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As filed with the Securities and Exchange Commission on May 13, 1996
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(B) OR 12(G) OF
THE SECURITIES EXCHANGE ACT OF 1934
_________________
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
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Page No.
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Item 1. Business.................................................. 1
Item 2. Financial Information..................................... 7
Item 3. Properties................................................ 13
Item 4. Security Ownership of Certain Beneficial Owners and
Management................................................ 26
Item 5. Directors and Executive Officers.......................... 27
Item 6. Executive Compensation.................................... 28
Item 7. Certain Relationships and Related Transactions............ 28
Item 8. Legal Proceedings......................................... 28
Item 9. Market Price of and Distributions on the Equity and
Related Security Holder Matters........................... 28
Item 10. Recent Sales of Unregistered Securities................... 29
Item 11. Description of Registrant's Securities to be
Registered................................................ 30
Item 12. Indemnification of Directors and Officers................. 36
Item 13. Financial Statements and Supplementary Data............... 37
Item 14. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure....................... 37
Item 15. Financial Statements and Exhibits......................... 37
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ITEM 1. BUSINESS
GENERAL
Colonial Realty Limited Partnership, a Delaware limited partnership (the
"Operating Partnership"), is the "operating partnership" of Colonial Properties
Trust, an Alabama real estate investment trust (the "Company") whose common
shares are listed on the New York Stock Exchange ("NYSE"). The Operating
Partnership is managed by the Company, through its wholly owned subsidiary,
Colonial Properties Holding Company, Inc., an Alabama corporation ("CPHC"),
which in turn owns approximately 68.4% of the partnership interests in the
Operating Partnership and serves as the sole general partner of the Operating
Partnership. The Company is a self-administered and self-managed real estate
investment trust ("REIT"), which was formed to succeed to substantially all of
the interests of Colonial Properties, Inc., an Alabama corporation ("Colonial"),
its affiliates and certain others. The Company's activities include ownership of
a diversified portfolio of 63 multifamily, retail and office 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 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, the Company
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, the Company 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 April 30, 1996, the Operating Partnership owned a diversified
portfolio of 37 garden-style multifamily apartment communities containing a
total of 12,131 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
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.") As of April 30, 1996, the Multifamily
Properties that had achieved stabilized occupancy, the Retail Properties and the
Office Properties were 94.7%, 92.5% and 96.1% leased, respectively.
The Company conducts all of its business through CPHC, the Operating
Partnership, 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
Operating Partnership owns all of the Properties (or interests therein). The
Operating Partnership 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. The Company 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 the
Company together represent 99% of the equity interest in the Management
Corporation. The members of the Board of Trustees of the Company and the members
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of the Board of Directors of CPHC are identical, and all of the executive
officers of the Company also are executive officers of CPHC.
Since the Company's IPO, the Operating Partnership has acquired direct or
indirect interests in 21 Multifamily Properties, eight Retail Properties and
several parcels of Land, representing a total investment of $438.9 million, and
has initiated the development of eight multifamily properties (including
additional phases of existing Multifamily Properties) and a major expansion of
Macon Mall representing a total investment of approximately $12.5 million
through April 30, 1996. 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.
As of April 30, 1996, the Company, through CPHC, owned approximately 67.4%
of the Class A units of limited partnership interest (the "Units") of the
Operating Partnership and a 1% general partnership interest. An additional 17.2%
of the Units of the Operating Partnership 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. 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 35 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.
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.
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.
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BUSINESS STRATEGY
The general business strategy of the Operating Partnership is to generate
stable and increasing cash flow and portfolio value. The Operating Partnership
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
Operating Partnership 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 Operating Partnership's business strategy and implementation of
that strategy are determined by CPHC, the Operating Partnership's general
partner, and may be changed from time to time. The Operating Partnership 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
Operating Partnership 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
Operating Partnership 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 Operating Partnership's name recognition.
Diversity of Product. The Operating Partnership and its predecessors have
maintained operations in three major real estate industry segments--multifamily,
retail and office--for over 25 years. The Operating Partnership'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 Operating Partnership 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 Operating Partnership of cyclical swings
associated with specific property types.
Experienced Management. The Operating Partnership believes that strong,
experienced leadership, particularly in the management and leasing area, is
critical to the success of a fully-integrated real estate company. CPHC's
President and its executive officers 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. CPHC believes
that the experience of its management team gives the Operating Partnership an
advantage over less experienced competitors in its primary markets. In
addition, the Operating Partnership is committed to a continuing education
program that encourages its employees to attain recognized, professional
designations.
Long-Term Relationships. The Operating Partnership'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 relationship with tenants and real
estate owners, as well as contractors, suppliers, professionals and lenders, in
the Southeast. The Operating Partnership believes that these relationships
result in cost savings due to reduced tenant turnover and fewer management
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terminations, enable the Operating Partnership to obtain favorable terms for
services, goods and loans and provide the Operating Partnership with access to
additional business opportunities.
Additional information about the business of the Operating Partnership is
set forth under "The Company," pages S-7 through S-9, in the Company'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 the Company'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, the Company issued 4,600,000 Common Shares at a price
of $24.625 per share including 600,000 Common Shares issued upon exercise of the
underwriters' over-allotment option. The net proceeds of the offering, which
totaled $107.3 million, were contributed, through CPHC, to the Operating
Partnership, which used $79.8 million of the proceeds to repay the balances of
certain indebtedness of the Operating Partnership. The remainder of the
proceeds were used to fund development activities and acquisitions.
In December 1995, the Operating Partnership 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 "SouthTrust Line of Credit"). The new 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 new credit facility is renewable annually in
December and provides for a two-year amortization in the event of non-renewal.
The Operating Partnership now has four bank lines of credit (the "Lines of
Credit") and one construction loan providing for total borrowings of up to
$100.8 million. These credit facilities are used by the Operating Partnership
primarily to finance property acquisitions and development.
MULTIFAMILY PROPERTY ACQUISITIONS
Effective April 1, 1996, the Operating Partnership 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 Operating
Partnership 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, 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 Operating Partnership 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 Operating Partnership 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 Operating Partnership assuming a mortgage
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with a balance of $7.5 million and which bears interest at 6.875% and through
advances on the SouthTrust Line of Credit. As of April 30, 1996, Crowne Chase
Apartments were 98.0% occupied, with average rent of $660 per unit.
MULTIFAMILY DEVELOPMENT PROJECTS
As of April 30, 1996, expansion construction at three 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 Operating Partnership expects to begin expansion
construction on one Multifamily Project located in Alabama in the third quarter
of 1996.
Inverness Lakes Apartments. The Operating Partnership began construction
on a 180-unit expansion of Inverness 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 SouthTrust 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 Operating Partnership 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 Operating Partnership 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
SouthTrust Line of Credit. The Company expects to complete lease-up of this
project during the third quarter of 1996.
Rime Village Hoover. The Operating Partnership began construction on a
160-unit expansion of the Operating Partnership's Rime Village Hoover Apartments
located in Hoover, Alabama (a suburb of Birmingham) 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
SouthTrust 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 Operating Partnership expects to
complete construction in the second quarter of 1996 and to complete lease-up
during the first quarter of 1997.
Heathrow. The Operating Partnership began construction on a 312-unit
development 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 SouthTrust Line of Credit.
The Operating Partnership 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 Operating Partnership 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
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expected to total approximately $11.6 million. Development costs are expected to
be financed through advances from the SouthTrust Line of Credit. The Operating
Partnership expects to complete construction in the fourth quarter of 1996 and
to complete lease-up during the second quarter of 1997.
Riverchase III. The Operating Partnership 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
SouthTrust Line of Credit. The Operating Partnership expects to complete
construction in the first quarter of 1997 and to complete lease-up during the
third quarter of 1997.
Heatherbrooke IV. The Operating Partnership 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 SouthTrust Line of Credit. The Operating Partnership
expects to complete construction in the second quarter of 1997 and to complete
lease-up during the fourth quarter of 1997.
RETAIL DEVELOPMENT PROJECTS
Macon Mall. The Operating Partnership began the 423,000 square foot
expansion of Macon Mall, a super regional mall containing approximately
1,017,000 square feet located in Macon, Georgia in May 1995. The mall expansion
will include new anchor tenants Dillard Department Stores, Inc. and Parisian,
Inc., together with 50 specialty shops, which will join existing department
stores, Macy's Primary Real Estate, Inc., Belk Matthews Company of Macon,
Georgia, Sears-Roebuck and Company, and J.C. Penney Company, Inc. 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 $50 million and will be financed through advances on the
SouthTrust Line of Credit. The Operating Partnership expects to complete the
expansion in the first quarter of 1997 and to complete lease-up during the first
quarter of 1998.
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
Operating Partnership'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
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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 Operating Partnership
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 Operating Partnership 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 Operating Partnership, that no material environmental
condition with respect to any Property has occurred during the Operating
Partnership's ownership thereof, or that future uses or conditions (including,
without limitation, changes in applicable environmental laws and regulations)
will not result in imposition of environmental liability.
At one of the Operating Partnership'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 Operating
Partnership 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 Operating
Partnership 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.
ITEM 2. FINANCIAL INFORMATION
The following table sets forth selected financial and operating information
on a historical basis for the Operating Partnership and the Colonial Group (as
hereinafter defined) for each of the five years ended December 31, 1995. The
following information should be read in conjunction with all of the financial
statements and notes thereto included elsewhere in this Form 10. 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. The "Colonial Group" consists of Colonial, 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.
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YEAR ENDED DECEMBER 31,
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1995 1994 1993(1) 1992 1991
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(AMOUNTS IN THOUSANDS EXCEPT UNIT AND PROPERTY DATA)
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OPERATING DATA:
Total revenue............................... $ 111,437 $ 63,958 $ 42,629 $ 35,046 $ 31,163
Expenses:
Depreciation and amortization............. 20,615 13,060 7,874 6,449 5,741
Other operating expenses.................. 42,282 24,011 16,777 14,788 13,645
Income from operations...................... 48,540 26,887 17,978 13,809 11,777
Interest expense............................ 23,972 10,820 12,772 14,509 14,654
Other income (expense), net................. 499 461 (1,697) -0- -0-
Income (loss) before gains from sales of
property, and extraordinary items......... 25,067 16,528 3,509 (700) (2,877)
Net income (loss)........................... 25,242 16,650 (3,775) (215) (2,826)
Per unit:
Net income................................ 1.28 1.17 -- -- --
Distributions............................. 1.90 1.73 -- -- --
BALANCE SHEET DATA:
Land, buildings and equipment, net.......... $ 624,514 $ 555,577 $ 236,058 $ 139,665 $ 127,509
Total assets................................ 681,297 603,135 290,925 156,560 151,471
Total debt.................................. 354,100 344,234 110,432 167,275 159,450
OTHER DATA:
Total properties (at period end)............ 61 55 36 23 22
</TABLE>
_________
(1) Increases (decreases) for 1993 compared to years 1992-1990 relate primarily
to the Company's formation as a public REIT on September 29, 1993.
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
Consolidated and Combined Financial Statements and Notes thereto included in
this Form 10.
GENERAL
On September 29, 1993, the Company completed its IPO, and the Operating
Partnership succeeded to the business and operations of Colonial. The Operating
Partnership 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 Operating Partnership 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
Operating Partnership's consolidated results of operations. As a result of the
IPO and the related transactions during 1993, comparisons of 1994 with 1993 and
prior periods may not be meaningful.
RESULTS OF OPERATIONS -- 1995 AND 1994
Summary. The Operating Partnership reported net income of $25,242,000 for
1995 compared to $16,650,000 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 Operating Partnership, as explained below:
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Revenue. Rent revenue increased by $44,918,000, or 72.2%, for 1995 when
compared to 1994. Of this increase, $39,928,000 represents rent revenues
generated by the 28 properties acquired/placed in service during 1994 and 1995.
The $4,990,000 remainder of the increase in rental revenue primarily represents
increases in rental rates charged for existing space. Other revenue increased
$2,561,000, or 150.2%, for 1995 when compared to 1994. This increase is
attributable primarily to $1,549,000 of other revenues generated by the 28
properties acquired/placed in service during 1994 and 1995 and $508,000 received
from lease cancellations during the second quarter of 1995.
Operating Expenses. Property operating expenses before depreciation and
amortization increased by $16,005,000, or 78.0%, and depreciation and
amortization expense increased by $7,554,000, or 57.8%, for 1995 when compared
to 1994. Of this increase, $14,195,000 and $6,980,000, respectively, represent
operating expenses and depreciation and amortization expense of the 28
properties acquired/placed in service during 1994 and 1995. General and
administrative expenses increased by $2,266,000, or 65.1%, during 1995 when
compared 1994 due to administrative expenses associated with the 28 properties
acquired/placed in service during 1994 and 1995, an increase in reserve for
contingencies, and a general increase in administrative expenses.
Other Income and Expenses. Interest expense increased $13,152,000, 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 Lines of Credit and the assumption of debt. The
financing of these properties increased interest expense by $13,316,000 for 1995
over 1994. The Operating Partnership capitalized interest on its development
projects during the construction period which reduced interest expense by
$868,000 in 1995, while only $333,000 was capitalized in 1994.
RESULTS OF OPERATIONS -- 1994 AND 1993
The Operating Partnership reported net income of $16,650,000 for 1994
compared to a net loss of $3,775,000 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 $21,329,000, or 50.0%, for 1994 when
compared to 1993. Of this increase, $11,309,000 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 Operating
Partnership's financial statements. Another $13,677,000 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 Operating Partnership's operating results. As a result of
the IPO and related transactions, the third-party management business of the
Company was transferred to the Management Corporation, in which the Operating
Partnership 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 $12,420,000, or 50.4%,
for 1994 when compared to 1993. Of this increase, $5,726,000 resulted from the
purchase of the outside interests in 11 properties that were accounted for under
the equity method prior to the IPO. Another $7,377,000 of the increase
represents the operating expenses of 10 new properties acquired by the Operating
Partnership during 1994. Operating expenses for 1994 would have included
$2,505,000 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 $1,339,000 as
a result of the amortization of interest rate buy-down and interest rate cap
9
<PAGE>
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 the Company's operating as a publicly traded company during 1994, which
expenses were reimbursed by the Operating Partnership.
Other Income and Expenses. Interest expense decreased $1,952,000, 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 $2,449,000 during
1994, while the repayment of debt with proceeds from the IPO decreased interest
expense by $8,137,000. The acquisition by the Operating Partnership of 10 new
properties during 1994, which was financed primarily through advances under the
Operating Partnership's lines of credit and the assumption of debt, increased
interest expense by $3,928,000 for 1994, while the capitalization of interest on
construction in progress reduced interest expense by $333,000. Mortgage
transfer expense of $1,556,000 presented in 1993 represents one-time costs
incurred to transfer the properties and related mortgages to the Operating
Partnership as part of the IPO and related transactions. The extraordinary loss
of $7,284,000 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 $6,454,000 and the write-off of
mortgage costs of $830,000.
LIQUIDITY AND CAPITAL RESOURCES
Land, buildings, and equipment, net, amounted to $624,514,000 as of
December 31, 1995 compared to $555,577,000 as of December 31, 1994, an increase
of $68,937,000, or 12.4%. During 1995 the Operating Partnership acquired six
retail shopping centers, representing 1.4 million square feet of leasable area,
at an aggregate cost of approximately $67,500,000 and completed two multifamily
apartment communities, representing 372 apartment units, at an aggregate cost of
approximately $16,127,000. The Operating Partnership has used cash proceeds
from the Company's secondary offering in May 1995, which totaled approximately
$73,656,000, net of offering costs of $4,832,000, advances on its bank lines of
credit, and cash from operations to finance its acquisitions and development
projects.
A portion of the purchase price of one of the properties acquired in 1994
was subject to adjustment during 1995 based upon the operating results of the
property. The additional purchase price required was paid through the issuance
of 70,864 Units, valued at approximately $1,630,000.
Undeveloped land and construction in progress increased by $9,314,000
during 1995 when compared to 1994. Two multifamily development projects were
completed and placed in service during 1995 which produced 372 apartment units
and reduced undeveloped land and construction in progress by $16,127,000, as
this amount was transferred to land, buildings, and equipment. The remainder of
the increase in undeveloped land and construction in progress ($25,441,000)
represents construction expenditures on seven multifamily apartment community
development and expansion projects, which combined will produce 1,240 new
apartment units, and construction expenditures on the expansion of the Macon
Mall in Macon, Georgia. The Operating Partnership has used cash proceeds from
its secondary offering in May 1995, advances on its bank lines of credit, and
cash from operations to finance these acquisitions and development projects.
Management anticipates three of the multifamily projects will be completed
during the first six months of 1996 at a combined total cost of approximately
$18,674,000. Two other multifamily projects are expected to be completed by the
end of 1996 at a combined total cost of approximately $31,950,000. The other
two multifamily development projects and the Macon Mall expansion are expected
to be completed during early 1997 at a combined total cost of $19,000,000 and
$50,000,000, respectively.
Notes and mortgages payable increased from $344,234,000 at December 31,
1994 to $354,100,000 at December 31, 1995. During the year, the Operating
Partnership reduced the
10
<PAGE>
principal outstanding on its notes and mortgages payable by $37,049,000 and
reduced its outstanding revolving credit balances by $15,306,000. The Operating
Partnership also borrowed $62,220,000 under new notes payable agreements. The
significant financing transactions of the Operating Partnership during 1995 are
presented below:
In February 1995 the Operating Partnership 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, the Operating Partnership may elect to repay the
note without penalty. The Operating Partnership 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.
In May 1995 the Company completed its first follow-on offering of stock
totaling 3,450,000 common shares of beneficial interest at a price of $22.75 per
share. The $73,656,000 proceeds of the offering, net of offering costs of
$4,832,000, were used to reduce the balances outstanding under the Operating
Partnership's revolving credit agreements and construction loans and to acquire
three retail shopping centers in Florida.
In December 1995 the Operating Partnership converted its $75,000,000 line
of credit agreement with SouthTrust bank, agent bank, to an unsecured basis. As
of December 31, 1995 the Operating Partnership 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 by the Operating Partnership primarily to
finance property acquisitions and development. The significant terms of these
credit lines are shown below:
<TABLE>
<CAPTION>
MAXIMUM BALANCE OUTSTANDING
BORROWINGS INTEREST RATE EXPIRATION DATE DECEMBER 31, 1995
---------- ------------- --------------- -----------------
<S> <C> <C> <C> <C>
Line of Credit $ 75,000,000 (1) December 1998 $ 63,192,000
Line of Credit 7,500,000 LIBOR + 150 March 1997
basis points 7,500,000
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 Loan 6,900,000 LIBOR + 175 April 1997 -0-
basis points
----------- -----------
$ 100,800,000 $ 70,692,000
=========== ==========
</TABLE>
(1) The interest rate on this unsecured line of credit is equal to LIBOR plus
150 basis points through June 14, 1996 and LIBOR plus 175 basis points
thereafter, unless the Operating Partnership's senior unsecured debt is rated,
in which case the interest rate on the line shall be contingent upon the debt
rating achieved, as set forth in the table below:
[Footnote continued on next page]
11
<PAGE>
[Footnote continued from previous page]
<TABLE>
<CAPTION>
DEBT RATING ACHIEVED RATE
-------------------- ----
<S> <C>
Less than BBB/Baa2....................LIBOR + 175 basis points
Equal to or greater than BBB/Baa2
and less than A-/A3...................LIBOR + 150 basis points
A-/A-3 or higher......................LIBOR + 125 basis points
</TABLE>
The terms of the unsecured line of credit also include certain financial
covenants and a limit on the Operating Partnership's distribution to its
partners to 95% of its funds from operations (earnings before interest, taxes,
depreciation and amortization less interest expense and debt financing costs).
This unsecured line of credit is renewable annually in December with the
approval of all parties and provides for a two year amortization in the case of
non-renewal.
In January 1996 the Company completed its second follow-on offering of
stock totaling 4,600,000 common shares of beneficial interest at a price of
$24.625 per share. The $106,872,000 proceeds of the offering, net of total
estimated offering costs of $6,403,000, were used to repay the balances
outstanding under the Operating Partnership's revolving credit agreement, which
had increased due to acquisition and development activity during the last half
of 1995, to repay two construction loans, and to repay the $8,181,000 balance
outstanding under a mortgage agreement.
At December 31, 1995, after considering the effect of the January 1996
follow-on offering, the Operating Partnership's total debt included fixed-rate
debt of $210,542,000, or 76.5%, and floating-rate debt of $64,675,000, or 23.5%.
The Operating Partnership has obtained interest rate protection for $26,200,000
of the floating-rate debt.
Management intends to replace significant borrowings under the bank lines
of credit with funds generated from the sale of additional securities, including
sales of Units to CPHC in connection with public offerings of securities by the
Company, and/or permanent financing, as market conditions permit. Management
believes that these potential sources of funds, along with the possibility of
issuing Units in exchange for properties, will provide the Operating Partnership
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 Operating Partnership to increase rental rates or other charges to tenants
in response to rising prices and, therefore, serve to minimize the Operating
Partnership's exposure to the adverse effects of inflation.
12
<PAGE>
ITEM 3. PROPERTIES
GENERAL
The 65 Properties consist of 37 Multifamily Properties, 18 Retail
Properties, and ten Office Properties, as described in more detail below.
Thirty-six of the Properties were acquired from related parties in connection
with the formation of the Company and the Operating Partnership (the "Formation
Transactions"), 19 Properties and one additional phase of an existing Property
were acquired during 1994, six Properties were acquired during 1995, and four
Properties were acquired in 1996.
SUMMARY OF PROPERTIES
---------------------
<TABLE>
<CAPTION>
Total 1995 Percent of Total Percentage
Number of Units/GLA/ Property 1995 Property Occupancy at
Type of Property Properties NRA (1) Revenue (1)(2) Revenue (3) Revenue (3) Dec. 31, 1995 (4)
- ------------------ -------------------- -------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C>
Multifamily 37 12,131 $ 70,492,000 62.8% 95.7%
Retail 18 4,528,750 33,013,000 28.9% 93.1%
Office 10 1,012,000 $ 9,577,000 (5) 8.3% 94.0%
-- -------------- -----
Total 65 $ 113,082,000 100.0%
== ============== =====
</TABLE>
______________
(1) Includes Spring Creek Apartments, Crowne Chase Apartments, Ashford Place
Apartments, and Pointe West Apartments, which were acquired in 1996.
(2) Units (in this table only) refers to multifamily apartment units, GLA refers
to gross leasable area of retail space and NRA refers to net rentable area
of office space. Information is presented as of December 31, 1995.
(3) Excludes Spring Creek Apartments, Crowne Chase Apartments, Ashford Place
Apartments, and Pointe West Apartments, which were acquired 1996.
(4) Excludes (i) 51 units of an expansion phase of a Multifamily Property that
had not achieved stabilized occupancy as of December 31, 1995 and (ii)
Spring Creek Apartments, Crowne Chase Apartments, Ashford Place Apartments,
and Pointe West Apartments, which were acquired 1996.
(5) Includes the Operating Partnership's proportionate share of revenue from
those Office Properties accounted for under the equity method.
MULTIFAMILY PROPERTIES
As of April 30, 1996, the 37 Multifamily Properties contain a total of
12,131 garden-style apartments and range in size from 104 to 920 apartment
units. Sixteen of the Multifamily Properties were acquired by the Operating
Partnership in connection with the Formation Transactions, 17 Properties and one
additional phase of an existing Property were acquired during 1994 from third
parties, and four Properties were acquired during 1996 from third parties. As
of April 30, 1996, 21 Multifamily Properties (containing a total of 7,871
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 Colonial and
all are now operated by the Operating Partnership. 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.
13
<PAGE>
The following table sets forth certain information relating to the Multifamily
Properties (other than Spring Creek Apartments, Crowne Chase Apartments, Ashford
Place Apartments, and Pointe West Apartments which were acquired by the
Operating Partnership during the second quarter of 1996) as of and for the year
ended December 31, 1995.
<TABLE>
<CAPTION>
MULTIFAMILY PROPERTIES
Average Percent of
Number Approximate Rental Total 1995 Total 1995
Year of Rentable Area Percent Rate Property Property
Multifamily Property (1) Location Completed(2) Units(3) (Square Feet) Occupied Per Unit Revenue Revenue(4)
- ------------------------ ---------- ------------- ---------- -------------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Chestnut Ridge Birmingham 1984 226 235,000 98.2% $569 $1,528,000 1.4%
Colony Park Mobile 1975 201 144,000 92.0% 365 886,000 0.8%
Grande View Towers Huntsville 1990 308 323,000 92.9% 558 2,118,000 1.9%
Heatherbrooke Birmingham 1986/87/90 502 395,000 91.2% 530 2,970,000 2.6%
Huntleigh Woods Mobile 1978 233 199,000 98.3% 405 1,062,000 0.9%
Inverness Mobile 1983 186 176,000 89.3% 538 1,136,000 1.0%
Inverness Lakes Mobile 1996 51 53,000 565 23,000 0.0%
McGehee Place Montgomery 1986/95 452 397,000 89.7% 528 2,216,000 2.1%
Monte D'Oro Birmingham 1977 200 297,000 100.0% 600 1,405,000 1.2%
Patio Auburn 1966/83/84 240 179,000 99.6% 384 1,040,000 0.9%
Rime Village
Hoover Birmingham 1986 920 953,000 95.7% 606 6,499,000 5.8%
Huntsville Huntsville 1987/94 736 827,000 92.1% 560 4,536,000 4.1%
Riverchase Manor Birmingham 1984/91 468 746,000 99.2% 707 3,769,000 3.4%
Ski Lodge I Birmingham 1972/73/76 648 592,000 96.3% 395 3,069,000 2.8%
Ski Lodge II Birmingham 1979/86 644 521,000 96.1% 402 2,966,000 2.7%
Ski Lodge III Birmingham 1984 554 502,000 95.0% 423 2,723,000 2.4%
Ski Lodge Tuscaloosa Tuscaloosa 1976/92 304 273,000 98.4% 380 1,373,000 1.2%
Vieux Carre Montgomery 1971/74/78 250 222,000 90.0% 467 1,291,000 1.1%
Willow Bend Montgomery 1984 160 151,000 94.4% 533 997,000 0.9%
------ ---------- ------ ------- ----------- ------
Subtotal - Alabama (18 Properties) 7,283 7,185,000 94.8% 505 41,587,000 37.2%
------ ---------- ------ ------- ----------- ------
Arbors at
Kirkman Park Orlando 1991 370 337,000 98.1% 718 3,098,000 2.7%
Carrollwood Tampa 1966 244 286,000 97.1% 750 2,114,000 1.9%
Pelican Pointe Bradenton 1992 340 292,000 96.8% 641 2,415,000 2.1%
Plantation Gardens Sarasota 1991 248 252,000 98.8% 744 2,162,000 1.9%
Polos Gainesville Gainesville 1989/93/94 560 487,000 94.8% 698 4,477,000 4.0%
Polos Ponte Vedra Jacksonville 1988 240 212,000 99.2% 627 1,784,000 1.6%
Polos West Orlando 1991 200 169,000 95.5% 593 1,368,000 1.2%
Riverchase II Tampa 1991 252 201,000 97.2% 559 1,595,000 1.4%
St. Croix Orlando 1991/95 504 431,000 99.4% 590 3,268,000 2.9%
Sunchase Bradenton 1986 168 135,000 100.0% 590 1,199,000 1.1%
Willowtree Pensacola 1983 152 116,000 98.7% 440 811,000 0.7%
------ ---------- ------ ------- ----------- ------
Subtotal - Florida (11 Properties) 3,278 2,918,000 97.6% 645 24,291,000 21.5%
------ ---------- ------ ------- ----------- ------
North Ingle Villas Macon 1983 140 133,000 97.1% 518 829,000 0.7%
Somerset Place Savannah 1986 120 108,000 97.5% 604 840,000 0.7%
Somerset Wharf Savannah 1986/87 178 151,000 97.2% 582 1,218,000 1.1%
Stockbridge Manor Stockbridge 1994 240 266,000 95.0% 624 1,727,000 1.6%
------ ---------- ------ ------- ----------- ------
Subtotal - Georgia (4 Properties) 678 658,000 96.5% 588 4,614,000 4.1%
------ ---------- ------ ------- ----------- ------
TOTAL (33 Properties) 11,239 10,761,000 95.7% $552 (5) $70,492,000 62.8%
====== ========== ====== ======= =========== ======
</TABLE>
____________________
(1) All Multifamily Properties are 100% owned by the Company.
(2) Year initially completed and, where applicable, year(s) in which additional
phases were completed at the Property.
(3) Units (in this table only) refers to multifamily apartment units. Number
of Units includes all apartment units occupied or available for occupancy
at December 31, 1995.
(4) Percent of Total 1995 Property Revenue represents the Multifamily
Property's proportionate share of all revenue from the 61 Properties owned
by the Operating Partnership as of December 31, 1995.
(5) Represents weighted average rental rate per unit at December 31, 1995 of
the 33 Multifamily Properties owned by the Operating Partnership on that
date.
14
<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 each of
the last five years for the Multifamily Properties owned by the Operating
Partnership (or, for periods prior to the IPO, its predecessors) on such dates:
<TABLE>
<CAPTION>
Average Base
Number Percent Rental Rate
Year-End of Units (1) Leased(2) Per Unit
-------- ------------ --------- --------
<S> <C> <C> <C>
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) Units (in this table only) refers to multifamily apartment units owned at
year end.
(2) Represents weighted average occupancy of the owned Multifamily Properties
that had achieved stabilized occupancy at the end of the respective period.
RETAIL PROPERTIES
The 18 Retail Properties contain a total of approximately 4.5 million
square feet (including space owned by anchor tenants). 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 Colonial, one was acquired in 1986, two were acquired in
1994, and six were acquired in 1995. All of the Retail Properties are now
managed by the Operating Partnership.
The following table sets forth certain information relating to the Retail
Properties as of and for the year ended December 31, 1995.
15
<PAGE>
RETAIL PROPERTIES
<TABLE>
<CAPTION>
Average
Gross Base Rent
Year Leasable Number Total The Leased Total 1995
Completed (Square Area of Percent Annualized Square Retail Property
Retail Property (1) Location (2) Feet) (3) Stores Leased (3) Base Rent Foot (4) Revenue
- ------------------- ------------ ------------ ------------ ---------- ------------ ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ALABAMA:
River Oaks Decatur 1979/89 494,000 62 90.4% $ 3,124,000 $13.82 $ 1,957,000(8)
81,000 (6)
Gadsden Mall Gadsden 1974/91 493,000 65 95.2% 2,560,000 12.59 3,977,000
Village Mall Auburn 1973/84/89 400,000 62 96.9% 2,501,000 12.57 3,757,000
Montgomery
Promenade Montgomery 1990 166,000 30 100.0% 1,557,000 12.67 1,971,000
44,000 (6)
McGehee Place Montgomery 1986 54,000 17 94.4% 583,000 11.30 687,000
49,000 (6)
Bellwood Montgomery 1988 37,000 15 100.0% 382,000 10.38 472,000
49,000 (6)
Old Springville Birmingham 1982 64,000 12 93.7% 384,000 7.96 484,000
Olde Town Montgomery 1978/90 38,000 16 90.9% 322,000 9.16 370,000
Meadowbrook
Mini-Storage(7) Birmingham 1986 36,000 -0- 94.9% 247,000 7.03 254,000
---------- --- ------ ----------- ------ -----------
Subtotal - Alabama (9 Properties) 2,005,000 279 94.8% 11,660,000 12.09 13,929,000
---------- --- ------ ----------- ------ -----------
FLORIDA:
University Park
Plaza Orlando 1986/89 399,000 42 94.7% 2,800,000 13.63 3,631,000
Country Lake Orlando 1990 217,000 22 90.9% 1,166,000 12.44 715,000(8)
Burnt Store
Square Punta Gorda 1990 199,000 22 90.0% 1,223,000 10.07 1,566,000
Winter Haven Orlando 1986 175,000 17 78.3% 894,000 10.73 522,000(8)
22,000 (6)
Northdale Court Tampa 1984 193,000 31 90.0% 1,476,000 10.61 479,000(8)
Bear Lake Orlando 1990 125,000 21 90.9% 1,061,000 11.60 718,000(8)
Paddock Park Ocala 1984 87,000 20 91.5% 634,000 12.00 94,000(8)
---------- --- ------ ----------- ------ -----------
Subtotal - Florida (7 Properties) 1,417,000 175 90.2% 9,254,000 11.78 7,725,000
---------- --- ------ ----------- ------ -----------
GEORGIA:
Macon Mall Macon 1975/88 507,000 123 94.9% 5,764,000 17.74 10,423,000
510,000 (6)
Britt David Columbus 1990 110,000 11 100.0% 799,000 12.14 936,000
---------- --- ------ ----------- ------ -----------
Subtotal - Georgia (2 Properties) 1,127,000 134 95.8% 6,563,000 17.34 11,359,000
---------- --- ------ ----------- ------ -----------
TOTAL (18 Properties) 4,549,000 588 93.1% $27,477,000 $13.23 $33,013,000
========== === ====== =========== ====== ===========
<CAPTION>
Percent of
Total 1995
Property
Retail Property (1) Location Revenue(5)
- ------------------- ------------ ---------------
<S> <C> <C>
ALABAMA:
River Oaks Decatur 1.7%
Gadsden Mall Gadsden 3.5%
Village Mall Auburn 3.3%
Montgomery
Promenade Montgomery 1.7%
McGehee Place Montgomery 0.6%
Bellwood Montgomery 0.4%
Old Springville Birmingham 0.4%
Olde Town Montgomery 0.3%
Meadowbrook
Mini-Storage(7) Birmingham 0.2%
-----
Subtotal - Alabama (9 Properties) 12.1%
-----
FLORIDA:
University Park
Plaza Orlando 3.2%
Country Lake Orlando 0.6%
Burnt Store
Square Punta Gorda 1.4%
Winter Haven Orlando 0.5%
Northdale Court Tampa 0.4%
Bear Lake Orlando 0.6%
Paddock Park Ocala 0.1%
----
Subtotal - Florida (7 Properties) 6.8%
----
GEORGIA:
Macon Mall Macon 9.2%
Britt David Columbus 0.8%
----
Subtotal - Georgia (2 Properties) 10.0%
-----
TOTAL (18 Properties) 28.9%
=====
</TABLE>
______________
(1) All Retail Properties are 100% owned by the Company.
(2) Year initially completed and, where applicable, year(s) in which the
Property was substantially renovated or an additional phase of the Property
was completed.
(3) Total GLA includes space owned by anchor tenants, but Percent Leased
excludes such space.
(4) Includes specialty store space only.
(5) Percent of Total 1995 Property Revenue represents the Retail Property's
proportionate share of all revenue from the 61 Properties owned by the
Operating Partnership as of December 31, 1995.
(6) Represents space owned by anchor tenants.
(7) Meadowbrook Mini-Storage is a mini-warehouse rental storage facility
containing 295 rental warehouse units.
(8) Represents revenues from the date of Company's acquisition of this Property
in 1995 through December 31, 1995.
16
<PAGE>
The following table sets forth the total gross leasable area, percent
leased and average base rent per leased square foot as of the end of each of the
last five fiscal years for the Retail Properties (excluding Meadowbrook Mini-
Storage) owned by the Operating Partnership (or, for periods prior to the IPO,
its predecessors) on such dates:
<TABLE>
<CAPTION>
Gross Average
Leasable Area Percent Base Rent Per
Year-End (Square Feet)(1) Leased Leased Square Foot(2)
-------- ---------------- ------ ---------------------
<S> <C> <C> <C>
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 December 31, 1995 for the Retail Properties (excluding
Meadowbrook Mini-Storage):
<TABLE>
<CAPTION>
Percent of Total
Net Rentable Annual Base
Number of Area Annualized Base Rent
Year of Tenants with of Expiring Rent of Represented by
Lease Expiring Leases Expiring Expiring
Expiration Leases (Square Feet)(1) Leases(1)(2) Leases(1)
---------- ---------------- ------------ ---------
<S> <C> <C> <C> <C>
1996 96 259,000 $ 2,576,000 9.5%
1997 79 182,000 2,011,000 7.4%
1998 110 338,000 3,377,000 11.9%
1999 84 378,000 3,211,000 11.6%
2000 81 528,000 4,100,000 14.2%
2001 17 56,000 835,000 3.3%
2002 20 103,000 1,091,000 4.3%
2003 21 68,000 857,000 3.2%
2004 27 406,000 2,213,000 7.6%
2005 24 90,000 1,573,000 5.1%
2006-2014 29 1,089,000 5,386,000 21.9%
--- --------- ----------- -----
588 3,497,000 $27,230,000 100.0%
=== ========= =========== =====
</TABLE>
____________________________
(1) Excludes 755,000 square feet of space owned by anchor tenants, 261,000
square feet of space not leased as of December 31, 1995 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 December 31, 1995.
The following is a brief description of certain of the Retail Properties.
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. Colonial 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
17
<PAGE>
lease for five 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 beginning with 1996. Leases accounting for approximately 15.8% of the
leased space (all of which is specialty space in Macon Mall will expire on or
before December 31, 1996.
<TABLE>
<CAPTION>
Percent of Total
Number of Net Rentable Annual Base Rent
Year of Tenants with Area of Expiring Annualized Base Represented by
Lease Expiring Leases Rent of Expiring Expiring Leases
Expiration Leases (Square Feet)(1) Leases(1)(2) (Square Feet)(1)
---------- ----------------- ------------------- ----------------- -----------------
<S> <C> <C> <C> <C>
1996 26 84,000 $ 911,000 15.8%
1997 13 31,000 439,000 7.6%
1998 16 46,000 827,000 14.4%
1999 14 30,000 622,000 10.8%
2000 16 204,000 1,112,000 19.2%
2001 5 8,000 258,000 4.5%
2002 7 10,000 262,000 4.6%
2003 6 21,000 183,000 3.2%
2004 2 6,000 130,000 2.3%
2005 14 32,000 822,000 14.2%
2006 4 12,000 198,000 3.4%
--- ------- --------- ------
123 484,000 $5,764,000 100.0%
=== ======= ========= ======
</TABLE>
(1) Excludes 510,000 square feet of space owned by anchor tenants and 23,000
square feet of space not leased as of December 31, 1996.
(2) Annualized base rent is calculated using a specialty store base rent as of
December 31, 1995.
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.
Macon Mall is subject to a conventional mortgage in the principal amount of
$34,565,000 with an interest rate of 6.0% and a maturity date of June 1, 1996
(approximately $34,448,000 will be due upon maturity). The mortgage can be
prepaid at any time without a prepayment penalty. 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.
The Company began to expand Macon Mall in May 1995. See "Recent
Developments -- Retail Development Activity" in Item 1.
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-
18
<PAGE>
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 Operating
Partnership 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 Colonial, and Colonial acquired the other six
Properties at various times between 1980 and 1990. All of the Office Properties
are now managed by the Operating Partnership.
19
<PAGE>
The following table sets forth certain additional information relating to
the Office Properties as of and for the year ended December 31, 1995.
OFFICE PROPERTIES
<TABLE>
<CAPTION>
Net Average Percent of
Year Rentable Total Base Rent Total 1995 Total 1995
Completed Area (Square Percent Annualized Per Leased Office Property Property
Office Property (1) Location (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 1982-85/89 227,000 86.1% $ 2,578,000 $13.04 $2,540,000 2.2%
International
Park Birmingham 1987/89 222,000 98.5% 3,226,000 14.72 1,040,000 0.9%
Energen Plaza Birmingham 1982 168,000 96.5% 2,205,000 13.64 1,360,000 1.2%
AmSouth Center Huntsville 1990 157,000 95.0% 2,543,000 17.24 2,834,000 2.5%
P&S Building Gadsden 1946/76/91 40,000 100.0% 127,000 3.20 127,000 0.1%
250 Commerce St. Montgomery 1904/81 35,000 100.0% 361,000 10.28 395,000 0.3%
Anderson Block (5) Montgomery 1981/83 34,000 96.1% 337,000 10.28 119,000 0.1%
Land Title Bldg. Birmingham 1975 30,000 100.0% 376,000 12.63 134,000 0.1%
Whitesburg Bldg. Huntsville 1974 25,000 100.0% 296,000 11.80 322,000 0.3%
--------- ------ ----------- ----- ---------- ----
Subtotal-Alabama (9 Properties) 938,000 94.7% 12,049,000 13.41 8,871,000 7.7%
========= ====== =========== ===== ========== ====
FLORIDA:
University Park
Plaza Orlando 1985 71,000 85.9% 758,000 12.44 706,000 0.6%
--------- ------ ----------- ------ ---------- ----
TOTAL (10 Properties) 1,009,000 94.0% $12,807,000 $13.52 $9,577,000 8.3%
========= ====== =========== ====== ========== ====
</TABLE>
__________________________
(1) All Office Properties are 100% owned by the Operating Partnership with the
exception of International Park, which consists of three buildings and is
37.5% owned by the Operating Partnership for buildings 1900 and 2100 and is
25% owned by the Operating Partnership for building 2000; Energen Plaza,
which is 50% owned by the Operating Partnership; and Anderson Block & Land
Title Building, which are each 33.33% owned by the Operating Partnership.
(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 1995 Office Property Revenue is the Operating Partnership's share
(based on its percentage ownership of the Property) of total Office
Property revenue.
(4) Percent of Total 1995 Property Revenue represents the Office Property's
proportionate share of all revenue from the 61 Properties owned by the
Operating Partnership as of December 31, 1995.
(5) The Operating Partnership has a leasehold interest in this Property.
The following table sets out a schedule of the lease expirations for
leases in place as of December 31, 1995 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 55 185,000 $ 1,770,000 13.8%
1997 48 249,000 3,510,000 27.4%
1998 19 90,000 1,150,000 9.0%
1999 29 258,000 3,606,000 28.2%
2000 9 74,000 1,081,000 8.4%
2001 6 25,000 416,000 3.3%
2002 1 12,000 197,000 1.5%
2005 2 56,000 1,077,000 8.4%
----- --------- ------------ ------
169 949,000 $ 12,807,000 100.0%
===== ========= ============ ======
</TABLE>
_____________________________
(1) Excludes 60,000 square feet of space not leased as of December 31, 1995.
(2) Annualized base rent is calculated using base rents as of December 31,
1995.
20
<PAGE>
The following sets forth the net rentable area, total percent leased and
average base rent per leased square foot for each of the last five years for the
Office Properties:
<TABLE>
<CAPTION>
Net Average Base
Rentable Area Total Rent Per Leased
Year-End (Square Feet) Percent Leased Square Foot(1)
-------- ------------- -------------- --------------
<S> <C> <C> <C>
December 31, 1995 1,009,000 94.0% $13.52
December 31, 1994 1,012,000 95.0% $12.99
December 31, 1993 1,007,000 93.7% $13.05
December 31, 1992 1,007,000 94.1% $12.99
December 31, 1991 1,007,000 92.2% $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
Operating Partnership 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 Operating Partnership
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 Operating Partnership owns 37.5% of the 1900 Building, 25% of
the 2000 Building and 37.5% of the 2100 Building in partnership with BE&K, an
international design engineering and construction company, and other partners.
The 1900 Building was constructed in 1987 and contains 65,000 rentable square
feet. Its largest tenants include Hoar Construction, A.B. Shopping Centers and
Innovative Healthcare. The 2000 Building was built in 1987, contains 129,000
rentable square feet and is solely occupied by BE&K. The most recently
constructed building, the 2100 Building (completed in 1989), contains 28,000
rentable square feet and also is solely occupied by BE&K.
21
<PAGE>
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 Operating Partnership owns nine undeveloped land parcels consisting of
approximately 32.3 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 Operating Partnership
determines that the particular market can absorb additional apartment units.
The Operating Partnership currently owns one such parcel. For expansion at
Retail Properties, the Operating Partnership 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 Operating Partnership owns four
such parcels.
Options to Acquire Additional Land. In addition to the Land, the Operating
Partnership has options to acquire certain additional land parcels owned by the
Lowder Family (collectively, the "Option Parcels"). The name, location,
proposed use and acreage of each Option Parcel is as follows:
<TABLE>
<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 has a term of five years from the date of the closing of the
IPO, subject to earlier termination if the Operating Partnership elects not to
exercise a right of first opportunity on a proposed sale of such Option Parcel
by the Lowder Family. The Operating Partnership 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).
22
<PAGE>
PROPERTY MARKETS
The table below sets forth certain information with respect to the
geographic concentration of the Properties as of April 30, 1996.
GEOGRAPHIC CONCENTRATION OF PROPERTIES
<TABLE>
<CAPTION>
Total Percent
1995 of Total
Units GLA NRA Property 1995 Property
State (Multifamily)(1) (Retail)(2) (Office)(3) Revenue(4) Revenue(4)
- ---------------------- ----------------- ------------- -------------- -------------- ------------------
<S> <C> <C> <C> <C> <C>
Alabama 7,871 2,005,000 938,000 $ 64,387,000 57.0%
Florida 3,286 1,417,000 71,000 32,722,000 28.9%
Georgia 974 1,127,000 -0- 15,973,000 14.7%
------ --------- --------- ------------ -----
Total 12,131 4,549,000 1,009,000 $113,082,000 100.0%
====== ========= ========= ============ =====
</TABLE>
_________________________
(1) Units (in this table only) refers to multifamily apartment units. Includes
Spring Creek Apartments, Crowne Chase Apartments, Ashford Place Apartments,
and Pointe West Apartments, which were acquired in 1996.
(2) GLA refers to gross leasable area of retail space.
(3) NRA refers to net rentable area of office space.
(4) Excludes Spring Creek Apartments, Crowne Chase Apartments, Ashford Place
Apartments, and Pointe West Apartments, which were acquired in 1996.
The Operating Partnership 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
Operating Partnership's primary markets. The Operating Partnership 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. Fourteen of the Operating Partnership'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 4.1%
as of September 1995 compared to a national unemployment rate of 5.6%.
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 4.6% as of
September 1995.
23
<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 4.5% as of
September 1995.
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
5.1% as of September 1995.
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 5.1% as of September 1995
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. 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 4.0% as of September 1995.
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, and Pointe West Apartments, which were acquired in the second
quarter of 1996) as of December 31, 1995 is set forth in the table below:
24
<PAGE>
MORTGAGE DEBT AND NOTES PAYABLE
<TABLE>
<CAPTION>
Anticipated
Principal Annual Debt Estimated
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) 12/18/93 (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 Operating Partnership
for the next two years and nine months on these loans as result of an
interest rate protection agreement entered into by the Operating
Partnership. 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.
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<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.
(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 Operating Partnership owns partial interests (and which therefore are not
consolidated in the financial statements of the Operating Partnership) also are
subject to existing mortgage indebtedness. The Operating Partnership's pro-rata
share of such indebtedness as of December 31, 1995 was $7,415,000 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 Operating Partnership acquired
four Properties which were subject to an aggregate of approximately $13,839,000
of indebtedness and had a weighted average interest rate of 7.0%.
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
Operating Partnership to be the beneficial owner of more than five percent of
the Operating Partnership's outstanding Units, (2) each trustee of the Company
(each of whom also serves as a director of CPHC) and each of the chief executive
officer and the four other most highly compensated executive officers of the
Company (the "Named Executive Officers") (each of whom also is an executive
officer of CPHC) and (3) the trustees and executive officers of the Company 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 the Company as of March 8, 1996 is set forth in the Company'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.
26
<PAGE>
<TABLE>
<CAPTION>
NAME AND BUSINESS NUMBER OF PERCENT OF
ADDRESS OF BENEFICIAL OWNER UNITS UNITS(1)
- --------------------------- --------- ----------
<S> <C> <C>
Colonial Properties Trust (through
Colonial Properties Holding Company, Inc.)...... 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 Operating Partnership.
(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 Operating Partnership is managed by the Company, through CPHC, the
general partner of the Operating Partnership. The information required by this
item is hereby incorporated by
27
<PAGE>
reference to the material appearing under the heading "Election of Trustees
(Proposal 1)," pages 2-4, in the Company'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," page 22 in the
Company's Form 10-K for the year ended December 31, 1995.
In April 1996, Jeffrey L. Shuster ceased to be an executive officer of the
Company. A biography of Paul F. Earle, who has replaced Mr. Shuster as Senior
Vice President--Multifamily Division of the Company 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 the Company, since April 1996. He joined Colonial 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 the Company's definitive proxy
statement for the annual meeting of shareholders held in 1994 (the "1994 Proxy
Statement"), pages 11-12, in the Company'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 Operating Partnership, CPHC or the Properties is presently
subject to any material litigation, nor, to the Operating Partnership's
knowledge, is any material litigation threatened against the Operating
Partnership, 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 Operating Partnership has made consecutive quarterly distributions
since its formation in the first quarter of 1993 and increased its initial
distribution rate in January 1995 (with respect to the fourth quarter of 1994).
The current indicated annual distribution rate is $2.00 per Unit. The Operating
Partnership'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.
28
<PAGE>
The following table sets forth the distributions per Unit paid by the
Operating Partnership 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 Operating Partnership 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 Operating Partnership 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 Operating Partnership.
. 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 the Company, through CPHC, of the net proceeds from the
Company'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 Operating Partnership 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 Operating Partnership as part of the Rime Acquisition.
29
<PAGE>
. In May and June 1995, 3,000,000 and 450,000 Units, respectively, were
issued to CPHC in exchange for the contribution by the Company, 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 the Company, 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 the Company'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 Operating Partnership 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 the Company's Dividend Reinvestment and Share
Purchase Plan, new Common Shares are issued and the proceeds of such
issuances are contributed, through CPHC, to the Operating Partnership 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 the Company's assets are held, and all of its
operations are conducted, by or through the Operating Partnership. The
ownership interest of limited partners in the Operating Partnership 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 the Company, is the general partner of the Operating Partnership
and also holds a substantial number of Units as a limited partner of the
Operating Partnership. As of April 30, 1996, the Company, through CPHC, owned
approximately 68.4% of the outstanding Units. The Company'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 Operating
Partnership. The number of Units held by CPHC generally corresponds to the
number of Common Shares that the Company has outstanding (and thus the cash
distribution per Unit by the Operating Partnership should be the same as the
cash dividend per Common Share paid by the Company).
The Second Amended and Restated Agreement of Limited Partnership of the
Operating Partnership, as amended from time to time (the "Operating Partnership
Agreement") currently authorizes the Operating Partnership 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 Operating
Partnership, the IPO of the Company, 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 Operating Partnership 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
30
<PAGE>
"Redemption of OP Units"), Acquisition Units have the same 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 Operating
Partnership will have the rights of limited partners under the Operating
Partnership Agreement and the Delaware Revised Uniform Limited Partnership Act
(the "Act"). The Operating 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
Operating Partnership Agreement and is subject to, and qualified in its entirety
by, the Operating Partnership Agreement.
DISTRIBUTIONS; ALLOCATIONS OF INCOME AND LOSS
Distributions Generally. The Operating Partnership Agreement provides for
-----------------------
the quarterly distribution of Available Cash, as determined in the manner
provided in the Operating 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 Operating
Partnership. "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 Operating Partnership 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
Operating Partnership 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 Operating Partnership 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 Operating Partnership 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 Operating Partnership 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 Operating Partnership Agreement
------------------------------
provides that if the Operating Partnership 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 Operating Partnership, 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 Operating
Partnership. The Operating Partnership Agreement also provides that, if the
Operating Partnership 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
31
<PAGE>
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.
LIABILITY OF GENERAL PARTNER AND LIMITED PARTNERS
CPHC, as general partner of the Operating Partnership, will be liable for
all general recourse obligations of the Operating Partnership to the extent not
paid by the Operating Partnership. CPHC will not be liable for the nonrecourse
obligations of the Operating Partnership.
The limited partners of the Operating Partnership will not be required to
make additional contributions to the Operating Partnership. Assuming that a
limited partner does not take part in the control of the business of the
Operating Partnership and otherwise acts in conformity with the provisions of
the Operating Partnership Agreement, the liability of the limited partner for
obligations of the Operating Partnership under the Operating 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 Operating
Partnership represented by his OP Units. Under the Act, a limited partner may
not receive a distribution from the Operating Partnership if, at the time of the
distribution and after giving effect thereto, the liabilities of the Operating
Partnership (other than liabilities to parties on account of their interests in
the Operating Partnership and liabilities for which recourse is limited to
specified property of the Operating Partnership) exceed the fair value of the
Operating Partnership's assets (other than the fair value of any property
subject to nonrecourse liabilities of the Operating Partnership 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 Operating Partnership 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 Operating Partnership 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
Operating Partnership Agreement or to take other action pursuant to the
Operating Partnership Agreement constituted "control" of the Operating
Partnership's business for the purposes of the statutes of any relevant
jurisdiction, the limited partners might be held personally liable for the
Operating Partnership's obligations. The Operating Partnership 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 Operating Partnership Agreement, CPHC generally has the exclusive
authority to determine whether, when and on what terms the assets of the
Operating Partnership will be sold. A sale of all or substantially all of the
assets of the Operating Partnership (or a merger of the Operating Partnership
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 Operating Partnership Agreement provides that the limited partners may
not remove CPHC as general partner of the Operating Partnership. CPHC may not
transfer any of its interests as general or limited partner in the Operating
Partnership 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,
32
<PAGE>
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 Operating Partnership
with partners of the Operating Partnership receiving substantially the same
consideration as holders of Common Shares.
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 Operating
Partnership Agreement. All transfers of Units are subject to the requirement
under the Operating Partnership Agreement that the holder obtain an opinion of
legal counsel to the Operating Partnership that the transfer would not (a)
result in the Operating Partnership'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 Operating Partnership Agreement amendment pursuant to which their
capital contributions are to be made to the Operating Partnership.
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 Operating Partnership Agreement permits
limited partners who hold Units (other than Units acquired upon conversion of
Acquisition Units) to require that the Operating Partnership redeem their Units
at any time by notifying the Operating Partnership. 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 Operating Partnership 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 Operating Partnership. Unless CPHC or the Company
elects to assume and perform the Operating Partnership'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 Operating Partnership's redeeming Units, CPHC
or the Company may elect to acquire the Units directly from a limited partner
seeking a redemption and upon such acquisition, become the owner of the Units.
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 Operating Partnership, except that no redemption can occur if
delivery of Common Shares would be prohibited under the provisions of the
Company'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
33
<PAGE>
exercising their right to require the redemption of Units that they hold if the
issuance of Common Shares to them by the Company would be prohibited under the
special restrictions contained in the Company's declaration of trust that are
applicable to their acquisition and ownership of shares. No 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 the Company. 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 Operating Partnership, except as a result of the
redemption or transfer of his or her OP Units pursuant to the terms of the
Operating Partnership Agreement.
ISSUANCE OF ADDITIONAL OP UNITS
CPHC is authorized, without the consent of the limited partners, to cause
the Operating Partnership 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) the
Company must issue additional Common Shares; (ii) the Company 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 Operating
Partnership an amount equal to the amount transferred to it by the Company.
CPHC also may cause the Operating Partnership 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 the Company having substantially similar rights, and the proceeds
thereof must be transferred to the Operating Partnership 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 Operating Partnership or the
issuance or sale of any partnership interests therein.
MEETINGS; VOTING
The Operating 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
Operating Partnership 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.
34
<PAGE>
BOOKS AND REPORTS
The Operating Partnership's books and records are maintained at the
principal office of the Operating Partnership which is located at 2101 6th
Avenue North, Suite 750, Birmingham, Alabama 35203. All elections and options
available to the Operating Partnership for Federal income tax purposes may be
taken or rejected by the Operating Partnership in the sole discretion of CPHC,
as the general partner of the Operating Partnership.
POWER OF ATTORNEY
Pursuant to the Operating Partnership Agreement, each limited partner and
each assignee appoints the general partner of the Operating Partnership, 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 Operating Partnership Agreement (and amendments
thereto as described below under "--Amendment of the Operating Partnership
Agreement"), any certificates, documents or instruments necessary or appropriate
in connection with the existence of the Operating Partnership 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 Operating 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 OPERATING PARTNERSHIP AGREEMENT
Amendments to the Operating Partnership Agreement may be proposed by CPHC
or by limited partners owning at least 20% of the OP Units. Generally, the
Operating 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 Operating
Partnership at a time or on terms inconsistent with those set forth in the
Operating 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 Operating 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 Operating Partnership Agreement; (3) establish the rights,
powers, duties and preferences of any additional partnership interests issued in
accordance with the terms of the Operating 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 Operating Partnership Agreement not inconsistent with law or
with other provisions of the Operating Partnership Agreement, or make other
changes concerning matters under the Operating Partnership Agreement that are
not otherwise inconsistent with the Operating 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.
35
<PAGE>
DISSOLUTION, WINDING UP AND TERMINATION
The Operating Partnership will continue until December 31, 2092, unless
sooner dissolved and terminated. The Operating Partnership 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 Operating Partnership's assets and properties; (3) the entry of a
decree of judicial dissolution of the Operating Partnership 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 Operating Partnership and
apply the proceeds therefrom in the order of priority set forth in the Operating
Partnership Agreement.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
In general, the Operating 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 Operating Partnership 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
Operating Partnership 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., the Company), (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 Operating
Partnership may designate from time to time in its sole and absolute discretion.
The Company'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
36
<PAGE>
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.
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 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 Operating Partnership 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 the Company and Thomas H.
Lowder
10.5** Officers and Trustees Indemnification Agreement
10.6** Land Option Agreement
10.7*** Credit agreement between the Company and SouthTrust Bank of
Alabama, National Association AmSouth Bank of Alabama, Wells
Fargo Realty Advisors Funding, Incorporated and National
Bank of Commerce of Birmingham dated December 18, 1995 and
related promissory notes
10.8** 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 the Company
99.4**** Bylaws of the Company
37
<PAGE>
99.5+ "The Company," pages S-7 through S-9, in the Company'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 the
Company's Registration Statement on Form S-3, File No. 33-89612
99.6+ "Voting Securities and Principal Holders Thereof," pages 15
through 17, in the Company's Proxy Statement dated March 29,
1996, delivered to the Company's shareholders in connection
with the 1996 Annual Meeting of Shareholders
99.7+ "Election of Trustees (Proposal 1)," pages 2 through 4, in the
Company's Proxy Statement dated March 29, 1996, delivered to
the Company's shareholders in connection with the 1996 Annual
Meeting of Shareholders
99.8+ "Executive Officers of the Company," page 22, from the
Company'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 the Company's
Proxy Statement dated March 29, 1996, delivered to the
Company'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 the Company's Proxy
Statement dated March 28, 1994, delivered to the Company'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 the Company's Proxy Statement dated
April 3, 1995, delivered to the Company'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 the Company's Proxy
Statement dated March 29, 1996, delivered to the Company's
shareholders in connection with the 1996 Annual Meeting of
Shareholders
______________
* Incorporated by reference to the same titled exhibit in the Company'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 the Company's
Registration Statement on Form S-11, No. 33-65954.
*** Incorporated by reference to the same titled exhibit in the Company's
Annual Report on Form 10-K dated December 31, 1995.
**** Incorporated by reference to the annexes to the Company's Proxy Statement
dated September 1, 1995.
+ To be filed by amendment.
38
<PAGE>
INDEX TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
DESCRIPTION NUMBER
- ----------- ------
<S> <C>
Report of Independent Accountants............................................................................... F-2
Consolidated Balance Sheets at December 31, 1995 and 1994....................................................... F-3
Consolidated and Combined Statements of Operations for the years ended December 31, 1995, 1994 and 1993......... F-4
Consolidated and Combined Statements of Cash Flows for the years ended December 31, 1995, 1994 and 1993......... F-5
Consolidated and Combined Statements of Partners' Capital for the years ended December 31, 1995, 1994 and 1993.. F-7
Notes to Consolidated and Combined Financial Statements......................................................... F-8
</TABLE>
F-1
<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-2
<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-3
<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 before depreciation:
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
- -------------------------------------------------------------------------------------------------
TOTAL PROPERTY OPERATING EXPENSES
BEFORE DEPRECIATION 36,534,200 20,529,484 12,595,577
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-4
<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-5
<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-6
<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-7
<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 (the
"Operating Partnership")(CRLP), a Delaware limited partnership, was formed on
August 6, 1993 to succeed as owner of substantially all of the predecessor
interests of Colonial Properties, Inc., Equity Partners Joint Venture, and
Colonial Properties Management Association, and certain real estate interests of
Thomas H. Lowder, Robert E. Lowder, James K. Lowder, Catherine K. Lowder, and
the Bellwood Trust (collectively referred to as the Colonial Group for purposes
of these financial statements). CRLP is the operating partnership of Colonial
Properties Trust, an Alabama real estate investment trust (the "Company") whose
shares are listed on the New York Stock Exchange ("NYSE"). The Company is
engaged in the ownership, development, management, and leasing of multifamily
housing communities, retail malls and centers, and office buildings. Certain
parcels of land are also included.
On September 29, 1993 the Company 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, the
Company 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 the Company
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.
The Company, which is considered a corporation for federal income tax
purposes, qualifies as a real estate investment trust for federal income tax
purposes and generally will not be subject to federal income tax to the extent
it distributes its REIT taxable income to its shareholders. REITs are subject
to a number of organizational and operational requirements. If the Company
fails to qualify as a REIT in any taxable year, the Company will be subject to
federal income tax on its taxable income at regular corporate rates.
Principles Of Consolidation and Combination--Subsequent to the formation of
the Company, the consolidated financial statements include the Operating
Partnership and Colonial Properties Services Limited Partnership (in which
Colonial Realty Limited Partnership holds 99% general and limited partner
interests).
The accompanying combined financial statements for periods prior to the
formation of the Company 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 the Company 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-8
<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-9
<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-10
<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 the Company'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-11
<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 the
Company'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-12
<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-13
<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
------------- -------------
$ 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-14
<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:
<TABLE>
<S> <C>
Land, buildings, and equipment $ 431,257,000
Undeveloped land and construction in progress 15,503,000
-------------
$ 446,760,000
=============
</TABLE>
The aggregate maturities of notes and mortgages payable at December 31,
1995 are as follows:
<TABLE>
<S> <C>
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
=============
</TABLE>
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 the Company'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 the Company) and The Colonial Company
(TCC) (an affiliate of certain limited partners) and its other related entities
in a noncontributory defined benefit pension plan (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, the Company 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. The Company's policy is to fund the minimum required contribution
under ERISA and the Internal Revenue Code.
F-15
<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:
<TABLE>
<S> <C> <C>
Weighted-average interest rate 7.0% 8.5%
Increase in future compensation levels 4.0% 5.0%
</TABLE>
CRLP and CPSI also participated with TCC and its other related entities in
a salary reduction profit sharing plan covering substantially all employees.
This plan provided, with certain restrictions, that employees may contribute a
portion of their earnings with the employer matching one-half of such
contributions. Contributions by CRLP and CPSI were $108,000 and $102,000 for the
years ended December 31, 1994 and 1993, respectively.
Effective January 1, 1995, the Company also created a new salary reduction
profit sharing plan covering substantially all employees of CRLP and CPSI.
Similar to TCC's salary reduction profit sharing plan, this plan provides, with
certain restrictions, that employees may contribute a portion of their earnings
with the employer matching one-half of such contributions. Therefore, the
employees of CRLP and CPSI did not participate in the salary reduction profit
sharing plan mentioned above after December 31, 1994. Contributions by CRLP and
CPSI were $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:
<TABLE>
<S> <C>
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
================
</TABLE>
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-16
<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
the Company'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 the Company. The acquisition agreements relating to
the acquisition transaction provided for the possible issuance of additional
Units to the owners of The Rime Companies if one of the properties met certain
performance criteria after the acquisition. During 1995 CRLP issued 33,661
Units to Mr. Ripps and 33,660 Units to the adult children of Mr. Meisler,
pursuant to these acquisition agreements.
11. SUBSEQUENT EVENT
On January 25, 1996, the Trustees declared a cash distribution to partners
of Colonial Realty Limited Partnership 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-17
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned thereunto duly authorized, on May 13, 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-2 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 in Item 13 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
- ----------- -------------
<C> <S> <C>
4.1 Second Amended and Restated Agreement of Limited Partnership
of the Operating Partnership 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 the Company and Thomas H. Lowder
10.5** Officers and trustees Indemnification Agreement
10.6** Land Option Agreement
10.7*** Credit agreement between the Company and SouthTrust Bank of
Alabama, National Association AmSouth Bank of Alabama, Wells
Fargo Realty Advisors Funding, Incorporated and National Bank
of Commerce of Birmingham dated December 18, 1995 and
related promissory notes
10.8** 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 Company
99.3**** Declaration of Trust of the Company
99.4**** Bylaws of the Company
99.5+ "The Company," pages S-7 through S-9, in the Company'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 the Company's
Registration Statement on Form S-3, File No. 33-89612
99.6+ "Voting Securities and Principal Holders Thereof," pages 15
and 17, from the Company's Proxy Statement dated March 29, 1996,
delivered to the Company's shareholders in connection with the
1996 Annual Meeting of Shareholders
99.7+ "Election of Trustees (Proposal 1)," pages 2 through 4, in the
Company's Proxy Statement dated March 29, 1996, delivered to
the Company's shareholders in connection with the 1996 Annual
Meeting of Shareholders
99.8+ "Executive Officers of the Company," page 22, from the
Company's Form 10-K for the fiscal year ended December 31,
1995, filed pursuant to Section 13 of the Exchange Act
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NO. NUMBERED PAGE
- ----------- -------------
<C> <S> <C>
99.9+ "Executive Compensation," pages 6 through 9, in the Company's
Proxy Statement dated March 29, 1996, delivered to the
Company'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 the Company's Proxy
Statement dated March 28, 1994, delivered to the Company'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 the Company's Proxy Statement dated
April 3, 1995, delivered to the Company'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 the Company's Proxy
Statement dated March 29, 1996, delivered to the Company's
shareholders in connection with the 1996 Annual Meeting of
Shareholders
</TABLE>
___________________
* Incorporated by reference to the same titled exhibit in the Company'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 the Company's
Registration Statement on Form S-11, No. 33-65954.
*** Incorporated by reference to the same titled exhibit in the Company's
Annual Report on Form 10-K dated December 31, 1995.
**** Incorporated by reference to the annexes to the Company's Proxy Statement
dated September 1, 1995.
+ To be filed by amendment.
<PAGE>
EXHIBIT 4.1
-----------
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
COLONIAL REALTY LIMITED PARTNERSHIP
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1 - DEFINED TERMS......................................................... 1
ARTICLE 2 - ORGANIZATIONAL MATTERS................................................ 10
Section 2.1 Organization and Continuation.................................... 10
Section 2.2 Name............................................................. 10
Section 2.3 Registered Office................................................ 10
Section 2.4 Power of Attorney................................................ 10
Section 2.5 Term............................................................. 12
ARTICLE 3 - PURPOSE............................................................... 12
Section 3.1 Purpose and Business............................................. 12
Section 3.2 Powers........................................................... 12
ARTICLE 4 - CAPITAL CONTRIBUTIONS................................................. 12
Section 4.1 Capital Contributions of the Partners............................ 12
Section 4.2 Issuances of Additional Partnership Interests.................... 13
Section 4.3 Contribution of Proceeds of Issuance of REIT Shares.............. 14
Section 4.4 No Preemptive Rights............................................. 15
ARTICLE 5 - DISTRIBUTIONS......................................................... 15
Section 5.1 Requirement and Characterization of Distributions................ 15
Section 5.2 Amounts Withheld................................................. 17
Section 5.3 Distributions Upon Liquidation................................... 17
ARTICLE 6 - ALLOCATIONS........................................................... 17
Section 6.1 Allocations for Capital Account Purposes......................... 17
ARTICLE 7 - MANAGEMENT AND OPERATIONS OF BUSINESS................................. 18
Section 7.1 Management....................................................... 18
Section 7.2 Certificate of Limited Partnership............................... 21
Section 7.3 Restrictions on General Partner's Authority...................... 21
Section 7.4 Reimbursement of the General Partner............................. 21
Section 7.5 Outside Activities of the General Partner and Colonial Properties 22
Section 7.6 Contracts with Affiliates........................................ 23
Section 7.7 Indemnification.................................................. 23
Section 7.8 Liability of the General Partner................................. 25
Section 7.9 Other Matters Concerning the General Partner..................... 25
Section 7.10 Title to Partnership Assets...................................... 26
Section 7.11 Reliance by Third Parties........................................ 26
ARTICLE 8 - RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS............................ 26
Section 8.1 Limitation of Liability.......................................... 26
Section 8.2 Management of Business........................................... 27
Section 8.3 Outside Activities of Limited Partners........................... 27
Section 8.4 Return of Capital................................................ 27
Section 8.5 Rights of Limited Partners Relating to the Partnership........... 27
Section 8.6 Redemption Right................................................. 28
ARTICLE 9 - BOOKS, RECORDS, ACCOUNTING AND REPORTS................................ 29
Section 9.1 Records and Accounting........................................... 29
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C> <C>
Section 9.2 Fiscal Year...................................................... 30
Section 9.3 Reports.......................................................... 30
ARTICLE 10 - TAX MATTERS.......................................................... 30
Section 10.1 Preparation of Tax Returns....................................... 30
Section 10.2 Tax Elections.................................................... 30
Section 10.3 Tax Matters Partner.............................................. 30
Section 10.4 Organizational Expenses.......................................... 31
Section 10.5 Withholding...................................................... 31
ARTICLE 11 - TRANSFERS AND WITHDRAWALS............................................ 33
Section 11.1 Transfer......................................................... 33
Section 11.2 Transfer of General Partner's Partnership Interest or Colonial
Properties' Interest in the General Partner..................... 33
Section 11.3 Limited Partners' Rights to Transfer............................. 34
Section 11.4 Substituted Limited Partners..................................... 34
Section 11.5 Assignees........................................................ 35
Section 11.6 General Provisions............................................... 35
ARTICLE 12 - ADMISSION OF PARTNERS................................................ 36
Section 12.1 Admission of Successor General Partner........................... 36
Section 12.2 Admission of Additional Limited Partners......................... 36
Section 12.3 Amendment of Agreement and Certificate of Limited Partnership.... 36
ARTICLE 13 - DISSOLUTION, LIQUIDATION AND TERMINATION............................. 37
Section 13.1 Dissolution...................................................... 37
Section 13.2 Winding-Up....................................................... 38
Section 13.3 Compliance with Timing Requirements of Regulations............... 39
Section 13.4 Deemed Distribution and Recontribution........................... 39
Section 13.5 Rights of Limited Partners....................................... 39
Section 13.6 Notice of Dissolution............................................ 39
Section 13.7 Termination of Partnership and Cancellation of Certificate
of Limited Partnership........................................... 40
Section 13.8 Reasonable Time for Winding-Up................................... 40
Section 13.9 Waiver of Partition.............................................. 40
ARTICLE 14 - AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS......................... 40
Section 14.1 Amendments....................................................... 40
Section 14.2 Meetings of the Partners......................................... 41
ARTICLE 15 - GENERAL PROVISIONS................................................... 42
Section 15.1 Addresses and Notice............................................. 42
Section 15.2 Titles and Captions.............................................. 42
Section 15.3 Pronouns and Plurals............................................. 42
Section 15.4 Further Action................................................... 42
Section 15.5 Binding Effect................................................... 42
Section 15.6 Creditors........................................................ 43
Section 15.7 Waiver........................................................... 43
Section 15.8 Counterparts..................................................... 43
Section 15.9 Applicable Law................................................... 43
Section 15.10 Invalidity of Provisions......................................... 43
Section 15.11 Entire Agreement................................................. 43
Section 15.12 Guaranty by Colonial Properties.................................. 43
</TABLE>
-ii-
<PAGE>
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
COLONIAL REALTY LIMITED PARTNERSHIP
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
COLONIAL REALTY LIMITED PARTNERSHIP ("Agreement"), dated as of October 27, 1994,
is entered into by and among Colonial Properties Holding Company, Inc. ("CPHC"),
an Alabama corporation, as the General Partner, and the Persons whose names are
set forth on Exhibit A as attached hereto who were admitted as limited partners
---------
in accordance with the provisions of the First Amended and Restated Agreement of
Limited Partnership, dated as of September 29, 1993 (the "Prior Agreement"), as
the Limited Partners, together with any other Persons who become Partners in the
Partnership as provided herein, and, for certain limited purposes set forth in
this Agreement. Colonial Properties Trust ("Colonial Properties"), a Maryland
real estate investment trust, owns all of the stock of CPHC, but is not a
partner in the Partnership.
In consideration of the mutual covenants set forth herein, and for
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree to continue the Partnership
as a limited partnership under the Delaware Revised Uniform Limited Partnership
Act (6 Del. C. (S) 17-101, et seq.), as amended from time to time (the "Act"),
as follows:
ARTICLE 1
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership Act, as
---
it may be amended from time to time, and any successor to such statute.
"Additional Limited Partner" means a Person admitted to the
--------------------------
Partnership as a Limited Partner pursuant to Section 4.2 hereof and who is shown
as such on the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for
------------------------
each Partner as of the end of each Partnership Year (i) increased by any amounts
which such Partner is obligated to restore pursuant to any provision of this
Agreement or is deemed to be obligated to restore pursuant to the penultimate
sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and (ii)
decreased by the items described in Regulations Sections 1.704-
1(b)(2)(ii)(d)(4), l.704-l(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6). The
foregoing definition of Adjusted Capital Account is intended to comply with the
provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any Partner,
--------------------------------
the deficit balance, if any, in such Partner's Adjusted Capital Account as of
the end of the relevant Partnership Year.
"Adjusted Property" means any property the Carrying Value of which has
-----------------
been adjusted pursuant to Exhibit B hereof. Once an Adjusted Property is deemed
---------
distributed by, and recontributed to, the Partnership for federal income tax
purposes upon a termination thereof pursuant to Section 708 of the Code, such
property shall thereafter constitute a Contributed Property until the Carrying
Value of such property is further adjusted pursuant to Exhibit B hereof.
---------
"Affiliate" means, with respect to any Person, (i) any Person directly
---------
or indirectly controlling, controlled by or under common control with such
Person, (ii) any Person owning or
<PAGE>
controlling ten percent (10%) or more of the outstanding voting interests of
such Person, (iii) any Person of which such Person owns or controls ten percent
(10%) or more of the voting interests, or (iv) any officer, director, general
partner or trustee of such Person or of any Person referred to in clauses (i),
(ii), and (iii) above.
"Agreed Value" means (i) in the case of any Contributed Property set
------------
forth in Exhibit D and as of the time of its contribution to the Partnership,
---------
the Agreed Value of such property as set forth in Exhibit D; (ii) in the case of
---------
any Contributed Property not set forth in Exhibit D and as of the time of its
---------
contribution to the Partnership, the 704(c) Value of such property, reduced by
any liabilities either assumed by the Partnership upon such contribution or to
which such property is subject when contributed, and (iii) in the case of any
property distributed to a Partner by the Partnership, the Partnership's Carrying
Value of such property at the time such property is distributed, reduced by any
indebtedness either assumed by such Partner upon such distribution or to which
such property is subject at the time of distribution as determined under Section
752 of the Code and the Regulations thereunder.
"Agreement" means this Second Amended and Restated Agreement of
---------
Limited Partnership, as it may be amended, supplemented or restated from time to
time.
"Assignee" means a Person to whom one or more Partnership Units have
--------
been transferred in a manner permitted under this Agreement, but who has not
become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5.
"Available Cash" means, with respect to any period for which such
--------------
calculation is being made, (i) the sum of:
(a) the Partnership's Net Income or Net Loss (as the case may
be) for such period (without regard to adjustments resulting from
allocations described in Sections 1.A through 1.E of Exhibit C);
---------
(b) Depreciation and all other noncash charges deducted in
determining Net Income or Net Loss for such period;
(c) the amount of any reduction in the reserves of the
Partnership referred to in clause (ii) (f) below (including, without
limitation, reductions resulting because the General Partner
determines such amounts are no longer necessary);
(d) the excess of proceeds from the sale, exchange, disposition,
or refinancing of Partnership property for such period over the gain
recognized from such sale, exchange, disposition, or refinancing
during such period (excluding Terminating Capital Transactions); and
(e) all other cash received by the Partnership for such period
that was not included in determining Net Income or Net Loss for such
period;
(ii) less the sum of:
(a) all principal debt payments made by the Partnership during
such period ;
(b) capital expenditures made by the Partnership during such
period;
(c) investments made by the Partnership during such period in
any entity (including loans made thereto) to the extent that such
investments are not otherwise described in clause (ii)(a) or (ii)(b);
-2-
<PAGE>
(d) all other expenditures and payments not deducted in
determining Net Income or Net Loss for such period;
(e) any amount included in determining Net Income or Net Loss
for such period that was not received by the Partnership during such
period;
(f) the amount of any increase in reserves during such period
which the General Partner determines to be necessary or appropriate in
its sole and absolute discretion; and
(g) the amount of any working capital accounts and other cash or
similar balances which the General Partner determines to be necessary
or appropriate, in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include any
cash received or reductions in reserves, or take into account any disbursements
made or reserves established, after commencement of the dissolution and
liquidation of the Partnership.
"Book-Tax Disparities" means, with respect to any item of Contributed
--------------------
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all
of its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Exhibit B and the hypothetical balance of such Partner's Capital Account
---------
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
"Business Day" means any day except a Saturday, Sunday or other day on
------------
which commercial banks in New York, New York are authorized or required by law
to close.
"Capital Account" means the Capital Account maintained for a Partner
---------------
pursuant to Exhibit B hereof.
---------
"Capital Contribution" means, with respect to any Partner, any cash,
--------------------
cash equivalents or the Agreed Value of Contributed Property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Section
4.1, 4.2, or 4.3 hereof.
"Carrying Value" means (i) with respect to a Contributed Property or
--------------
Adjusted Property, the 704(c) Value of such property, reduced (but not below
zero) by all Depreciation with respect to such Property charged to the Partners'
Capital Accounts following the contribution of or adjustment with respect to
such Property, and (ii) with respect to any other Partnership property, the
adjusted basis of such property for federal income tax purposes, all as of the
time of determination. The Carrying Value of any property shall be adjusted
from time to time in accordance with Exhibit B hereof, and to reflect changes,
---------
additions or other adjustments to the Carrying Value for dispositions and
acquisitions of Partnership properties, as deemed appropriate by the General
Partner.
"Cash Amount" means an amount of cash equal to the Value on the
-----------
Valuation Date of the REIT Shares Amount.
"Certificate" means the Certificate of Limited Partnership relating to
-----------
the Partnership filed in the office of the Delaware Secretary of State, as
amended from time to time in accordance with the terms hereof and the Act.
"Class A" means the Partners who are holders of Class A Units.
-------
-3-
<PAGE>
"Class A Share" means that portion of Available Cash for a
-------------
Distribution Period to be distributed with respect to Class A as determined by
multiplying the amount of Available Cash for such Distribution Period by the
fraction set forth in Section 5.1.B.1 hereof.
"Class A Unit" means any Partnership Unit other than a Class B Unit.
------------
"Class B" means the Partners who are holders of Class B Units.
-------
"Class B Share" means that portion of Available Cash for a
-------------
Distribution Period to be distributed with respect to Class B as determined by
multiplying the amount of Available Cash for such Distribution Period by the
fraction set forth in Section 5.1.B.2 hereof (as such fraction may be adjusted
in accordance with Section 5.1.B hereof).
"Class B Unit" means a Partnership Unit with such designations,
------------
preferences, rights, powers and duties as are described in or pursuant to
Section 4.2.C.
"Code" means the Internal Revenue Code of 1986, as amended and in
----
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Consent" means the consent or approval of a proposed action by a
-------
Partner given in accordance with Section 14.2 hereof.
"Contributed Property" means each property or other asset, in such
--------------------
form as may be permitted by the Act, but excluding cash, contributed or deemed
contributed to the Partnership (including deemed contributions to the
Partnership on termination and reconstitution thereof pursuant to Section 708 of
the Code). Once the Carrying Value of a Contributed Property is adjusted
pursuant to Exhibit B hereof, such property shall no longer constitute a
----------
Contributed Property for purposes of Exhibit B hereof, but shall be deemed an
---------
Adjusted Property for such purposes.
"Conversion Factor" means 1.0, provided that in the event that
----------------- -------- ----
Colonial Properties (i) declares or pays a dividend on its outstanding REIT
Shares in REIT Shares or makes a distribution to all holders of its outstanding
REIT Shares in REIT Shares; (ii) subdivides its outstanding REIT Shares; or
(iii) combines its outstanding REIT Shares into a smaller number of REIT Shares,
the Conversion Factor shall be adjusted by multiplying the Conversion Factor by
a fraction, the numerator of which shall be the number of REIT Shares issued and
outstanding on the record date for such dividend, distribution, subdivision or
combination assuming for such purpose that such dividend, distribution,
subdivision or combination has occurred as of such time, and the denominator of
which shall be the actual number of REIT Shares (determined without the above
assumption) issued and outstanding on the record date for such dividend,
distribution, subdivision or combination. Any adjustment to the Conversion
Factor shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
"Debt" means, as to any Person, as of any date of determination, (i)
----
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services; (ii) all amounts owed by such Person to banks or
other Persons in respect of reimbursement obligations under letters of credit,
surety bonds and other similar instruments guaranteeing payment or other
performance of obligations by such Person; (iii) all indebtedness for borrowed
money or for the deferred purchase price of property or services secured by any
lien on any property owned by such Person, to the extent attributable to such
Person's interest in such property, even though such Person has not assumed or
become liable for the payment thereof; and (iv) lease obligations of such Person
which, in accordance with generally accepted accounting principles, should be
capitalized.
-4-
<PAGE>
"Declaration of Trust" means the Declaration of Trust of Colonial
--------------------
Properties filed in the State of Maryland on July 9, 1993, as amended or
restated from time to time.
"Depreciation" means, for each fiscal year an amount equal to the
------------
federal income tax depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year, except that if the Carrying
Value of an asset differs from its adjusted basis fro federal income tax
purposes at the beginning of such year or other period, Depreciation shall be an
amount which bears the same ratio to such beginning Carrying Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year bears to such beginning adjusted tax basis; provided, however,
--------
that if the federal income tax depreciation, amortization, or other cost
recovery deduction for such year is zero, Depreciation shall be determined with
reference to such beginning Carrying Value using any reasonable method selected
by the General Partner.
"Distribution Period" means any calendar quarter or shorter period
-------------------
with respect to which a distribution of Available Cash is to be made to the
Partners by the Partnership.
"Effective Date" means the date of closing of the initial public
--------------
offering of shares of Colonial Properties pursuant to that certain agreement
among Colonial Properties, the Partnership, the General Partner, and Lehman
Brothers Inc., Bear, Stearns & Co. Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and The Robinson-Humphrey Company, Inc. as agents for the
underwriters.
"General Partner" means Colonial Properties Holding Company, Inc., in
---------------
its capacity as the general partner of the Partnership, or its successors as
general partner of the Partnership.
"General Partner Interest" means a Partnership Interest held by the
------------------------
General Partner that is a general partnership interest. A General Partner
Interest may be expressed as a number of Partnership Units.
"IRS" means the Internal Revenue Service, which administers the
---
internal revenue laws of the United States.
"Immediate Family" means, with respect to any natural Person, such
----------------
natural Person's spouse and such natural Person's natural or adoptive parents,
descendants, nephews, nieces, brothers, and sisters.
"Incapacity" or "Incapacitated" means, (i) as to any individual
---------- -------------
Partner, death, total physical disability or entry by a court of competent
jurisdiction adjudicating him incompetent to manage his Person or his estate;
(ii) as to any corporation which is a Partner, the filing of a certificate of
dissolution, or its equivalent, for the corporation or the revocation of its
charter; (iii) as to any partnership which is a Partner, the dissolution and
commencement of winding up of the partnership; (iv) as to any estate which is a
Partner, the distribution by the fiduciary of the estate's entire interest in
the Partnership; (v) as to any trustee of a trust which is a Partner, the
termination of the trust (but not the substitution of a new trustee); or (vi) as
to any Partner, the bankruptcy of such Partner. For purposes of this definition,
bankruptcy of a Partner shall be deemed to have occurred when (a) the Partner
commences a voluntary proceeding seeking liquidation, reorganization or other
relief under any bankruptcy, insolvency or other similar law now or hereafter in
effect, (b) the Partner is adjudged as bankrupt or insolvent, or a final and
nonappealable order for relief under any bankruptcy, insolvency or similar law
now or hereafter in effect has been entered against the Partner, (c) the Partner
executes and delivers a general assignment for the benefit of the Partner's
creditors, (d) the Partner files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against the
Partner in any proceeding of the nature described in clause (b) above, (e) the
Partner seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator for the Partner or for all or any substantial part of the
Partner's properties, (f) any proceeding seeking liquidation, reorganization or
other relief of or against such Partner under
-5-
<PAGE>
any bankruptcy, insolvency or other similar law now or hereafter in effect has
not been dismissed within one hundred twenty (120) days after the commencement
thereof, (g) the appointment without the Partner's consent or acquiescence of a
trustee, receiver or liquidator has not been vacated or stayed within ninety
(90) days of such appointment, or (h) an appointment referred to in clause (g)
which has been stayed is not vacated within ninety (90) days after the
expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding by
----------
reason of his status as (A) the General Partner, or (B) the sole shareholder of
the General Partner (i.e., Colonial Properties), or (C) a director or officer of
----
the Partnership, the General Partner or Colonial Properties, or (D) a guarantor,
pursuant to a loan guarantee or any other guarantee given to a third party in
connection with any partnership property or loan (other than in connection with
the transfer of properties to the Partnership in connection with the initial
public offering of REIT Shares), including without limitation, environmental
indemnities, reimbursements agreements or guaranties to credit enhancers under
bond issues, undertakings or indemnities to title companies, or otherwise, for
any indebtedness of the Partnership or any Subsidiary of the Partnership
(including, without limitation, any indebtedness which the Partnership or any
Subsidiary of the Partnership has assumed or taken assets subject to), and (ii)
such other Persons (including Affiliates of the General Partner or the
Partnership) as the General Partner may designate from time to time (whether
before or after the event giving rise to potential liability), in its sole and
absolute discretion.
"Limited Partner" means any Person named as a Limited Partner in
---------------
Exhibit A attached hereto, as such Exhibit may be amended from time to time, or
- ---------
any Substituted Limited Partner or Additional Limited Partner, in such Person's
capacity as a Limited Partner in the Partnership.
"Limited Partner Interest" means a Partnership Interest of a Limited
------------------------
Partner in the Partnership representing a fractional part of the Partnership
Interests of all Partners and includes any and all benefits to which the holder
of such a Partnership Interest may be entitled as provided in this Agreement,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement. A Limited Partner Interest may be expressed as a
number of Partnership Units.
"Liquidator" has the meaning set forth in Section 13.2.
----------
"Management Corporation" means Colonial Real Estate Services, Inc.
----------------------
"Net Income" means, for any taxable period, the excess, if any, of the
----------
Partnership's items of income and gain for such taxable period over the
Partnership's items of loss and deduction for such taxable period. The items
included in the calculation of Net Income shall be determined in accordance with
federal income tax accounting principles, subject to the specific adjustments
provided for in Exhibit B.
---------
"Net Loss" means, for any taxable period, the excess, if any, of the
--------
Partnership's items of loss and deduction for such taxable period over the
Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
federal income tax accounting principles, subject to the specific adjustments
provided for in Exhibit B.
---------
"Nonrecourse Built-in Gain" means, with respect to any Contributed
-------------------------
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Section 2.B of Exhibit C if such
---------
properties were disposed of in a taxable transaction in full satisfaction of
such liabilities and for no other consideration.
-6-
<PAGE>
"Nonrecourse Deductions" has the meaning set forth in Regulations
----------------------
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations
---------------------
Section 1.752-1(a)(2).
"Notice of Redemption" means the Notice of Redemption substantially
--------------------
in the form of Exhibit E to this Agreement.
---------
"Original Limited Partner" means a Limited Partner who is a Partner
------------------------
on the date of this Agreement and who owns one or more Original Limited
Partnership Units on the date action is called for under Section 13.1.
"Original Limited Partnership Unit" means a Partnership Unit held by
---------------------------------
an Original Limited Partner on the date of this Agreement and held by such
Original Limited Partner on the date action is called for under Section 18.3.
"Ownership Interest" means the stock and securities (including any
------------------
evidence of indebtedness) of the General Partner at any time owned or held by
Colonial Properties.
"Partner" means a General Partner or a Limited Partner, and "Partners"
------- --------
means the General Partner and the Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each Partner
--------------------
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth Regulations
------------------------
Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in
------------------------------
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section 1.704-
2(i)(2).
"Partnership" means the limited partnership formed under the Act and
-----------
continued by this Agreement, and any successor thereto.
"Partnership Interest" means an ownership interest in the Partnership
--------------------
representing a Capital Contribution by either a Limited Partner or the General
Partner and includes any and all benefits to which the holder of such a
Partnership Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement. A Partnership Interest may be expressed as a number of
Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in Regulations
------------------------
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in a Partnership Minimum Gain, for a Partnership
Year shall be determined in accordance with the rules of Regulations Section
1.704-2(d).
"Partnership Record Date" means the record date established by the
-----------------------
General Partner for the distribution of Available Cash pursuant to Section 5.1
hereof, which record date shall be the same as the record date established by
Colonial Properties for a distribution to its shareholders of some of all of its
portion of such distribution.
-7-
<PAGE>
"Partnership Unit" means a fractional, undivided share of the
----------------
Partnership Interests of all Partners issued pursuant to Sections 4.1, 4.2 and
4.3. As of the date of this Agreement, there shall be 13,582,401 Partnership
Units outstanding. The ownership of Partnership Units shall be evidenced by such
form of certificate for units as the General Partner adopts from time to time.
"Partnership Year" means the fiscal year of the Partnership, which
----------------
shall be the calendar year.
"Percentage Interest" means, as to a Partner, its interest in the
-------------------
Partnership as determined by dividing the Partnership Units owned by such
Partner by the total number of Partnership Units then outstanding and as
specified in Exhibit A attached hereto, as such Exhibit may be amended from time
---------
to time.
"Person" means an individual or a corporation, partnership, trust,
------
unincorporated organization, association or other entity.
"Prior Agreement" means the First Amended and Restated Agreement of
---------------
Limited Partnership, dated as of September 29, 1993, which is amended and
restated in its entirety by this Agreement.
"Recapture Income" means any gain recognized by the Partnership upon
----------------
the disposition of any property or asset of the Partnership, which gain is
characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
"Redeeming Partner" has the meaning set forth in Section 8.6 hereof.
-----------------
"Redemption Right" shall have the meaning set forth in Section 8.6
----------------
hereof.
"Regulations" means the Income Tax Regulations promulgated under the
-----------
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"REIT" means a real estate investment trust under Section 856 of the
----
Code.
"REIT Share" shall mean a common share of beneficial interest in
----------
Colonial Properties.
"REIT Shares Amount" shall mean a number of REIT Shares equal to the
------------------
product of the number of Partnership Units offered for redemption by a Redeeming
Partner, multiplied by the Conversion Factor, provided that in the event
-------- ----
Colonial Properties distributes to all holders of REIT Shares rights, options,
warrants or convertible or exchangeable securities entitling the shareholders to
subscribe for or purchase REIT Shares, or any other securities or property
(collectively, the "rights"), then the REIT Shares Amount shall also include
such rights that a holder of that number of REIT Shares would be entitled to
receive.
"Residual Gain" or "Residual Loss" means any item of gain or loss, as
------------- -------------
the case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of Contributed Property or
Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 2.B.1(a) or 2.B.2(a) of Exhibit C to eliminate Book-Tax
---------
Disparities.
"704(c) Value" of any Contributed Property means the value of such
------------
property as set forth in Exhibit D or if no value is set forth in Exhibit D, the
--------- ---------
fair market value of such property or other consideration at the time of
contribution as determined by the General Partner using such
-8-
<PAGE>
reasonable method of valuation as it may adopt; provided, however, that the
704(c) Value of any property deemed contributed to the Partnership for federal
income tax purposes upon termination and reconstitution thereof pursuant to
Section 708 of the Code shall be determined in accordance with Exhibit B hereof.
---------
Subject to Exhibit B hereof, the General Partner shall, in its sole and absolute
discretion, use such method as it deems reasonable and appropriate to allocate
the aggregate of the 704(c) Values of Contributed Properties in a single or
integrated transaction among the separate properties on a basis proportional to
their respective fair market values
"Specified Redemption Date" means the tenth (10th) Business Day after
------------------------- ------
receipt by the General Partner of a Notice of Redemption; provided that no
-------- ----
Specified Redemption Date shall occur before one (1) year from the date of this
Agreement, provided further that if Colonial Properties combines its outstanding
REIT Shares, no Specified Redemption Date shall occur after the record date and
prior to the effective date of such combination.
"Subsidiary" means, with respect to any Person, any corporation,
----------
partnership or other entity of which a majority of (i) the voting power of the
voting equity securities or (ii) the outstanding equity interests is owned,
directly or indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted as a
---------------------------
Limited Partner to the Partnership Pursuant to Section 11.4.
"Terminating Capital Transaction" means any sale or other disposition
-------------------------------
of all or substantially all of the assets of the Partnership or a related series
of transactions that, taken together, result in the sale or other disposition of
all or substantially all of the assets of the Partnership.
"Unrealized Gain" attributable to any item of Partnership property
---------------
means, as of any date of determination, the excess, if any, of (i) the fair
market value of such property (as determined under Exhibit B hereof) as of such
---------
date, over (ii) the Carrying Value of such property (prior to any adjustment to
be made pursuant to Exhibit B hereof) as of such date.
---------
"Unrealized Loss" attributable to any item of Partnership property
---------------
means, as of any date of determination, the excess, if any, of (i) the Carrying
Value of such property (prior to any adjustment to be made pursuant to Exhibit B
---------
hereof) as of such date, over (ii) the fair market value of such property (as
determined under Exhibit B hereof) as of such date.
---------
"Valuation Date" means the date of receipt by the General Partner of a
--------------
Notice of Redemption or, if such date is not a Business Day, the first Business
Day thereafter.
"Value" means, with respect to a REIT Share, the average of the daily
-----
market price for the ten (10) consecutive trading days immediately preceding the
Valuation Date. The market price for each such trading day shall be: (i) if the
REIT Shares are listed or admitted to trading on any securities exchange or the
NASDAQ- National Market System, the closing price, regular way, on such day, or
if not such sale takes place on such day, the average of the closing bid and
asked prices on such day; (ii) if the REIT Shares are not listed or admitted to
trading on any securities exchange or the NASDAQ-National Market System, the
last reported sale price on such day or, if no sale takes place on such day, the
average of the closing bid and asked prices on such day, as reported by a
reliable quotation source designated by the General Partner; or (iii) if the
REIT Shares are not listed or admitted to trading on any securities exchange or
the NASDAQ-National Market System and no such last reported sale price or
closing bid and asked prices are available, the average of the reported high bid
and low asked prices on such day, as reported by a reliable quotation source
designated by the General Partner, or if there shall be no bid and asked prices
on such day, the average of the high bid and low asked prices, as so reported,
on the most recent day (not more than ten (10) days prior to the date in
question) for which prices have been so reported; provided that if there are no
-------- ----
bid and asked prices reported during the ten (10) days prior to the date in
question, the Value of the REIT
-9-
<PAGE>
Shares shall be determined by the General Partner acting in good faith on the
basis of such quotations and other information as it considers, in its
reasonable judgment, appropriate. In the event the REIT Shares Amount includes
rights that a holder of REIT Shares would be entitled to receive, then the Value
of such rights shall be determined by the General Partner acting in good faith
on the basis of such quotations and other information as it considers, in its
reasonable judgment, appropriate.
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1 Organization and Continuation
-----------------------------
The Partnership is a limited partnership organized pursuant to the
provisions of the Act and upon the terms and conditions set forth in the Prior
Agreement. The Partners hereby continue the Partnership and amend and restate
the Prior Agreement in its entirety. Except as expressly provided herein to the
contrary, the rights and obligations of the Partners and the administration and
termination of the Partnership shall be governed by the Act. The Partnership
Interest of each Partner shall be personal property for all purposes.
Section 2.2 Name
----
The name of the Partnership shall be Colonial Realty Limited Partnership.
The Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or
similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole and absolute discretion may change
the name of the Partnership at any time and from time to time and shall notify
the Limited Partners of such change in the next regular communication to the
Limited Partners.
Section 2.3 Registered Office and Agent; Principal Office
---------------------------------------------
The address of the registered office of the Partnership in the State of
Delaware shall be located at 1013 Centre Road, County of New Castle, Wilmington,
Delaware 19805, and the registered agent for service of process on the
Partnership in the State of Delaware at such registered office shall be
Corporation Service Company. The principal office of the Partnership shall be
Energen Plaza, Suite 750, 2101 Sixth Avenue North, Birmingham, Alabama 35202,
or such other place as the General Partner may from time to time designate by
notice to the Limited Partners. The Partnership may maintain offices at such
other place or places within or outside the States of Delaware and Alabama as
the General Partner deems advisable.
Section 2.4 Power of Attorney
-----------------
A. Each Limited Partner and each Assignee hereby constitutes and appoints
the General Partner, 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:
(1) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (a) all certificates, documents and other
instruments (including, without limitation, this Agreement and the
Certificate and all amendments or restatements thereof) that the
General Partner or the Liquidator deems appropriate or necessary to
form, qualify or continue the existence or qualification of the
Partnership as a limited partnership (or a partnership in
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which the limited Partners have limited liability) in the State of
Delaware and in all other jurisdictions in which the Partnership may
or plans to conduct business or own property; (b) all instruments that
the General Partner deems appropriate or necessary to reflect any
amendment, change, modification or restatement of this Agreement in
accordance with its terms; (c) all conveyances and other instruments
or documents that the General Partner or the Liquidator deems
appropriate or necessary to reflect the dissolution and liquidation of
the Partnership pursuant to the terms of this Agreement, including,
without limitation, a certificate of cancellation; (d) all instruments
relating to the admission, withdrawal, removal or substitution of any
Partner pursuant to, or other events described in, Article 11, 12 or
13 hereof or the Capital Contribution of any Partner; and (e) all
certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of Partnership
Interests; and
(2) execute, swear to, seal, acknowledge and file all ballots, consents,
approvals, waivers, certificates and other instruments appropriate or
necessary, in the sole and absolute discretion of the General Partner
or any Liquidator, to make, evidence, give, confirm or ratify any
vote, consent, approval, agreement or other action which is made or
given by the Partners hereunder or is consistent with the terms of
this Agreement or appropriate or necessary, in the sole discretion of
the General Partner or any Liquidator, to effectuate the terms or
intent of this Agreement.
Nothing contained herein shall be construed as authorizing the General Partner
or any Liquidator to amend this Agreement except in accordance with Article 14
hereof or as may be otherwise expressly provided for in this Agreement.
B. The foregoing power of attorney is hereby declared to be irrevocable
and a power coupled with an interest, in recognition of the fact that each of
the Partners will be relying upon the power of the General Partner and any
Liquidator to act as contemplated by this Agreement in any filing or other
action by it on behalf of the Partnership, and it shall survive and not be
affected by the subsequent Incapacity of any Limited Partner or Assignee and the
transfer of all or any portion of such Limited Partner's or Assignee's
Partnership Units and shall extend to such Limited Partner's or Assignee's
heirs, successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by the
General Partner or any Liquidator, acting in good faith pursuant to such power
of attorney, and each such Limited Partner or Assignee hereby waives any and all
defenses which may be available to contest, negate or disaffirm the action of
the General Partner or any Liquidator, taken in good faith under such power of
attorney. Each Limited Partner or Assignee shall execute and deliver to the
General Partner or the Liquidator, within fifteen (15) days after receipt of the
General Partner's or Liquidator's request therefor, such further designation,
powers of attorney and other instruments as the General Partner or the
Liquidator, as the case may be, deems necessary to effectuate this Agreement and
the purposes of the Partnership.
Section 2.5 Term
----
The term of the Partnership commenced on August 9, 1993, the date the
Certificate was filed in the office of the Secretary of State of Delaware in
accordance with the Act and shall continue until December 31, 2092, unless, the
Partnership is dissolved sooner pursuant to the provisions of Article l3 or as
otherwise provided by law.
ARTICLE 3
PURPOSE
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Section 3.1 Purpose and Business
--------------------
The purpose and nature of the business to be conducted by the Partnership
is (i) to conduct any business that may be lawfully conducted by a limited
partnership organized pursuant to the Act, provided, however, that such business
shall be limited to and conducted in such a manner as to permit Colonial
Properties at all times to be classified as a REIT, unless Colonial Properties
ceases to qualify as a REIT for reasons other than the conduct of the business
of the Partnership, (ii) to enter into any partnership, joint venture or other
similar arrangement to engage in any of the foregoing or to own interests in any
entity engaged in any of the foregoing, and (iii) to do anything necessary or
incidental to the foregoing. In connection with the foregoing, and without
limiting Colonial Properties' right, in its sole discretion, to cease qualifying
as a REIT, the Partners acknowledge Colonial Properties' current status as a
REIT inures to the benefit of all of the Partners and not solely the General
Partner.
Section 3.2 Powers
------
The Partnership is empowered to do any and all acts and things necessary,
appropriate, proper, advisable, incidental to or convenient for the furtherance
and accomplishment of the purposes and business described herein and for the
protection and benefit of the Partnership, provided that the Partnership shall
-------- ----
not take any action which, in the judgment of the General Partner, in its sole
and absolute discretion, (i) could adversely affect the ability of Colonial
Properties to continue to qualify as a REIT, (ii) could subject Colonial
Properties to any additional taxes under Section 857 or Section 4981 of the
Code, or (iii) could violate any law or regulation of any governmental body or
agency having jurisdiction over Colonial Properties or the General Partner or
either of their securities, unless such action shall have been specifically
consented to by the General Partner in writing.
ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions of the Partners
-------------------------------------
On the Effective Date, the Partners made the Capital Contributions
described in the section captioned "Formation of the Company" in the final
Prospectus of the REIT in connection with the initial public offering of the
REIT Shares. To the extent the Partnership acquires any property by the merger
of any other Person into the Partnership, Persons who receive Partnership
Interests in exchange for their interests in the Person merging into the
Partnership shall become Partners and shall be deemed to have made Capital
Contributions as provided in the applicable merger agreement and as set forth in
Exhibit A as amended to reflect such deemed Capital Contributions. The Partners
- ---------
shall own Partnership Units in the amounts set forth for such Partner in Exhibit
-------
A and shall have a Percentage Interest in the Partnership as set forth Exhibit
- - -------
A, which Percentage Interest shall be adjusted in Exhibit A from time to time by
---------
the General Partner to the extent necessary to reflect accurately redemptions,
Capital Contributions, the issuance of additional Partnership Units (pursuant to
any merger or otherwise), or similar events having an effect on a Partner's
Percentage Interest. The number of Partnership Units held by the General
Partner equal to one percent (1%) of all outstanding Partnership Units from time
to time shall be deemed to be the general partner Partner Units and shall be the
General Partnership Interest. Except as provided in Sections 4.2 and 10.5, the
Partners shall have no obligation to make any additional Capital Contributions
or loans to the Partnership.
Section 4.2 Issuances of Additional Partnership Interests
---------------------------------------------
A. The General Partner is hereby authorized to cause the Partnership from
time to time to issue to the Partners (including the General Partner) or other
Persons additional
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Partnership Units or other Partnership Interests in one or more classes, or one
or more series of any of such classes, with such designations, preferences and
relative, participating, optional or other special rights, powers and duties,
including rights, powers and duties senior to Limited Partner Interests, all as
shall be determined by the General Partner in its sole and absolute discretion
subject to Delaware law, including, without limitation, (i) the allocations of
items of Partnership income, gain, loss, deduction and credit to each such class
or series of Partnership Interests; (ii) the right of each such class or series
of Partnership Interests to share in Partnership distributions; and (iii) the
rights of each such class or series of Partnership Interests upon dissolution
and liquidation of the Partnership; provided that no such additional Partnership
-------- ----
Units or other Partnership Interests shall be issued to the General Partner
unless either (a)(1) the additional Partnership Interests are issued in
connection with an issuance of shares of Colonial Properties, which shares have
designations, preferences and other rights such that the economic interests
attributable to such shares are substantially similar to the designations,
preferences and other rights of the additional Partnership Interests issued to
the General Partner in accordance with this Section 4.2.A, and (2) Colonial
Properties shall transfer to the General Partner, by loan or contribution, an
amount equal to the net proceeds raised in connection with the issuance of such
shares of Colonial Properties and, in turn, the General Partner shall make a
Capital Contribution to the Partnership in an amount equal to the amount
transferred to it by Colonial Properties, or (b) the additional Partnership
Interests are issued to all Partners in proportion to their respective
Percentage Interests.
B. After the initial public offering of REIT Shares, Colonial Properties
shall not issue any additional REIT Shares (other than REIT Shares issued
pursuant to Section 8.6), or rights, options, warrants or convertible or
exchangeable securities containing the right to subscribe for or purchase REIT
Shares (collectively "New Securities") other than to all holders of REIT Shares
--------------
unless (i) the General Partner shall cause the Partnership to issue to the
General Partner Partnership Interests or rights, options, warrants or
convertible or exchangeable securities of the Partnership having designations,
preferences and other rights, all such that the economic interests are
substantially similar to those of the New Securities, and (ii) Colonial
Properties transfers to the General Partner, by loan or contribution, the net
proceeds from the issuance of such New Securities and from the exercise of
rights contained in such New Securities and the General Partner, in turn,
contributes the amount so transferred to it to the Partnership. Without
limiting the foregoing, Colonial Properties is expressly authorized to issue New
Securities for less than fair market value, and the General Partner is expressly
authorized to cause the Partnership to issue to the General Partner
corresponding Partnership Interests, so long as (x) the General Partner
concludes in good faith that such issuance is in the interests of the General
Partner and the Partnership (for example, and not by way of limitation, the
issuance of REIT Shares and corresponding Units pursuant to an employee stock
purchase plan providing for employee purchases of REIT Shares at a discount from
fair market value or employee stock options that have an exercise price that is
less than the fair market value of the REIT Shares, either at the time of
issuance or at the time of exercise), and (y) Colonial Properties transfers all
proceeds from such issuance and exercise to the General Partner, whether by loan
or contribution, and the General Partner, in turn, contributes the amount so
transferred to it to the Partnership.
C. Under the authority granted to it by Section 4.2.A, the General
Partner hereby establishes an additional class of Partnership Units entitled
"Class B Units" that is available to be issued in lieu of Class A Units, at the
election of the General Partner, in its sole and absolute discretion, to newly
admitted Partners in exchange for the contribution by such Partners of cash,
real estate partnership interests, stock, notes or other assets or
consideration. Except as otherwise provided below and in Section 5.1.B hereof,
each Class B Unit shall have the same designations, rights, preferences, powers
and duties as each Class A Unit:
(1) The amount of Available Cash distributable with respect to Class B
Units shall be determined in accordance with Section 5.1.B hereof.
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<PAGE>
(2) Each Class B Unit shall be converted automatically into a Class A Unit
on the day immediately following the Partnership Record Date for the
Distribution Period (as defined in Section 5.1.B) in which the Class B
Unit was issued, without the requirement for any action by either the
Partnership or the Partner holding the Class B Unit.
(3) A holder of Class B Units will not have the Redemption Right under
Section 8.6 with respect to its Class B Units. The Redemption Right
for a holder of Class A Units into which Class B Units have been
converted pursuant to clause (2) above shall be the same as set forth
in Section 8.6 except that such Redemption Right shall not be
exercisable for a period of one (1) year following the issuance of
such Class B Units (or such longer or shorter period as may be set
forth in the contribution agreement or amendment to this Agreement
pursuant to which such Class B Units were issued).
(4) A holder of either Class B Units or Class A Units into which Class B
Units have been converted pursuant to clause (2) above shall be
subject to the restrictions on transfer imposed by Sections 11.3.C
through 11.3.E of this Agreement (in addition to any other
restrictions on transfer as may be set forth in the contribution
agreement or amendment to this Agreement pursuant to which such Class
B Units were issued).
(5) The General Partner shall cause Class B Units to be issued by the
Partnership only pursuant to an amendment to this Agreement under the
authority granted to the General Partner by Section 14.1.B.3 hereof,
which amendment shall designate that the newly issued Partnership
Units are Class B Units. The General Partner shall have the right, in
its sole and absolute discretion, subject to Section 4.2.A above, to
determine whether the Partnership should issue Class A Units, Class B
Units (or one or more series thereof), or another class of Partnership
Interests in connection with a contribution of property, other assets,
or other consideration to the Partnership.
Section 4.3 Contribution of Proceeds of Issuance of REIT Shares
---------------------------------------------------
In connection with the issuance of REIT Shares pursuant to Section 4.2,
Colonial Properties shall transfer to the General Partner any net proceeds
raised in connection with such issuance, by loan or capital contribution, and
the General Partner shall contribute the amount so transferred to it to the
Partnership; provided that if the net proceeds actually received by Colonial
-------- ----
Properties or the General Partner are less than the gross proceeds of such
issuance as a result of any underwriter's discount or other expenses paid or
incurred in connection with such issuance, then the General Partner shall be
deemed to have made a Capital Contribution to the Partnership in the amount
equal to the sum of the net proceeds of such issuance plus the amount of such
underwriter's discount and other expenses paid by Colonial Properties or the
General Partner.
Section 4.4 No Preemptive Rights
--------------------
No Person shall have any preemptive, preferential or other similar right
with respect to (i) additional Capital Contributions or loans to the
Partnership; or (ii) issuance or sale of any Partnership Units or other
Partnership Interests.
ARTICLE 5
DISTRIBUTIONS
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<PAGE>
Section 5.1 Requirement and Characterization of Distributions
-------------------------------------------------
A. Except as set forth in Section 5.1.B, the General Partner shall
distribute at least quarterly an amount equal to 100% of Available Cash
generated by the Partnership during such quarter or shorter period to the
Partners who are Partners on the Partnership Record Date with respect to such
quarter or shorter period. Except as set forth in Section 5.1.B, all
distributions of Available Cash shall be made to the Partners in accordance with
their respective Percentage Interests on such Partnership Record Date; provided
--------
that in no event may a Partner receive a distribution of Available Cash with
- ----
respect to a Partnership Unit if such Partner is entitled to receive a
distribution out of such Available Cash with respect to a REIT Share for which
such Partnership Unit has been redeemed or exchanged. The General Partner shall
take such reasonable efforts, as determined by it in its sole and absolute
discretion and consistent with Colonial Properties' qualification as a REIT, to
distribute Available Cash to the Limited Partners so as to preclude any such
distribution or portion thereof from being treated as part of a sale of property
to the Partnership by a Limited Partner under Section 707 of the Code or the
Regulations thereunder; provided that the General Partner and the Partnership
-------------
shall not have liability to a Limited Partner under any circumstances as a
result of any distribution to a Limited Partner being so treated.
B. If for any quarter or shorter period with respect to which a
distribution is to be made (a "Distribution Period") Class B Units are
outstanding on the Partnership Record Date for such Distribution Period, the
General Partner shall allocate the Available Cash with respect to such
Distribution Period between the Partners who are holders of Class A Units
("Class A") and the Partners who are holders of Class B Units ("Class B") as
follows:
1) Class A shall receive that portion of the Available
Cash (the "Class A Share") determined by multiplying the amount
of Available Cash by the following fraction:
A x Y
---------------
(A x Y)+(B x X)
2) Class B shall receive that portion of the Available
Cash (the "Class B Share") determined by multiplying the amount
of Available Cash by the following fraction:
B x X
---------------
(A x Y)+(B x X)
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3) For purposes of the foregoing formulas, (i) "A" equals
the number of Class A Units outstanding on the Partnership Record
Date for such Distribution Period; (ii) "B" equals the number of
Class B Units outstanding on the Partnership Record Date for such
Distribution Period; (iii) "Y" equals the number of days in the
Distribution Period; and (iv) "X" equals the number of days in
the Distribution Period for which the Class B Units were issued
and outstanding.
The Class A Share shall be distributed among Partners holding Class A Units
on the Partnership Record Date for the Distribution Period in accordance with
the number of Class A Units held by each Partner on such Partnership Record
Date; provided that in no event may a Partner receive a distribution of
-------------
Available Cash with respect to a Class A Unit if a Partner is entitled to
receive a distribution out of such Available Cash with respect to a REIT Share
for which such Class A Unit has been redeemed or exchanged. The Class B Share
shall be distributed among the Partners holding Class B Units on the Partnership
Record Date for the Distribution Period in accordance with the number of Class B
Units held by each Partner on such Partnership Record Date. In no event shall
any Class B Units be entitled to receive any distribution of Available Cash for
any Distribution Period ending prior to the date on which such Class B Units are
issued.
C. In the event that Class B Units which have been issued on different
dates are outstanding on the Partnership Record Date for any Distribution
Period, then the Class B Units issued on each particular date shall be treated
as a separate series of Partnership Units for purposes of making the allocation
of Available Cash for such Distribution Period among the holders of Partnership
Units (and the formula for making such allocation, and the definitions of
variables used therein, shall be modified accordingly). Thus, for example, if
two series of Class B Units are outstanding on the Partnership Record Date for
any Distribution Period, the allocation formula for each series, "Series B1" and
"Series B2," would be as follows:
1) Series B1 shall receive that portion of the Available
Cash determined by multiplying the amount of Available Cash by
the following fraction:
B1 x X1
-------------- - ----------
(A x Y)+(B1 x X1)+(B2 x X2)
2) Series B2 shall receive that portion of the Available
Cash determined by multiplying the amount of Available Cash by
the following fraction:
B2 x X2
------------- - -----------
(A x Y)+(B1 x X1)+(B2 x X2)
3) For purposes of the foregoing formulas the definitions
set forth in Section 5.1.B.3 remain the same except that (i) "B1"
equals the number of Partnership Units in Series B1 outstanding
on the Partnership Record Date for such Distribution Period; (ii)
"B2" equals the number of Partnership Units in Series B2
outstanding on the Partnership Record Date for such Distribution
Period; (iii) "X1" equals the number of days in the Distribution
Period for which the Partnership Units in Series B1 were issued
and outstanding; and (iv) "X2" equals the number of days in
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the Distribution Period for which the Partnership Units in
Series B\2\ were issued and outstanding.
Section 5.2 Amounts Withheld
----------------
All amounts withheld pursuant to the Code or any provisions of any state or
local tax law and Section 10.5 hereof with respect to any allocation, payment or
distribution to the General Partner, the Limited Partners or Assignees shall be
treated as amounts distributed to the General Partner, Limited Partners, or
Assignees pursuant to Section 5.1 for all purposes under this Agreement.
Section 5.3 Distributions Upon Liquidation
------------------------------
Proceeds from a Terminating Capital Transaction and any other cash received
or reductions in reserves made after commencement of the liquidation of the
Partnership shall be distributed to the Partners in accordance with Section
13.2.
ARTICLE 6
ALLOCATIONS
Section 6.1 Allocations For Capital Account Purposes
----------------------------------------
For purposes of maintaining the Capital Accounts and in determining the
rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Exhibit B hereof) shall be
---------
allocated among the Partners in each taxable year (or portion thereof) as
provided herein below.
A. Net Income. Net Income shall be allocated (i) first, to the General
Partner to the extent that Net Losses previously allocated to the General
Partner pursuant to the last sentence of Section 6.1.B exceed Net Income
previously allocated to the General Partner pursuant to this clause (i) of
Section 6.1.A, and (ii) thereafter, Net Income shall be allocated to the
Partners in accordance with their respective Percentage Interests.
B. Net Losses. After giving effect to the special allocations set forth
in Section 1 of Exhibit C, Net Losses shall be allocated to the Partners in
---------
accordance with their respective Percentage Interests; provided that Net Losses
-------- ----
shall not be allocated to any Limited Partner pursuant to this Section 6.1.B to
the extent that such allocation would cause such Limited Partner to have an
Adjusted Capital Account Deficit at the end of such taxable year (or increase
any existing Adjusted Capital Account Deficit). All Net Losses in excess of the
limitations set forth in this Section 6.1.B shall be allocated to the General
Partner.
C. For purposes of Regulations Section 1.752-3(a), the Partners agree
that Nonrecourse Liabilities of the Partnership in excess of the sum of (i) the
amount of Partnership Minimum Gain and (ii) the total amount of Nonrecourse
Built-in Gain shall be allocated among the Partners in accordance with their
respective Percentage Interests.
D. Any gain allocated to the Partners upon the sale or other taxable
disposition of any Partnership asset shall to the extent possible, after taking
into account other required allocations of gain pursuant to Exhibit C, be
---------
characterized as Recapture Income in the same proportions and to the same extent
as such Partners have been allocated any deductions directly or indirectly
giving rise to the treatment of such gains as Recapture Income.
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ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management
----------
A. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs the Partnership are and shall be
exclusively vested in the General Partner, and no Limited Partner shall have any
right to participate in or exercise control or management power over the
business and affairs of the Partnership. The General Partner may not be removed
by the Limited Partners with or without cause. In addition to the powers now or
hereafter granted a general partner of a limited partnership under applicable
law or which are granted to the General Partner under any other provision of
this Agreement, the General Partner, subject to Section 7.3 hereof, shall have
full power and authority to do all things deemed necessary or desirable by it to
conduct the business of the Partnership, to exercise all powers set forth in
Section 3.2 hereof and to effectuate the purposes set forth in Section 3.1
hereof, including, without limitation:
(1) the making of any expenditures, the lending or borrowing of money
(including, without limitation, making prepayments on loans and
borrowing money to permit the Partnership to make distributions to its
Partners in such amounts as will permit Colonial Properties (so long
as Colonial Properties qualifies as a REIT) to avoid the payment of
any federal income tax (including, for this purpose, any excise tax
pursuant to Section 4981 of the and to make distributions to the
General Partner such that Colonial Properties can distribute to its
shareholders amounts sufficient to permit Colonial Properties to
maintain REIT status), the assumption or guarantee of, or other
contracting for, indebtedness and other liabilities, the issuance of
evidences of indebtedness (including the securing of same by deed to
secure debt, mortgage, deed of trust or other lien or encumbrance on
the Partnership's assets) and the incurring of any obligations it
deems necessary for the conduct of the activities of the Partnership;
(2) the making of tax, regulatory and other filings, or rendering of
periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Partnership;
(3) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any assets of the Partnership (including
the exercise or grant of any conversion, option, privilege, or
subscription right or other right available in connection with any
assets at any time held by the Partnership) or the merger or other
combination of the Partnership with or into another entity (all of the
foregoing subject to any prior approval only to the extent required by
Section 7.3 hereof);
(4) the use of the assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with the terms of
this Agreement and on any terms it sees fit, including, without
limitation, the financing of the conduct of the operations of Colonial
Properties, the General Partner, the Partnership or any of the
Partnership's Subsidiaries, the lending of funds to other Persons
(including, without limitation, the Subsidiaries of the Partnership
and/or Colonial Properties) and the repayment of obligations of the
Partnership and its Subsidiaries and any other Person in which it has
an equity investment, and the making of capital contributions to its
Subsidiaries;
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<PAGE>
(5) the management, operation, leasing, landscaping, repair, alteration,
demolition or improvement of any real property or improvements owned
by the Partnership or any Subsidiary of the Partnership;
(6) the negotiation, execution, and performance of any contracts,
conveyances or other instruments that the General Partner considers
useful or necessary to the conduct of the Partnership's operations or
the implementation of the General Partner's powers under this
Agreement, including contracting with contractors, developers,
consultants, accountants, legal counsel, other professional advisors
and other agents and the payment of their expenses and compensation
out of the Partnership's assets;
(7) the distribution of Partnership cash or other Partnership assets in
accordance with this Agreement;
(8) holding, managing, investing and reinvesting cash and other assets of
the Partnership;
(9) the collection and receipt of revenues and income of the Partnership;
(10) the establishment of one or more divisions of the Partnership, the
selection and dismissal of employees of the Partnership, any division
of the Partnership, or the General Partner (including, without
limitation, employees having titles such as "president," "vice
president," "secretary" and "treasurer" of the Partnership, any
division of the Partnership, or the General Partner), and agents,
outside attorneys, accountants, consultants and contractors of the
General Partner or the Partnership or any division of the Partnership,
and the determination of their compensation and other terms of
employment or hiring;
(11) the maintenance of such insurance for the benefit of the Partnership
and the Partners as it deems necessary or appropriate;
(12) the formation of, or acquisition of an interest in, and the
contribution of property to, any further limited or general
partnerships, joint ventures or other relationships that it deems
desirable (including, without limitation, the acquisition of interests
in, and the contributions of property to, its Subsidiaries and any
other Person in which it has an equity investment from time to time);
(13) the control of any matters affecting the rights and obligations of the
Partnership, including the settlement, compromise, submission to
arbitration or any other form of dispute resolution, or abandonment
of, any claim, cause of action, liability, debt or damages, due or
owing to or from the Partnership, the commencement or defense of
suits, legal proceedings, administrative proceedings, arbitration or
other forms of dispute, resolution, and the representation of the
Partnership in all suits or legal proceedings, administrative
proceedings, arbitrations or other forms of dispute resolution, the
incurring of legal expense, and the indemnification of any Person
against liabilities and contingencies to the extent permitted by law;
(14) the undertaking of any action in connection with the Partnership's
direct or indirect investment in its Subsidiaries or any other Person
(including, without limitation, the contribution or loan of funds by
the Partnership to such Persons);
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<PAGE>
(15) the determination of the fair market value of any Partnership
property distributed in kind using such reasonable method of
valuation as it may adopt;
(16) the exercise, directly or indirectly, through any attorney-in-fact
acting under a general or limited power of attorney, any right,
including the right to vote, appurtenant to any asset or investment
held by the Partnership;
(17) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of or in connection with
any Subsidiary of the Partnership or any other Person in which
the Partnership has a direct or indirect interest, or jointly
with any such Subsidiary or other Person;
(18) the exercise of any of the powers of the General Partner enumerated in
this Agreement on behalf of any Person in which the Partnership does
not have an interest pursuant to contractual or other arrangements
with such Person:
(19) the making, execution and delivery of any and all deeds, leases,
notes, deeds to secure debt, mortgages, deeds of trust, security
agreements, conveyances, contracts, guarantees, warranties,
indemnities, waivers, release or legal instruments or agreements in
writing necessary or appropriate in the judgement of the General
Partner for the accomplishment of any of the powers of the General
Partner enumerated in this Agreement.
B. Each of the Limited Partners agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Partners, notwithstanding any other provision of this Agreement
(except as provided in Section 7.3), the Act or any applicable law, rule or
regulation, to the fullest extent permitted under the Act or other applicable
law. The execution, delivery or performance by the General Partner or the
Partnership of any agreement authorized or permitted under this Agreement shall
not constitute a breach by the General Partner of any duty that the General
Partner may owe the Partnership or the Limited Partners or any other Persons
under this Agreement or of any duty stated or implied by law or equity.
C. At all times from and after the date hereof, the General Partner may
cause the Partnership to obtain and maintain (i) causalty, liability and other
insurance on the properties of the Partnership and (ii) liability insurance for
the Indemnitees hereunder.
D. At all times from and after the date hereof, the General Partner may
cause the Partnership to establish and maintain at any and all times working
capital accounts and other cash or similar balances in such amounts as the
General Partner, in its sole and absolute discretion, deems appropriate and
reasonable from time to time.
E. In exercising its authority under this Agreement, the General
Partner may, but shall be under no obligation to, take into account the tax
consequences to any Partner of any action taken by it; provided that, if the
-------- ----
General Partner decides to refinance (directly or indirectly) any outstanding
indebtedness of the Partnership, the General Partner shall use reasonable
efforts to structure such refinancing in a manner that minimizes any adverse tax
consequences therefrom to the Limited Partners, and provided further that, in
-------- ------- ----
deciding whether or not to dispose of any property that represents more than one
percent of the Partnership's total assets, the General Partner shall consider in
good faith the income tax consequences of such disposition for both the General
Partners and the Limited Partners. The General Partner and the Partnership
shall not have liability to a Limited Partner under any circumstances as a
result of an income tax liability
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incurred by such Limited Partner as a result of an action (or inaction) by the
General Partner pursuant to its authority under this Agreement.
Section 7.2 Certificate of Limited Partnership
----------------------------------
The General Partner has previously filed the Certificate with the Secretary
of State of Delaware as required by the Act. The General Partner shall use all
reasonable efforts to cause to be filed such other certificates or documents as
may be reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the limited partners have limited liability) in the State of Delaware and any
other state, or the District of Columbia, in which the Partnership may elect to
do business or own property. To the extent that such action is determined by the
General Partner to be reasonable and necessary or appropriate, the General
Partner shall file amendments to and restatements of the Certificate and do all
the things to maintain the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) under the laws
of the State of Delaware and each other state or the District of Columbia in
which the Partnership may elect to do business or own property. Subject to the
terms of Section 8.5.A(4) hereof, the General Partner shall not be required,
before or after filing, to deliver or mail a copy of the Certificate or any
amendment thereto to any Limited Partner.
Section 7.3 Restrictions on General Partner's Authority
-------------------------------------------
A. The General Partner may not take any action in contravention of an
express prohibition or limitation of this Agreement without the written Consent
of all of the Limited Partners (including Limited Partner Interests held by the
General Partner) (or such lower percentage of the Limited Partners as may be
specifically provided for under a provision of this Agreement or the Act).
B. Except as provided in Article l3 hereof, the General Partner may not
sell, exchange, transfer or otherwise dispose of all or substantially all of the
Partnership's assets in a single transaction or a series of related transactions
(including by way of merger, consolidation or other combination with any other
Person) without the Consent of holders of three-fourths (3/4) of the outstanding
Limited Partner Interests (including Limited Partner Interests held by the
General Partner).
Section 7.4 Reimbursement of the General Partner
------------------------------------
A. Except as provided in this Section 7.4 and elsewhere in this Agreement
(including the provisions of Articles 5 and 6 regarding distributions, payments,
and allocations to which it may be entitled), the General Partner shall not be
compensated for its services as general partner of the Partnership.
B. The General Partner shall be reimbursed on a monthly basis, or such
other basis as the General Partner may determine in its sole and absolute
discretion, for all expenses that it and/or Colonial Properties incurs relating
to the ownership and operation of, or for the benefit of, the Partnership;
provided that the amount of any such reimbursement shall be reduced by any
- -------- ----
interest earned by the General Partner with respect to bank accounts or other
instruments or accounts held by it on behalf of the Partnership as permitted in
Section 7.5.A. The Limited Partners acknowledge that, for purposes of this
Section 7.4.B, all expenses of the General Partner and Colonial Properties are
deemed incurred for the benefit of the Partnership. Such reimbursements shall
be in addition to any reimbursement to the General Partner and/or Colonial
Properties as a result of indemnification pursuant to Section 7.7 hereof.
C. As set forth in Section 4.3, the General Partner shall be treated as
having made a Capital Contribution in the amount of all expenses that it and
Colonial Properties incur
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relating to any issuance of additional Partnership Interests or REIT Shares
pursuant to Section 4.2 hereof.
D. In the event that the General Partner or Colonial Properties shall
elect to purchase from the shareholders of Colonial Properties REIT Shares for
the purpose of delivering such Shares to satisfy an obligation under any
dividend reinvestment program adopted by Colonial Properties, any employee stock
purchase plan adopted by the General Partner or Colonial Properties, or any
similar obligation or arrangement undertaken by the General Partner or Colonial
Properties in the future, the purchase price paid by the General Partner or
Colonial Properties for such REIT Shares and any other expenses incurred by the
General Partner or Colonial Properties in connection with such purchase shall be
considered expenses of the Partnership and shall be reimbursed to the General
Partner or Colonial Properties, as the case may be, subject to the condition
that: (i) if such REIT Shares subsequently are to be sold by the General Partner
or Colonial Properties, the General Partner shall pay to the Partnership any
proceeds received by the General Partner or Colonial Properties for such REIT
Shares (provided that a transfer of REIT Shares for Units pursuant to Section
8.6 would not be considered a sale for such purposes); and (ii) if such REIT
Shares are not retransferred by the General Partner or Colonial Properties
within 30 days after the purchase thereof, the General Partner shall cause the
Partnership to cancel a number of Partnership Units held by the General Partner
equal to the product obtained by multiplying the Conversion Factor by the number
of such REIT Shares.
Section 7.5 Outside Activities of the General Partner and Colonial
------------------------------------------------------
Properties
- ----------
A. The General Partner shall not directly or indirectly enter into or
conduct any business other than in connection with the ownership, acquisition
and disposition of Partnership Interests as a General Partner or Limited Partner
and the management of the business of the Partnership, and such activities as
are incidental thereto, and Colonial Properties shall not directly or indirectly
enter into or conduct any business other than in connection with the ownership
of the stock of the General Partner and the Management Corporation, making loans
to the General Partner, and such activities as are incidental thereto. Colonial
Properties and the General Partner shall not incur any debts other than that for
which the General Partner may be liable in its capacity as General Partner of
the Partnership and other than a debt incurred by Colonial Properties or the
General Partner pursuant to Article III of the Declaration of Trust. The assets
of the General Partner shall be limited to Partnership Interests and the assets
of Colonial Properties shall be limited to the stock and debt obligations of the
General Partner and stock of the Management Corporation. The General Partner
shall not hold any assets other than Partnership Interests as a General Partner
or Limited Partner, and other than such bank accounts or similar instruments or
accounts as it deems necessary to carry out its responsibilities contemplated
under this Agreement and its organizational documents. The General Partner and
any Affiliates of the General Partner may acquire Limited Partner Interests and
shall be entitled to exercise all rights of a Limited Partner relating to such
Limited Partner Interests.
B. Except as provided in Section 7.4.D, in the event Colonial Properties
exercises its rights under Article VI of the Declaration of Trust to purchase
REIT Shares, then the General Partner shall cause the Partnership to purchase
from it that number of Partnership Units equal to the product obtained by
multiplying the number of REIT Shares to be purchased by Colonial Properties
times the Conversion Factor on the same terms and for the same aggregate price
that Colonial Properties purchased such REIT Shares. The General Partner shall
then distribute such funds to Colonial Properties.
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C. The General Partner shall not issue at any time any capital stock
(whether voting or non-voting or common or preferred) or any evidence of
indebtedness except to Colonial Properties.
Section 7.6 Contracts with Affiliates
-------------------------
A. The Partnership may lend or contribute funds or other assets to its
Subsidiaries, other Persons in which it has an equity investment, or the
Management Corporation and such Persons may borrow funds from the Partnership,
on terms and conditions established in the sole and absolute discretion of the
General Partner. The foregoing authority shall not create any right or benefit
in favor of any Subsidiary or any other Person.
B. Except as provided in Section 7.5.A, the Partnership may transfer
assets to joint ventures, other partnerships, corporations or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions consistent with this Agreement and applicable law as
the General Partner, in its sole and absolute discretion, believes are
advisable.
C. Except as expressly permitted by this Agreement, neither the General
Partner nor any of its Affiliates shall sell, transfer or convey any property
to, or purchase any property from, the Partnership, directly or indirectly,
except pursuant to transactions that are determined by the General Partner in
good faith to be fair and reasonable and no less favorable to the Partnership
than would be obtained from an unaffiliated third party.
D. The General Partner, in its sole and absolute discretion and without
the approval of the Limited Partners, may propose and adopt on behalf of the
Partnership employee benefit plans, stock option plans, and similar plans funded
by the Partnership for the benefit of employees of the General Partner, the
Partnership, Subsidiaries of the Partnership or any Affiliate of any of them in
respect of services performed, directly or indirectly, for the benefit of the
Partnership, the General Partner, or any of the Partnership's Subsidiaries.
E. The General Partner is expressly authorized to enter into, in the name
and on behalf of the Partnership, a right of first opportunity arrangement and
other conflict avoidance agreements with various Affiliates of the Partnership
and the General Partner, on such terms as the General Partner, in its sole and
absolute discretion, believes are advisable.
Section 7.7 Indemnification
---------------
A. The Partnership shall indemnify each Indemnitee from and against any
and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, attorneys fees and other legal fees and
expenses), judgments, fines, settlements, and other amounts arising from any and
all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that relate to the operations of the
Partnership as set forth in this Agreement 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. Without limitation, the foregoing
indemnity shall extend to any liability of any Indemnitee, pursuant to a loan
guaranty or otherwise, for any indebtedness of the Partnership or any Subsidiary
of the Partnership (including without limitation, any indebtedness which the
Partnership or any Subsidiary of the Partnership has assumed or taken subject
to) except as set forth in Exhibit F, and the General Partner is hereby
---------
authorized and empowered, on behalf of the Partnership, to enter into one or
more indemnity agreements consistent with the provisions of this Section 7.7 in
favor of any Indemnitee having or
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potentially having liability for any such indebtedness. The termination of any
proceeding by judgment, order or settlement does not create a presumption that
the Indemnitee did not meet the requisite standard of conduct set forth in this
Section 7.7.A with respect to the subject matter of such proceeding. The
termination of any proceeding by conviction of an Indemnitee or upon a plea of
nolo contendere or its equivalent by an Indemnitee, or an entry of an order of
probation against an Indemnitee prior to judgment, creates a rebuttable
presumption that such Indemnitee acted in a manner contrary to that specified in
this Section 7.7.A. Any indemnification pursuant to this Section 7.7 shall be
made only out of the assets of the Partnership, and neither the General Partner
nor any Limited Partner shall have any obligation to contribute to the capital
of the Partnership or otherwise provide funds, to enable the Partnership to fund
its obligations under this Section 7.7.
B. Reasonable expenses incurred by an Indemnitee who is a party to a
proceeding may be paid or reimbursed by the Partnership in advance of the final
disposition of the proceeding upon receipt by the Partnership of (i) a written
affirmation by the Indemnitee of the Indemnitee's good faith belief that the
standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 7.7.A has been met, and (ii) a written undertaking by
or on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
C. The indemnification provided by this Section 7.7 shall be in addition
to any other rights to which an Indemnitee or any other Person may be entitled
under any agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, and shall continue as to an Indemnitee who has ceased to serve in
such capacity unless otherwise provided in a written agreement pursuant to which
such Indemnities is indemnified.
D. The Partnership may, but shall not be obligated to, purchase and
maintain insurance, on behalf of the Indemnitees and such other Persons as the
General Partner shall determine, against any liability that may be asserted
against or expenses that may be incurred by such Person in connection with the
Partnership's activities, regardless of whether the Partnership would have the
power to indemnify such Person against such liability under the provisions of
this Agreement.
E. For purposes of this Section 7.7, the Partnership shall be deemed to
have requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute fines
within the meaning of Section 7.7; and actions taken or omitted by the
Indemnitee with respect to an employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is not opposed to the best interests of the Partnership.
F. In no event may an Indemnitee subject any of the Partners to personal
liability by reason of the indemnification provisions set forth in this
Agreement.
G. An Indemnitee shall not be denied indemnification in whole or in part
under this Section 7.7 because the Indemnitee had an interest in the transaction
with respect to which the indemnification applies if the transaction was
otherwise permitted by the terms of this Agreement.
H. The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.7 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on the
Partnership's liability to any Indemnitee under this Section 7.7 as in effect
immediately prior to such amendment, modification, or repeal with respect to
claims arising from or relating to matters
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occurring, in whole or in part, prior to such amendment, modification or repeal,
regardless of when such claims may arise or be asserted.
Section 7.8 Liability of the General Partner
--------------------------------
A. Notwithstanding anything to the contrary set forth in this Agreement,
neither the General Partner nor Colonial Properties shall be liable for monetary
damages to the Partnership, any Partners or any Assignees for losses sustained
or liabilities incurred as a result of errors in judgment or of any act or
omission if the General Partner acted in good faith.
B. The Limited Partners expressly acknowledge that the General Partner is
acting on behalf of the Partnership, Colonial Properties, and the shareholders
of Colonial Properties collectively, that the General Partner is under no
obligation to consider the separate interests of the Limited Partners
(including, without limitation, the tax consequences to Limited Partners or
Assignees) in deciding whether to cause the Partnership to take (or decline to
take) any actions, and that neither the General Partner nor Colonial Properties
shall be liable for monetary damages for losses sustained, liabilities incurred,
or benefits not derived by Limited Partners in connection with such decisions,
provided that the General Partner has acted in good faith.
C. Subject to its obligations and duties as General Partner set forth in
Section 7.1.A hereof, the General Partner may exercise any of the powers granted
to it by this Agreement and perform any of the duties imposed upon it hereunder
either directly or by or through its agents. Neither the General Partner nor
Colonial Properties shall be responsible for any misconduct or negligence on the
part of any such agent appointed by the General Partner in good faith.
D. Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the General Partner's liability to the Partnership and the
Limited Partners under this Section 7.8 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.
Section 7.9 Other Matters Concerning the General Partner
--------------------------------------------
A. The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture, or other
paper or document believed by it in good faith to be genuine and to have been
signed or presented by the proper party or parties.
B. The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers, architects, engineers,
environmental consultants and other consultants and advisers selected by it, and
any act taken or omitted to be taken in reliance upon the opinion of such
Persons as to matters which such General Partner reasonably believes to be
within such Person's professional or expert competence shall be conclusively
presumed to have been done or omitted in good faith and in accordance with such
opinion.
C. The General Partner shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its duly authorized
officers and a duly appointed attorney or attorneys-in-fact. Each such attorney
shall, to the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform all and every act and duty which
is permitted or required to be done by the General Partner hereunder.
D. Notwithstanding any other provisions of this Agreement or the Act, any
action of the General Partner on behalf of the Partnership or any decision of
the General Partner to refrain from acting on behalf of the Partnership,
undertaken in the good faith belief that such action
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or omission is necessary or advisable in order (i) to protect the ability of
Colonial Properties to continue to qualify as a REIT or (ii) to avoid Colonial
Properties incurring any taxes under Section 857 or Section 4981 of the Code, is
expressly authorized under this Agreement and is deemed approved by all of the
Limited Partners.
Section 7.10 Title to Partnership Assets
---------------------------
Title to Partnership assets, whether real, personal or mixed and whether
tangible or intangible, shall be deemed to be owned by the Partnership as an
entity, and no Partner, individually or collectively, shall have any ownership
interest in such Partnership assets or any portion thereof. Title to any or all
of the Partnership assets may be held in the name of the Partnership, the
General Partner or one or more nominees, as the General Partner may determine,
including Affiliates of the General Partner. The General Partner hereby declares
and warrants that any Partnership assets for which legal title is held in the
name of the General Partner or any nominee or Affiliate of the General Partner
shall be held by the General Partner for the use and benefit of the Partnership
in accordance with the provisions of this Agreement; provided, however, that the
-------- -------
General Partner shall use its best efforts to cause beneficial and record title
to such assets to be vested in the Partnership as soon as reasonably
practicable. All Partnership assets shall be recorded as the property of the
Partnership in its books and records, irrespective of the name in which legal
title to such Partnership assets is held.
Section 7.11 Reliance by Third Parties
-------------------------
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority, without consent or approval of any other
Partner or Person to encumber, sell or otherwise use in any manner any and all
assets of the Partnership and to enter into any contracts on behalf of the
Partnership, and take any and all actions on behalf of the Partnership and such
Person shall be entitled to deal with the General Partner as if the General
Partner were the Partnership's sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all defenses or other
remedies which may be available against such Person to contest, negate or
disaffirm any action of the General Partner in connection with any such dealing.
In no event shall any Person dealing with the General Partner or its
representatives be obligated to ascertain that the terms of this Agreement have
been complied with or to inquire into the necessity or expedience of any act or
action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Partnership
by the General Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that (i) at
the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect, (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership and (iii)
such certificate, document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and is binding upon
the Partnership.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability
-----------------------
The Limited Partners shall have no liability under this Agreement except as
expressly provided in this Agreement, including Section 10.5 hereof, or under
the Act.
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Section 8.2 Management of Business
----------------------
No Limited Partner or Assignee (other than the General Partner, any of its
Affiliates or any officer, director, employee, partner, agent or trustee of the
General Partner, the Partnership or any of their Affiliates, in their capacity
as such) shall take part in the operation, management or control (within the
meaning of the Act) of the Partnership's business, transact any business in the
Partnership's name or have the power to sign documents for or otherwise bind the
Partnership. The transaction of any such business by the General Partner, any of
its Affiliates or any officer, director, employee, partner, agent or trustee of
the General Partner, the Partnership or any of their Affiliates, in their
capacity as such, shall not affect, impair or eliminate the limitations on the
liability of the Limited Partners or Assignees under this Agreement.
Section 8.3 Outside Activities of Limited Partners
--------------------------------------
Subject to any agreements entered into pursuant to Section 7.6.E hereof and
any other agreements entered into by a Limited Partner or its Affiliates with
the Partnership or a Subsidiary, any Limited Partner (other than the General
Partner) and any officer, director, employee, agent, trustee, Affiliate or
shareholder of any Limited Partner (other than the General Partner) shall be
entitled to and may have business interests and engage in business activities in
addition to those relating to the Partnership, including business interests and
activities that are in direct competition with the Partnership or that are
enhanced by the activities of the Partnership. Neither the Partnership nor any
Partners shall have any rights by virtue of this Agreement in any business
ventures of any Limited Partner or Assignee. None of the Limited Partners (other
than the General Partner) nor any other Person shall have any rights by virtue
of this Agreement or the Partnership relationship established hereby in any
business ventures of any other Person (other than the General Partner to the
extent expressly provided herein) and such Person shall have no obligation
pursuant to this Agreement to offer any interest in any such business ventures
to the Partnership, any Limited Partner or any such other Person, even if such
opportunity is of a character which, if presented to the Partnership, any
Limited Partner or such other Person, could be taken by such Person.
Section 8.4 Return of Capital
-----------------
Except pursuant to the right of redemption set forth in Section 8.6, no
Limited Partner shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent of distributions made pursuant to this
Agreement or upon termination of the Partnership as provided herein. Except to
the extent provided by Exhibit C hereof or as permitted by Section 4.2.B, or
---------
otherwise expressly provided in this Agreement, no Limited Partner or Assignee
shall have priority over any other Limited Partner or Assignee either as to the
return of Capital Contributions or as to profits, losses or distributions.
Section 8.5 Rights of Limited Partners Relating to the Partnership
------------------------------------------------------
A. In addition to other rights provided by this Agreement or by the Act,
and except as limited by Section 8.5.C hereof, each Limited Partner shall have
the right, for a purpose reasonably related to such Limited Partner's interest
as a limited partner in the Partnership, upon written demand with a statement of
the purpose of such demand and at such Limited Partner's own expense (including
such copying and administrative charges as the General Partner may establish
from time to time):
(1) to obtain a copy of the most recent annual and quarterly reports filed
with the Securities and Exchange Commission by Colonial Properties
pursuant to the Securities Exchange Act of 1934;
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(2) to obtain a copy of the Partnership's federal, state and local income
tax returns for each Partnership Year;
(3) to obtain a current list of the name and last known business,
residence or mailing address of each Partner;
(4) to obtain a copy of this Agreement and the Certificate and all
amendments thereto, together with executed copies of all powers of
attorney pursuant to which this Agreement, the Certificate and all
amendments thereto have been executed; and
(5) to obtain true and full information regarding the amount of cash and a
description and statement of any other property or services
contributed by each Partner and which each Partner has agreed to
contribute in the future, and the date on which each became a Partner.
B. The Partnership shall notify each Limited Partner upon request of the
then current Conversion Factor.
C. Notwithstanding any other provision of this Section 8.5, the General
Partner may keep confidential from the Limited Partners, for such period of time
as the General Partner determines in its sole and absolute discretion to be
reasonable, any information that (i) the General Partner reasonably believes to
be in the nature of trade secrets or other information the disclosure of which
the General Partner in good faith believes is not in the best interests of the
Partnership or could damage the Partnership or its business or (ii) the
Partnership is required by law or by agreements with an unaffiliated third party
to keep confidential.
Section 8.6 Redemption Right
----------------
A. Subject to Sections 4.2.C.3 and 8.6.C, on or after the date one (1)
year after the closing of the initial public offering of REIT Shares by Colonial
Properties, each Limited Partner, other than the General Partner, shall have the
right (the "Redemption Right") to require the Partnership to redeem on a
----------------
Specified Redemption Date all or a portion of the Partnership Units held by such
Limited Partner at a redemption price equal to and in the form of the Cash
Amount to be paid by the Partnership. The Redemption Right shall be exercised
pursuant to a Notice of Redemption delivered to the Partnership (with a copy to
the General Partner) by the Limited Partner who is exercising the redemption
right (the "Redeeming Partner"). A Limited Partner may not exercise the
Redemption Right for less than one thousand (1,000) Partnership Units or, if
such Limited Partner holds less than one thousand (1,000) Partnership Units, all
of the Partnership Units held by such Partner. The Redeeming Partner shall have
no right, with respect to any Partnership Units so redeemed, to receive any
distributions paid after the Specified Redemption Date. The Assignee of any
Limited Partner may exercise the rights of such Limited Partner pursuant to this
Section 8.6, and such Limited Partner shall be deemed to have assigned such
rights to such Assignee and shall be bound by the exercise of such rights by
such Limited Partner's Assignee. In connection with any exercise of such rights
by such Assignee on behalf of such Limited Partner, the Cash Amount shall be
paid by the Partnership directly to such Assignee and not to such Limited
Partner.
B. Notwithstanding the provisions of Section 8.6.A, either of the General
Partner or Colonial Properties may, in its sole and absolute discretion, elect
to assume directly and satisfy a Redemption Right by either paying to the
Redeeming Partner the Cash Amount or issuing to the Redeeming Partner the REIT
Shares Amount, as elected by the General Partner or Colonial Properties (in its
sole and absolute discretion) on the Specified Redemption Date, whereupon the
General Partner shall acquire the Partnership Units offered for redemption by
the Redeeming Partner and shall be treated for all purposes of this Agreement as
the owner of such Partnership Units. Unless the General Partner or Colonial
Properties (in their sole and absolute discretion) shall
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exercise its right to assume directly and satisfy the Redemption Right, neither
the General Partner nor Colonial Properties shall have any obligation to the
Redeeming Partner or the Partnership with respect to the Redeeming Partner's
exercise of the Redemption Right. In the event the General Partner or Colonial
Properties shall exercise its right to satisfy the Redemption Right in the
manner described in the first sentence of this Section 8.6.B, the Partnership
shall have no obligation to pay any amount to the Redeeming Partner with respect
to such Redeeming Partner's exercise of the Redemption Right, and each of the
Redeeming Partner, the Partnership, and the General Partner or Colonial
Properties, as the case may be, shall treat the transaction between the General
Partner or Colonial Properties, as the case may be, and the Redeeming Partner
for federal income tax purposes as a sale of the Redeeming Partner's Partnership
Units to the General Partner or Colonial Properties, as the case may be. Each
Redeeming Partner agrees to execute such documents as the General Partner may
reasonably require in connection with the issuance of REIT Shares upon exercise
of the Redemption Right.
C. Notwithstanding the provisions of Section 8.6.A and Section 8.6.B, a
Partner shall not be entitled to exercise the Redemption Right pursuant to
Section 8.6.A if the delivery of REIT Shares to such Partner on the Specified
Redemption Date by the General Partner or Colonial Properties pursuant to
Section 8.6.B (regardless of whether or not the General Partner or Colonial
Properties would in fact exercise its rights under Section 8.6.B) would be
prohibited under the Declaration of Trust. Without limitation on the preceding
sentence, the following restrictions shall apply to the exercise of a Redemption
Right by a Partner: (i) neither a Person who is an "Excluded Holder" as defined
in the Declaration of Trust, nor any Person related to an "Excluded Holder" by
either blood or marriage, nor any Person whose ownership of REIT Shares would be
attributed to an "Excluded Holder" under Section 318 of the Code, nor any Person
who would be considered by reason of the application of Section 318 of the Code
to own REIT Shares actually or constructively owned by an "Excluded Holder"
shall be permitted to exercise the Redemption Right if (A) after giving effect
to such exercise, The Colonial Company or any direct or indirect Subsidiary of
The Colonial Company would be regarded as a "related party tenant" of Colonial
Properties for purposes of Section 856(d)(2)(B) of the Code and (B) the total
rental income considered derived by Colonial Properties from all "related party
tenants" could reasonably be expected to exceed one percent (1%) of the gross
income of Colonial Properties (as determined for the purposes of Section
856(c)(2) of the Code); and (ii) neither an "Excluded Holder", nor any Person
related to an "Excluded Holder" by either blood or marriage, nor any Person
whose ownership of REIT Shares would be attributed to an "Excluded Holder" under
Section 544(a) of the Code, nor any Person who would be considered by reason of
the application of Section 544(a) of the Code to own REIT Shares actually or
constructively owned by an "Excluded Holder" shall be permitted to exercise the
Redemption Right if, after giving effect to such exercise (A) any single Person
described above would be considered to own more than 29 percent of the
outstanding REIT Shares (as determined for purposes of Sections 542(a)(2) and
856(a)(6) of the Code); (B) any two Persons described above would be considered
to own more than 34 percent of the outstanding REIT Shares (as determined for
purposes of Sections 542(a)(2) and 856(a)(6) of the Code); (C) any three Persons
described above would be considered to own more than 39 percent of the
outstanding REIT Shares (as determined for purposes of Sections 542(a)(2) and
856(a)(6) of the Code); or (D) any four Persons described above would be
considered to own more than 44 percent of the outstanding REIT Shares (as
determined for purposes of Sections 542(a)(2) and 856(a)(6) of the Code).
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting
----------------------
The General Partner shall keep or cause to be kept at the principal office
of the Partnership those records and documents required to be maintained by the
Act and other books and records deemed by the General Partner to be appropriate
with respect to the Partnership's business,
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including, without limitation, all books and records necessary to provide to the
Limited Partners any information, lists and copies of documents required to be
provided pursuant to Section 9.3 hereof. Any records maintained by or on behalf
of the Partnership in the regular course of its business may be kept on, or be
in the form of, punch cards, magnetic tape, photographs, micrographics or any
other information storage device, provided that the records so maintained are
-------------
convertible into clearly legible written form within a reasonable period of
time. The books of the Partnership shall be maintained, for financial and tax
reporting purposes, on an accrual basis in accordance with generally accepted
accounting principles, or such other basis as the General Partner determines to
be necessary or appropriate.
Section 9.2 Fiscal Year
-----------
The fiscal year of the Partnership shall be the calendar year.
Section 9.3 Reports
-------
A. As soon as practicable, but in no event later than one hundred five
(105) days after the close of each Partnership Year, the General Partner shall
cause to be mailed to each Limited Partner as of the close of the Partnership
Year, an annual report containing financial statements of the Partnership, or of
the General Partner or Colonial Properties if such statements are prepared
solely on a consolidated basis with the General Partner or Colonial Properties,
for such Partnership Year, presented in accordance with generally accepted
accounting principles, such statements to be audited by a nationally recognized
firm of independent public accountants selected by the General Partner.
B. As soon as practicable, but in no event later than one hundred five
(105) days after the close of each calendar quarter (except the last calendar
quarter of each year), the General Partner shall cause to be mailed to each
Limited Partner as of the last day of the calendar quarter, a report containing
unaudited financial statements of the Partnership, or of the General Partner or
Colonial Properties, if such statements are prepared solely on a consolidated
basis with the General Partner or Colonial Properties, and such other
information as may be required by applicable law or regulation, or as the
General Partner determines to be appropriate.
ARTICLE 10
TAX MATTERS
Section 10.1 Preparation of Tax Returns
--------------------------
The General Partner shall arrange for the preparation and timely filing of
all returns of Partnership income, gains, deductions, losses and other items
required of the Partnership for federal and state income tax purposes and shall
use all reasonable efforts to furnish, within ninety (90) days of the close of
each taxable year, the tax information reasonably required by Limited Partners
for federal and state income tax reporting purposes.
Section 10.2 Tax Elections
-------------
Except as otherwise provided herein, the General Partner shall, in its sole
and absolute discretion, determine whether to make any available election
pursuant to the Code; provided, however, that the General Partner shall make the
--------
election under Section 754 of the Code in accordance with applicable regulations
thereunder. The General Partner shall have the right to seek to revoke any such
election (including, without limitation, the election under Section 754 of the
Code) upon the General Partner's determination in its sole and absolute
discretion that such revocation is in the best interests of the Partners.
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Section 10.3 Tax Matters Partner
-------------------
A. The General Partner shall be the "tax matters partner" of the
Partnership for federal income tax purposes. Pursuant to Section 6230(e) of the
Code, upon receipt of notice from the IRS of the beginning of an administrative
proceeding with respect to the Partnership, the tax matters partner shall
furnish the IRS with the name, address, taxpayer identification number, and
profit interest of each of the Limited Partners and the Assignees; provided,
--------
however, that such information is provided to the Partnership by the Limited
Partners and the Assignees.
B. The tax matters partner is authorized, but not required:
(1) to enter into any settlement with the IRS with respect to any
administrative or judicial proceedings for the adjustment of
Partnership items required to be taken into account by a Partner
for income tax purposes (such administrative proceedings being
referred to as a "tax audit" and such judicial proceedings being
referred to as "judicial review"), and in the settlement agreement
the tax matters partner may expressly state that such agreement
shall bind all Partners, except that such settlement agreement
shall not bind any Partner (i) who (within the time prescribed
pursuant to the Code and Regulations) files a statement with the
IRS providing that the tax matters partner shall not have the
authority to enter into a settlement agreement on behalf of such
Partner or (ii) who is a "notice partner" (as defined in Section
6231(a)(8) of the Code) or a member of a "notice group" (as
defined in Section 6223(b)(2) of the Code);
(2) in the event that a notice of a final administrative adjustment at
the Partnership level of any item required to be taken into
account by a Partner for tax purposes (a "final adjustment") is
mailed to the tax matters partner, to seek judicial review of such
final adjustment, including the filing of a petition for
readjustment with the Tax Court or the filing of a complaint for
refund with the United States Claims Court or the District Court
of the United States for the district in which the Partnership's
principal place of business is located;
(3) to intervene in any action brought by any other Partner for
judicial review of a final adjustment;
(4) to file a request for an administrative adjustment with the IRS
and, if any part of such request is not allowed by the IRS, to
file an appropriate pleading (petition or complaint) for judicial
review with respect to such request;
(5) to enter into an agreement with the IRS to extend the period for
assessing any tax which is attributable to any item required to be
taken account by a Partner for tax purposes, or an item affected
by such item; and
(6) to take any other action on behalf of the Partners of the
Partnership in connection with any tax audit or judicial review
proceeding to the extent permitted by applicable law or
regulations.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the General
Partner set forth in Section 7.7 of this Agreement shall be fully applicable to
the tax matters partner in its capacity as such.
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C. The tax matters partner shall receive no compensation for its
services. All third party costs and expenses incurred by the tax matters
partner in performing its duties as such (including legal and accounting fees
and expenses) shall be borne by the Partnership. Nothing herein shall be
construed to restrict the Partnership from engaging an accounting firm to assist
the tax matters partner in discharging its duties hereunder, so long as the
compensation paid by the Partnership for such services is reasonable.
Section 10.4 Organizational Expenses
-----------------------
The Partnership shall elect to deduct expenses, if any, incurred by it
in organizing the Partnership ratably over a sixty (60) month period as provided
in Section 709 of the Code.
Section 10.5 Withholding
-----------
Each Limited Partner hereby authorizes the Partnership to withhold
from or pay on behalf of or with respect to such Limited Partner any amount of
federal, state, local, or foreign taxes that the General Partner determines that
the Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Sections 1441, 1442, 1445, or 1446 of the Code. Any
amount paid on behalf of or with respect to a Limited Partner shall constitute a
loan by the Partnership to such Limited Partner, which loan shall be repaid by
such Limited Partner within fifteen (15) days after notice from the General
Partner that such payment must be made unless (i) the Partnership withholds such
payment from a distribution which would otherwise be made to the Limited Partner
or (ii) the General Partner determines, in its sole and absolute discretion,
that such payment may be satisfied out of the available funds of the Partnership
which would, but for such payment, be distributed to the Limited Partner. Any
amounts withheld pursuant to the foregoing clauses (i) or (ii) shall be treated
as having been distributed to such Limited Partner. Each Limited Partner hereby
unconditionally and irrevocably grants to the Partnership a security interest in
such Limited Partner's Partnership Interest to secure such Limited Partner's
obligation to pay to the Partnership any amounts required to be paid pursuant
to this Section 10.5. In the event that a Limited Partner fails to pay any
amounts owed to the Partnership pursuant to this Section 10.5 when due, the
General Partner may, in its sole and absolute discretion, elect to make the
payment to the Partnership on behalf of such defaulting Limited Partner, and in
such event shall be deemed to have loaned such amount to such defaulting Limited
Partner and shall succeed to all rights and remedies of the Partnership as
against such defaulting Limited Partner. Without limitation, in such event the
General Partner shall have the right to receive distributions that would
otherwise be distributable to such defaulting Limited Partner until such time as
such loan, together with all interest thereon, has been paid in full, and any
such distributions so received by the General Partner shall be treated as having
been distributed to the defaulting Limited Partner and immediately paid by the
defaulting Limited Partner to the General Partner in repayment of such loan.
Any amounts payable by a Limited Partner hereunder shall bear interest at the
lesser of (A) the base rate on corporate loans at large United States money
center commercial banks, as published from time to time in the Wall Street
-----------
Journal, plus four (4) percentage points, or (B) the maximum lawful rate of
- -------
interest on such obligation, such interest to accrue from the date such amount
is due (i.e., fifteen (15) days after demand) until such amount is paid in full.
Each Limited Partner shall take such actions as the Partnership or the General
Partner shall request in order to perfect or enforce the security interest
created hereunder.
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ARTICLE 11
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer
--------
A. The term "transfer," when used in this Article 11 with respect to
a Partnership Unit, shall be deemed to refer to a transaction by which the
General Partner purports to assign all or any part of its General Partner
Interest to another Person or by which a Limited Partner purports to assign all
or any part of its Limited Partner Interest to another Person, and includes a
sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange
or any other disposition by law or otherwise. The term "transfer" when used in
this Article 11 does not include any redemption of Partnership Units by a
Limited Partner or acquisition of Partnership Units from a Limited Partner by
the General Partner pursuant to Section 8.6.
B. No Partnership Interest shall be transferred, in whole or in
part, except in accordance with the terms and conditions set forth in this
Article 11. Any transfer or purported transfer of a Partnership Interest not
made in accordance with this Article 11 shall be null and void.
Section 11.2 Transfer of General Partner's Partnership Interest or
-----------------------------------------------------
Colonial Properties' Interest in the General Partner
- ----------------------------------------------------
A. The General Partner may not transfer any of its General Partner
Interest or Limited Partnership Interests or withdraw as General Partner except
as provided in Section 11.2.B or in connection with a transaction described in
Section 11.2.C. Colonial Properties shall not transfer any of its Ownership
Interest except in connection with a transaction described in Section 11.2.C.
B. The General Partner may transfer Limited Partner Interests held by
it either to the Partnership in accordance with Section 7.5.B hereof or to a
purported holder of REIT Shares in accordance with the provisions of Section 6.6
of the Declaration of Trust.
C. Except as otherwise provided in Section 11.2.D, neither the
General Partner nor Colonial Properties shall engage in any merger,
consolidation or other combination with or into another Person or sale of all or
substantially all of its assets, or any reclassification, or recapitalization or
change of outstanding REIT Shares (other than a change in par value, or from par
value to no par value, or as a result of a subdivision or combination as
described in the definition of "Conversion Factor") ("Transaction"), unless (i)
the Transaction also includes a merger of the Partnership or sale of
substantially all of the assets of the Partnership which has been approved by
the requisite Consent of the Partners pursuant to Section 7.3 and as a result of
which all Limited Partners will receive for each Partnership Unit an amount of
cash, securities, or other property equal to the product of the Conversion
Factor and the greatest amount of cash, securities or other property paid to a
holder of one REIT Share in consideration of one REIT Share at any time during
the period from and after the date on which the Transaction is consummated,
provided that if, in connection with the Transaction, a purchase, tender or
- -------- ----
exchange offer shall have been made to and accepted by the holders of more than
fifty percent (50%) of the outstanding REIT Shares, each holder of Partnership
Units shall receive the greatest amount of cash, securities, or other property
which such holder would have received had it exercised the Redemption Right and
received REIT Shares in exchange for its Partnership Units immediately prior to
the expiration of such purchase, tender or exchange offer and had thereupon
accepted such purchase, tender or exchange offer; and (ii) no more than forty-
nine percent (49%) of the equity securities of the acquiring Person in such
transaction shall be owned, after consummation of such Transaction, by the
General Partner or Persons who are Affiliates of the Partnership or the General
Partner immediately prior to the date on which the Transaction is consummated.
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<PAGE>
D. Notwithstanding Section 11.2.C, either the General Partner or
Colonial Properties may merge with another entity if immediately after such
merger substantially all of the assets of the surviving entity, other than
Partnership Units held by the General Partner (whether such Partnership Units
constitute the General Partner Interest or a Limited Partner Interest), are
contributed to the Partnership as a Capital Contribution in exchange for
Partnership Units with a fair market value, as reasonably determined by the
General Partner, equal to the 704(c) Value of the assets so contributed.
Section 11.3 Limited Partners' Rights to Transfer
------------------------------------
A. Subject to the provisions of Sections 11.3.C, 11.3.D, 11.3.E, and
11.4, a Limited Partner may transfer, with or without the consent of the General
Partner, all or any portion of its Partnership Interest, or any of such Limited
Partner's economic rights as a Limited Partner.
B. If a Limited Partner is subject to Incapacity, the executor,
administrator, trustee, committee, guardian, conservator or receiver of such
Limited Partner's estate shall have all the rights of a Limited Partner, but not
more rights than those enjoyed by other Limited Partners, for the purpose of
settling or managing the estate and such power as the Incapacitated Limited
Partner possessed to transfer all or any part of his or its interest in the
Partnership. The Incapacity of a Limited Partner, in and of itself, shall not
dissolve or terminate the Partnership.
C. The General Partner may prohibit any transfer by a Limited Partner
of its Partnership Units if, in the opinion of legal counsel to the Partnership,
such transfer would require filing of a registration statement under the
Securities Act of 1933 or would otherwise violate any federal or state
securities laws or regulations applicable to the Partnership or the Partnership
Unit.
D. No transfer by a Limited Partner of its Partnership Units may be
made to any Person if (i) in the opinion of legal counsel for the Partnership,
it would result in the Partnership being treated as an association taxable as a
corporation, or (ii) such transfer is effectuated through an "established
securities market" or a "secondary market (or the substantial equivalent
thereof)" within the meaning of Section 7704 of the Code.
E. No transfer of any Partnership Units may be made to a lender to
the Partnership or any Person who is related (within the meaning of Section
1.752-4(b) of the Regulations) to any lender to the Partnership whose loan
constitutes a Nonrecourse Liability, without the consent of the General Partner,
in its sole and absolute discretion, provided that as a condition to such
-------- ----
consent the lender will be required to enter into an arrangement with the
Partnership and the General Partner to exchange or redeem for the Cash Amount or
REIT Shares Amount, at the election of the Partnership, any Partnership Units in
which a security interest is held simultaneously with the time at which such
lender would be deemed to be a partner in the Partnership for purposes of
allocating liabilities to such lender under Section 752 of the Code.
Section 11.4 Substituted Limited Partners
----------------------------
A. The General Partner's failure or refusal to permit a transferee of
any such interests to become a Substituted Limited Partner shall not give rise
to any cause of action against the Partnership or any Partner.
B. A transferee who has been admitted as a Substituted Limited
Partner in accordance with this Article 11 shall have all the rights and powers
and be subject to all the restrictions and liabilities of a Limited Partner
under this Agreement.
C. Upon the admission of a Substituted Limited Partner, the General
Partner shall amend Exhibit A to reflect the name, address, number of
---------
Partnership Units, and Percentage
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Interest of such Substituted Limited Partner and to eliminate or adjust, if
necessary, the name, address and interest of the predecessor of such Substituted
Limited Partner.
Section 11.5 Assignees
---------
If the General Partner, in its sole and absolute discretion, does not
consent to the admission of any permitted transferee under Section 11.3 as a
Substituted Limited Partner, as described in Section 11.4, such transferee shall
be considered an Assignee for purposes of this Agreement. An Assignee shall be
deemed to have had assigned to it, and shall be entitled to receive
distributions from the Partnership and the share of Net Income, Net Losses,
Recapture Income, and any other items, gain, loss deduction and credit of the
Partnership attributable to the Partnership Units assigned to such transferee,
but shall not be deemed to be a holder of Partnership Units for any other
purpose under this Agreement, and shall not be entitled to vote such Partnership
Units in any matter presented to the Limited Partners for a vote (such
Partnership Units being deemed to have been voted on such matter in the same
proportion as all other Partnership Units held by Limited Partners are voted).
In the event any such transferee desires to make a further assignment of any
such Partnership Units, such transferee shall be subject to all the provisions
of this Article 11 to the same extent and in the same manner as any Limited
Partner desiring to make an assignment of Partnership Units.
Section 11.6 General Provisions
------------------
A. No Limited Partner may withdraw from the Partnership other than as
a result of a permitted transfer of all of such Limited Partner's Partnership
Units in accordance with this Article 11 or pursuant to redemption of all of its
Partnership Units under Section 8.6.
B. Any Limited Partner who shall transfer all of its Partnership
Units in a transfer permitted pursuant to this Article 11 shall cease to be a
Limited Partner upon the admission of all Assignees of such Partnership Units as
Substitute Limited Partners. Similarly, any Limited Partner who shall transfer
all of its Partnership Units pursuant to a redemption of all of its Partnership
Units under Section 8.6 shall cease to be a Limited Partner.
C. Transfers pursuant to this Article 11 may only be made on the
first day of a month, unless the General Partner otherwise agrees; provided,
--------
however, that a transfer of Partnership Units pursuant to exercise of rights by
- -------
a secured party in connection with a pledge of such Partnership Units may occur
at any time.
D. If any Partnership Interest is transferred or assigned during any
quarterly segment of the Partnership's fiscal year in compliance with the
provisions of this Article 11 or redeemed or transferred pursuant to Section
8.6, or any day other than the first day of a Partnership Year, then Net Income,
Net Losses, each item thereof and all other items attributable to such interest
for such Partnership Year shall be divided and allocated between the transferor
Partner and the transferee Partner by taking into account their varying
interests during the Partnerships year in accordance with Section 706(d) of the
Code, using the interim closing of the books method. Solely for purposes of
making such allocations, each of such items for the calendar month in which the
transfer or assignment occurs shall be allocated to the transferee Partner, and
none of such items for the calendar month in which a redemption occurs shall be
allocated to the Redeeming Partner. All distributions of Available Cash
attributable to such Partnership Unit with respect to which the Partnership
Record Date is before the date of such transfer, assignment, or redemption shall
be made to the transferor Partner or the Redeeming Partner, as the case may be,
and in the case of a transfer or assignment other than a redemption, all
distributions of Available Cash thereafter attributable to such Partnership Unit
shall be made to the transferee Partner.
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ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner
--------------------------------------
A successor to all of the General Partner Interest pursuant to Section
11.2 hereof who is proposed to be admitted as a successor General Partner shall
be admitted to the Partnership as the General Partner, effective upon such
transfer. Any such transferee shall carry on the business of the Partnership
without dissolution. In each case, the admission shall be subject to the
successor General Partner executing and delivering to the Partnership an
acceptance of all of the terms and conditions of this Agreement and such other
documents or instruments as may be required to effect the admission. In the
case of such admission on any day other than the first day of a Partnership
Year, all items attributable to the General Partner Interest for such
Partnership year shall be allocated between the transferring General Partner and
such successor as provided in Section 11.6.D hereof.
Section 12.2 Admission of Additional Limited Partners
----------------------------------------
A. A Person who makes a Capital Contribution to the Partnership in
accordance with this Agreement shall be admitted to the Partnership as an
Additional Limited Partner only upon furnishing to the General Partner (i)
evidence of acceptance in form satisfactory to the General Partner of all of the
terms and conditions of this Agreement, including, without limitation, the power
of attorney granted in Section 2.4 hereof and (ii) such other documents or
instruments as may be required in the discretion of the General Partner in order
to effect such Person's admission as an Additional Limited Partner.
B. Notwithstanding anything to the contrary in this Section 12.2, no
Person shall be admitted as an Additional Limited Partner without the consent of
the General Partner, which consent may be given or withheld in the General
Partner's sole and absolute discretion. The admission of any Person as an
Additional Limited Partner shall become effective on the date upon which the
name of such Person is recorded on the books and records of the Partnership,
following the consent of the General Partner to such admission.
C. If any Additional Limited Partner is admitted to the Partnership
on any day other than the first day of a Partnership Year, then Net Income, Net
Losses, each item thereof and all other items allocable among Partners and
Assignees for such Partnership Year shall be allocated among such Additional
Limited Partner and all other Partners and Assignees by taking into account
their varying interests during the Partnership Year in accordance with Section
706(d) of the Code, using the interim closing of the books method. Solely for
purposes of making such allocations, each of such item for the calendar month in
which an admission of any Additional Limited Partner occurs shall be allocated
among all the Partners and Assignees including such Additional Limited Partner.
All distributions of Available Cash with respect to which the Partnership Record
Date is before the date of such admission shall be made solely to Partners and
Assignees other than the Additional Limited Partner, and all distributions of
Available Cash thereafter shall be made to all of the Partners and Assignees
including such Additional Limited Partner.
Section 12.3 Amendment of Agreement and Certificate of Limited
-------------------------------------------------
Partnership
- -----------
For the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Act to amend
the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement (including an amendment of Exhibit A)
---------
and, if required by law, shall prepare and file an amendment to the Certificate
and may for this purpose exercise the power of attorney granted pursuant to
Section 2.4 hereof.
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ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 13.1 Dissolution
-----------
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
its affairs shall be wound up, upon the first to occur of any of the following
("Liquidating Events"):
A. the expiration of its term as provided in Section 2.5 hereof;
B. an event of withdrawal of the General Partner, as defined in the
Act (other than an event of bankruptcy), unless, within ninety (90) days after
such event of withdrawal all the remaining Partners agree in writing to continue
the business of the Partnership and to the appointment, effective as of the date
of withdrawal, of a successor General Partner;
C. from and after the Effective Date through December 31, 2013, an
election to dissolve the Partnership made by the General Partner, unless any
Original Limited Partner who holds one or more Original Limited Partnership
Units objects in writing to such dissolution within thirty (30) days of
receiving written notice of such election from the General Partner;
D. from and after January 1, 2014 through December 31, 2043, an
election to dissolve the Partnership made by the General Partner, unless
Original Limited Partners holding at least five percent (5%) of the Original
Limited Partnership Units object in writing to such dissolution within thirty
(30) days of receiving written notice of such election from the General Partner;
E. on or after January 1, 2043 an election to dissolve the
Partnership made by the General Partner, in its sole and absolute discretion;
F. entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act;
G. the sale of all or substantially all of the assets and properties
of the Partnership; or
H. a final and non-appealable judgment is entered by a court of
competent jurisdiction ruling that the General Partner is bankrupt or insolvent,
or a final and non-appealable order for relief is entered by a court with
appropriate jurisdiction against the General Partner, in each case under any
federal or state bankruptcy or insolvency laws as now or hereafter in effect,
unless prior to the entry of such order or judgment all of the remaining
Partners agree in writing to continue the business of the Partnership and to the
appointment, effective as of a date prior to the date of such order or judgment,
of a substitute General Partner.
Section 13.2 Winding Up
----------
A. Upon the occurrence of a Liquidating Event, the Partnership shall
continue solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets, and satisfying the claims of its creditors and Partners.
No Partner shall take any action that is inconsistent with, or not necessary to
or appropriate for, the winding up of the Partnership's business and affairs.
The General Partner, or, in the event there is no remaining General Partner, any
Person elected by a majority in interest of the Limited Partners (the General
Partner or such
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other Person being referred to herein as the "Liquidator"), shall be responsible
for overseeing the winding up and dissolution of the Partnership and shall take
full account of the Partnership's liabilities and property and the Partnership
property shall be liquidated as promptly as is consistent with obtaining the
fair value thereof, and the proceeds therefrom (which may, to the extent
determined by the General Partner, include shares of stock in the General
Partner) shall be applied and distributed in the following order:
(1) First, to the payment and discharge of all of the Partnership's
debts and liabilities to creditors other than the Partners;
(2) Second, to the payment and discharge of all of the Partnership's
debts and liabilities to the General Partner;
(3) Third, to the payment and discharge of all of the Partnership's
debts and liabilities to the other Partners; and
(4) The balance, if any, to the General Partner and Limited Partners
in accordance with their Capital Accounts, after giving effect to
all contributions, distributions, and allocations for all
periods.
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13.
B. Notwithstanding the provisions of Section 13.2.A hereof which
require liquidation of the assets of the Partnership, but subject to the order
of priorities set forth therein, if prior to or upon dissolution of the
Partnership the Liquidator determines that an immediate sale of part or all of
the Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole and absolute discretion, defer for a
reasonable time the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership (including to those Partners as creditors) and/or
distribute to the Partners, in lieu of cash, as tenants in common and in
accordance with the provisions of Section 13.2.A hereof, undivided interests in
such Partnership assets as the Liquidator deems not suitable for liquidation.
Any such distributions in kind shall be made only if, in the good faith judgment
of the Liquidator, such distributions in kind are in the best interest of the
Partners, and shall be subject to such conditions relating to the disposition
and management of such properties as the Liquidator deems reasonable and
equitable and to any agreements governing the operation of such properties at
such time. The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.
C. In the discretion of the Liquidator, a pro rata portion of the
distributions that would otherwise be made to the General Partner and Limited
Partners pursuant to this Article l3 may be:
(1) distributed to a trust established for the benefit of the General
Partner and Limited Partners for the purposes of liquidating
Partnership assets, collecting amounts owed to the Partnership,
and paying any contingent or unforeseen liabilities or
obligations of the Partnership or of the General Partner arising
out of or in connection with the Partnership. The assets of any
such trust shall be distributed to the General Partner and
Limited Partners from time to time, in the reasonable discretion
of Liquidator, in the same proportions as the amount distributed
to such trust by the Partnership would otherwise have been
distributed to the General Partner and Limited Partners Pursuant
to this Agreement; or
-38-
<PAGE>
(2) withheld or escrowed to provide a reasonable reserve for
Partnership liabilities (contingent or otherwise) and to reflect
the unrealized portion of any installment obligations owed to the
Partnership, provided that such withheld or escrowed amounts
shall be distributed to the General Partner and Limited Partners
in the manner and order of priority set forth in Section 13.2.A
as soon as practicable.
Section 13.3 Compliance with Timing Requirements of Regulations
--------------------------------------------------
In the event the Partnership is "liquidated" within the meaning of
Regulations Section 1.704-l(b)(2)(ii)(g), distributions shall be made pursuant
to this Article 13 to the General Partner and Limited Partners who have positive
Capital Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2).
If any Partner has a deficit balance in his Capital Account (after giving effect
to all contributions, distributions and allocations for all taxable years,
including the year during which such liquidation occurs), such Partner shall
have no obligation to make any contribution to the capital of the Partnership
with respect to such deficit, and such deficit shall not be considered a debt
owed to the Partnership or to any other Person for any purpose whatsoever.
Section 13.4. Deemed Distribution and Recontribution
--------------------------------------
Notwithstanding any other provision of this Article 13, in the event
the Partnership is considered liquidated within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the
Partnership's property shall not be liquidated, the Partnership's liabilities
shall not be paid or discharged, and the Partnership's affairs shall not be
wound up. Instead, for federal income tax purposes and for purposes of
maintaining Capital Accounts pursuant to Exhibit B hereto, the Partnership shall
---------
be deemed to have distributed the property in kind to the General Partner and
Limited Partners, who shall be deemed to have assumed and taken such property
subject to all Partnership liabilities, all in accordance with their respective
Capital Accounts. Immediately thereafter, the General Partner and Limited
Partners shall be deemed to have recontributed the Partnership property in kind
to the Partnership, which shall be deemed to have assumed and taken such
property subject to all such liabilities.
Section 13.5 Rights of Limited Partners
--------------------------
Except as otherwise provided in this Agreement, each Limited Partner
shall look solely to the assets of the Partnership for the return of its Capital
Contributions and shall have no right or power to demand or receive property
other than cash from the Partnership. Except as otherwise provided in this
Agreement, no Limited Partner shall have priority over any other Partner as to
the return of its Capital Contributions, distributions, or allocations.
Section 13.6 Notice of Dissolution
---------------------
In the event a Liquidating Event occurs or an event occurs that would,
but provisions of an election or objection by one or more Partners pursuant to
Section 13.1, result in a dissolution of the Partnership, the General Partner
shall, within thirty (30) days thereafter, provide written notice thereof to
each of the Partners.
-39-
<PAGE>
Section 13.7 Termination of Partnership and Cancellation of
----------------------------------------------
Certificate of Limited Partnership
-------------------------------------
Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 13.2 hereof, the Partnership shall be
terminated, a certificate of cancellation shall be filed, and all qualifications
of the Partnership as a foreign limited partnership in jurisdictions other than
the State of Delaware shall be canceled and such other actions as may be
necessary to terminate the Partnership shall be taken.
Section 13.8 Reasonable Time for Windinq-Up
------------------------------
A reasonable time shall be allowed for the orderly winding-up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 hereof, in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect between the Partners during the period of liquidation.
Section 13.9 Waiver of Partition
-------------------
Each Partner hereby waives any right to partition of the Partnership
property.
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1 Amendments
----------
A. Amendments to this Agreement may be proposed by the General
Partner or by any Limited Partners holding twenty percent (20%) or more of the
Partnership Interests. Following such proposal, the General Partner shall submit
any proposed amendment to the Limited Partners. The General Partner shall seek
the written vote of the Partners on the proposed amendment or shall call a
meeting to vote thereon and to transact any other business that it may deem
appropriate. For purposes of obtaining a written vote, the General Partner may
require a response within a reasonable specified time, but not less than fifteen
(15) days, and failure to respond in such time period shall constitute a vote
which is consistent with the General Partner's recommendation with respect to
the proposal. Except as provided in Section 14.1.B, 14.1.C or 14.,1.D, a
proposed amendment shall be adopted and be effective as an amendment hereto if
it is approved by the General Partner and it receives the Consent of Partners
holding a majority of the Percentage Interests of the Limited Partners
(including Limited Partner Interests held by the General Partner).
B. Notwithstanding Section 14.1.A, the General Partner shall have
the power, without the consent of the Limited Partners, to amend this Agreement
as may be required to facilitate or implement any of the following purposes:
(1) to add to the obligations of the General Partner or surrender any
right or power granted to the General Partner or any Affiliate of
the General Partner for the benefit of the Limited Partners;
(2) to reflect the admission, substitution, termination, or
withdrawal of Partners in accordance with this Agreement;
(3) to set forth the designations, rights, powers, duties, and
preferences of the holders of any additional Partnership
Interests issued pursuant to Section 4.2.A hereof;
-40-
<PAGE>
(4) to reflect a change that is of an inconsequential nature and does
not adversely affect the Limited Partners in any material
respect, or to cure any ambiguity, correct or supplement any
provision in this Agreement not inconsistent with law or with
other provisions, or make other changes with respect to matters
arising under this Agreement that will not be inconsistent with
law or with the provisions of this Agreement; and
(5) to satisfy any requirements, conditions, or guidelines contained
in any order, directive, opinion, ruling or regulation of a
federal or state agency or contained in federal or state law.
The General Partner shall provide notice to the Limited Partners when any action
under this Section 14.1.B is taken.
C. Notwithstanding Section 14.1.A and 14.1.B hereof, this Agreement
shall not be amended without the Consent of each Partner adversely affected if
such amendment would (i) convert a Limited Partner's interest in the Partnership
into a general partner interest, (ii) modify the limited liability of a Limited
Partner in a manner adverse to such Limited Partner, (iii) alter rights of the
Partner to receive distributions pursuant to Article 5, or the allocations
specified in Article 6 (except as permitted pursuant to Section 4.2 and Section
14.1.B(3) hereof), (iv) alter or modify the Redemption Right and REIT Shares
Amount as set forth in Sections 8.6 and 11.2.B, and the related definitions, in
a manner adverse to such Partner, (v) cause the termination of the Partnership
prior to the time set forth in Sections 2.5 or 13.1, or (vi) amend this Section
14.1.C. Further, no amendment may alter the restrictions on the General
Partner's authority set forth in Section 7.3 without the Consent specified in
that section.
D. Notwithstanding Section 14.1.A or Section 14.1.B hereof, the
General Partner shall not amend Sections 4.2.A, 7.5, 7.6, 11.2 or 14.2 without
the Consent of a majority of the Percentage Interests of the Limited Partners
excluding Limited Partner Interests held by the General Partner.
Section 14.2 Meetings of the Partners
------------------------
A. Meetings of the Partners may be called by the General Partner and
shall be called upon the receipt by the General Partner of a written request by
Limited Partners holding twenty percent (20%) or more of the Partnership
Interests. The call shall state the nature of the business to be transacted.
Notice of any such meeting shall be given to all Partners not less than seven
(7) days nor more than thirty (30) days prior to the date of such meeting.
Partners may vote in person or by proxy at such meeting. Whenever the vote or
Consent of the Partners is permitted or required under this Agreement, such vote
or Consent may be given at a meeting of the Partners or may be given in
accordance with the procedure prescribed in Section 14.1.A hereof. Except as
otherwise expressly provided in this Agreement, the Consent of holders of a
majority of the Percentage Interests held by Limited Partners (including Limited
Partnership Interests held by the General Partner) shall control.
B. Any action required or permitted to be taken at a meeting of the
Partners may be taken without a meeting if a written consent setting forth the
action so taken is signed by a majority of the Percentage Interests of the
Partners (or such other percentage as is expressly required by this Agreement).
Such consent may be in one instrument or in several instruments, and shall have
the same force and effect as a vote of a majority of the Percentage Interests of
the Partners (or such other percentage as is expressly required by this
Agreement). Such consent shall be filed with the General Partner. An action so
taken shall be deemed to have been taken at a meeting held on the effective date
so certified.
-41-
<PAGE>
C. Each Limited Partner may authorize any Person or Persons to act
for him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or participating
at a meeting. Every proxy must be signed by the Limited Partner or his attorney-
in-fact. No proxy shall be valid after the expiration of eleven (11) months from
the date thereof unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the Limited Partner executing it, such revocation
to be effective upon the Partnership's receipt of or written notice such
revocation from the Limited Partner executing such proxy.
D. Each meeting of Partners shall be conducted by the General
Partner or such other Person as the General Partner may appoint pursuant to such
rules for the conduct of the meeting as the General Partner or such other Person
deems appropriate. Without limitation, meetings of Partners may be conducted in
the same manner as meetings of the shareholders of Colonial Properties and may
be held at the same time, and as part of, meetings of the shareholders of
Colonial Properties.
ARTICLE 15
GENERAL PROVISIONS
Section 15.1 Addresses and Notice
--------------------
Any notice, demand, request or report required or permitted to be
given or made to a Partner or Assignee under this Agreement shall be in writing
and shall be deemed given or made when delivered in person or when sent by first
class United States mail or by other means of written communication to the
Partner or Assignee at the address set forth in Exhibit A or such other address
---------
of which the Partner shall notify the General Partner in writing.
Section 15.2 Titles and Captions
-------------------
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
Section 15.3 Pronouns and Plurals
--------------------
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
Section 15.4 Further Action
--------------
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 15.5 Binding Effect
--------------
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
-42-
<PAGE>
Section 15.6 Creditors
---------
Other than as expressly set forth herein with respect to the
Indemnitees, none of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Partnership.
Section 15.7 Waiver
------
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
Section 15.8 Counterparts
------------
This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
Section 15.9 Applicable Law
--------------
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Delaware, without regard to the principles
of conflicts of law.
Section 15.10 Invalidity of Provisions
------------------------
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
Section 15.11 Entire Agreement
----------------
This Agreement contains the entire understanding and agreement among
the Partners with respect to the subject matter hereof and supersedes the Prior
Agreement and any other prior written or oral understandings or agreements among
them with respect thereto.
Section 15.12 Guaranty by Colonial Properties
-------------------------------
Colonial Properties unconditionally and irrevocably guarantees to the
Limited Partners the performance by the General Partner of the General Partner's
obligations under this agreement including, without limitation, the indemnity in
Section 7.7A and the indemnity agreements executed in accordance therewith.
This guarantee is exclusively for the benefit of the Limited Partners and shall
not extend to the benefit any creditor of the Partnership
-43-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GENERAL PARTNER:
Colonial Properties Holding Company, Inc.
By: /s/ Douglas B. Nunnelley
-----------------------------------
Title: Senior Vice President and Chief
-----------------------------------
Financial Officer
-----------------------------------
[CORPORATE SEAL]
LIMITED PARTNERS:
By: Colonial Properties Holding Company,
Inc. as Attorney-in-Fact for the
Limited Partners
By: /s/ Douglas B. Nunnelley
-----------------------------------
Title: Senior Vice President and Chief
-----------------------------------
Financial Officer
-----------------------------------
[CORPORATE SEAL]
COLONIAL PROPERTIES TRUST, for the purposes
of Sections 4.2.B, 4.3, 7.5, 8.6, 11.2,and
15.12 :
By: /s/ Douglas B. Nunnelley
-----------------------------------
Title: Senior Vice President and Chief
-----------------------------------
Financial Officer
-----------------------------------
-44-
<PAGE>
AS OF CLOSE OF BUSINESS OCTOBER 29, 1993
EXHIBIT A
PARTNERS. CONTRIBUTIONS AND
PARTNERSHIP INTERESTS
<TABLE>
<CAPTION>
AGREED VALUE
NAME AND CASH OF CONTRIBUTED TOTAL PARTNERSHIP PERCENTAGE
ADDRESS OF PARTNER CONTRIBUTION PROPERTY CONTRIBUTION UNITS INTEREST
- ------------------ ------------ -------- ------------ ----- --------
<S> <C> <C> <C> <C> <C>
General Partner:
- ---------------
COLONIAL PROPERTIES
HOLDING COMPANY, INC.
Energen Plaza, Suite 750
2101 Sixth Avenue North
Birmingham, AL 35202................. $ 1,971,650 $ 92,340 $ 2,063,990 142,613 1.00%
Limited Partners:
- ----------------
COLONIAL PROPERTIES
HOLDING COMPANY, INC.
Energen Plaza, Suite 750
2101 Sixth Avenue North
Birmingham, AL 35202................. 195,193,312 9,141,631 204,334,943 9,425,064 66.09%
COLONIAL PROPERTIES MANAGEMENT
ASSOCIATION
Energen Plaza, Suite 750
2101 Sixth Avenue North
Birmingham, AL 35202................. 0 36,440,648 36,440,648 1,584,376 11.11%
COLONIAL PROPERTIES, INC.
Energen Plaza, Suite 750
2101 Sixth Avenue North
Birmingham, AL 35202................. 0 33,953,359 33,953,359 1,476,233 10.35%
EQUITY PARTNERS JOINT VENTURE
Energen Plaza, Suite 750
2101 Sixth Avenue North
Birmingham, AL 35202................. 0 21,573,655 21,573,655 937,985 6.58%
CATHERINE K. LOWDER
200 Interstate Parkway
Suite 400
Montgomery, AL 36104................. 0 9,868,771 9,868,771 429,077 3.01%
WINTER PARK PINES, LTD.
c/o Donald L. Berg
200 Ocean Lane Drive
Penthouse A6
Key Biscayne, FL 33149............... 0 3,719,560 3,719,560 161,720 1.13%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AGREED VALUE
NAME AND CASH OF CONTRIBUTED TOTAL PARTNERSHIP PERCENTAGE
ADDRESS OF PARTNER CONTRIBUTION PROPERTY CONTRIBUTION UNITS INTEREST
- ------------------ ------------ -------- ------------ ----- --------
<S> <C> <C> <C> <C> <C>
HAWKINS IRREVOCABLE TRUST
DATED OCTOBER 18, 1983
c/o Jerry L. Hall, Trustee
Hall & Storey
750 Walnut Street
Gadsden, AL 35901.................... 0 1,191,791 1,191,791 51,817 0.36%
JACK L. RAY
Exchange Bank of Alabama
Corner of 6th and Blaunt Street
Altoona, AL 35952.................... 0 795,156 795,156 34,572 0.24%
LUGENIA M. RAY
Exchange Bank of Alabama
Corner of 6th and Blaunt Street
Altoona, AL 35952.................... 0 396,635 396,635 17,245 0.12%
THOMAS H. LOWDER IRREVOCABLE
CHILDREN'S TRUST
c/o Colonial Properties
Management Association
Energen Plaza, Suite 750
2101 Sixth Avenue North
Birmingham, AL 35202................. 0 4,485 4,485 195 *
ROBERT E. LOWDER IRREVOCABLE
CHILDREN'S TRUST
c/o Colonial Properties
Management Association
Energen Plaza, Suite 750
2101 Sixth Avenue North
Birmingham, AL 35202................. 0 4,485 4,485 195 *
JAMES K. LOWDER IRREVOCABLE
CHILDREN'S TRUST
c/o Colonial Properties
Management Association
Energen Plaza, Suite 750
2101 Sixth Avenue North
Birmingham, AL 35202................. 0 4,485 4,485 195 *
------------ ------------ ------------ ---------- ------
$197,164,962 $117,187,001 $314,351,963 14,261,287 100.00%
============ ============ ============ ========== ======
</TABLE>
_____________________
* Less than 0.01%
<PAGE>
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
1. Capital Accounts of the Partners
--------------------------------
A. The Partnership shall maintain for each Partner a separate Capital
Account in accordance with the rules of Regulations Section l.704-l(b)(2)(iv).
Such Capital Account shall be increased by (i) the amount of all Capital
Contributions and any other deemed contributions made by such Partner to the
Partnership pursuant to this Agreement and (ii) all items of Partnership income
and gain (including income and gain exempt from tax) computed in accordance with
Section 1.B hereof and allocated to such Partner pursuant to Section 6.1.A of
the Agreement and Exhibit C hereof, and decreased by (x) the amount of cash or
---------
Agreed Value of all actual and deemed distributions of cash or property made to
such Partner pursuant to this Agreement and (y) all items of Partnership
deduction and loss computed in accordance with Section 1.B hereof and allocated
to such Partner pursuant to Section 6.1.B of the Agreement and Exhibit C hereof.
---------
B. For purposes of computing the amount of any item of income, gain,
deduction or loss to be reflected in the Partners' Capital Accounts, unless
otherwise specified in this Agreement, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes determined in
accordance with Section 703(a) of the Code (for this purpose all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss), with
the following adjustments:
(1) Except as otherwise provided in Regulations Section 1.704-
1(b)(2)(iv)(m), the computation of all items of income, gain,
loss and deduction shall be made without regard to any election
under Section 754 of the Code which may be made by the
Partnership, provided that the amounts of any adjustments to the
adjusted bases of the assets of the Partnership made pursuant to
Section 734 of the Code as a result of the distribution of
property by the Partnership to a Partner (to the extent that such
adjustments have not previously been reflected in the Partners'
Capital Accounts) shall be reflected in the Capital Accounts of
the Partners in the manner and subject to the limitations
prescribed in Regulations Section l.704-1(b)(2)(iv)(m)(4).
(2) The computation of all items of income, gain, and deduction shall
be made without regard to the fact that items described in
Sections 705(a)(l)(B) or 705(a)(2)(B) of the Code are not
includable gross income or are neither currently deductible nor
capitalized for federal income tax purposes.
(3) Any income, gain or loss attributable to the taxable disposition
of any Partnership property shall be determined as if the adjusted
basis of such property as of such date of disposition were equal
in amount to the Partnership's Carrying Value with respect to such
property as of such date.
(4) In lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such
fiscal year.
(5) In the event the Carrying Value of any Partnership Asset is
adjusted pursuant to Section 1.D hereof, the amount of any such
adjustment shall be taken into account as gain or loss from the
disposition of such asset.
<PAGE>
(6) Any items specially allocated under Section 2 of Exhibit C hereof
---------
shall not be taken into account.
C. Generally, a transferee (including an Assignee) of a Partnership
Unit shall succeed to a pro rata portion of the Capital Account of the
transferor; provided, however, that, if the transfer causes a termination of the
Partnership under Section 708(b)(l)(B) of the Code, the Partnership's properties
shall be deemed solely for federal income tax purposes, to have been distributed
in liquidation of the Partnership to the holders of Partnership Units (including
such transferee) and recontributed by such Persons in reconstitution of the
Partnership. In such event, the Carrying Values of the Partnership properties
shall be adjusted immediately prior to such deemed distribution pursuant to
Section 1.D (2) hereof. The Capital Accounts of such reconstituted Partnership
shall be maintained in accordance with the principles of this Exhibit B.
----------
D. (1) Consistent with the provisions of Regulations Section 1.704-
1(b)(2)(iv)(f), and as provided in Section 1.D (2), the Carrying
Values of all Partnership assets shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as of the times of the
adjustments provided in Section 1.D (2) hereof, as if such
Unrealized Gain or Unrealized Loss had been recognized on an actual
sale of each such property and allocated pursuant to Section 6.1 of
the Agreement.
(2) Such adjustments shall be made as of the following times: (a)
immediately prior to the acquisition of an additional interest in
the Partnership by any new or existing Partner in exchange for more
than a de minimis Capital Contribution; (b) immediately prior to
the distribution by the Partnership to a Partner of more than a de
minimis amount of property as consideration for an interest in the
Partnership; and (c) immediately prior to the liquidation of the
Partnership within the meaning of Regulations Section 1.704-
l(b)(2)(ii)(g), provided, however, that adjustments pursuant to
-------- -------
clauses (a) and (b) above shall be made only if the General Partner
determines that such adjustments are necessary or appropriate to
reflect the relative economic interests of the Partners in the
Partnership.
(3) In accordance with Regulations Section 1.704-l(b)(2)(iv)(e), the
Carrying Value of Partnership assets distributed in kind shall be
adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as of
the time any such asset is distributed.
(4) In determining Unrealized Gain or Unrealized Loss for purposes of
this Exhibit B, the aggregate cash amount and fair market value of
---------
all Partnership assets (including cash or cash equivalents) shall
be determined by the General Partner using such reasonable method
of valuation as it may adopt, or in the case of a liquidating
distribution pursuant to Article 13 of the Agreement, shall be
determined and allocated by the Liquidator using such reasonable
methods of valuation as it may adopt. The General Partner, or the
Liquidator, as the case may be, shall allocate such aggregate value
among the assets of the Partnership (in such manner as it
determines in its sole and absolute discretion to arrive at a fair
market value for individual properties).
E. The provisions of this Agreement (including this Exhibit B and the
---------
other ExhIbits to this Agreement) relating to the maintenance of Capital
Accounts are intended to comply with Regulations Section 1.704-1(b), and shall
be interpreted and applied in a manner consistent with such Regulations. In the
event the General Partner shall determine that it is prudent to modify the
manner in which the Capital Accounts, or any debits or credits thereto
(including, without
-2-
<PAGE>
limitation, debits or credits relating to liabilities which are secured by
contributed or distributed property or which are assumed by the Partnership, the
General Partner, or the Limited Partners) are computed in order to comply with
such Regulations, the General Partner may make such modification without regard
to Article 14 of the Agreement, provided that it is not likely to have a
material effect on the amounts distributable to any Person pursuant to Article
13 of the Agreement upon the dissolution of the Partnership. The General Partner
also shall (i) make any adjustments that are necessary or appropriate to
maintain equality between the Capital Accounts of the Partners and the amount of
Partnership capital reflected on the Partnership's balance sheet, as computed
for book purposes, in accordance with Regulations Section l.704-l(b)(2)(iv)(q),
and (ii) make any appropriate modifications in the event unanticipated events
might otherwise cause this Agreement not to comply with Regulations Section
l.704-1(b).
2. No Interest
-----------
No interest shall be paid by the Partnership on Capital Contributions
or on balances in Partners' Capital Accounts.
3. No Withdrawal
-------------
No Partner shall be entitled to withdraw any part of his Capital
Contribution or his Capital Account or to receive any distribution from the
Partnership, except as provided in Articles 4, 5, 7 and 13 of the Agreement.
-3-
<PAGE>
EXHIBIT C
SPECIAL ALLOCATION RULES
1. Special Allocation Rules.
-------------------------
Notwithstanding any other provision of the Agreement or this Exhibit
-------
C, the following special allocations shall be made in the following order:
- --
A. Minimum Gain Chargeback. Notwithstanding the provisions of
------------------------
Section 6.1 of the Agreement or any other provisions of this Exhibit C, if there
----------
is a net decrease in Partnership Minimum Gain during any Partnership Year, each
Partner shall be specially allocated items of Partnership income and gain for
such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain, as determined
under Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(f)(6). This Section
1.A is intended to comply with the minimum gain chargeback requirements in
Regulations Section 1.704-2(f) and for purposes of this Section 1.A only, each
Partner's Adjusted Capital Account Deficit shall be determined prior to any
other allocations pursuant to Section 6.1 of this Agreement with respect to such
Partnership Year and without regard to any decrease in Partner Minimum Gain
during such Partnership Year.
B. Partner Minimum Gain Chargeback. Notwithstanding any other
--------------------------------
provision of Section 6.1 of this Agreement or any other provisions of this
Exhibit C (except Section 1.A hereof), if there is a net decrease in Partner
- ---------
Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership
Year, each Partner who has a share of the Partner Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5), shall be specially allocated items of Partnership income and gain
for such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant thereto. The items to be so allocated shall be determined in accordance
with Regulations Section 1.704-2(i)(4). This Section 1.B is intended to comply
with the minimum gain chargeback requirement in such Section of the Regulations
and shall be interpreted consistently therewith. Solely for purposes of this
Section 1.B, each Partner's Adjusted Capital Account Deficit shall be determined
prior to any other allocations pursuant to Section 6.1 of the Agreement or this
Exhibit with respect to such Partnership Year, other than allocations pursuant
to Section 1.A hereof.
C. Qualified Income Offset. In the event any Partner unexpectedly
------------------------
receives any adjustments, allocations or distributions described in Regulations
Sections 1.704-l(b)(2)(ii)(d)(4), l.704-1(b)(2)(ii)(d)(5), or 1.704-
l(b)(2)(ii)(d)(6), and after giving effect to the allocations required under
Sections 1.A and 1.B hereof, such Partner has an Adjusted Capital Account
Deficit, items of Partnership income and gain (consisting of a pro rata portion
of each item of Partnership income, including gross income and gain for the
Partnership Year) shall be specifically allocated to such Partner in an amount
and manner sufficient to eliminate, to the extent required by the Regulations,
its Adjusted Capital Account Deficit created by such adjustments, allocations or
distributions as quickly as possible.
D Nonrecourse Deductions. Nonrecourse Deductions for any Partnership
-----------------------
Year shall be allocated to the Partners in accordance with their respective
Percentage Interests. If the General Partner determines in its good faith
discretion that the Partnership's Nonrecourse Deductions must be allocated in a
different ratio to satisfy the safe harbor requirements of the
<PAGE>
Regulations promulgated under Section 704(b) of the Code, the General Partner is
authorized, upon notice to the Limited Partners, to revise the prescribed ratio
to the numerically closest ratio for such Partnership Year which would satisfy
such requirements.
E. Partner Nonrecourse Deductions. Any Partner Nonrecourse
-------------------------------
Deductions for any Partnership Year shall be specially allocated to the Partner
who bears the economic risk of loss with respect to the Partner Nonrecourse Debt
to which such Partner Nonrecourse Deductions are attributable in accordance with
Regulations Section 1.704-2(i).
F. Code Section 754 Adjustments. To the extent an adjustment to the
-----------------------------
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(b)
of the Code is required, pursuant to Regulations Section 1.704-l(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such item of gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Section of the
Regulations.
2. Allocations for Tax Purposes
----------------------------
A. Except as otherwise provided in this Section 2, for federal income
tax purposes, each item of income, gain, loss and deduction shall be allocated
among the Partners in the same manner as its correlative item of "book" income,
gain, loss or deduction is allocated pursuant to Section 6.1 of the Agreement
and Section 1 of this Exhibit C.
---------
B. In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss, and
deduction shall be allocated for federal income tax purposes among the Partners
as follows:
(1) (a) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners
consistent with the principles of Section 704(c) of the Code
to take into account the variation between the 704(c) Value
of such property and its adjusted basis at the time of
contribution; and
(b) any item of Residual Gain or Residual Loss attributable to a
Contributed Property shall be allocated among the Partners
in the same manner as its correlative item of "book" gain or
loss is allocated pursuant to Section 6.1 of the Agreement
and Section 1 of this Exhibit C.
---------
(2) (a) In the case of an Adjusted Property, such items shall
(1) first, be allocated among the Partners in a manner
consistent with the principles of Section 704(c) of the Code
to take into account the Unrealized Gain or Unrealized Loss
attributable to such property and the allocations thereof
pursuant to Exhibit B, and
---------
(2) second, in the event such property was originally a
Contributed Property, be allocated among the Partners in a
manner consistent with Section 2.B (1) of this Exhibit C;
---------
and
(b) any item of Residual Gain or Residual Loss attributable to
an Adjusted Property shall be allocated among the Partners
in the same
-2-
<PAGE>
manner its correlative item of "book" gain or loss is
allocated pursuant to Section 6.1 of the Agreement and
Section 1 of this Exhibit C.
---------
(3) all other items of income, gain, loss and deduction shall be
allocated among the Partners the same manner as their correlative
item of "book" gain or loss is allocated pursuant to Section 6.1
of the Agreement and Section 1 of the Exhibit C.
---------
C. To the extent Treasury Regulations promulgated pursuant to
Section 704(c) of the Code permit a Partnership to utilize alternative methods
to eliminate the disparities between the Carrying Value of property and its
adjusted basis, the General Partner shall have the authority to elect the method
to be used by the Partnership and such election shall be binding on all
Partners.
-3-
<PAGE>
EXHIBIT D
VALUE OF CONTRIBUTED PROPERTY
<TABLE>
<CAPTION>
UNDERLYING PROPERTY 704(C) VALUE AGREED VALUE
- ------------------- ------------ ------------
<S> <C> <C> <C>
1. Heatherbrooke II $ 4,116,875 $ 746,875
2. Heatherbrooke III 3,870,404 1,401,404
3. McGehee Place Apts. 10,690,920 2,701,920
4. Pelican Pointe 15,536,816 3,566,816
5. Riverchase II 8,696,409 1,364,409
6. Somerset Wharf II 3,976,286 1,300,286
7. St. Croix I 14,165,820 4,258,820
8. Sunchase 5,749,801 570,801
9. Vieux Carre 8,332,713 3,087,713
10. Willowtree 3,916,053 768,053
11. Bellwood 3,281,448 13,448
12. Gadsden Mall/P&S Building 17,859,181 7,150,681
13. Macon Mall 76,842,167 41,566,167
14. McGehee Place 3,159,624 (433,376)
15. Old Springville 3,759,719 1,512,719
16. Olde Town 2,639,145 883,145
17. University Park Plaza I & II 13,743,566 3,719,566
18. Village Mall 26,394,165 15,337,165
19. Montgomery Promenade 7,598,187 1,443,187
20. Meadowbrook Mini-Storage 901,923 541,293
21. AmSouth Center 16,048,235 1,046,235
22. Energen Plaza (50%) 8,844,041 5,164,041
23. Interstate Park Center 7,206,973 1,990,973
24. Interstate Park #500 2,109,063 871,063
25. Interstate Park JV (25%) 1,989,368 631,868
26. University Park 3,296,483 703,483
27. Whitesburg Building 2,275,807 913,807
28. 250 Commerce Street 2,180,026 1,363,026
29. International Park 1900 (37.5%) 1,906,907 (5,593)
30. International Park 2000 (25%) 3,587,541 1,012,828
31. International Park 2100 (37.5%) 1,261,232 352,731
32. Anderson Block (33.33%) 610,919 73,919
33. Land Title Building (33.33%) 557,721 (78,468)
34. Macon Mall Land 3,855,474 0
35. Village Mall Land 924,897 174,492
36. Old Springville Outparcel 35,072 6,617
37. St. Croix II Land 1,403,696 264,822
38. Heatherbrooke Phase IV Land 1,275,438 240,624
39. McGehee Place Phase II Land 1,962,159 370,182
40. Willowtree Note 2,239,219 2,239,219
41. Colony Park Note 610,898 610,898
42. North Ingle Villas Note 77,357 77,357
43. Management Corporation Note 672,914 672,914
44. Management Business -- REIT Properties 885,723 885,723
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNDERLYING PROPERTY 704(C) VALUE AGREED VALUE
- ------------------- ------------ ------------
<S> <C> <C> <C>
45. Inverness Land 573,651 298,031
46. Monte d'Oro 8,188,522 2,771,189
47. Ski Lodge I 15,825,962 7,786,522
48. Ski Lodge Tuscaloosa 7,833,351 2,919,378
49. Huntleigh Woods 5,867,876 2,791,729
50. Ski Lodge II 16,871,495 7,627,369
51. Ski Lodge III 17,862,775 7,162,775
52. Riverchase 27,238,437 9,523,292
53. Rime Village -- Hoover 43,335,883 20,235,883
54. Rime Village -- Huntsville 31,136,045 9,269,045
55. Stockbridge Manor 12,849,271 5,149,271
</TABLE>
-2-
<PAGE>
NOTICE OF REDEMPTION
The undersigned Limited Partner hereby irrevocably (i) redeems
_________ Limited Partnership Units in Colonial Realty Limited Partnership in
accordance with the terms of the Amended and Restated Agreement of Limited
Partnership of Colonial Realty Limited Partnership and the Redemption Right
referred to therein, (ii) surrenders such Limited Partnership Units and all
right, title and interest therein, and (iii) directs that the Cash Amount or
REIT Shares Amount (as determined by the General Partner) deliverable upon
exercise of the Redemption Right be delivered to the address specified below,
and if REIT Shares are to be delivered, such REIT Shares be registered or placed
in the name(s) and at the address(es) specified below. The undersigned hereby
represents, warrants, and certifies that the undersigned (a) has marketable and
unencumbered title to such Limited Partnership Units, free and clear of the
rights or interests of any other person or entity, (b) has the full right,
power, and authority to redeem and surrender such Limited Partnership Units as
provided herein, and (c) has obtained the consent or approval of all person or
entities, if any, having the right to consent or approve such redemption and
surrender.
Dated: _______________________
Name of Limited Partner:_______________________________
Please Print
____________________________________
(Signature of Limited Partner)
____________________________________
(Street Address)
____________________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
____________________________________
<PAGE>
IF REIT SHARES ARE TO BE ISSUED, ISSUE TO:
Name: __________________________
Please insert social security or identifying number: ______________________
-2-
<PAGE>
EXHIBIT F
GUARANTEED DEBT NOT SUBJECT TO INDEMNITY
1. No indemnity to Thomas H. Lowder Irrevocable Children's Trust, Robert E.
Lowder Irrevocable Children's Trust or James K. Lowder Irrevocable
Children's Trust with respect to their guarantee of the loan in the amount
of $3,050,000 made by American General and secured by the Bellwood retail
property.
2. No indemnity to Colonial Properties, Inc., Colonial Properties Management
Association or Catherine K. Lowder with respect to $448,097 of the loan in
the amount of $8,400,000 made by SouthTrust Bank and secured by, among
other land parcels, the Village Mall Land.
3. No indemnity to Colonial Properties, Inc. with respect to $28,455 of the
loan in the amount of $8,400,000 made by SouthTrust Bank and secured by,
among other land parcels, the Old Springville Outparcel.
4. No indemnity to Colonial Properties, Inc. with respect to $81,282 of the
loan in the amount of $8,400,000 made by SouthTrust Bank and secured by,
among other land parcels, the McGehee Place Phase II Land and McGehee Place
Outparcel #3.
5. No indemnity to Colonial Properties, Inc. with respect to $69,174 of the
loan in the amount of $8,400,000 made by SouthTrust Bank and secured by,
among other land parcels, the McGehee Place Outparcel E.
6. No indemnity to Colonial Properties, Inc. with respect to its guarantee of
$131,446 of the loan in the amount of $5,430,000 made by SMA Life Assurance
and secured by the Interstate Park JV properties.
<PAGE>
TWELFTH AMENDMENT TO
SECOND AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF
COLONIAL REALTY LIMITED PARTNERSHIP
THIS TWELFTH AMENDMENT TO THE SECOND AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF COLONIAL REALTY LIMITED PARTNERSHIP (this "Twelfth
Amendment"), dated as of April 1, 1996, is entered into by Colonial Properties
Holding Company, Inc., as general partner (the "General Partner") of Colonial
Realty Limited Partnership (the "Partnership"), for itself and on behalf of the
limited partners of the Partnership.
W I T N E S S E T H
-------------------
WHEREAS, Colonial Properties Holding Company, Inc. is the general
partner of the Partnership;
WHEREAS, on the date hereof, Mayer Mitchell and Abraham A. Mitchell
(the "Sellers") have acquired 182,804 Class B Units of the Partnership in
exchange for their interests in certain real estate assets known as Pointe West
Apartments and Ashford Place Apartments (the "Mitchell Properties");
WHEREAS, each of the Sellers desires to become a party to the Second
Amended and Restated Agreement of Limited Partnership of Colonial Realty Limited
Partnership (the "Partnership Agreement") and agrees to be bound by all of the
terms conditions and other provisions of the Partnership Agreement including,
without limitation, Section 2.4 thereof regarding powers of attorney;
WHEREAS the General Partner desires to amend the Partnership Agreement
to reflect the admission of the Sellers as Limited Partners and to amend and
restate Exhibit A to the Partnership Agreement to reflect the issuance of Class
B Units to the Sellers and the Percentage Interests of the Limited Partners;
WHEREAS, pursuant to Section 12.2.B. of the Partnership Agreement, the
General Partner has the power, in its sole and absolute discretion, to consent
to the admission of Additional Limited Partners, and has the power, pursuant to
Section 12.3 of the Partnership Agreement, to amend Exhibit A to the Partnership
Agreement to reflect the name, address, number of Partnership Units, and
Percentage Interest of any Additional Limited Partner;
WHEREAS, contemporaneously with the execution of this Twelfth
Amendment, the Partnership is acquiring the Sellers' interest in the Mitchell
Properties which are encumbered by certain regulatory agreements recorded in the
Probate Office of Mobile County in the State of Alabama (the "Regulatory
Agreements"), the terms of which are mandated by the Secretary of the Department
of Housing and Urban Development ("HUD") in connection with HUD's agreement to
guarantee or insure repayment of certain mortgage loans relating to the Mitchell
Properties (the "HUD Mortgages"); and
WHEREAS, the Partnership has agreed to be bound to the same extent as
the original executing party by the terms of the HUD Mortgages and the
Regulatory Agreements, and HUD has conditioned its consent to the transfer of
the Mitchell Properties to the Partnership upon (i) the execution by the General
Partner of a Form 92530 HUD Prior Participation Certificate (a copy of which is
attached as Exhibit B hereto),and (ii) an amendment of the Partnership Agreement
with respect to any conflict of the terms of the Partnership Agreement and the
Regulatory Agreements.
<PAGE>
NOW, THEREFORE, in consideration of the premises and for good and
valuable consideration, the General Partner hereby amends the Partnership
Agreement as follows:
1. ADDITION OF LIMITED PARTNERS
The Sellers are hereby added as Limited Partners of the Partnership on
the terms and conditions set forth in the Partnership Agreement, and Exhibit A
to the Partnership Agreement is hereby amended and restated to incorporate such
changes by replacing such Exhibit A with the Exhibit A attached to this Twelfth
Amendment.
2. AMENDMENT OF ARTICLE 15 -- GENERAL PROVISIONS.
Article 15 of the Partnership Agreement is hereby amended by adding
the following new Section 15.13 to the Partnership Agreement:
-------------
Section 15.13 HUD Limitations
---------------
As long as the Secretary of Housing and Urban
Development, or his successors or assigns ("HUD"), is
the insurer or holder of the mortgage loans (the "HUD
Mortgages") relating to the real property consisting of
the two apartment projects known as Pointe West
Apartments and Ashford Place Apartments located at 1601
Hillcrest Road, Mobile, Alabama and 6075 Grelot Road,
Mobile, Alagama, respectively (the "Mitchell
Properties"), that are encumbered by the two Regulatory
Agreements for Multi-Family Housing Projects that are
recorded in Book 2179, Page 760 and Book 2617, Page 207
in the Probate Office of Mobile County, Alabama (the
"Regulatory Agreements"), no amendment to the
Partnership Agreement which results in any of the
following shall be of force and effect, without the
prior written consent of HUD: (i) any amendment which
modifies the duration of the Partnership Agreement;
(ii) any amendment which results in the requirement
that a Form 92530 HUD Prior Participation Certificate
be obtained for any additional party; and (iii) any
amendment which in any way impacts or affects the HUD
Mortgages or the Regulatory Agreements. In addition, as
long as HUD is the insurer or holder of the HUD
Mortgages relating to the Mitchell Properties, upon any
dissolution of the Partnership, no title or right to
possession and control of the Mitchell Properties, and
no right to collect the rents therefrom, shall pass to
any person who is not bound by the terms of the HUD
Mortgages or the Regulatory Agreements in a manner
satisfactory to HUD.
All capitalized terms used herein and not otherwise defined have the
meanings assigned to them in the Partnership Agreement. Except as modified
herein, all covenants, terms and conditions of the Partnership Agreement shall
remain in full force and effect, which covenants, terms and conditions the
General Partner hereby ratifies and affirms.
2
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Twelfth
Amendment as of the date first written above.
COLONIAL PROPERTIES HOLDING
COMPANY, INC., as General Partner of Colonial
Realty Limited Partnership
By:/s/ Thomas H. Lowder
-----------------------------------
Thomas H. Lowder,
President and
Chief Executive Officer
3
<PAGE>
SUPPLEMENTAL SIGNATURE PAGE TO
SECOND AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF
COLONIAL REALTY LIMITED PARTNERSHIP
This Supplemental Signature Page evidences the agreement of the
undersigned to become, upon execution of the Twelfth Amendment to the Second
Amended and Restated Agreement of Limited Partnership of Colonial Realty Limited
Partnership (the "Partnership Agreement") admitting each of the undersigned as
Additional Limited Partners holding Class B Units, a party to the Partnership
Agreement, as amended to the date hereof and as the same may be amended from
time to time hereafter. All terms used in this Supplemental Signature Page have
the meanings given them in the Partnership Agreement, as amended to the date
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Supplemental
Signature Page, or caused this Supplemental Signature Page to be executed on
his, her or its behalf, as of April 1, 1996.
/s/ Mayer Mitchell
-----------------------------------------
MAYER MITCHELL
/s/ Abraham A. Mitchell
-----------------------------------------
ABRAHAM A. MITCHELL
<PAGE>
AS OF APRIL 1, 1996
EXHIBIT A
PARTNERS CONTRIBUTIONS AND
PARTNERSHIP INTERESTS
<TABLE>
<CAPTION>
AGREED VALUE
OF
NAME AND CASH CONTRIBUTED TOTAL PARTNERSHIP PERCENTAGE
ADDRESS OF PARTNER CONTRIBUTION PROPERTY CONTRIBUTION UNITS INTEREST
- ---------------------------------------------------------------------------------------------------------------
CLASS A UNITS
-------------
<S> <C> <C> <C> <C> <C>
General Partner:
- ----------------
COLONIAL PROPERTIES
HOLDING COMPANY, INC.
Energen Plaza, Suite 750
2101 Sixth Avenue North
Birmingham, AL 35202................... $3,843,702 $92,340 $3,936,042 257,790 1.00%
Limited Partners:
- -----------------
COLONIAL PROPERTIES
HOLDING COMPANY, INC.
Energen Plaza, Suite 750
2101 Sixth Avenue North
Birmingham, AL 35202................... 378,774,785 9,141,631 387,916,416 17,380,113 66.94%
COLONIAL COMMERCIAL
INVESTMENTS, INC.
Energen Plaza, Suite 750
2101 Sixth Avenue North
Birmingham, AL 35202................... 0 27,596,113 27,596,113 1,199,831 4.62%
CBC REALTY, INC.
1 Commerce Street
Montgomery, Alabama 0 4,914,065 4,914,065 213,655 0.82%
Attn: Robert E. Lowder.................
EQUITY PARTNERS JOINT
VENTURE
Energen Plaza, Suite 750
2101 Sixth Avenue North
Birmingham, AL 35202................... 0 23,016,836 23,016,836 1,000,732 3.85%
CATHERINE K. LOWDER
200 Interstate Parkway
Suite 400
Montgomery, AL 36104................... 0 9,868,771 9,868,771 438,332 1.68%
THOMAS H. LOWDER
c/o Colonial Properties
Management Association
Energen Plaza, Suite 750
2101 Sixth Avenue North
Birmingham, AL 35202................... 0 12,254,400 12,254,400 532,800 2.05%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AGREED VALUE
OF
NAME AND CASH CONTRIBUTED TOTAL PARTNERSHIP PERCENTAGE
ADDRESS OF PARTNER CONTRIBUTION PROPERTY CONTRIBUTION UNITS INTEREST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JAMES K. LOWDER
c/o Colonial Properties
Management Association
Energen Plaza, Suite 750
2101 Sixth Avenue North
Birmingham, AL 35202................... 0 12,254,400 12,254,400 532,800 2.05%
ROBERT E. LOWDER
c/o Colonial Properties
Management Association
Energen Plaza, Suite 750
2101 Sixth Avenue North
Birming ham, AL 35202.................. 0 12,041,558 12,041,558 523,546 2.01%
WINTER PARK PINES, LTD.
c/o Donald L. Berg
200 Ocean Lane Drive
Penthouse A6
Key Biscayne, FL 33149................. 0 3,719,560 3,719,560 161,720 0.62%
HAWKINS IRREVOCABLE
TRUST
DATED OCTOBER 18, 1983
c/o Jerry L. Hall, Trustee
Hall & Storey
750 Walnut Street 0 1,191,791 1,191,791 51,817 0.19%
Gadsden, AL 35901......................
JACK L. RAY
Exchange Bank of Alabama
Corner of 6th and Blaunt Street
Altoona, AL 35952...................... 0 795,156 795,156 34,572 0.13%
LUGENIA M. RAY
Exchange Bank of Alabama
Corner of 6th and Blaunt Street
Altoona, AL 35952...................... 0 396,635 396,635 17,245 0.06%
THOMAS H. LOWDER
IRREVOCABLE CHILDREN'S
TRUST
c/o Colonial Properties
Management Association
Energen Plaza, Suite 750
2101 Sixth Avenue North
Birmingham, AL 35202................... 0 4,485 4,485 195 *
ROBERT E. LOWDER
IRREVOCABLE
CHILDREN'S TRUST
c/o Colonial Properties
Management Association
Energen Plaza, Suite 750
2101 Sixth Avenue North
Birmingham, AL 35202................... 0 4,485 4,485 195 *
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
AGREED VALUE
OF
NAME AND CASH CONTRIBUTED TOTAL PARTNERSHIP PERCENTAGE
ADDRESS OF PARTNER CONTRIBUTION PROPERTY CONTRIBUTION UNITS INTEREST
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JAMES K. LOWDER
IRREVOCABLE
CHILDREN'S TRUST
c/o Colonial Properties
Management Association
Energen Plaza, Suite 750
2101 Sixth Avenue North
Birmingham, AL 35202................... 0 4,485 4,485 195 *
HAROLD W. RIPPS
2029 King Stables Road
Birmingham, AL 35242................... 0 42,580,084 42,580,084 1,851,308 7.13%
IRVING D. MEISLER
261 Montrose Drive
McDonough, GA 30253.................... 0 2,646,541 2,646,541 115,067 0.44%
HERBERT A. MEISLER
2556 North Delwood Drive
Mobile, AL 36606....................... 0 1,266,426 1,266,426 55,062 0.21%
CHESTER L. PARKER, JR.
4752 Southlake Parkway
Birmingham, AL 35244................... 0 557,888 557,888 24,256 0.09%
BAMIL INVESTMENT
COMPANY
500 Robert Jemison Road
Birmingham, AL 35209................... 0 21,063,929 21,063,929 915,823 3.52%
BERFAN COMPANY
500 Robert Jemison Road
Birmingham, AL 35209................... 0 10,853,056 10,853,056 471,872 1.81%
CLASS B UNITS
-------------
MAYER MITCHELL
c/o Mitchell Brothers, Inc.
P.O. Box 16006
Mobile, AL 36616....................... 0 2,250,774 2,250,774 91,402 0.35%
ABRAHAM A. MITCHELL
c/o Mitchell Brothers, Inc.
P.O. Box 16006
Mobile, AL 36616....................... 0 2,250,774 2,250,774 91,402 0.35%
------------ ------------ ------------ ----------- --------
Total $382,618,487 $200,766,183 $583,384,670 $25,961,730 100%
============ ============ ============ =========== ====
</TABLE>
____________________
* Less than 0.01%
3
<PAGE>
Exhibit 21.1
------------
LIST OF SUBSIDIARIES OF COLONIAL REALTY LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
Jurisdiction Other Names Under
of Which Subsidiary
Subsidiary Organization Does Business
- ---------- ------------ -------------
<S> <C> <C>
Colonial Properties Services Limited Delaware None
Partnership
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1994
<PERIOD-START> JAN-01-1995 JAN-01-1994
<PERIOD-END> DEC-31-1995 DEC-31-1994
<CASH> 1,584,850 2,797,767
<SECURITIES> 0 0
<RECEIVABLES> 2,280,508 1,789,037
<ALLOWANCES> 71,190 119,429
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 736,833,724 640,676,743
<DEPRECIATION> (79,779,155) (61,772,778)
<TOTAL-ASSETS> 681,296,570 603,134,917
<CURRENT-LIABILITIES> 0 0
<BONDS> 354,099,770 344,234,014
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 310,594,656 245,219,982
<TOTAL-LIABILITY-AND-EQUITY> 681,296,570 603,134,917
<SALES> 0 0
<TOTAL-REVENUES> 111,436,674 63,958,233
<CGS> 0 0
<TOTAL-COSTS> 62,896,388 37,071,521
<OTHER-EXPENSES> (23,473,443) (10,358,746)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (23,972,107) (10,819,643)
<INCOME-PRETAX> 0 0
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 25,241,797 16,649,568
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 25,241,797 16,649,568
<EPS-PRIMARY> 1.28 1.17
<EPS-DILUTED> 1.28 1.17
</TABLE>
