subsidiaries (the Company) as of September 30, 2001 and the
related condensed consolidated statements of operations for the three and nine
month periods ended September 30, 2001 and 2000, the condensed consolidated
statement of changes in shareholders equity for the nine month period ended
September 30, 2001 and the condensed consolidated statements of cash flows for
the nine month periods ended September 30, 2001 and 2000. These financial
statements are the responsibility of the Companys management.

We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and of making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with auditing standards generally accepted in the United States
of America, the objective of which is the expression of an opinion regarding
the financial statements taken as a whole. Accordingly, we do not express such
an opinion.

Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with accounting principles generally accepted in the United States
of America.

As described in Note 8 to the condensed consolidated financial statements, the
Company has entered into an agreement to sell 3.9 million of rentable square
feet to AREIF Realty Trust, an affiliate of Apollo Real Estate Advisors, L.P.,
a significant shareholder.

We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet of the
Company as of December 31, 2000, and the related consolidated statements of
operations, changes in shareholders equity, and cash flows for the year then
ended (not presented herein); and in our report dated February 23, 2001, we
expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of December 31, 2000 is fairly stated, in all
material respects, in relation to the consolidated balance sheet from which it
has been derived.

DELOITTE & TOUCHE LLP
Certified Public Accountants

West Palm Beach, Florida
October 26, 2001

3



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##### Table of Contents












PART I . FINANCIAL INFORMATION

Item 1.  Financial Statements

KOGER EQUITY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited  See Independent Accountants Report)
(In thousands)

|                                                                                                          |                                                  |                                     |                                            |        |          |               |        |              |          |         |  | 
|--------------------------------------------------------------------------------------------------------- | ------------------------------------------------ | ----------------------------------- | ------------------------------------------ | ------ | -------- | ------------- | ------ | ------------ | -------- | ------- |  | 
|                                                                                                          |                                                  |                                     |                                            |        |          | September 30, |        | December 31,
|                                                                                                          |                                                  |                                     |                                            |        |          | 2001          |        | 2000        
|                                                                                                          |                                                  |                                     |                                            |        |          |               |        |             
|ASSETS                                                                                                    |                                                  |                                     |                                            |        |          |               |        |             
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|Real Estate Investments:                                                                                  |                                                  |                                     |                                            |        |          |               |        |             
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                          | Operating properties:                            |                                     |                                            |        |          |               |        |              |         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                          |                                                  | Land                                |                                            | $      | 140,448  |               |        | $            | 138,214  |        
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                          |                                                  | Buildings                           |                                            |        | 831,406  |               |        |              | 805,935  |        
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                          |                                                  | Furniture and equipment             |                                            |        | 3,228    |               |        |              | 2,631    |        
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                          |                                                  | Accumulated depreciation            |                                            |        | (180,983 | )             |        |              | (155,817 | )      
|                                                                                                          |                                                  |                                     |                                            |        |          |               |        |             
|                                                                                                          |                                                  |                                     | Operating properties  net                 |        | 794,099  |               |        |              | 790,963  |        
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                          | Properties under construction:                   |                                     |                                            |        |          |               |        |              |         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                          |                                                  | Land                                |                                            |        |         |               |        |              | 2,128    |        
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                          |                                                  | Buildings                           |                                            |        |         |               |        |              | 12,023   |        
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                          | Undeveloped land held for investment             |                                     |                                            | 13,899 |          |               |        | 13,899       |         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                          | Undeveloped land held for sale, net of allowance |                                     |                                            | 76     |          |               |        | 76           |         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|Cash and cash equivalents                                                                                 |                                                  |                                     | 9,140                                      |        |          |               | 1,615  |             
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|Accounts receivable, net of allowance for uncollectible
accounts of $787 and $584                         |                                                  |                                     | 12,338                                     |        |          |               | 13,232 |             
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|Investment in Koger Realty Services, Inc.                                                                 |                                                  |                                     |                                           |        |          |               | 2,533  |             
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|Cost in excess of fair value of net assets acquired, net of
accumulated amortization of $1,323 and $1,195 |                                                  |                                     | 1,232                                      |        |          |               | 1,360  |             
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|Other assets                                                                                              |                                                  |                                     | 13,997                                     |        |          |               | 13,193 |             
|                                                                                                          |                                                  |                                     |                                            |        |          |               |        |             
|                                                                                                          |                                                  |                                     | TOTAL ASSETS                               |        | $        | 844,781       |        |              | $        | 851,022 | 
|                                                                                                          |                                                  |                                     |                                            |        |          |               |        |             
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                      |                                                  |                                     |                                            |        |          |               |        |             
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|Liabilities:                                                                                              |                                                  |                                     |                                            |        |          |               |        |             
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                          |                                                  | Mortgages and loans payable         |                                            | $      | 337,879  |               |        | $            | 343,287  |        
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                          |                                                  | Accounts payable                    |                                            |        | 3,090    |               |        |              | 4,961    |        
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                          |                                                  | Accrued real estate taxes payable   |                                            |        | 9,491    |               |        |              | 4,175    |        
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                          |                                                  | Accrued liabilities  other         |                                            |        | 8,969    |               |        |              | 10,562   |        
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                          |                                                  | Dividends payable                   |                                            |        | 9,381    |               |        |              | 9,392    |        
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                          |                                                  | Advance rents and security deposits |                                            |        | 6,489    |               |        |              | 7,014    |        
|                                                                                                          |                                                  |                                     |                                            |        |          |               |        |             
|                                                                                                          |                                                  |                                     | Total Liabilities                          |        |          | 375,299       |        |              |          | 379,391 | 
|                                                                                                          |                                                  |                                     |                                            |        |          |               |        |             
|Minority interest                                                                                         |                                                  |                                     | 23,132                                     |        |          |               | 23,138 |             
|                                                                                                          |                                                  |                                     |                                            |        |          |               |        |             
|Shareholders equity:                                                                                     |                                                  |                                     |                                            |        |          |               |        |             
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                          |                                                  | Common stock                        |                                            |        | 296      |               |        |              | 296      |        
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                          |                                                  | Capital in excess of par value      |                                            |        | 469,010  |               |        |              | 468,277  |        
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                          |                                                  | Notes receivable from stock sales   |                                            |        | (5,066   | )             |        |              | (6,250   | )      
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                          |                                                  | Retained earnings                   |                                            |        | 17,460   |               |        |              | 20,261   |        
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                          |                                                  | Treasury stock, at cost             |                                            |        | (35,350  | )             |        |              | (34,091  | )      
|                                                                                                          |                                                  |                                     |                                            |        |          |               |        |             
|                                                                                                          |                                                  |                                     | Total Shareholders Equity                 |        |          | 446,350       |        |              |          | 448,493 | 
|                                                                                                          |                                                  |                                     |                                            |        |          |               |        |             
|                                                                                                          |                                                  |                                     | TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |        | $        | 844,781       |        |              | $        | 851,022 | 
|                                                                                                          |                                                  |                                     |                                            |        |          |               |        |             

See Notes to Unaudited Condensed Consolidated Financial Statements.

4



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##### Table of Contents






KOGER EQUITY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited  See Independent Accountants Report)
(In thousands, except per share data)

|                                                                                        |                                         |                |       |                     |        |                     |       |        |        |      |        |         |         |   |        |         |         | 
|--------------------------------------------------------------------------------------- | --------------------------------------- | -------------- | ----- | ------------------- | ------ | ------------------- | ----- | ------ | ------ | ---- | ------ | ------- | ------- | - | ------ | ------- | ------- | 
|                                                                                        |                                         |                |       | Three Month Period  |        | Nine Month Period  
|                                                                                        |                                         |                |       | Ended September 30, |        | Ended September 30,
|                                                                                        |                                         |                |       |                     |        |                    
|                                                                                        |                                         |                |       | 2001                |        | 2000                |       | 2001   |        | 2000
|                                                                                        |                                         |                |       |                     |        |                     |       |        |        |     
|REVENUES                                                                                |                                         |                |       |                     |        |                     |       |        |        |      |        |         |         |   |        |        
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        | Rental and other rental services        |                | $     | 42,243              |        |                     | $     | 40,750 |        |      | $      | 125,462 |         |   | $      | 124,287 |        
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        | Management fees                         |                |       | 1,074               |        |                     |       | 604    |        |      |        | 3,530   |         |   |        | 1,255   |        
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        | Interest                                |                |       | 154                 |        |                     |       | 229    |        |      |        | 596     |         |   |        | 478     |        
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        | Income from Koger Realty Services, Inc. |                |       |                    |        |                     |       | 191    |        |      |        | 81      |         |   |        | 352     |        
|                                                                                        |                                         |                |       |                     |        |                     |       |        |        |      |        |         |         |   |        |        
|                                                                                        |                                         | Total revenues |       |                     | 43,471 |                     |       |        | 41,774 |      |        |         | 129,669 |   |        |         | 126,372 | 
|                                                                                        |                                         |                |       |                     |        |                     |       |        |        |      |        |         |         |   |        |        
|EXPENSES                                                                                |                                         |                |       |                     |        |                     |       |        |        |      |        |         |         |   |        |        
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        | Property operations                     |                |       | 15,591              |        |                     |       | 16,267 |        |      |        | 46,749  |         |   |        | 47,964  |        
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        | Depreciation and amortization           |                |       | 9,844               |        |                     |       | 8,760  |        |      |        | 27,834  |         |   |        | 25,886  |        
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        | Mortgage and loan interest              |                |       | 6,316               |        |                     |       | 6,882  |        |      |        | 19,379  |         |   |        | 20,559  |        
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        | General and administrative              |                |       | 2,276               |        |                     |       | 2,001  |        |      |        | 6,148   |         |   |        | 16,088  |        
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        | Direct cost of management fees          |                |       | 798                 |        |                     |       | 309    |        |      |        | 2,658   |         |   |        | 607     |        
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        | Other                                   |                |       | 60                  |        |                     |       | 55     |        |      |        | 171     |         |   |        | 191     |        
|                                                                                        |                                         |                |       |                     |        |                     |       |        |        |      |        |         |         |   |        |        
|                                                                                        |                                         | Total expenses |       |                     | 34,885 |                     |       |        | 34,274 |      |        |         | 102,939 |   |        |         | 111,295 | 
|                                                                                        |                                         |                |       |                     |        |                     |       |        |        |      |        |         |         |   |        |        
|INCOME BEFORE GAIN ON SALE OR DISPOSITION OF
ASSETS, INCOME TAXES AND MINORITY INTEREST |                                         |                | 8,586 |                     |        |                     | 7,500 |        |        |      | 26,730 |         |         |   | 15,077 |        
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Gain on sale or disposition of assets                                                   |                                         |                |      |                     |        |                     | 2,033 |        |        |      |       |         |         |   | 6,437  |        
|                                                                                        |                                         |                |       |                     |        |                     |       |        |        |      |        |         |         |   |        |        
|INCOME BEFORE INCOME TAXES AND MINORITY INTEREST                                        |                                         |                | 8,586 |                     |        |                     | 9,533 |        |        |      | 26,730 |         |         |   | 21,514 |        
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Income taxes                                                                            |                                         |                | 257   |                     |        |                     | (174  | )      |        |      | 449    |         |         |   | (19    | )      
|                                                                                        |                                         |                |       |                     |        |                     |       |        |        |      |        |         |         |   |        |        
|INCOME BEFORE MINORITY INTEREST                                                         |                                         |                | 8,329 |                     |        |                     | 9,707 |        |        |      | 26,281 |         |         |   | 21,533 |        
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Minority interest                                                                       |                                         |                | 323   |                     |        |                     | 361   |        |        |      | 937    |         |         |   | 992    |        
|                                                                                        |                                         |                |       |                     |        |                     |       |        |        |      |        |         |         |   |        |        
|NET INCOME                                                                              |                                         | $              | 8,006 |                     |        | $                   | 9,346 |        |        | $    | 25,344 |         |         | $ | 20,541 |        
|                                                                                        |                                         |                |       |                     |        |                     |       |        |        |      |        |         |         |   |        |        
|EARNINGS PER SHARE:                                                                     |                                         |                |       |                     |        |                     |       |        |        |      |        |         |         |   |        |        
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        | Basic                                   |                | $     | 0.30                |        |                     | $     | 0.35   |        |      | $      | 0.94    |         |   | $      | 0.77    |        
|                                                                                        |                                         |                |       |                     |        |                     |       |        |        |      |        |         |         |   |        |        
|                                                                                        | Diluted                                 |                | $     | 0.30                |        |                     | $     | 0.35   |        |      | $      | 0.94    |         |   | $      | 0.76    |        
|                                                                                        |                                         |                |       |                     |        |                     |       |        |        |      |        |         |         |   |        |        
|WEIGHTED AVERAGE SHARES:                                                                |                                         |                |       |                     |        |                     |       |        |        |      |        |         |         |   |        |        
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        | Basic                                   |                |       | 26,865              |        |                     |       | 26,710 |        |      |        | 26,872  |         |   |        | 26,707  |        
|                                                                                        |                                         |                |       |                     |        |                     |       |        |        |      |        |         |         |   |        |        
|                                                                                        | Diluted                                 |                |       | 26,912              |        |                     |       | 26,920 |        |      |        | 26,888  |         |   |        | 26,991  |        
|                                                                                        |                                         |                |       |                     |        |                     |       |        |        |      |        |         |         |   |        |        

See Notes to Unaudited Condensed Consolidated Financial Statements.

5



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##### Table of Contents






KOGER EQUITY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
SHAREHOLDERS EQUITY
(Unaudited  See Independent Accountants Report)
(In thousands)

|                            |  |              |        |            |  |            |     |            |  |          |         |          |  |               |        |       |  |   |         |   |  |   |         |   |  |   |         |  
|--------------------------- |  | ------------ | ------ | ---------- |  | ---------- | --- | ---------- |  | -------- | ------- | -------- |  | ------------- | ------ | ----- |  | - | ------- | - |  | - | ------- | - |  | - | ------- | -
|                            |  | Common Stock |        |            |  |            |     | Notes      |  |          |         |          |  |               |        |       |  |   |         |   |  |   |         |  
|                            |  |              |        | Capital in |  | Receivable |     |            |  |          |         |          |  |               |        | Total
|                            |  | Shares       |        | Par        |  | Excess of  |     | from Stock |  | Retained |         | Treasury |  | Shareholders'
|                            |  | Issued       |        | Value      |  | Par Value  |     | Sales      |  | Earnings |         | Stock    |  | Equity       
|                            |  |              |        |            |  |            |     |            |  |          |         |          |  |              
|Balance, December 31, 2000  |  |              | 29,559 |            |  | $          | 296 |            |  | $        | 468,277 |          |  | $             | (6,250 | )     |  | $ | 20,261  |   |  | $ | (34,091 | ) |  | $ | 448,493 |  
|                           
|                           
|                           
|                           
|Common stock sold           |  |              |        |            |  |            |     |            |  |          | 94      |          |  |               |        |       |  |   |         |   |  |   | 105     |   |  |   | 199     |  
|                           
|                           
|                           
|                           
|Stock loan repayments       |  |              |        |            |  |            |     |            |  |          |         |          |  |               | 1,184  |       |  |   |         |   |  |   | (1,364  | ) |  |   | (180    | )
|                           
|                           
|                           
|                           
|Options exercised           |  |              | 48     |            |  |            |     |            |  |          | 639     |          |  |               |        |       |  |   |         |   |  |   |         |   |  |   | 639     |  
|                           
|                           
|                           
|                           
|Dividends declared          |  |              |        |            |  |            |     |            |  |          |         |          |  |               |        |       |  |   | (28,145 | ) |  |   |         |   |  |   | (28,145 | )
|                           
|                           
|                           
|                           
|Net Income                  |  |              |        |            |  |            |     |            |  |          |         |          |  |               |        |       |  |   | 25,344  |   |  |   |         |   |  |   | 25,344  |  
|                            |  |              |        |            |  |            |     |            |  |          |         |          |  |               |        |       |  |   |         |   |  |   |         |   |  |   |         |  
|Balance, September 30, 2001 |  |              | 29,607 |            |  | $          | 296 |            |  | $        | 469,010 |          |  | $             | (5,066 | )     |  | $ | 17,460  |   |  | $ | (35,350 | ) |  | $ | 446,350 |  
|                            |  |              |        |            |  |            |     |            |  |          |         |          |  |               |        |       |  |   |         |   |  |   |         |   |  |   |         |  

See Notes to Unaudited Condensed Consolidated Financial Statements.

6



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##### Table of Contents






KOGER EQUITY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited  See Independent Accountants Report)
(In thousands)

|                                   |                                                                                   |                                         |                                                                                    |         |                     |         |      |         |        |         |  
|---------------------------------- | --------------------------------------------------------------------------------- | --------------------------------------- | ---------------------------------------------------------------------------------- | ------- | ------------------- | ------- | ---- | ------- | ------ | ------- | -
|                                   |                                                                                   |                                         |                                                                                    |         | Nine Month Period  
|                                   |                                                                                   |                                         |                                                                                    |         | Ended September 30,
|                                   |                                                                                   |                                         |                                                                                    |         |                    
|                                   |                                                                                   |                                         |                                                                                    |         | 2001                |         | 2000
|                                   |                                                                                   |                                         |                                                                                    |         |                     |         |     
|OPERATING ACTIVITIES               |                                                                                   |                                         |                                                                                    |         |                     |         |      |        
|                                  
|                                  
|                                  
|                                  
|                                   | Net income                                                                        |                                         | $                                                                                  | 25,344  |                     |         | $    | 20,541  |       
|                                  
|                                  
|                                  
|                                  
|                                   | Adjustments to reconcile net income to net cash provided
by operating activities: |                                         |                                                                                    |         |                     |         |      |         |       
|                                  
|                                  
|                                  
|                                  
|                                   |                                                                                   | Depreciation and amortization           |                                                                                    |         | 27,834              |         |      |         | 25,886 |        
|                                  
|                                  
|                                  
|                                  
|                                   |                                                                                   | Income from Koger Realty Services, Inc. |                                                                                    |         | (81                 | )       |      |         | (352   | )      
|                                  
|                                  
|                                  
|                                  
|                                   |                                                                                   | Provision for uncollectible accounts    |                                                                                    |         | 1,108               |         |      |         | 622    |        
|                                  
|                                  
|                                  
|                                  
|                                   |                                                                                   | Minority interest                       |                                                                                    |         | 937                 |         |      |         | 992    |        
|                                  
|                                  
|                                  
|                                  
|                                   |                                                                                   | Gain on sale or disposition of assets   |                                                                                    |         |                    |         |      |         | (6,437 | )      
|                                  
|                                  
|                                  
|                                  
|                                   |                                                                                   | Changes in assets and liabilities:      |                                                                                    |         |                     |         |      |         |        |        
|                                  
|                                  
|                                  
|                                  
|                                   |                                                                                   |                                         | Increase (decrease) in accounts payable, accrued liabilities
and other liabilities |         |                     | 395     |      |         |        | (3,014  | )
|                                  
|                                  
|                                  
|                                  
|                                   |                                                                                   |                                         | Increase in receivables and other assets                                           |         |                     | (1,305  | )    |         |        | (891    | )
|                                   |                                                                                   |                                         |                                                                                    |         |                     |         |      |        
|                                   |                                                                                   |                                         | Net cash provided by operating activities                                          |         |                     | 54,232  |      |         |        | 37,347  |  
|                                   |                                                                                   |                                         |                                                                                    |         |                     |         |      |        
|INVESTING ACTIVITIES               |                                                                                   |                                         |                                                                                    |         |                     |         |      |        
|                                  
|                                  
|                                  
|                                  
|                                   | Property acquisitions                                                             |                                         |                                                                                    |        |                     |         |      | (10     | )     
|                                  
|                                  
|                                  
|                                  
|                                   | Building and land construction expenditures                                       |                                         |                                                                                    | (2,025  | )                   |         |      | (12,075 | )     
|                                  
|                                  
|                                  
|                                  
|                                   | Tenant improvements to first generation space                                     |                                         |                                                                                    | (3,734  | )                   |         |      | (3,361  | )     
|                                  
|                                  
|                                  
|                                  
|                                   | Tenant improvements to existing properties                                        |                                         |                                                                                    | (4,979  | )                   |         |      | (7,108  | )     
|                                  
|                                  
|                                  
|                                  
|                                   | Building improvements                                                             |                                         |                                                                                    | (3,086  | )                   |         |      | (2,834  | )     
|                                  
|                                  
|                                  
|                                  
|                                   | Energy management improvements                                                    |                                         |                                                                                    | (197    | )                   |         |      | (196    | )     
|                                  
|                                  
|                                  
|                                  
|                                   | Deferred tenant costs                                                             |                                         |                                                                                    | (1,568  | )                   |         |      | (2,495  | )     
|                                  
|                                  
|                                  
|                                  
|                                   | Additions to furniture and equipment                                              |                                         |                                                                                    | (147    | )                   |         |      | (270    | )     
|                                  
|                                  
|                                  
|                                  
|                                   | Dividends received from Koger Realty Services, Inc.                               |                                         |                                                                                    |        |                     |         |      | 355     |       
|                                  
|                                  
|                                  
|                                  
|                                   | Cash acquired in purchase of assets from KRSI                                     |                                         |                                                                                    | 2,535   |                     |         |      |        |       
|                                  
|                                  
|                                  
|                                  
|                                   | Proceeds from sale of assets                                                      |                                         |                                                                                    | 15      |                     |         |      | 49,743  |       
|                                   |                                                                                   |                                         |                                                                                    |         |                     |         |      |        
|                                   |                                                                                   |                                         | Net cash provided by (used in) investing activities                                |         |                     | (13,186 | )    |         |        | 21,749  |  
|                                   |                                                                                   |                                         |                                                                                    |         |                     |         |      |        
|FINANCING ACTIVITIES               |                                                                                   |                                         |                                                                                    |         |                     |         |      |        
|                                  
|                                  
|                                  
|                                  
|                                   | Collection of notes receivable from stock sales                                   |                                         |                                                                                    | 174     |                     |         |      |        |       
|                                  
|                                  
|                                  
|                                  
|                                   | Proceeds from exercise of stock options                                           |                                         |                                                                                    | 634     |                     |         |      | 7,454   |       
|                                  
|                                  
|                                  
|                                  
|                                   | Proceeds from sales of common stock                                               |                                         |                                                                                    | 199     |                     |         |      | 2,057   |       
|                                  
|                                  
|                                  
|                                  
|                                   | Proceeds from mortgages and loans                                                 |                                         |                                                                                    | 32,500  |                     |         |      | 68,783  |       
|                                  
|                                  
|                                  
|                                  
|                                   | Dividends paid                                                                    |                                         |                                                                                    | (28,156 | )                   |         |      | (28,043 | )     
|                                  
|                                  
|                                  
|                                  
|                                   | Distributions paid to minority interest holders                                   |                                         |                                                                                    | ( 943   | )                   |         |      | (901    | )     
|                                  
|                                  
|                                  
|                                  
|                                   | Treasury stock purchased                                                          |                                         |                                                                                    |        |                     |         |      | (20,428 | )     
|                                  
|                                  
|                                  
|                                  
|                                   | Principal payments on mortgages and loans                                         |                                         |                                                                                    | (37,908 | )                   |         |      | (83,906 | )     
|                                  
|                                  
|                                  
|                                  
|                                   | Financing costs                                                                   |                                         |                                                                                    | (21     | )                   |         |      | (16     | )     
|                                   |                                                                                   |                                         |                                                                                    |         |                     |         |      |        
|                                   |                                                                                   |                                         | Net cash used in financing activities                                              |         |                     | (33,521 | )    |         |        | (55,000 | )
|                                   |                                                                                   |                                         |                                                                                    |         |                     |         |      |        
|                                   | Net increase in cash and cash equivalents                                         |                                         |                                                                                    | 7,525   |                     |         |      | 4,096   |       
|                                  
|                                  
|                                  
|                                  
|                                   | Cash and cash equivalents  beginning of period                                   |                                         |                                                                                    | 1,615   |                     |         |      |        |       
|                                   |                                                                                   |                                         |                                                                                    |         |                     |         |      |        
|                                   | Cash and cash equivalents  end of period                                         |                                         | $                                                                                  | 9,140   |                     |         | $    | 4,096   |       
|                                   |                                                                                   |                                         |                                                                                    |         |                     |         |      |        
|SUPPLEMENTAL CASH FLOW INFORMATION |                                                                                   |                                         |                                                                                    |         |                     |         |      |        
|                                  
|                                  
|                                  
|                                  
|                                   | Cash paid during the period for interest, net of amount capitalized               |                                         | $                                                                                  | 19,543  |                     |         | $    | 20,717  |       
|                                   |                                                                                   |                                         |                                                                                    |         |                     |         |      |        
|                                   | Cash paid during the period for income taxes                                      |                                         | $                                                                                  | 252     |                     |         | $    | 155     |       
|                                   |                                                                                   |                                         |                                                                                    |         |                     |         |      |        

See Notes to Unaudited Condensed Consolidated Financial Statements.

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##### Table of Contents






KOGER EQUITY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTH PERIODS
ENDED SEPTEMBER 30, 2001 AND 2000
(Unaudited  See Independent Accountants Report)

1.     BASIS OF PRESENTATION. The condensed consolidated financial statements
include the accounts of Koger Equity, Inc., its wholly-owned subsidiaries and
KogerVanguard Partners, L.P. (the Company). All material intercompany
transactions and accounts have been eliminated in consolidation. The financial
statements have been prepared in accordance with the rules and regulations of
the Securities and Exchange Commission related to interim financial statements.

During January 2001, Koger Equity, Inc. organized KRSI Merger, Inc., a Florida
corporation, as a wholly owned taxable subsidiary. Effective February 1, 2001,
Koger Realty Services, Inc. (KRSI), a Delaware corporation, was merged into
this new subsidiary (the Merger). Pursuant to the Merger, the common stock
of KRSI was repurchased at the formula price set forth in KRSIs Articles of
Incorporation. Subsequent to the Merger, the name of the new Florida
subsidiary was changed to Koger Realty Services, Inc. This merger was
accounted for using the purchase method of accounting resulting in a reduction
in the cost basis of assets of approximately $143,000. Prior to the Merger,
the Company accounted for its investment in the preferred stock of KRSI using
the equity method.

The financial statements should be read in conjunction with the consolidated
financial statements and notes thereto for the year ended December 31, 2000,
included in the Companys Form 10-K Annual Report for the year ended December 31,
2000. The accompanying balance sheet at December 31, 2000, has been derived
from the audited financial statements at that date and is condensed.

All adjustments of a normal recurring nature which, in the opinion of
management, are necessary to present a fair statement of the results for the
interim periods have been made. Results of operations for the nine month
period ended September 30, 2001, are not necessarily indicative of the results
to be expected for the full year.

On July 20, 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 141, Business Combinations, and
SFAS No. 142, Goodwill and Other Intangible Assets. These Statements make
significant changes to the accounting for business combinations, goodwill, and
intangible assets. SFAS No. 141 eliminates the pooling-of-interests method of
accounting for business combinations with limited exceptions for combinations
initiated prior to July 1, 2001. In addition, it further clarifies the criteria
for recognition of intangible assets separately from goodwill. This statement
is effective for business combinations completed after June 30, 2001.

SFAS No. 142 discontinues the practice of amortizing goodwill and indefinite
lived intangible assets and initiates an annual review for impairment.
Impairment would be examined more frequently if certain indicators are
encountered. Intangible assets with a determinable useful life will continue
to be amortized over that period. The amortization provisions apply to goodwill
and intangible assets acquired after September 30, 2001. SFAS No. 142 is
effective for fiscal years beginning after December 15, 2001. Goodwill and
intangible assets on the books at September 30, 2001 will be affected when the
Company adopts the Statement effective January 1, 2002.

The Company is evaluating the impact of the adoption of these standards and has
not yet determined the effect of adoption on its financial position and results
of operations.

2.     ORGANIZATION.Koger Equity, Inc. (KE), a Florida corporation, was
incorporated in 1988 for the purpose of investing in the ownership of income
producing properties, primarily commercial office buildings. KE is
self-administered and self-managed. Koger-Vanguard Partners, L.P. (KVP) is a
Delaware limited partnership, for which KE is the general partner. Koger
Equitys common stock is listed on the New York Stock exchange under the ticker
symbol KE.

8



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##### Table of Contents



In addition to managing its own properties, the Company provides property
management services to certain third parties. The
Company currently provides asset management services to Crocker Realty Trust
for office properties containing approximately 4,802,000 rentable square feet.
Crocker Realty Trust is in the process of selling this portfolio.

3.     FEDERAL INCOME TAXES. KE is operated in a manner so as to qualify, and
has elected tax treatment, as a real estate investment trust under the Internal
Revenue Code (a REIT). As a REIT, KE is required to distribute annually at
least 90 percent of its taxable income to its shareholders. Since KE had no
REIT taxable income during 2000 and does not expect to have REIT taxable income
during 2001, no provision has been made for Federal income taxes. To the
extent that KE pays dividends equal to 100 percent of taxable income, the
earnings of KE are not taxed at the corporate level. KE has a net operating
loss carryforward which totals approximately $2,481,000, which may be used to
reduce REIT taxable income. However, the use of net operating loss
carryforwards are limited for alternative minimum tax purposes. KE has
recorded a provision of $150,000 for alternative minimum tax for the nine
months ended September 30, 2001. Koger Realty Services, Inc. has recorded a
provision of $241,000 for Federal income tax for the nine months ended
September 30, 2001.

4.     STATEMENTS OF CASH FLOWS. Cash in excess of daily requirements is
invested in short-term monetary securities. Such temporary cash investments
have an original maturity date of less than three months and are deemed to be
cash equivalents for purposes of the statements of cash flows. During the nine
month period ended September 30, 2001, the Company received 86,779 shares of
its common stock as settlement of $1,364,000 of notes receivables from former
employees ($1,010,000 of which were Notes Receivable from Stock Sales).
Pursuant to the Merger, the Company acquired the net assets of KRSI in exchange
for its preferred stock in KRSI. The net assets of KRSI acquired consisted of
(i) cash in the amount of $2,535,000, (ii) other assets with a fair value of
$1,016,000 and (iii) liabilities assumed with a fair value of $937,000. During
the nine month period ended September 30, 2000, the Company contributed 15,557
shares of common stock to the Companys 401(k) Plan. These shares had a value
of approximately $262,000 based on the closing price of the Companys common
stock on the American Stock Exchange on December 31, 1999.

5.     EARNINGS PER COMMON SHARE. Basic earnings per common share has been
computed based on the weighted average number of shares of common stock
outstanding for each period. Diluted earnings per common share is similar to
basic earnings per share except that the weighted average number of common
shares outstanding is increased to include the number of additional common
shares that would have been outstanding if the dilutive common shares (options)
had been issued. The treasury stock method is used to calculate dilutive
shares which reduces the gross number of dilutive shares by the number of
shares purchasable from the proceeds of the options assumed to be exercised.

6.     MORTGAGES AND LOANS PAYABLE. At September 30, 2001, the Company had
$337,879,000 of loans outstanding, which are collateralized by mortgages on
certain operating properties. Annual maturities for mortgages and loans
payable are as follows (in thousands):

|                         |       |   |         |         | 
|------------------------ | ----- | - | ------- | ------- | 
|Year Ending December 31,
|2001                     |       | $ | 89,568  |        
|                        
|                        
|                        
|                        
|2002                     |       |   | 12,720  |        
|                        
|                        
|                        
|                        
|2003                     |       |   | 5,235   |        
|                        
|                        
|                        
|                        
|2004                     |       |   | 5,672   |        
|                        
|                        
|                        
|                        
|2005                     |       |   | 6,148   |        
|                        
|                        
|                        
|                        
|Subsequent Years         |       |   | 218,536 |        
|                         |       |   |         |        
|                         | Total |   | $       | 337,879 | 
|                         |       |   |         |        

The Companys secured revolving credit facility will mature in December 2001.
At September 30, 2001, the outstanding balance of this credit facility was $88
million. The Company plans to extend or replace this credit facility.

9



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7.     DIVIDENDS. The Company paid the following dividends during the nine
months ended September 30, 2001:

|                                            |  |                                                |  |                     |                   | 
|------------------------------------------- |  | ---------------------------------------------- |  | ------------------- | ----------------- | 
|Payment Date                                |  | Record Date                                    |  | Dividends Per Share
|                                            |  |                                                |  |                    
|February 1, 2001
May 3, 2001
August 2, 2001 |  | December 31, 2000
March 31, 2001
June 30, 2001 |  |                     | $0.35
$0.35
$0.35 | 

During the quarter ended September 30, 2001, the Companys Board of Directors
declared a quarterly dividend of $0.35 per share payable on November 1, 2001,
to shareholders of record on September 30, 2001. The Company currently expects
that all dividends paid during 2001 will be treated as ordinary income to the
recipient for income tax purposes.

8.     AGREEMENT TO SELL PROPERTIES.On August 23, 2001, the Company entered
into an agreement to sell select non-core assets to AREIF Realty Trust, Inc.
(AREIF), an affiliate of Apollo Real Estate Advisors, LP. Included in the
sale are ten properties comprising 75 suburban office buildings and one retail
center located throughout San Antonio and Austin, Texas; Greensboro and
Charlotte, North Carolina; Greenville, South Carolina; and Birmingham, Alabama.
The portfolio, which contains more than 3.9 million rentable square feet, will
be purchased by AREIF for consideration including $208.3 million cash, the
exchange of AREIFs 5.73 million common share interest in the Company and a
membership interest in the AREIF subsidiary entity acquiring the assets. The
membership interest will provide the Company with a 20 percent participation in
the net cash flow from the disposed assets after AREIF has received a 15
percent internal rate of return on its equity investment. Currently, the
Company expects this transaction to close during December 2001.




|        |  |                                                                                      
|------- |  | -------------------------------------------------------------------------------------
|Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results
of Operations

The following discussion should be read in conjunction with the condensed
consolidated financial statements and related notes appearing elsewhere in this
Form 10-Q, and the Managements Discussion and Analysis of Financial Condition
and Results of Operations included in the Companys Annual Report on Form 10-K
for the period ended December 31, 2000.

RESULTS OF OPERATIONS.

Rental and other rental services revenues totaled $42,243,000 for the quarter
ended September 30, 2001, compared to $40,750,000 for the quarter ended
September 30, 2000. This increase in rental revenues resulted primarily from
(i) increases in the Companys average rental rate and (ii) increases in rental
revenues ($2,504,000) from nine buildings constructed by the Company. The
effect of these increases was partially offset by the loss of rental revenues
($503,000) caused by the sale of two office parks during 2000 and the decrease
in the Companys average occupancy. At September 30, 2001, the Companys
buildings were on average 88 percent leased with an average rental rate of
$18.68 per usable square foot ($16.58 per rentable square foot). At September
30, 2000, the Companys buildings were on average 92 percent leased with an
average rental rate of $16.81 per usable square foot. Rental and other rental
services revenues totaled $125,462,000 for the nine month period ended
September 30, 2001, compared to $124,287,000 during the same period last year.
This increase resulted primarily from (i) increases in the Companys average
rental rate and (ii) increases in rental revenues ($6,521,000) from the nine
buildings constructed by the Company. The effect of these increases was
partially offset by the loss of rental revenues ($5,143,000) caused by the sale
of office parks as described above and the decrease in the Companys average
occupancy.

Management fee revenues totaled $1,074,000 for the quarter ended September 30,
2001, compared to $604,000 for the quarter ended September 30, 2000. This
increase was due primarily to (i) the merger of KRSI into a wholly owned
taxable subsidiary of the Company on February 1, 2001 and (ii) the fees earned
from Crocker Realty Trust ($138,000). Management fee revenues increased to
$3,530,000 during the nine month period ended September 30, 2001, compared to
$1,255,000 during the same period last year, due to (i) the merger previously
described and (ii) the fees earned from Crocker Realty Trust ($397,000).

10



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##### Table of Contents



Income from Koger Realty Services, Inc. decreased by $191,000 and $271,000,
respectively, during the three and nine
month periods ended September 30, 2001, compared to the same periods last year,
due to the Merger.

Property operations expense includes charges for utilities, real estate taxes,
janitorial, maintenance, property insurance, provision for uncollectible rents
and management costs. The amount of property operations expense and its
percentage of total rental revenues for the applicable periods are as follows:

|                                 |  |        |            |          |  |              |      |  
|-------------------------------- |  | ------ | ---------- | -------- |  | ------------ | ---- | -
|                                 |  |        |            |          |  | Percent of  
|                                 |  |        |            |          |  | Total Rental
|Period                           |  | Amount |            | Revenues
|                                 |  |        |            |         
|September 30, 2001  Quarter     |  | $      | 15,591,000 |          |  |              | 36.9 | %
|                                
|                                
|                                
|                                
|September 30, 2000  Quarter     |  |        | 16,267,000 |          |  |              | 39.9 | %
|                                
|                                
|                                
|                                
|September 30, 2001  Nine Months |  |        | 46,749,000 |          |  |              | 37.3 | %
|                                
|                                
|                                
|                                
|September 30, 2000  Nine Months |  |        | 47,964,000 |          |  |              | 38.6 | %

Property operations expense decreased primarily due to the decline in property
operations expense ($319,000 and $2,195,000, respectively, for the three and
nine month periods ended September 30, 2001) caused by the sale of two office
parks during 2000 and the reduction in costs to manage the Companys
properties. The effect of these decreases was partially offset by (i)
increased accruals to provision for uncollectible accounts and (ii) increases
in property operations expense ($218,000 and $1,061,000, respectively, for the
three and nine month periods ended September 30, 2001) for the nine buildings
constructed by the Company.

Depreciation expense has been calculated on the straight-line method based
upon the useful lives of the Companys depreciable assets, generally 3 to 40
years. Depreciation expense increased $981,000 and $1,703,000, respectively,
for the three and nine month periods ended September 30, 2001, compared to the
same periods last year, due to (i) the construction completed during 2000 and
2001 and (ii) tenant and building improvements incurred after September 30,
2000. Amortization expense increased $103,000 and $245,000 respectively, for
the three and nine month periods ended September 30, 2001, compared to the
same periods last year, due primarily to deferred tenant costs incurred after
September 30, 2000.

Interest expense decreased by $566,000 and $1,180,000, respectively, during
the three and nine month periods ended September 30, 2001, compared to the
same periods last year, primarily due to decreases in the average balance of
mortgages and loans payable and in the weighted average interest rate on the
secured revolving credit facility. At September 30, 2001 and 2000, the
weighted average interest rate on the Companys outstanding debt was
approximately 7.19 percent and 8.04 percent, respectively.

General and administrative expenses for the three month periods ended
September 30, 2001 and 2000, totaled $2,276,000 and $2,001,000, respectively.
This increase is primarily due to an increase in legal and other professional
fees. General and administrative expenses for the nine month periods ended
September 30, 2001 and 2000, totaled $6,148,000 and $16,088,000, respectively.
This decrease is primarily due to certain non-recurring charges incurred
during 2000 for (i) costs of a corporate reorganization ($6,832,000), (ii)
severance payments made to certain former senior executives ($2,562,000),
(iii) changes in termination benefits under the supplemental executive
retirement plan ($584,000), (iv) payments to retiring directors ($138,000) and
(v) initial fees for listing on the New York Stock Exchange ($161,000).

Direct costs of management contracts increased $489,000 for the three month
period ended September 30, 2001, compared to the same period last year, due
primarily to the merger of KRSI into a wholly owned taxable subsidiary of the
Company on February 1, 2001. Compared to the prior year, direct costs of
management contracts increased $2,051,000 for the nine months ended September 30,
2001. This increase was primarily due to the merger previously described.

Net income totaled $8,006,000 for the quarter ended September 30, 2001,
compared to $9,346,000 for the corresponding period of 2000. This decrease is
due primarily to (i) the decrease in gain on sale or disposition and assets and
(ii) the increases

11



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##### Table of Contents



in depreciation and amortization expense and income tax expense. These items
were partially offset by (i) the increase in rental and other rental services
revenues and (ii) the decreases in property operations expense and interest
expense. Net income increased $4,803,000 during the nine month period ended
September 30, 2001, compared to the same period last year. This increase is
due primarily to (i) the increase in rental and other rental services revenues
and (ii) decreases in general and administrative expenses, property operations
expense and interest expense. These items were partially offset by (i) the
decrease in gain on sale or disposition of assets and (ii) the increases in
depreciation and amortization expense and income tax expense.

LIQUIDITY AND CAPITAL RESOURCES.

Operating Activities During the nine months ended September 30, 2001,
the Company generated approximately $54.2 million in net cash from operating
activities. The Companys primary internal sources of cash are (i) the
collection of rents from buildings owned by the Company and (ii) the receipt of
management fees paid to the Company in respect of properties managed on behalf
of Koala Realty Holding Co., Inc. (Koala) and Crocker Realty Trust. As a
REIT for Federal income tax purposes, the Company is required to pay out
annually, as dividends, 90 percent of its taxable income (which, due to
non-cash charges, including depreciation and net operating loss carryforwards,
may be substantially less than cash flows). In the past, the Company has paid
out dividends in amounts at least equal to its taxable income. The Company
believes that its cash provided by operating activities will be sufficient to
cover debt service payments and to pay the dividends required to maintain REIT
status through 2001.

The level of cash flow generated by rents depends primarily on the occupancy
rates of the Companys buildings and changes in rental rates on new and renewed
leases and from escalation provisions in existing leases. At September 30,
2001, leases representing approximately 7.2 percent of the gross annualized
rent from the Companys properties, without regard to the exercise of options
to renew, were due to expire during the remainder of 2001. This represents 218
leases for space in buildings located in 19 of the 23 centers or locations in
which the Company owns buildings. Certain of these tenants may not renew their
leases or may reduce their demand for space. During the nine months ended
September 30, 2001, leases were renewed on approximately 68 percent of the
Companys rentable square feet, which were scheduled to expire during the nine
month period. For those leases which were renewed, the average rental rate
increased from $14.97 to $15.72, an increase of 5.0 percent. Based upon the
number of leases which will expire during 2001 and 2002 and the competition for
tenants in the markets in which the Company operates, the Company has and
expects to continue to offer incentives to certain new and renewal tenants.
These incentives may include the payment of tenant improvement costs and in
certain markets reduced rents during initial lease periods.

The Company has benefited from existing economic conditions and stable vacancy
levels for office buildings in many of the metropolitan areas in which the
Company owns buildings. The Company believes that the southeastern and
southwestern regions of the United States offer excellent growth potential due
to their diverse regional economies, expanding metropolitan areas, skilled work
force and moderate labor costs. However, the Company cannot predict whether
such economic growth will
continue and the Company is currently experiencing slower growth in the markets
in which it owns buildings. Cash flow from operations could be reduced if
economic growth were not to continue in the Companys markets and if this
resulted in lower occupancy and rental rates for the Companys buildings.

Governmental tenants (including the State of Florida and the United States
Government) which account for approximately 19.1 percent of the Companys
leased space at September 30, 2001, may be subject to budget reductions in
times of recession and governmental austerity measures. Consequently, there
can be no assurance that governmental appropriations for rents may not be
reduced. Additionally, certain of the Companys private sector tenants may
reduce their need for office space in the future.

During May 2001, the agreement with Koala to manage 15 office buildings located
in Tampa, Florida was terminated when the properties were sold by Koala. The
Company earned fees of $307,000 and incurred costs of $224,000 for the
management of

12



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these properties during the nine months ended September 30, 2001. Effective
September 1, 2001, the agreement for Koger Realty Services, Inc. to manage the
remaining 55 office buildings owned by Koala was terminated. The Company
earned fees of $2,784,000 and incurred costs of $2,141,000 for the management
of these properties during the nine months ended September 30, 2001. Koger
Realty Services, Inc. currently has no agreements to manage third party owned
properties.

Investing Activities At September 30, 2001, substantially all of the
Companys invested assets were in real properties. Improvements to the
Companys existing properties have been financed through internal operations.
During the nine month period ended September 30, 2001, the Companys
expenditures for improvements to existing properties decreased $1,876,000 from
the corresponding period of the prior year. This decrease was due to the
reduction in expenditures for tenant improvements primarily caused by (i) the
sale of two office parks during 2000 and (ii) the lower leasing activity of
second generation space during the first nine months of 2001 compared to 2000.

Financing Activities The Company has a $150 million secured revolving
credit facility, with variable interest rates, ($88 million of which was
outstanding on September 30, 2001 at a weighted average interest rate of 4.78
percent) provided by First Union National Bank of Florida, AmSouth Bank, N.A.,
Citizens Bank of Rhode Island, Compass Bank and Guaranty Federal Bank.

Loan maturities and normal amortization of mortgages and loans payable are
expected to total approximately $101 million over the next 12 months. The
Companys secured revolving credit facility will mature in December 2001. This
credit facility will either be extended or replaced. The Company has filed
shelf registration statements with respect to the possible issuance of up to
$300 million of its common and/or preferred stock and the Company has issued
$91.6 million of its common stock under such registration statements in prior
years. At September 30, 2001, the Company had 20 office buildings, containing
approximately 1.8 million rentable square feet, which were unencumbered.

The foregoing discussion contains forward-looking statements concerning 2001.
The actual results of operations for 2001 could differ materially from those
projected because of factors affecting the financial markets, reactions of the
Companys existing and prospective investors, the ability of the Company to
identify and execute development projects and acquisition opportunities, the
ability of the Company to renew and enter into new leases on favorable terms,
and other risk factors. See Item 7. Managements Discussion and Analysis of
Financial Condition and Results of Operations  Cautionary Statement Relevant
to Forward-Looking Information for Purpose of the Safe Harbor Provisions of
the Private Securities Litigation Reform Act of 1995 in the Companys Annual
Report on Form 10-K for the Fiscal Year Ended December 31, 2000.




Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk.The Company currently has a $150 million secured
revolving credit facility with variable interest rates. The Company may incur
additional variable rate debt in the future to meet its financing needs.
Increases in interest rates on such debt could increase the Companys interest
expense, which would adversely affect the Companys cash flow and the amount of
distributions to its shareholders. The Company has not entered into any
interest rate hedge contracts to mitigate this interest rate risk. As of
September 30, 2001, the Company had $88 million outstanding under the secured
revolving credit facility. If the weighted average interest rate on this
variable rate debt changes 100 basis points higher or lower, annual interest
expense would be increased or decreased by approximately $880,000.




PART II.  OTHER INFORMATION




Item 1.  Legal Proceedings

None.

13



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##### Table of Contents






Item 5. Other Information



|(a) |  | The following table sets forth, with respect to each Koger Center or
location at September 30, 2001, gross square feet, rentable square feet,
percentage leased, and the average annual rent per rentable square foot
leased.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                         |  |        |            |          |  |           |            |         |  |          |     |   |  |         |       |    
|---------------------------------------- |  | ------ | ---------- | -------- |  | --------- | ---------- | ------- |  | -------- | --- | - |  | ------- | ----- | ---
|                                         |  |        |            |          |  |           |            |         |  |          |     |   |  | Average
|                                         |  |        |            |          |  |           |            |         |  |          |     |   |  | Annual 
|                                         |  | Gross  |            | Rentable |  |           |            |         |  | Rent Per
|                                         |  | Square |            | Square   |  | Percent   |            | Square 
|Koger Center/Location                    |  | Feet   |            | Feet     |  | Leased(1) |            | Foot(2)
|                                         |  |        |            |          |  |           |            |        
|Atlanta Chamblee                         |  |        | 1,199,800  |          |  |           | 1,112,194  |         |  |          | 90  | % |  | $       | 18.07 |    
|                                        
|                                        
|                                        
|                                        
|Atlanta Gwinnett (3)                     |  |        | 274,400    |          |  |           | 261,484    |         |  |          | 76  | % |  |         | 18.97 |    
|                                        
|                                        
|                                        
|                                        
|Atlanta Perimeter                        |  |        | 184,000    |          |  |           | 176,503    |         |  |          | 93  | % |  |         | 20.74 |    
|                                        
|                                        
|                                        
|                                        
|Austin (5)                               |  |        | 458,400    |          |  |           | 440,666    |         |  |          | 97  | % |  |         | 20.80 |    
|                                        
|                                        
|                                        
|                                        
|Birmingham Colonnade (3)(5)              |  |        | 471,200    |          |  |           | 451,994    |         |  |          | 89  | % |  |         | 16.59 |    
|                                        
|                                        
|                                        
|                                        
|Birmingham Colonnade  Retail (5)        |  |        | 112,600    |          |  |           | 112,186    |         |  |          | 70  | % |  |         | 12.46 | (4)
|                                        
|                                        
|                                        
|                                        
|Charlotte Carmel (5)                     |  |        | 339,200    |          |  |           | 322,842    |         |  |          | 91  | % |  |         | 17.71 |    
|                                        
|                                        
|                                        
|                                        
|Charlotte University                     |  |        | 190,600    |          |  |           | 182,852    |         |  |          | 100 | % |  |         | 18.06 |    
|                                        
|                                        
|                                        
|                                        
|Charlotte Vanguard                       |  |        | 548,200    |          |  |           | 525,615    |         |  |          | 89  | % |  |         | 15.99 |    
|                                        
|                                        
|                                        
|                                        
|Greensboro South (5)                     |  |        | 749,200    |          |  |           | 692,463    |         |  |          | 72  | % |  |         | 14.44 |    
|                                        
|                                        
|                                        
|                                        
|Greensboro Wendover (5)                  |  |        | 98,300     |          |  |           | 89,986     |         |  |          | 72  | % |  |         | 17.72 |    
|                                        
|                                        
|                                        
|                                        
|Greenville Park Central (5)              |  |        | 161,700    |          |  |           | 158,971    |         |  |          | 85  | % |  |         | 16.87 |    
|                                        
|                                        
|                                        
|                                        
|Greenville Roper Mt. (5)                 |  |        | 431,000    |          |  |           | 402,656    |         |  |          | 83  | % |  |         | 15.89 |    
|                                        
|                                        
|                                        
|                                        
|Jacksonville Baymeadows                  |  |        | 793,400    |          |  |           | 748,351    |         |  |          | 95  | % |  |         | 12.04 | (4)
|                                        
|                                        
|                                        
|                                        
|Jacksonville JTB                         |  |        | 436,000    |          |  |           | 416,773    |         |  |          | 100 | % |  |         | 12.91 | (4)
|                                        
|                                        
|                                        
|                                        
|Memphis Germantown (3)                   |  |        | 562,600    |          |  |           | 526,874    |         |  |          | 86  | % |  |         | 18.22 |    
|                                        
|                                        
|                                        
|                                        
|Orlando Central                          |  |        | 699,700    |          |  |           | 614,902    |         |  |          | 97  | % |  |         | 15.61 |    
|                                        
|                                        
|                                        
|                                        
|Orlando Lake Mary                        |  |        | 318,000    |          |  |           | 303,481    |         |  |          | 97  | % |  |         | 19.96 |    
|                                        
|                                        
|                                        
|                                        
|Orlando University (3)                   |  |        | 405,200    |          |  |           | 380,289    |         |  |          | 90  | % |  |         | 17.96 |    
|                                        
|                                        
|                                        
|                                        
|Richmond Paragon                         |  |        | 154,300    |          |  |           | 145,008    |         |  |          | 100 | % |  |         | 17.92 |    
|                                        
|                                        
|                                        
|                                        
|San Antonio Airport (5)                  |  |        | 258,800    |          |  |           | 231,777    |         |  |          | 94  | % |  |         | 18.36 |    
|                                        
|                                        
|                                        
|                                        
|San Antonio West (5)                     |  |        | 1,102,200  |          |  |           | 1,057,801  |         |  |          | 85  | % |  |         | 14.96 |    
|                                        
|                                        
|                                        
|                                        
|St. Petersburg (3)                       |  |        | 715,500    |          |  |           | 666,726    |         |  |          | 86  | % |  |         | 15.79 |    
|                                        
|                                        
|                                        
|                                        
|Tallahassee                              |  |        | 960,300    |          |  |           | 833,209    |         |  |          | 80  | % |  |         | 18.39 |    
|                                         |  |        |            |          |  |           |            |         |  |          |     |   |  |         |       |    
|Total                                    |  |        | 11,624,600 |          |  |           | 10,855,603 |         |  |          |     |   |  |         |       |    
|                                         |  |        |            |          |  |           |            |         |  |          |     |   |  |         |       |    
|Weighted Average  Total Company         |  |        |            |          |  |           |            |         |  |          | 88  | % |  | $       | 16.58 |    
|                                         |  |        |            |          |  |           |            |         |  |          |     |   |  |         |       |    
|Weighted Average  Operational Buildings |  |        |            |          |  |           |            |         |  |          | 88  | % |  | $       | 16.46 |    
|                                         |  |        |            |          |  |           |            |         |  |          |     |   |  |         |       |    
|Weighted Average  Buildings in Lease-up |  |        |            |          |  |           |            |         |  |          | 81  | % |  | $       | 19.68 |    
|                                         |  |        |            |          |  |           |            |         |  |          |     |   |  |         |       |    



---

|(1) |  | The percent leased rates have been calculated by dividing total rentable
square feet leased in an office building by rentable square feet in such
building.                                                                                                           
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Rental rates are computed by dividing (a) total annualized base rents
(which excludes expense pass-through and reimbursements) for a Koger
Center or location as of September 30, 2001 by (b) the rentable square
feet applicable to such total annualized base rents.
|   
|(3) |  | Includes a building which is currently in the lease-up period.                                                                                                                                                                                                        
|   
|(4) |  | Includes the effect of net leases where tenants pay certain operating
costs in addition to base rent.                                                                                                                                                                 
|   
|(5) |  | The Company has entered into an agreement to sell these properties. See
Footnote 8 on Page 10 for additional information.                                                                                                                                             

14



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##### Table of Contents





|(b) |  | The following schedule sets forth for all of the Companys buildings (i)
the number of leases which will expire during the remainder of calendar
year 2001 and calendar years 2002 through 2009, (ii) the total rentable
area in square feet covered by such leases, (iii) the percentage of total
rentable square feet represented by such leases, (iv) the average annual
rent per square foot for such leases, (v) the current annualized base
rents represented by such leases, and (vi) the percentage of total
annualized base rents contributed by such leases. This information is
based on the buildings owned by the Company on September 30, 2001 and on
the terms of leases in effect as of September 30, 2001, on the basis of
then existing base rentals, and without regard to the exercise of options
to renew. Furthermore, the information below does not reflect that some
leases have provisions for early termination for various reasons,
including, in the case of government entities, lack of budget
appropriations. Leases were renewed on approximately 68 percent of the
Companys rentable square feet, which were scheduled to expire during the
nine month period ended September 30, 2001.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|       |  |           |       |             |  |                 |           |                 |  |                 |       |                  |  |       |       |          |  |            |             |  |  |  |       |  
|------ |  | --------- | ----- | ----------- |  | --------------- | --------- | --------------- |  | --------------- | ----- | ---------------- |  | ----- | ----- | -------- |  | ---------- | ----------- |  |  |  | ----- | -
|       |  |           |       |             |  |                 |           |                 |  | Percentage of   |       | Average          |  |       |       |          |  | Percentage
|       |  |           |       |             |  |                 |           |                 |  | Total Square    |       | Annual Rent      |  | Total |       | of Total
|       |  | Number of |       | Number of   |  | Feet Leased     |           | per Square      |  | Annualized      |       | Annualized Rents
|       |  | Leases    |       | Square Feet |  | Represented by  |           | Foot Under      |  | Rents Under     |       | Represented by  
|Period |  | Expiring  |       | Expiring    |  | Expiring Leases |           | Expiring Leases |  | Expiring Leases |       | Expiring Leases 
|       |  |           |       |             |  |                 |           |                 |  |                 |       |                 
|2001   |  |           | 218   |             |  |                 | 682,455   |                 |  |                 | 7.2   | %                |  | $     | 16.58 |          |  | $          | 11,314,865  |  |  |  | 7.2   | %
|      
|      
|      
|      
|2002   |  |           | 483   |             |  |                 | 1,562,552 |                 |  |                 | 16.5  | %                |  |       | 16.95 |          |  |            | 26,480,999  |  |  |  | 16.9  | %
|      
|      
|      
|      
|2003   |  |           | 457   |             |  |                 | 2,126,412 |                 |  |                 | 22.5  | %                |  |       | 15.86 |          |  |            | 33,716,879  |  |  |  | 21.5  | %
|      
|      
|      
|      
|2004   |  |           | 362   |             |  |                 | 1,846,163 |                 |  |                 | 19.5  | %                |  |       | 16.14 |          |  |            | 29,793,244  |  |  |  | 19.0  | %
|      
|      
|      
|      
|2005   |  |           | 168   |             |  |                 | 922,459   |                 |  |                 | 9.8   | %                |  |       | 17.51 |          |  |            | 16,153,280  |  |  |  | 10.3  | %
|      
|      
|      
|      
|2006   |  |           | 95    |             |  |                 | 690,829   |                 |  |                 | 7.3   | %                |  |       | 17.57 |          |  |            | 12,137,874  |  |  |  | 7.8   | %
|      
|      
|      
|      
|2007   |  |           | 19    |             |  |                 | 491,080   |                 |  |                 | 5.2   | %                |  |       | 16.37 |          |  |            | 8,038,787   |  |  |  | 5.1   | %
|      
|      
|      
|      
|2008   |  |           | 15    |             |  |                 | 340,559   |                 |  |                 | 3.6   | %                |  |       | 18.09 |          |  |            | 6,162,198   |  |  |  | 3.9   | %
|      
|      
|      
|      
|2009   |  |           | 9     |             |  |                 | 246,334   |                 |  |                 | 2.6   | %                |  |       | 19.71 |          |  |            | 4,854,943   |  |  |  | 3.1   | %
|      
|      
|      
|      
|Other  |  |           | 12    |             |  |                 | 542,145   |                 |  |                 | 5.8   | %                |  |       | 14.90 |          |  |            | 8,079,734   |  |  |  | 5.2   | %
|       |  |           |       |             |  |                 |           |                 |  |                 |       |                  |  |       |       |          |  |            |             |  |  |  |       |  
|Total  |  |           | 1,838 |             |  |                 | 9,450,988 |                 |  |                 | 100.0 | %                |  | $     | 16.58 |          |  | $          | 156,732,803 |  |  |  | 100.0 | %
|       |  |           |       |             |  |                 |           |                 |  |                 |       |                  |  |       |       |          |  |            |             |  |  |  |       |  



|(c) |  | The Company believes that Funds from Operations is one measure of the
performance of an equity real estate investment trust. Funds from
Operations should not be considered as an alternative to net income as an
indication of the Companys financial performance or to cash flow from
operating activities (determined in accordance with generally accepted
accounting principles) as a measure of the Companys liquidity, nor is it
necessarily indicative of sufficient cash flow to fund all of the
Companys needs. Funds from Operations is calculated as follows (in
thousands):
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                    |                       |   |                     |        |                     |   |        |        |      |   |        |        |  |   |        |        | 
|--------------------------------------------------- | --------------------- | - | ------------------- | ------ | ------------------- | - | ------ | ------ | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|                                                    |                       |   | Three Month Period  |        | Nine Month Period  
|                                                    |                       |   | Ended September 30, |        | Ended September 30,
|                                                    |                       |   |                     |        |                    
|                                                    |                       |   | 2001                |        | 2000                |   | 2001   |        | 2000
|                                                    |                       |   |                     |        |                     |   |        |        |     
|Net Income                                          |                       | $ | 8,006               |        |                     | $ | 9,346  |        |      | $ | 25,344 |        |  | $ | 20,541 |       
|                                                   
|                                                   
|                                                   
|                                                   
|Depreciation  real estate                          |                       |   | 8,849               |        |                     |   | 7,889  |        |      |   | 24,991 |        |  |   | 23,348 |       
|                                                   
|                                                   
|                                                   
|                                                   
|Amortization  deferred tenant costs                |                       |   | 597                 |        |                     |   | 500    |        |      |   | 1,658  |        |  |   | 1,431  |       
|                                                   
|                                                   
|                                                   
|                                                   
|Amortization  goodwill                             |                       |   | 43                  |        |                     |   | 43     |        |      |   | 128    |        |  |   | 128    |       
|                                                   
|                                                   
|                                                   
|                                                   
|Minority interest                                   |                       |   | 323                 |        |                     |   | 361    |        |      |   | 937    |        |  |   | 992    |       
|                                                   
|                                                   
|                                                   
|                                                   
|Gain on sale of operating properties                |                       |   |                    |        |                     |   | (1,709 | )      |      |   |       |        |  |   | (6,385 | )     
|                                                   
|                                                   
|                                                   
|                                                   
|Gain on sale or disposition of non-operating assets |                       |   |                    |        |                     |   | (324   | )      |      |   |       |        |  |   | (52    | )     
|                                                    |                       |   |                     |        |                     |   |        |        |      |   |        |        |  |   |        |       
|                                                    | Funds from Operations |   | $                   | 17,818 |                     |   | $      | 16,106 |      |   | $      | 53,058 |  |   | $      | 40,003 | 
|                                                    |                       |   |                     |        |                     |   |        |        |      |   |        |        |  |   |        |       

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##### Table of Contents






Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits

|        |  |                                                     |  | 
|------- |  | --------------------------------------------------- |  | 
|Exhibit |  |                                                     |  | 
|Number  |  | Description                                        
|        |  |                                                    
|11      |  | Earnings Per Share Computations.                   
|       
|       
|       
|       
|15      |  | Letter re: Unaudited interim financial information.

(b)  Report on Form 8-K

| | On August 27, 2001, the
Company filed a Form 8-K (dated August 23, 2001) reporting
under Item 9, Regulation FD Disclosure, the announcement of
an agreement for the sale of certain of its non-core assets and
providing under Item 7, Financial Statements and Exhibits,
(i) Purchase and Sale Agreement by and among Koger Equity, Inc., as Seller, and AREIF II Realty Trust, Inc., as Buyer, dated as of August 23, 2001 and (ii) Koger Equity,
Inc. News Release dated August 23, 2001.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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##### Table of Contents






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

|       |  |                   |  |                                                                                     | 
|------ |  | ----------------- |  | ----------------------------------------------------------------------------------- | 
|       |  |                   |  | KOGER EQUITY, INC.
         Registrant                                             
|      
|       |  |                   |  | /s/  Robert E. OniskoROBERT E. ONISKO
CHIEF FINANCIAL OFFICER                      
|      
|Dated: |  | November 12, 2001 |  |                                                                                    
|      
|       |  |                   |  | /s/  James L. StephensJAMES L. STEPHENS
VICE PRESIDENT AND
CHIEF ACCOUNTING OFFICER

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