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As filed with the Securities and Exchange Commission on June 21, 1996
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10/A
Amendment No. 1 to Form 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
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COLONIAL REALTY LIMITED PARTNERSHIP
(Exact Name of Registrant as Specified in Its Charter)
Delaware 63-1098468
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2101 Sixth Avenue North
Suite 750
Birmingham, Alabama 35203
(Address of principal executive offices)
(205) 250-8700
(Registrant's telephone number, including area code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
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to be so registered each class is to be registered
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Not applicable Not applicable
Securities to be registered pursuant to Section 12(g) of the Act:
Class A Units of Limited Partnership Interest
(Title of class)
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Table of Contents
<TABLE>
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Page No.
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<S> <C> <C>
Item 1. Business.................................................................... 3
Item 2. Financial Information....................................................... 11
Item 3. Properties.................................................................. 14
Item 4. Security Ownership of Certain Beneficial Owners and Management.............. 28
Item 5. Directors and Executive Officers............................................ 29
Item 6. Executive Compensation...................................................... 30
Item 7. Certain Relationships and Related Transactions.............................. 30
Item 8. Legal Proceedings........................................................... 30
Item 9. Market Price of and Distributions on the Registrant's Common
Equity and Related Security Holder Matters.................................. 30
Item 10. Recent Sales of Unregistered Securities..................................... 31
Item 11. Description of Registrant's Securities to be Registered..................... 32
Item 12. Indemnification of Directors and Officers................................... 38
Item 13. Financial Statements and Supplementary Data................................. 39
Item 14. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................................... 39
Item 15. Financial Statements and Exhibits........................................... 39
</TABLE>
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Item 1. Business
GENERAL
Colonial Realty Limited Partnership, a Delaware limited partnership (the
"Company"), is the "operating partnership" of Colonial Properties Trust
("Colonial"), an Alabama real estate investment trust ("REIT") whose common
shares are listed on the New York Stock Exchange ("NYSE") under the symbol
"CLP." The Company is managed by Colonial, through its wholly owned subsidiary,
Colonial Properties Holding Company, Inc., an Alabama corporation ("CPHC"),
which in turn owns approximately 68.0% of the partnership interests in the
Company as of May 31, 1996 and serves as the sole general partner of the
Company. The Company's activities as of May 31, 1996 include ownership of a
diversified portfolio of 67 multifamily, retail and office properties located in
Alabama, Florida and Georgia, development of new properties, acquisitions of
existing properties, and build-to-suit development.
Colonial completed its $195 million initial public offering of 8,480,000
common shares of beneficial interest, $.01 par value per share ("Common
Shares"), in September 1993 at a price of $23.00 per share (the "IPO"). In
October 1993, the underwriters of the IPO exercised an over-allotment option to
purchase an additional 686,200 Common Shares. On May 23, 1995, Colonial
completed a second public offering of 3,000,000 Common Shares at a price of
$22.75 per share, and on June 13, 1995 the Company issued another 450,000 Common
Shares pursuant to an over-allotment option exercised by the underwriters (the
"Second Offering"). On January 22, 1996, Colonial completed a third public
offering of 4,600,000 Common Shares (600,000 of which were issued upon exercise
of the underwriter's over-allotment option) at a price of $24.625 per share (the
"Third Offering"). See "Recent Development -- Financing Activity."
As of May 31, 1996, the Company owned a diversified portfolio of 39 garden-
style multifamily apartment communities containing a total of 12,568 apartment
units (the "Multifamily Properties"), 18 retail properties (including four
regional malls, two "power centers," 11 neighborhood shopping centers, and one
mini-warehouse storage facility) containing a total of approximately 4.5 million
square feet of retail space (the "Retail Properties"), ten office properties
containing a total of approximately 1.0 million square feet of office space (the
"Office Properties") and parcels of land adjacent to or near certain of these
properties (the "Land"). (The Multifamily Properties, the Retail Properties,
the Office Properties and the Land are referred to collectively as the
"Properties.") The Company also is expanding four Multifamily Properties and
two Retail Properties and is developing three new multifamily properties.
Colonial currently conducts all of its business through CPHC, the Company,
Colonial Properties Services Limited Partnership (the "Management Partnership"),
which provides management services for the Properties, and Colonial Properties
Services, Inc. (the "Management Corporation"), which provides management
services for properties owned by third parties. The Company owns all of the
Properties (or interests therein). The Company is the sole general partner of
the Management Partnership and owns 99% of the interests therein. The
Management Corporation owns the remaining 1% interest as a limited partner.
Colonial owns 100% of the nonvoting common stock (representing 98.99% of the
total equity of the Management Corporation) and 1% of the voting common stock
(representing .01% of the total equity) of the Management Corporation. Thomas
and James Lowder and their affiliates own the remaining voting common stock of
the Management Corporation. The nonvoting common stock and voting common stock
owned by Colonial together represent 99% of the equity interest in the
Management Corporation. The members of the Board of Trustees of Colonial and
the members of the Board of Directors of CPHC are identical, and all of the
executive officers of Colonial also are executive officers of CPHC.
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Since the IPO, the Company has significantly expanded its portfolio of
Properties and its operating businesses. The Company has acquired direct or
indirect interests in 23 additional Multifamily Properties, eight additional
Retail Properties and several additional parcels of Land. These acquisitions
included (i) the acquisition of ten Multifamily Properties developed and owned
by The Rime Companies, representing a total of 4,947 apartment units, for an
aggregate purchase price, paid in units of limited partnership of the Operating
Partnership, of approximately $190.8 million (the "Rime Acquisition") and (ii)
the acquisition of four Multifamily Properties developed and indirectly owned by
EPOCH Properties, Inc., representing a total of 1,370 apartment units, for an
aggregate purchase price of approximately $75.1 million. The Company also has
completed the expansion of two Multifamily Properties, has initiated or is
planning the expansion or development of seven additional Multifamily Properties
and has initiated major expansions of Macon Mall and Montgomery Promenade. The
Company's acquisitions and its expansion and development activities have
increased the Company's presence in Alabama, Florida and Georgia. The Company
also is planning to develop a new Multifamily Property on Land it recently
acquired in Florida.
As of May 31, 1996, Colonial, through CPHC, owned approximately 68.0% of
the Class A units of limited partnership interest (the "Units") of the Company
and a 1% general partnership interest. An additional 17.1% of the Units of the
Company were owned by members of the Lowder Family (which includes Thomas,
James, Robert and Catherine Lowder and their affiliates), which collectively
contributed 25 of the Properties in connection with the IPO, and 9.2% of the
Units were owned directly or indirectly by Harold W. Ripps and Herbert A.
Meisler, who received their Units in connection with the Rime Acquisition.
Operating Strategy
The Company is organized into three distinct operating divisions--
multifamily, retail and office--each of which is responsible for the management
and leasing of its property type. The Company is experienced in the management
and leasing of multifamily, retail and office properties and believes that the
management and leasing of its own portfolio has helped the Properties maintain
consistent income growth and has resulted in reduced operating expenses relating
to the Properties. Colonial is engaged, through the Management Corporation, in
the third-party management, leasing and brokerage businesses, which has allowed
Colonial to establish additional relations with tenants that may require
additional retail or office space in properties owned by the Company and to
identify potential acquisitions for the Company. Additional information with
respect to each of the operating divisions is set forth below.
Multifamily Division. The multifamily division of the Company is
responsible for all aspects of the Company's multifamily operations, including
day-to-day management and leasing of the 39 Multifamily Properties, as well as
the acquisition, expansion or development of additional multifamily properties.
Retail Division. The Company's retail division is responsible for all
aspects of the Company's retail operations, including the provision of
management, leasing, and brokerage services for the 18 Retail Properties, as
well as the acquisition, expansion and development of additional retail
properties.
Office Division. The Company's office division is responsible for all
aspects of the Company's commercial office operations, including the provision
of management, leasing, and brokerage services for the ten Office Properties, as
well as the acquisition, expansion and development of additional office
properties.
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Business Strategy
The general business strategy of the Company is to generate stable and
increasing cash flow and portfolio value. The Company has implemented this
strategy principally by (i) realizing growth in income from its existing
portfolio of properties, (ii) developing, expanding, and selectively acquiring
additional multifamily, retail and office properties in mid-sized growth markets
located in the southeastern United States where the Company has first-hand
knowledge of growth patterns and local economic conditions and generally has a
competitive advantage due to its size and access to lower-cost capital,
(iii) managing its own properties, which has enabled it to better control
operating expenses and establish long-term relationships with its retail and
office tenants, and (iv) employing a comprehensive capital maintenance program
to maintain properties in first-class condition. The Company plans to continue
the implementation of these business strategies while capitalizing on what it
believes are its competitive advantages in the real estate marketplace. These
competitive advantages include the following:
Regional Focus. All of the Properties are located in Alabama, Florida and
Georgia, and primarily in mid-sized cities in those states. By focusing on the
southeastern United States in general, and these three states in particular, the
Company believes that it has been able to maintain a strong market presence in
and an in-depth knowledge of each of its primary markets. The Company believes
this focus enables it to better understand and respond to market and submarket
conditions and to attract new residents or tenants because of the Company's name
recognition.
Diversity of Product. The Company and its predecessors have maintained
operations in three major real estate industry segments--multifamily, retail and
office--for over 25 years. The Company's operations in these three segments are
conducted through three distinct divisions, each of which is independently
operated and staffed with management and staff personnel that have specialized
experience in that industry segment. See "Business--General--Operating
Strategy." The Company believes that its diversified operations create cross-
selling opportunities between the office and retail divisions, give it more in-
depth knowledge of local real estate markets, and may minimize the effect on the
Company of cyclical swings associated with specific property types.
Experienced Management. The Company believes that strong, experienced
leadership, particularly in the management and leasing area, is critical to the
success of a fully-integrated real estate company. The Company's senior
managers have extensive experience (an average of 21 years) in the real estate
industry in the southeastern United States, and have established numerous
contacts throughout the industry through leadership of various local and
national chapters of real estate associations. The Company believes that the
experience of its management team gives it an advantage over less experienced
competitors in its primary markets. In addition, the Company is committed to a
continuing education program that encourages its employees to attain recognized,
professional designations.
Long-Term Relationships. The Company's predecessor, Colonial Properties,
Inc. ("CPI"), and Thomas Lowder have been actively engaged in the real estate
business in the southeastern United States for over 25 years. Thomas Lowder and
his brother, James, have close ties to this region and are established members
of the local and regional business communities. Through their extensive
business dealings in the region, CPI and the Lowder family have developed a
number of long-term business relationships with tenants and real estate owners,
as well as contractors, suppliers, professionals and lenders, in the Southeast.
The Company believes that these relationships result in cost savings due to
reduced tenant turnover, enable the Company to obtain favorable terms for
services, goods and loans and provide the Company with access to additional
business opportunities.
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Additional information about the business of the Company is set forth under
"The Company," pages S-7 through S-9, in Colonial's Prospectus Supplement (to
Prospectus dated December 21, 1995) dated January 17, 1996, filed with the
Securities and Exchange Commission (the "Commission") pursuant to Rule 424(b) of
Regulation C under the Securities Act of 1933, as amended (the "Securities
Act"), relating to Colonial's Registration Statement on Form S-3, File
No. 33-89612, which hereby is incorporated by reference in this Registration
Statement and shall be deemed a part hereof.
RECENT DEVELOPMENTS
Financing Activity
On January 22, 1996, Colonial issued 4,600,000 Common Shares at a price of
$24.625 per share. The net proceeds of the offering amounted to $107.3 million,
of which $79.8 million was used to repay the balances of certain indebtedness of
the Company, and the remainder of which was used to fund acquisitions and
expansion and development activities.
In December 1995, the Company increased the amount available for borrowings
under the $62.6 million secured line of credit with SouthTrust Bank, N.A. (agent
bank), AmSouth Bank, Wells Fargo Realty Advisors Funding, and National Bank of
Commerce to $75.0 million and converted the line of credit to an unsecured
facility (the "Unsecured Line of Credit"). The Unsecured Line of Credit bears
interest at a rate ranging between 125 and 175 basis points above the 30-day or
90-day LIBOR and requires quarterly compliance with several financial covenants,
including limits on interest expense, fixed charges, and debt to total market
capitalization. The Unsecured Line of Credit is renewable annually in December
and provides for a two-year amortization in the event of non-renewal.
As of March 31, 1996, the Company had available floating-rate debt in the
maximum amount of $100.8 million pursuant to the Unsecured Line of Credit, three
secured lines of credit (the "Secured Lines of Credit") and one construction
loan (collectively, the "Credit Facilities"). In May 1996, the Company increased
the amount available for borrowings under the Unsecured Line of Credit from
$75.0 million to $110.0 million. During June 1996, the Company terminated one
Secured Line of Credit and the construction loan and terminated a second Secured
Line of Credit effective July 1, 1996. The Company expects to terminate its
final Secured Line of Credit of $5.0 million in early July upon completion of
the refinancing of a portion of the Company's tax-exempt bond debt.
Multifamily Property Acquisitions
During the second quarter of 1996, the Company acquired six Multifamily
Properties (the "1996 Acquisitions"). Effective April 1, 1996, the Company
acquired Ashford Place Apartments, a 168-unit multifamily property, and Pointe
West Apartments, a 104-unit multifamily property, both located in Mobile,
Alabama. The purchase price of the two properties was approximately $10.9
million, which the Company financed by (i) issuing 182,804 Units, at a valuation
of $24.00 per unit, (ii) assuming a mortgage with a balance of approximately
$6.4 million and which bears interest at 7.125% per annum, and (iii) paying
acquisition costs estimated at approximately $130,000. As of April 30, 1996,
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each of Ashford Place Apartments and Pointe West Apartments was approximately
98% occupied, and the average rent at the properties was $462 per-unit and $578
per-unit, respectively.
On April 2, 1996, the Company acquired Spring Creek Apartments, a 296-unit
multifamily property located in Macon, Georgia. The purchase price of the
property was approximately $14.4 million, which was financed through advances on
the Lines of Credit. As of April 30, 1996, Spring Creek Apartments were 96.6%
occupied, with average rent of $610 per unit.
On April 16, 1996, the Company acquired Crowne Chase Apartments, a 244-unit
multifamily property located in Birmingham, Alabama. The purchase price of the
property was approximately $13.7 million, which was financed by the Company
assuming a mortgage with a balance of $7.5 million and which bears interest at
6.875% and through advances on the Unsecured Line of Credit. As of April 30,
1996, Crowne Chase Apartments were 98.0% occupied, with average rent of $660 per
unit.
On May 14, 1996, the Company acquired Crowne Point Apartments, a 392-unit
multifamily property, and Crowne Ridge Apartments, a 125-unit multifamily
property, both located in Birmingham, Alabama. The purchase price of Crowne
Point Apartments was approximately $23.1 million, which was financed by the
Company assuming a mortgage with a balance of $12.4 million and which bears
interest at 8.0% and through an advance on the Unsecured Line of Credit. The
purchase price of Crowne Ridge Apartments was approximately $7.2 million, which
was financed by the Company assuming a mortgage with a balance of $3.8 million
and which bears interest at 8.06% and through an advance on the Unsecured Line
of Credit. As of May 14, 1996, these properties were approximately 90%
occupied.
Multifamily Expansion and Development Projects
As of May 31, 1996, expansion construction at two Multifamily Properties
located in Alabama and one Multifamily Property located in Florida, and
development construction of two Multifamily Properties located in Florida, were
in progress. The Company expects to begin expansion construction on one
Multifamily Property located in Alabama in the third quarter of 1996. The
Company also expects to begin development of one multifamily property located in
Florida in the third quarter of 1996. The Company completed the expansion of
one Multifamily Property located in Alabama in the first quarter of 1996.
Inverness Lakes Apartments. The Company began construction on a 180-unit
expansion of Inverness Lakes Apartments located in Mobile, Alabama in 1995.
Project development costs, including land acquisition costs, are expected to
total $9.1 million and will be funded by a construction loan from Wells Fargo
and advances under the Unsecured Line of Credit. The expansion will include a
exercise center, tennis and basketball courts, a clubhouse, laundry facilities
and a swimming pool. As of April 30, 1996, the Company had completed
approximately 75% of the construction and had leased a portion of the property.
The Company expects to complete construction in the second quarter of 1996 and
to complete lease-up during the fourth quarter of 1996.
McGehee Place V. The Company began construction on a 16-unit expansion of
McGehee Place Apartments located in Montgomery, Alabama in March 1995. The
expansion was completed in the first quarter of 1996 at a total cost of
$750,000, including land acquisition costs, which was funded through the
Unsecured Line of Credit. The Company expects to complete lease-up of this
project during the third quarter of 1996.
Rime Village Hoover. The Company began construction on a 160-unit
expansion of the Company's Rime Village Hoover Apartments located in Hoover,
Alabama (a suburb of Birmingham)
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in August 1995. Project development costs, which are expected to total
approximately $8.8 million, including land acquisition costs, will be funded
through advances under the Unsecured Line of Credit. The expansion will include
an enhancement of existing amenities with an additional swimming pool and cabana
area. As of April 30, 1996, the Company had completed approximately 75% of the
construction and had leased a portion of the property. The Company expects to
complete construction in the second quarter of 1996 and to complete lease-up
during the first quarter of 1997.
Colonial Grand at Heathrow. The Company began construction on a 312-unit
development (formerly known as Heathrow) located in Heathrow (Orlando), Florida
in October 1995. The Company acquired the land (30 acres) for $2.2 million in
December 1994. The new development, which will be named Colonial Grand at
Heathrow, will be located adjacent to Heathrow International Business Center and
Heathrow Country Club. The new apartment community will offer a variety of
amenities, including a clubhouse with conference and computer rooms, an exercise
center, tennis and basketball courts, a swimming pool and laundry facilities.
Construction costs, including land acquisition costs, are expected to total
approximately $20.4 million and will be funded through advances on the Unsecured
Line of Credit. The Company expects to complete construction in the fourth
quarter of 1996 and to complete lease-up during the second quarter of 1997.
Colonial Grand at Bayshore. The Company began construction of a 212-unit
development named Colonial Grand at Bayshore (formerly known as Colonial Cay) in
Bradenton, Florida in November 1995. The new community will offer a variety of
amenities, including a clubhouse, an exercise center, a swimming pool
overlooking a five acre lake, tennis and basketball courts, a children's
playground, tenant garages, and storage units. Project development costs are
expected to total approximately $11.6 million. Development costs are expected
to be financed through advances from the Unsecured Line of Credit. The Company
expects to complete construction in the fourth quarter of 1996 and to complete
lease-up during the second quarter of 1997.
Riverchase III. The Company began construction on a 276-unit expansion of
Riverchase Apartments located in Tampa, Florida in December 1995. The community
amenities will include a clubhouse, a swimming pool, an exercise center, an air
conditioned racquetball court, tennis courts and laundry facilities. Project
development costs, including land acquisition costs, are expected to total $14.9
million and will be funded through advances on the Unsecured Line of Credit.
The Company expects to complete construction in the first quarter of 1997 and to
complete lease-up during the third quarter of 1997.
Heatherbrooke IV. The Company expects to begin construction on an 84-unit
expansion of Heatherbrooke Apartments located in Birmingham, Alabama during the
third quarter of 1996. Project development costs, including land acquisition
costs, are expected to total $4.1 million and will be funded through advances on
the Unsecured Line of Credit. The Company expects to complete construction in
the second quarter of 1997 and to complete lease-up during the fourth quarter of
1997.
Colonial Grand at Hunters Creek. The Company expects to begin construction
on a 496-unit development named Colonial Grand at Hunters Creek located in
Orlando, Florida during the third quarter of 1996. The property will be
developed in two phases, the first of which is expected to contain 313 units.
Project development costs, including land acquisition costs, are expected to
total approximately $33.0 million and will be funded through advances on the
Unsecured Line of Credit. The Company expects to complete construction in the
second quarter of 1998 and to complete lease-up during the first quarter of
1999.
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Retail Development Projects
Macon Mall. In May 1995, the Company began a 423,000 square foot expansion
of Macon Mall, which is expected to open in the first quarter of 1997. The
expansion will include the addition of 175,000 square feet of specialty store
gross leasable area ("GLA"). The expansion also will include the addition of
anchor tenants Dillard's and Parisian, which will join existing anchor tenants
Sears, J.C. Penney, Macy's, and Belk Matthews. As of June 12, 1996, more than
56% of the specialty store space of the expansion was committed and leased or
out for signature. When fully developed and expanded, Macon Mall will contain
approximately 1,440,000 square feet of leaseable area. Project expansion costs
are expected to total approximately $52.0 million and will be financed through
advances on the Unsecured Line of Credit. The Company expects to complete
lease-up during the first quarter of 1998.
Montgomery Promenade North. In June 1996, the Company began a 225,000
square foot expansion of Montgomery Promenade, which is expected to open in the
first quarter of 1997. The expansion will be known as Montgomery Promenade
North and is expected to include approximately 95,000 square feet of specialty
store GLA. The expansion also will include a 130,000 square foot tenant-owned
Home Depot, which will join existing anchor tenants Winn Dixie Market Place,
Stein Mart, Michael's Arts & Crafts, and Books-a-Million. The Company
anticipates that project expansion costs will not exceed $7.0 million and will
be financed through advances on the Unsecured Line of Credit.
Americans with Disabilities Act
The Properties and any newly developed or acquired properties must comply
with Title III of the Americans with Disabilities Act (the "ADA") to the extent
that such properties are "public accommodations" and/or "commercial facilities"
as defined by the ADA. Compliance with the ADA could require removal of
structural barriers to handicapped access in certain public areas of the
Company's Properties where such removal is readily achievable. The ADA does
not, however, consider residential properties, such as apartment communities, to
be public accommodations or commercial facilities, except to the extent portions
of such facilities, such as the leasing office, are open to the public.
Noncompliance with the ADA could result in imposition of fines or awards of
damages to private litigants.
Environmental Regulations
Under various Federal, state and local laws, ordinances and regulations, a
current or previous owner or operator of real estate may be required to
investigate and clean up certain hazardous substances released at the property,
and may be held liable to a governmental entity or to third parities for
property damage and for investigation and cleanup costs incurred by such parties
in connection with the contamination. In addition, some environmental laws
create a lien on the contaminated site in favor of the government for damages
and costs it incurs in connection with the contamination. The presence of
contamination or the failure to remediate contamination may adversely affect the
owner's ability to sell or lease real estate or to borrow using the real estate
as collateral. The owner or operator of a site may be liable under common law
to third parties for damages and injuries resulting from environmental
contamination emanating form the site. The Company has not been notified by any
governmental authority of any material non-compliance, liability or other claim
in connection with any of the Properties and the Company is not aware of any
other environmental condition with respect to any of the Properties that could
be material. No assurance, however, can be given that no prior owner created
any material environmental condition not known to the Company, that no material
environmental condition with respect to any Property has occurred during the
Company's ownership thereof, or that future uses or conditions
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(including, without limitation, changes in applicable environmental laws and
regulations) will not result in imposition of environmental liability.
At one of the Company's Properties, Gadsden Mall in Gadsden, Alabama, four
underground storage tanks were removed in 1989. In connection with the removal
of these gasoline storage tanks, associated petroleum contamination was
discovered in the soil and groundwater. The Company is currently working with
the state regulatory agency to remediate the contamination in accordance with
applicable requirements. Because the tanks were registered with the Alabama
Department of Environmental Management and the facility was in compliance with
regulations prior to the incident, the Company has been reimbursed under the
Alabama Underground Storage Tank Trust Fund for the costs incurred to date in
connection with the ongoing cleanup, and expects to be reimbursed for the
remaining costs as well. Currently a free product recovery program is underway.
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Item 2. Financial Information
The following table sets forth selected financial and operating
information on a historical basis for the Company (and, for periods prior to the
IPO, the Colonial Group) for each of the five years ended December 31, 1995 and
for each of the quarters ended March 31, 1996 and 1995. The historical
operating data for the years ended December 31, 1992 and 1991 has been derived,
and the historical operating data for the year ended December 31, 1993 has been
partially derived, from the historical financial statements of the Colonial
Group, whose real estate interests were acquired in connection with the
formation of the Company in 1993. The "Colonial Group" consists of CPI, Equity
Partners Joint Venture, Colonial Properties Management Association, and certain
real estate interests of Thomas H. Lowder, Robert E. Lowder, James K. Lowder,
Catherine K. Lowder and the Bellwood Trust. The operating data, balance sheet
data and certain other data for the three months ended March 31, 1996 and 1995
have been derived from the unaudited consolidated financial statements of the
Company. In the opinion of the Company, the operating and balance sheet data for
the three months ended March 31, 1996 and 1995 include all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the information set forth therein. Such information should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included elsewhere in this Form 10 and the financial
statements and notes thereto included in this Form 10. The Company believes
that the book value of its real estate assets, which reflects the historical
costs of such assets less accumulated depreciation, is not indicative of the
current market value of the Properties.
<TABLE>
<CAPTION>
Three Months Ended
March 31, Year Ended December 31,
------------------ --------------------------------------------------
1996 1995 1995 1994 1993(1) 1992 1991
---- ---- ---- ---- ------- ---- ----
(unaudited)
(amounts in thousands except unit and property data)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Total revenue $ 29,607 $ 25,508 $111,437 $ 63,958 $ 42,629 $ 35,046 $ 31,163
Expenses:
Depreciation and amortization 5,295 4,839 20,615 13,060 7,874 6,449 5,741
Other operating expenses 10,540 9,362 42,282 24,011 16,777 14,788 13,645
Income from operations 13,772 11,307 48,540 26,887 17,978 13,809 11,777
Interest expense 5,090 6,306 23,972 10,820 12,772 14,509 14,654
Other income (expense), net 133 127 499 461 (1,697) -0- -0-
Income (loss) before gains
from sales of property, and
extraordinary items 8,814 5,128 25,067 16,528 3,509 (700) (2,877)
Net income (loss) 8,496 5,304 25,242 16,650 (3,775) (215) (2,826)
Per unit:
Net income 0.34 0.30 1.28 1.17 -- -- --
Distributions 0.50 0.475 1.90 1.73 -- -- --
BALANCE SHEET DATA:
Land, buildings and
equipment, net $622,767 $552,372 $624,514 $555,577 $236,058 $139,665 $127,509
Total assets 707,762 602,094 681,297 603,135 290,925 156,560 151,471
Total debt 274,610 342,955 354,100 344,234 110,432 167,275 159,450
OTHER DATA:
Total properties (at period end) 61 55 61 55 36 23 22
</TABLE>
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(1) Increases (decreases) for 1993 compared to years 1992-1990 relate primarily
to Colonial's formation as a public REIT on September 29, 1993.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the consolidated financial
condition and results of operations should be read in conjunction with the
Selected Financial and Operating Information and the Consolidated and Combined
Financial Statements and Notes thereto included in this Form 10.
General
On September 29, 1993, Colonial completed its IPO, and the Company
succeeded to the business and operations of CPI. The Company completed its
first full quarter of operations on December 31, 1993 and its first full year on
December 31, 1994. For purposes of financial statement presentation, the
results of operations of the properties acquired by the Company in the IPO are,
for periods prior to the IPO, attributed to the Colonial Group, reflecting the
Colonial Group's ownership of those properties (see Note 1 to the Consolidated
and Combined Financial Statements). Results of operations subsequent to the IPO
are included in the Company's consolidated results of operations.
Results of Operations -- Three Months Ended March 31, 1996 and 1995
Revenue. Total revenue increased by $4.1 million, or 16.1%, for the first
quarter of 1996 when compared to the first quarter of 1995. Of this increase,
$3.4 million represents revenues generated by ten properties acquired and
developed during 1995. The remainder of the increase was primarily attributable
to increases in rent revenues.
Operating Expenses. Operating expenses increased by $1.6 million, or 11.5%
for the first quarter of 1996 when compared to the first quarter of 1995. Of
this increase, $1.1 million and $0.4 million represent property operating
expenses and depreciation expense, respectively, of ten properties acquired
during 1995.
Other Income and Expenses. Interest expense decreased by $1.2 million or
19.3%, for the first quarter of 1996 when compared to the first quarter of 1995.
This decrease is primarily attributed to the decrease in indebtedness which was
repaid through a portion of Colonial's equity offering proceeds in May 1995 and
January 1996.
Results of Operations -- 1995 and 1994
Summary. The Company reported net income of $25.2 million for 1995
compared to $16.7 million for 1994. On a per Unit basis, net income was $1.28
for 1995 compared to $1.17 for 1994. Net income increased during 1995 when
compared to 1994 primarily due to the acquisition of 26 properties during 1994
and 1995 and the placement in service during 1995 of two properties developed by
the Company, as explained below:
Revenue. Rent revenue increased by $44.9 million, or 72.2%, for 1995 when
compared to 1994. Of this increase, $39.9 million represents rent revenues
generated by the 28 properties acquired/placed in service during 1994 and 1995.
The $5.0 million remainder of the increase in rental revenue primarily
represents increases in rental rates charged for existing space. Other revenue
increased $2.6 million, or 150.2%, for 1995 when compared to 1994. This
increase is
12
<PAGE>
attributable primarily to $1.5 million of other revenues generated by the 28
properties acquired/placed in service during 1994 and 1995 and $0.5 million
received from lease cancellations during the second quarter of 1995.
Operating Expenses. Operating expenses increased by $25.8 million, or
69.7%, for 1995 when compared to 1994 property. Of this increase, $14.2 million
and $7.0 million, respectively, represent property operating expenses and
depreciation and amortization expense of the 28 properties acquired/placed in
service during 1994 and 1995, and $2.3 million represents an increase in
administrative expenses associated with the management of those 28 properties,
an increase in reserve for contingencies, and a general increase in
administrative expenses.
Other Income and Expenses. Interest expense increased $13.2 million, or
121.6%, for 1995 when compared to 1994. This increase is attributed primarily
to properties acquired/placed in service during 1994 and 1995 that were financed
through advances under the Credit Facilities and the assumption of debt. The
financing of these properties increased interest expense by $13.3 million for
1995 over 1994. The Company capitalized interest on its development projects
during the construction period which reduced interest expense by $0.9 million in
1995, while only $0.3 million was capitalized in 1994.
RESULTS OF OPERATIONS -- 1994 AND 1993
The Company reported net income of $16.7 million for 1994 compared to a
net loss of $3.8 million for 1993. The improvement resulted primarily from
reduced interest expense following the repayment of debt in connection with the
IPO, the acquisition of 10 properties during 1994, and the impact during 1993 of
mortgage transfer expenses and debt prepayment penalties incurred in connection
with the IPO.
Revenue. Revenue increased by $21.3 million or 50.0%, for 1994 when
compared to 1993. Of this increase, $11.3 million resulted from the purchase in
the IPO of the outside interests in 11 properties that were accounted for under
the equity method prior to the IPO. As a result of the purchase of these outside
interests, these 11 properties are now consolidated into the Company's financial
statements. Another $13.7 million of the increase represents revenues generated
by 10 new properties acquired during 1994. The operating results of another 10
new properties acquired as of year-end 1994 are not included in the Company's
operating results. As a result of the IPO and related transactions, the third-
party management business of Colonial was transferred to the Management
Corporation, in which the Company does not own an interest. This transaction
eliminated leasing and management fees revenue for the year ended December 31,
1994.
Operating Expenses. Operating expenses increased $12.4 million, or 50.4%,
for 1994 when compared to 1993. Of this increase, $5.7 million resulted from the
purchase of the outside interests in 11 properties that were accounted for under
the equity method prior to the IPO. Another $7.4 million of the increase
represents the operating expenses of 10 new properties acquired by the Company
during 1994. Operating expenses for 1994 would have included $2.5 million
attributable to leasing and management activities if not for the transfer of the
third-party management and leasing business to the Management Corporation
following the IPO. Operating expenses also increased $1.3 million as a result of
the amortization of interest rate buy-down and interest rate cap agreements that
were entered into upon the closing of the IPO. Another $899,000 of the increase
in operating expenses represents additional expenses associated with Colonial's
operating as a publicly traded company during 1994, which expenses were
reimbursed by the Company.
Other Income and Expenses. Interest expense decreased $2.0 million, or
15.3%, for 1994 when compared to 1993. The purchase of the outside interests in
and the consolidation of the 11 properties that were accounted for under the
equity method prior to the IPO increased interest expense by $2.4 million during
1994, while the repayment of debt with proceeds from the IPO decreased interest
expense by $8.1 million. The acquisition by the Company of 10 new properties
during 1994, which was financed primarily through advances under the Company's
lines of credit and the assumption of debt, increased interest expense by $3.9
million for 1994, while the capitalization of interest on construction in
progress reduced interest expense by $333,000. Mortgage transfer expense of $1.6
million, presented in 1993 represents one-time costs incurred to transfer the
properties and related mortgages to the Company as part of the IPO and related
transactions. The extraordinary loss of $7.3 million during 1993 resulted from
the early extinguishment of debt and represents expenses incurred as a result of
the repayment of debt with IPO proceeds, including prepayment penalties of $6.5
million and the write-off of mortgage costs of $830,000.
Liquidity and Capital Resources
During 1995, the Company acquired six retail shopping centers, representing
1.4 million square feet of leasable area, at an aggregate cost of approximately
$67.5 million and completed development of two multifamily apartment
communities, representing 372 apartment units, at an aggregate cost of
approximately $16.1 million. The Company used cash proceeds from Colonial's
secondary offering in May 1995, which totaled approximately $73.7 million, net
of offering costs of $4.8 million, advances on its Credit Facilities, and cash
from operations to finance these acquisitions and development projects. During
the first quarter of 1996, the Company completed the expansion of one
Multifamily Property, adding 16 units at a total cost of $750,000. The Company
currently is expanding or developing seven Multifamily Properties and two Retail
Properties representing a total expected investment of $160.9 million.
In January 1996, Colonial completed an offering of 4,600,000 common shares
of beneficial interest at a price of $24.625 per share. The $106.9 million
proceeds from the offering, net of total offering costs of $6.4 million, were
used to repay the balances outstanding under the Company's Credit Facilities,
which had increased due to acquisition, expansion and development activity
during the last half of 1995, to repay an additional construction loan, and to
repay the $8.2 million balance outstanding under a mortgage agreement.
In June 1996, the Company increased the amount available for borrowings
under the Unsecured Line of Credit. The Unsecured Line of Credit bears interest
at a rate ranging between 125 and 175 basis points above the 30-day or 90-day
LIBOR and requires quarterly compliance with several financial covenants,
including limits on interest expense, fixed charges, and debt to total market
capitalization. The Unsecured Line of Credit is renewable annually in December
and provides for a two-year amortization in the event of non-renewal.
Management intends to replace significant borrowings under the Unsecured
Line of Credit with funds generated from the sale of additional securities,
including sales of partnership
13
<PAGE>
interests to CPHC in connection with public offerings of securities by Colonial,
and/or permanent financing, as market conditions permit. Management believes
that these potential sources of funds, along with the possibility of issuing
partnership interests in exchange for properties, will provide the Company with
the means to finance additional acquisitions and development. Management
anticipates that its net cash provided by operations and its existing cash
balances will provide the necessary funds on a short- and long-term basis to
cover its operating expenses, interest expense on outstanding indebtedness,
recurring capital expenditures, and distributions to Unit holders.
Inflation
Substantially all of the leases at the Retail Properties provide for pass-
through to tenants of certain operating costs, including real estate taxes,
common area maintenance expenses, and insurance. Leases at the Multifamily
Properties generally provide for an initial term of six months or one year and
allow for rent adjustments at the time of renewal. Leases at the Office
Properties typically provide for rent adjustment and pass-through of certain
operating expenses during the term of the lease. All of these provisions permit
the Company to increase rental rates or other charges to tenants in response to
rising prices and, therefore, serve to minimize the Company's exposure to the
adverse effects of inflation.
Item 3. Properties
GENERAL
The 67 Properties consist of 39 Multifamily Properties, 18 Retail
Properties, and ten Office Properties, as described in more detail below.
Thirty six of the Properties were owned at the time of the formation of the
Company in 1993 (the "Formation Transactions"), 19 Properties and one additional
phase of an existing Property were acquired during 1994, six Properties were
acquired during 1995, and six Properties (the 1996 Acquisitions) have been
acquired thus far in 1996.
<TABLE>
<CAPTION>
Summary of Properties
Total First Quarter Percent of Total Percentage
Number of Apartment 1996 Property First Quarter 1996 Occupancy
Type of Property Properties (1) Units/GLA/NRA(1) Revenue Property Revenue at Mar. 31, 1996
- ------------------ --------------- ----------------- ---------------------- -------------------- ------------------
<S> <C> <C> <C> <C> <C>
Multifamily 39 12,648 (2) $18,030,000 (3) 60.0% (3) 94.8% (4)
Retail 18 4,549,000 9,527,000 31.7% 92.2%
Office 10 1,009,000 2,482,000 8.3% 94.0%
-- ---------- -----
Total 67 $30,039,000 100.0%
== =========== ======
</TABLE>
- ------------------
(1) Includes the 1996 Acquisitions.
(2) Includes 115 apartment units placed in service at March 31, 1996 in
connection with the expansion or development of multifamily properties.
(3) Excludes 1996 Acquisitions.
(4) Excludes the 1996 Acquisitions and 115 apartment units at Properties that
had not achieved stabilized occupancy as of March 31, 1996.
Multifamily Properties
As of May 31, 1996, the 39 Multifamily Properties contain a total of 12,648
garden-style apartments and range in size from 104 to 920 apartment units.
Twenty-three of the Multifamily Properties (containing a total of 8,388
apartment units) are located in Alabama, 11 Multifamily Properties (containing a
total of 3,286 apartment units) are located in Florida and five Multifamily
Properties (containing a total of 974 apartments units) are located in Georgia.
Fourteen of the Multifamily Properties were originally developed by the Company.
The Company is
14
<PAGE>
currently expanding or planning the expansion of four of the Multifamily
Properties which will add 700 additional units (107 of which have already been
turned over) and developing or planning the development of three new multifamily
properties containing 837 units (eight of which have already been turned over).
Upon completion of the development and expansion of these properties, the
Company will own 42 Multifamily Properties containing a total of 14,185 units.
Each of the Multifamily Properties is established in its local market and
provides residents with numerous amenities, including a swimming pool, jacuzzi,
clubhouse, laundry room, tennis court(s), and/or a playground.
15
<PAGE>
The following table sets forth certain information relating to the
Multifamily Properties as of March 31, 1996.
Multifamily Properties
<TABLE>
<CAPTION>
Percent of
Average Total First Total First
Number of Approximate Percent Rental Quarter 1996 Quarter 1996
Year Apartment Rentable Area Occupied Rate Property Property
Multifamily Property Location Completed (1) Units (Square Feet) (2) Per Unit Revenue Revenue(3)
- ----------------------- --------------- -------------- ----------- --------------- --------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Existing Properties:
Chestnut Ridge Birmingham, AL 1984 226 235,000 98.2% $575 $ 384,000 1.3%
Colony Park Mobile, AL 1975 201 144,000 89.6% 367 203,000 0.7%
Grande View Towers Huntsville, AL 1990 308 323,000 92.2% 563 469,000 1.6%
Heatherbrooke Birmingham, AL 1986/87/90 502 395,000 93.6% 532 714,000 2.4%
Huntleigh Woods Mobile, AL 1978 233 199,000 93.4% 410 276,000 0.9%
Inverness Mobile, AL 1983 186 176,000 87.1% 541 274,000 0.9%
McGehee Place Montgomery, AL 1986/95 468 397,000 87.0% 541 661,000 2.2%
Monte D'Oro Birmingham, AL 1977 200 297,000 99.5% 606 358,000 1.2%
Patio Auburn, AL 1966/83/84 240 179,000 99.6% 386 288,000 1.0%
Rime Village Hoover Birmingham, AL 1986 920 953,000 93.7% 617 1,618,000 5.4%
Rime Village Huntsville Huntsville, AL 1987/94 736 827,000 90.5% 561 1,128,000 3.8%
Riverchase Manor Birmingham, AL 1984/91 468 746,000 95.5% 721 952,000 3.2%
Ski Lodge I Birmingham, AL 1972/73/76 648 592,000 97.4% 402 786,000 2.6%
Ski Lodge II Birmingham, AL 1979/86 644 521,000 92.2% 405 732,000 2.4%
Ski Lodge III Birmingham, AL 1984 554 502,000 92.8% 424 674,000 2.1%
Ski Lodge Tuscaloosa Tuscaloosa, AL 1976/92 304 273,000 98.7% 388 352,000 1.2%
Vieux Carre Montgomery, AL 1971/74/78 250 222,000 90.0% 477 325,000 1.1%
Willow Bend Montgomery, AL 1984 160 151,000 95.6% 537 240,000 0.8%
------ ---------- ---- ------- ----------- -------
Subtotal - Alabama 7,248 7,132,000 93.4% 518 10,434,000 34.8%
------ ---------- ---- ------- ----------- -------
Arbors at Kirkman Park Orlando, FL 1991 370 337,000 99.2% 719 819,000 2.7%
Carrollwood Tampa, FL 1966 244 286,000 97.1% 756 531,000 1.8%
Pelican Pointe Bradenton, FL 1992 340 292,000 99.7% 646 658,000 2.1%
Plantation Gardens Sarasota, FL 1991 248 252,000 99.2% 750 551,000 1.8%
Polos Gainesville Gainesville, FL 1989/93/94 560 487,000 98.0% 698 1,130,000 3.8%
Polos Ponte Vedra Jacksonville, FL 1988 240 212,000 99.6% 633 453,000 1.5%
Polos West Orlando, FL 1991 200 169,000 95.5% 596 352,000 1.2%
Riverchase II Tampa, FL 1991 252 201,000 94.1% 562 396,000 1.3%
St. Croix Orlando, FL 1991/95 504 431,000 98.0% 600 912,000 3.0%
Sunchase Bradenton, FL 1986 168 135,000 97.6% 596 297,000 1.0%
Willowtree Pensacola, FL 1983 152 116,000 97.4% 448 206,000 0.7%
------ ---------- ---- ------- ----------- -------
Subtotal - Florida 3,278 2,918,000 98.0% 648 6,305,000 20.9%
------ ---------- ---- ------- ----------- -------
North Ingle Villas Macon, GA 1983 140 133,000 97.9% 526 213,000 0.7%
Somerset Place Savannah, GA 1986 120 108,000 95.0% 611 212,000 0.7%
Somerset Wharf Savannah, GA 1986/87 178 151,000 96.1% 588 310,000 1.0%
Stockbridge Manor Stockbridge, GA 1994 240 266,000 98.8% 633 448,000 1.5%
------ ---------- ---- ------- ----------- -------
Subtotal - Georgia 678 658,000 97.2% 595 1,183,000 3.9%
------ ---------- ---- ------- ----------- -------
TOTAL - existing Properties 11,204 10,708,000 94.8% $587 (4) 17,922,000 59.6%
------ ---------- ==== ==== ----------- -------
Recent Acquisitions:
Ashford Place Mobile, AL 1983 168 135,000
Crowne Chase Birmingham, AL 1994 244 252,000
Crowne Pointe Birmingham, AL 1987/91 392 393,000
Crowne Ridge Birmingham, AL 1992 125 131,000
Pointe West Mobile, AL 1981 104 114,000
Spring Creek Macon, GA 1992/94 296 328,000
------ ----------
Subtotal - recent acquisitions 1,329 1,353,000
------ ----------
Expansions:
Inverness Lakes Mobile, AL 1996 180 187,000 108,000 (5) 0.4% (5)
Rime Village Hoover Birmingham, AL 1996 160 215,000 -- --
Heatherbrooke IV Birmingham, AL 1997 84 87,000 -- --
Riverchase III Tampa, FL 1997 276 285,000 -- --
------ ---------- -------
Subtotal - expansions 700 774,000 108,000 0.4%
------ ---------- ----------- -------
Developments:
Colonial Grand at Orlando, FL 1996 312 356,000
Heathrow
Colinial Grand at Bradenton, FL 1996 212 203,000
Bayshore
Colonial Grand at
Hunters Creek Orlando, FL 1998 313 (6) 375,000
--- ----------
Subtotal - developments 837 934,000
------ ----------
TOTAL - including existing Properties, recent
acquisitions, expansions and developments 14,185 13,769,000 $18,030,000 60.0%
====== ========== =========== =======
</TABLE>
- ---------------------
(1) Year initially completed and, where applicable, year(s) in which additional
phases were completed or year in which completion is anticipated.
(2) Does not include properties that have not yet achieved stabilized
occupancy.
(3) Percent of Total First Quarter 1996 Property Revenue represents the
Multifamily Property's proportionate share of all revenue from the 61
Properties owned by the Company as of March 31, 1996.
(4) Represents weighted average rental rate per unit at March 31, 1996 of the
33 Multifamily Properties owned by the Company on that date.
(5) Includes 107 units which were completed and generating revenues as of
March 31, 1996.
(6) The Company owns land on which it expects to develop a second phase of this
property containing 183 apartment units.
16
<PAGE>
The following table sets forth the total number of apartment units, percent
leased and average base rental rate per apartment unit as of the end of
March 31, 1996 and as of each of the last five years for the Multifamily
Properties owned by the Company on such dates:
<TABLE>
<CAPTION>
Average Base
Number of Percent Rental Rate
Period-End Apartment Units (1) Leased (1) Per Unit
---------- ------------------- ---------- --------
<S> <C> <C> <C>
March 31, 1996 11,319 (2) 94.8% $556
December 31, 1995 11,239 95.7% $552
December 31, 1994 10,972 96.0% $531
December 31, 1993 3,618 96.7% $510
December 31, 1992 3,618 94.9% $472
December 31, 1991 3,330 92.3% $454
</TABLE>
- ----------------
(1) Represents weighted average occupancy of the owned Multifamily Properties
that had achieved stabilized occupancy as of the date presented.
(2) Includes 115 units placed in service at March 31, 1996 in connection with
the expansion or development of multifamily properties.
Retail Properties
The 18 Retail Properties contain a total of approximately 4.5 million
square feet of GLA. Nine of the Retail Properties are located in Alabama, seven
Retail Properties are located in Florida and two Retail Properties are located
in Georgia. The Retail Properties consist of four enclosed regional malls
(Macon Mall, Gadsden Mall, Village Mall and River Oaks Center), two power
centers, 11 neighborhood shopping centers, and a mini-warehouse storage
facility. Nine of the 18 Retail Properties were originally developed by the
Company. The Company is currently expanding Macon Mall and Montgomery
Promenade, and upon their completion the Company's 18 Retail Properties will
contain a total of approximately 5.2 million square feet of GLA.
17
<PAGE>
The following table sets forth certain information relating to the Retail
Properties as of and for the quarter ended March 31, 1996.
<TABLE>
<CAPTION>
Retail Properties
Percent of
Average Total First Total First
Gross Base Rent Quarter 1996 Quarter
Leasable Number Total Per Leased Retail 1996
Year Area (Square of Percent Annualized Square Property Property
Retail Property Location Completed(1) Feet)(2) Stores Leased(2) Base Rent(3) Foot(4) Revenue Revenue(5)
- -------------------- ------------- -------------- ------------- ------ ---------- -------------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Existing Properties:
Alabama:
River Oaks Decatur, AL 1979/89 494,000 62 90.9% $ 3,141,000 $13.29 $1,062,000 3.5%
81,000(6)
Gadsden Mall Gadsden, AL 1974/91 493,000 64 93.8% 2,525,000 12.96 872,000 2.9%
Village Mall Auburn, AL 1973/84/89 400,000 62 96.9% 2,516,000 12.67 932,000 3.2%
Montgomery
Promenade Montgomery, AL 1990 166,000 29 98.8% 1,534,000 12.71 482,000 1.6%
44,000(6)
McGehee Place Montgomery, AL 1986 54,000 13 78.9% 490,000 11.37 148,000 0.5%
49,000(6)
Bellwood Montgomery, AL 1988 37,000 15 100.0% 385,000 10.46 119,000 0.4%
49,000(6)
Old Springville Birmingham, AL 1982 64,000 11 92.6% 378,000 7.92 116,000 0.4%
Olde Town Montgomery, AL 1978/90 38,000 17 90.9% 336,000 9.38 99,000 0.3%
Meadowbrook
Mini-Storage(7) Birmingham, AL 1986 36,000 -0- 90.6% 247,000 7.32 63,000 0.2%
---------- --- ----- ----------- ---- ---------- -----
Subtotal - Alabama (9 Properties) 2,005,000 273 93.8% 11,552,000 12.16 3,893,000 13.0%
---------- --- ----- ----------- ----- ---------- -----
Florida:
University Park Plaza Orlando, FL 1986/89 399,000 44 95.9% 2,885,000 13.70 931,000 3.1%
Country Lake Orlando, FL 1990 217,000 22 91.4% 1,189,000 12.64 361,000 1.2%
Burnt Store Square Punta Gorda, FL 1990 199,000 22 90.0% 1,230,000 11.19 400,000 1.3%
Winter Haven Orlando, FL 1986 175,000 16 77.6% 879,000 10.64 263,000 0.9%
22,000(6)
Northdale Court Tampa, FL 1984 193,000 30 84.0% 1,394,000 9.53 482,000 1.6%
Bear Lake Orlando, FL 1990 125,000 22 91.6% 1,090,000 12.97 309,000 1.0%
Paddock Park Ocala, FL 1984 87,000 21 98.4% 686,000 11.43 191,000 0.6%
---------- --- ----- ----------- ----- ---------- ----
Subtotal - Florida (7 Properties) 1,417,000 177 90.2% 9,353,000 11.89 2,937,000 9.7%
---------- --- ----- ----------- ----- ---------- ----
Georgia:
Macon Mall Macon, GA 1975/88 507,000 113 90.9% 5,760,000 19.02 2,463,000 8.2%
510,000(6)
Britt David Columbus, GA 1990 110,000 11 100.0% 801,000 12.22 234,000 0.8%
---------- -- ------ ----------- ----- ---------- ----
Subtotal - Georgia (2 Properties) 1,127,000 124 92.5% 6,561,000 18.50 2,697,000 9.0%
---------- --- ----- ----------- ----- ---------- ----
TOTAL - Existing Properties (18 Properties) 4,549,000 574 92.2% $27,466,000 $13.53 $9,527,000 31.7%
========= === ===== =========== ====== ========== =====
Expansions:
Macon Mall Macon, GA 1997 423,000(8)
Montgomery
Promenade North Montgomery, AL 1997 225,000(9)
---------
Subtotal - expansions 648,000
---------
TOTAL - including existing Properties
and expansions 5,197,000
=========
</TABLE>
- ------------------------
(1) Year initially completed and, where applicable, year(s) in which the
Property was substantially renovated or an additional phase of the Property
was completed or anticipated year of completion.
(2) Total GLA includes space owned by anchor tenants, Percent Leased excludes
such space.
(3) Represents annualized base rent as of March 31, 1996.
(4) Includes specialty store space only.
(5) Percent of Total First Quarter 1996 Property Revenue represents the Retail
Property's proportionate share of all revenue from the 61 Properties owned
by the Company as of March 31, 1996.
(6) Represents space owned by anchor tenants.
(7) Meadowbrook Mini-Storage is a mini-warehouse rental storage facility
containing 295 rental warehouse units.
(8) Includes 175,000 square feet of space owned by an anchor.
(9) Includes 130,000 square feet of space owned by an anchor.
18
<PAGE>
The following table sets forth the total gross leasable area, percent
leased and average base rent per leased square foot as of March 31, 1996 and as
of the end of each of the last five fiscal years for the Retail Properties
(excluding Meadowbrook Mini-Storage) owned by the Company on such dates:
<TABLE>
<CAPTION>
Gross Average
Leasable Area Percent Base Rent Per
Period-End (Square Feet)(1) Leased Leased Square Foot(2)
---------- ---------------- ------- ---------------------
<S> <C> <C> <C>
March 31, 1996 3,758,000 92.2% $13.53
December 31, 1995 3,758,000 93.1% $13.23
December 31, 1994 2,467,000 95.8% $12.61
December 31, 1993 2,158,000 95.0% $12.27
December 31, 1992 2,148,000 93.5% $11.50
December 31, 1991 2,148,000 93.8% $11.33
</TABLE>
- ----------------------
(1) Excludes 755,000 square feet of space owned by anchor tenants and 36,000
square feet at Meadowbrook Mini-Storage, a mini-warehouse rental storage
facility.
(2) Average base rent per leased square foot is calculated using specialty store
period end base rent figures.
The following table sets out a schedule of the lease expirations for leases
in place as of March 31, 1996 for the Retail Properties (excluding Meadowbrook
Mini-Storage):
<TABLE>
<CAPTION>
Net Percent of Total
Number of Rentable Area Annualized Annual Base Rent
Year of Tenants with of Expiring Leases Base Rent of Represented by
Lease Expiration Expiring Leases (Square Feet)(1) Expiring Leases(1)(2) Expiring Leases(1)
---------------- --------------- ----------------- ---------------------- ------------------
<S> <C> <C> <C> <C>
1996 62 155,000 $ 1,616,000 5.9%
1997 76 177,000 1,942,000 7.1%
1998 109 339,000 3,341,000 12.3%
1999 94 399,000 3,447,000 12.7%
2000 81 519,000 4,103,000 15.1%
2001 24 100,000 1,207,000 4.4%
2002 21 105,000 1,115,000 4.1%
2003 21 65,000 856,000 3.1%
2004 27 406,000 2,216,000 8.1%
2005 24 91,000 1,577,000 5.8%
2006-2014 35 1,109,000 5,799,000 21.4%
--- --------- ----------- ------
574 3,465,000 $27,219,000 100.0%
=== ========= =========== ======
</TABLE>
- ----------------------
(1) Excludes 755,000 square feet of space owned by anchor tenants, 293,000
square feet of space not leased as of March 31, 1996 and 36,000 square feet
at Meadowbrook Mini-Storage, a mini-warehouse rental storage facility.
(2) Annualized base rent is calculated using base rents as of March 31, 1996.
Macon Mall. Macon Mall is a super-regional mall with approximately
1,017,000 square feet of rental space located in Macon, Georgia, approximately
100 miles south of Atlanta, Georgia and serving a trade area of more than
550,000 people. CPI developed Macon Mall in 1975, completely renovated its
interior in 1988, and commenced a 423,000 square foot expansion of the mall in
1995. As of December 31, 1995, the mall was 94.9% leased to a total of 123
tenants. Macy's, Sears, Belk Matthews and J.C. Penney are the anchor department
stores. As of December 31, 1995, J.C. Penney occupied approximately 169,000
square feet (approximately 17% of the gross leasable area) pursuant to a lease
which expires in August 2000. J.C. Penney has five options to extend the lease
for five
19
<PAGE>
years each. Each of Macy's, Sears and Belk Matthews owns its store.
In the opinion of the Company, Macon Mall is adequately covered by insurance.
The following table sets out a schedule of the lease expirations for Macon
Mall as of March 31, 1996.
<TABLE>
<CAPTION>
Percent of Total Annual
Year of Number of Net Rentable Area Annualized Base Rent Base Rent Represented by
Lease Tenants with of Expiring Leases of Expiring Leases Expiring Leases
Expiration Expiring Leases (Square Feet)(1) (1)(2) (Square Feet)(1)
------------ ----------------- -------------------- ---------------------- --------------------------
<S> <C> <C> <C> <C>
1996 13 55,000 $ 637,000 11.1%
1997 12 29,000 396,000 6.9%
1998 15 43,000 774,000 13.4%
1999 14 29,000 622,000 10.8%
2000 16 204,000 1,155,000 20.1%
2001 6 11,000 271,000 4.7%
2002 7 10,000 263,000 4.6%
2003 5 19,000 164,000 2.9%
2004 2 6,000 130,000 2.3%
2005 14 32,000 827,000 14.3%
2006 9 23,000 521,000 8.9%
--- ------- ---------- ------
113 461,000 $5,760,000 100.0%
=== ======= ========== ======
</TABLE>
- -----------------------
(1) Excludes 510,000 square feet of space owned by anchor tenants and 23,000
square feet of space not leased as of March 31, 1996.
(2) Annualized base rent is calculated using specialty store base rent as of
March 31, 1996.
The aggregate tax basis of depreciable real property of Macon Mall for
Federal income tax purposes was $20,556,000 as of December 31, 1995. The
aggregate tax basis of depreciable personal property associated with the
Property for Federal income tax purposes was $294,000 as of December 31, 1995.
Depreciation and amortization are computed on a straight-line method or
appropriate accelerated methods over the estimated useful life of the Property's
assets, which range from five to 49 years. The current realty tax rate for
Macon Mall is $41.30 per $1,000 of assessed value. The aggregate real estate
tax obligation of Macon Mall for 1995 was $785,000, or approximately $1.18 per
square foot of taxable building area.
A 336,457 square foot portion of the land underlying Macon Mall is subject
to a ground lease that expires in 2071. The ground lease requires ground rent
payments of $24,000 each year and is subject to a one-time adjustment per the
wholesale index in the year 2000.
In May 1995, the Company began a 423,000 square foot expansion of Macon
Mall, which is expected to open in the first quarter of 1997. The expansion
will include the addition of 175,000 square feet of specialty store GLA. The
expansion also will include the addition of anchor tenants Dillard's and
Parisian, which will join existing anchor tenants Sears, J.C. Penney, Macy's,
and Belk Matthews. As of June 12, 1996, more than 56% of the specialty store in
the expansion was committed and leased or out for signature. Total expansion
costs are expected to be approximately $52.0 million. See "Recent Developments-
- -Expansion and Development Activity--Retail."
20
<PAGE>
Gadsden Mall. Gadsden Mall is a 493,000 square foot regional mall located
in Gadsden, Alabama, approximately 60 miles northeast of Birmingham, Alabama.
J.C. Penney, Sears, McRae's and Belk Matthews are the anchor tenants. The mall
was expanded in 1990 to allow Belk Matthews to relocate and expand within the
mall with its newest prototype store and to allow J.C. Penney the opportunity to
move to the mall from its downtown location. In addition, the interior of the
mall was totally renovated, including the addition of a food court. McRae's, an
anchor tenant, exercised a one-time option in August 1994 to extend its initial
lease term to July 2014 and completed a major renovation of its store at a cost
of approximately $2 million.
Village Mall. Village Mall is a 400,000 square foot regional mall located
in Auburn, Alabama, which is approximately 55 miles east of Montgomery, Alabama
and 45 miles northwest of Columbus, Georgia. Anchored by Gayfer's (Mercantile),
Sears and J.C. Penney, it is the only enclosed mall in east central Alabama.
Originally built in 1973, the mall was expanded to its current size in 1984 with
the addition of J.C. Penney and approximately 60,000 square feet in specialty
shops. An extensive renovation of the interior in 1989 included the creation of
a food court.
University Park. University Park is a 399,000 square foot power center
located in Orlando, Florida. The anchor tenants are Beall's, Ben Franklin
Crafts, Stein Mart, Baby Superstore, Waccamaw, Albertson's, and Books-A-Million
which represent approximately 68% of the Property's gross leasable area. The
shopping center was constructed in two phases, with Phase I and Phase II opening
in 1986 and 1989, respectively.
River Oaks Center. River Oaks Center, a 575,000 square foot retail
shopping center located in Decatur, Alabama, was acquired by the Company on June
30, 1995 for a purchase price of $26.9 million, financed by advances under the
Lines of Credit. The shopping center was developed in 1979, renovated and
expanded in 1988, and, as of December 31, 1995, earned an average base rent of
$13.82 per square foot. The shopping center was 90.4% leased as of
December 31, 1995 to 62 tenants. The anchor tenants are Parisian, Castner Knot,
Sears, J.C. Penney, and Rogers which represent approximately 63% of the
Property's gross leasable area.
Office Properties
The ten Office Properties contain a total of approximately 1.0 million
rentable square feet. Nine of the Office Properties are located in Alabama
(representing 93% of the office portfolio's net rentable square feet) and one is
located in Orlando, Florida. The Office Properties range in size from
approximately 25,000 square feet to 227,000 square feet. Four of the Office
Properties were developed by the Company, and the Company acquired the other six
Properties at various times between 1980 and 1990. All of the Office Properties
are managed by the Company.
21
<PAGE>
The following table sets forth certain additional information relating to
the Office Properties as of and for the quarter ended March 31, 1996.
<TABLE>
<CAPTION>
Office Properties
Net Percent of
Rentable Average Total First Total First
Area Total Base Rent Quarter 1996 Quarter 1996
Year (Square Percent Annualized Per Office Property
Office Property (1) Location Completed(2) Feet)(3) Leased Base Rent Square Foot Revenue(3) Revenue(4)
- ----------------------- ------------ ------------- ------------ -------- ------------ ------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alabama:
Interstate Park Montgomery, AL 982-85/89 227,000 94.6% $ 2,755,000 $12.85 $ 701,000 2.3%
International Park Birmingham, AL 1987/89 222,000 98.5% 3,226,000 (5) 14.61 257,000 0.9%
Energen Plaza Birmingham, AL 1982 168,000 96.1% 2,205,000 (5) 13.64 350,000 1.2%
AmSouth Center Huntsville, AL 1990 157,000 94.9% 2,514,000 17.04 727,000 2.4%
P&S Building Gadsden, AL 1946/76/91 40,000 100.0% 127,000 3.20 32,000 0.1%
250 Commerce St. Montgomery, AL 1904/81 35,000 100.0% 361,000 10.28 87,000 0.3%
Anderson Block (6) Montgomery, AL 1981/83 34,000 97.8% 337,000 (5) 10.36 33,000 0.1%
Land Title Bldg. Birmingham, AL 1975 30,000 100.0% 376,000 12.63 34,000 0.1%
Whitesburg Bldg. Huntsville, AL 1974 25,000 100.0% 296,000 11.80 78,000 0.3%
--------- ------ ------------ ----- ---------- ----
Subtotal-Alabama (9 Properties) 938,000 96.7% 12,197,000 13.46 2,299,000 7.7%
--------- ----- ------------ ----- ---------- ----
Florida:
University Park Orlando, FL 1985 71,000 85.9% 796,000 13.04 183,000 0.6%
--------- ----- ------------ ----- ---------- ----
TOTAL (10 Properties) 1,009,000 94.0% $ 12,993,000 $13.43 $2,482,000 8.3%
========= ===== ============ ====== ============ ====
</TABLE>
- ---------------------------
(1) All Office Properties are 100% owned by the Company with the exception of
International Park, which consists of three buildings and is 37.5% owned by
the Company for buildings 1900 and 2100 and is 25% owned by the Company for
building 2000; Energen Plaza, which is 50% owned by the Company; and
Anderson Block & Land Title Building, which are each 33.33% owned by the
Company.
(2) Year initially completed and, where applicable, most recent year in which
the Property was substantially renovated or in which an additional phase of
the Property was completed.
(3) Total First Quarter 1996 Office Property Revenue is the Company's share
(based on its percentage ownership of the Property) of total Office Property
revenue.
(4) Percent of Total First Quarter 1996 Property Revenue represents the Office
Property's proportionate share of all revenue from the 61 Properties owned
by the Company as of March 31, 1996.
(5) Total Annualized Base Rent represents rents for the entire Property, not
just the Company's proportionate share.
(6) The Company has a leasehold interest in this Property.
The following table sets out a schedule of the lease expirations for leases
in place as of March 31, 1996 for the Office Properties (including all lease
expirations for partially-owned Properties).
<TABLE>
<CAPTION>
Net Rentable Percent of Total
Number of Area of Annualized Annual Base Rent
Year of Tenants with Expiring Leases Base Rent of Represented by
Lease Expiration Expiring Leases (Square Feet)(1) Expiring Leases(1)(2) Expiring Leases(1)
- ------------------ ----------------- ------------------ ----------------------- --------------------
<S> <C> <C> <C> <C>
1996 49 170,000 $1,529,000 11.8%
1997 48 259,000 3,611,000 27.8%
1998 21 96,000 1,231,000 9.5%
1999 31 263,000 3,673,000 28.3%
2000 10 84,000 1,215,000 9.4%
2001 7 29,000 460,000 3.5%
2002 1 12,000 197,000 1.5%
2005 2 55,000 1,077,000 8.2%
-- ------ --------- ------
169 968,000 $12,993,000 100.0%
=== ======= =========== ======
</TABLE>
- -------------------------
(1) Excludes 41,000 square feet of space not leased as of March 31, 1996.
(2) Annualized base rent is calculated using base rents as of March 31, 1996.
22
<PAGE>
The following table sets forth the net rentable area, total percent leased
and average base rent per leased square foot as of March 31, 1996 and as of the
end of each of the last five years for the Office Properties:
<TABLE>
<CAPTION>
Rentable Area Total Rent Per Leased
Period-End (Square Feet) Percent Leased Square Foot(1)
- ---------- ------------- -------------- ---------------
<S> <C> <C> <C>
March 31, 1996 1,009,000 94.0% $13.43
December 31, 1995 1,009,000 94.0% $13.52 $13.52
December 31, 1994 1,012,000 95.0% $12.99 $12.99
December 31, 1993 1,007,000 93.7% $13.05 $13.05
December 31, 1992 1,007,000 94.1% $12.99 $12.99
December 31, 1991 1,007,000 92.2% $12.38 $12.38
--------- ----- ------ ------
</TABLE>
- ----------------
(1) Average base rent per leased square foot is calculated using base rents
as of December 31 for each respective year.
The following is a brief description of certain of the Office Properties.
Interstate Park. Interstate Park is a master planned suburban office park
located in east Montgomery, Alabama containing a total of 227,000 rentable
square feet. The Property consists of the Interstate Park Center, a four-story
building completed in 1989 containing a total of 78,000 rentable square feet,
and the Interstate Buildings 100 through 600, which were constructed between
1982 and 1985 and which contain a total of 149,000 rentable square feet. The
Property's major tenants include certain affiliates of The Colonial Company,
including Lowder Construction Company, Inc., and Colonial Mortgage Company;
Goodwyn Mills & Cawood; CACI; Webb Crumpton; and the Alabama Housing Finance
Authority.
Historical Rehabilitation Properties. Anderson Block (in which the Company
has only a 33.3% interest) and 250 Commerce Street are historic buildings
located in Montgomery, Alabama which have been renovated to Class A office
space. The two Properties benefit from their presence on the National Historic
Register and from their prime locations in Montgomery's downtown financial
district. Both Properties were originally constructed as warehouses in the late
1800s/early 1900s and later underwent complete renovation in the early 1980s.
The Colonial BancGroup, Inc. occupies approximately 43% of 250 Commerce Street,
with the remainder leased to smaller tenants. Anderson Block leases its entire
space to seven separate tenants.
Energen Plaza. Energen Plaza is a 12-story Class A office building located
in the downtown central business district of Birmingham, Alabama containing a
total of 168,000 rentable square feet and in which the Company owns a 50%
interest. The building was constructed in 1982 and includes a four-level
parking garage with 417 parking spaces. It is the headquarters building for
Energen Corp. (the parent company of Alabama Gas Corporation) and for the
Company, which occupies 18,000 square feet. The remainder of the Property is
leased to Gorham & Waldrep (a law firm) and to other smaller tenants.
International Park. International Park is a 100-acre master planned office
park located 15 minutes south of Birmingham in the Highway 280/Southeast
suburban submarket. The Property consists of three separate office buildings
(the 1900, 2000 and 2100 Buildings) which contain a total of 222,000 rentable
square feet. The Company owns 37.5% of the 1900 Building, 25% of the 2000
Building and 37.5% of the 2100 Building in partnership with BE&K, an
international design engineering and construction company, and other partners.
The 1900 Building was constructed in 1987 and contains 65,000 rentable square
feet. Its largest tenants include Hoar Construction, A.B. Shopping Centers and
Innovative Healthcare. The 2000 Building was built in 1987, contains 129,000
23
<PAGE>
rentable square feet and is solely occupied by BE&K. The most recently
constructed building, the 2100 Building (completed in 1989), contains 28,000
rentable square feet and also is solely occupied by BE&K.
AmSouth Center. AmSouth Center is an 11-story Class A office building
located in downtown Huntsville, Alabama. Constructed in 1990, the Property
contains a total of 157,000 rentable square feet and has an attached six-story
parking deck with 424 parking spaces. The building is anchored by AmSouth Bank.
Other major tenants include New York Life; Watson, Gammons & Fees; the Tennessee
Valley Authority and the law firms of Sirote & Permutt and Bradley, Arant, Rose
& White.
Undeveloped Land
The Company owns nine undeveloped land parcels consisting of approximately
30.5 acres (collectively, the "Land"). These parcels are adjacent to five of
the Properties and are suitable for potential expansion at those Properties.
The Land suitable for expansion is located adjacent to a Multifamily Property
and four Retail Properties. Land adjacent to Multifamily Properties typically
will be considered for potential development of another phase of an existing
Multifamily Property if the Company determines that the particular market can
absorb additional apartment units. The Company currently owns one such parcel.
For expansion at Retail Properties, the Company owns parcels both contiguous to
the boundaries of Retail Properties, which would accommodate expansion of the
mall or shopping center, and outparcels which are suitable for restaurants,
financial institutions or free-standing retailers. The Company owns four such
parcels.
Options to Acquire Additional Land. In addition to the Land, the Company
has options to acquire certain additional land parcels owned by Thomas and James
Lowder and members of their family (collectively, the "Option Parcels"). The
name, location, proposed use and acreage of each Option Parcel is as follows:
<TABLE>
<CAPTION>
Site Name Location Proposed Use Acres
- --------- -------- ------------ -----
<S> <C> <C> <C>
North Macon (Wimbleton Forest).. Macon, GA Retail 137.7
Altamonte Crossing.............. Altamonte Springs, FL Retail 2.6
Bellwood Commercial............. Montgomery, AL Retail 9.7
Osprey (Sarasota)............... Sarasota, FL Mixed Use 73.9
Interstate Park................. Montgomery, AL Office 11.3
Bellwood Office................. Montgomery, AL Office 4.9
Huntsville Research Park........ Huntsville, AL Office 9.8
</TABLE>
Each option expires on September 29, 1998, subject to earlier termination
if the Company elects not to exercise a right of first opportunity on a proposed
sale of such Option Parcel by Thomas and James Lowder and members of their
family. The Company also has a five-year right of first opportunity with
respect to each Option Parcel beginning on the expiration date of the option
term (if the option is not exercised).
24
<PAGE>
Property Markets
The table below sets forth certain information with respect to the
geographic concentration of the Properties as of May 31, 1996.
Geographic Concentration of Properties
<TABLE>
<CAPTION>
Percent of Total
Apartment Total First First Quarter
Units GLA NRA Quarter 1996 Property 1996 Property
State (Multifamily)(1) (Retail)(2) (Office)(3) Revenue(4) Revenue(4)
- -------------- ---------------- ------------- ------------- ------------------------ -------------------
<S> <C> <C> <C> <C> <C>
Alabama 8,388 2,005,000 938,000 $16,734,000 55.7%
Florida 3,286 1,417,000 71,000 9,425,000 31.4%
Georgia 974 1,127,000 -0- 3,880,000 12.9%
------ --------- --------- ----------- ------
Total 12,648 4,549,000 1,009,000 $30,039,000 100.0%
====== ========= ========= =========== ======
</TABLE>
- --------------------
(1) Includes the 1996 Acquisitions and 115 apartment units placed in service at
March 31, 1996 in connection with the expansion or development of
multifamily properties.
(2) GLA refers to gross leasable area of retail space.
(3) NRA refers to net rentable area of office space.
(4) Excludes the 1996 Acquisitions.
The Company believes that the demographic and economic trends and
conditions in the markets where the Properties are located indicate a potential
for continued growth in property net operating income. The Properties are
located in a variety of distinct submarkets within Alabama, Georgia and Florida;
however, Birmingham, Alabama, Orlando, Florida, Huntsville, Alabama, Macon,
Georgia, Montgomery, Alabama, and Sarasota/Bradenton, Florida are the Company's
primary markets. The Company believes that these six markets, which are
characterized by stable and increasing population and employment growth, should
continue to reflect a steady demand for multifamily, retail and office
properties.
Birmingham, Alabama. Sixteen of the Company's Properties are located in
Birmingham, Alabama. Birmingham is the business, financial, educational and
cultural center of Alabama and the state's largest city, with a population in
its four-county Metropolitan Statistical Area ("MSA") of approximately 900,000.
Located in the center of the state, the Birmingham MSA consists of Blount,
Jefferson, St. Clair and Shelby counties. The University of Alabama at
Birmingham is the city's largest employer and is one of the leading medical
centers in the nation. From 1980 to 1990, the population of the Birmingham MSA
increased 3.4% and from 1990 to 1995, the population increased 4.4%. Year end
occupancy rates for multifamily, retail and office properties in Birmingham were
91%, 95% and 93%, respectively, for 1995 as compared to 97%, 95% and 93%,
respectively, for 1994. The unemployment rate in Birmingham was 3.2% as of
April 1996 compared to a national unemployment rate of 5.4%.
Orlando, Florida. Nine of the Properties are located in Orlando, Florida
area, which is characterized by strong population and job growth. With
approximately 1.4 million residents, Orlando is the third largest metropolitan
area in Florida. Orlando's economy is based primarily upon tourism. With Walt
Disney World, Disney's MGM Studios, EPCOT Center, Universal Studio and Sea
World, Orlando is considered one of the most popular tourist destinations in the
United States. The rapid expansion of Orlando's tourism industry has also
resulted in related commercial development of the area, including development of
banking, light industrial manufacturing and distribution activities. Year end
occupancy rates for multifamily, retail and office properties in Orlando were
92%, 84% and 85%, respectively, for 1994 as compared to 92%, 83% and 87%,
respectively, for 1993. The average unemployment rate in Orlando was 3.8% as of
April 1996.
25
<PAGE>
Huntsville, Alabama. Four of the Properties, including AmSouth Center, are
located in Huntsville, Alabama. AmSouth is an 11-story class A office building
located in downtown Huntsville. Huntsville is located in the northern part of
the state and had a total population of approximately 320,000 in 1994. Year end
occupancy rates for multifamily, retail and office properties in Huntsville were
92%, 84% and 85%, respectively, for 1994 as compared to 92%, 83% and 87%,
respectively, for 1993. The unemployment rate in Huntsville as 3.4% as of
April 1996.
Macon, Georgia. Three of the Properties, including the Macon Mall, are
located in Macon, Georgia. Macon is located approximately 100 miles south of
Atlanta. The Macon MSA, comprised of Bibb, Houston, Jones and Peach counties,
is the third largest metropolitan area in the state, with a total population of
approximately 310,000 in 1994. Situated in the center of Georgia along
Interstate Highway 75, Macon is considered the primary business center of the
central Georgia region. The Macon MSA total population increased approximately
6.6% between 1980 and 1990. Year end occupancy rates for multifamily, retail
and office properties in Macon were 92%, 84% and 85%, respectively, for 1994 as
compared to 92%, 83% and 87%, respectively, for 1993. The Macon MSA has
maintained lower unemployment rates than both the State of Georgia and the
nation as a whole over the past five years. The unemployment rate in Macon was
4.4% as of April 1996.
Montgomery, Alabama. Ten of the Properties are located in Montgomery,
Alabama. Montgomery is Alabama's capital and the state's third largest city.
It is the center of state government and has a diversified manufacturing and
services economy and two important military installations, Maxwell Air Force
Base and Gunter Air Force Base. The Montgomery MSA consists of Montgomery,
Elmore and Autauga counties, and its population grew steadily from 1990 to 1994,
increasing 6.7% to 312,000. Its unemployment rate of 4.0% as of April 1996 has
consistently fallen below state and national averages. The Montgomery
Properties are located primarily in East Montgomery, the fastest growing area of
the city. Year end occupancy rates for multifamily, retail and office
properties in Montgomery were 92%, 84% and 85%, respectively, for 1994 as
compared to 92%, 83% and 87%, respectively, for 1993.
Sarasota/Bradenton, Florida. Three of the Multifamily Properties are
located in the Sarasota/Bradenton, Florida area. This area is located on the
Gulf Coast of Florida south of Tampa and its economy is based largely on
tourism. Sarasota/Bradenton's MSA population is approximately 520,000, and the
unemployment rate was 3.2% as of April 1996.
Mortgage Financing
Certain of the Properties are subject to mortgage indebtedness. The
Properties whose financial results are consolidated in the financial statements
of the Company are subject to existing mortgage indebtedness and other notes
payable in an aggregate amount as of December 31, 1995 of approximately $354.1
million carrying a weighted average interest rate of 7.55% and a weighted
average maturity of 4.7 years. The mortgage indebtedness on the Properties
(other than Spring Creek Apartments, Crowne Chase Apartments, Ashford Place
Apartments, Pointe West Apartments, Crowne Point Aparments and Crowne Ridge
Apartments which were acquired in the second quarter of 1996) as of December 31,
1995 is set forth in the table below:
26
<PAGE>
<TABLE>
<CAPTION>
Mortgage Debt and Notes Payable
Principal Annual Debt Anticipated
Interest Balance Service (1/1/96- Maturity Balanced Due
Property(1) Rate (as of 12/31/95) 12/31/96) Date(2) on Maturity
- -------------------------------- ----------- ------------------ ------------------ ---------- --------------
<S> <C> <C> <C> <C> <C>
Multifamily Properties:
Arbors at Kirkman Park 7.90% $12,673,101 $ 1,133,816 03/15/98 $ 12,360,767
Chestnut Ridge Apartments 5.90% 6,000,000 354,000 08/01/02(3) 6,000,000
7.63% 1,496,667 189,769 08/01/02(3) 841,667
Grande View Towers 7.50% 10,083,184 882,570 12/15/98 9,685,749
Heatherbrooke 5.96%(4) 9,900,000 788,053 12/31/98(5) 9,300,000
Huntleigh Woods 9.50% 3,049,340 315,825 05/01/02 2,827,436
Inverness Apartments 5.90% 4,000,000 236,000 08/01/02(6) 4,000,000
7.63% 1,811,667 205,693 08/01/02(7) 1,234,167
Monte D'Oro 8.75% 5,366,159 519,222 12/01/99 5,140,841
Polos West 7.45% 5,911,189 569,275 12/05/03 4,526,555
Rime Village Hoover 5.24% 22,400,000 2,144,000 01/01/99(8) 1,800,000
7.55% 700,000 722,461 06/01/96 722,461
Rime Village Huntsville 6.02% 13,275,000 1,276,500 05/01/98(9) 875,000
Riverchase Manor 9.00% 8,190,368(10) 84,498(10) 01/01/97 8,181,418(10)
7.15% 9,305,571 769,968 12/31/98 8,967,396
Ski Lodge I 9.50% 7,969,975 824,878 06/01/99 7,705,589
Ski Lodge II 9.50% 9,164,253 948,483 06/01/99 8,860,248
Ski Lodge III 6.09% 10,500,000 821,000 03/15/15(11) 900,000
Ski Lodge - Tuscaloosa 9.50% 4,871,150 504,512 05/01/02 4,516,671
Somerset Place 5.96%(4) 4,500,000 268,200 12/31/98(5) 4,300,000
Somerset Wharf I 5.96%(4) 3,400,000 202,640 12/31/98(5) 3,200,000
Vieux Carre 9.75% 5,187,475 533,606 06/01/01 4,993,827
Willow Bend 5.90% 3,330,000 196,470 08/01/02(6) 3,330,000
7.63% 1,735,693 198,292 08/01/02(7) 1,179,167
Retail Properties:
Bellwood 10.13% 3,016,285 324,825 01/01/99 2,948,518
Macon Mall 6.00% 34,565,394 35,424,582 06/01/96 34,447,545
Montgomery Promenade 9.25% 10,810,000 999,925 07/01/00 10,810,000
Olde Town 10.00% 1,703,693 196,279 03/01/98 1,638,619
Office Properties:
Interstate Park Building 8.50% 4,962,338 643,440 08/01/03 2,648,144
Whitesburg Building 10.25% 1,309,961 160,494 09/01/01 1,109,612
Other debt:
Land Loan 7.47% 700,000 56,349 09/30/98 648,778
6 Mortgages 8.87% 61,520,000 5,459,900 02/05/05 61,520,000
Line of Credit 7.47%(12) 63,192,000(10) 422,689(10) 12/18/98(13) 64,085,000(10)
Construction Loan 7.43% 7,500,000(10) 42,834(10) 05/01/98 7,500,000(10)
------------- ----------- ------------- -------------
TOTAL $ 354,099,770 $58,421,048 $ 302,805,175
============= =========== =============
</TABLE>
- ----------------------
(1) As noted in the table, certain Properties were developed in phases and
separate mortgage indebtedness encumbers each of the various phases.
(2) All of the mortgages can be prepaid at any time, subject to prepayment
penalties calculated typically on a yield maintenance basis, except for the
mortgages encumbering Chestnut Ridge, Inverness Apartments, Willowbend,
Whitesburg Building and one of the mortgages encumbering Riverchase Manor,
which are closed to prepayment for varying lengths of time.
(3) The maturity date noted represents the date on which credit enhancement
expires for the tax-exempt municipal bonds put in place as part of the
original financing for the Property. The stated maturity date for the loans
is August 1, 2007.
(4) Represents the maximum interest rate payable by the Company for the next
two years and nine months on these loans as result of an interest rate
protection agreement entered into by the Company. The loans (which are
financed through tax-exempt bonds) secured by these Properties (or phases
thereof) bear interest at a variable rate, determined weekly at the rate
necessary to produce a bid in the process of remarketing the bonds equal to
par plus accrued interest, based on comparable issues in the market. The
interest rate (including a credit enhancement fee) for these debt
obligations as of December 31, 1995 was 5.99% for Heatherbrooke I and 5.98%
for Somerset Place and Somerset Wharf I.
27
<PAGE>
(5) The maturity date noted represents the date on which credit enhancement
expires for the tax-exempt municipal bonds put in place as part of the
original financing for the Property. The stated maturity date for the loans
is October 1, 2013.
(6) The maturity date noted represents the date on which credit enhancement
expires for the tax-exempt municipal bonds put in place as part of the
original financing for the Property. The stated maturity date for the loans
is August 1, 2022.
(7) The maturity date noted represents the date on which credit enhancement
expires for the tax-exempt municipal bonds put in place as part of the
original financing for the Property. The stated maturity date for the loans
is August 1, 2010.
(8) The maturity date noted represents the date on which the credit enhancement
expires for the tax-exempt municipal bonds put in place as part of the
original financial for the Property. The stated maturity date for the loan
is December 1, 2013.
(9) The maturity date noted represents the date on which the credit enhancement
expires for the tax-exempt municipal bonds put in place as part of the
original financial for the Property. The stated maturity date for the loan
is April 1, 2014.
(10) The principal balances outstanding on these loans were repaid in January
and February 1996 with proceeds from the January 1996 equity offering. The
amounts presented for anticipated annual debt service for these loans
represent the interest paid during January and February 1996. The amounts
presented for estimated balance due on maturity for these loans represent
the outstanding balances that were repaid in January and February 1996.
See "Management's Discussion and Analysis -- Liquidity and Capital
Resources."
(11) The maturity date noted represents the date on which the credit enhancement
expires for the tax-exempt municipal bonds put in place as part of the
original financial for the Property. The stated maturity date for the loan
is March 1, 2015.
(12) This loan bears interest at a variable rate, based on LIBOR plus a spread
determined by certain capitalization and coverage ratios that range from
125 to 175 basis points. $8.4 million of this indebtedness is covered by
an interest rate protection agreement which limits the effective interest
rate on this amount to 6.0%. This protection agreement expires in
September 1996.
(13) This credit facility is renewable annually in December and provides for a
two-year amortization in the event of non-renewal.
In addition to the foregoing mortgage debt, the four Properties in which
the Company owns partial interests (and which therefore are not consolidated in
the financial statements of the Company) also are subject to existing mortgage
indebtedness. The Company's pro-rata share of such indebtedness as of
December 31, 1995 was $7.4 million which carried a weighted average interest
rate of 8.7%. The maturity dates of these loans range from February 28, 1997 to
August 1, 2005, and as of December 31, 1995, the loans had a weighted average
maturity of 2.3 years.
During the second quarter of 1996, the Company acquired six Properties
which were subject to an aggregate of approximately $30.1 million of
indebtedness and had a weighted average interest rate of 7.5%.
Item 4. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information, as of March 8, 1996, regarding
the beneficial ownership of Units by (1) each person known by the Company to be
the beneficial owner of more than five percent of the Company's outstanding
Units, (2) each trustee of Colonial (each of whom also serves as a director of
CPHC) and each of the chief executive officer and the four other most highly
compensated executive officers of Colonial (the "Named Executive Officers")
(each of whom also is an executive officer of CPHC) and (3) the trustees and
executive officers of Colonial as a group. Each person named in the table has
sole voting and investment power with respect to all Units shown as beneficially
owned by such person, except as otherwise set forth in the notes to the table.
The extent to which a person held Common Shares of Colonial as of March 8, 1996
is set forth in Colonial's Proxy Statement dated March 29, 1996 under the
caption "Voting Securities and Principal Holders Thereof," pages 15 through 17,
and is incorporated by reference in this Registration Statement and shall be
deemed a part hereof. Unless otherwise provided in the table, the address of
each beneficial owner is Energen Plaza, Suite 750, 2101 Sixth Avenue North,
Birmingham, Alabama 35203.
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<PAGE>
<TABLE>
<CAPTION>
Name and Business Number of Percent oA
Address of Beneficial Owner Units Units(1)
- --------------------------- --------- ----------
<S> <C> <C>
Colonial Properties Trust (through
Colonial Properties Holding Company, Inc.)...... 17,381,670(2) 67.4%
Thomas H. Lowder................................ 2,733,363(3) 10.6%
James K. Lowder................................. 2,733,363(4) 10.6%
2000 Interstate Parkway
Suite 400
Montgomery, Alabama 36104
Robert E. Lowder................................ 1,737,933(5) 6.7%
One Commerce Street
Montgomery, Alabama 36104
Carl F. Bailey.................................. -0- *
M. Miller Gorrie................................ -0- *
Herbert A. Meisler.............................. 526,934(6) 2.0%
Claude B. Nielsen............................... -0- *
Harold W. Ripps................................. 1,851,308 7.2%
Donald T. Senterfitt............................ -0- *
Howard B. Nelson, Jr............................ -0- *
Charles A. McGehee.............................. -0- *
John L. Moss.................................... -0- *
Jeffrey L. Shuster.............................. -0- *
All executive officers and trustees as a group
(15 persons).................................... 5,644,405(7) 21.9%
</TABLE>
* Less than 1%
___________________
(1) The number of Units outstanding as of March 8, 1996 was 25,787,887.
(2) Does not include 257,880 units of general partnership interest held by
CPHC, representing a one percent equity interest in the Company.
(3) Includes 532,800 Units owned by Thomas Lowder, 1,199,831 Units owned by
Colonial Commercial Investments, Inc. ("CCI"), a corporation owned equally
by Thomas and James Lowder, and 1,000,732 Units owned by Equity Partners
Joint Venture ("EPJV"), a general partnership of which Thomas, James and
Robert Lowder are the sole general partners. Units owned by CCI are
reported twice in this table, once as beneficially owned by Thomas Lowder
and again as beneficially owned by James Lowder. Units owned by EPJV are
reported three times in this table, as beneficially owned by each of the
Lowder brothers.
(4) Includes 532,800 Units owned by James Lowder, 1,199,831 Units owned by CCI
and 1,000,732 Units owned by EPJV.
(5) Includes 523,546 Units owned by Robert Lowder, 213,655 Units owned by CBC
Realty, Inc. ("CBC"), a corporation wholly owned by Robert Lowder, and
1,000,732 Units owned by EPJV.
(6) Includes 55,062 Units owned by Mr. Meisler and 471,872 Units owned by
BerFan Company, a partnership of which Mr. Meisler and his wife are the
sole general partners.
(7) Units held by CCI and EPJV have been counted only once for this purpose.
Item 5. Directors and Executive Officers
The Company is managed by Colonial, through CPHC, the general partner of
the Company. The information required by this item is hereby incorporated by
reference to the
29
<PAGE>
material appearing under the heading "Election of Trustees (Proposal 1)," pages
2-5, in the Colonial's definitive proxy statement for the annual meeting of
shareholders to be held in 1996 (the "1996 Proxy Statement") and under the
heading "Executive Officers of the Company," pages 22-23 in
Colonial's Form 10-K for the year ended December 31, 1995.
In April 1996, Jeffrey L. Shuster ceased to be an executive officer of
Colonial. A biography of Paul F. Earle, who has replaced Mr. Shuster as Senior
Vice President--Multifamily Division of Colonial follows:
Paul F. Earle, 38, has been Senior Vice President--Multifamily Division of
CPHC, with responsibility for management of all multifamily properties owned
and/or managed by Colonial, since April 1996. He joined CPI in December 1991 as
Vice President--New Business Development and became Vice President--Acquisitions
in September 1993. From 1980 until December 1991, Mr. Earle served in several
management capacities for Balcor Property Management, Inc., American Residential
Management, Inc., and Great Atlantic Management, Inc.
Item 6. Executive Compensation
The information required by this item is hereby incorporated by reference
to the material appearing in the 1996 Proxy Statement under the caption
"Executive Compensation," pages 6-9.
Item 7. Certain Relationships and Related Transactions
The information required by this item is hereby incorporated by reference
to the material appearing under the caption "Executive Compensation Committee
Interlocks and Insider Participation" in Colonial's definitive proxy statement
for the annual meeting of shareholders held in 1994 (the "1994 Proxy
Statement"), pages 11-12, in Colonial's definitive proxy statement for the
annual meeting of shareholders held in 1995 (the "1995 Proxy Statement"),
page 13, and in the 1996 Proxy Statement, pages 13-14, and under the caption
"Certain Relationships and Transactions" in the 1994 Proxy Statement, page 14,
and the 1995 Proxy Statement, page 15.
Item 8. Legal Proceedings
None of the Company, Colonial, CPHC or the Properties is presently subject
to any material litigation, nor, to the Company's knowledge, is any material
litigation threatened against the Company, Colonial, CPHC or the Properties,
other than routine litigation arising in the ordinary course of business which
is expected to be covered by liability insurance.
Item 9. Market Price of and Distributions on the Registrant's Common Equity and
Related Security Holder Matters
There is no established public trading market for the Units. As of
March 8, 1996, there were 21 holders of record of Units.
The Company has made consecutive quarterly distributions since its
formation in the first quarter of 1993 and increased its distribution rate in
January 1995 and January 1996. The current indicated annual distribution rate is
$2.00 per Unit. The Company's ability to make distributions depends on a number
of factors, including its net cash provided by operating activities, capital
commitments and debt repayment schedules. Holders of Units are entitled to
receive distributions when, as and if declared by the Board of Directors of
CPHC, its general partner, out of any fund legally available for that purpose.
30
<PAGE>
The following table sets forth the distributions per Unit paid by the
Company with respect to the periods noted:
<TABLE>
<CAPTION>
Calendar Period Distribution
--------------- -------------------
<S> <C>
1993:
Third Quarter..... $.01 (1)
Fourth Quarter $.43
1994:
First Quarter $.43
Second Quarter $.43
Third Quarter $.43
Fourth Quarter $.43
1995:
First Quarter $.475
Second Quarter $.475
Third Quarter $.475
Fourth Quarter $.475
1996:
First Quarter $.50
</TABLE>
--------------------
(1) In January 1994, the Company declared an aggregate
distribution of $.44 per Unit, representing a
distribution of $.01 per Unit with respect to the
period September 29, 1993 through September 30, 1993,
and $.43 per Unit with respect to the fourth quarter
of 1993.
Item 10. Recent Sales of Unregistered Securities
Since its formation in September 1993, the Company has issued Units in
private placements exempt from registration under the Securities Act pursuant to
Section 4(2) thereof in the amounts, for the consideration and at the times set
forth below:
. In connection with the IPO in September 1993, 401,477 Units were issued
to CPHC in exchange for the contribution of 3 Multifamily Properties to
the Company.
. In connection with the IPO in September 1993, 4,693,610 Units were
issued to members of the Colonial Group and certain of their affiliates
in exchange for the contribution of their respective direct and indirect
interests in certain of the Properties.
. In connection with the IPO, 8,480,000 and 686,200 Units were issued in
September and October, 1993, respectively, to CPHC in exchange for the
contribution by Colonial, through CPHC, of the net proceeds from
Colonial's IPO and the exercise of the underwriters' over-allotment
option, respectively.
. In November 1994, an aggregate of 14,025 Units were issued to Thomas H.
Lowder, James K. Lowder and Robert E. Lowder in exchange for the
contribution to the Company of their respective interests in certain
land.
. In December 1994, 3,362,524 million units of limited partnership
interest were issued to the owners of interests in The Rime Companies in
exchange for the Rime Companies' contribution of ten Multifamily
Properties to the Company as part of the Rime Acquisition.
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<PAGE>
. In May and June 1995, 3,000,000 and 450,000 Units, respectively, were
issued to CPHC in exchange for the contribution by Colonial, through
CPHC, of the net proceeds from a public offering of Common Shares and
from the exercise of the underwriters over-allotment option, as
described under "Item 1. Business--General" above.
. In January 1996, 4,600,000 Units were issued to CPHC in exchange for the
contribution by Colonial, through CPHC, of the net proceeds from a
public offering of Common Shares and from the exercise of the
underwriters over-allotment option, as described under "Item 1.
Business--Recent Developments--Sale of Additional Common Shares" above.
. From time to time under Colonial's Employee Share Option and Restricted
Share Plan and its Trustee Share Option Plan, new or restricted Common
Shares are issued and the proceeds of such issuances are contributed,
through CPHC, to the Company in exchange for additional Units. As of
April 30, 1996, 24,120 Units had been issued to CPHC in connection
therewith.
. From time to time under Colonial's Dividend Reinvestment and Share
Purchase Plan, new Common Shares are issued and the proceeds of such
issuances are contributed, through CPHC, to the Company in exchange for
additional Units. As of April 30, 1996, 5,712 Units had been issued to
CPHC in connection therewith.
. In April 1996, 182,804 units of limited partnership interest were issued
to two individuals in exchange for the contribution of two Multifamily
Properties.
Item 11. Description of Registrant's Securities to be Registered
General
Substantially all of Colonial's assets are held, and all of its operations
are conducted, by or through the Company. The ownership interest of limited
partners in the Company is denominated in units of limited partnership interest
("OP Units"). The Units are the only class of OP Units currently outstanding.
CPHC, a wholly owned subsidiary of Colonial, is the general partner of the
Company and also holds a substantial number of Units as a limited partner of the
Company. As of May 31, 1996, Colonial, through CPHC, owned approximately 68.0%
of the outstanding Units. Colonial's Common Shares are listed on the New York
Stock Exchange. Holders of Units (including CPHC, in its capacities as a
limited partner and the general partner) are entitled to share in cash
distributions from, and in the profits and losses of, the Company. The number
of Units held by CPHC generally corresponds to the number of Common Shares that
Colonial has outstanding (and thus the cash distribution per Unit by the Company
should be the same as the cash dividend per Common Share paid by Colonial).
The Second Amended and Restated Agreement of Limited Partnership of the
Company, as amended from time to time (the "Partnership Agreement") currently
authorizes the Company to issue from time to time two classes of OP Units:
(i) the Units, including the Units that were issued to limited partners in
connection with the formation of the Company, the IPO of Colonial, and the
related transactions, subsequent public offerings, and the related transactions,
and any other OP Units that are not designated as Acquisition Units; and
(ii) "Acquisition Units," which are OP Units that are issued to limited partners
admitted after September 29, 1993 in exchange for their contribution to the
Company of real property or other assets, unless CPHC elects to issue other OP
Units in such instances. With the exception of distributions (as described
under "Distributions; Allocations of Income and Loss--Units; Acquisition Units"
and restrictions on redemption (as described under "Redemption of OP Units"),
Acquisition Units have the same
32
<PAGE>
rights, preferences, powers and duties as Units. All references herein to OP
Units include Units and Acquisition Units.
The OP Units are not listed on any exchange or quoted on any national
market system. Holders of OP Units who are admitted to the Company will have
the rights of limited partners under the Partnership Agreement and the Delaware
Revised Uniform Limited Partnership Act (the "Act"). The Partnership Agreement
imposes certain restrictions on the transfer of OP Units, as described below.
The following description is only a summary of certain provisions of the
Partnership Agreement and is subject to, and qualified in its entirety by, the
Partnership Agreement.
Distributions; Allocations of Income and Loss
Distributions Generally. The Partnership Agreement provides for the
-----------------------
quarterly distribution of Available Cash, as determined in the manner provided
in the Partnership Agreement. If no Acquisition Units are issued and
outstanding during a quarter, Available Cash is distributed for such quarter to
the holders of Units on the record date for such quarter in proportion to their
respective percentage interests in the Company. "Available Cash" is generally
defined as net income plus depreciation and other adjustments and minus
reserves, principal payments on debt and capital expenditures and other
adjustments. Neither CPHC nor the limited partners are entitled to any
preferential or disproportionate distributions of Available Cash. Each OP Unit
generally will receive a distribution from the Company in substantially the same
amount as the dividend paid on each Common Share.
Units; Acquisition Units. If Acquisition Units are issued and outstanding
------------------------
for any portion of a quarter, Available Cash for such quarter is distributed
among holders of Units (which includes CPHC) and Acquisition Units on the
applicable record date in accordance with their percentage interests in the
Company and the weighted average number of days during the quarter that the
Units and Acquisition Units, respectively, were issued and outstanding. Units
are always treated for this purpose as having been outstanding for the entire
quarter regardless of when they were issued. Consequently, limited partners
holding Units (which includes CPHC) on the applicable record date will receive
distributions of Available Cash in accordance with their percentage interests in
the Company for the entire quarter. Limited partners holding Acquisition Units
on the applicable record date will receive distributions of Available Cash in
accordance with their percentage interests in the Company for the weighted
average number of days during that quarter for which such limited partners held
their Acquisition Units. Holders of Acquisition Units who are admitted to the
Company between the end of a quarter and the record date applicable to
distributions for such quarter will not receive any distributions for the
preceding quarter, but will receive distributions of Available Cash with respect
to the portion of the quarter in which their Acquisition Units were issued.
Each Acquisition Unit will be converted automatically into a Unit on the day
immediately following the record date for distributions for the quarter in which
the Acquisition Units were issued.
Allocations of Income and Loss. The Partnership Agreement provides that if
------------------------------
the Company operates at a net loss, net losses shall be allocated to CPHC and
the limited partners in proportion to their respective percentage interests in
the Company, provided that net losses which would have the effect of creating a
deficit balance in a limited partner's capital account (as specially adjusted
for such purpose) ("Excess Losses") will be reallocated to CPHC, as general
partner of the Company. The Partnership Agreement also provides that, if the
Company operates at a net profit, net income generally shall be allocated first
to CPHC to the extent of Excess Losses with respect to which CPHC has not
previously been allocated net income, and any remaining net income shall be
allocated in proportion to the respective percentage interests of CPHC and the
limited partners.
33
<PAGE>
Liability of General Partner and Limited Partners
CPHC, as general partner of the Company, will be liable for all general
recourse obligations of the Company to the extent not paid by the Company. CPHC
will not be liable for the nonrecourse obligations of the Company.
The limited partners of the Company will not be required to make additional
contributions to the Company. Assuming that a limited partner does not take
part in the control of the business of the Company and otherwise acts in
conformity with the provisions of the Partnership Agreement, the liability of
the limited partner for obligations of the Company under the Partnership
Agreement and the Act will be limited, subject to certain possible exceptions,
generally to the loss of the limited partner's investment in the Company
represented by his OP Units. Under the Act, a limited partner may not receive a
distribution from the Company if, at the time of the distribution and after
giving effect thereto, the liabilities of the Company (other than liabilities to
parties on account of their interests in the Company and liabilities for which
recourse is limited to specified property of the Company) exceed the fair value
of the Company's assets (other than the fair value of any property subject to
nonrecourse liabilities of the Company but only to the extent of such
liabilities). The Act provides that a limited partner who receives a
distribution knowing at the time that it violates the foregoing prohibition is
liable to the Company for the amount of the distribution. Unless otherwise
agreed, such a limited partner will not be liable for the return of such
distribution after the expiration of three years from the date of such
distribution.
The Company is qualified to conduct business in Alabama, Florida and
Georgia, and may qualify to conduct business in the future in certain other
jurisdictions. Maintenance of limited liability may require compliance with
certain legal requirements of those jurisdictions and certain other
jurisdictions. Limitations on the liability of a limited partner for the
obligations of a limited partnership have not been clearly established in many
jurisdictions. Accordingly, if it were determined that the right, or exercise
of the right by the limited partners, to make certain amendments to the
Partnership Agreement or to take other action pursuant to the Partnership
Agreement constituted "control" of the Company's business for the purposes of
the statutes of any relevant jurisdiction, the limited partners might be held
personally liable for the Company's obligations. The Company will operate in a
manner that the general partner deems reasonable, necessary and appropriate to
preserve the limited liability of the limited partners.
Sales of Assets
Under the Partnership Agreement, CPHC generally has the exclusive authority
to determine whether, when and on what terms the assets of the Company will be
sold. A sale of all or substantially all of the assets of the Company (or a
merger of the Company with another entity), however, requires an affirmative
vote of three-fourths of the outstanding OP Units (including OP Units held by
CPHC).
Removal of the General Partner; Transfer of the General Partner's Interest
The Partnership Agreement provides that the limited partners may not remove
CPHC as general partner of the Company. CPHC may not transfer any of its
interests as general or limited partner in the Company except in connection with
a merger or sale of all or substantially all its assets. CPHC also may not sell
all or substantially all of its assets, or enter into a merger unless the sale
or merger includes the sale of all or substantially all of the assets of, or the
merger of, the Company with partners of the Company receiving substantially the
same consideration as holders of Common Shares.
34
<PAGE>
Restrictions on Transfer of OP Units by Limited Partners
Subject to compliance with federal and state securities law, limited
partners who hold Units and limited partners who hold Acquisition Units will be
permitted to transfer all or any portion of their OP Units without restriction
so long as they satisfy certain requirements set forth in the Partnership
Agreement. All transfers of Units are subject to the requirement under the
Partnership Agreement that the holder obtain an opinion of legal counsel to the
Company that the transfer would not (a) result in the Company's being treated as
an association taxable as a corporation for federal income tax purposes, or (b)
require the filing of a registration statement under the Securities Act of 1933
or otherwise violate any federal or state securities laws or regulations. In
addition, no transfer may be effectuated through an "established securities
market" or a "secondary market (or the substantial equivalent thereof)" within
the meaning of the Code. Limited partners who hold Acquisition Units (or Units
into which Acquisition Units were converted) will be subject, in addition to the
limitations set forth above, to such restrictions on transfer as may be set
forth in the contribution agreement or Partnership Agreement amendment pursuant
to which their capital contributions are to be made to the Company.
The right of any permitted transferee of OP Units to become a substitute
limited partner is subject to the consent of the general partner, which the
general partner may withhold in its sole and absolute discretion. If the
general partner does not consent to the admission of a transferee of OP Units as
a substitute limited partner, the transferee will succeed to all economic rights
and benefits attributable to such OP Units (including the right of redemption),
but will not become a limited partner or possess any other rights of limited
partners (including the right to vote).
Redemption of Units
Subject to certain limitations, the Partnership Agreement permits limited
partners who hold Units (other than Units acquired upon conversion of
Acquisition Units) to require that the Company redeem their Units at any time by
notifying the Company. Limited partners who hold Acquisition Units (or Units
into which Acquisition Units were converted) will not be permitted to redeem
their OP Units for at least one year following their admission to the Company or
such longer or shorter term as may be set forth in the contribution agreement
pursuant to which their capital contributions are made to the Company. Unless
CPHC or Colonial elects to assume and perform the Company's redemption
obligation, as outlined below, the redeeming limited partner will receive cash
in an amount equal to the market value of the Units to be redeemed. The market
value of a Unit for this purpose will be equal to the average of the closing
trading price of a Common Share (or substitute information, if no such closing
price is available) for the ten trading days before the day on which the
redemption notice was given. In lieu of the Company's redeeming Units, CPHC or
Colonial may elect to acquire the Units, for cash or a number of Common Shares
equal to the number of Units to be redeemed, directly from a limited partner
seeking a redemption and upon such acquisition, become the owner of the Units.
Although Colonial has no legal obligation to do so, Colonial currently intends
to exercise its right to issue Common Shares in exchange for any Units tendered
for redemption. Upon redemption or the direct acquisition of Units by CPHC or
the Company, the limited partner's right to receive distributions for the Units
redeemed will cease. At least 1,000 Units (or all Units owned by the limited
partner if less than 1,000 Units) must be redeemed each time the redemption
right is exercised. The redemption generally will occur on the tenth business
day after delivery of notice to the Company, except that no redemption can occur
if delivery of Common Shares would be prohibited under the provisions of
Colonial's declaration of trust designed to protect its qualification as a real
estate investment trust or would be prohibited under applicable securities law.
In this regard, members of the Lowder Family and entities that they control may
be prohibited from exercising their right to require the redemption of Units
that they hold if the issuance of Common Shares to them by Colonial would be
prohibited under the special restrictions contained in Colonial's declaration of
trust that are applicable to their acquisition and ownership of shares. No
35
<PAGE>
limited partner, by virtue of being the holder of one or more Units, will be
deemed to be a shareholder of or have any other interests in Colonial. In the
event of any change in the outstanding shares by reason of any share dividend,
split, recapitalization, merger, consolidation, combination, exchange of shares
or other similar change, the conversion factor shall be proportionately adjusted
so that one Unit remains exchangeable for one Common Share without dilution.
No Withdrawal by Limited Partners
No limited partner has the right to withdraw from or reduce his or her
capital contribution to the Company, except as a result of the redemption or
transfer of his or her OP Units pursuant to the terms of the Partnership
Agreement.
Issuance of Additional OP Units
CPHC is authorized, without the consent of the limited partners, to cause
the Company to issue additional OP Units (including, without limitation, Units
or Acquisition Units) to itself, to the limited partners or to other persons for
such consideration and on such terms and conditions as CPHC deems appropriate.
If additional OP Units are issued to CPHC, then (i) Colonial must issue
additional Common Shares; (ii) Colonial must transfer to CPHC an amount equal to
the net proceeds raised in connection with the issuance of the Common Shares;
and (iii) CPHC, in turn, must transfer to the Company an amount equal to the
amount transferred to it by Colonial. CPHC also may cause the Company to issue
to itself, to the limited partners or to other persons additional partnership
interests in different series or classes, which may be senior to the OP Units,
for such consideration, on such terms and conditions, and with such designations
and preferences as CPHC deems appropriate (provided, however, that if such
partnership interests are issued to CPHC, they must be issued in conjunction
with an offering of securities of Colonial having substantially similar rights,
and the proceeds thereof must be transferred to the Company in the manner
described in (ii) and (iii) of the preceding sentence). Consideration for
additional partnership interests may be cash or any property or other assets
permitted by the Act. No limited partner has preemptive, preferential or
similar rights with respect to additional capital contributions to the Company
or the issuance or sale of any partnership interests therein.
Meetings; Voting
The Partnership Agreement does not provide for annual meetings of the
limited partners, and CPHC does not anticipate calling such meetings. Meetings
of the limited partners may be called only by CPHC, on its own motion or upon
written request of limited partners owning at least 20% of the OP Units.
Limited partners may vote either in person or by proxy at meetings. Any action
that is required or permitted to be taken by the limited partners of the Company
may be taken either at a meeting of the limited partners or without a meeting if
consents in writing setting forth the action so taken are signed by limited
partners owning not less than the minimum number of OP Units that would be
necessary to authorize or take such action at a meeting of the limited partners
at which all limited partners entitled to vote on such action were present.
Each limited partner (including CPHC to the extent it holds OP Units) will have
a vote equal to the number of OP Units he or she holds on matters on which
limited partners are entitled to vote. A transferee of OP Units who has not
been admitted as a substitute limited partner of record with respect to such OP
Units will have no voting rights with respect to such OP Units, even if such
transferee holds other OP Units as to which it has been admitted as a limited
partner.
Books and Reports
The Company's books and records are maintained at the principal office of
the Company which is located at 2101 Sixth Avenue North, Suite 750, Birmingham,
Alabama 35203.
36
<PAGE>
All elections and options available to the Company for Federal income tax
purposes may be taken or rejected by the Company in the sole discretion of CPHC,
as the general partner of the Company.
Power of Attorney
Pursuant to the Partnership Agreement, each limited partner and each
assignee appoints the general partner of the Company, any liquidator, and
authorized officers and attorneys-in-fact of each, and each of those acting
singly, in each case with full power of substitution, as its true and lawful
agent and attorney-in-fact, with full power and authority in its name, place and
stead to execute, swear to, acknowledge, deliver, file and record, among other
things, the Partnership Agreement (and amendments thereto as described below
under "--Amendment of the Partnership Agreement"), any certificates, documents
or instruments necessary or appropriate in connection with the existence of the
Company or the conduct of its business, or relating to the admission,
withdrawal, removal or substitution of any partner or to the determination of
the rights, preferences and privileges of partnership interests. The
Partnership Agreement provides that such power of attorney is irrevocable, will
survive the incapacity of any limited partner or the transfer of any such
limited partner's Units and will extend to such limited partner's or assignee's
heirs, successors, assigns and personal representatives.
Amendment of the Partnership Agreement
Amendments to the Partnership Agreement may be proposed by CPHC or by
limited partners owning at least 20% of the OP Units. Generally, the
Partnership Agreement may be amended with the approval of CPHC, as general
partner, and limited partners (including CPHC) holding a majority of the OP
Units. Certain amendments that would, among other things, convert a limited
partner's interest into a general partner's interest; modify the limited
liability of a limited partner; alter the interest of a partner in profits or
losses, or the rights to receive any distributions; alter or modify the
redemption right described above; or cause the termination of the Company at a
time or on terms inconsistent with those set forth in the Partnership Agreement
must be approved by CPHC and each limited partner that would be adversely
affected by such amendment. Notwithstanding the foregoing, CPHC, as general
partner, will have the power, without the consent of the limited partners, to
amend the Partnership Agreement as may be required to (1) add to the obligations
of CPHC as general partner or surrender any right or power granted to CPHC as
general partner; (2) reflect the admission, substitution, termination or
withdrawal of partners in accordance with the terms of the Partnership
Agreement; (3) establish the rights, powers, duties and preferences of any
additional partnership interests issued in accordance with the terms of the
Partnership Agreement; (4) reflect a change of an inconsequential nature that
does not materially adversely affect the limited partners, or cure any
ambiguity, correct or supplement any provisions of the Partnership Agreement not
inconsistent with law or with other provisions of the Partnership Agreement, or
make other changes concerning matters under the Partnership Agreement that are
not otherwise inconsistent with the Partnership Agreement or law; or (5) satisfy
any requirements of federal or state law. Certain provisions affecting the
rights and duties of CPHC as general partner (e.g., restrictions on CPHC's power
to conduct businesses other than owning Units) may not be amended without the
approval of a majority of the OP Units not held by CPHC.
Dissolution, Winding Up and Termination
The Company will continue until December 31, 2092, unless sooner dissolved
and terminated. The Company will be dissolved prior to the expiration of its
term, and its affairs wound up upon the occurrence of the earliest of: (1) the
withdrawal of CPHC as general partner without the permitted transfer of CPHC's
interest to a successor general partner (except in certain limited
circumstances); (2) the sale of all or substantially all of the Company's assets
37
<PAGE>
and properties; (3) the entry of a decree of judicial dissolution of the Company
pursuant to the provisions of the Act or the entry of a final order for relief
in a bankruptcy proceeding of the general partner; (4) the entry of a final
judgment ruling that the general partner is bankrupt or insolvent; (5) (i) from
and after September 29, 1993 through December 31, 2013, an election by CPHC,
unless any limited partner who became a limited partner on September 29, 1993
and who holds Units issued at such time objects to such dissolution in writing,
(ii) from and after January 1, 2014 through December 31, 2043, an election by
CPHC, unless limited partners who became limited partners on September 29, 1993
and who hold at least five percent (5%) of the Units issued at such time object
to such dissolution in writing and (iii) on or after January 1, 2044, an
election by CPHC, in its sole and absolute discretion. Upon dissolution, CPHC,
as general partner, or any liquidator will proceed to liquidate the assets of
the Company and apply the proceeds therefrom in the order of priority set forth
in the Partnership Agreement.
Item 12. Indemnification of Directors and Officers
In general, the Partnership Agreement provides for indemnification of each
Indemnitee (as hereinafter defined) from and against liability arising from any
and all claims, demands, actions, suits or proceedings that relate to the
operations of the Company in which such Indemnitee may be involved, or is
threatened to be involved, as a party or otherwise, unless it is established
that: (i) the act or omission of the Indemnitee was material to the matter
giving rise to the proceeding and either was committed in bad faith or was the
result of active and deliberate dishonesty; (ii) the Indemnitee actually
received an improper personal benefit in money, property or services; or
(iii) in the case of any criminal proceeding, the Indemnitee had reasonable
cause to believe that the act or omission was unlawful. Under certain
circumstances, reasonable expenses incurred by an Indemnitee who is a party to a
proceeding may be paid or reimbursed by the Company in advance of the final
disposition of the proceeding. In general, an "Indemnitee" is (i) any person
made a party to a proceeding by reason of his status as (A) the general partner
(i.e., CPHC), (B) the sole shareholder of the general partner (i.e., Colonial),
(C) a director, trustee or officer of an entity described in (A) or (B), or (D)
a guarantor, pursuant to a guarantee given to a third party in connection with
any partnership property or loan, and (ii) such other person as the general
partner of the Company may designate from time to time in its sole and absolute
discretion.
Colonial's declaration of trust provides for indemnification of officers,
trustees, employees and agents to the fullest extent permitted by Alabama Law.
In general, under Alabama Law, an Alabama real estate investment trust (an
"Alabama REIT") may indemnify its trustees, officers, employees and agents who
are made party to a proceeding because of such individual's status as a trustee,
officer, employee or agent from and against liability incurred in the proceeding
if: (a) the individual conducted himself or herself in good faith; (b) the
individual reasonably believed (i) in the case of conduct in his or her official
capacity with the Alabama REIT, that the conduct was in its best interests, and
(ii) in all other cases, that the conduct was at least not opposed to its best
interests; and (c) in the case of any criminal proceeding, the individual had no
reasonable cause to believe his or her conduct was unlawful. Such
indemnification is not available, however, in connection with (1) a proceeding
by or in the right of the Alabama REIT in which the individual is adjudged
liable to the Alabama REIT, or (2) any other proceeding charging improper
personal benefit to the individual, whether or not involving action in his or
her official capacity, in which the individual was adjudged liable on the basis
that personal benefit was improperly received by him or her. Under Alabama Law,
an Alabama REIT is required to indemnify a trustee, officer, employee or agent
who is successful, on the merits or otherwise, in the defense of any proceeding,
or of any claim, issue or matter in such proceeding, where he or she was a party
because he or she is or was a trustee, officer, employee or agent of the Alabama
REIT, against recoverable expenses incurred in connection therewith,
notwithstanding that he or she was not successful on any other claim, issue or
matter in any such proceeding. In addition, under certain circumstances, an
Alabama REIT may pay for or reimburse the reasonable expenses incurred by a
trustee, officer, employee or agent who is a party to a proceeding in advance of
final disposition of the proceeding.
38
<PAGE>
Item 13. Financial Statements and Supplementary Data
See "Index to Consolidated and Combined Financial Statements" on page F-1
of this Form 10 and "Index to Financial Statement Schedules" on page S-1 of this
Form 10.
Item 14. Change in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
Item 15. Financial Statements and Exhibits
(a) Financial Statements and Financial Statement Schedules
------------------------------------------------------
See "Index to Consolidated and Combined Financial Statements" on page
F-1 of this Form 10 and "Index to Financial Statement Schedules" on page S-
1 of this Form 10.
(b) Exhibits
--------
4.1 + Second Amended and Restated Agreement of Limited Partnership
of the Company dated as of October 27, 1994, as amended
10.1* First Amended and Restated Employee Share Option and
Restricted Share Plan
10.2** Non-employee Trustee Share Option Plan
10.3** Non-employee Trustee Option Agreement
10.4** Employment Agreement between Colonial and Thomas H. Lowder
10.5** Officers and Trustees Indemnification Agreement
10.6** Land Option Agreement
10.7*** Credit agreement between Colonial and SouthTrust Bank of
Alabama, National Association AmSouth Bank of Alabama, Wells
Fargo Realty Advisors Funding, Incorporated and National Bank
of Commerce of Birmingham dated December 18, 1995 and related
promissory notes
10.8** Annual Incentive Plan
21.1+ List of Subsidiaries
27.1 Financial Data Schedule
99.1* Articles of Incorporation of CPHC, as amended.
99.2** Bylaws of CPHC
99.3**** Declaration of Trust of Colonial
99.4**** Bylaws of Colonial
99.5 "The Company," pages S-7 through S-9, in Colonial's
Prospectus Supplement (to Prospectus dated December 21, 1995)
dated January 17, 1996, filed pursuant to Rule 424(b) of
Regulation C under the Securities Act, relating to Colonial's
Registration Statement on Form S-3, File No. 33-89612
99.6 "Voting Securities and Principal Holders Thereof," pages 15
through 17, in Colonial's Proxy Statement dated March 29,
1996, delivered to
39
<PAGE>
Colonial's shareholders in connection with
the 1996 Annual Meeting of Shareholders
99.7 "Election of Trustees (Proposal 1)," pages 2 through 4, in
Colonial's Proxy Statement dated March 29, 1996, delivered to
Colonial's shareholders in connection with the 1996 Annual
Meeting of Shareholders
99.8 "Executive Officers of the Company," pages 22 through 23,
from Colonial's Form 10-K for the fiscal year ended
December 31, 1995, filed pursuant to Section 13 of the
Exchange Act
99.9 "Executive Compensation," pages 6 through 9, in Colonial's
Proxy Statement dated March 29, 1996, delivered to Colonial's
shareholders in connection with the 1996 Annual Meeting of
Shareholders
99.10 "Executive Compensation Committee Interlocks and Insider
Participation," pages 11 and 12, and "Certain Relationships
and Related Transactions," page 14, in Colonial's Proxy
Statement dated March 28, 1994, delivered to Colonial's
shareholders in connection with the 1994 Annual Meeting of
Shareholders
99.11 "Executive Compensation Committee Interlocks and Insider
Participation," page 13, and "Certain Relationships and
Related Transactions," page 15, in Colonial's Proxy Statement
dated April 3, 1995, delivered to Colonial's shareholders in
connection with the 1995 Annual Meeting of Shareholders
99.12 "Executive Compensation Committee Interlocks and Insider
Participation," pages 13 and 14, from Colonial's Proxy
Statement dated March 29, 1996, delivered to Colonial's
shareholders in connection with the 1996 Annual Meeting of
Shareholders
- -------------------
* Incorporated by reference to the same titled exhibit in Colonial's
Amendment No. 1 to Form 10-K on Form 10-K/A for the fiscal year ended
December 31, 1994, dated March 20, 1995.
** Incorporated by reference to the same titled exhibit in Colonial's
Registration Statement on Form S-11, No. 33-65954.
*** Incorporated by reference to the same titled exhibit in Colonial's
Annual Report on Form 10-K dated December 31, 1995.
**** Incorporated by reference to the annexes to Colonial's Proxy Statement
dated September 1, 1995.
+ Previously filed.
40
<PAGE>
INDEX TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
Description Number
- ----------- ------
<S> <C>
Consolidated Condensed Balance Sheets at March 31, 1996 (unaudited).............. F-2
Consolidated Condensed Statements of Operations for the three months
ended March 31, 1996 and 1995(unaudited)................................... F-3
Consolidated Condensed Statements of Cash Flows for the three months
ended March 31, 1996 and 1995(unaudited).................................... F-4
Notes to Consolidated Condensed Financial Statements(unaudited).................. F-6
Report of Independent Accountants................................................ F-7
Consolidated Balance Sheets at December 31, 1995 and 1994........................ F-8
Consolidated and Combined Statements of Operations for the years ended
December 31, 1995, 1994 and 1993................................................ F-9
Consolidated and Combined Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993................................................ F-10
Consolidated and Combined Statements of Partners' Capital for the years
ended December 31, 1995, 1994 and 1993...................................... F-12
Notes to Consolidated and Combined Financial Statements.......................... F-13
</TABLE>
F-1
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED CONDENSED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
March 31, 1996
- ---------------------------------------------------------------
<S> <C>
ASSETS
Land, buildings, & equipment, net $ 622,767,154
Undeveloped land and construction in progress 55,063,722
Cash and Equivalents 8,251,889
Restricted cash 2,092,089
Accounts receivable, net 1,565,496
Prepaid expenses 3,485,391
Notes receivable 568,813
Deferred debt and lease costs 3,670,303
Investment in partnerships 5,292,886
Other assets 5,004,730
- ---------------------------------------------------------------
$ 707,762,473
===============================================================
LIABILITIES AND PARTNERS' CAPITAL
Notes and mortgages payable $ 274,609,531
Accounts payable 13,269,486
Accrued interest 695,032
Accrued expenses 3,222,794
Tenant deposits 2,427,771
Unearned rent 417,864
- ---------------------------------------------------------------
Total liabilities 294,642,478
- ---------------------------------------------------------------
Partners' capital 413,119,995
- ---------------------------------------------------------------
$ 707,762,473
===============================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended March 31, 1996 and 1995
- --------------------------------------------------------------------------------
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Revenue:
Rent $ 28,577,480 $ 24,661,718
Other 1,029,474 846,323
- --------------------------------------------------------------------------------
Total revenue 29,606,954 25,508,041
- --------------------------------------------------------------------------------
Property operating expenses
General operating expenses 2,350,757 1,880,086
Salaries and benefits 1,853,035 1,700,243
Repairs and maintenance 2,826,857 2,291,889
Taxes and licenses 2,671,432 2,283,429
General and administrative 838,129 1,206,171
Depreciation and amortization 5,295,014 4,838,736
- --------------------------------------------------------------------------------
Total operating expenses 15,835,224 14,200,554
- --------------------------------------------------------------------------------
Income from operations 13,771,730 11,307,487
- --------------------------------------------------------------------------------
Other income (expense):
Interest expense (5,090,473) (6,306,237)
Income from partnerships 133,157 127,008
- --------------------------------------------------------------------------------
Total other expense (4,957,316) (6,179,229)
- --------------------------------------------------------------------------------
Income before gains from sales of property
and extraordinary items 8,814,414 5,128,258
Gains from sales of property -0- 175,578
- --------------------------------------------------------------------------------
Income before extraordinary items 8,814,414 5,303,836
Extraordinary loss from early extinguishment of debt (318,630) -0-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Net income $ 8,495,784 $ 5,303,836
================================================================================
- --------------------------------------------------------------------------------
Net income per unit $0.34 $0.30
================================================================================
- --------------------------------------------------------------------------------
Weighted average units outstanding 24,669,472 17,653,653
================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended March 31, 1996 and 1995
- --------------------------------------------------------------------------------
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 8,495,784 $ 5,303,836
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,295,014 4,838,736
Provision for doubtful accounts 36,333 59,303
Gains from sales of property -0- (175,578)
Income from partnerships (133,157) (127,008)
Other 11,355 4,467
Decrease (increase) in:
Restricted cash (12,293) (847,107)
Accounts receivable 678,679 773,047
Prepaid expenses 259,556 (285,469)
Other assets (497,082) (516,586)
Increase (decrease) in:
Accounts payable 1,845,656 (352,619)
Accrued interest (262,486) 282,664
Accrued expenses 2,247,244 1,687,357
Tenant deposits 26,167 64,617
Unearned rent (425,778) 84,374
- --------------------------------------------------------------------------------
Net cash provided by operating activities 17,564,992 10,794,034
- --------------------------------------------------------------------------------
</TABLE>
(continued on next page)
F-4
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS (continued)
(unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended March 31, 1996 and 1995
- --------------------------------------------------------------------------------
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from investing activities:
Acquisition of properties -0- (563,038)
Development expenditures (24,710,252) (2,220,512)
Tenant improvements (95,043) (335,643)
Capital expenditures (618,800) (142,587)
Proceeds from sales of property -0- 328,861
Distributions from partnerships 206,910 206,370
Capital contributions to partnerships (3,000) (76,100)
- --------------------------------------------------------------------------------
Net cash used in investing activities (25,220,185) (2,802,649)
- --------------------------------------------------------------------------------
Cash flows from financing activities:
Principal reductions of debt (8,981,605) (893,411)
Proceeds from additional borrowings -0- 61,520,000
Net change in revolving credit balances (70,691,970) (61,905,652)
Capital contributions 106,919,019 -0-
Capital distributions (12,889,464) (6,785,556)
Payment of mortgage financing cost (33,748) (629,702)
- --------------------------------------------------------------------------------
Net cash provided by (used in) financing
activities 14,322,232 (8,694,321)
- --------------------------------------------------------------------------------
Increase (decrease) in cash and equivalents 6,667,039 (702,936)
Cash and equivalents, beginning of period 1,584,850 2,797,767
- --------------------------------------------------------------------------------
Cash and equivalents, end of period $ 8,251,889 $ 2,094,831
================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 1996
(Unaudited)
---------------------
Note 1 -- Basis of Presentation
The accompanying unaudited consolidated condensed financial statements
have been prepared by management in accordance with generally accepted
accounting principles for interim financial reporting and in conjunction with
the rules and regulations of the Securities and Exchange Commission. These
financial statements should be read in conjunction with the information for the
year ended December 31, 1995 included in the Form 10 filed with the Securities
and Exchange Commission on May 13, 1996. In the opinion of management, all
adjustments considered necessary for a fair presentation have been included.
Colonial Realty Limited Partnership (CRLP) is the operating partnership of
Colonial Properties Trust, an Alabama real estate investment trust whose shares
are listed on the New York Stock Exchange.
Note 2 -- Acquisitions
On March 28, 1996, CRLP acquired two land parcels totaling 36 acres in
Orlando, Florida. The purchase price for this land was $4 million. The property
will be used to build 496 apartment units. The land acquisition was financed
through proceeds from the Company's public offering of common shares in January
1996 and advances on the CRLP's line of credit. Development expenditures related
to this project are expected to be financed through advances on CRLP's line of
credit as well.
On April 1, 1996, CRLP acquired a multifamily community located in
Macon, Georgia. The purchase price of $14.4 million was funded through advances
on CRLP's line of credit.
On April 15, 1996, CRLP acquired a multifamily community located in
Birmingham, Alabama. The purchase price of $13.7 million was financed through
the assumption of a mortgage with an outstanding balance of $7.5 million, which
bears interest at 6.875% and through advances on CRLP's line of credit.
On April 30, 1996, CRLP acquired two multifamily communities located in
Mobile, Alabama. The combined purchase price of $10.9 million was paid through
the issuance of 182,804 limited partnership units at $24.00 per share, the
assumption of $6.4 million of indebtedness at an interest rate of 7.125%, and
through advances on CRLP's line of credit.
On May 10, 1996, CRLP acquired two multifamily communities located in
Birmingham, Alabama. The combined purchase price of $30.3 million was paid
through the assumption of $16.2 million of indebtedness at an interest rate of
8.0% and through advances on CRLP's line of credit.
Note 3 -- Distribution
On April 25, 1996, a cash distribution was declared to partners of CRLP
in the amount of $.50 and per unit, totaling $12,894,000. The distribution was
made to partners of record as of May 6, 1996 and was paid on May 13, 1996.
F-6
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Colonial Properties Holding Company, Inc.:
We have audited the accompanying consolidated balance sheets of Colonial Realty
Limited Partnership as of December 31, 1995 and 1994 and the consolidated and
combined statements of operations, Partners' capital and cash flows for each of
the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Colonial Realty
Limited Partnership as of December 31, 1995 and 1994 and the consolidated and
combined results of its operations and its cash flows for each of the three
years in the period ended December 31, 1995 in conformity with generally
accepted accounting principles.
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
January 25, 1996
F-7
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, 1995 and 1994
- -----------------------------------------------------------------------------------------------------
1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Land, buildings, & equipment, net $ 624,514,188 $ 555,577,428
Undeveloped land and construction in progress 32,640,381 23,326,535
Cash and equivalents 1,584,850 2,797,767
Restricted cash 2,079,796 1,146,703
Accounts receivable, net 2,280,508 1,702,864
Accounts receivable from affiliates -0- 86,173
Prepaid expenses 3,561,611 3,305,587
Notes receivable 580,169 622,350
Deferred debt and lease costs 3,841,814 4,598,633
Investment in partnerships 5,363,639 5,590,916
Other assets 4,849,614 4,379,961
- -----------------------------------------------------------------------------------------------------
$ 681,296,570 $ 603,134,917
=====================================================================================================
LIABILITIES AND PARTNERS' CAPITAL
Notes and mortgages payable $ 354,099,770 $ 344,234,014
Accounts payable 6,343,353 5,600,686
Accounts payable to affiliates 5,080,477 -0-
Accrued interest 957,518 450,084
Accrued expenses 975,550 5,077,786
Tenant deposits 2,401,604 2,126,442
Unearned rent 843,642 425,923
- -----------------------------------------------------------------------------------------------------
Total liabilities 370,701,914 357,914,935
- -----------------------------------------------------------------------------------------------------
Partners' capital 310,594,656 245,219,982
- -----------------------------------------------------------------------------------------------------
$ 681,296,570 $ 603,134,917
=====================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-8
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED AND COMBINED
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Years Ended December 31, 1995, 1994, 1993
- -------------------------------------------------------------------------------------------------
1995 1994 1993
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUE:
Rent $ 106,335,068 $ 61,478,244 $ 37,532,875
Rent - affiliates 836,426 775,492 782,199
Leasing and management fees -0- -0- 1,600,118
Leasing and management fees - affiliates -0- -0- 1,149,680
Other 4,265,180 1,704,499 1,564,358
- -------------------------------------------------------------------------------------------------
Total revenue 111,436,674 63,958,235 42,629,230
- -------------------------------------------------------------------------------------------------
Property operating expenses
General operating expenses 8,355,107 4,704,992 3,155,863
Salaries and benefits 7,362,486 4,203,958 2,639,286
Repairs and maintenance 10,890,018 5,770,758 3,554,709
Taxes and licenses 9,926,589 5,849,776 3,245,719
General and administrative 5,747,452 3,399,214 4,046,449
General and administrative--affiliates -0- 82,303 135,218
Depreciation and amortization 20,614,736 13,060,520 7,874,460
- -------------------------------------------------------------------------------------------------
Total operating expenses 62,896,388 37,071,521 24,651,704
- -------------------------------------------------------------------------------------------------
Income from operations 48,540,286 26,886,714 17,977,526
- -------------------------------------------------------------------------------------------------
Other income (expense):
Interest expense (23,972,107) (10,819,643) (12,771,645)
Income from partnerships 498,664 460,897 (96,914)
Mortgage transfer expense -0- -0- (1,556,014)
Other, net -0- -0- (43,933)
- -------------------------------------------------------------------------------------------------
Total other expense (23,473,443) (10,358,746) (14,468,506)
- -------------------------------------------------------------------------------------------------
Income before gains from sales of property
and extraordinary items 25,066,843 16,527,968 3,509,020
Gains from sales of property 174,954 121,600 -0-
- -------------------------------------------------------------------------------------------------
INCOME BEFORE EXTRAORDINARY ITEMS 25,241,797 16,649,568 3,509,020
Extraordinary loss from early extinguishment of debt -0- -0- (7,283,777)
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
Net income (loss) $ 25,241,797 $ 16,649,568 $ (3,774,757)
=================================================================================================
- -------------------------------------------------------------------------------------------------
Net income per unit $1.28 $1.17 --
=================================================================================================
- -------------------------------------------------------------------------------------------------
Weighted average units outstanding 19,694,071 14,270,527 --
=================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-9
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED AND COMBINED
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Years Ended December 31, 1995, 1994, 1993
- ---------------------------------------------------------------------------------------------------------------------------
1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 25,241,797 $ 16,649,568 ($3,774,757)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 20,614,736 13,060,520 7,874,460
Provision for doubtful accounts 179,670 100,369 58,865
Gains from sales of property (174,954) (121,600) -0-
Extraordinary loss from early extinguishment of debt -0- -0- 7,283,777
Mortgage transfer expense -0- -0- 1,556,014
Income from partnerships (498,664) (460,897) (679,451)
Other (43,553) 55,258 (46,327)
Decrease (increase) in:
Restricted cash (933,092) (629,340) (99,580)
Accounts receivable 218,455 (1,005,957) 1,311,227
Due from affiliates -0- 23,961,595 -0-
Prepaid expenses (172,691) 903,025 (2,823,488)
Other assets (1,855,155) (1,302,050) (1,375,603)
Increase (decrease) in:
Accounts payable 2,928,457 92,829 (1,162,904)
Due to affiliates 1,654,555 -0- (24,102,426)
Accrued interest 138,518 208,473 (1,470,430)
Accrued expenses (701,954) 111,367 14,780
Tenant deposits 157,464 33,505 268,245
Unearned rent 413,726 143,020 29,325
Income taxes payable -0- -0- (93,000)
- ----------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 47,167,315 51,799,685 (17,231,273)
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(continued on next page)
F-10
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED AND COMBINED
STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
For the Years Ended December 31, 1995, 1994, 1993
- -----------------------------------------------------------------------------------------------------------------------------
1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of properties (67,580,603) (106,035,067) (17,655,078)
Development expenditures (3,741,192) (3,364,634) -0-
Development expenditures paid to an affiliate (21,646,534) (8,933,717) (146,130)
Tenant improvements (1,061,087) (1,531,885) (387,043)
Capital expenditures (2,803,685) (658,202) (472,970)
Proceeds from sales of property 328,237 513,963 -0-
Distributions from partnerships 998,244 1,037,234 174,186
Capital contributions to partnerships (230,121) (202,269) (4,551,901)
Decrease in notes receivable from affiliates -0- -0- 626,262
- ---------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (95,736,741) (119,174,577) (22,412,674)
- ---------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal reductions of debt (19,231,834) (1,102,053) (155,795,769)
Proceeds from additional borrowings 62,220,000 -0- 12,400,513
Net change in revolving credit balances (33,205,744) 93,897,744 5,686,862
Payments on notes payable to affiliates -0- -0- (2,186,000)
Capital contributions 73,742,388 -0- 194,696,555
Capital distributions (35,222,284) (24,684,603) (4,394,503)
Payment of mortgage financing cost (946,017) (1,206,340) (444,299)
Payment of mortgage transfer costs -0- -0- (1,556,014)
Payment of debt prepayment penalties -0- -0- (6,453,836)
Other -0- -0- 702,782
- ---------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 47,356,509 66,904,748 42,656,291
- ---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and equivalents (1,212,917) (470,144) 3,012,344
Cash and equivalents, beginning of period 2,797,767 3,267,911 255,567
- ---------------------------------------------------------------------------------------------------------------------------
Cash and equivalents, end of period $ 1,584,850 $ 2,797,767 $ 3,267,911
===========================================================================================================================
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 23,609,172 $10,621,230 $16,304,438
===========================================================================================================================
Income taxes $ -0- $ -0- $ 93,000
===========================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-11
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED AND COMBINED STATEMENTS
OF PARTNERS' CAPITAL
<TABLE>
<CAPTION>
For the Years Ended December 31, 1995, 1994, 1993
- --------------------------------------------------------------------------------
<S> <C>
Balance, December 31, 1992 $ (13,229,930)
Contributions 194,696,555
Distributions (4,394,503)
Net loss (3,774,757)
Other 1,334,166
- --------------------------------------------------------------------------------
Balance, December 31, 1993 174,631,531
Distributions (24,684,603)
Net income 16,649,568
Issuance of limited partnership units 75,538,014
Other 3,085,472
- --------------------------------------------------------------------------------
Balance, December 31, 1994 245,219,982
Contributions 73,742,388
Distributions (35,222,284)
Net income 25,241,797
Issuance of limited partnership units 1,629,872
Other (17,099)
- --------------------------------------------------------------------------------
Balance, December 31, 1995 $ 310,594,656
================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-12
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
____________________
1. Formation, Organization, and Basis of Presentation
Formation and Organization--Colonial Realty Limited Partnership
("CRLP"), a Delaware limited partnership, was formed on August 6, 1993 to
succeed as owner of substantially all of the predecessor interests of Colonial
Properties, Inc., Equity Partners Joint Venture, and Colonial Properties
Management Association, and certain real estate interests of Thomas H. Lowder,
Robert E. Lowder, James K. Lowder, Catherine K. Lowder, and the Bellwood Trust
(collectively referred to as the Colonial Group for purposes of these financial
statements). CRLP is the operating partnership of Colonial Properties Trust, an
Alabama real estate investment trust ("Colonial") whose shares are listed on the
New York Stock Exchange ("NYSE"). Colonial is engaged in the ownership,
development, management, and leasing of multifamily housing communities, retail
malls and centers, and office buildings. Certain parcels of land are also
included.
Colonial manages CRLP through Colonial's wholly owned subsidiary,
Colonial Properties Holdings Company, Inc. ("CPHC"), which in turn owns
approximately 68% of the general and limited partnership interests in CRLP and
serves as the sole general partner of CRLP. The limited partners who hold
partnership units can require that CRLP redeem their partnership units. Unless
Colonial elects the right to issue common shares in exchange for these
partnership units, the redeeming limited partner will receive cash in an amount
equal to the market value of the partnership units to be redeemed. Colonial
currently intends to exercise its right to issue the common shares for these
redeemed partnership units.
On September 29, 1993 Colonial completed an initial public offering of
8,480,000 shares of its common shares of beneficial interest at $23.00 per
share. Prior to or simultaneously with the closing of the public offering,
Colonial succeeded to substantially all of the interests of the Colonial Group
and to the development, acquisition, management, leasing, and brokerage
businesses of Colonial Properties, Inc., and acquired additional interests in
certain other properties from third-parties. On October 29, 1993 Colonial
issued an additional 686,200 shares of beneficial interest pursuant to an over-
allotment option agreed to with the underwriters of the initial public
offering.
Federal Income Tax Status--No provison for income taxes is provided
since all taxable income or loss or tax credits are passed through to the
partners.
Colonial, which is considered a corporation for federal income tax
purposes, qualifies as a real estate investment trust for federal income tax
purposes and generally will not be subject to federal income tax to the extent
it distributes its REIT taxable income to its shareholders. REITs are subject
to a number of organizational and operational requirements. If Colonial fails
to qualify as a REIT in any taxable year, Colonial will be subject to federal
income tax on its taxable income at regular corporate rates.
Principles Of Consolidation and Combination--Subsequent to the formation
of Colonial, the consolidated financial statements include the CRLP and Colonial
Properties Services Limited Partnership (in which CRLP holds 99% general and
limited partner interests).
The accompanying combined financial statements for periods prior to the
formation of Colonial are presented on a combined basis because of common
ownership and management of the entities included. All significant intercompany
accounts and transactions have been eliminated in combination. The combined
owners' deficit prior to the formation of Colonial represents the collective
partners' capital account balances of the partnerships included in the combined
financial statements and the retained earnings and contributed capital of
Colonial Properties, Inc. These combined financial statements consist of the
accounts of the properties listed below which were under the common majority
ownership and control of the Colonial Group:
Retail Properties:
Village Mall Auburn, AL
Old Springville Shopping Center Birmingham, AL
Meadowbrook Mini Storage Birmingham, AL
Gadsden Mall Gadsden, AL
McGehee Place Shopping Center Montgomery, AL
Olde Town Shopping Center Montgomery, AL
Bellwood Shopping Center Montgomery, AL
Macon Mall Macon, GA
F-13
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)
Multifamily Properties:
Heatherbrooke (Phases II and III) Birmingham, AL
Pelican Point Apartments Bradenton, FL
Sunchase Apartments Bradenton, FL
Vieux Carre Apartments Montgomery, AL
McGehee Place Apartments Montgomery, AL
St. Croix I Orlando, FL
Somerset Wharf II Savannah, GA
Riverchase II Tampa, FL
Willowtree Apartments Pensacola, FL
Office Properties:
AmSouth Center Huntsville, AL
Whitesburg Building Huntsville, AL
250 Commerce Street Montgomery, AL
Interstate Park Montgomery, AL
Building 500
Building 2000
University Park Orlando, FL
Building 110
Building 120
Building 130
P&S Building Gadsden, AL
Other Properties:
Heatherbrooke Phase IV Land Birmingham, AL
Macon Mall Expansion Macon, GA
McGehee Place II Apartments Montgomery, AL
McGehee Place Shopping Center II Montgomery, AL
McGehee Place Outparcel #3 Montgomery, AL
McGehee Place Outparcel E Montgomery, AL
Old Springville Outparcel Birmingham, AL
St. Croix II Orlando, FL
Village Mall--Lot 2 Auburn, AL
Village Mall--Lot 3 Auburn, AL
Village Mall Outparcel Auburn, AL
Investments In Partnerships--Partnerships in which CRLP owns a fifty
percent or less interest and does not control are reflected in the consolidated
financial statements as investments accounted for under the equity method. Under
this method the investment is carried at cost plus or minus equity in
undistributed earnings or losses since the date of acquisition.
F-14
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)
2. Summary of Significant Accounting Policies
Land, Buildings, and Equipment--Land, buildings, and equipment is stated
at the lower of cost, less accumulated depreciation, or net realizable value.
Where an impairment of a property's value is determined to be other than
temporary, an allowance for the estimated potential loss is established to
record the property at its net realizable value. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets.
Maintenance and repairs are charged to expense as incurred. Replacements and
improvements are capitalized and depreciated over the estimated remaining useful
lives of the assets. When items of land, buildings, or equipment are sold or
retired, the related cost and accumulated depreciation are removed from the
accounts and any gain or loss is included in the results of operations.
Undeveloped Land and Construction in Progress--Undeveloped land and
construction in progress is stated at the lower of cost or net realizable value.
CRLP capitalizes all costs associated with land development including
construction period interest and property taxes.
Capitalization of Interest--CRLP capitalizes interest during periods in
which property is undergoing development activities necessary to prepare the
asset for its intended use.
Cash and Equivalents--CRLP includes highly liquid marketable securities
and debt instruments purchased with a maturity of three months or less in cash
equivalents.
Restricted Cash--Cash which is legally restricted as to use consists
primarily of tenant deposits.
Deferred Debt and Lease Costs--Amortization of mortgage costs is
recorded using the straight-line method, which approximates the effective
interest method, over the terms of the related mortgages. Leasing commissions
and fees are amortized using the straight-line method over the terms of the
related leases.
Derivatives--CRLP has only limited involvement with derivative financial
instruments and does not use them for trading purposes. Interest rate cap
agreements are used to reduce the potential impact of increases in interest
rates on variable-rate debt. Premiums paid for purchased interest rate cap
agreements are amortized to expense over the terms of the caps. Unamortized
premiums are included in other assets in the balance sheets. Amounts receivable
under cap agreements are accrued as a reduction of interest expense.
Revenue Recognition--Rental income attributable to leases is recognized
on a straight-line basis over the terms of the leases.
Use of Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at December 31, 1995 and 1994 and the reported amounts of revenues
and expenses for the years ended December 31, 1995, 1994, and 1993. Actual
results could differ from those estimates.
Recently Issued Accounting Standards--Statement of Financial Accounting
Standards No. 121 (SFAS 121), Accounting for the Impairment of Long-Lived
Assets, establishes guidance beginning in 1996 for recognizing and measuring
impairment losses and would require that the carrying amount of impaired assets
be reduced to fair value. Management does not believe that the adoption of SFAS
121 will have a material effect on the financial statements of CRLP.
F-15
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)
3. Property Acquisitions
During 1995 CRLP acquired six properties at an aggregate cost of
approximately $68,365,000. CRLP used cash proceeds from Colonial's secondary
offering, advances on its bank lines of credit, and cash from operations to fund
these acquisitions.
During 1994 CRLP acquired 20 properties at an aggregate cost of
approximately $331,016,000. CRLP used cash proceeds from the IPO, advances on
its bank lines of credit, cash from operations, and proceeds from the issuance
of limited partnership units to finance these acquisitions. A portion of the
purchase price of Rime Village-Huntsville was subject to adjustment during 1995,
based upon the operating results of the second phase of the property which was
in lease-up when it was acquired. The additional purchase price due to the
seller related to this property was paid through the issuance of 70,864
additional limited partnership units. The properties acquired during 1995 and
1994 are listed below:
Effective
Acquisition
Location Date
-------------------- --------------------
Multifamily Properties:
Carrollwood Tampa, FL January 1, 1994
Grande View Towers Huntsville, AL January 1, 1994
Plantation Gardens Sarasota, FL March 31, 1994
Patio I Auburn, AL March 31, 1994
Arbors at Kirkman Orlando, FL August 10, 1994
Polos at Gainesville Gainesville, FL August 10, 1994
Polos at Ponte Vedra Jacksonville, FL August 10, 1994
Polos West Orlando, FL August 10, 1994
Huntleigh Woods Mobile, AL December 31, 1994
Monte D'Oro Birmingham, AL December 31, 1994
Rime Village-Hoover Birmingham, AL December 31, 1994
Rime Village-Huntsville Huntsville, AL December 31, 1994
Riverchase Manor Birmingham, AL December 31, 1994
Ski Lodge I Birmingham, AL December 31, 1994
Ski Lodge II Birmingham, AL December 31, 1994
Ski Lodge III Birmingham, AL December 31, 1994
Ski Lodge Tuscaloosa Tuscaloosa, AL December 31, 1994
Stockbridge Manor Stockbridge, GA December 31, 1994
Retail Properties:
Burnt Store Square Punta Gorda, FL July 13, 1994
Britt David Shopping Center Columbus, GA October 25, 1994
Bear Lake Village Orlando, FL July 1, 1995
Country Lake Village Orlando, FL July 1, 1995
Winter Haven Village Orlando, FL July 1, 1995
River Oaks Center Decatur, AL July 14,1995
Northdale Court Tampa, FL October 1, 1995
Paddock Park Ocala, FL November 16, 1995
Results of operation of these properties, subsequent to their respective
acquisition dates, are included in the 1995 and 1994 financial statements.
On September 29, 1993, CRLP purchased for cash the outside ownership
interests in Montgomery Promenade Joint Venture, Colony Park Apartments, Ltd.,
Inverness Apartments, Ltd., Patio Apartments II, Ltd., Patio Apartments III,
Ltd., Chestnut Ridge Apartments, Ltd., North Ingle Villas, Ltd., Willow Bend
Apartments, Ltd., Heatherbrooke Investors, Ltd., and Interstate Office Park
Joint Venture. CRLP also acquired the outside ownership interests in University
Park and Village Park through the issuance of limited partnership units. Results
of operations of these entities are included in the financial statements on an
equity basis prior to the purchase of the
F-16
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)
outside interests according to the previous ownership percentages above. Results
of operations subsequent to September 29, 1993 are included in CRLP's
consolidated results of operations.
The acquisitions during 1995, 1994, and 1993 comprised the following.
The cash paid to acquire these properties is included in the statements of cash
flows.
<TABLE>
<CAPTION> 1995 1994 1993
------------------ ------------------ -----------------
<S> <C> <C> <C>
Assets purchased:
Land, buildings, and equipment $ 68,322,274 $ 328,593,287 $ 102,759,665
Deferred debt and lease costs -0- -0- 2,186,812
Other assets 42,691 2,422,530 1,495,845
------------------ ------------------ -----------------
68,364,965 331,015,817 106,442,322
Notes and mortgages assumed -0- (141,005,861) (83,051,988)
Other liabilities assumed or recorded (784,362) (8,436,875) (903,061)
Previous investments in partnerships -0- -0- (1,930,890)
Issuance of limited partnership units -0- (75,538,014) (2,901,305)
------------------ ------------------ -----------------
Cash paid $ 67,580,603 $ 106,035,067 $ 17,655,078
================== ================== =================
</TABLE>
CRLP's unaudited pro forma results of operations, assuming these
acquisitions had been effected by CRLP prior to January 1, 1993 and assuming
Colonial's IPO and formation transactions had been effected prior to January 1,
1993, are as follows:
<TABLE>
<CAPTION>
For the Year For the Year For the Year
Ended December Ended December Ended December
December 31, 1995 December 31, 1994 December 31, 1993
------------------ ------------------ -----------------
<S> <C> <C> <C>
Revenues $ 117,796,000 $ 107,275,000 $ 103,486,000
================== ================== =================
Net income $ 27,913,000 $ 27,143,000 $ 23,714,000
================== ================== =================
Net income per unit $ 1.32 $ 1.28 $ 1.12
================== ================== =================
</TABLE>
4. Land, Buildings, and Equipment
Land, buildings, and equipment consists of the following at December 31,
1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
------------------ -----------------
<S> <C> <C>
Buildings $ 568,861,504 $ 532,524,658
Furniture and fixtures 18,284,701 14,494,505
Equipment 1,406,215 756,908
Land improvements 14,218,447 10,244,717
Tenant improvements 10,516,274 9,443,451
------------------ -----------------
613,287,141 567,464,239
Accumulated depreciation (79,779,155) (61,772,778)
------------------ -----------------
533,507,986 505,691,461
Land 91,006,202 49,885,967
------------------ -----------------
$ 624,514,188 $ 555,577,428
================== =================
</TABLE>
Depreciation expense amounted to $18,043,000, $10,816,000, and
$6,963,000, for the years ended December 31, 1995, 1994, and 1993, respectively.
F-17
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)
5. Undeveloped Land and Construction in Progress
During 1995 CRLP completed the construction of two multifamily expansion
projects at a combined total cost of approximately $16,127,000. The expansion
projects produced 372 new apartment units, 192 units at St. Croix in Orlando,
Florida and 180 units at McGehee Place in Montgomery, Alabama. CRLP currently
has eight active expansion and development projects in progress and various
parcels of land available for expansion, construction, or sale. Undeveloped
land and construction in progress is comprised of the following at December 31,
1995:
<TABLE>
<CAPTION>
Total
Units/ Costs
Square Estimated Estimated Capitalized
Feet Completion Total Costs To Date
--------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
Multifamily Projects:
McGehee Place V (expansion) 16 1996 $ 750,000 $ 436,450
Inverness Lakes (expansion) 180 1996 9,100,000 7,444,250
Rime Village Hoover (expansion) 160 1996 8,800,000 3,627,048
Heathrow 312 1996 20,300,000 7,091,707
Colonial Cay 212 1996 11,600,000 1,890,719
Heatherbrooke IV (expansion) 84 1997 4,100,000 1,094,162
Riverchase III (expansion) 276 1997 14,900,000 2,879,308
--------------- --------------- ---------------
1,240 69,550,000 24,463,644
===============
Retail Projects:
Macon Mall (expansion) 423,000 1997 50,000,000 7,622,402
===============
Other Projects and
Undeveloped Land 554,335
--------------- ---------------
$ 119,550,000 $ 32,640,381
=============== ===============
</TABLE>
Interest capitalized in construction in progress during 1995 and 1994 was
$868,000 and $333,000, respectively.
6. Investment in Partnerships
Investments in partnerships at December 31, 1995 and 1994 consists of
the following:
<TABLE>
<CAPTION>
Percent
Owned 1995 1994
---------------- --------------- ---------------
<S> <C> <C> <C>
Office:
600 Building Partnership, Birmingham, AL 33.34% $ 21,143 $ 30,684
Anderson Block Properties, Montgomery, AL 33.33% (65,760) (75,997)
Hoar/Colonial/Polar-BEK Partnership I,
Birmingham, AL 37.50% (395,691) (389,115)
Hoar/Colonial/Polar-BEK Partnership II,
Birmingham, AL 37.50% (2,438) (3,227)
Polar-BEK/Colonial Partnership I,
Birmingham, AL 50.00% 5,236,912 5,480,753
Polar-BEK/Rubaiyat/Colonial Partnership,
Birmingham, AL 25.00% 526,824 547,867
--------------- ---------------
$ 5,320,990 $ 5,590,965
--------------- ---------------
Other:
Colonial/Polar-BEK Management Company,
Birmingham, AL 50.00% 42,650 (49)
--------------- ---------------
$ 5,363,639 $ 5,590,916
=============== ===============
</TABLE>
F-18
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS - (Continued)
7. Notes and Mortgages Payable
Notes and mortgages payable at December 31, 1995 and 1994 consists
of the following:
<TABLE>
<CAPTION>
1995 1994
------------------ -----------------
<S> <C> <C>
Revolving credit agreements $70,692,000 $103,897,744
Mortgages and other notes:
4.50% to 6.00% 88,095,394 113,798,617
6.01% to 7.50% 49,774,944 26,345,805
7.51% to 9.00% 98,455,300 52,812,609
9.01% to 10.25% 47,082,132 47,379,239
------------------ -----------------
x $354,099,770 $344,234,014
------------------ -----------------
</TABLE>
As of December 31, 1995 CRLP has four bank lines of credit and one
construction loan providing for total borrowings of up to $100,800,000. These
credit facilities are used primarily by CRLP to finance property acquisitions
and development. The significant terms of these credit facilities are shown
below:
<TABLE>
<CAPTION> Balance
Maximum Interest Expiration Outstanding At
Borrowings Rate Date December 31, 1995
------------------- ---------------- ------------ -----------------
<S> <C> <C> <C> <C>
Line of Credit $ 75,000,000 LIBOR + 125 to December 1998 $63,192,000
175 Basis Points
Line of Credit 7,500,000 LIBOR + 150 March 1997 7,500,000
Basis Points
Line of Credit 6,400,000 LIBOR + 175 October 1996 -0-
Basis Points
Line of Credit 5,000,000 LIBOR + 175 May 1998 -0-
Basis Points
Construction 6,900,000 LIBOR + 175 April 1997 -0-
Loan Basis Points
------------------- -----------------
$100,800,000 $70,692,000
=================== =================
</TABLE>
The weighted average interest rate of short-term borrowings was 7.47%
and 7.08% at December 31, 1995 and 1994, respectively.
In February 1995 CRLP entered into a note payable agreement with
Nationwide Life Insurance Company (Nationwide) in the amount of $61,520,000. The
ten-year note requires monthly payments of interest only at 8.87% for the first
five years and monthly payments of interest only at a redetermined interest rate
for the remainder of the term. At the end of the first five years of the term,
CRLP may elect to repay the note without penalty. CRLP used the proceeds of the
note to meet the principal amount due on its $35 million line of credit and to
reduce the balance of its $75 million line of credit.
CRLP has entered into interest rate cap agreements which limit debt of
$8,400,000 to an interest rate of 6.0% through September 30, 1996 and limit debt
of $17,800,000 to an interest rate of 5.96% through September 30, 1998. CRLP
paid approximately $494,000 in total for the agreements, which is being
amortized over the life of the agreements. CRLP is exposed to credit losses in
the event of nonperformance by the counterparties to its interest rate caps and
nonderivative financial assets but has no off-balance-sheet credit risk of
accounting loss. CRLP anticipates, however, that counterparties will be able to
fully satisfy their obligations under the contracts. CRLP does not obtain
collateral or other security to support financial instruments subject to credit
risk but monitors the credit standing of counterparties.
In September 1993 CRLP prepaid interest on a mortgage payable with a
balance outstanding of $34,565,000 at December 31, 1995. CRLP paid approximately
$3,250,000 to reduce the effective interest rate on this loan from 9.5% to 6.0%.
This amount is being amortized over the 33-month period of prepayment.
F-19
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS - (Continued)
In December 1995 CRLP converted its $75,000,000 line of credit agreement
with SouthTrust Bank, agent bank, to an unsecured basis. The notes and mortgages
payable and the other revolving credit agreements are collateralized by the
assignment of rents and leases of certain properties and assets with net book
values as follows:
Land, buildings, and equipment $431,257,000
Undeveloped land and construction in progress 15,503,000
------------
$446,760,000
============
The aggregate maturities of notes and mortgages payable at December 31,
1995 are as follows:
1996 39,107,699
1997 82,218,208
1998 36,123,891
1999 27,784,050
2000 14,089,016
Thereafter 154,776,906
------------
$354,099,770
============
CRLP's notes and mortgages payable have been recently financed or are
covered by interest rate cap agreements, and as such, the balances outstanding
on these notes and mortgages are considered to be the fair values. CRLP's line
of credit arrangements bear interest at rates that vary with changes in LIBOR;
therefore, the balances outstanding are considered to be the fair value.
Concurrent with Colonial's IPO, CRLP used $140,430,000 of the proceeds
to pay off notes and mortgages payable. CRLP recognized an extraordinary loss
from this early extinguishment of debt amounting to $7,284,000, which includes
prepayment penalties of $6,454,000 and the write-off of deferred debt costs of
$830,000.
Certain partners and trustees of CRLP have guaranteed indebtedness of
the CRLP totaling approximately $5,172,000 at December 31, 1995. CRLP has
indemnified these individuals from their guarantees of approximately $2,155,000
of this indebtedness.
8. Employee Benefits
Employees of CRLP have participated with those of Colonial Properties
Services, Inc. (CPSI) (an affiliate of Colonial) and The Colonial Company (TCC)
(an affiliate of certain limited partners) and its other related entities in a
noncontributory defined benefit pension plan (the Old Plan) covering
substantially all employees. TCC's policy was to currently fund the amount of
pension cost allowed by the Internal Revenue Code. Pension expense includes
service and interest costs adjusted by actual earnings on plan assets and
amortization of prior service cost and the transition amount, calculated using
the guidelines of Statement of Financial Accounting Standards No. 87. The
benefits are based on years of service and the employees' final
compensation.
The allocated pension cost of CRLP and CPSI, based on their portion of
total payroll expense, was $186,000 and $122,000 for the years ended December
31, 1994 and 1993, respectively. These amounts were paid to The Colonial
Company.
Effective January 1, 1995, Colonial created a new noncontributory
defined benefit pension plan designed to cover substantially all employees of
CRLP and CPSI (the New Plan). Therefore, these employees did not participate in
the pension plan mentioned above after December 31, 1994. The benefits provided
by the New Plan are based on years of service and the employee's final average
compensation. Colonial's policy is to fund the minimum required contribution
under ERISA and the Internal Revenue Code.
F-20
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS - (Continued)
The table below presents a summary of pension plan status as of December
31, 1995 and 1994 as it relates to the employees of CRLP and CPSI.
<TABLE>
<CAPTION>
1995 1994
(New Plan) (Old Plan)
--------------- --------------
<S> <C> <C>
Actuarial present value of accumulated benefit obligation
including vested benefits of $374,000 and $109,000
at December 31, 1995 and 1994, respectively $ 401,000 $ 118,000
Actuarial present value of projected benefit obligations
at year end $ 1,140,000 $ 677,000
Fair value of assets at year end $ 358,000 $ 223,000
Accrued pension cost $ 176,000 $ 26,000
Net pension cost for the year $ 216,000 $ 186,000
</TABLE>
Actuarial assumptions used in determining the actuarial present value of
projected benefit obligations at January 1, 1995 are as follows:
Weighted-average interest rate 7.0% 8.5%
Increase in future compensation levels 4.0% 5.0%
CRLP and CPSI also participated with TCC and its other related entities
in a salary reduction profit sharing plan covering substantially all employees.
This plan provided, with certain restrictions, that employees may contribute a
portion of their earnings with the employer matching one-half of such
contributions. Contributions by CRLP and CPSI were $108,000 and $102,000 for the
years ended December 31, 1994 and 1993, respectively.
Effective January 1, 1995, Colonial also created a new salary reduction
profit sharing plan covering substantially all employees of CRLP and CPSI.
Similar to TCC's salary reduction profit sharing plan, this plan provides, with
certain restrictions, that employees may contribute a portion of their earnings
with the employer matching one-half of such contributions. Therefore, the
employees of CRLP and CPSI did not participate in the salary reduction profit
sharing plan mentioned above after December 31, 1994. Contributions by CRLP and
CPSI were $155,000 for the year ended December 31, 1995.
9. Leasing Operations
CRLP is in the business of leasing and managing commercial, retail, and
residential property. For properties owned by CRLP, minimum rentals due in
future periods under noncancelable operating leases extending beyond one year at
December 31, 1995 are as follows:
1996 $22,312,000
1997 19,347,000
1998 17,105,000
1999 13,714,000
2000 10,394,000
Thereafter 63,283,000
------------
$146,155,000
============
The noncancelable leases are primarily with tenants engaged in retail
and commercial operations in Alabama, Georgia, and Florida. Performance in
accordance with the lease terms is in part dependent upon the economic
conditions of the respective areas. No additional credit risk exposure relating
to the leasing arrangements exists beyond the accounts receivable amounts shown
in the December 31, 1995 balance sheet. Leases with tenants in multifamily
properties are generally for one year or less and are thus excluded from the
above table. Substantially all of CRLP's land, buildings, and equipment
represent property leased under the above and other short-term leasing
arrangements.
F-21
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS - (Continued)
Rental income for 1995, 1994, and 1993 includes contingent rent of
$1,782,000, $1,729,000, and $1,684,000, respectively. This rental income was
earned when certain retail tenants attained sales volumes specified in their
respective lease agreements.
10. Related Party Transactions
During part of 1993 the Colonial Group had notes receivable from
affiliates of approximately $623,000 which included working capital and other
loans to limited partnerships in which the Colonial Group had a direct or
indirect ownership interest. Interest earned on these loans amounted to $43,000
for the year ended December 31, 1993.
During part of 1993 the Colonial Group had notes payable to affiliates
of $2,186,000 which represented a note payable to a bank in which TCC and its
stockholders have an ownership interest. Interest expense paid to this bank
totaled $75,000 during the year ended December 31, 1993.
CRLP paid $16,124,000, $8,934,000, and $146,000 for property development
costs to Lowder Construction Company, Inc., a construction company owned by TCC,
during the years ended December 31, 1995, 1994, and 1993, respectively. CRLP had
outstanding construction invoices and retainage payable to Lowder Construction
Company, Inc. totaling $3,306,000 and $2,615,000 at December 31, 1995 and 1994,
respectively.
CRLP also paid $5,522,000 for property development costs to two
construction companies owned by three trustees during the year ended December
31, 1995. CRLP had outstanding construction invoices and retainage payable to
these construction companies totaling $678,000 at December 31, 1995.
CRLP received rental income totaling $836,000, $775,000, and $782,000
from TCC, CPSI, and other affiliated companies during the years ended December
31, 1995, 1994, and 1993, respectively.
Management and leasing fees paid to Colonial Properties Inc. from
January 1, 1993 to September 28, 1993 (including those that have been eliminated
from Colonial's financial statements as intercompany items) were approximately
$2,524,000. The fees paid for the period September 29, 1993 to December 31, 1993
amounted to $193,000.
TCC has performed certain administrative services for CRLP including
payroll processing and computer processing. CRLP paid TCC $82,303 and $135,218
for these services during the years ended December 31, 1994, and 1993,
respectively. Colonial Insurance Company provides insurance brokerage services
for CRLP for which CRLP paid $168,000, $172,000, and $150,000 during the years
ended December 31, 1995, 1994, and 1993, respectively. CRLP paid rent to Polar
BEK/Colonial Partnership I, which is a partnership accounted for by CRLP under
the equity method (listed in Note 6), in the amounts of $110,000, $115,000, and
$200,000 during the years ended December 31, 1995, 1994, and 1993, respectively.
Colonial Commercial Investments, Inc. has guaranteed indebtedness
totaling $1,521,000 at December 31, 1995 for Anderson Block Properties, which is
a partnership accounted for by CRLP under the equity method (listed in Note 6).
CRLP has indemnified Colonial Commercial Investments, Inc. from its guarantees
of this indebtedness.
In connection with the expansion development of the Inverness
multifamily property located in Mobile, Alabama, CRLP acquired land that was 50%
owned by Thomas, Robert, and James Lowder and 50% owned by a third-party. The
Lowder brothers received 14,025 limited partnership units having a deemed value
of $302,000. The Lowder Construction Company, Inc., of which James Lowder is
chairman of the board, was engaged to serve as the construction manager for the
project.
In December 1994 CRLP acquired, in exchange for units of limited
partnership interest ("Units"), ten multifamily properties developed and owned
by The Rime Companies, in which Messrs. Ripps and Meisler owned an interest.
Subsequent to the acquisition, Messrs. Ripps and Meisler were elected to serve
on the board of trustees of Colonial. The acquisition agreements relating to the
acquisition transaction provided for the possible issuance of additional Units
to the owners of The Rime Companies if one of the properties met certain
performance criteria after the acquisition. During 1995 CRLP issued 33,661 Units
to Mr. Ripps and 33,660 Units to the adult children of Mr. Meisler, pursuant to
these acquisition agreements.
11. Subsequent Event
On January 25, 1996, the Trustees declared a cash distribution to
partners of CRLP in the amount of $.50 per unit, totaling $12,889,000. The
distribution was made to partners of record as of February 2, 1996, and was paid
on February 12, 1996.
F-22
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this Amendment to the Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, on June 21, 1996.
COLONIAL REALTY LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Colonial Properties Holding Company, Inc.,
its general partner
By: /s/ Douglas B. Nunnelley
------------------------
Douglas B. Nunnelley
Senior Vice President and
Chief Financial Officer
<PAGE>
INDEX TO FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
PAGE
DESCRIPTION NUMBER
- ----------- ------
<S> <C>
Report of Independent Accountants............................................ S-2
Schedule II Valuation and Qualifying Accounts............................. S-3
Schedule III Real Estate and Accumulated Depreciation...................... S-4
</TABLE>
All other schedules have been omitted because the required information of
such other schedules is not present in amounts sufficient to require submission
of the schedule or because the required information is included in the
consolidated and combined financial statements.
S-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Colonial Properties Holding Company, Inc.:
Our report on the consolidated and combined financial statements of Colonial
Realty Limited Partnership is included on page F-7 of this Form 10. In
connection with our audits of such financial statements, we have also audited
the related financial statement schedules listed in the index on page S-1 of
this Form 10.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
January 25, 1996
S-2
<PAGE>
SCHEDULE II
COLONIAL REALTY LIMITED PARTNERSHIP
VALUATION AND QUALIFYING ACCOUNTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Additions
----------------------
Balance at Charged Charged Balance
Beginning to to at End
Description of Period Income Accounts Deductions of Period
- ---------------------------------- ---------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1995:
Allowance for doubtful accounts $119,429 $ -0- $ -0- $(48,239) $ 71,190
======== ======== ======== ========= ========
YEAR ENDED DECEMBER 31, 1994:
Allowance for doubtful accounts $153,253 $ -0- $ -0- $(33,824) $119,429
======== ======== ======== ========= ========
YEAR ENDED DECEMBER 31, 1993:
Allowance for doubtful accounts $170,235 $ -0- $ -0- $(16,982) $153,253
======== ======== ======== ========= ========
</TABLE>
S-3
<PAGE>
SCHEDULE III
COLONIAL REALTY LIMITED PARTNERSHIP
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Initial Cost to
Company Cost
------------------------ Capitalized
Building and Subsequent to
Description Encumbrances Land Improvements Acquisition
----------- ------------ ---------- ------------ -------------
<S> <C> <C> <C> <C>
Multifamily:
Arbors at Kirkman $ 12,673,101 $2,220,000 $21,747,240 $ 15,793
Carrollwood Apartments 6,230,000 1,464,000 10,657,840 214,061
Chestnut Ridge 7,496,667 644,943 8,325,057 2,223
Colony Park -0- 409,401 4,345,599 14,352
Grande View Towers 10,083,184 1,540,000 12,671,606 51,088
Heatherbrooke 9,900,000 1,713,668 10,352,151 7,085,808
Huntleigh Woods 3,049,340 745,600 4,908,990 172,259
Inverness Apts 5,811,667 735,461 7,254,539 48,304
McGehee Place Apts -0- 795,627 -0- 15,201,274
Monte D'Oro 5,366,159 1,000,000 6,994,227 131,189
North Ingle Villas -0- 497,574 4,122,426 157,782
Patio I, II & III -0- 249,876 3,305,124 1,775,122
Pelican Pointe 8,245,000 1,479,352 -0- 12,002,575
Plantation Gardens -0- 1,488,000 13,515,075 13,711
Polos at Gainesville 11,360,000 3,360,000 24,173,649 2,395,807
Polos at Ponte Vedra 5,760,000 1,440,000 10,038,593 70,658
Polos West 5,911,189 1,200,000 8,581,389 86,870
Rime Village - Hoover 23,100,000 4,600,000 39,078,925 243,780
Rime Village - Huntsville 13,275,000 3,680,000 31,686,621 (2,348,362)
Riverchase II -0- 857,080 -0- 8,781,130
Riverchase Manor 17,495,939 2,340,000 25,248,548 147,644
Ski Lodge I 7,969,975 3,270,000 12,574,303 164,871
Ski Lodge II 9,164,253 3,220,000 13,678,104 116,509
Ski Lodge III 10,500,000 2,770,000 15,244,144 138,825
Ski Lodge - Tuscaloosa 4,871,150 1,064,000 6,636,685 56,660
Somerset Place 4,500,000 699,128 4,920,872 25,561
Somerset Wharf 3,400,000 960,984 3,511,596 2,879,427
Stockbridge Manor -0- 960,000 11,975,947 23,979
St. Croix 7,500,000 2,145,480 -0- 18,650,386
Sunchase -0- 1,121,244 -0- 5,454,547
Vieux Carre 5,187,475 32,143 -0- 4,546,438
Willow Bend 5,065,000 511,700 5,508,300 103,260
Willowtree -0- 134,000 3,986,304 125,748
Retail:
Bear Lake Village -0- 2,134,440 6,551,683 -0-
Bellwood 3,016,285 330,000 -0- 2,821,358
Britt David -0- 1,755,000 4,951,852 -0-
Burnt Store Square -0- 3,750,000 8,198,677 4,961
Country Lake Village -0- 3,659,040 6,783,697 -0-
Gadsden Mall 15,480,000 639,577 -0- 18,315,373
Macon Mall 34,565,394 1,684,875 -0- 28,898,667
</TABLE>
<TABLE>
<CAPTION>
Gross Amount at Which
Carried at Close of Period
----------------------------------------
Building and Accumulated Date Date Depreciation
Description Land Improvements Total Depreciation Completed Acquired Lives-Years
----------- ----------- ------------ ------------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Multifamily:
Arbors at Kirkman $2,220,000 $ 21,763,033 $ 23,983,033 $ 999,076 1991 1994 7-40 Years
Carrollwood Apartments 1,464,000 10,871,901 12,335,901 744,325 1966 1994 7-40 Years
Chestnut Ridge 644,943 8,327,280 8,972,223 472,370 1984 1993 7-40 Years
Colony Park 409,406 4,359,946 4,769,352 248,690 1975 1993 7-40 Years
Grande View Towers 1,540,000 12,722,694 14,262,694 894,613 1990 1994 7-40 Years
Heatherbrooke 1,713,668 17,437,959 19,151,627 2,632,117 1986/87/90 1993/86/86 7-40 Years
Huntleigh Woods 745,600 5,081,249 5,826,849 128,047 1978 1994 7-40 Years
Inverness Apts 735,080 7,303,224 8,038,304 416,090 1983 1993 7-40 Years
McGehee Place Apts 721,089 15,275,812 15,996,901 2,675,908 1986/95 1981 7-40 Years
Monte D'Oro 1,000,000 7,125,416 8,125,416 175,753 1977 1994 7-40 Years
North Ingle Villas 497,574 4,280,208 4,777,782 246,404 1983 1983 7-40 Years
Patio I, II & III 366,717 4,963,405 5,330,122 260,211 1966/83/84 1994/93/93 7-40 Years
Pelican Pointe 1,479,352 12,002,575 13,481,927 2,104,902 1992 1987 7-40 Years
Plantation Gardens 1,489,500 13,527,286 15,016,786 805,745 1991 1994 7-40 Years
Polos at Gainesville 3,361,850 26,567,606 29,929,456 1,320,433 1989/93/94 1994 7-40 Years
Polos at Ponte Vedra 1,440,000 10,109,251 11,549,251 412,101 1988 1994 7-40 Years
Polos West 1,200,000 8,668,259 9,868,259 407,845 1991 1994 7-40 Years
Rime Village - Hoover 4,600,000 39,322,705 43,922,705 1,015,568 1986 1994 7-40 Years
Rime Village - Huntsville 3,680,000 29,338,259 33,018,259 961,912 1987/94 1994 7-40 Years
Riverchase II 857,080 8,781,130 9,638,210 1,674,631 1991 1985 7-40 Years
Riverchase Manor 2,340,000 25,396,192 27,736,192 729,932 1984/91 1994 7-40 Years
Ski Lodge I 3,270,000 12,739,174 16,009,174 317,545 1972/73/76 1994 7-40 Years
Ski Lodge II 3,220,000 13,794,613 17,014,613 343,761 1979/86 1994 7-40 Years
Ski Lodge III 2,770,000 15,382,969 18,152,969 382,465 1984 1994 7-40 Years
Ski Lodge - Tuscaloosa 1,064,000 6,693,345 7,757,345 189,894 1976/92 1994 7-40 Years
Somerset Place 699,128 4,946,433 5,645,561 279,135 1986 1993 7-40 Years
Somerset Wharf 960,984 6,391,028 7,352,007 1,177,593 1986/87 1993/85 7-40 Years
Stockbridge Manor 960,000 11,999,926 12,959,926 445,668 1993/94 1994 7-40 Years
St. Croix 3,634,094 17,161,772 20,795,866 2,230,574 1991/95 1988 7-40 Years
Sunchase 1,121,244 5,454,547 6,575,791 1,623,177 1991 1986 7-40 Years
Vieux Carre 32,143 4,546,438 4,578,581 2,962,780 1971/74/78 1969 7-40 Years
Willow Bend 511,700 5,611,560 6,123,260 320,364 1984 1993 7-40 Years
Willowtree 134,000 4,112,052 4,246,052 1,901,657 1983 1983 7-30 Years
Retail: 2,134,440 6,551,683 8,686,123 82,396 1988 1995 7-40 Years
Bear Lake Village 330,000 2,821,358 3,151,358 694,725 1988 1971 7-40 Years
Bellwood 1,755,000 4,951,852 6,706,852 144,429 1990 1994 7-40 Years
Britt David 3,750,000 8,203,638 11,953,638 307,505 1990 1994 7-40 Years
Burnt Store Square 3,659,040 6,783,697 10,442,737 84,734 1988 1995 7-40 Years
Country Lake Village 639,577 18,315,373 18,954,950 6,435,850 1974 1971 5-40 Years
Gadsden Mall 1,684,875 28,898,667 30,583,542 12,666,706 1975 1972 7-50 Years
Macon Mall
</TABLE>
S-4
<PAGE>
SCHEDULE III
COLONIAL REALTY LIMITED PARTNERSHIP
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Initial Cost to
Company Cost
--------------------------- Capitalized
Building and Subsequent to
Description Encumbrances Land Improvements Acquisition
----------- ------------ ----------- ------------- --------------
<S> <C> <C> <C> <C>
McGehee Place -0- 197,152 -0- 3,639,932
Meadowbrook Mini-Storage -0- 80,051 810,108 110,908
Montgomery Promenade 10,810,000 3,788,913 11,346,754 958,467
Northdale Court -0- 3,059,760 8,054,090 -0-
Old Springville -0- 272,594 -0- 3,298,372
Olde Town 1,703,693 343,325 -0- 2,413,821
Paddock Park -0- 1,532,520 3,754,879 -0-
River Oaks -0- 3,262,800 23,636,229 -0-
University Park Plaza 14,445,000 6,946,785 20,104,517 108,560
Village Mall -0- 103,480 -0- 13,835,847
Winter Haven Village -0- 1,768,586 3,928,903 -0-
Office:
250 Commerce Street -0- 25,000 200,200 2,242,198
AmSouth Center -0- 764,961 -0- 16,414,033
Interstate Park 4,962,338 1,125,990 7,113,558 7,731,603
P&S Building -0- 104,089 -0- 641,336
University Park -0- 396,960 -0- 4,050,146
Whitesburg Building 1,309,961 1,081,618 1,050,000 25,986
Active Development Projects:
Colonial Grand at Bayshore -0- 1,062,827 -0- 827,892
Heathbrooke Phase IV -0- 630,858 -0- 463,304
Colonial Grand at Heathrow -0- 2,201,539 -0- 4,890,165
Inverness Lakes -0- 590,487 -0- 6,853,763
Macon Mall Expansion -0- 3,192,332 -0- 3,766,928
McGehee Place Apts. V -0- 58,205 -0- 378,245
Rime Village Hoover II -0- 705,101 -0- 2,921,947
Riverchase III -0- 1,662,913 -0- 1,216,395
Unimproved Land:
Macon Mall Outparcels -0- 663,142 -0- -0-
McGehee Placea Apts. IV -0- 121,232 -0- -0-
McGehee Place Outparcels 700,000 203,260 -0- (145,611)
McGehee Place Shop Ctr II -0- 430,151 -0- -0-
Village Mall -0- 404,187 -0- -0-
Other Land Parcels -0- 5,381 -0- -0-
Other Miscellaneous -0- -0- -0- 82,457
------------ ------------ ------------ ------------
$290,907,770 $100,088,392 $431,529,001 $205,316,331
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Gross Amount at Which
Carried at Close of Period
----------------------------------------
Building and Accumulated Date Date Depreciation
Description Land Improvements Total Depreciation Completed Acquired Lives-Years
----------- ----------- ------------ ------------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
McGehee Place 197,152 3,639,932 3,837,084 895,821 1986 1981 7-40 Years
Meadowbrook Mini-Storage 80,051 921,016 1,001,067 228,458 1986 1986 7-40 Years
Montgomery Promenade 4,332,432 11,761,702 16,094,134 1,407,416 1990 1993 7-40 Years
Northdale Court 3,059,760 8,054,090 11,113,850 33,551 1988 1971 7-31.5 Years
Old Springville 272,594 3,298,372 3,570,966 2,165,993 1982 1981 10-40 Years
Olde Town 343,325 2,413,821 2,757,146 468,582 1978 1977 7-40 Years
Paddock Park 1,532,520 3,754,879 5,287,399 10,997 1988 1971 7-31.5 Years
River Oaks 3,262,800 23,636,229 26,899,029 193,698 1986/89 1993 7-40 Years
University Park Plaza 6,946,785 20,213,077 27,159,862 4,526,977 1986/89 1993 7-40 Years
Village Mall 344,696 13,594,631 13,939,327 6,893,614 1973 1971 5-40 Years
Winter Haven Village 1,768,586 3,928,903 5,697,489 48,611 1988 1971 7-31.5 Years
Office:
250 Commerce Street 25,000 2,442,398 2,467,398 2,200,443 1904 1980 5-40 Years
AmSouth Center 764,961 16,414,033 17,178,994 3,920,828 1990 1990 7-40 Years
Interstate Park 1,125,988 14,845,163 15,971,151 3,160,296 1982-85/89 1981/93 7-40 Years
P&S Building 104,089 641,336 745,425 325,711 1946 1974 7-26 Years
University Park 396,960 4,050,146 4,447,106 1,220,896 1985 1982 7-40 Years
Whitesburg Building 1,081,618 1,075,986 2,157,604 157,649 1974 1990 7-40 Years
Active Development Projects:
Colonial Grand at Bayshore 1,062,827 827,892 1,890,719 -0- N/A 1985 N/A
Heathbrooke Phase IV 630,858 463,304 1,094,162 -0- N/A 1985 N/A
Colonial Grand at Heathrow 2,201,539 4,890,165 7,091,704 -0- N/A 1994 N/A
Inverness Lakes 590,487 6,853,763 7,444,250 -0- N/A 1994 N/A
Macon Mall Expansion 3,192,332 3,766,928 6,959,260 -0- N/A 1987 N/A
McGehee Place Apts. V 58,205 378,245 436,450 -0- N/A 1987 N/A
Rime Village Hoover II 705,101 2,921,947 3,627,048 -0- N/A 1988 N/A
Riverchase III 1,662,913 1,216,395 2,879,308 -0- N/A 1985 N/A
Unimproved Land:
Macon Mall Outparcels 663,142 -0- 663,142 -0- N/A 1987 N/A
McGehee Placea Apts. IV 121,232 -0- 121,232 -0- N/A 1981 N/A
McGehee Place Outparcels 57,649 -0- 57,649 -0- N/A 1981 N/A
McGehee Place Shop Ctr II 430,151 -0- 430,151 -0- N/A 1981 N/A
Village Mall 404,187 -0- 404,187 -0- N/A 1971 N/A
Other Land Parcels 5,381 -0- 5,381 -0- N/A Various N/A
Other Miscellaneous 66,536 15,921 82,457 1,983 N/A Various N/A
------------ ------------ ------------ ----------- -------- -------- --------
$102,327,940 $634,605,784 $736,933,724 $79,779,155
============ ============ ============ ===========
</TABLE>
<PAGE>
NOTES TO SCHEDULE III
COLONIAL REALTY LIMITED PARTNERSHIP
DECEMBER 31, 1995
(1) The aggregate cost for Federal Income Tax purposes was approximately
$554,917,000 at December 31, 1995.
(2) See description of mortgage notes payable in Note 7 of Notes to
Consolidated and Combined Financial Statements.
(3) The following is a reconciliation of real estate to balances reported at
the beginning of the year:
RECONCILIATION OF REAL ESTATE
<TABLE>
<CAPTION>
1995 1994 1993
--------------- --------------- -----------------
<S> <C> <C> <C>
Real estate investments:
Balance at beginning of year $640,676,741 $295,516,276 $187,650,603
Acquisitions and mergers of new property 67,326,328 328,589,310 106,857,943
Improvements and development 29,121,436 17,362,104 1,010,122
Disposition of property (190,781) (790,949) (2,392)
------------ ------------ ------------
Balance at end of year $736,933,724 $640,676,741 $295,516,276
============ ============ ============
</TABLE>
RECONCILIATION OF ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
1995 1994 1993
--------------- --------------- -----------------
<S> <C> <C> <C>
Accumulated depreciation:
Balance at beginning of year $61,772,778 $51,354,506 $40,295,451
Mergers of new property -0- -0- 4,098,278
Depreciation 18,043,875 10,816,858 6,963,169
Depreciation of disposition of property (37,498) (398,586) (2,392)
----------- ----------- -----------
Balance at end of year $79,779,155 $61,772,778 $51,354,506
=========== =========== ===========
</TABLE>
S-6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit No. Numbered Page
- ----------- -------------
<S> <C>
4.1+ Second Amended and Restated Agreement of Limited Partnership of the
Company dated as of October 27, 1994, as amended
10.1* First Amended and Restated Employee Share Option and Restricted Share
Plan
10.2** Non-employee Trustee Share Option Plan
10.3** Non-employee Trustee Option Agreement
10.4** Employment Agreement between Colonial and Thomas H. Lowder
10.5** Officers and trustees Indemnification Agreement
10.6** Land Option Agreement
10.7*** Credit agreement between Colonial and SouthTrust Bank of Alabama,
National Association AmSouth Bank of Alabama, Wells Fargo Realty
Advisors Funding, Incorporated and National Bank of Commerce of
Birmingham dated December 18, 1995 and related promissory notes
10.8** Annual Incentive Plan
21.1+ List of Subsidiaries
27.1 Financial Data Schedule
99.1* Articles of Incorporation of CPHC, as amended
99.2** Bylaws of the CPHC
99.3**** Declaration of Trust of Colonial
99.4**** Bylaws of Colonial
99.5 "The Company," pages S-7 through S-9, in Colonial's Prospectus
Supplement (to Prospectus dated December 21, 1995) dated January 17,
1996, filed pursuant to Rule 424(b) of Regulation C under the
Securities Act, relating to Colonial's Registration Statement on
Form S-3, File No. 33-89612
99.6 "Voting Securities and Principal Holders Thereof," pages 15 through
17, from Colonial's Proxy Statement dated March 29, 1996, delivered
to Colonial's shareholders in connection with the 1996 Annual
Meeting of Shareholders
99.7 "Election of Trustees (Proposal 1)," pages 2 through 5, in Colonial's
Proxy Statement dated March 29, 1996, delivered to Colonial's
shareholders in connection with the 1996 Annual Meeting of
Shareholders
99.8 "Executive Officers of the Company," pages 22 through 23, from
Colonial's Form 10-K for the fiscal year ended December 31, 1995,
filed pursuant to Section 13 of the Exchange Act
</TABLE>
<PAGE>
Sequentially
Exhibit No. Numbered Page
- ----------- ----------------
99.9 "Executive Compensation" pages 6 through 9
in Colonial's Proxy Statement dated March 29,
1996, delivered to Colonial's shareholders in
connection with the 1996 Annual Meeting of
Shareholders.
99.10 "Executive Compensation Committee Interlocks and
Insider Participation," pages 11 and 12, and
"Certain Relationships and Related Transactions,"
page 14, in Colonial's Proxy Statement dated March 28,
1994, delivered to Colonial's shareholders in
connection with the 1994 Annual Meeting of
Shareholders
99.11 "Executive Compensation Committee Interlocks and
Insider Participation," page 13, and "Certain
Relationships and Related Transactions," page 15, in
Colonial's Proxy Statement dated April 3, 1995, delivered
to Colonial's shareholders in connection with
the 1995 Annual Meeting of Shareholders
99.12 "Executive Compensation Committee Interlocks and
Insider Participation," pages 13 and 14, from Colonial's
Proxy Statement dated March 29, 1996, delivered to
Colonial's shareholders in connection with the 1996
Annual Meeting of Shareholders
- ---------------------
* Incorporated by reference to the same titled exhibit in Colonial's
Amendment No.1 to Form 10-K on Form 10-K/A for the fiscal year ended
December 13, 1994 dated March 20, 1995.
** Incorporated by reference to the same titled exhibit in Colonial's
Registration Statement on Form S-11, No. 33-65954.
*** Incorporated by reference to the same titled exhibit in Colonial's
Annual Report on Form 10-K dated December 31, 1995.
**** Incorporated by reference to the annexes to Colonial's Proxy Statement
dated September 1, 1995.
+ Previously filed.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 8,251,889
<SECURITIES> 0
<RECEIVABLES> 1,565,496
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 762,357,819
<DEPRECIATION> (84,526,943)
<TOTAL-ASSETS> 707,762,473
<CURRENT-LIABILITIES> 0
<BONDS> 274,609,531
0
0
<COMMON> 0
<OTHER-SE> 413,119,995
<TOTAL-LIABILITY-AND-EQUITY> 707,762,473
<SALES> 0
<TOTAL-REVENUES> 29,606,954
<CGS> 0
<TOTAL-COSTS> 15,835,224
<OTHER-EXPENSES> (4,957,316)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (5,090,473)
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 8,814,414
<DISCONTINUED> 0
<EXTRAORDINARY> (318,630)
<CHANGES> 0
<NET-INCOME> 8,495,784
<EPS-PRIMARY> .34
<EPS-DILUTED> .34
</TABLE>
<PAGE>
Exhibit 99.5
- ------------
THE COMPANY
The Company is one of the largest owners, developers and operators of
multifamily, retail and office properties in the southeastern United States.
The Company has been engaged in the multifamily, retail and office property
business for over 25 years. It is a fully-integrated real estate company, whose
activities include ownership of a diversified portfolio of 61 properties located
in Alabama, Florida and Georgia, development of new properties, acquisitions of
existing properties, build-to-suit development and the provision of management,
leasing and brokerage services for commercial real estate. The Company's primary
markets in the Southeast are generally characterized by high population and
employment rates.
The Company, through CPHC, is the sole general partner of, and, as of November
30, 1995, held approximately 62% of the interests in, the Operating Partnership.
The Operating Partnership owns all of the Properties (or interests therein).
The Company conducts all of its business through CPHC, the Operating Partnership
and the Company's two management subsidiaries, the Management Partnership, which
provides management services for the Company's Properties, and the Management
Corporation, which provides management services for properties owned by third
parties. As sole general partner of the Operating Partnership, the Company,
through CPHC, has the exclusive power to manage and conduct the business of
the Operating Partnership, subject to certain limited exceptions.
Through the Operating Partnership, the Company has significantly expanded its
multifamily and retail property holdings through acquisitions and development.
Additional information regarding the Company's operating and business strategies
is provided below.
Operating Strategy
The Company is organized into three distinct operating divisions--multifamily,
retail and office--each of which is responsible for the management and leasing
of its respective property types. The Company is experienced in the management
and leasing of multifamily, retail and office properties and believes that the
management and leasing of its own portfolio has helped the Properties maintain
consistent income growth and has resulted in reduced operating expenses relating
to the Properties. In addition, the third-party management, leasing and
brokerage businesses have provided the Company both with a source of cash flow
that is relatively stable and with the benefits of economies of scale in
conjunction with the management and leasing of its own properties. These
businesses also allow the Company to establish additional relations with tenants
that may require additional retail or office space and to identify potential
acquisitions. Additional information with respect to each of the operating
divisions is set forth below.
Multifamily Division. The multifamily division of the Company is responsible
for all aspects of the Company's multifamily operations, including day-to-day
management and leasing of the 33 Multifamily Properties, as well as development
and acquisition of additional multifamily properties. The multifamily division
also is responsible for the provision of third-party management services for
apartment communities in which the Company does not have an interest. The
multifamily division currently has approximately 283 employees, most of whom are
located at the Multifamily Property sites and a small number of whom are located
in Birmingham, Alabama and in regional offices in Mobile, Alabama and Lake Mary
(Orlando) and Tampa, Florida.
Retail Division. The Company's retail division is responsible for all
aspects of the Company's retail operations, including the provision of
management, leasing, and brokerage services for the 18 Retail Properties, as
well as the development and acquisition of additional retail properties. The
retail division also is responsible for the provision of third-party management
services for retail properties in which the Company does not have an interest.
The retail division has regional offices in Huntsville and Montgomery, Alabama
and Orlando, Florida and satellite leasing offices in two cities in central
Florida. The retail division currently has approximately 163 employees.
S-7
<PAGE>
Exhibit 99.5
- ------------
Office Division. The Company's office division is responsible for all aspects
of the Company's commercial office operations, including the provision of
management, leasing, and brokerage services for the ten Office Properties, as
well as the development and acquisition of additional office properties. The
office division also is responsible for the provision of third-party management
services for office properties in which the Company does not have an interest.
The office division currently has approximately 30 employees located in
Birmingham, Alabama and in regional offices in Huntsville and Montgomery,
Alabama and Orlando, Florida.
Business Strategy
The general business strategy of the Company is to generate stable and
increasing cash flow and portfolio value for its shareholders. The Company has
implemented this strategy principally by (i) realizing growth in income from its
existing portfolio of properties, (ii) developing, expanding, and selectively
acquiring additional multifamily, retail and office properties in mid-sized
growth markets located in the southeastern United States where the Company has
first-hand knowledge of growth patterns and local economic conditions and
generally has a competitive advantage due to its size and access to lower-cost
capital, (iii) managing its own properties, which has enabled it to better
control operating expenses and establish long-term relationships with its retail
and office tenants, (iv) maintaining its third-party property management
business, which has increased cash flow and established additional relationships
with tenants and (v) employing a comprehensive capital maintenance program to
maintain properties in first-class condition. The Company plans to continue the
implementation of these business strategies while capitalizing on what it
believes are its competitive advantages in the real estate marketplace. These
competitive advantages include the following:
Regional Focus. All of the Company's Properties are located in Alabama,
Florida and Georgia, and primarily in mid-sized cities in those states. By
focusing on the southeastern United States in general, and these three states in
particular, the Company believes that it has been able to maintain a strong
market presence in and an in-depth knowledge of each of its primary markets. The
Company believes this focus enables it to better understand and respond to
market and submarket conditions and to attract new residents or tenants because
of the Company's name recognition.
Diversity of Product. The Company has maintained operations in three major
real estate industry segments-multifamily, retail and office-for over 25 years.
The Company's operations in these three segments are conducted through three
distinct divisions, each of which is independently operated and staffed with
management and staff personnel that have specialized experience in that market
segment. See "The Company--Operating Strategy." The Company believes that its
diversified operations create cross-selling opportunities between the office and
retail divisions, give it more in-depth knowledge of local real estate markets,
and may minimize the effect on the Company of cyclical swings associated with
specific property types.
Experienced Management. The Company believes that strong, experienced
leadership, particularly in the management and leasing area, is critical to the
success of a fully-integrated real estate company. The Company's President and
its principal executive officers all have extensive experience (an average of 21
years) in the real estate industry in the southeastern United States, and have
established numerous contacts throughout the industry through leadership of
various local and national chapters of real estate associations. The Company
believes that the experience of its management team gives it an advantage over
less experienced competitors in its primary markets. In addition, the Company
is committed to a continuing education program that encourages its employees to
attain recognized, professional designations.
Long-Term Relationships. The Company's predecessor, Colonial Properties,
Inc., and Thomas Lowder have been actively engaged in the real estate business
in the southeastern United States for over 25 years. Thomas Lowder and his
brother, James, have close ties to this region and are established members of
the local and regional business communities. Through their extensive business
dealings in the region, Colonial and the Lowder family have developed a number
of long-term business relationships with tenants and real estate owners, as well
as contractors, suppliers, professionals and lenders, in the Southeast. The
Company
S-8
<PAGE>
Exhibit 99.5
- ------------
believes that these relationships result in cost savings due to reduced
tenant turnover and fewer management terminations, enable the Company to obtain
favorable terms for services, goods and loans and provide the Company with
access to additional business opportunities.
S-9
<PAGE>
Exhibit 99.6
- ------------
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth information regarding the beneficial ownership
of Common Shares as of March 8, 1996 for (1) each person known by the Company to
be the beneficial owner of more than five percent of the Company's outstanding
Common Shares, (2) each trustee of the Company and each Named Executive Officer
and (3) the trustees and executive officers of the Company as a group. Each
person named in the table has sole voting and investment power with respect to
all shares shown as beneficially owned by such person, except as otherwise set
forth in the notes to the table. Units owned by a person named in the table are
included in the "Number of Common Shares" column because such Units are
redeemable, at the option of the holder, for cash equal to the value of an equal
number of Common Shares or, at the election of the Company, for an equal number
of Common Shares. Because of limitations on ownership of Common Shares imposed
by the Company's Declaration of Trust, none of the Lowder brothers nor Mr. Ripps
could in fact redeem all of his Units for Common Shares without divesting a
substantial number of Common Shares in connection with the redemption. The
extent to which a person holds Units as opposed to Common Shares is set forth in
the footnotes.
<TABLE>
<CAPTION>
Percent of
Number of Percent of Common
Name and Business Address Common Common Shares
of Beneficial Owner Shares Shares (1) and Units(2)
- ------------------------- --------- ---------- ------------
<S> <C> <C> <C>
Thomas H. Lowder........... 3,054,774 (3) 15.0% 11.8%
Energen Plaza, Suite 750
2101 Sixth Avenue North
Birmingham, Alabama 35203
James K. Lowder............ 3,047,306 (4) 14.9% 11.8%
2000 Interstate Parkway
Suite 400
Montgomery, Alabama 36104
Robert E. Lowder........... 1,834,055 (5) 9.5% 7.1%
One Commerce Street
Montgomery, Alabama 36104
Cohen & Steers Capital
Management, Inc........... 1,601,000 (6) 9.1% 6.2%
757 Third Avenue
New York, New York 10007
Wellington Management
Company................... 1,368,900 (7) 7.8% 5.3%
75 State Street
Boston, Massachusetts 02109
FMR Corp................... 1,015,900 (8) 5.8% 3.9%
82 Devonshire Street
Boston, Massachusetts 02109
Carl F. Bailey............. 12,899 (9) * *
M. Miller Gorrie........... 124,999 (9) * *
Herbert A. Meisler......... 528,600 (10) 2.9% 2.1%
Claude B. Nielsen.......... 5,999 (9) * *
Harold W. Ripps............ 1,852,974 (11) 10.0% 7.2%
</TABLE>
15
<PAGE>
Exhibit 99.6
- ------------
<TABLE>
<S> <C> <C> <C>
Donald T. Senterfitt....... 5,999 (9) * *
Howard B. Nelson, Jr....... 11,581 (12) * *
Charles A. McGehee......... 10,018 (12) * *
Jeffrey L. Shuster......... 8,702 (12) * *
John N. Hughey............. 4,608 (12) * *
All executive officers and
trustees as a group
(15 persons).............. 6,258,487 (13) 26.8%(14) 24.2%(15)
- ----------------------
</TABLE>
* Less than 1%
____________________________
(1) For purposes of this calculation, the number of Common Shares deemed
outstanding includes 17,646,864 Common Shares currently outstanding and the
number of Common Shares issuable to the named person(s) upon redemption of
Units or upon the exercise of options exercisable within 60 days.
(2) For purposes of this calculation, the number of Common Shares and Units
deemed outstanding includes 17,646,864 Common Shares currently outstanding,
8,141,023 Units currently outstanding (excluding Units held by the
Company), and the number of Common Shares issuable to the named person(s)
upon the exercise of options exercisable within 60 days.
(3) Includes 321,411 Common Shares and 2,733,363 Units. The total includes
62,131 shares owned by Thomas Lowder, 175,296 shares owned by Colonial
Commercial Investments, Inc. ("CCI"), a corporation owned equally by Thomas
and James Lowder, 61,574 shares owned by Equity Partners Joint Venture
("EPJV"), a general partnership of which Thomas, James and Robert Lowder
are the sole general partners, 6,465 shares owned pursuant to the Company's
401(k) plan and 15,945 shares subject to options exercisable within 60
days. In addition, the total includes 532,800 Units owned by Thomas Lowder,
1,199,831 Units owned by CCI and 1,000,732 Units owned by EPJV. Shares and
Units owned by CCI are reported twice in this table, once as beneficially
owned by Thomas Lowder and again as beneficially owned by James Lowder.
Shares and Units owned by EPJV are reported three times in this table, as
beneficially owned by each of the Lowder brothers.
(4) Includes 313,943 Common Shares and 2,733,363 Units. The total includes
64,020 shares owned by James Lowder, 175,296 shares owned by CCI, 61,574
shares owned by EPJV, 8,054 shares owned pursuant to the Company's 401(k)
plan and 4,999 shares subject to options exercisable within 60 days. In
addition, the total includes 532,800 Units owned by James Lowder, 1,199,831
Units owned by CCI and 1,000,732 Units owned by EPJV.
(5) Includes 96,122 Common Shares and 1,737,933 Units. The total includes
61,574 shares owned by EPJV, 31,215 shares owned by CBC Realty, Inc.
("CBC"), a corporation wholly owned by Robert Lowder, and 3,333 shares
subject to options exercisable within 60 days. In addition, the total
includes 523,546 Units owned by Robert Lowder, 1,000,732 Units owned by
EPJV and 213,655 Units owned by CBC.
(6) Based on a Schedule 13G dated January 25, 1996 and filed with the SEC,
reflecting beneficial ownership as of December 31, 1995. According to the
Schedule 13G, these shares are held for the benefit of client accounts
pursuant to investment advisory arrangements. In addition, according to the
Schedule 13G, sole voting power exists for only 1,362,500 of the 1,601,000
Common Shares. Accordingly, the Company believes that the ownership of
these shares does not exceed the ownership limit established by the
Company's Declaration of Trust.
(7) Based on Schedule 13G dated February 9, 1996 and filed with the SEC,
reflecting beneficial ownership as of December 31, 1995. According to the
Schedule 13G, these shares are held for the benefit of client accounts
pursuant to investment advisory arrangements. In addition, according to the
Schedule 13G, Wellington Management Company has shared voting power with
respect to 306,600 of these Common Shares and shared dispositive power with
respect to 1,368,900 of these Common Shares. Accordingly, the Company
believes that the ownership of these shares does not exceed the ownership
limit established by the Company's Declaration of Trust.
16
<PAGE>
Exhibit 99.6
- ------------
(8) Based on Schedule 13G dated February 14, 1996 and filed with the SEC,
reflecting beneficial ownership as of December 31, 1995. According to the
Schedule 13G, these shares are held for the benefit of client accounts
pursuant to investment advisory arrangements. In addition, according to the
Schedule 13G, sole voting power exists for only 55,400 of the 1,015,900
Common Shares. Accordingly, the Company believes that the ownership of
these shares does not exceed the ownership limit established by the
Company's Declaration of Trust.
(9) Includes 4,999 shares subject to options exercisable within 60 days.
(10) Includes 1,666 shares subject to options exercisable within 60 days and
526,934 Units owned by Mr. Meisler and BerFan Company, a partnership of
which Mr. Meisler and his wife are the sole general partners.
(11) Includes 1,666 shares subject to options exercisable within 60 days and
1,851,308 Units owned by Mr. Ripps.
(12) Includes, for Messrs. Nelson, McGehee, Shuster and Hughey, respectively,
2,883, 4,070, 2,527 and 349 shares held pursuant to the Company's 401(k)
plan and 4,456, 3,338, 3,666 and 2,924 shares subject to options
exercisable within 60 days.
(13) Includes 547,173 Common Shares, 5,644,405 Units and 66,909 Common Shares
subject to options exercisable within 60 days. Shares and Units held by
CCI and EPJV have been counted only once for this purpose.
(14) For purposes of this calculation, the number of Common Shares deemed
outstanding includes 17,646,864 Common Shares currently outstanding,
5,644,405 Units reported as beneficially owned by Thomas H. Lowder, James
K. Lowder, Mr. Ripps and Mr. Meisler and 66,909 Common Shares subject to
options exercisable within 60 days.
(15) For purposes of this calculation, the number of Common Shares and Units
deemed outstanding is described in note 2 to this table and includes 66,909
Common Shares subject to options exercisable within 60 days.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
trustees and executive officers to file reports with the SEC on Forms 3, 4 and 5
to report their ownership of and transactions in Common Shares and Units.
During 1995, each of Messrs. Bailey and Ripps failed timely to report one
transaction.
17
<PAGE>
Exhibit 99.7
- ------------
ELECTION OF TRUSTEES
(Proposal 1)
Board of Trustees
The Board of Trustees of the Company is divided into three classes, with
approximately one-third of the trustees elected by the shareholders annually.
The trustees whose terms will expire at the Meeting are Claude B. Nielsen and
Donald T. Senterfitt, each of whom has been nominated for election at the
Meeting as trustees to hold office until the 1999 Annual Meeting of
Shareholders and until their successors are elected and qualified. Two
nominees for trustee will be elected upon a favorable vote of a plurality of
the Common Shares present and entitled to vote, in person or by proxy, at the
Meeting.
The Board of Trustees of the Company recommends a vote FOR Claude B. Nielsen
and Donald T. Senterfitt as trustees to hold office until the 1999 Annual
Meeting of Shareholders and until their successors are elected and qualified.
Should any or all of these nominees become unable to serve for any reason, the
Board of Trustees may designate substitute nominees, in which event the persons
named in the enclosed proxy will vote for the election of such substitute
nominee or nominees, or may reduce the number of trustees on the Board of
Trustees.
Nominees for Election to Term Expiring 1999
Claude B. Nielsen, 45, is a trustee of the Company and a director of Colonial
Properties Holding Company, Inc. ("CPHC"), a wholly owned subsidiary of the
Company that serves as general partner of Colonial Realty Limited Partnership
(the "Operating Partnership"), the entity that owns all of the Company's
properties. Since 1990, Mr. Nielsen has been president of Coca-Cola Bottling
Company United, Inc., headquartered in Birmingham, Alabama, serving also as
chief operating officer from 1990 to 1991 and as chief executive officer since
1991. Prior to 1990, Mr. Nielsen served as president of Birmingham Coca-Cola
Bottling Company. Mr. Nielsen is on the board of directors of AmSouth
Bancorporation. He also currently serves as a board member and finance
committee chairman of the Birmingham Civil Rights Institute as well as a board
member of the Birmingham Airport Authority and the Birmingham Chamber of
Commerce. Mr. Nielsen is a member of the Executive Compensation Committee of
the Board of Trustees. Mr. Nielsen also is a member of the executive
compensation committee of the board of directors of CPHC.
Donald T. Senterfitt, 76, has been a trustee of the Company and a director of
CPHC since September 1993. Mr. Senterfitt is a former director and vice
chairman of SunTrust Banks, Inc., a bank holding company. He is past president
of the American Bankers Association and former General Counsel to the Florida
Bankers Association, and served both organizations in a variety of other
capacities. He currently serves as president and chief executive officer of
The Pilot Group, L.C., a financial institutions consulting firm headquartered
in Orlando, Florida. Mr. Senterfitt is a member of the Audit Committee of the
Board of Trustees.
Incumbent Directors--Term Expiring 1997
Thomas H. Lowder, 46, has been a trustee of the Company since its formation
in July 1993. He is the chairman of the board, president and chief executive
officer of the Company and CPHC and is the president and a director of Colonial
Properties Services, Inc. (the "Management Corporation"), which conducts the
Company's third-party management leasing and brokerage operations. Mr. Lowder
became President of Colonial Properties, Inc. ("Colonial"), the Company's
predecessor, in 1976 and since that time has been actively engaged in the
acquisition, development, management, leasing and sale of multifamily, retail
and office properties for Colonial and the Company. Mr. Lowder is a member and
past president of the Alabama Chapter of the Commercial Investment Real Estate
Institute. Mr. Lowder is a former state Chairman of the Young Presidents'
Organization and
2
<PAGE>
Exhibit 99.7
------------
is a member of the Birmingham Area Board of Realtors, the National Association
of Industrial Office Parks, the International Council of Shopping Centers and
the National Association of Real Estate Investment Trusts (NAREIT). He serves
on the Board of Directors for, among other companies, Discovery 2000, the
Children's Hospital of Alabama, American Red Cross -Birmingham Area Chapter and
the United Way of Central Alabama. Mr. Lowder is a member of the Executive
Committee of the Board of Trustees. Mr. Lowder also is a member of the
executive committee of the board of directors of CPHC. Mr. Lowder is the
brother of James K. Lowder, who also serves as a trustee.
Carl F. Bailey, 65, has been a trustee of the Company and a director of CPHC
and the Management Corporation since September 1993. Mr. Bailey is a former
co-chairman of BellSouth Telecommunications, Inc. and former chairman and chief
executive officer of South Central Bell Telephone Company, positions from which
he retired in 1991. He worked for South Central Bell in a number of capacities
over the past three and a half decades and was elected president and a member
of the board of directors in 1982. Mr. Bailey currently serves on the board of
trustees and the executive committee of Birmingham Southern College, is a
director of Delchamps of Mobile, and is on the board of trustees and executive
committee of Southern Research Institute. Mr. Bailey is also on the board of
directors for Alabama National Bancorp. Mr. Bailey is a member of the
Executive Committee and of the Audit Committee of the Board of Trustees. He
also is a member of the executive committee of the board of directors of CPHC.
Harold W. Ripps, 57, is a trustee of the Company and a director of CPHC and
the Management Corporation. Together with Mr. Meisler, they formed The Rime
Companies, a real estate development, construction and management firm
specializing in the development of multifamily properties. In December 1994,
the Company purchased ten multifamily properties from partners associated with
The Rime Companies. While with The Rime Companies, Mr. Ripps oversaw the
development and construction of approximately 15,000 multifamily apartment
units in the southeastern United States. He is a member of the executive
committee of the Birmingham Council of Boy Scouts of America, the President's
Advisory Committee of Birmingham Southern College and the President's Council
of the University of Alabama in Birmingham. Mr. Ripps is a member of the
Executive Committee and the Executive Compensation Committee of the Board of
Trustees. He also is a member of the executive committee and the executive
compensation committee of the board of directors of CPHC.
Incumbent Directors--Term Expiring 1998
James K. Lowder, 46, has been a trustee of the Company since its formation in
July 1993. He is also a director of CPHC. Mr. Lowder is also chairman of the
board of The Colonial Company, chairman of the board of Lowder Construction
Company, Inc. and chairman of the board of Lowder New Homes, Inc. and Lowder
Realty Company, Inc. He is also a member of the Alabama Association of
Realtors, Montgomery Board of Realtors, the Home Builders Association of
Alabama and the Greater Montgomery Home Builders Association. Mr. Lowder is a
member of the Executive Compensation Committee of the Board of Trustees. Mr.
Lowder also is a member of the executive compensation committee of the board of
directors of CPHC.
M. Miller Gorrie, 60, is a trustee of the Company and a director of CPHC and
the Management Corporation. Mr. Gorrie is, and has been since 1964, president
and chief executive officer of Brasfield & Gorrie, Inc., a general contracting
firm located in Birmingham, Alabama that is ranked consistently among ENR's
"Top 100 Contractors." He serves on the board of directors for, among other
organizations, Alabama Metal Industries, AmSouth Bank of Alabama, Southern
Research Institute, the Birmingham Construction Industry Authority and American
Cast Iron Pipe Co. He is a past director of the Alabama Chamber of Commerce,
the Associated General Contractors, the Building Science Advisory Board of
Auburn University, the Business Council of Alabama and the March of Dimes. Mr.
Gorrie is a member of the Executive Committee and the Executive
3
<PAGE>
Exhibit 99.7
------------
Compensation Committee of the Board of Trustees. He also is a member of the
executive committee and the executive compensation committee of the board of
directors of CPHC.
Herbert A. Meisler, 68, is a trustee of the Company and a director of CPHC.
Together with Mr. Ripps, he formed The Rime Companies, a real estate
development, construction and management firm specializing in the development
of multifamily properties. In December 1994, the Company purchased ten
multifamily properties from partners associated with The Rime Companies. While
with The Rime Companies, Mr. Meisler oversaw the development and construction
of approximately 15,000 multifamily apartment units in the southeastern United
States. He currently serves on the board of directors for the Community
Foundation of South Alabama and the Mobile Airport Authority and is the
president of Wichita Greyhound Park. He is a past director of the Alabama Eye
and Tissue Bank and past president of the Mobile Jewish Welfare Fund. Mr.
Meisler is a member of the Executive Compensation Committee and the Audit
Committee of the Board of Trustees. He also is a member of the executive
compensation committee of the board of directors of CPHC.
Committees of the Board of Trustees; Meetings
In accordance with the Bylaws of the Company, the Board of Trustees has
established an Executive Committee, an Audit Committee, and an Executive
Compensation Committee. The membership of these Committees is set forth in the
preceding section of this Proxy Statement.
The Executive Committee has the authority, subject to the Company's conflict
of interest policies, to acquire and dispose of real property and the power to
authorize, on behalf of the full Board of Trustees, the execution of certain
contracts and agreements, including those related to the borrowing of money by
the Company (and, consistent with the Second Amended and Restated Agreement of
Limited Partnership of the Operating Partnership, as amended, to cause the
Operating Partnership to take such actions). The Executive Committee met six
times in 1995.
The Audit Committee, which consists of three independent trustees, was
established to make recommendations concerning the engagement of independent
public accountants, review with the independent public accountants the plans
and results of the audit engagement, review professional services provided by
the independent public accountants, review the independence of the independent
public accountants, consider the range of audit and non-audit fees, and review
the adequacy of the Company's internal accounting controls. The Audit
Committee met three times during 1995.
The Executive Compensation Committee was established to determine
compensation for the Company's executive officers and to administer the
Company's stock option and annual incentive plans. The Executive Compensation
Committee met one time during 1995.
The Board of Trustees held five meetings during 1995.
Compensation of Trustees
The Company pays its trustees who are not officers of the Company fees for
their services as trustees. Trustees receive annual compensation of $12,000
plus a fee of $500 (plus out-of-pocket expenses) for attendance (in person or
by telephone) at each meeting of the Board of Trustees, including Committee
meetings. (Herbert A. Meisler has waived his right to trustee fees and has
requested that the Company donate a like amount to religious or charitable
organizations.) Pursuant to the Company's Non-employee Trustee Share Option
Plan, each newly elected trustee who is not an employee of the Company
receives, upon election, an option to purchase 5,000 Common Shares for a price
equal to fair market value of such shares on the date of grant. Each non-
employee trustee also receives an automatic grant of an option, exercisable for
5,000 Common Shares,
4
<PAGE>
Exhibit 99.7
- ------------
following each annual election of trustees after the trustee has completed at
least one year of service. Officers of the Company who are trustees are not
paid any trustee fees nor are they eligible to participate in the Non-employee
Trustee Share Option Plan.
5
<PAGE>
Exhibit 99.8
------------
Executive Officers of the Company
The following is a biographic summary of the executive officers of the
Company:
Thomas H. Lowder, 46, is the President and Chief Executive Officer of the
Company and CPHC, a trustee of the Company and a director of CPHC and the
Management Corporation. Mr. Lowder became President of Colonial in 1976 and
since that time has been actively engaged in the acquisition, development,
management, leasing and sale of multifamily, retail and office properties for
Colonial. Mr. Lowder is a member and past president of the Alabama Chapter of
the Commercial Investment Real Estate Institute. Mr. Lowder is a former state
Chairman of the Young Presidents' Organization and a member of the Birmingham
Area Board of Realtors, the National Association of Industrial Office Parks, the
International Council of Shopping Centers and the National Association of Real
Estate Investment Trusts (NAREIT). He serves on the board of directors for
Discovery 2000, the Children's Hospital of Alabama, American Red Cross-
Birmingham Area Chapter and the United Way of Central Alabama. He graduated
with honors from Auburn University with a Bachelor of Science Degree.
Howard B. Nelson, Jr., 48, has been Senior Vice President and Chief
Operating Officer of the Company and CPHC, with responsibility for the day-to-
day management of the Company, since September 1993. He joined Colonial in 1984
as a vice president and became Senior Vice President-Finance in 1987. Mr.
Nelson has served as treasurer, vice president, president and board member of
the Birmingham Chapter of the National Association of Industrial and Office
Parks as well as vice present and board member of the Building Owners and
Managers Association of Metropolitan Birmingham. Mr. Nelson serves on the
College of Business Advisory Council of Auburn University. He holds a Bachelor
of Science Degree from Auburn University.
Douglas B. Nunnelley, 53, has been Senior Vice President and Chief
Financial Officer of the Company and CPHC, with general responsibility for
financing matters, since September 1993. From 1979 until April 1993, Mr.
Nunnelley served as Executive Vice President, Comptroller and Chief Accounting
Officer of the AmSouth Bancorporation, and as Senior Vice President and
Comptroller of the First National Bank of Birmingham. From April 1993 until
joining Colonial in August 1993, Mr. Nunnelley was self-employed as a certified
public accountant. Mr. Nunnelley holds a Bachelor of Science Degree in
accounting from the University of Alabama and is a graduate of the Stonier
Graduate School of Banking at Rutgers University.
John N. Hughey, 36, has been Senior Vice President--Retail Division
Leasing/Development of CPHC, with responsibility for supervising the leasing of
all retail space owned and/or managed by the Company, since September 1993. He
joined Colonial in 1982 and assumed responsibility for an increasing number of
shopping centers until being named to Senior Vice President--Retail Division of
Colonial in 1991. Mr. Hughey served as the Alabama/Mississippi State Operations
Chairman for the International Council of Shopping Centers from 1993-1995. He
holds a Bachelor of Science Degree from Auburn University.
Charles A. McGehee, 50, has been Senior Vice President--
Acquisitions/Brokerage of CPHC, in charge of the Company's acquisitions and the
Birmingham sales brokerage departments, since September 1993. He joined
Colonial in 1976 as vice president of retail leasing and was responsible for
leasing all retail space owned and/or managed by Colonial. He became Senior
Vice President--Office Division of Colonial in 1990, a position he held until
assuming his current position. Mr. McGehee has served as president and a board
member of the National Association of Industrial and Office Parks as well as a
member of the board of directors of the Birmingham Area Board of Realtors. He
holds a Bachelor of Science Degree from Auburn University.
22
<PAGE>
Exhibit 99.8
- ------------
John L. Moss, 46, has been Senior Vice President--Retail Division-
Management of CPHC, with responsibility for management and marketing of all
retail property owned and/or managed by the Company, since September 1993. He
joined Colonial in 1973 as a property manager and assumed various positions of
increasing responsibility in the retail area until becoming Senior Vice
President--Retail Division of Colonial in 1990. Mr. Moss, who is a Certified
Shopping Center Manager (CSM), has served as the state director and the
Alabama/Mississippi state governmental affairs chairman of the International
Council of Shopping Centers. He holds a Bachelor of Science Degree from Auburn
University.
Thomas M. LaDow, 45, has been Senior Vice President Office Division of
CPHC, with responsibility for management and leasing of all office properties
owned and/or managed by the Company, since September 1993. He joined Colonial
in 1975 as a property manager and became Senior Vice-President--Office Division
of Colonial in September 1983. Mr. LaDow is a Certified Property Manager (CPM)
and is an active member of the Institute of Real Estate Management, Building
Owner's and Manager's Association and the National Association of Industrial and
Office Park. He holds a Bachelor of Science Degree from Birmingham Southern
College in Birmingham, Alabama.
Jeffrey L. Shuster, 49, has been Senior Vice President--Multifamily
Division of CPHC, with responsibility for management of all multifamily
properties owned and/or managed by the Company, since September 1993. He joined
Colonial in 1986 as vice president and became Senior Vice President--Multifamily
Division of Colonial in June 1988. Mr. Shuster is a Certified Property Manager
(CPM) and a past director and officer of the Central Florida Multifamily Housing
Association and an active member of the Institute of Real Estate Management. He
holds a Bachelor of Business Administration Degree from Florida International
University of Miami.
23
<PAGE>
Exhibit 99.9
------------
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the annual and
long-term compensation for the chief executive officer and the four other most
highly compensated executive officers of the Company (the "Named Executive
Officers"):
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------------------ -------------------------------------------
Restricted Securities All
Other Annual Share Underlying Other
Name and Principal Position Year Salary ($)(1) Bonus ($) Compensation Awards ($) (2) Options(#) Compensation(3)
- --------------------------- ---- ------------ -------- ------------ -------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas H. Lowder.................. 1995 $285,000 $110,000 -- $62,775 15,835 $4,500
Chairman of the Board 1994 275,000 100,000 -- 62,745 16,000 4,620
President and Chief 1993 70,813 (4) -- -- -- --
Executive Officer
Howard B. Nelson, Jr.............. 1995 145,000 68,000 -- 26,100 6,450 4,159
Senior Vice President and Chief 1994 120,000 62,000 -- 13,684 3,460 3,588
Operating Officer 1993 30,900 42,000 -- -- -- --
Charles A. McGehee................ 1995 110,000 63,000 -- 15,413 3,815 3,276
Senior Vice President - 1994 107,500 58,600 -- 12,238 3,100 3,349
Acquisitions/Brokerage 1993 27,681 43,000 -- -- -- --
Jeffrey L. Shuster................ 1995 130,000 26,000 -- 18,225 4,510 3,555
Senior Vice President - 1994 112,500 26,000 -- 12,794 3,245 3,576
Multifamily Division 1993 28,969 24,000 -- -- -- --
John N. Hughey.................... 1995 95,000 62,000 -- 13,388 3,295 3,088
Senior Vice President - Retail 1994 95,000 38,000 -- 10,903 2,740 2,685
Division - Leasing/Development 1993 24,463 27,000 -- -- -- --
</TABLE>
- -------------------
(1) The Company commenced operations on September 29, 1993. The amounts set
forth as "salary" for 1993 represent the salary paid to such executive
officers for the period from September 29, 1993 to December 31, 1993.
(2) The number and value of restricted shares held by the Named Executive
Officers as of December 31, 1995 were as follows: Mr. Lowder - 5,610 shares
($143,055); Mr. Nelson - 1,775 shares ($45,263); Mr. McGehee - 1,235 shares
($31,493); Mr. Shuster - 1,385 shares ($35,318); and Mr. Hughey - 1,085
shares ($27,668). Dividends are paid on restricted shares at the same rate
paid to all holders of Common Shares.
(3) All Other Compensation consists solely of employer contributions to the
Company's 401(k) Plan.
(4) Mr. Lowder did not receive a bonus award for 1993 because he was not
eligible to participate in the incentive plan maintained by Colonial, the
Company's predecessor.
6
<PAGE>
Exhibit 99.9
- ------------
The following table sets forth certain information concerning exercised and
unexercised options held by the Named Executive Officers at December 31, 1995.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
<TABLE>
<CAPTION>
Number of Value of Unexercised
Shares Securities Underlying In-the-Money
Acquired Value Unexercised Options Options Exercisable
Name on Exercise(#) Realized($) at December 31, 1995 at December 31, 1995
- ---- ------------- ----------- ----------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable(1)
--------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
Thomas H. Lowder........... -0- $-0- 5,333 26,502 $13,333 $66,255
Howard B. Nelson, Jr. -0- -0- 1,153 8,757 2,883 21,893
Charles A. McGehee......... -0- -0- 1,033 5,882 2,583 14,705
Jeffrey L. Shuster......... -0- -0- 1,082 6,673 2,705 16,683
John N. Hughey............. -0- -0- 913 5,122 2,283 12,805
</TABLE>
________________________
(1) Based on closing price of $25.50 per Common Share on December 29, 1995, as
reported by the New York Stock Exchange.
The following table shows certain information relating to options to purchase
Common Shares granted to the Named Executive Officers during 1995.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
- -----------------------------------------------------------------------------------------------
Potential Realized
Percent Value at Assumed
Number of of Total Annual Rates of Share
Securities Options Price Appreciation for
Underlying Granted to Exercise Option Term
Options Employees in Price Expiration -----------------------
Name Granted (#) Fiscal Year ($/Sh) Date 5% 10%
- --------------------------------------------------------------------------------------------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Thomas H. Lowder........................ 15,835 31.5% $23.00 1/6/05 $229,449 $579,086
Howard B. Nelson, Jr.................... 6,450 12.9% $23.00 1/6/05 93,461 235,877
Charles A. McGehee...................... 3,815 7.6% $23.00 1/6/05 55,279 139,515
Jeffrey L. Shuster...................... 4,510 9.0% $23.00 1/6/05 65,350 164,931
John N. Hughey.......................... 3,295 6.6% $23.00 1/6/05 47,744 120,498
</TABLE>
All options granted in 1995 become exercisable in three equal installments
beginning on the first anniversary of the date of grant and have a term of ten
years.
7
<PAGE>
Exhibit 99.9
- ------------
Defined Benefit Plan
The Company has adopted a Retirement Plan (the "Plan") for all of the
employees of the Company and its subsidiaries. The Plan also has been adopted
by the Management Corporation. An employee becomes eligible to participate in
the Plan on January 1 of the year following the person's employment by the
Company or one of its consolidated or unconsolidated subsidiaries. Benefits are
based upon the number of years of service (maximum 25 years), and the average of
the participant's earnings during the five highest years of compensation during
the final 10 years of employment. Each participant accrues a benefit at a
specified percentage of compensation up to the Social Security wage base, and at
a higher percentage of compensation above the Social Security wage base.
Employment by Colonial, the Company's predecessor, or certain of its affiliated
entities is treated as covered service for purposes of the Plan. A participant
receives credit for a year of service for every year in which 1,000 hours are
completed in the employment of the Company or its subsidiaries.
The following table reflects estimated annual benefits payable upon retirement
under the Plan as a single life annuity commencing at age 65. These benefits
ignore the lower benefit rate applicable to earnings below the Social Security
covered compensation level.
Pension Plan Table
<TABLE>
<CAPTION>
Years of Service
-----------------------------------------------------
Remuneration 5 10 15 20 25
- ---------------
<S> <C> <C> <C> <C> <C>
$100,000 $ 7,600 $15,200 $22,800 $30,400 $38,000
125,000 $ 9,500 $19,000 $28,500 $38,000 $47,500
150,000 $11,400 $22,800 $34,200 $45,600 $57,000
Over $150,000 $11,400 $22,800 $34,200 $45,600 $57,000
</TABLE>
The benefits shown are limited by the current statutory limitations which
restrict the amount of benefits which can be paid from a qualified retirement
plan. The statutory limit on compensation which may be recognized in
calculating benefits is $150,000 in 1996. This limit is scheduled to increase
periodically with the cost of living.
Covered compensation under the Plan includes only the employees' base salary.
Thomas H. Lowder has 21 years of covered service under the Plan, Howard B.
Nelson, Jr. has 11 years of service, Charles A. McGehee has 18 years, Jeffrey L.
Shuster has nine years and John N. Hughey has 13 years.
Employment Agreement
Thomas H. Lowder, the chief executive officer of the Company, entered into an
employment agreement with the Company in September 1993. This agreement is for
a term of three years, and provides for annual compensation of at least $275,000
and incentive compensation on substantially the same terms as set forth in the
description of the Annual Incentive Plan. See "Report on Executive Compensation
- --Annual Incentive Plan." The agreement includes provisions restricting Mr.
Lowder from competing with the Company during employment and, except in certain
circumstances, for two years after termination of employment. The employment
agreement provides for certain severance payments in the event of disability or
termination by the Company without cause or by the employee with cause.
8
<PAGE>
Exhibit 99.9
- ------------
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, that might incorporate other filings with the
Securities and Exchange Commission ("SEC"), including this Proxy Statement, in
whole or in part, the following Performance Graph and Report on Executive
Compensation shall not be incorporated by reference into any such filings.
Performance Graph
Comparison of Cumulative Total Return of
Colonial Properties Trust,
the NAREIT Equity REIT Total Return Index,
and the S&P 500 Index 1/
-
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
9/93 12/93 3/94 6/94 9/94 12/94 3/95 6/95 9/95 12/95
----- ------ ----- ----- ----- ------ ----- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Colonial Properties $ 100 $ 93 $ 100 $ 103 $ 100 $ 106 $ 110 $ 113 $ 124 $ 130
S&P 500 Index $ 100 $ 102 $ 98 $ 99 $ 104 $ 104 $ 114 $ 125 $ 134 $ 142
NAREIT Index $ 100 $ 94 $ 96 $ 98 $ 96 $ 95 $ 96 $ 102 $ 107 $ 112
</TABLE>
- -------------------
1/ Assumes $100 invested on September 30, 1993 in the Company's Common
Shares, the NAREIT Equity REIT Total Return Index, and the S&P 500 Index. Total
return assumes reinvestment of dividends.
9
<PAGE>
Exhibit 99.10
- -------------
EXECUTIVE COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
None of the three members of the Executive Compensation Committee is an
employee of the Company. As described below, James Lowder, who is a member of
the Committee, together with his brothers, Thomas and Robert, owns an interest
in certain entities that, during 1993, were parties to certain transactions
involving the Company and Colonial.
Prior to the formation of the Company, Colonial made loans to certain
partnerships in which the Lowder family owned an interest (including
partnerships that owned properties that were acquired by the Company in
connection with its formation). The greatest aggregate principal amount of such
loans outstanding during 1993 was approximately $2,375,000. In connection with
the Formation Transactions, these loans were repaid through the issuance of
127,282 Common Shares to Colonial.
Prior to the formation of the Company, Colonial guaranteed certain loans made
to partnerships in which Colonial and certain affiliates owned an interest
(including partnerships that owned properties that were acquired by the Company
in connection with its formation). The greatest aggregate principal amount of
such loans outstanding during 1993 was approximately $10,415,000. As of
December 31, 1993, the aggregate outstanding principal amount of such loans was
$1,667,000. The Operating Partnerships has indemnified Colonial for the entire
balance.
Prior to the formation of the Company, the Lowder brothers guaranteed certain
loans made to Colonial and to certain partnerships whose assets were acquired by
the Company in connection with its formation. The greatest aggregate principal
amount of such loans outstanding during 1993 was $90,577,000. The Company used
proceeds from the initial public offering to repay aggregate outstanding
balances of approximately $80,702,000 of these loans assumed by the Company in
its formation. The Lowder brothers were released as guarantors of an additional
aggregate outstanding balance of approximately $3,680,000. As of December 31,
1993, the aggregate outstanding principal amount of loans held by the Company
and guaranteed by the Lowder brothers amounted to approximately $6,195,000. The
Operating Partnership has indemnified the Lowder brothers against these
guarantees for a maximum amount of approximately $3,145,000.
Prior to the formation of the Company, a bank of which the Lowder brothers are
directors and controlling shareholders advanced funds to Colonial under a line
of credit secured by certain assets owned by Colonial. The greatest principal
amount outstanding under the line of credit during 1993 was $7,900,000. The
Company assumed and repaid $2,186,000 of this indebtedness in connection with
its formation. Interest expense on this indebtedness incurred by Colonial for
the period from January 1, 1993 to September 28, 1993 totaled approximately
$75,000.
Lowder Construction Company, Inc., a corporation indirectly owned by the
Lowder brothers and of which James Lowder is president, performed construction
services for Colonial and the Company during 1993. These services involved
primarily initial construction, but also involved tenant improvements to retail
and office properties and renovation of existing buildings. The aggregate
amount paid to Lowder Construction Company, Inc. for construction costs incurred
by Colonial for the period from January 1, 1993 to September 28, 1993 was
approximately $119,000. The aggregate amount paid to Lowder Construction
Company, Inc. for construction costs incurred by the Company for the period from
September 29, 1993 (commencement of operations) to December 31, 1993 was
approximately $27,000.
Colonial Insurance Agency, which is indirectly owned by the Lowder brothers,
performed insurance brokerage services for Colonial and the Company during 1993.
These services involved primarily obtaining property, casualty, and liability
insurance coverage, but also involved risk
11
<PAGE>
Exhibit 99.10
- -------------
management and other services. The aggregate amount of payments, including
premiums to be remitted to insurers, paid to the Colonial Insurance Agency by
Colonial for the period from January 1, 1993 to September 28, 1993 was
approximately $848,000. The aggregate amount of payments, including premiums to
be remitted to insurers, paid to the Colonial Insurance Agency by the Company
for the period from September 29, 1993 (commencement of operations) to December
31, 1993 was approximately $416,000.
Certain entities in which the Lowder brothers have an interest have leased
office space from Colonial and the Company. Rent paid by Colonial by these
entities from January 1, 1993 to September 28, 1993 totaled approximately
$587,000. Rent paid to the Company by these entities from September 29, 1993
(commencement of operations) through December 31, 1993 totaled approximately
$195,000.
The Colonial Company, a corporation indirectly owned by the Lowder brothers,
provided computer rentals, payroll services and employee benefit plan
administration services to Colonial and the Company during 1993. The aggregate
amount paid to The Colonial Company by Colonial for such services for the period
from January 1, 1993 to September 28, 1993 was approximately $104,000. The
aggregate amount paid to The Colonial Company by the Company for such services
for the period from September 29, 1993 (commencement of operations) to December
31, 1993 was approximately $31,000.
Colonial and the Management Corporation provided management and leasing
services during 1993 to certain partnerships in which the Lowder brothers have
an interest. The aggregate amount of fees paid to Colonial by such partnerships
from January 1, 1993 to September 28, 1993 (including those that have been
eliminated from the Company's financial statements as intercompany items) was
approximately $2,524,000. The aggregate amount of fees paid to the Management
Corporation by such partnerships for the period September 29, 1993 (commencement
of operations) to December 31, 1993 was approximately $193,000.
12
<PAGE>
Exhibit 99.10
- -------------
CERTAIN RELATIONSHIPS AND TRANSACTIONS
In connection with the formation of the Company in September 1993, the Lowder
family (including Thomas, James and Robert Lowder and their mother) transferred
to the Operating Partnership and the Company all of its interests in 36 retail,
multifamily and office properties, approximately $2.8 million principal amount
of notes receivable from partnerships that owned three of these properties and
Colonial's operating businesses, in exchange for an aggregate of 4,428,256
Units, 408,791 Common Shares, approximately $560,000 in cash, and the assumption
of mortgage indebtedness secured by these Properties.
Partnerships in which the Lowder brothers or their affiliates served as
general partner transferred interests in 11 of the Properties to the Operating
Partnership in exchange for approximately $17.2 million in cash and interests in
three Properties for 265,354 Units. The Company assumed the mortgage
indebtedness secured by these Properties and the cash consideration was paid
from a portion of the net proceeds of the Company's initial public offering.
Immediately following the offering, the Operating Partnership assumed the Lowder
family's obligations (either as obligor or guarantor) with respect to
indebtedness encumbering the Properties in the aggregate mount of approximately
$17.6 million.
During 1993, entities affiliated with Thomas, James, and Robert Lowder engaged
in certain transactions with the Company. See "Executive Compensation Committee
Interlocks and Insider Participation."
14
<PAGE>
Exhibit 99.11
- -------------
EXECUTIVE COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
None of the four members of the Executive Compensation Committee is an
employee of the Company. As described below, James K. Lowder, who is a member
of the Committee, together with his brothers, Thomas and Robert, owns an
interest in certain entities that, during 1994, were parties to certain
transactions involving the Company.
The Management Corporation provided management and leasing services during
1994 to certain partnerships in which the Lowder brothers have an interest. The
aggregate amount of fees paid to the Management Corporation by such partnerships
during 1994 was approximately $112,000.
In connection with the expansion of one of the Company's multifamily
properties, the Company acquired land that was fifty percent owned by the Lowder
brothers and fifty percent owned by a third party. The Lowder brothers received
for their interest an aggregate of 14,025 Units having a deemed value of
$302,000. The Lowder Construction Company, Inc. was engaged to serve as the
construction manager for the project. The Company also paid to the Lowder
Construction Company, Inc., a total of $9 million ($8.6 million of which was
then paid to unaffiliated subcontractors) for construction of other multifamily
development projects.
The Colonial Company, a corporation owned by the Lowder family, provided
certain administrative services for the Company, including payroll processing
and computer processing, during 1994. The aggregate amount paid by the Company
to The Colonial Company for these services was approximately $82,000.
Colonial Insurance Company, a corporation indirectly owned by the Lowder
family, provided insurance brokerage services for the Company during 1994. The
aggregate amount paid by the Company to Colonial Insurance Company for these
services for the year ended December 31, 1994 was approximately $172,000.
The Company leased space to certain entities in which the Lowder family has an
interest and received rent from these entities totaling approximately $775,000
during 1994.
13
<PAGE>
CERTAIN RELATIONSHIPS AND TRANSACTIONS
For a discussion of certain transactions involving the Company and
certain of its officers and trustees, see "Executive Compensation Committee
Interlocks and Insider Participation."
15
<PAGE>
Exhibit 99.12
- -------------
EXECUTIVE COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
None of the five members of the Executive Compensation Committee is an
employee of the Company. As described below, James K. Lowder, Harold W. Ripps,
Herbert A. Meisler and M. Miller Gorrie, who are members of the Committee, own
interests in certain entities that, during 1995, were parties to certain
transactions involving the Company.
In December 1994, the Company acquired, in exchange for units of limited
partnership interest in the Operating Partnership ("Units"), ten multifamily
properties developed and owned by The Rime Companies, in which Messrs. Ripps and
Meisler owned an interest. The acquisition agreements relating to that
transaction provided for the possible issuance of additional Units to the owners
of The Rime Companies if one of the properties met certain performance criteria
after the acquisition. During 1995, the Operating Partnership issued 33,661
Units to Mr. Ripps and 33,661 Units to the adult children of Mr. Meisler
pursuant to these acquisition agreements.
The Management Corporation provided management and leasing services during
1995 to certain entities in which James K. Lowder and his brothers Thomas L.
Lowder and Robert E. Lowder, have an interest. The aggregate amount of fees
paid to the Management Corporation by such entities during 1995 was
approximately $71,000.
Colonial Insurance Company, a corporation indirectly owned by the Lowder
family, provided insurance brokerage services for the Company during 1995. The
aggregate amount paid by the Company to Colonial Insurance Company for these
services for the year ended December 31, 1995 was approximately $168,000.
The Company leased space to certain entities in which the Lowder family has an
interest and received rent from these entities totaling approximately $836,000
during 1995.
13
<PAGE>
Exhibit 99.12
- -------------
Brasfield & Gorrie General Contractors, Inc., a corporation of which M. Miller
Gorrie is a shareholder and chairman of the board, was engaged during 1995 to
prepare the site work for the expansion of the Company's Macon Mall. The
Company paid the corporation a total of $2.7 million ($2.6 million of which was
then paid to unaffiliated subcontractors) during 1995 pursuant to this
engagement.
The Company engaged Lowder Construction Company, Inc., of which James K.
Lowder serves as chairman of the board and which is indirectly owned by James K.
Lowder and Thomas H. Lowder, to serve as construction manager for eight
multifamily development and expansion projects during 1995. The Company paid a
total of $16.1 million ($15.8 million of which was then paid to unaffiliated
subcontractors) for the construction of these development projects during 1995.
The Company also paid to Rime Construction Company, Inc., a corporation owned by
Harold W. Ripps and (until June 1995 when he transferred his interest to his son
and an unrelated party) Herbert A. Meisler, a total of $2.84 million ($2.76
million of which was then paid to unaffiliated subcontractors) for construction
of one multifamily expansion project during 1995.
14
