<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN DECLARED +
+EFFECTIVE BY THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 415 +
+UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED WITHOUT THE DELIVERY OF A FINAL PROSPECTUS +
+SUPPLEMENT AND PROSPECTUS. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS +
+SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY +
+THE SECURITIES DESCRIBED HEREIN, NOR SHALL THERE BE ANY SALE OF SUCH +
+SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE +
+WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES +
+LAWS OF SUCH JURISDICTION. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion, dated July 12, 1996
PROSPECTUS SUPPLEMENT Pursuant to RULE 424(b)(5)
(To Prospectus dated July 12, 1996) Registration No. 333-04301
[LOGO OF COLONIAL REALTY APPEARS HERE]
$125,000,000
COLONIAL REALTY LIMITED PARTNERSHIP
$ ,000,000 % SENIOR NOTES DUE 2001
$ ,000,000 % SENIOR NOTES DUE 2006
------------
INTEREST PAYABLE
AND
------------
The % Senior Notes Due , 2001 (the "2001 Notes") and the % Senior
Notes Due , 2006 (the "2006 Notes," and together with the 2001 Notes, the
"Notes") offered hereby (the "Offering") are being issued by Colonial Realty
Limited Partnership, a Delaware limited partnership (the "Company"), in an
aggregate principal amount equal to $125.0 million.
Interest on the Notes will be payable semi-annually in arrears on and
, commencing , 1997. The Notes are redeemable at any time at the
option of the Company, in whole or in part, at a redemption price equal to the
sum of: (i) the principal amount of the Notes being redeemed plus accrued
interest to the redemption date; and (ii) the Make-Whole Amount (as defined
under "Description of the Notes--Optional Redemption"), if any. The 2001 Notes
and the 2006 Notes will mature on , 2001 and , 2006, respectively.
Upon completion of the Offering and the related transactions described herein,
the Company will have approximately $ million of secured indebtedness which
will rank senior to the Notes and no unsecured indebtedness which will rank
pari passu with the Notes.
The 2001 Notes and the 2006 Notes constitute separate series of debt
securities, each of which will be represented by a single fully-registered note
in book-entry form (each, a "Global Note") registered in the name of a nominee
of The Depository Trust Company ("DTC"). Beneficial interests in the Global
Notes will be shown on, and transfers thereof will be effected only through,
records maintained by DTC (with respect to beneficial interests of
participants) or by participants or persons that hold interests through
participants (with respect to beneficial interests of beneficial owners).
Owners of beneficial interests in the Global Notes will be entitled to physical
delivery of Notes in certificated form equal in principal amount to their
respective beneficial interests only under the limited circumstances described
under "Description of the Notes--Book-Entry System." Settlement for the Notes
will be made in immediately available funds. The Notes will trade in DTC's
Same-Day Funds Settlement System until maturity or earlier redemption, as the
case may be, or until the Notes are issued in certificated form, and secondary
market trading activity in the Notes will therefore settle in immediately
available funds. All payments of principal and interest in respect of the Notes
will be made by the Company in immediately available funds. See "Description of
the Notes--Same-Day Settlement and Payment."
SEE "RISK FACTORS" BEGINNING ON PAGE 2 OF THE ACCOMPANYING PROSPECTUS FOR
CERTAIN FACTORS RELEVANT TO AN INVESTMENT IN THE NOTES.
------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PRO-
SPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<CAPTION>
Price to Underwriting Proceeds to
Public(1) Discount(2) Company(1)(3)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Per 2001 Note........ % % %
- -------------------------------------------------------------------------------
Per 2006 Note........ % % %
- -------------------------------------------------------------------------------
Total................ $ $ $
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from July , 1996 to the date of delivery.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"). See "Underwriting."
(3) Before deducting estimated expenses of $ payable by the Company.
------------
The Notes offered by this Prospectus Supplement are offered by the
Underwriters subject to prior sale, withdrawal, cancellation or modification of
the offer without notice, to delivery to and acceptance by the Underwriters and
to certain further conditions. It is expected that delivery of the Notes will
be made in book-entry form through the facilities of DTC, against payment
therefor in immediately available funds, on or about July , 1996.
------------
LEHMAN BROTHERS
MERRILL LYNCH & CO.
DEAN WITTER REYNOLDS INC.
The date of this Prospectus Supplement is July , 1996
<PAGE>
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED
THE MERITS OF THIS OFFERING; ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT
LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE>
PROSPECTUS SUPPLEMENT SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus Supplement and the accompanying Prospectus or
incorporated herein or therein by reference. As used herein, and unless the
context otherwise requires, the term "Company" includes the Company and one or
more of its subsidiaries, including Colonial Properties Services Limited
Partnership (the "Management Partnership"), and predecessors.
THE COMPANY
The Notes offered hereby are being issued by the Company, which is the
"operating partnership" of Colonial Properties Trust ("Colonial"), an Alabama
real estate investment trust ("REIT") whose common shares are listed on the New
York Stock Exchange ("NYSE") under the symbol "CLP." The Company is managed by
Colonial, through its wholly owned subsidiary, Colonial Properties Holding
Company, Inc., an Alabama corporation ("CPHC"), which in turn owns
approximately 68.0% of the partnership interests in the Company ("Units") as of
May 31, 1996 and serves as the sole general partner of the Company. The
Company's activities include ownership and management of a diversified
portfolio of 67 multifamily, retail and office properties located in the
southeastern United States, development of new properties, acquisitions of
existing properties and build-to-suit development.
As of May 31, 1996, the Company owned a diversified portfolio of 39 garden-
style multifamily apartment communities containing a total of 12,648 apartment
units (the "Multifamily Properties"), 18 retail properties (including four
regional malls, two "power centers," 11 neighborhood shopping centers and one
mini-warehouse storage facility) containing a total of approximately 4.5
million square feet of retail space (the "Retail Properties"), ten office
properties containing a total of approximately 1.0 million square feet of
office space (the "Office Properties") and parcels of land adjacent to or near
certain of these properties (the "Land"). (The Multifamily Properties, the
Retail Properties, the Office Properties and the Land are referred to
collectively as the "Properties.") The Company also is expanding four
multifamily properties and two retail properties and is developing three new
multifamily properties.
The following table sets forth certain information with respect to the
Properties:
SUMMARY OF PROPERTIES
<TABLE>
<CAPTION>
PERCENT OF TOTAL
TOTAL FIRST QUARTER FIRST QUARTER PERCENTAGE
NUMBER OF APARTMENT 1996 PROPERTY 1996 PROPERTY OCCUPANCY AT
TYPE OF PROPERTY PROPERTIES UNITS/GLA/NRA (2) REVENUE REVENUE MAR. 31, 1996
- ---------------- ---------- ----------------- ------------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
Multifamily............. 39(1) 12,648(3) $18,030,000(4) 60.0%(4) 94.8%(5)
Retail.................. 18 4,549,000 9,527,000 31.7% 92.2%
Office.................. 10 1,009,000 2,482,000 8.3% 94.0%
--- ----------- -----
Total................. 67 $30,039,000 100.0%
=== =========== =====
</TABLE>
- --------
(1) Includes six multifamily properties acquired during the second quarter of
1996, containing an aggregate of 1,329 units (the "2Q 1996 Acquisitions").
(2) Apartment units refers to multifamily apartment units, GLA refers to gross
leasable area of retail space (including space owned by anchor tenants) and
NRA refers to net rentable area of office space.
(3) Includes the 2Q 1996 Acquisitions and 115 apartment units placed in service
in connection with expansions or developments that had not achieved
stabilized occupancy as of March 31, 1996 (the "Lease-up Units").
(4) Excludes the 2Q 1996 Acquisitions.
(5) Excludes the 2Q 1996 Acquisitions and the Lease-up Units.
The Company's staff of approximately 575 employees provides a full range of
real estate services from the Company's headquarters in Birmingham, Alabama and
from five regional offices located in the Mobile, Huntsville and Montgomery,
Alabama and Orlando and Tampa, Florida metropolitan areas. See "The Company--
Operating Strategy."
S-3
<PAGE>
RECENT DEVELOPMENTS
Since Colonial's initial public offering (the "IPO") in September 1993, the
Company has significantly expanded its portfolio of Properties and its
operating businesses. The Company has acquired direct and indirect interests in
23 additional multifamily properties, ten additional retail properties and
several additional parcels of Land. The Company also has completed the
expansion of two multifamily properties and has initiated the expansion or
development of ten additional multifamily properties and two retail properties.
The Company's acquisitions and its expansion and development activities have
increased the Company's presence in Alabama, Florida and Georgia.
The following is a summary of the Company's recent acquisition, expansion and
development, and financing activity.
Acquisition Activity
. During the second quarter of 1996, the Company acquired six multifamily
properties, including five multifamily properties in Alabama and one in
Georgia, containing an aggregate of 1,329 units, for a total purchase
price of approximately $69.3 million.
Expansion and Development Activity
. The Company is in the process of expanding four multifamily properties
and two retail properties. The expansions of the four multifamily
properties will add 700 units and are expected to cost approximately
$36.9 million (including land acquisition costs), of which the Company
had spent approximately $18.9 million as of March 31, 1996. The
expansions of the two Retail Properties will add a total of 648,000
square feet of GLA at an expected cost of approximately $59.0 million.
The Company had spent approximately $10.3 million on the retail property
expansions as of March 31, 1996.
. The Company is developing four new multifamily properties, including
three located in Florida and one located in Georgia. The new properties
will contain a total of 1,424 units and are expected to cost
approximately $86.9 million, including land acquisition costs. The
Company had spent approximately $23.9 million on these projects through
March 31, 1996.
Financing Activity
. In January 1996, Colonial issued 4,600,000 Common Shares at a price of
$24.625 per share. Of the net proceeds of $107.3 million, $80.1 million
was used to repay certain indebtedness of the Company and the remainder
of the proceeds were used to fund acquisitions, expansion and
development activities.
. In May 1996, the Company increased the amount available for borrowing
under its unsecured line of credit from $75 million to $110 million. As
of the date of this Prospectus Supplement, the principal amount
outstanding under this line of credit is approximately $81.7 million.
During June 1996, the Company terminated all of its secured lines of
credit.
. In June 1996, the Company refinanced approximately $53.0 million of
amortizing tax-exempt bonds, which were scheduled to mature on various
dates between February 1998 and January 1999, through a new tax-exempt
bond issue. The new bonds mature in 30 years, are non-amortizing during
the first ten years and bear interest at a variable rate.
S-4
<PAGE>
THE OFFERING
All capitalized terms not defined herein have the meanings specified in
"Description of the Notes." For a more complete description of the terms of the
Notes specified in the following summary, see "Description of the Notes."
Securities Offered................ $ aggregate principal amount of % Notes
due , 2001 (the "2001 Notes") and
$ aggregate principal amount of % Notes
due , 2006 (the "2006 Notes").
Maturity.......................... The 2001 Notes will mature on , 2001
and the 2006 Notes will mature on ,
2006.
Interest Payment Dates............ Interest on the Notes is payable semi-
annually on and , , commencing
, 1997, and at maturity.
Ranking........................... The Notes will rank pari passu with each
other and with all other unsecured and
unsubordinated indebtedness of the Company,
except that the Notes will be effectively
subordinated to the prior claims of each
secured mortgage lender to any specific
property which secures such lender's
mortgage. Following the completion of the
Offering, the Company will have
approximately $268.7 million of secured
indebtedness collateralized by 35
Properties.
Use of Proceeds................... To repay outstanding indebtedness under the
Company's unsecured line of credit, to fund
acquisition and development activity and/or
to repay fixed-rate mortgage debt.
Limitations on Incurrence of The Notes contain various covenants,
Debt............................. including the following:
(1) The Company will not, and will not
permit any Subsidiary to, incur any
Debt, other than intercompany and
similar Debt that is subordinate in
right of payment to the Notes, if,
immediately after giving effect
thereto, the aggregate principal amount
of all outstanding Debt of the Company
and its Subsidiaries on a consolidated
basis is greater than 60% of the sum
of: (i) the Company's Adjusted Total
Assets as of the end of the most recent
fiscal quarter prior to the incurrence
of such additional Debt; (ii) the
purchase price of all real estate
assets or mortgages receivable (or
interests therein) acquired by the
Company or any Subsidiary since the end
of such quarter, including those assets
acquired in connection with the
incurrence of such additional Debt; and
(iii) the amount of any securities
offering proceeds received by the
Company or any Subsidiary since the end
of such fiscal quarter (to the extent
that such proceeds were not used to
acquire such real estate assets or
mortgages receivable or used to reduce
Debt).
S-5
<PAGE>
(2) The Company will not incur any Secured
Debt if, immediately after giving
effect thereto, the aggregate principal
amount of all outstanding Secured Debt
of the Company and its Subsidiaries on
a consolidated basis is greater than
40% of the sum of: (i) the Company's
Adjusted Total Assets as of the end of
the most recent fiscal quarter prior to
the incurrence of such additional Debt;
(ii) the purchase price of any real
estate assets or mortgages receivable
(or interests therein) acquired by the
Company or any Subsidiary since the end
of such fiscal quarter, including those
assets acquired in connection with the
incurrence of such additional Debt; and
(iii) the amount of any securities
offering proceeds received by the
Company or any Subsidiary since the end
of such fiscal quarter (to the extent
that such proceeds were not used to
acquire such real estate assets or
mortgages receivable or used to reduce
Debt).
(3) The Company will not, and will not
permit any Subsidiary to, incur any
Debt if the ratio of Consolidated
Income Available for Debt Service to
the Annual Service Charge for the four
consecutive fiscal quarters most
recently ended prior to the date on
which such additional Debt is to be
incurred shall have been less than 1.50
to 1 on a pro forma basis, after giving
effect thereto.
Maintenance of Unencumbered Total
Asset Value......................
The Company must maintain an Unencumbered
Total Asset Value in an amount not less
than 150% of the aggregate principal amount
of outstanding unsecured Debt of the
Company and its Subsidiaries.
Optional Redemption............... The Notes are redeemable at the option of
the Company, in whole or in part, at a
redemption price equal to the sum of: (i)
the principal amount of the Notes being
redeemed plus accrued interest to the
redemption date and (ii) the Make-Whole
Amount, if any. See "Description of the
Notes--Optional Redemption."
S-6
<PAGE>
THE COMPANY
The Company is one of the largest owners, developers and operators of
multifamily, retail and office properties in the southeastern United States.
The Company or its predecessors have been engaged in the multifamily, retail
and office property business for over 25 years. The Company is a fully-
integrated real estate company, whose activities include ownership and
management of a diversified portfolio of 67 properties located in Alabama,
Florida and Georgia, development of new properties, acquisitions of existing
properties and build-to-suit development. The Company's primary markets in the
Southeast are generally characterized by high population and employment growth
rates.
The Company is managed by Colonial, through CPHC, which in turn owns
approximately 68.0% of the Units as of May 31, 1996 and serves as the sole
general partner of the Company. Colonial currently conducts all of its
business through CPHC, the Company, Colonial Properties Services Limited
Partnership (the "Management Partnership"), which provides management services
for the Properties, and Colonial Properties Services, Inc. (the "Management
Corporation"), which provides management services for properties owned by
third parties. The Company owns all of the Properties (or interests therein).
The Company is the sole general partner of the Management Partnership and owns
99% of the interests therein.
The Company has significantly expanded its multifamily and retail property
holdings through acquisitions, expansion and development. Additional
information regarding the Company's operating and business strategies is
provided below.
OPERATING STRATEGY
The Company is organized into three distinct operating divisions--
multifamily, retail and office--each of which is responsible for the
management and leasing of its property type. The Company is experienced in the
management and leasing of multifamily, retail and office properties and
believes that the management and leasing of its own portfolio has helped the
Properties maintain consistent income growth and has resulted in reduced
operating expenses relating to the Properties. Colonial is engaged, through
the Management Corporation, in the third-party management, leasing and
brokerage businesses, which has allowed Colonial to establish additional
relations with tenants that may require additional retail or office space in
properties owned by the Company and to identify potential acquisitions for the
Company. Additional information with respect to each of the operating
divisions is set forth below.
Multifamily Division. The multifamily division of the Company is responsible
for all aspects of the Company's multifamily operations, including day-to-day
management and leasing of the Multifamily Properties, as well as the
acquisition, expansion or development of additional multifamily properties.
Retail Division. The Company's retail division is responsible for all
aspects of the Company's retail operations, including the provision of
management, leasing and brokerage services for the Retail Properties, as well
as the acquisition, expansion and development of additional retail properties.
Office Division. The Company's office division is responsible for all
aspects of the Company's commercial office operations, including the provision
of management, leasing and brokerage services for the Office Properties, as
well as the acquisition, expansion and development of additional office
properties.
BUSINESS STRATEGY
The general business strategy of the Company is to generate stable and
increasing cash flow and portfolio value. The Company has implemented this
strategy principally by (i) realizing growth in income from its existing
portfolio of properties, (ii) developing, expanding and selectively acquiring
additional multifamily, retail and office properties in mid-sized growth
markets located in the southeastern United States where the Company has first-
hand knowledge of growth patterns and local economic conditions and generally
has a competitive advantage due to its size and access to lower-cost capital,
(iii) managing its own properties, which has enabled it
S-7
<PAGE>
to better control operating expenses and establish long-term relationships
with its retail and office tenants and (iv) employing a comprehensive capital
maintenance program to maintain properties in first-class condition. The
Company plans to continue the implementation of these business strategies
while capitalizing on what it believes are its competitive advantages in the
real estate marketplace. These competitive advantages include the following:
Regional Focus. All of the Properties are located in Alabama, Florida and
Georgia, and primarily in mid-sized cities in those states. By focusing on the
southeastern United States in general, and these three states in particular,
the Company believes that it has been able to maintain a strong market
presence in and an in-depth knowledge of each of its primary markets. The
Company believes this focus enables it to better understand and respond to
market and submarket conditions and to attract new residents or tenants
because of the Company's name recognition.
Diversity of Product. The Company and its predecessors have maintained
operations in three major real estate industry segments--multifamily, retail
and office--for over 25 years. The Company's operations in these three
segments are conducted through three distinct divisions, each of which is
independently operated and staffed with management and staff personnel that
have specialized experience in that industry segment. See "Business--General--
Operating Strategy." The Company believes that its diversified operations
create cross-selling opportunities between the office and retail divisions,
give it more in-depth knowledge of local real estate markets, and may minimize
the effect on the Company of cyclical swings associated with specific property
types.
Experienced Management. The Company believes that strong, experienced
leadership, particularly in the management and leasing area, is critical to
the success of a fully-integrated real estate company. The Company's senior
managers have extensive experience (an average of 21 years) in the real estate
industry in the southeastern United States, and have established numerous
contacts throughout the industry through leadership of various local and
national chapters of real estate associations. The Company believes that the
experience of its management team gives it an advantage over less experienced
competitors in its primary markets. In addition, the Company is committed to a
continuing education program that encourages its employees to attain
recognized, professional designations.
Long-Term Relationships. The Company's predecessor, Colonial Properties,
Inc. ("CPI"), and Thomas Lowder have been actively engaged in the real estate
business in the southeastern United States for over 25 years. Thomas Lowder
and his brother, James, have close ties to this region and are established
members of the local and regional business communities. Through their
extensive business dealings in the region, CPI and the Lowder family have
developed a number of long-term business relationships with tenants and real
estate owners, as well as contractors, suppliers, professionals and lenders,
in the Southeast. The Company believes that these relationships result in cost
savings due to reduced tenant turnover, enable the Company to obtain favorable
terms for services, goods and loans and provide the Company with access to
additional business opportunities.
CAPITAL STRATEGY
The Company's capital strategy is to finance its growth with a prudent blend
of debt and equity. This strategy involves maintaining a conservative debt or
leverage ratio; funding the Company's long-term borrowing needs through long-
term fixed rate debt and low-cost tax-exempt bonds while utilizing short-term
borrowings for acquisitions, expansions and developments; managing the
Company's floating rate debt exposure; and maintaining a conservative dividend
pay-out ratio. To further enhance its financial flexibility, the Company
intends to continue to reduce the amount of secured debt as a percentage of
its total debt. The Company believes that its capital strategy will allow it
to access a broad range of capital sources, including bank and institutional
borrowings and secured and unsecured debt and equity offerings.
The Company intends to maintain the ability to raise additional capital,
including additional debt (subject to certain restrictions as set forth in the
Indenture for the Notes and the Unsecured Line of Credit, as defined below),
to pursue investment opportunities that may arise, and otherwise to act in a
manner that it believes to be in the
S-8
<PAGE>
best interest of the Company. The organizational documents of the Company do
not impose any limit on the level of debt that the Company may incur.
Credit Facilities. As of March 31, 1996, the Company had available floating-
rate debt in the maximum amount of $100.8 million pursuant to four lines of
credit and one construction loan (the "Credit Facilities"). The Company's line
of credit with SouthTrust Bank (agent bank), which is an unsecured line of
credit (the "Unsecured Line of Credit"), provided for maximum borrowings of
$75.0 million. The remaining Credit Facilities, representing maximum
borrowings of $25.8 million, were secured by mortgages on certain properties.
At March 31, 1996, no amounts were drawn against any of the Credit
Facilities. On May 31, 1996, the maximum amount available for borrowing under
the Unsecured Line of Credit was increased to $110.0 million. During June
1996, the Company terminated all of the Credit Facilities other than the
Unsecured Line of Credit. After giving effect to the completion of the
Offering and the application of proceeds therefrom, the Company will have
approximately $110.0 million available under the Unsecured Line of Credit.
Pro Forma Indebtedness. The Company will use the net proceeds of the
Offering to repay amounts drawn under the Unsecured Line of Credit as
described below under "Use of Proceeds." Following completion of the Offering,
the application of the net proceeds thereof and the acquisition of Briarcliffe
Mall (see "Recent Developments--Acquisition Activity"), the Company's total
indebtedness will be $394.9 million, of which $268.7 million represents
secured indebtedness, and the Company's debt-to-total market capitalization
ratio (defined as total indebtedness as a percentage of the value of the
Company's outstanding partnership units plus total indebtedness) will be
approximately 38.2%, assuming a value of $24.625 per Unit, the last reported
sale price of Colonial's common shares on the NYSE on July 10, 1996.
Interest Rate Agreements. The Company has interest rate cap agreements which
limit debt of $8.4 million to an interest rate of 6.0% through September 30,
1996 and limit debt of $17.8 million to an interest rate of 5.96% through
September 30, 1998. During the second quarter of 1996, the Company entered
into three treasury lock agreements covering an aggregate notional amount of
$75.0 million and providing for interest rates ranging from 6.47% to 6.71%.
RECENT DEVELOPMENTS
Since Colonial's IPO, the Company has significantly expanded its portfolio
of Properties and its operating businesses. The Company has acquired direct
and indirect interests in 23 additional multifamily properties, eight
additional retail properties and several additional parcels of land. The
Company also has completed the expansion of two multifamily properties and has
initiated the expansion or development of ten additional multifamily
properties and major expansions of two retail properties. The Company's
acquisitions and its expansion and development activities have increased the
Company's presence in Alabama, Florida and Georgia.
The following is a summary of the Company's recent acquisition and expansion
and development activity.
ACQUISITION ACTIVITY
The Company acquired six multifamily properties in the second quarter of
1996, containing an aggregate of 1,329 units. The acquired properties
represented a total investment of $69.3 million, including the assumption of
debt amounting to $30.1 million and the issuance of 182,804 Units. The table
on the following page sets forth certain information regarding these recently
acquired Multifamily Properties:
S-9
<PAGE>
SUMMARY OF
RECENT ACQUISITION ACTIVITY
<TABLE>
<CAPTION>
DATE OF NAME OF NUMBER OF TOTAL COST
ACQUISITION PROPERTY LOCATION TYPE OF PROPERTY APARTMENT UNITS (IN THOUSANDS)
- ----------- ------------- -------------- ---------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
2nd Qtr 96 Spring Creek Macon, GA Multifamily 296 $14,400
2nd Qtr 96 Crowne Chase Birmingham, AL Multifamily 244 13,700
2nd Qtr 96 Ashford Place Mobile, AL Multifamily 168 6,300
2nd Qtr 96 Pointe West Mobile, AL Multifamily 104 4,600
2nd Qtr 96 Crowne Point Birmingham, AL Multifamily 392 23,100
2nd Qtr 96 Crowne Ridge Birmingham, AL Multifamily 125 7,200
----- -------
Total 1,329 $69,300
===== =======
</TABLE>
The Company has entered into a contract to acquire Briarcliffe Mall, a
regional shopping mall located in Myrtle Beach, South Carolina containing an
aggregate of approximately 488,000 square feet of GLA. The purchase price of
the property is approximately $42.2 million, consisting of cash of
approximately $40.9 million and newly issued Units having a value of
approximately $1.3 million. The transaction, which is expected to close
shortly after the consummation of the Offering, is subject to customary
closing conditions, and there can be no assurance that the transaction will
close on schedule, if at all. The Company has arranged a temporary unsecured
line of credit under which it may borrow up to $25.0 million in connection
with the purchase of Briarcliffe Mall in the unexpected event that the closing
of that acquisition occurs prior to the closing of the Offering. Any amount
borrowed under the temporary line of credit would bear interest at a variable
rate and would be repayable from the proceeds of the Offering.
The Company intends to continue to pursue acquisitions in the southeastern
United States that meet the Company's acquisition criteria for property
quality, market strength and investment return.
EXPANSION AND DEVELOPMENT ACTIVITY
Multifamily. During the first quarter of 1996, the Company completed the
expansion of one multifamily property, adding a total of 16 units at a total
cost of $750,000. The Company also is expanding four additional multifamily
properties containing an aggregate of 700 units and is developing four
multifamily properties containing an aggregate of 1,424 units. The expansions
and developments currently in progress are expected to cost approximately
$123.8 million, of which the Company had spent approximately $42.8 million as
of March 31, 1996.
Retail. In May 1995, the Company began a 423,000 square-foot expansion of
Macon Mall, a super regional mall located in Macon, Georgia, which is expected
to open in the first quarter of 1997. The mall expansion includes the addition
of 146,000 square feet of specialty store GLA. The mall expansion also
includes the addition of two new anchor tenants, Dillard's and Parisian, which
will join existing department store anchor tenants Sears, J.C. Penney, Macy's
and Belk Matthews. The cost of the expansion is expected to total
approximately $52.0 million, of which the Company had spent approximately
$10.3 million as of March 31, 1996. The Company also is expanding Montgomery
Promenade, a shopping center located in Montgomery, Alabama by adding
approximately 225,000 square feet of GLA at a cost expected not to exceed $7.0
million.
S-10
<PAGE>
The following table provides an overview of the Company's expansion and
development activity currently in progress and Development Activity:
SUMMARY OF RECENT EXPANSION AND DEVELOPMENT ACTIVITY
<TABLE>
<CAPTION>
APARTMENT TOTAL SPENT
ANTICIPATED TYPE OF UNITS OR ANTICIPATED THROUGH
COMPLETION DATE NAME OF PROPERTY LOCATION PROPERTY GLA TOTAL COST MARCH 31, 1996
--------------- ------------------------------- -------------- ----------- --------- -------------- --------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
EXPANSIONS:
3rd Qtr 96............ Inverness Lakes Mobile, AL Multifamily 180 $ 9,100 $ 8,600
3rd Qtr 96............ Rime Village Hoover Birmingham, AL Multifamily 160 8,800 4,900
1st Qtr 97............ Riverchase III Tampa, FL Multifamily 276 14,900 4,200
1st Qtr 97............ Macon Mall Macon, GA Retail 423,000(1) 52,000 10,300
1st Qtr 97............ Montgomery Promenade North Montgomery, AL Retail 225,000(2) 7,000 --
4th Qtr 97............ Heatherbrooke IV Birmingham, AL Multifamily 84 4,100 1,200
-------- -------
Subtotal.............. 95,900 29,200
DEVELOPMENTS:
4th Qtr 96............ Colonial Grand at Heathrow Orlando, FL Multifamily 312 20,400 14,200
4th Qtr 97............ Colonial Grand at Bayshore Bradenton, FL Multifamily 376 20,700 4,900
4th Qtr 97............ Colonial Grand at Wesleyan Macon, GA Multifamily 240 12,800 --
2nd Qtr 98............ Colonial Grand at Hunters Creek Orlando, FL Multifamily 496 33,000 4,800
-------- -------
Subtotal.............. 86,900 23,900
-------- -------
Total................. $182,800 $53,100
======== =======
</TABLE>
- --------
(1) Includes 175,000 square feet of space owned by an anchor.
(2) Includes 130,000 square feet of space owned by an anchor.
FINANCING ACTIVITY
On January 22, 1996, Colonial issued 4,600,000 Common Shares at a price of
$24.625 per share. The net proceeds of the offering amounted to $106.9
million, of which $79.8 million was used to repay the balances of certain
indebtedness of the Company, and the remainder of which was used to fund
acquisitions and expansion and development activities.
In May 1996, the Company increased the amount available for borrowings under
the Unsecured Line of Credit from $75.0 million to $110.0 million. The
Unsecured Line of Credit bears interest at a rate related to LIBOR and
requires quarterly compliance with several financial covenants, including
limits on interest expense, fixed charges and debt to total market
capitalization. The Unsecured Line of Credit is renewable annually in December
and provides for a two-year amortization in the event of non-renewal.
In June 1996, the Company refinanced approximately $53.0 million of
amortizing tax-exempt bonds, which were scheduled to mature on various dates
between February 1998 and January 1999, through a new tax-exempt bond issue.
The new bonds mature in 30 years, are non-amortizing during the first ten
years and bear interest at a variable rate.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Notes offered hereby,
after payment of the underwriting discount and offering and other expenses of
approximately $ million, are estimated to be approximately $ million.
The Company intends to use the net proceeds to repay the entire outstanding
balance under the Unsecured Line of Credit ($81.7 million as of the date this
Prospectus Supplement). The remaining net proceeds will be used to fund
current acquisitions, including the expected acquisition of Briarcliffe Mall
(which would require cash of approximately $40.9 million), to fund expansion
and development projects or to repay certain fixed-rate mortgage debt. Pending
such uses, the net proceeds may be invested in short-term, income-producing
investments such as commercial paper, government securities or money market
funds that invest in government securities. After the application of the net
proceeds, the Unsecured Line of Credit will be available to finance additional
acquisitions and expansion and development projects.
S-11
<PAGE>
CAPITALIZATION
The following table sets forth the historical and pro forma capitalization
of the Company as of March 31, 1996. The pro forma capitalization assumes that
the Company acquired the 2Q 1996 Acquisitions and Briarcliffe Mall on March
31, 1996 and gives effect to the completion of the Offering and the use of the
net proceeds therefrom as described in "Use of Proceeds." The information set
forth in the following table should be read in conjunction with the financial
information and notes thereto incorporated herein and in the accompanying
Prospectus by reference, and the discussion set forth in "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources," as well as the historical financial
statements and the notes thereto included in the Company's filings under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
<TABLE>
<CAPTION>
MARCH 31, 1996
-------------------
PRO-
HISTORICAL FORMA
---------- --------
(IN THOUSANDS)
<S> <C> <C>
DEBT:
Mortgages Payable..................................... $273,410 $269,030
Unsecured Line of Credit.............................. -0- -0-
Unsecured Senior Notes................................ -0- 125,000
Other Unsecured Debt.................................. 1,200 1,200
-------- --------
274,610 395,230
REDEEMABLE UNITS........................................ 192,332 198,020
PARTNERS' CAPITAL....................................... 220,788 220,788
-------- --------
TOTAL CAPITALIZATION.................................... $687,730 $814,038
======== ========
</TABLE>
S-12
<PAGE>
SELECTED FINANCIAL AND OPERATING INFORMATION
The following table sets forth selected financial and operating information
on a historical basis for the Company (and, for periods prior to the IPO, the
Colonial Group) for each of the five years ended December 31, 1995 and for
each of the quarters ended March 31, 1996 and 1995. The historical operating
data for the years ended December 31, 1992 and 1991 has been derived, and the
historical operating data for the year ended December 31, 1993 has been
partially derived, from the historical financial statements of the Colonial
Group, whose real estate interests were acquired in connection with the
formation of the Company in 1993. The "Colonial Group" consists of CPI, Equity
Partners Joint Venture, Colonial Properties Management Association and certain
real estate interests of Thomas H. Lowder, Robert E. Lowder, James K. Lowder,
Catherine K. Lowder and the Bellwood Trust. The operating data, balance sheet
data and certain other data for the three months ended March 31, 1996 and 1995
have been derived from the unaudited consolidated financial statements of the
Company. In the opinion of the Company, the operating and balance sheet data
for the three months ended March 31, 1996 and 1995 include all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the information set forth therein. Such information should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included elsewhere in this Prospectus Supplement
and the financial statements included in the documents incorporated by
reference into the accompanying Prospectus. The Company believes that the book
value of its real estate assets, which reflects the historical costs of such
assets less accumulated depreciation, is not indicative of the current market
value of the Properties.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------- -------------------------------------------------
1996 1995 1995 1994 1993(1) 1992 1991
--------- --------- -------- --------- -------- -------- --------
(AMOUNTS IN THOUSANDS EXCEPT UNIT AND
(UNAUDITED) PROPERTY DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Total revenue.......... $ 29,607 $ 25,508 $111,437 $ 63,958 $ 42,629 $ 35,046 $ 31,163
Expenses:
Depreciation and amor-
tization.............. 5,295 4,839 20,615 13,060 7,874 6,449 5,741
Other operating ex-
penses................ 10,540 9,362 42,282 24,011 16,777 14,788 13,645
Income from opera-
tions................. 13,772 11,307 48,540 26,887 17,978 13,809 11,777
Interest expense....... 5,090 6,306 23,972 10,820 12,772 14,509 14,654
Other income (expense),
net................... 133 127 499 461 (1,697) (80) (490)
Income (loss) before
gains from sales of
property, and
extraordinary items... 8,814 5,128 25,067 16,528 3,509 (780) (3,366)
Net income (loss)...... 8,496 5,304 25,242 16,650 (3,775) (215) (2,826)
Per unit:
Net income............. 0.34 0.30 1.28 1.17 -- -- --
Distributions.......... 0.50 0.475 1.90 1.73 -- -- --
BALANCE SHEET DATA:
Land, buildings and
equipment, net........ $ 622,767 $ 552,372 $624,514 $ 555,577 $236,058 $139,665 $127,509
Total assets........... 707,762 602,094 681,297 603,135 290,925 156,560 151,471
Total debt............. 274,610 342,955 354,100 344,234 110,432 167,275 159,450
OTHER DATA:
Funds from operations
(2)................... $ 13,681 $ 9,583 $ 43,684 $ 27,878 $ 12,109 $ 5,646 $ 2,438
EBITDA (3)............. $ 19,490 $ 16,748 $ 71,037 $ 41,749 $ 23,452 $ 20,242 $ 17,623
Cash flow provided by
(used in)
Operating activities... $ 17,565 $ 10,794 $ 47,167 $ 51,800 $(17,231) $ 4,720 $ 2,081
Investing activities... $ (25,220) $ (2,803) $(95,737) $(119,175) $(22,413) $ (9,362) $(17,925)
Financing activities... $ 14,322 $ (8,694) $ 47,357 $ 66,905 $ 42,656 $ 4,194 $ 15,006
Total properties (at
period end)........... 61 55 61 55 36 23 22
Ratio of earnings to
fixed charges (4)..... 2.43 1.75 1.92 2.23 1.31 .95 .79
Ratio of EBITDA to
fixed charges......... 3.16 2.29 2.62 3.11 1.74 1.36 1.14
</TABLE>
- -------
(1) Increases (decreases) for 1993 compared to years 1992-1990 relate
primarily to the Colonial's formation as a public REIT on September 29,
1993.
(2) NAREIT originally defined "funds from operations" to mean net income
(loss) (computed in accordance with generally accepted accounting
principles), excluding gains (or losses) from debt restructuring and sales
of property, plus depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures (the "Old Definition").
NAREIT subsequently established new guidelines clarifying its definition
of funds from operations (the "New Definition"), the primary effect of
which was to reduce funds from operations for the amortization of
capitalized debt costs. Funds from operations as presented in this table
for periods beginning on or after January 1, 1994 is calculated based on
the New Definition, and for prior periods is calculated based on the Old
Definition. Adjustments for unconsolidated partnerships and joint ventures
are calculated to reflect funds from operations on the same basis. Funds
from operations does not represent cash generated from operating
activities in accordance with generally accepted accounting principles
(which, unlike Funds from operations, generally reflects all cash effects
of transactions and other events that enter into the determination of net
income), is not necessarily indicative of cash flow available to fund cash
needs and should not be considered as an alternative to net income as an
indication of the Company's operating performance or to cash flow as a
measure of liquidity or the ability to make distributions.
(3) EBITDA represents earnings before interest, taxes, depreciation and
amortization. EBITDA does not represent cash generated from operating
activities as defined by generally accepted accounting principles and,
therefore, should not be considered as an alternative to net income as the
primary indicator of operating performance or to cash flow as a measure of
liquidity, nor does it indicate that cash flow is sufficient to fund all
cash requirements.
(4) Ratio of earnings to fixed charges represents net income plus fixed
charges to fixed charges. Fixed charges consist primarily of interest and
amortization of deferred financing costs.
S-13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the consolidated financial
condition and results of operations should be read in conjunction with the
"Selected Financial and Operating Information" and the "Consolidated and
Combined Financial Statements" and the notes thereto incorporated by reference
in the Prospectus attached hereto.
GENERAL
On September 29, 1993, Colonial completed its IPO and the Company succeeded
to the business and operations of CPI. The Company completed its first full
quarter of operations on December 31, 1993 and its first full year on December
31, 1994. For purposes of financial statement presentation, the results of
operations of the properties acquired by the Company in the IPO are, for
periods prior to the IPO, attributed to the Colonial Group, reflecting the
Colonial Group's ownership of those properties (see note 1 to the Consolidated
and Combined Financial Statements). Results of operations subsequent to the
IPO are included in the Company's consolidated results of operations.
RESULTS OF OPERATIONS--THREE MONTHS ENDED MARCH 31, 1996 AND 1995
Revenue. Total revenue increased by $4.1 million, or 16.1%, for the first
quarter of 1996 when compared to the first quarter of 1995. Of this increase,
$3.4 million represents revenues generated by ten properties acquired and
developed during 1995. The remainder of the increase was primarily
attributable to increases in rent revenues.
Operating Expenses. Operating expenses increased by $1.6 million, or 11.5%,
for the first quarter of 1996 when compared to the first quarter of 1995. Of
this increase, $1.1 million and $0.4 million represent operating expenses and
depreciation expense, respectively, of ten properties acquired during 1995.
Other Income and Expenses. Interest expense decreased by $1.2 million, or
19.3%, for the first quarter of 1996 when compared to the first quarter of
1995. This decrease is primarily attributed to the decrease in indebtedness
which was repaid through a portion of Colonial's equity offering proceeds in
May 1995 and January 1996.
RESULTS OF OPERATIONS--1995 AND 1994
Summary. The Company reported net income of $25.2 million for 1995 compared
to $16.7 million for 1994. On a per Unit basis, net income was $1.28 for 1995
compared to $1.17 for 1994. Net income increased during 1995 when compared to
1994 primarily due to the acquisition of 26 properties during 1994 and 1995
and the placement in service during 1995 of two properties developed by the
Company, as explained below:
Revenue. Rent revenue increased by $44.9 million, or 72.2%, for 1995 when
compared to 1994. Of this increase, $39.9 million represents rent revenues
generated by the 28 properties acquired/placed in service during 1994 and
1995. The $5.0 million remainder of the increase in rental revenue primarily
represents increases in rental rates charged for existing space. Other revenue
increased $2.6 million, or 150.2%, for 1995 when compared to 1994. This
increase is attributable primarily to $1.5 million of other revenues generated
by the 28 properties acquired/placed in service during 1994 and 1995 and $0.5
million received from lease cancellations during the second quarter of 1995.
Operating Expenses. Property operating expenses before depreciation and
amortization increased by $16.0 million, or 78.0%, and depreciation and
amortization expense increased by $7.6 million, or 57.8%, for 1995 when
compared to 1994. Of this increase, $14.2 million and $7.0 million,
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 $2.3 million, 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.
S-14
<PAGE>
Other Income and Expenses. Interest expense increased $13.2 million, or
121.6%, for 1995 when compared to 1994. This increase is attributed primarily
to properties acquired/placed in service during 1994 and 1995 that were
financed through advances under the Credit Facilities and the assumption of
debt. The financing of these properties increased interest expense by $13.3
million for 1995 over 1994. The Company capitalized interest on its
development projects during the construction period which reduced interest
expense by $0.9 million in 1995, while only $0.3 million was capitalized in
1994.
LIQUIDITY AND CAPITAL RESOURCES
The Company generally finances capital expenditures, which consist primarily
of tenant improvements at the retail properties and the office properties and
ongoing capital maintenance at all of the Properties, from cash flow provided
by operations. The Company generally finances property acquisitions and
expansion and development activity by using funds available under the
Unsecured Line of Credit.
Management intends to replace borrowings under the Unsecured Line of Credit
with funds generated from the sale of additional securities, including public
sales of debt securities and sales of partnership interests to CPHC in
connection with public offerings of securities by Colonial, and/or with
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 Company with the means to finance
additional acquisitions, expansions and developments. 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.
In June 1996, the Company increased the amount available for borrowings
under the Unsecured Line of Credit from $75.0 million to $110.0 million. The
Unsecured Line of Credit bears interest at a rate ranging between 125 and 175
basis points above the 30-day or 90-day LIBOR and requires quarterly
compliance with several financial covenants, including limits on interest
expense, fixed charges and debt to total market capitalization. The Unsecured
Line of Credit is renewable annually in December and provides for a two-year
amortization in the event of non-renewal.
At March 31, 1996, the Company's total debt included fixed-rate debt of
$210.1 million, or 76.5%, and floating-rate debt of $64.5 million, or 23.5%.
The Company has obtained interest rate protection for $17.8 million of the
floating-rate debt. During the second quarter of 1996, the Company entered
into three treasury lock agreements covering an aggregate notional amount of
$75.0 million and providing for interest rates ranging from 6.47% to 6.71%.
See "The Company--Capital Strategy."
INFLATION
Substantially all of the leases at the Retail Properties provide for pass-
through to tenants of certain operating costs, including real estate taxes,
common area maintenance expenses and insurance. Leases at the Multifamily
Properties generally provide for an initial term of six months or one year and
allow for rent adjustments at the time of renewal. Leases at the Office
Properties typically provide for rent adjustment and pass-through of certain
operating expenses during the term of the lease. All of these provisions
permit the Company to increase rental rates or other charges to tenants in
response to rising prices and, therefore, serve to minimize the Company's
exposure to the adverse effects of inflation.
S-15
<PAGE>
EBITDA
The following table sets forth the manner in which EBITDA has been
calculated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
HISTORICAL
-----------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net income (loss).................. $25,242 $16,650 $(3,775) $ (215) $(2,826)
Interest expense(1)................ 24,568 11,426 12,772 14,509 14,654
Income taxes(1).................... -0- -0- 39 43 54
Depreciation and amortization(1)... 21,227 13,673 7,874 6,449 5,741
Extraordinary loss (gain) from
early extinguishment of debt(1)... -0- -0- 6,542 (544) -0-
------- ------- ------- ------- -------
EBITDA........................... $71,037 $41,749 $23,452 $20,242 $17,623
======= ======= ======= ======= =======
</TABLE>
- --------
(1) Includes the Company's proportionate share with respect to four office
properties partially owned by the Company.
PROPERTIES
GENERAL
The 67 Properties consist of 39 multifamily properties, 18 retail properties
and ten office properties, as described in more detail below. Thirty-six of
the Properties were owned at the time of the formation of the Company in 1993
(the "Formation Transactions"), 19 properties and one additional phase of an
existing property were acquired during 1994, six Properties were acquired
during 1995, and six properties have been acquired thus far in 1996.
SUMMARY OF PROPERTIES
<TABLE>
<CAPTION>
TOTAL FIRST QUARTER PERCENT OF TOTAL FIRST PERCENTAGE
NUMBER OF APARTMENT 1996 PROPERTY QUARTER 1996 PROPERTY OCCUPANCY AT
TYPE OF PROPERTY PROPERTIES UNITS/GLA/NRA REVENUE REVENUE MAR. 31, 1996
- ---------------- ---------- ------------- ------------------- ---------------------- -------------
<S> <C> <C> <C> <C> <C>
Multifamily............. 39(1) 12,648(2) $18,030,000(3) 60.0%(3) 94.8%(4)
Retail.................. 18 4,549,000 9,527,000 31.7% 92.2%
Office.................. 10 1,009,000 2,482,000 8.3% 94.0%
--- ----------- -----
Total................. 67 $30,039,000 100.0%
=== =========== =====
</TABLE>
- --------
(1) Includes the 2Q 1996 Acquisitions.
(2) Includes the 2Q 1996 Acquisitions and the Lease-up Units.
(3) Excludes the 2Q 1996 Acquisitions.
(4) Excludes the 2Q 1996 Acquisitions and the Lease-up Units.
MULTIFAMILY PROPERTIES
As of May 31, 1996, the 39 multifamily properties contained a total of
12,648 garden-style apartments and range in size from 104 to 920 apartment
units. Twenty-three of the multifamily properties (containing a total of 8,388
apartment units) are located in Alabama, 11 multifamily properties (containing
a total of 3,286 apartment units) are located in Florida and five multifamily
properties (containing a total of 974 apartments units) are located in
Georgia. Fourteen of the multifamily properties were originally developed by
the Company. The Company is currently expanding four of the multifamily
properties, which will include 700 units (107 of which have been placed in
service) and developing four new multifamily properties containing 1,424 units
(eight of which have been placed in service). Upon completion of the
development and expansion of these properties, the Company will own 43
multifamily properties containing a total of 14,657 units. Each of the
multifamily properties is established in its local market and provides
residents with numerous amenities, including a swimming pool, jacuzzi,
clubhouse, laundry room, tennis court(s) and/or a playground.
S-16
<PAGE>
The following table sets forth certain information relating to the
multifamily properties. Information regarding the existing Multifamily
Properties is presented as of March 31, 1996.
MULTIFAMILY PROPERTIES
<TABLE>
<CAPTION>
PERCENT OF
TOTAL FIRST TOTAL FIRST
NUMBER OF APPROXIMATE AVERAGE QUARTER 1996 QUARTER 1996
YEAR APARTMENT RENTABLE AREA PERCENT RENTAL RATE PROPERTY PROPERTY
MULTIFAMILY PROPERTY LOCATION COMPLETED (1) UNITS (SQUARE FEET) OCCUPIED PER UNIT REVENUE REVENUE(2)
- -------------------- -------- ------------- --------- ------------- -------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EXISTING
PROPERTIES:
Chestnut Ridge..... Birmingham, AL 1984 226 235,000 98.2% $575 $ 384,000 1.3%
Colony Park........ Mobile, AL 1975 201 144,000 89.6% 367 203,000 0.7%
Grande View
Towers............ Huntsville, AL 1990 308 323,000 92.2% 563 469,000 1.6%
Heatherbrooke...... Birmingham, AL 1986/87/90 502 395,000 93.6% 532 714,000 2.4%
Huntleigh Woods.... Mobile, AL 1978 233 199,000 93.4% 410 276,000 0.9%
Inverness.......... Mobile, AL 1983 186 176,000 87.1% 541 274,000 0.9%
McGehee Place...... Montgomery, AL 1986/95 468 397,000 87.0% 541 661,000 2.2%
Monte D'Oro........ Birmingham, AL 1977 200 297,000 99.5% 606 358,000 1.2%
Patio.............. Auburn, AL 1966/83/84 240 179,000 99.6% 386 288,000 1.0%
Rime Village
Hoover............ Birmingham, AL 1986 920 953,000 93.7% 617 1,618,000 5.4%
Rime Village
Huntsville........ Huntsville, AL 1987/94 736 827,000 90.5% 561 1,128,000 3.8%
Riverchase Manor... Birmingham, AL 1984/91 468 746,000 95.5% 721 952,000 3.2%
Ski Lodge I........ Birmingham, AL 1972/73/76 648 592,000 97.4% 402 786,000 2.6%
Ski Lodge II....... Birmingham, AL 1979/86 644 521,000 92.2% 405 732,000 2.4%
Ski Lodge III...... Birmingham, AL 1984 554 502,000 92.8% 424 674,000 2.1%
Ski Lodge
Tuscaloosa........ Tuscaloosa, AL 1976/92 304 273,000 98.7% 388 352,000 1.2%
Vieux Carre........ Montgomery, AL 1971/74/78 250 222,000 90.0% 477 325,000 1.1%
Willow Bend........ Montgomery, AL 1984 160 151,000 95.6% 537 240,000 0.8%
------ ---------- ---- ---- ----------- ----
Subtotal--
Alabama.......... 7,248 7,132,000 93.4% 518 10,434,000 34.8%
------ ---------- ---- ---- ----------- ----
Arbors at Kirkman
Park.............. Orlando, FL 1991 370 337,000 99.2% 719 819,000 2.7%
Carrollwood........ Tampa, FL 1966 244 286,000 97.1% 756 531,000 1.8%
Pelican Pointe..... Bradenton, FL 1992 340 292,000 99.7% 646 658,000 2.1%
Plantation
Gardens........... Sarasota, FL 1991 248 252,000 99.2% 750 551,000 1.8%
Polos Gainesville.. Gainesville, FL 1989/93/94 560 487,000 98.0% 698 1,130,000 3.8%
Polos Ponte Vedra.. Jacksonville, FL 1988 240 212,000 99.6% 633 453,000 1.5%
Polos West......... Orlando, FL 1991 200 169,000 95.5% 596 352,000 1.2%
Riverchase II...... Tampa, FL 1991 252 201,000 94.1% 562 396,000 1.3%
St. Croix.......... Orlando, FL 1991/95 504 431,000 98.0% 600 912,000 3.0%
Sunchase........... Bradenton, FL 1986 168 135,000 97.6% 596 297,000 1.0%
Willowtree......... Pensacola, FL 1983 152 116,000 97.4% 448 206,000 0.7%
------ ---------- ---- ---- ----------- ----
Subtotal--
Florida.......... 3,278 2,918,000 98.0% 648 6,305,000 20.9%
------ ---------- ---- ---- ----------- ----
North Ingle
Villas............ Macon, GA 1983 140 133,000 97.9% 526 213,000 0.7%
Somerset Place..... Savannah, GA 1986 120 108,000 95.0% 611 212,000 0.7%
Somerset Wharf..... Savannah, GA 1986/87 178 151,000 96.1% 588 310,000 1.0%
Stockbridge Manor.. Stockbridge, GA 1994 240 266,000 98.8% 633 448,000 1.5%
------ ---------- ---- ---- ----------- ----
Subtotal--
Georgia.......... 678 658,000 97.2% 595 1,183,000 3.9%
------ ---------- ---- ---- ----------- ----
TOTAL--Existing
Properties....... 11,204(3) 10,708,000 94.8% $587(4) 17,922,000 59.6%
------ ---------- ==== ==== ----------- ----
2Q 1996
ACQUISITIONS:
Ashford Place...... Mobile, AL 1983 168 135,000
Crowne Chase....... Birmingham, AL 1994 244 252,000
Crowne Point....... Birmingham, AL 1987/91 392 393,000
Crowne Ridge....... Birmingham, AL 1992 125 131,000
Pointe West........ Mobile, AL 1981 104 114,000
Spring Creek....... Macon, GA 1992/94 296 328,000
------ ----------
Subtotal--Recent
Acquisitions..... 1,329 1,353,000
------ ----------
EXPANSIONS:
Inverness Lakes.... Mobile, AL 1996 180 187,000 108,000(5) 0.4%(5)
Rime Village
Hoover............ Birmingham, AL 1996 160 215,000 -- --
Heatherbrooke IV... Birmingham, AL 1997 84 87,000 -- --
Riverchase III..... Tampa, FL 1997 276 285,000 -- --
------ ---------- ----------- ----
Subtotal--
Expansions....... 700 774,000 108,000 0.4%
------ ---------- ----------- ----
DEVELOPMENTS:
Colonial Grand at
Heathrow.......... Orlando, FL 1996 312 356,000
Colinial Grand at
Bayshore.......... Bradenton, FL 1997 376 364,000
Colonial Grand at
Wesleyan.......... Macon, GA 1997 240 266,000
Colonial Grand at
Hunters Creek..... Orlando, FL 1998 496 375,000
------ ----------
Subtotal--
Developments..... 1,424 1,361,000
------ ----------
TOTAL--Including
Existing
Properties, 2Q
1996
Acquisitions,
Expansions and
Developments..... 14,657 14,196,000 $18,030,000 60.0%
====== ========== =========== ====
</TABLE>
- -------
(1) Year initially completed and, where applicable, year(s) in which
additional phases were completed or year in which completion is
anticipated.
(2) Percent of Total First Quarter 1996 Property Revenue represents the
Multifamily Property's proportionate share of all revenue from the 61
Properties owned by the Company as of March 31, 1996.
(3) Does not include the 115 Lease-up Units.
(4) Represents weighted average rental rate per unit at March 31, 1996 of the
33 Multifamily Properties owned by the Company on that date.
(5) Includes 107 Lease-up Units which were completed and generating revenues
as of March 31, 1996.
S-17
<PAGE>
The following table sets forth the total number of apartment units, percent
leased and average base rental rate per apartment unit as of the end of March
31, 1996 and as of each of the last five years for the multifamily properties
owned by the Company on such dates:
<TABLE>
<CAPTION>
AVERAGE BASE
NUMBER OF PERCENT RENTAL RATE
PERIOD-END APARTMENT UNITS LEASED(1) PER UNIT
---------- --------------- --------- ------------
<S> <C> <C> <C>
March 31, 1996........................ 11,319 94.8% $556
December 31, 1995..................... 11,239 95.7% $552
December 31, 1994..................... 10,972 96.0% $531
December 31, 1993..................... 3,618 96.7% $510
December 31, 1992..................... 3,618 94.9% $472
December 31, 1991..................... 3,330 92.3% $454
</TABLE>
- --------
(1) Represents weighted average occupancy of the owned Multifamily Properties
that had achieved stabilized occupancy as of the date presented.
S-18
<PAGE>
RETAIL PROPERTIES
The 18 retail properties contain a total of approximately 4.5 million square
feet of GLA. Nine of the retail properties are located in Alabama, seven
retail properties are located in Florida and two retail properties are located
in Georgia. The retail properties consist of four enclosed regional malls
(Macon Mall, Gadsden Mall, Village Mall and River Oaks Center), two power
centers, 11 neighborhood shopping centers and a mini-warehouse storage
facility. Nine of the 18 retail properties were originally developed by the
Company. The Company is currently expanding Macon Mall and Montgomery
Promenade, and upon their completion the Company's 18 retail properties will
contain a total of approximately 5.2 million square feet of GLA.
The following table sets forth certain information relating to the retail
properties. Information regarding the existing Retail Properties is presented
as of March 31, 1996.
RETAIL PROPERTIES
<TABLE>
<CAPTION>
AVERAGE
GROSS BASE RENT TOTAL FIRST
LEASABLE NUMBER TOTAL PER LEASED QUARTER 1996
YEAR AREA (SQUARE OF PERCENT ANNUALIZED SQUARE RETAIL PROPERTY
RETAIL PROPERTY LOCATION COMPLETED(1) FEET)(2) STORES LEASED(2) BASE RENT(3) FOOT(4) REVENUE
--------------- --------------- ------------ ------------ ------ --------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EXISTING
PROPERTIES:
ALABAMA:
River Oaks....... Decatur, AL 1979/89 494,000 62 90.9% $ 3,141,000 $13.29 $1,062,000
81,000(6)
Gadsden Mall..... Gadsden, AL 1974/91 493,000 64 93.8% 2,525,000 12.96 872,000
Village Mall..... Auburn, AL 1973/84/89 400,000 62 96.9% 2,516,000 12.67 932,000
Montgomery Montgomery, AL 1990 166,000 29 98.8% 1,534,000 12.71 482,000
Promenade....... 44,000(6)
McGehee Place.... Montgomery, AL 1986 54,000 13 78.9% 490,000 11.37 148,000
49,000(6)
Bellwood......... Montgomery, AL 1988 37,000 15 100.0% 385,000 10.46 119,000
49,000(6)
Old Springville.. Birmingham, AL 1982 64,000 11 92.6% 378,000 7.92 116,000
Olde Town........ Montgomery, AL 1978/90 38,000 17 90.9% 336,000 9.38 99,000
Meadowbrook Mini-
Storage(7)...... Birmingham, AL 1986 36,000 -0- 90.6% 247,000 7.32 63,000
--------- --- ----- ----------- ------ ----------
Subtotal--
Alabama (9
Properties).... 2,005,000 273 93.8% 11,552,000 12.16 3,893,000
--------- --- ----- ----------- ------ ----------
FLORIDA:
University Park
Plaza........... Orlando, FL 1986/89 399,000 44 95.9% 2,885,000 13.70 931,000
Country Lake..... Orlando, FL 1990 217,000 22 91.4% 1,189,000 12.64 361,000
Burnt Store
Square.......... Punta Gorda, FL 1990 199,000 22 90.0% 1,230,000 11.19 400,000
Winter Haven..... Orlando, FL 1986 175,000 16 77.6% 879,000 10.64 263,000
22,000(6)
Northdale Court.. Tampa, FL 1984 193,000 30 84.0% 1,394,000 9.53 482,000
Bear Lake........ Orlando, FL 1990 125,000 22 91.6% 1,090,000 12.97 309,000
Paddock Park..... Ocala, FL 1984 87,000 21 98.4% 686,000 11.43 191,000
--------- --- ----- ----------- ------ ----------
Subtotal--
Florida (7
Properties) ... 1,417,000 177 90.2% 9,353,000 11.89 2,937,000
--------- --- ----- ----------- ------ ----------
GEORGIA:
Macon Mall....... Macon, GA 1975/88 507,000 113 90.9% 5,760,000 19.02 2,463,000
510,000(6)
Britt David...... Columbus, GA 1990 110,000 11 100.0% 801,000 12.22 234,000
--------- --- ----- ----------- ------ ----------
Subtotal--
Georgia (2
Properties).... 1,127,000 124 92.5% 6,561,000 18.50 2,697,000
--------- --- ----- ----------- ------ ----------
TOTAL--Existing
Properties (18
Properties).... 4,549,000 574 92.2% $27,466,000 $13.53 $9,527,000
========= === ===== =========== ====== ==========
EXPANSIONS:
Macon Mall....... Macon, GA 1997 423,000(8)
Montgomery
Promenade
North........... Montgomery, AL 1997 225,000(9)
---------
Subtotal--
Expansions..... 648,000
---------
TOTAL--Including
Existing
Properties and
Expansions..... 5,197,000
=========
<CAPTION>
PERCENT OF
TOTAL FIRST
QUARTER 1996
PROPERTY
RETAIL PROPERTY REVENUE(5)
--------------- ------------
<S> <C>
EXISTING
PROPERTIES:
ALABAMA:
River Oaks....... 3.5%
Gadsden Mall..... 2.9%
Village Mall..... 3.2%
Montgomery 1.6%
Promenade.......
McGehee Place.... 0.5%
Bellwood......... 0.4%
Old Springville.. 0.4%
Olde Town........ 0.3%
Meadowbrook Mini-
Storage(7)...... 0.2%
------------
Subtotal--
Alabama (9
Properties).... 13.0%
------------
FLORIDA:
University Park
Plaza........... 3.1%
Country Lake..... 1.2%
Burnt Store
Square.......... 1.3%
Winter Haven..... 0.9%
Northdale Court.. 1.6%
Bear Lake........ 1.0%
Paddock Park..... 0.6%
------------
Subtotal--
Florida (7
Properties) ... 9.7%
------------
GEORGIA:
Macon Mall....... 8.2%
Britt David...... 0.8%
------------
Subtotal--
Georgia (2
Properties).... 9.0%
------------
TOTAL--Existing
Properties (18
Properties).... 31.7%
============
EXPANSIONS:
Macon Mall.......
Montgomery
Promenade
North...........
Subtotal--
Expansions.....
TOTAL--Including
Existing
Properties and
Expansions.....
</TABLE>
- -------
(1) Year initially completed and, where applicable, year(s) in which the
Property was substantially renovated or an additional phase of the
Property was completed or anticipated year of completion.
(2) Total GLA includes space owned by anchor tenants, Percent Leased excludes
such space.
(3) Represents annualized base rent as of March 31, 1996.
(4) Includes specialty store space only.
(5) Percent of Total First Quarter 1996 Property Revenue represents the Retail
Property's proportionate share of all revenue from the 61 Properties owned
by the Company as of March 31, 1996.
(6) Represents space owned by anchor tenants.
(7) Meadowbrook Mini-Storage is a mini-warehouse rental storage facility
containing 295 rental warehouse units.
(8) Includes 175,000 square feet of space owned by an anchor.
(9) Includes 130,000 square feet of space owned by an anchor.
S-19
<PAGE>
The following table sets forth the total gross leasable area, percent leased
and average base rent per leased square foot as of March 31, 1996 and as of
the end of each of the last five fiscal years for the retail properties
(excluding Meadowbrook Mini-Storage) owned by the Company on such dates:
<TABLE>
<CAPTION>
GROSS AVERAGE
LEASABLE AREA PERCENT BASE RENT PER
PERIOD-END (SQUARE FEET)(1) LEASED LEASED SQUARE FOOT(2)
---------- ---------------- ------- ---------------------
<S> <C> <C> <C>
March 31, 1996................ 3,758,000 92.2% $13.53
December 31, 1995............. 3,758,000 93.1% $13.23
December 31, 1994............. 2,467,000 95.8% $12.61
December 31, 1993............. 2,158,000 95.0% $12.27
December 31, 1992............. 2,148,000 93.5% $11.50
December 31, 1991............. 2,148,000 93.8% $11.33
</TABLE>
- --------
(1) Excludes 755,000 square feet of space owned by anchor tenants and 36,000
square feet at Meadowbrook Mini-Storage, a mini-warehouse rental storage
facility.
(2) Average base rent per leased square foot is calculated using specialty
store period end base rent figures.
The following table sets forth a schedule of the lease expirations for
leases in place as of March 31, 1996 for the Retail Properties (excluding
Meadowbrook Mini-Storage):
<TABLE>
<CAPTION>
NET PERCENT OF TOTAL
NUMBER OF RENTABLE AREA ANNUALIZED ANNUAL BASE RENT
YEAR OF TENANTS WITH OF EXPIRING LEASES BASE RENT OF REPRESENTED BY
LEASE EXPIRATION EXPIRING LEASES (SQUARE FEET)(1) EXPIRING LEASES(1)(2) EXPIRING LEASES(1)
---------------- --------------- ------------------ --------------------- ------------------
<S> <C> <C> <C> <C>
1996.................. 62 155,000 $ 1,616,000 5.9%
1997.................. 76 177,000 1,942,000 7.1%
1998.................. 109 339,000 3,341,000 12.3%
1999.................. 94 399,000 3,447,000 12.7%
2000.................. 81 519,000 4,103,000 15.1%
2001.................. 24 100,000 1,207,000 4.4%
2002.................. 21 105,000 1,115,000 4.1%
2003.................. 21 65,000 856,000 3.1%
2004.................. 27 406,000 2,216,000 8.1%
2005.................. 24 91,000 1,577,000 5.8%
2006-2014.............. 35 1,109,000 5,799,000 21.4%
--- --------- ----------- -----
574 3,465,000 $27,219,000 100.0%
=== ========= =========== =====
</TABLE>
- --------
(1) Excludes 755,000 square feet of space owned by anchor tenants, 293,000
square feet of space not leased as of March 31, 1996 and 36,000 square
feet at Meadowbrook Mini-Storage, a mini-warehouse rental storage
facility.
(2) Annualized base rent is calculated using base rents as of March 31, 1996.
Macon Mall. Macon Mall is a super-regional mall with approximately 1,017,000
square feet of rental space located in Macon, Georgia, approximately 100 miles
south of Atlanta, Georgia and serving a trade area of more than 550,000
people. The Company 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 March 31, 1996, the mall was 90.9% leased to a total of 113
tenants. Macy's, Sears, Belk Matthews and J.C. Penney are the anchor
department stores. As of March 31, 1996, J.C. Penney occupied approximately
169,000 square feet (approximately 17% of the gross leasable area) pursuant to
a lease which expires ten years after completion of the expansion of Macon
Mall. J.C. Penney has five options to extend the lease for five years each.
Each of Macy's, Sears and Belk Matthews owns its store.
S-20
<PAGE>
The following table sets forth a schedule of the lease expirations for Macon
Mall as of March 31, 1996:
<TABLE>
<CAPTION>
NET PERCENT OF TOTAL
YEAR OF NUMBER OF RENTABLE AREA ANNUALIZED ANNUAL BASE RENT
LEASE TENANTS WITH OF EXPIRING LEASES BASE RENT OF REPRESENTED BY
EXPIRATION EXPIRING LEASES (SQUARE FEET)(1) EXPIRING LEASES(1)(2) EXPIRING LEASES(1)
---------- --------------- ------------------ --------------------- ------------------
<S> <C> <C> <C> <C>
1996................... 13 55,000 $ 637,000 11.1%
1997................... 12 29,000 396,000 6.9%
1998................... 15 43,000 774,000 13.4%
1999................... 14 29,000 622,000 10.8%
2000................... 16 204,000 1,155,000 20.1%
2001................... 6 11,000 271,000 4.7%
2002................... 7 10,000 263,000 4.6%
2003................... 5 19,000 164,000 2.9%
2004................... 2 6,000 130,000 2.3%
2005................... 14 32,000 827,000 14.3%
2006................... 9 23,000 521,000 8.9%
--- ------- ---------- -----
113 461,000 $5,760,000 100.0%
=== ======= ========== =====
</TABLE>
- --------
(1) Excludes 510,000 square feet of space owned by anchors and 23,000 square
feet of space not leased as of March 31, 1996.
(2) Annualized base rent is calculated using specialty store base rent as of
March 31, 1996.
In May 1995, the Company began a 423,000 square foot expansion of Macon
Mall, which is expected to open in the first quarter of 1997. Total expansion
costs are expected to be approximately $52.0 million. The expansion will
include the addition of 146,000 square feet of specialty store GLA. The
expansion also will include the addition of anchor tenants Dillard's and
Parisian, which will join existing anchor tenants Sears, J.C. Penney, Macy's,
and Belk Matthews. As of June 21, 1996, the Company had leased or was in
active discussions to lease more than 78% of the specialty store space, and
had more than 56% of the specialty store space committed and leased or out for
signature. See "Recent Developments--Expansion and Development Activity--
Retail."
S-21
<PAGE>
OFFICE PROPERTIES
The ten office properties contain a total of approximately 1.0 million
rentable square feet. Nine of the office properties are located in Alabama
(representing 93% of the office portfolio's net rentable square feet) and one
is located in Orlando, Florida. The office properties range in size from
approximately 25,000 square feet to 227,000 square feet. Four of the office
properties were developed by the Company and the Company acquired the other
six properties at various times between 1980 and 1990. All of the office
properties are managed by the Company.
The following table sets forth certain additional information relating to
the Office Properties as of and for the quarter ended March 31, 1996:
OFFICE PROPERTIES
<TABLE>
<CAPTION>
NET PERCENT OF
RENTABLE AVERAGE TOTAL FIRST TOTAL FIRST
AREA TOTAL BASE RENT QUARTER 1996 QUARTER 1996
YEAR (SQUARE PERCENT ANNUALIZED PER LEASED OFFICE PROPERTY PROPERTY
OFFICE PROPERTY (1) LOCATION COMPLETED(2) FEET)(3) LEASED BASE RENT SQUARE FOOT REVENUE(3) REVENUE(4)
- ------------------- -------- ------------ --------- ------- ----------- ----------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ALABAMA:
Interstate Park...... Montgomery, AL 1982-85/89 227,000 94.6% $ 2,755,000 $12.85 $ 701,000 2.3%
International Park... Birmingham, AL 1987/89 222,000 98.5% 3,226,000(5) 14.61 257,000 0.9%
Energen Plaza........ Birmingham, AL 1982 168,000 96.1% 2,205,000(5) 13.64 350,000 1.2%
AmSouth Center....... Huntsville, AL 1990 157,000 94.9% 2,514,000 17.04 727,000 2.4%
P&S Building......... Gadsden, AL 1946/76/91 40,000 100.0% 127,000 3.20 32,000 0.1%
250 Commerce St...... Montgomery, AL 1904/81 35,000 100.0% 361,000 10.28 87,000 0.3%
Anderson Block(6).... Montgomery, AL 1981/83 34,000 97.8% 337,000(5) 10.36 33,000 0.1%
Land Title Bldg. .... Birmingham, AL 1975 30,000 100.0% 376,000 12.63 34,000 0.1%
Whitesburg Bldg. .... Huntsville, AL 1974 25,000 100.0% 296,000 11.80 78,000 0.3%
--------- ------ ----------- ------ ---------- ---
Subtotal-Alabama
(9 Properties)..... 938,000 96.7% 12,197,000 13.46 2,299,000 7.7%
--------- ------ ----------- ------ ---------- ---
FLORIDA:
University Park...... Orlando, FL 1985 71,000 85.9% 796,000 13.04 183,000 0.6%
--------- ------ ----------- ------ ---------- ---
TOTAL (10
Properties)........ 1,009,000 94.0% $12,993,000 $13.43 $2,482,000 8.3%
========= ====== =========== ====== ========== ===
</TABLE>
- --------
(1) All Office Properties are 100% owned by the Company with the exception of
International Park, which consists of three buildings and is 37.5% owned
by the Company for buildings 1900 and 2100 and is 25% owned by the Company
for building 2000; Energen Plaza, which is 50% owned by the Company; and
Anderson Block & Land Title Building, which are each 33.33% owned by the
Company.
(2) Year initially completed and, where applicable, most recent year in which
the Property was substantially renovated or in which an additional phase
of the Property was completed.
(3) Total First Quarter 1996 Office Property Revenue is the Company's share
(based on its percentage ownership of the Property) of total Office
Property revenue.
(4) Percent of Total First Quarter 1996 Property Revenue represents the Office
Property's proportionate share of all revenue from the 61 Properties owned
by the Company as of March 31, 1996.
(5) Total Annualized Base Rent represents rents for the entire Property, not
just the Company's proportionate share.
(6) The Company has a leasehold interest in this Property.
S-22
<PAGE>
The following table sets forth a schedule of the lease expirations for
leases in place as of March 31, 1996 for the Office Properties (including all
lease expirations for partially-owned Properties):
<TABLE>
<CAPTION>
NET RENTABLE PERCENT OF TOTAL
NUMBER OF AREA OF ANNUALIZED ANNUAL BASE RENT
YEAR OF TENANTS WITH EXPIRING LEASES BASE RENT OF REPRESENTED BY
LEASE EXPIRATION EXPIRING LEASES (SQUARE FEET)(1) EXPIRING LEASES(1)(2) EXPIRING LEASES(1)
- ---------------- --------------- ---------------- --------------------- ------------------
<S> <C> <C> <C> <C>
1996.................. 49 170,000 $ 1,529,000 11.8%
1997.................. 48 259,000 3,611,000 27.8%
1998.................. 21 96,000 1,231,000 9.5%
1999.................. 31 263,000 3,673,000 28.3%
2000.................. 10 84,000 1,215,000 9.4%
2001.................. 7 29,000 460,000 3.5%
2002.................. 1 12,000 197,000 1.5%
2005.................. 2 55,000 1,077,000 8.2%
--- ------- ----------- -----
169 968,000 $12,993,000 100.0%
=== ======= =========== =====
</TABLE>
- --------
(1) Excludes 41,000 square feet of space not leased as of March 31, 1996.
(2) Annualized base rent is calculated using base rents as of March 31, 1996.
The following table sets forth the net rentable area, total percent leased
and average base rent per leased square foot as of March 31, 1996 and as of
the end of each of the last five years for the Office Properties:
<TABLE>
<CAPTION>
NET AVERAGE BASE
RENTABLE AREA TOTAL RENT PER LEASED
PERIOD-END (SQUARE FEET) PERCENT LEASED SQUARE FOOT(1)
---------- ------------- -------------- ---------------
<S> <C> <C> <C>
March 31, 1996.................. 1,009,000 94.0% $13.43
December 31, 1995............... 1,009,000 94.0% $13.52
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.
UNDEVELOPED LAND
The Company owns nine undeveloped land parcels consisting of approximately
30.5 acres (collectively, the "Land"). These parcels are adjacent to five of
the properties and are suitable for potential expansion at those properties.
The Land suitable for expansion is located adjacent to a multifamily property
and four retail properties. Land adjacent to multifamily properties typically
will be considered for potential development of another phase of an existing
multifamily property if the Company determines that the particular market can
absorb additional apartment units. The Company currently owns one such parcel.
For expansion at retail properties, the Company owns parcels both contiguous
to the boundaries of retail properties, which would accommodate expansion of
the mall or shopping center, and outparcels which are suitable for
restaurants, financial institutions or free-standing retailers. The Company
owns four such parcels.
S-23
<PAGE>
Options to Acquire Additional Land. In addition to the Land, the Company has
options to acquire certain additional land parcels owned by Thomas and James
Lowder and members of their family (collectively, the "Option Parcels"). The
name, location, proposed use and acreage of each Option Parcel is as follows:
<TABLE>
<CAPTION>
SITE NAME LOCATION PROPOSED USE ACRES
- --------- -------- ------------ -----
<S> <C> <C> <C>
North Macon (Wimbleton Forest)........ Macon, GA Retail 87.9
Altamonte Crossing.................... Altamonte Springs, FL Retail 2.6
Bellwood Commercial................... Montgomery, AL Retail 9.7
Osprey (Sarasota)..................... Sarasota, FL Mixed Use 73.9
Interstate Park....................... Montgomery, AL Office 11.3
Bellwood Office....................... Montgomery, AL Office 4.9
Huntsville Research Park.............. Huntsville, AL Office 9.8
</TABLE>
Each option expires on September 29, 1998, subject to earlier termination if
the Company elects not to exercise a right of first opportunity on a proposed
sale of such Option Parcel by Thomas and James Lowder and members of their
family. The Company also has a five-year right of first opportunity with
respect to each Option Parcel beginning on the expiration date of the option
term (if the option is not exercised).
PROPERTY MARKETS
The table below sets forth certain information with respect to the
geographic concentration of the Properties as of May 31, 1996:
GEOGRAPHIC CONCENTRATION OF PROPERTIES
<TABLE>
<CAPTION>
TOTAL FIRST PERCENT OF TOTAL
QUARTER 1996 FIRST QUARTER
APARTMENT UNITS GLA NRA PROPERTY 1996 PROPERTY
STATE (MULTIFAMILY)(1) (RETAIL)(2) (OFFICE)(3) REVENUE(4) REVENUE(4)
- ----- ---------------- ----------- ----------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Alabama................. 8,388 2,005,000 938,000 $16,734,000 55.7%
Florida................. 3,286 1,417,000 71,000 9,425,000 31.4%
Georgia................. 974 1,127,000 -0- 3,880,000 12.9%
------ --------- --------- ----------- -----
Total................. 12,648 4,549,000 1,009,000 $30,039,000 100.0%
====== ========= ========= =========== =====
</TABLE>
- --------
(1) Includes the 2Q 1996 Acquisitions and the Lease-up Units.
(2) GLA refers to gross leasable area of retail space.
(3) NRA refers to net rentable area of office space.
(4) Excludes the 2Q 1996 Acquisitions.
The Company believes that the demographic and economic trends and conditions
in the markets where the Properties are located indicate a potential for
continued growth in property net operating income. The Properties are located
in a variety of distinct submarkets within Alabama, Georgia and Florida;
however, Birmingham, Alabama, Orlando, Florida, Huntsville, Alabama, Macon,
Georgia, Montgomery, Alabama and Sarasota/Bradenton, Florida are the Company's
primary markets. The Company believes that these six markets, which are
characterized by stable and increasing population and employment growth,
should continue to reflect a steady demand for multifamily, retail and office
properties.
Birmingham, Alabama. Sixteen of the Company's Properties are located in
Birmingham, Alabama. Birmingham is the business, financial, educational and
cultural center of Alabama and the state's largest city, with a population in
its four-county Metropolitan Statistical Area ("MSA") of approximately
900,000. Located in the center of the state, the Birmingham MSA consists of
Blount, Jefferson, St. Clair and Shelby counties. The University of Alabama at
Birmingham is the city's largest employer and is one of the leading medical
centers in the nation. From 1980 to 1990, the population of the Birmingham MSA
increased 3.4% and from 1990 to 1995,
S-24
<PAGE>
the population increased 4.4%. Year end occupancy rates for multifamily,
retail and office properties in Birmingham were 97%, 95% and 94%,
respectively, for 1995 as compared to 97%, 95% and 93%, respectively, for
1994. The unemployment rate in Birmingham was 3.2% as of April 1996 compared
to a national unemployment rate of 5.4%.
Orlando, Florida. Nine of the Properties are located in Orlando, Florida
area, which is characterized by strong population and job growth. With
approximately 1.4 million residents, Orlando is the third largest metropolitan
area in Florida. Orlando's economy is based primarily upon tourism. With Walt
Disney World, Disney's MGM Studios, EPCOT Center, Universal Studios 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 94%, 90% and 88%, respectively, for 1995 as compared to 92%, 84% and 85%,
respectively, for 1994. The average unemployment rate in Orlando was 3.8% as
of April 1996.
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 95%, 93% and 90%, respectively, for 1995 as compared to 92%,
84% and 85%, respectively, for 1994. The unemployment rate in Huntsville was
3.4% as of April 1996.
Macon, Georgia. Three of the Properties, including the Macon Mall, are
located in Macon, Georgia. Macon is located approximately 100 miles south of
Atlanta. The Macon MSA, comprised of Bibb, Houston, Jones and Peach counties,
is the third largest metropolitan area in the state, with a total population
of approximately 310,000 in 1994. Situated in the center of Georgia along
Interstate Highway 75, Macon is considered the primary business center of the
central Georgia region. The Macon MSA total population increased approximately
6.6% between 1980 and 1990. Year end occupancy rates for multifamily, retail
and office properties in Macon were 97%, 85% and 87%, respectively, for 1995
as compared to 92%, 84% and 85%, respectively, for 1994. The Macon MSA has
maintained lower unemployment rates than both the State of Georgia and the
nation as a whole over the past five years. The unemployment rate in Macon was
4.4% as of April 1996.
Montgomery, Alabama. Ten of the Properties are located in Montgomery,
Alabama. Montgomery is Alabama's capital and the state's third largest city.
It is the center of state government and has a diversified manufacturing and
services economy and two important military installations, Maxwell Air Force
Base and Gunter Air Force Base. The Montgomery MSA consists of Montgomery,
Elmore and Autauga counties, and its population grew steadily from 1990 to
1994, increasing 6.7% to 312,000. Its unemployment rate of 4.0% as of April
1996 has consistently fallen below state and national averages. The Montgomery
Properties are located primarily in East Montgomery, the fastest growing area
of the city. Year end occupancy rates for multifamily, retail and office
properties in Montgomery were 92%, 84% and 85%, respectively, for 1994 as
compared to 92%, 83% and 87%, respectively, for 1993.
Sarasota/Bradenton, Florida. Three of the Multifamily Properties are located
in the Sarasota/Bradenton, Florida area. This area is located on the Gulf
Coast of Florida south of Tampa and its economy is based largely on tourism.
Sarasota/Bradenton's MSA population is approximately 520,000, and the
unemployment rate was 3.2% as of April 1996.
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DESCRIPTION OF THE NOTES
GENERAL
The following description of the specific terms of the Notes supplements the
description of the general terms and provisions of Debt Securities set forth
in the Prospectus under the caption "Description of Debt Securities."
The 2001 Notes and the 2006 Notes constitute separate series of debt
securities (which are more fully described in the accompanying Prospectus),
each to be issued pursuant to an indenture (the "Indenture") dated as of
, 1996, between the Company and Bankers Trust Company, as trustee (the
"Trustee"), and will be limited to aggregate principal amounts of $ and
$ , respectively. The terms of the Notes include those provisions contained
in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The Notes
are subject to all such terms, and holders of Notes are referred to the
Indenture and the Trust Indenture Act for a statement thereof. The following
summary of certain provisions of the Indenture does not purport to be complete
and is subject to and qualified in its entirety by reference to the Indenture,
including the definitions therein of certain terms used below.
The Notes will be direct, unsecured recourse obligations of the Company and
will rank pari passu with each other and with all other unsecured and
unsubordinated indebtedness of the Company from time to time outstanding. The
Notes will be recourse to all of the assets of the Company, but will be non-
recourse with respect to the partners of the Company, including CPHC, the
Company's general partner. The Notes will be effectively subordinated to (i)
the prior claims of each secured mortgage lender to any specific property of
the Company which secures such lender's mortgage and (ii) any indebtedness or
other claims of creditors of any Subsidiary of the Company, the amount of
which is restricted by the Indenture.
Subject to certain limitations set forth in the Indenture, and as described
under "Description of Debt Securities--Certain Covenants--Limitations on
Incurrence of Debt" in the accompanying Prospectus, the Indenture will permit
the Company to incur additional secured and unsecured indebtedness. Following
the completion of the Offering, the application of the net proceeds thereof
and the acquisition of Briarcliffe Mall, the Company will have approximately
$268.7 million of secured indebtedness collateralized by 35 Properties and
approximately $126.2 million of unsecured indebtedness.
The 2001 Notes will mature on , 2001 and the 2006 Notes will mature
on , 2006 (each, a "Maturity Date"). The Notes are not subject to any
sinking fund provisions. The Notes will be issued only in fully registered,
book-entry form without coupons, in denominations of $1,000 and integral
multiples thereof, except under the limited circumstances described below
under "Book-Entry System."
Except as described below under "Certain Covenants--Limitations on
Incurrence of Debt" and under "Description of Debt Securities--Merger,
Consolidation or Sale" in the accompanying Prospectus, the Indenture does not
contain any provisions that would limit the ability of the Company to incur
indebtedness or that would afford holders of the Notes protection in the event
of: (i) a highly leveraged or similar transaction involving the Company, CPHC
as general partner of the Company or any affiliate of either such party; (ii)
a change of control; or (iii) a reorganization, restructuring, merger or
similar transaction involving the Company that may adversely affect the
holders of the Notes. However, certain restrictions on the ownership and
transfer of Colonial's common shares of beneficial interest designed to
preserve Colonial's status as a REIT may act to prevent or hinder a change of
control. The Company and its management have no present intention of engaging
in a transaction which would result in the Company's being highly leveraged.
PRINCIPAL AND INTEREST
The 2001 Notes will bear interest at % per annum and the 2006 Notes will
bear interest at % per annum, in each case from , 1996 or from the
immediately preceding Interest Payment Date (as defined below) to which
interest has been paid, payable semi-annually in arrears on and ,
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commencing , 1997 (each, an "Interest Payment Date"), and on the
applicable Maturity Date, to the persons (the "Holders") in whose names the
applicable Notes are registered in the security register applicable to the
Notes at the close of business 15 calendar days prior to such payment date,
regardless of whether such day is a Business Day, as defined below (each, a
"Regular Record Date"). Interest on the Notes will be computed on the basis of
a 360-day year of twelve 30-day months.
The principal of each Note payable on the Maturity Date will be paid against
presentation and surrender of such Note at the corporate trust office of the
Trustee, located initially at Four Albany Street, New York, New York 10006, in
such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.
If any Interest Payment Date or the Maturity Date falls on a day that is not
a Business Day, the required payment will be made on the next Business Day as
if it were made on the date such payment was due and no interest will accrue
on the amount so payable for the period from and after such Interest Payment
Date or the Maturity Date, as the case may be. "Business Day" means any day,
other than a Saturday or Sunday, that is neither a legal holiday nor a day on
which banking institutions in New York City are authorized or required by law,
regulation or executive order to close.
CERTAIN COVENANTS
The Indenture contains the following covenants:
Limitations on Incurrence of Debt. The Company will not, and will not permit
any Subsidiary to, incur any Debt (as defined below), other than intercompany
Debt (representing Debt to which the only parties are Colonial, any of its
subsidiaries, the Company and any Subsidiary, or Debt owed to the Management
Corporation arising from routine cash management practices, but only so long
as such Debt is held solely by any of Colonial, any of its subsidiaries, the
Company and any Subsidiary), that is subordinate in right of payment to the
Notes, if, immediately after giving effect to the incurrence of such Debt and
the application of the proceeds thereof, the aggregate principal amount of all
outstanding Debt of the Company and its Subsidiaries on a consolidated basis
determined in accordance with generally accepted accounting principles is
greater than 60% of the sum of (i) the Company's Adjusted Total Assets (as
defined below) as of the end of the most recent fiscal quarter prior to the
incurrence of such additional Debt, (ii) the purchase price of any real estate
assets or mortgages receivable (or interests therein) acquired by the Company
or any Subsidiary since the end of such fiscal quarter, including those
obtained in connection with the incurrence of such additional Debt and (iii)
the net amount of any securities offering proceeds received by the Company or
any Subsidiary since the end of such fiscal quarter (to the extent that such
proceeds were not used to acquire such real estate assets or mortgages
receivable or used to reduce Debt) (Section 1004(a)).
In addition to the foregoing limitation on the incurrence of Debt, the
Company will not, and will not permit any Subsidiary to, incur any Debt if the
ratio of Consolidated Income Available for Debt Service to the Annual Service
Charge for the four consecutive fiscal quarters most recently ended prior to
the date on which such additional Debt is to be incurred shall have been less
than 1.5 to 1, on a pro forma basis after giving effect to the incurrence of
such Debt and to the application of the proceeds thereof (Section 1004(b)).
Further, the Company will not, and will not permit any Subsidiary to, incur
any Debt secured by any mortgage, lien, charge, pledge, encumbrance or
security interest of any kind upon any of the property of the Company or any
Subsidiary ("Secured Debt"), whether owned at the date of the Indenture or
thereafter acquired, if, immediately after giving effect to the incurrence of
such Secured Debt and the application of the proceeds thereof, the aggregate
principal amount of all outstanding Secured Debt of the Company and its
Subsidiaries on a consolidated basis is greater than 40% of the sum of (i) the
Company's Adjusted Total Assets as of the end of the most recent fiscal
quarter prior to the incurrence of such additional Debt, (ii) the purchase
price of any real estate assets or mortgages receivable (or interests therein)
acquired by the Company or any Subsidiary since the
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end of such fiscal quarter, including those obtained in connection with the
incurrence of such additional Debt and (iii) the amount of any securities
offering proceeds received by the Company or any Subsidiary since the end of
such fiscal quarter (to the extent that such proceeds were not used to acquire
such real estate assets or mortgages receivable or used to reduce Debt)
(Section 1004(c)).
For purposes of the foregoing provisions regarding the limitation on the
incurrence of Debt, Debt shall be deemed to be "incurred" by the Company or a
Subsidiary whenever the Company or such Subsidiary shall create, assume,
guarantee or otherwise become liable in respect thereof.
Maintenance of Unencumbered Total Asset Value. The Company will at all times
maintain an Unencumbered Total Asset Value in an amount not less than 150% of
the aggregate principal amount of all outstanding unsecured Debt of the
Company and its Subsidiaries (Section 1004(d)).
As used in the Indenture and the description thereof herein:
"Adjusted Total Assets" as of any date means the sum of (i) $328,177,823
(which represents the amount determined by multiplying the price at which
Colonial's common shares of beneficial interest were offered in the IPO by the
sum of (A) the common shares of beneficial interest of Colonial issued in the
IPO and (B) the Units of the Company not held by Colonial that were issued in
connection with the IPO), (ii) $108,841,000 (which represents the principal
amount of outstanding Debt of the Company immediately following the IPO) and
(iii) the purchase price or cost of any real estate assets or mortgages
receivable (or interests therein) acquired (including the value of any Units
issued in connection therewith) or developed after the IPO and the amount of
any securities offering proceeds and other proceeds of Debt received after the
IPO (to the extent such proceeds were not used to acquire real estate assets
or mortgages receivable or used to reduce Debt), adjusted for the proceeds of
any real estate assets disposed of by the Company. This definition of
"Adjusted Total Assets" values the assets owned by the Company at the time of
the IPO at the market capitalization of the Company at that time, which the
Company believes to be a more appropriate measure of the value of those assets
than undepreciated book value, which reflects their pre-IPO cost before
accumulated depreciation.
"Annual Service Charge" as of any date means the amount of any interest
expensed during the four consecutive fiscal quarters most recently ended prior
to such date.
"Consolidated Income Available for Debt Service" for any period means
Consolidated Net Income (as defined below) of the Company and its Subsidiaries
plus amounts which have been deducted for (a) interest on Debt of the Company
and its Subsidiaries, (b) provision for taxes of the Company and its
Subsidiaries based on income, (c) amortization of debt discount, (d)
provisions for gains and losses on properties, (e) depreciation and
amortization, (f) the effect of any noncash charge resulting from a change in
accounting principles in determining Consolidated Net Income for such period
and (g) amortization of deferred charges.
"Consolidated Net Income" for any period means the amount of net income (or
loss) of the Company and its Subsidiaries for such period determined on a
consolidated basis in accordance with generally accepted accounting
principles.
"Debt" of the Company or any Subsidiary means any indebtedness of the
Company or any Subsidiary, whether or not contingent, in respect of (i)
borrowed money evidenced by bonds, notes, debentures or similar instruments,
(ii) indebtedness secured by any mortgage, pledge, lien, charge, encumbrance
or any security interest existing on property owned by the Company or any
Subsidiary, (iii) reimbursement obligations in connection with any letters of
credit actually issued or amounts representing the balance deferred and unpaid
of the purchase price of any property except any such balance that constitutes
an accrued expense or trade payable or (iv) any lease of property by the
Company or any Subsidiary as lessee which is reflected on the Company's
consolidated balance sheet as a capitalized lease in accordance with generally
accepted accounting principles; in the case of items of indebtedness incurred
under (i) through (iii) above to the extent that any such items (other
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<PAGE>
than letters of credit) would appear as a liability on the Company's
consolidated balance sheet in accordance with generally accepted accounting
principles, and also includes, to the extent not otherwise included, any
obligation of the Company or any Subsidiary to be liable for, or to pay, as
obligor, guarantor or otherwise (other than for purposes of collection in the
ordinary course of business), indebtedness of another person (other than the
Company or any Subsidiary).
"Disqualified Stock" means, with respect to any person, any capital stock or
partnership interest of such person which by the terms of such capital stock
or partnership interest (or by the terms of any security into which it is
convertible or for which it is exchangeable or exercisable), upon the
occurrence of any event or otherwise: (i) matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise; (ii) is
convertible into or exchangeable or exercisable for Debt or Disqualified
Stock; or (iii) is redeemable at the option of the holder thereof, in whole or
in part, in each case on or prior to the maturity of the relevant series of
Notes.
"Subsidiary" means a corporation, partnership or limited liability company,
a majority of the outstanding voting stock, partnership interests or
membership interests, as the case may be, of which is owned or controlled,
directly or indirectly, by the Company or by one or more Subsidiaries of the
Company. For the purposes of this definition, "voting stock" means stock
having the voting power for the election of directors, general partners,
managers or trustees, as the case may be, whether at all times or only so long
as no senior class of stock has such voting power by reason of any
contingency. The Management Corporation would not be considered a Subsidiary
of the Company.
"Unencumbered Total Asset Value" as of any date means the sum of (i) the
portion of Adjusted Total Assets allocable to the Company's real estate assets
and (ii) the value of all other assets of the Company and its Subsidiaries on
a consolidated basis determined in accordance with generally accepted
accounting principles (but excluding intangibles and accounts receivable), in
each case which are unencumbered by any mortgage, lien, charge, pledge or
security interest. For purposes of this definition, the portion of Adjusted
Total Assets allocable to each of the 36 properties owned by the Company at
the time of the IPO shall be determined by reference to each such property's
contribution to net operating income of the Company at the time of the IPO,
and the portion allocable to each property acquired or developed after the IPO
shall be equal to the purchase price or cost of such property.
Reference is made to the section entitled "Description of Debt Securities--
Certain Covenants" in the accompanying Prospectus for a description of
additional covenants applicable to the Notes. Compliance with the covenants
described herein and such additional covenants with respect to the Notes
generally may not be waived by the Board of Directors of CPHC, as general
partner of the Company, or by the Trustee unless the Holders of at least a
majority in principal amount of all outstanding Notes consent to such waiver;
provided, however, that the defeasance and covenant defeasance provisions of
the Indenture described under "Description of Debt Securities--Discharge,
Defeasance and Covenant Defeasance" in the accompanying Prospectus will apply
to the Notes, including with respect to the covenants described in this
Prospectus Supplement.
OPTIONAL REDEMPTION
The Notes may be redeemed at any time at the option of the Company, in whole
or from time to time in part, at a redemption price equal to the sum of: (i)
the principal amount of the Notes being redeemed plus accrued interest thereon
to the redemption date; and (ii) the Make-Whole Amount (as defined below), if
any, with respect to such Notes (the "Redemption Price").
If notice of redemption has been given as provided in the Indenture and
funds for the redemption of any Notes called for redemption shall have been
made available on the redemption date referred to in such notice, such Notes
will cease to bear interest on the date fixed for such redemption specified in
such notice and the only right of the Holders of the Notes from and after the
redemption date will be to receive payment of the Redemption Price upon
surrender of such Notes in accordance with such notice.
Notice of any optional redemption of any Notes will be given to Holders at
their addresses, as shown in the security register for the Notes, not more
than 60 nor less than 30 days prior to the date fixed for redemption. The
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notice of redemption will specify, among other items, the Redemption Price and
principal amount of the Notes held by such Holder to be redeemed.
If less than all the Notes are to be redeemed at the option of the Company,
the Company will notify the Trustee at least 45 days prior to giving notice of
redemption (or such shorter period as may be satisfactory to the Trustee) of
the aggregate principal amount of Notes to be redeemed and their redemption
date. The Trustee shall select, in such manner as it shall deem fair and
appropriate, Notes to be redeemed in whole or in part.
As used herein:
"Make-Whole Amount" means, in connection with any optional redemption of any
Notes, the excess, if any, of: (i) the aggregate present value as of the date
of such redemption of each dollar of principal being redeemed and the amount
of interest (exclusive of interest accrued to the date of redemption) that
would have been payable in respect of each such dollar if such redemption had
not been made, determined by discounting, on a semi-annual basis, such
principal and interest at the Reinvestment Rate (determined on the third
Business Day preceding the date notice of such redemption is given) from the
respective dates on which such principal and interest would have been payable
if such redemption had not been made, to the date of redemption; over (ii) the
aggregate principal amount of the Notes being redeemed.
"Reinvestment Rate" means the yield on Treasury securities at a constant
maturity corresponding to the remaining life (as of the date of redemption,
and rounded to the nearest month) to Stated Maturity of the principal being
redeemed (the "Treasury Yield"), plus 0.25%. For purposes hereof, the Treasury
Yield shall be equal to the arithmetic mean of the yields published in the
Statistical Release (as defined below) under the heading "Week Ending" for
"U.S. Government Securities--Treasury Constant Maturities" with a maturity
equal to such remaining life; provided, that if no published maturity exactly
corresponds to such remaining life, then the Treasury Yield shall be
interpolated or extrapolated on a straight-line basis from the arithmetic
means of the yields for the next shortest and next longest published
maturities. For purposes of calculating the Reinvestment Rate, the most recent
Statistical Release published prior to the date of determination of the Make-
Whole Amount shall be used. If the format or content of the Statistical
Release changes in a manner that precludes determination of the Treasury Yield
in the above manner, then the Treasury Yield shall be determined in the manner
that most closely approximates the above manner, as reasonably determined by
the Company.
"Statistical Release" means the statistical release designated "H.15(519)"
or any successor publication which is published weekly by the Federal Reserve
System and which reports yields on actively traded United States government
securities adjusted to constant maturities, or, if such statistical release is
not published at the time of any determination under the Indenture, then such
other reasonably comparable index which shall be designated by the Company.
BOOK-ENTRY SYSTEM
The following are summaries of certain rules and operating procedures of DTC
that affect the payment of principal and interest and transfers in the Global
Notes. Upon issuance, each series of Notes will be issued only in the form of
a Global Note which will be deposited with, or on behalf of, DTC and
registered in the name of Cede & Co., as nominee of DTC. Unless and until it
is exchanged in whole or in part for Notes in definitive form under the
limited circumstances described below, a Global Note may not be transferred
except as a whole: (i) by DTC to a nominee of DTC; (ii) by a nominee of DTC to
DTC or another nominee of DTC; or (iii) by DTC or any such nominee to a
successor or a nominee of such successor.
Ownership of beneficial interests in a Global Note will be limited to
persons that have accounts with DTC for such Global Note ("participants") or
persons that may hold interests through participants. Upon the issuance of a
Global Note, DTC will credit, on its book-entry registration and transfer
system, the participants' accounts with the respective principal amounts of
the Notes represented by such Global Note beneficially owned by such
participants. Ownership of beneficial interests in such Global Notes will be
shown on, and the transfer of such
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ownership interests will be effected only through, records maintained by DTC
(with respect to interests of participants) and on the records of participants
(with respect to interests of persons holding through participants). The laws
of some states may require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such laws may limit or impair
the ability to own, transfer or pledge beneficial interests in the Global
Notes.
So long as DTC or its nominee is the registered owner of a Global Note, DTC
or its nominee, as the case may be, will be considered the sole owner or
Holder of the Notes represented by such Global Note for all purposes under the
Indenture. Except as set forth below, owners of beneficial interests in a
Global Note will not be entitled to have Notes represented by such Global Note
registered in their names, will not receive or be entitled to receive physical
delivery of such Notes in certificated form and will not be considered the
registered owners or Holders thereof under the Indenture. Accordingly, each
person owning a beneficial interest in a Global Note must rely on the
procedures of DTC and, if such person is not a participant, on the procedures
of the participant through which such person owns its interest, to exercise
any rights of a Holder under the Indenture. The Company understands that under
existing industry practices, if the Company requests any action of Holders or
if an owner of a beneficial interest in a Global Note desires to give or take
any action that a Holder is entitled to give or take under the Indenture, DTC
would authorize the participants holding the relevant beneficial interests to
give or take such action, and such participants would authorize beneficial
owners owning through such participants to give or take such action or would
otherwise act upon the instructions of beneficial owners holding through them.
Principal and interest payments on interests represented by a Global Note
will be made to DTC or its nominee, as the case may be, as the registered
owner of such Global Note. None of the Company, the Trustee or any agent of
the Company or agent of the Trustee will have any responsibility or liability
for any aspect of the records relating to or payment made on account of
beneficial ownership interests in the Global Notes or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The Company expects that DTC, upon receipt of any payment of principal or
interest in respect of a Global Note, will immediately credit participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in such Global Note as shown on the records of DTC. The Company also
expects that payments by participants to owners of beneficial interests in the
Global Notes held through such participants will be governed by standing
customer instructions and customary practice, as is now the case with
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such participants.
If DTC is at any time unwilling or unable to continue as depository for the
Notes and the Company fails to appoint a successor depository registered as a
clearing agency under the Exchange Act within 90 days, the Company will issue
the Notes in definitive form in exchange for the Global Notes. Any Notes
issued in definitive form in exchange for the Global Notes will be registered
in such name or names, and will be issued in denominations of $1,000 and such
integral multiples thereof, as DTC shall instruct the Trustee. It is expected
that such instructions will be based upon directions received by DTC from
participants with respect to ownership of beneficial interests in the Global
Notes.
DTC has advised the Company of the following information regarding DTC. DTC
is a limited-purpose trust company organized under the Banking Law of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC was created to hold securities of its participants and to
facilitate the clearance and settlement of transactions among its participants
in such securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. DTC's participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations,
some of which (and/or their representatives) own DTC. Access to the DTC book-
entry system is also available to others, such as banks,
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brokers and dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters (as defined
herein) in immediately available funds. All payments of principal and interest
in respect of the Notes will be made by the Company in immediately available
funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing house or next-day funds. In contrast, the Notes
will trade in DTC's Same-Day Funds Settlement System until maturity or until
the Notes are issued in certificated form, and secondary market trading
activity in the Notes will therefore be required by DTC to settle in
immediately available funds. No assurance can be given as to the effect, if
any, of settlement in immediately available funds on trading activity in the
Notes.
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
(the "Underwriting Agreement"), the Company has agreed to sell to each of the
Underwriters named below, and each of the Underwriters has severally agreed to
purchase from the Company, the principal amount of the Notes set forth below
opposite their respective names.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRINCIPAL AMOUNT
UNDERWRITERS OF 2001 NOTES OF 2006 NOTES
------------ ---------------- ----------------
<S> <C> <C>
Lehman Brothers Inc.................... $ $
Merrill Lynch, Pierce Fenner & Smith
Incorporated..................
Dean Witter Reynolds Inc...............
---- ----
Total................................ $ $
==== ====
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to purchase the Notes are subject to the conditions contained
therein, and that if any of the Notes are purchased by the Underwriters
pursuant to the Underwriting Agreement, all the Notes agreed to be purchased
by the Underwriters must be so purchased.
The Company has been advised that the Underwriters propose initially to
offer the Notes directly to the public at the public offering price set forth
on the cover page of this Prospectus Supplement, and to certain selected
dealers (who may include the Underwriters) at such price less a concession not
in excess of % of the principal amount of the 2001 Notes and % of the
principal amount of the 2006 Notes. The Underwriters may allow and the
selected dealers may reallow a concession to certain other dealers not in
excess of % of the principal amount of the Notes or % of the principal
amount of the 2006 Notes.
The distribution of this Prospectus Supplement and the offering or sale of
the Notes in certain jurisdictions may be restricted by law. Accordingly, the
Notes may not be offered or sold, directly or indirectly, and neither this
Prospectus Supplement nor any other offering material or advertisements in
connection with the Notes may be distributed or published in or from any
jurisdiction, except under circumstances that will result in compliance with
applicable rules and regulations of any such jurisdiction. Persons into whose
possession this Prospectus Supplement comes are required by the Company and
the Underwriters to inform themselves about and to observe any applicable
restrictions. This Prospectus Supplement does not constitute an offer of, or
any invitation to purchase, the Notes and may not be used for the purpose of
an offer to, or solicitation by, anyone in any jurisdiction or in any
circumstances in which such offer or solicitation is not authorized or is
unlawful.
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The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute
to payments that the Underwriters may be required to make in respect thereof.
The Company has agreed that, until the closing of the Offering, it will not,
without the prior written consent of Lehman Brothers Inc., sell, offer to
sell, distribute or otherwise dispose of any of its debt securities or
register for sale under the Securities Act any of its debt securities, except
for the Notes offered hereby.
The Company does not intend to apply for listing of the Notes on any
national securities exchange, but has been advised by the Underwriters that
they presently intend to make a market in the Notes, as permitted by
applicable law and regulations. The Underwriters are not obligated, however,
to make a market in the Notes and any such market making may be discontinued
at any time at the sole discretion of the Underwriters. Accordingly, no
assurance can be given as to the liquidity of, or the existence of trading
markets for, the Notes.
The Company has interest rate cap agreements with Lehman Brothers Inc. which
limit debt of $8.4 million to an interest rate of 6.0% through September 30,
1996 and limit debt of $17.8 million to an interest rate of 5.96% through
September 30, 1998. See "The Company--Capital Strategy--Interest Rate
Agreements."
LEGAL MATTERS
The legality of the Notes will be passed upon for the Company by Hogan &
Hartson L.L.P., Washington, D.C. and certain legal matters will be passed upon
for the Underwriters by Goodwin, Procter & Hoar LLP. Hogan & Hartson L.L.P.
and Goodwin, Procter & Hoar LLP will rely on the opinion of Sirote & Permutt
P.C., Birmingham, Alabama, as to matters of Alabama law.
EXPERTS
The consolidated and combined financial statements and the related financial
statement schedules of the Company for the years ended December 31, 1995,
1994, and 1993; the combined historical summary of revenues and direct
operating expenses of Acquisition Properties--Crowne Chase Apartments and
Crowne Point Apartments for the year ending December 31, 1995; the historical
summary of revenues and direct operating expenses of Acquired Property--
Northdale Court for the year ended December 31, 1994; the combined historical
summaries of revenues and direct operating expenses of Acquired Properties--
Rime Properties for the nine months ended September 30, 1994 and the year
ended December 31, 1993; and the combined historical summary of revenues and
direct operating expenses of Acquired Properties--Epoch Properties for the
year ended December 31, 1993; all of which are incorporated in this Prospectus
Supplement and the accompanying Prospectus by reference to the Company's
Registration Statement on Form 10, to the extent and for the periods indicated
in their reports, have been audited by Coopers & Lybrand L.L.P., independent
accountants, and are incorporated herein in reliance upon the authority of
that firm as experts in accounting and auditing.
The historical summary of revenues and direct operating expenses of
Acquisition Property--Briarcliffe Mall for the year ended December 31, 1995,
which is incorporated in this Prospectus Supplement and the accompanying
Prospectus by reference to the Company's Registration Statement on Form 10,
has been audited by Margolin, Winer & Evens LLP, independent accountants, and
is included herein in reliance upon the authority of said firm as experts in
accounting and auditing.
S-33
<PAGE>
PROSPECTUS
$250,000,000
COLONIAL REALTY LIMITED PARTNERSHIP
DEBT SECURITIES
-----------
Colonial Realty Limited Partnership (the "Company") may from time to time
offer in one or more series debt securities ("Debt Securities") with an
aggregate public offering price of up to $250,000,000 (or its equivalent based
on the exchange rate at the time of sale) in amounts, at prices and on terms to
be determined at the time of offering. The Debt Securities may be offered in
separate series in amounts, at prices and on terms to be described in one or
more supplements to this Prospectus (a "Prospectus Supplement").
The specific terms of the Debt Securities in respect of which this Prospectus
is being delivered will be set forth in the applicable Prospectus Supplement
and will include, where applicable, the specific title, aggregate principal
amount, currency, form (which may be registered or bearer, or certificated or
global), authorized denominations, maturity, rate (or manner of calculation
thereof) and time of payment of interest, any terms for redemption at the
option of the Company or repayment at the option of the holder, any terms for
any sinking fund payments, covenants and any initial public offering price.
The applicable Prospectus Supplement also will contain information, where
applicable, about certain U.S. federal income tax considerations relating to,
and any listing on a securities exchange of, the Debt Securities covered by
such Prospectus Supplement.
The Debt Securities may be offered directly, through agents designated from
time to time by the Company, or to or through underwriters or dealers. If any
agents or underwriters are involved in the sale of any of the Debt Securities,
their names, and any applicable purchase price, fee, commission or discount
arrangement with, between or among them, will be set forth, or will be
calculable from the information set forth, in an accompanying Prospectus
Supplement. See "Plan of Distribution." No Debt Securities may be sold without
delivery of a Prospectus Supplement describing the method and terms of the
offering of such Debt Securities.
SEE "RISK FACTORS" BEGINNING ON PAGE 2 FOR CERTAIN FACTORS RELATING TO AN
INVESTMENT IN THE DEBT SECURITIES.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-----------
THE ATTORNEY GENERAL OF THE STATE OF NEW
YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
-----------
The date of this Prospectus is July 12, 1996
<PAGE>
THE COMPANY
The Debt Securities offered hereby are being issued by the Company, which is
the "operating partnership" of Colonial Properties Trust ("Colonial"), an
Alabama real estate investment trust ("REIT") whose common shares are listed
on the New York Stock Exchange ("NYSE") under the symbol "CLP." The Company is
managed by Colonial, through its wholly owned subsidiary, Colonial Properties
Holding Company, Inc., an Alabama corporation ("CPHC"), which in turn owns
approximately 68.0% of the partnership interests in the Company as of May 31,
1996 and serves as the sole general partner of the Company. The Company's
activities as of May 31, 1996 include ownership of a diversified portfolio of
67 multifamily, retail and office properties located in Alabama, Florida and
Georgia, development of new properties, acquisitions of existing properties,
and build-to-suit development.
As of May 31, 1996, the Company owned a diversified portfolio of 39 garden-
style multifamily apartment communities containing a total of 12,568 apartment
units (the "Multifamily Properties"), 18 retail properties (including four
regional malls, two "power centers," 11 neighborhood shopping centers, and one
mini-warehouse storage facility) containing a total of approximately 4.5
million square feet of retail space (the "Retail Properties"), ten office
properties containing a total of approximately 1.0 million square feet of
office space (the "Office Properties") and parcels of land adjacent to certain
of these properties (the "Land"). (The Multifamily Properties, the Retail
Properties, the Office Properties and the Land are referred to collectively as
the "Properties.") The Company also is expanding four Multifamily Properties
and two Retail Properties and is developing three new multifamily properties.
Colonial currently conducts all of its business through CPHC, the Company,
Colonial Properties Services Limited Partnership (the "Management
Partnership"), which provides management services for the Properties, and
Colonial Properties Services, Inc. (the "Management Corporation"), which
provides management services for properties owned by third parties. The
Company owns all of the Properties (or interests therein). The Company is the
sole general partner of the Management Partnership and owns 99% of the
interests therein.
Since Colonial's initial public offering in September 1993 (the "IPO"), the
Company has significantly expanded its portfolio of Properties and its
operating businesses. The Company has acquired direct or indirect interests in
23 additional Multifamily Properties, eight additional Retail Properties and
several additional parcels of Land. The Company also has completed the
expansion of two Multifamily Properties, has initiated or is planning the
expansion or development of seven additional Multifamily Properties, and has
initiated major expansions of Macon Mall and Montgomery Promenade. The
Company's acquisitions and its expansion and development activities have
increased the Company's presence in Alabama, Florida and Georgia and the
Company is planning to develop a new Multifamily Property on Land it recently
acquired in Florida.
The Company's staff of approximately 572 employees provides a full range of
real estate services from its headquarters in Birmingham, Alabama and from
five regional offices located in the Mobile, Huntsville and Montgomery,
Alabama and Orlando and Tampa, Florida metropolitan areas.
The principal executive offices of the Company are located at 2101 Sixth
Avenue North, Suite 750, Birmingham, Alabama 35203, and its telephone number
is (205) 250-8700.
RISK FACTORS
Prospective investors should carefully consider, among other factors, the
matters described below.
REAL ESTATE INVESTMENT RISKS
General. Real property investments are subject to varying degrees of risk.
The Company's ability to service debt will depend in large part on the amount
of income generated, expenses incurred and capital expenditures
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required. The Company's income from retail, multifamily or office properties
may be adversely affected by a number of factors, including the general
economic climate and local real estate conditions, such as an oversupply of,
or a reduction in demand for, retail, apartment or office space in the area
and the attractiveness of the properties to shoppers, residents and tenants.
In addition, income from properties and real estate values also are affected
by such factors as the cost of compliance with government regulation,
including zoning and tax laws, the potential for liability under applicable
laws, interest rate levels and the availability of financing. Certain
significant expenditures associated with each equity investment by the Company
in a property (such as mortgage payments, if any, real estate taxes and
maintenance costs) also are generally not reduced when circumstances cause a
reduction in income from the property.
Renewal of Leases and Reletting of Space. The Company is subject to the
risks that upon expiration of leases for space located at the Properties, the
leases may not be renewed, the space may not be relet or the terms of the
renewal or reletting (including the cost of required renovations or
concessions to tenants) may be less favorable than current lease terms.
Although the Company has established an annual budget for renovation and
reletting expenses that it believes are reasonable in light of each Property's
situation, no assurance can be given that this budget will be sufficient to
cover these expenses. If the Company is unable promptly to relet or renew
leases for all or substantially all of the space at its Properties, if the
rental rates upon such renewal or reletting are significantly lower than
expected, or if the Company's reserves for these purposes prove inadequate,
then the Company's cash provided by operating activities and ability to make
debt service payments could be adversely affected.
Dependence on Primary Markets. All of the Properties are located in the
Southeastern United States, and 37 of the Properties are located in Birmingham
and Montgomery, Alabama, Orlando, Florida and Macon, Georgia. The Company's
performance and its ability to make debt service payments could be adversely
affected by economic conditions in the Southeast and in Birmingham,
Montgomery, central Florida and Macon in particular.
Possible Environmental Liabilities. 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 parties for property damage and for investigation and
cleanup costs incurred by such parties in connection with the contamination.
In addition, some environmental laws create a lien on the contaminated site in
favor of the government for damages and costs it incurs in connection with the
contamination. The presence of contamination or the failure to remediate
contamination may adversely affect the owner's ability to sell or lease real
estate or to borrow using the real estate as collateral. The owner or operator
of a site may be liable under common law to third parties for damages and
injuries resulting from environmental contamination emanating from the site.
The Company has not been notified by any governmental authority of any
material non-compliance, liability or other claim in connection with any of
the Properties and the Company is not aware of any other environmental
condition with respect to any of the Properties that could be material. No
assurance, however, can be given that no prior owner created any material
environmental condition not known to the Company, that no material
environmental condition with respect to any Property has occurred during the
Company's ownership thereof, or that future uses or conditions (including,
without limitation, changes in applicable environmental laws and regulations)
will not result in imposition of environmental liability.
At one of the Company's Properties, the Gadsden Mall in Gadsden, Alabama,
four underground storage tanks were removed in 1989. In connection with the
removal of these gasoline storage tanks, associated petroleum contamination
was discovered in the soil and groundwater. The Company is currently working
with the state regulatory agency to remediate the contamination in accordance
with applicable requirements. Because the tanks were registered with the
Alabama Department of Environmental Management and the facility was in
compliance with regulations prior to the incident, the Company has been
reimbursed under the Alabama Underground Storage Tank Trust Fund for the costs
incurred to date in connection with the ongoing cleanup, and expects to be
reimbursed for the remaining costs as well. Currently, a free product recovery
program is underway.
3
<PAGE>
DEBT FINANCING
The Company is subject to the risks associated with debt financing,
including the risk that the Company's cash provided by operating activities
will be insufficient to meet required payments of principal and interest, the
risks of rising interest rates on the Company's floating rate debt, the risk
that the Company will not be able to prepay or refinance existing indebtedness
on the Properties (which generally will not have been fully amortized at
maturity) or that the terms of such refinancing will not be as favorable as
the terms of existing indebtedness. In the event the Company is unable to
secure refinancing of such indebtedness on acceptable terms, the Company might
be forced to dispose of properties upon disadvantageous terms, which might
result in losses to the Company and might adversely affect the cash flow
available for debt service. In addition, if a property or properties are
mortgaged to secure payment of indebtedness and the Company is unable to meet
mortgage payments, the mortgage securing the property could be foreclosed upon
by, or the property could be otherwise transferred to, the mortgagee with a
consequent loss of income and asset value to the Company.
CONFLICTS OF INTEREST
The Lowder family (which includes Thomas, James, Robert and Catherine Lowder
and their affiliates) holds interests in certain companies that in the past
have performed construction management, insurance brokerage and other services
with respect to the Properties. These companies may perform similar services
for the Company in the future. As a result of its financial interest in these
companies, the Lowder family may realize benefits from transactions between
such companies and the Company that are not realized by other holders of
interests in the Company. In addition, Thomas Lowder and his brother, James
Lowder, as directors of CPHC, may be in a position to influence the Company to
do business with companies in which the Lowder family has a financial
interest. Although the Company is subject to certain policies designed to
eliminate or minimize potential conflicts of interest, including a policy
which requires that transactions in which a director or officer of CPHC has a
conflict of interest be approved by a majority of the disinterested directors,
there can be no assurance that these policies will be successful in
eliminating the influence of such conflicts, or that such transactions, if
any, will be on terms as favorable to the Company as could be obtained in an
arms-length transaction with a third party.
DEVELOPMENT AND ACQUISITION RISKS
The Company intends to continue development of new multifamily, retail and
office properties (including expansions of existing Properties on the land
adjacent to those Properties) and to consider acquisitions of multifamily,
retail and office properties where it believes that such development or
acquisition is consistent with the business strategies of the Company. New
project development is subject to a number of risks, including construction
delays or cost overruns that may increase project costs, financing risks as
described above, the failure to meet anticipated occupancy or rent levels,
failure to receive required zoning, occupancy and other governmental permits
and authorizations and changes in applicable zoning and land use laws, which
may result in the incurrence of development costs in connection with projects
that are not pursued to completion. In addition, because Colonial must
distribute 95% of its taxable income in order to maintain its qualification as
a REIT, the Company anticipates that new developments and acquisitions will be
financed primarily through lines of credit or other forms of secured or
unsecured construction financing. If permanent debt or equity financing is not
available on acceptable terms to refinance such new developments or
acquisitions are undertaken without permanent financing, further development
activities or acquisitions may be curtailed or cash available for distribution
to shareholders or to meet debt service obligations may be adversely affected.
Acquisitions entail risks that investments will fail to perform in accordance
with expectations and that judgments with respect to the costs of improvements
to bring an acquired property up to standards established for the market
position intended for that property will prove inaccurate, as well as general
investment risks associated with any new real estate investment. See "Real
Estate Investment Risks" above.
CHANGES IN POLICIES
The major policies of the Company, including its policies with respect to
development, acquisitions, financing, growth, operations, debt capitalization
and distributions, are determined by the board of directors of
4
<PAGE>
CPHC. Although it has no present intention to do so, the board may amend or
revise these and other policies from time to time. A change in these policies
could adversely affect the Company's financial condition, results of
operations, or ability to make debt service payments.
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement, the
Company intends to use the net proceeds of any sale of Debt Securities for
general business purposes, including, without limitation, the development and
acquisition of additional properties as suitable opportunities arise, the
repayment of certain debt outstanding at such time, capital expenditures,
improvements to certain properties in the Company's portfolio, working capital
and other general purposes.
RATIOS OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for the years ended
December 31, 1994 and 1995 and the three months ended March 31, 1996 was 2.23,
1.92 and 2.43, respectively.
The ratios of earnings to fixed charges were computed by dividing earnings
by fixed charges. For this purpose, earnings consist of income (loss) before
gains from sales of property and extraordinary items plus fixed charges. Fixed
charges consist of interest expense (including interest costs capitalized) and
the amortization of debt issuance costs.
Prior to completion of Colonial's IPO, certain of the predecessor entities
to the Company operated in a highly leveraged manner. As a result, although
the Properties have historically generated positive net cash flow, the
consolidated and combined financial statements of the Company for the fiscal
year ended December 31, 1993 (the year in which the IPO occurred) and the
combined financial statements of the predecessor entities for the fiscal years
ended December 31, 1992 and 1991 show net losses. Consequently, the
computation of the ratio of earnings to fixed charges for such periods
indicates that earnings were inadequate to cover fixed charges by
approximately $.8 million, $3.4 million and $3.9 million for the years ended
December 31, 1993, 1992 and 1991, respectively.
The reorganization and recapitalization effected in connection with the IPO
permitted the Company tode-leverage the Properties significantly, resulting in
an improved ratio of earnings to fixed charges for periods subsequent to the
IPO.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions of
the Debt Securities to which this Prospectus and any applicable Prospectus
Supplement may relate. The particular terms of the Debt Securities being
offered and the extent to which such general provisions may apply will be
described in a Prospectus Supplement relating to such Debt Securities.
The Debt Securities will be issued under an Indenture, as amended or
supplemented from time to time (the "Indenture"), between the Company and a
trustee (the "Trustee"). The Indenture has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part and is available for
inspection at the corporate trust office of the Trustee or as described above
under "Available Information." The Indenture is subject to, and governed by,
the Trust Indenture Act of 1939, as amended (the "TIA"). The statements made
hereunder relating to the Indenture and the Debt Securities to be issued
thereunder are summaries of certain provisions thereof and do not purport to
be complete and are subject to, and are qualified in their entirety by
reference to, all provisions of the Indenture and such Debt Securities. All
section references appearing herein are to sections of the Indenture, and
capitalized terms used but not defined herein shall have the respective
meanings set forth in the Indenture.
5
<PAGE>
GENERAL
The Debt Securities will be direct, unsecured recourse obligations of the
Company and will rank equally with all other unsecured and unsubordinated
indebtedness of the Company. Unless otherwise specified in the applicable
Prospectus Supplement, Colonial has no obligation for payment of principal or
interest on the Debt Securities. Except as set forth in the Indenture or in
one or more indentures supplemental thereto and described in a Prospectus
Supplement relating thereto, the Debt Securities may be issued without limit
as to aggregate principal amount, in one or more series, in each case as
established from time to time in or pursuant to authority granted by a
resolution of the Board of Directors of CPHC, as general partner of the
Company, or as established in the Indenture or in one or more indentures
supplemental to the Indenture. All Debt Securities of one series need not be
issued at the same time and, unless otherwise provided, a series may be
reopened, without the consent of the Holders of the Debt Securities of such
series, for issuances of additional Debt Securities of such series. The Debt
Securities, while recourse to all of the assets of the Company, will not be
recourse to either CPHC, as general partner of the Company, or to Colonial, as
sole shareholder of CPHC.
The Indenture provides that there may be more than one Trustee thereunder,
each with respect to one or more series of Debt Securities. Any Trustee under
the Indenture may resign or be removed with respect to one or more series of
Debt Securities, and a successor Trustee may be appointed to act with respect
to such series. In the event that two or more persons are acting as Trustee
with respect to different series of Debt Securities, each such Trustee shall
be a trustee of a trust under the Indenture separate and apart from the trust
administered by any other Trustee, and, except as otherwise indicated herein,
any action described herein to be taken by each Trustee may be taken by each
such Trustee with respect to, and only with respect to, the one or more series
of Debt Securities for which it is Trustee under the Indenture.
The Prospectus Supplement relating to any series of Debt Securities being
offered will contain the specific terms thereof, including, without
limitation:
(1)The title of such Debt Securities;
(2) The aggregate principal amount of such Debt Securities and any limit on
such aggregate principal amount;
(3) The percentage of the principal amount at which such Debt Securities
will be issued and, if other than the principal amount thereof, the
portion of the principal amount thereof payable upon declaration of
acceleration of the maturity thereof;
(4) The date or dates, or the method for determining such date or dates, on
which the principal of such Debt Securities will be payable;
(5) The rate or rates (which may be fixed or variable), or the method by
which such rate or rates shall be determined, at which such Debt
Securities will bear interest, if any;
(6) The date or dates, or the method for determining such date or dates,
from which any such interest will accrue, the dates on which any such
interest will be payable, the regular record dates for such interest
payment dates, or the method by which such dates shall be determined,
the persons to whom such interest shall be payable, and the basis upon
which interest shall be calculated if other than that of a 360-day year
of twelve 30-day months;
(7) The place or places where the principal of (and premium, if any) and
interest, if any, on such Debt Securities will be payable, where such
Debt Securities may be surrendered for conversion or registration of
transfer or exchange and where notices or demands to or upon the
Company in respect of such Debt Securities and the Indenture may be
served;
(8) The period or periods within which, the price or prices at which and
the other terms and conditions upon which such Debt Securities may be
redeemed, in whole or in part, at the option of the Company, if the
Company is to have such an option;
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(9) The obligation, if any, of the Company to redeem, repay or purchase
such Debt Securities pursuant to any sinking fund or analogous
provision or at the option of a Holder thereof, and the period or
periods within which or the date and dates on which, the price or
prices at which and the other terms and conditions upon which such Debt
Securities will be redeemed, repaid or purchased, in whole or in part,
pursuant to such obligation;
(10) If other than U.S. dollars, the currency or currencies in which such
Debt Securities are denominated and payable, which may be a foreign
currency or units of two or more foreign currencies or a composite
currency or currencies, and the terms and conditions relating thereto;
(11) Whether the amount of payments of principal of (and premium, if any)
or interest, if any, on such Debt Securities may be determined with
reference to an index, formula or other method (which index, formula
or method may, but need not be, based on a currency, currencies,
currency unit or units or composite currency or currencies) and the
manner in which such amounts shall be determined;
(12) Any additions to, modifications of or deletions from the terms of such
Debt Securities with respect to Events of Default or covenants set
forth in the Indenture;
(13) Whether such Debt Securities will be issued in certificated or book-
entry form;
(14) Whether such Debt Securities will be in registered or bearer form and,
if in registered form, the denominations thereof if other than $1,000
and any integral multiple thereof and, if in bearer form, the
denominations thereof and the terms and conditions relating thereto;
(15) The applicability, if any, of the defeasance and covenant defeasance
provisions of Article Fourteen of the Indenture;
(16) Whether and under what circumstances the Company will pay any
additional amounts on such Debt Securities in respect of any tax,
assessment or governmental charge and, if so, whether the Company will
have the option to redeem such Debt Securities in lieu of making such
payment;
(17) The terms and conditions, if any, upon which such Debt Securities may
be subordinated to other indebtedness of the Company; and
(18) Any other terms of such Debt Securities not inconsistent with the
provisions of the Indenture (Section 301).
The Debt Securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
("Original Issue Discount Securities"). Special federal income tax, accounting
and other considerations applicable to Original Issue Discount Securities will
be described in the applicable Prospectus Supplement.
Except as set forth below under "Certain Covenants--Limitations on
Incurrence of Debt," the Indenture does not contain any provisions that would
limit the ability of the Company to incur indebtedness or that would afford
Holders of Debt Securities protection in the event of a highly leveraged or
similar transaction involving the Company or in the event of a change of
control. Restrictions on ownership and transfers of Colonial's common shares
of beneficial interest and preferred shares of beneficial interest are
designed to preserve its status as a REIT and, therefore, may act to prevent
or hinder a change of control. Reference is made to the applicable Prospectus
Supplement for information with respect to any deletions from, modifications
of or additions to the Events of Default or covenants of the Company that are
described below, including any addition of a covenant or other provision
providing event risk or similar protection.
DENOMINATION, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement, the Debt
Securities of any series will be issuable in denominations of $1,000 and
integral multiples thereof (Section 302).
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and applicable premium, if any) and interest on any series of
Debt Securities will be payable at the corporate trust office of the
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<PAGE>
Trustee, the address of which will be stated in the applicable Prospectus
Supplement; provided that, at the option of the Company, payment of interest
may be made by check mailed to the address of the person entitled thereto as
it appears in the register for such Debt Securities or by wire transfer of
funds to such person at an account maintained within the United States
(Sections 301, 305, 306, 307 and 1002).
Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the applicable regular record
date and may either be paid to the person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to the Holder of such Debt Security not
less than ten days prior to such Special Record Date, or may be paid at any
time in any other lawful manner, all as more completely described in the
Indenture (Section 307).
Subject to certain limitations imposed upon Debt Securities issued in book-
entry form, the Debt Securities of any series will be exchangeable for other
Debt Securities of the same series and of a like aggregate principal amount
and tenor of different authorized denominations upon surrender of such Debt
Securities at the corporate trust office of the Trustee referred to above. In
addition, subject to certain limitations imposed upon Debt Securities issued
in book-entry form, the Debt Securities of any series may be surrendered for
conversion or registration of transfer or exchange thereof at the corporate
trust office of the Trustee. Every Debt Security surrendered for conversion,
registration of transfer or exchange must be duly endorsed or accompanied by a
written instrument of transfer. No service charge will be made for any
registration of transfer or exchange of any Debt Securities, but the Company
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. If the applicable Prospectus
Supplement refers to any transfer agent (in addition to the Trustee) initially
designated by the Company with respect to any series of Debt Securities, the
Company may at any time rescind the designation of any such transfer agent or
approve a change in the location through which any such transfer agent acts,
except that the Company will be required to maintain a transfer agent in each
place of payment for such series. The Company may at any time designate
additional transfer agents with respect to any series of Debt Securities
(Section 1002).
Neither the Company nor the Trustee shall be required to (i) issue, register
the transfer of or exchange Debt Securities of any series during a period
beginning at the opening of business 15 days before any selection of Debt
Securities of that series to be redeemed and ending at the close of business
on the day of mailing of the relevant notice of redemption; (ii) register the
transfer of or exchange any Debt Security, or portion thereof, called for
redemption, except the unredeemed portion of any Debt Security being redeemed
in part; or (iii) issue, register the transfer of or exchange any Debt
Security that has been surrendered for repayment at the option of the Holder,
except the portion, if any, of such Debt Security not to be so repaid (Section
305).
MERGER, CONSOLIDATION OR SALE
The Company will be permitted to consolidate with, or sell, lease or convey
all or substantially all of its assets to, or merge with or into, any other
entity, provided that (a) either the Company shall be the continuing entity,
or the successor entity (if other than the Company) formed by or resulting
from any such consolidation or merger or which shall have received the
transfer of such assets shall expressly assume payment of the principal of
(and premium, if any) and interest on all of the Debt Securities and the due
and punctual performance and observance of all of the covenants and conditions
contained in the Indenture; (b) immediately after giving effect to such
transaction and treating any indebtedness that becomes an obligation of the
Company or any Subsidiary as a result thereof as having been incurred by the
Company or such Subsidiary at the time of such transaction, no Event of
Default under the Indenture, and no event which, after notice or the lapse of
time, or both, would become such an Event of Default, shall have occurred and
be continuing; and (c) an officer's certificate and legal opinion covering
such conditions shall be delivered to the Trustee (Sections 801 and 803).
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CERTAIN COVENANTS
Limitations on Incurrence of Debt. The Company will not, and will not permit
any Subsidiary to, incur any Debt (as defined below), other than intercompany
Debt (representing Debt to which the only parties are Colonial, any of its
subsidiaries, the Company and any Subsidiary, or Debt owed to the Management
Corporation arising from routine cash management practices, but only so long
as such Debt is held solely by any of Colonial, any of its subsidiaries, the
Company and any Subsidiary, that is subordinate in right of payment to the
Debt Securities, if, immediately after giving effect to the incurrence of such
Debt and the application of the proceeds thereof, the aggregate principal
amount of all outstanding Debt of the Company and its Subsidiaries on a
consolidated basis determined in accordance with generally accepted accounting
principles is greater than 60% of the sum of (i) the Company's Adjusted Total
Assets (as defined below) as of the end of the most recent fiscal quarter
prior to the incurrence of such additional Debt, (ii) the purchase price of
any real estate assets or mortgages receivable (or interests therein) acquired
by the Company or any Subsidiary since the end of such fiscal quarter,
including those obtained in connection with the incurrence of such additional
Debt and (iii) the net amount of any securities offering proceeds received by
the Company or any Subsidiary since the end of such fiscal quarter (to the
extent that such proceeds were not used to acquire such real estate assets or
mortgages receivable or used to reduce Debt) (Section 1004(a)).
In addition to the foregoing limitation on the incurrence of Debt, the
Company will not, and will not permit any Subsidiary to, incur any Debt if the
ratio of Consolidated Income Available for Debt Service to the Annual Service
Charge for the four consecutive fiscal quarters most recently ended prior to
the date on which such additional Debt is to be incurred shall have been less
than 1.5 to 1, on a pro forma basis after giving effect to the incurrence of
such Debt and to the application of the proceeds thereof (Section 1004(b)).
Further, the Company will not, and will not permit any Subsidiary to, incur
any Debt secured by any mortgage, lien, charge, pledge, encumbrance or
security interest of any kind upon any of the property of the Company or any
Subsidiary ("Secured Debt"), whether owned at the date of the Indenture or
thereafter acquired, if, immediately after giving effect to the incurrence of
such Secured Debt and the application of the proceeds thereof, the aggregate
principal amount of all outstanding Secured Debt of the Company and its
Subsidiaries on a consolidated basis is greater than 40% of the sum of (i) the
Company's Adjusted Total Assets as of the end of the most recent fiscal
quarter prior to the incurrence of such additional Debt, (ii) the purchase
price of any real estate assets or mortgages receivable (or interests therein)
acquired by the Company or any Subsidiary since the end of such fiscal
quarter, including those obtained in connection with the incurrence of such
additional Debt and (iii) the amount of any securities offering proceeds
received by the Company or any Subsidiary since the end of such fiscal quarter
(to the extent that such proceeds were not used to acquire such real estate
assets or mortgages receivable or used to reduce Debt) (Section 1004(c)).
For purposes of the foregoing provisions regarding the limitation on the
incurrence of Debt, Debt shall be deemed to be "incurred" by the Company or a
Subsidiary whenever the Company or such Subsidiary shall create, assume,
guarantee or otherwise become liable in respect thereof.
Maintenance of Unencumbered Total Asset Value. The Company will at all times
maintain an Unencumbered Total Asset Value in an amount not less than 150% of
the aggregate principal amount of all outstanding Debt of the Company and its
Subsidiaries that is unsecured Debt (Section 1004(d)).
Existence. Except as described above under "Merger, Consolidation or Sale,"
the Company will do or cause to be done all things necessary to preserve and
keep in full force and effect its existence, rights (by partnership agreement
and statute) and franchises; provided, however, that the Company shall not be
required to preserve any right or franchise if it determines that the
preservation thereof is no longer desirable in the conduct of its business and
that the loss thereof is not disadvantageous in any material respect to the
Holders of the Debt Securities (Section 1006).
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Maintenance of Properties. The Company will cause all of its material
properties used or useful in the conduct of its business or the business of
any Subsidiary to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that the Company and its
Subsidiaries shall not be prevented from selling or otherwise disposing of for
value its properties in the ordinary course of business (Section 1007).
Insurance. The Company will, and will cause each of its Subsidiaries to,
keep all of its insurable properties insured against loss or damage at least
equal to their then full insurable value with insurers of recognized
responsibility and having an A.M. Best policy holder's rating of not less than
A-:V (Section 1008).
Payment of Taxes and Other Claims. The Company will pay or discharge or
cause to be paid or discharged, before the same shall become delinquent, (i)
all taxes, assessments and governmental charges levied or imposed upon it or
any Subsidiary or upon the income, profits or property of the Company or any
Subsidiary, and (ii) all lawful claims for labor, materials and supplies
which, if unpaid, might by law become a lien upon the property of the Company
or any Subsidiary; provided, however, that the Company shall not be required
to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings or for which the Company
has set apart and maintains an adequate reserve (Section 1009).
Provision of Financial Information. Whether or not the Company is subject to
Section 13 or 15(d) of the Exchange Act, the Company will, to the extent
permitted under the Exchange Act, file with the Commission the annual reports,
quarterly reports and other documents which the Company would have been
required to file with the Commission pursuant to such Sections 13 or 15(d) if
the Company were so subject (the "Financial Information"), such documents to
be filed with the Commission on or prior to the respective dates (the
"Required Filing Dates") by which the Company would have been required so to
file such documents if the Company were so subject. The Company also will in
any event (x) within 15 days of each Required Filing Date (i) transmit by mail
to all Holders of Debt Securities, as their names and addresses appear in the
Security Register, without cost to such Holders, copies of the Financial
Information and (ii) file with the Trustee copies of the Financial
Information, and (y) if filing such documents by the Company with the
Commission is not permitted under the Exchange Act, promptly upon written
request and payment of the reasonable cost of duplication and delivery, supply
copies of such documents to any prospective Holder (Section 1010).
AS USED HEREIN,
"Adjusted Total Assets" as of any date means the sum of (i) $328,177,823
(which represents the amount determined by multiplying the price at which
Colonial's common stock was offered in the IPO by the sum of (A) the shares of
Common Stock of Colonial issued in the IPO and (B) the Units of the Company
not held by Colonial that were issued in connection with the IPO), (ii)
$108,841,000 (which represents the principal amount of outstanding Debt of the
Company immediately following the IPO) and (iii) the purchase price or cost of
any real estate assets or mortgages receivable (or interests therein) acquired
(including the value of any Units issued in connection therewith) or developed
after the IPO and the amount of any securities offering proceeds and other
proceeds of Debt received after the IPO (to the extent such proceeds were not
used to acquire real estate assets or mortgages receivable or used to reduce
Debt), adjusted for the proceeds of any real estate assets disposed of by the
Company. This definition of "Adjusted Total Assets" values the assets owned by
the Company at the time of the IPO at the market capitalization of the Company
at that time, which the Company believes to be a more appropriate measure of
the value of those assets than undepreciated book value, which reflects their
pre-IPO cost before accumulated depreciation.
"Annual Service Charge" as of any date means the amount of any interest
expensed during the four consecutive fiscal quarters most recently ended prior
to such date.
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"Consolidated Income Available for Debt Service" for any period means
Consolidated Net Income (as defined below) of the Company and its Subsidiaries
plus amounts which have been deducted for (a) interest on Debt of the Company
and its Subsidiaries, (b) provision for taxes of the Company and its
Subsidiaries based on income, (c) amortization of debt discount, (d)
provisions for gains and losses on properties, (e) depreciation and
amortization, (f) the effect of any noncash charge resulting from a change in
accounting principles in determining Consolidated Net Income for such period
and (g) amortization of deferred charges.
"Consolidated Net Income" for any period means the amount of net income (or
loss) of the Company and its Subsidiaries for such period determined on a
consolidated basis in accordance with generally accepted accounting
principles.
"Debt" of the Company or any Subsidiary means any indebtedness of the
Company or any Subsidiary, whether or not contingent, in respect of (i)
borrowed money evidenced by bonds, notes, debentures or similar instruments,
(ii) indebtedness secured by any mortgage, pledge, lien, charge, encumbrance
or any security interest existing on property owned by the Company or any
Subsidiary, (iii) reimbursement obligations in connection with any letters of
credit actually issued or amounts representing the balance deferred and unpaid
of the purchase price of any property except any such balance that constitutes
an accrued expense or trade payable or (iv) any lease of property by the
Company or any Subsidiary as lessee which is reflected on the Company's
consolidated balance sheet as a capitalized lease in accordance with generally
accepted accounting principles; in the case of items of indebtedness incurred
under (i) through (iii) above to the extent that any such items (other than
letters of credit) would appear as a liability on the Company's consolidated
balance sheet in accordance with generally accepted accounting principles, and
also includes, to the extent not otherwise included, any obligation of the
Company or any Subsidiary to be liable for, or to pay, as obligor, guarantor
or otherwise (other than for purposes of collection in the ordinary course of
business), indebtedness of another person (other than the Company or any
Subsidiary).
"Subsidiary" means a corporation, partnership or limited liability company,
a majority of the outstanding voting stock, partnership interests or
membership interests, as the case may be, of which is owned or controlled,
directly or indirectly, by the Company or by one or more Subsidiaries of the
Company. For the purposes of this definition, "voting stock" means stock
having the voting power for the election of directors, general partners,
managers or trustees, as the case may be, whether at all times or only so long
as no senior class of stock has such voting power by reason of any
contingency. The Management Corporation would not be considered a Subsidiary
of the Company.
"Unencumbered Total Asset Value" as of any date means the sum of (i) the
portion of Adjusted Total Assets allocable to the Company's real estate assets
and (ii) the value of all other assets of the Company and its Subsidiaries on
a consolidated basis determined in accordance with generally accepted
accounting principles (but excluding intangibles and accounts receivable), in
each case which are unencumbered by any mortgage, lien, charge, pledge or
security interest. For purposes of this definition, the portion of Adjusted
Total Assets allocable to each of the 36 properties owned by the Company at
the time of the IPO shall be determined by reference to each such property's
contribution to net operating income of the Company at the time of the IPO,
and the portion allocable to each property acquired or developed after the IPO
shall be equal to the purchase price or cost of such property.
ADDITIONAL COVENANTS AND/OR MODIFICATIONS TO THE COVENANTS DESCRIBED ABOVE
Any additional covenants of the Company and/or modifications to the
covenants described above with respect to any Debt Securities or series
thereof, will be described in the Prospectus Supplement relating thereto.
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that the following events are "Events of Default"
with respect to any series of Debt Securities issued thereunder: (i) default
for 30 days in the payment of any installment of interest on any Debt Security
of such series; (ii) default in the payment of principal of (or premium, if
any, on) any Debt Security of
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such series at its maturity; (iii) default in making any sinking fund payment
as required for any Debt Security of such series; (iv) default in the
performance or breach of any other covenant or warranty of the Company
contained in the Indenture (other than a covenant added to the Indenture
solely for the benefit of a series of Debt Securities issued thereunder other
than such series), continued for 60 days after written notice as provided in
the Indenture; (v) default in the payment of an aggregate principal amount
exceeding $10,000,000 of any indebtedness of the Company or any mortgage,
indenture or other instrument under which such indebtedness is issued or by
which such indebtedness is secured, such default having occurred after the
expiration of any applicable grace period and having resulted in the
acceleration of the maturity of such indebtedness, but only if such
indebtedness is not discharged or such acceleration is not rescinded or
annulled; (vi) certain events of bankruptcy, insolvency or reorganization, or
court appointment of a receiver, liquidator or trustee of the Company or any
Significant Subsidiary or either of its property; and (vii) any other Event of
Default provided with respect to a particular series of Debt Securities
(Section 501). "Significant Subsidiary" means any Subsidiary that is a
"significant subsidiary" (within the meaning of Regulation S-X promulgated
under the Securities Act) of the Company.
If an Event of Default under the Indenture with respect to Debt Securities
of any series at the time outstanding occurs and is continuing, then in every
such case the Trustee or the Holders of not less than 25% of the principal
amount of the Outstanding Debt Securities of that series will have the right
to declare the principal amount (or, if the Debt Securities of that series are
Original Issue Discount Securities or indexed securities, such portion of the
principal amount as may be specified in the terms thereof) of all the Debt
Securities of that series to be due and payable immediately by written notice
thereof to the Company (and to the applicable Trustee if given by the
Holders). However, at any time after such a declaration of acceleration with
respect to Debt Securities of such series (or of all Debt Securities then
Outstanding under the Indenture, as the case may be) has been made, but before
a judgment or decree for payment of the money due has been obtained by the
Trustee, the Holders of not less than a majority in principal amount of
Outstanding Debt Securities of such series (or of all Debt Securities then
Outstanding under the Indenture, as the case may be) may rescind and annul
such declaration and its consequences if (a) the Company shall have deposited
with the Trustee all required payments of the principal of (and premium, if
any) and interest on the Debt Securities of such series (or of all Debt
Securities then Outstanding under the Indenture, as the case may be), plus
certain fees, expenses, disbursements and advances of the Trustee and (b) all
events of default, other than the non-payment of accelerated principal (or
specified portion thereof), with respect to Debt Securities of such series (or
of all Debt Securities then Outstanding under the Indenture, as the case may
be) have been cured or waived as provided in the Indenture (Section 502). The
Indenture also provides that the Holders of not less than a majority in
principal amount of the Outstanding Debt Securities of any series (or of all
Debt Securities then Outstanding under the Indenture, as the case may be) may
waive any past default with respect to such series and its consequences,
except a default (x) in the payment of the principal of (or premium, if any)
or interest on any Debt Security of such series or (y) in respect of a
covenant or provision contained in the Indenture that cannot be modified or
amended without the consent of the Holder of each Outstanding Debt Security
affected thereby (Section 513).
The Trustee will be required to give notice to the Holders of Debt
Securities within 90 days of a default under the Indenture unless such default
shall have been cured or waived; provided, however, that the Trustee may
withhold notice to the Holders of any series of Debt Securities of any default
with respect to such series (except a default in the payment of the principal
of (or premium, if any)) or interest on any Debt Security of such series or in
the payment of any sinking fund installment in respect of any Debt Security of
such series) if specified responsible officers of the Trustee consider such
withholding to be in the interest of such Holders (Section 601).
The Indenture provides that no Holders of Debt Securities of any series may
institute any proceedings, judicial or otherwise, with respect to the
Indenture or for any remedy thereunder, except in the cases of failure of the
Trustee, for 60 days, to act after it has received a written request to
institute proceedings in respect of an Event of Default from the Holders of
not less than 25% in principal amount of the Outstanding Debt Securities of
such series, as well as an offer of indemnity reasonably satisfactory to it
(Section 507). This provision will
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not prevent, however, any Holder of Debt Securities from instituting suit for
the enforcement of payment of the principal of (and premium, if any) and
interest on such Debt Securities at the respective due dates thereof (Section
508).
Subject to provisions in the Indenture relating to its duties in case of
default, the Trustee is under no obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any Holders of any
series of Debt Securities then Outstanding under the Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
(Section 602). The Holders of not less than a majority in principal amount of
the Outstanding Debt Securities of any series (or of all Debt Securities then
Outstanding under the Indenture, as the case may be) shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or of exercising any trust or power conferred upon
such Trustee. However, the Trustee may refuse to follow any direction which is
in conflict with any law or the Indenture, which may involve the Trustee in
personal liability or which may be unduly prejudicial to the Holders of Debt
Securities of such series not joining therein (Section 512).
Within 120 days after the close of each fiscal year, the Company will be
required to deliver to the Trustee a certificate, signed by one of several
specified officers of CPHC, stating whether or not such officer has knowledge
of any default under the Indenture and, if so, specifying each such default
and the nature and status thereof (Section 1011).
MODIFICATION OF THE INDENTURES
Modifications and amendments of the Indenture may be made only with the
consent of the Holders of not less than a majority in principal amount of all
Outstanding Debt Securities issued under the Indenture which are affected by
such modification or amendment; provided, however, that no such modification
or amendment may, without the consent of the Holder of each such Debt Security
affected thereby, (a) change the stated maturity of the principal of, or any
installment of interest (or premium, if any) on, any such Debt Security; (b)
reduce the principal amount of, or the rate or amount of interest on, or any
premium payable on redemption of, any such Debt Security, or reduce the amount
of principal of an Original Issue Discount Security that would be due and
payable upon declaration of acceleration of the maturity thereof or would be
provable in bankruptcy, or adversely affect any right of repayment of the
Holder of any such Debt Security; (c) change the place of payment, or the coin
or currency, for payment of principal or premium, if any, or interest on any
such Debt Security; (d) impair the right to institute suit for the enforcement
of any payment on or with respect to any such Debt Security; (e) reduce the
above-stated percentage of Outstanding Debt Securities of any series necessary
to modify or amend the Indenture, to waive compliance with certain provisions
thereof or certain defaults and consequences thereunder or to reduce the
quorum or voting requirements set forth in the Indenture; or (f) modify any of
the foregoing provisions or any of the provisions relating to the waiver of
certain past defaults or certain covenants, except to increase the required
percentage to effect such action or to provide that certain other provisions
may not be modified or waived without the consent of the Holder of such Debt
Security (Section 902).
The Holders of not less than a majority in principal amount of Outstanding
Debt Securities of each series affected thereby have the right to waive
compliance by the Company with certain covenants in the Indenture (Section
1013).
Modifications and amendments of the Indenture may be permitted to be made by
the Company and the Trustee without the consent of any Holder of Debt
Securities for any of the following purposes: (i) to evidence the succession
of another person to the Company as obligor under the Indenture; (ii) to add
to the covenants of the Company for the benefit of the Holders of all or any
series of Debt Securities or to surrender any right or power conferred upon
the Company in the Indenture; (iii) to add Events of Default for the benefit
of the Holders of all or any series of Debt Securities; (iv) to add or change
any provisions of the Indenture to facilitate the issuance of, or to
liberalize certain terms of, Debt Securities in bearer form, or to permit or
facilitate the issuance of Debt Securities in uncertificated form, provided
that such action shall not adversely affect the interests of the Holders of
the Debt Securities of any series in any material respect; (v) to change or
eliminate any provisions of
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the Indenture, provided that any such change or elimination shall become
effective only when there are no Debt Securities Outstanding of any series
created prior thereto which are entitled to the benefit of such provision;
(vi) to secure the Debt Securities; (vii) to establish the form or terms of
Debt Securities of any series; (viii) to provide for the acceptance of
appointment by a successor Trustee or facilitate the administration of the
trusts under the Indenture by more than one Trustee; (ix) to cure any
ambiguity, defect or inconsistency in the Indenture, provided that such action
shall not adversely affect the interests of Holders of Debt Securities of any
series issued under the Indenture in any material respect; or (x) to
supplement any of the provisions of the Indenture to the extent necessary to
permit or facilitate defeasance and discharge of any series of such Debt
Securities, provided that such action shall not adversely affect the interests
of the Holders of the Debt Securities of any series in any material respect
(Section 901).
The Indenture provides that in determining whether the Holders of the
requisite principal amount of Outstanding Debt Securities of a series have
given any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of Holders of Debt
Securities, (i) the principal amount of an Original Issue Discount Security
that shall be deemed to be Outstanding shall be the amount of the principal
thereof that would be due and payable as of the date of such determination
upon declaration of acceleration of the maturity thereof, (ii) the principal
amount of any Debt Security denominated in a foreign currency that shall be
deemed Outstanding shall be the U.S. dollar equivalent, determined on the
issue date for such Debt Security, of the principal amount (or, in the case of
Original Issue Discount Security, the U.S. dollar equivalent on the issue date
of such Debt Security of the amount determined as provided in (i) above),
(iii) the principal amount of an indexed security that shall be deemed
Outstanding shall be the principal face amount of such indexed security at
original issuance, unless otherwise provided with respect to such indexed
security pursuant to the Indenture, and (iv) Debt Securities owned by the
Company or any other obligor upon the Debt Securities or any affiliate of the
Company or of such other obligor shall be disregarded.
The Indenture contains provisions for convening meetings of the Holders of
Debt Securities of a series (Section 1501). A meeting will be permitted to be
called at any time by the Trustee, and also, upon request, by the Company or
the Holders of at least 10% in principal amount of the Outstanding Debt
Securities of such series, in any such case upon notice given as provided in
the Indenture. Except for any consent that must be given by the Holder of each
Debt Security affected by certain modifications and amendments of the
Indenture, any resolution presented at a meeting or adjourned meeting duly
reconvened at which a quorum is present may be adopted by the affirmative vote
of the Holders of a majority in principal amount of the Outstanding Debt
Securities of that series; provided, however, that, except as referred to
above, any resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action that may be made, given or
taken by the Holders of a specified percentage, which is less than a majority,
in principal amount of the Outstanding Debt Securities of a series may be
adopted at a meeting or adjourned meeting or adjourned meeting duly reconvened
at which a quorum is present by the affirmative vote of the Holders of such
specified percentage in principal amount of the Outstanding Debt Securities of
that series. Any resolution passed or decision taken at any meeting of Holders
of Debt Securities of any series duly held in accordance with the Indenture
will be binding on all Holders of Debt Securities of that series. The quorum
at any meeting called to adopt a resolution, and at any reconvened meeting,
will be persons holding or representing a majority in principal amount of the
Outstanding Debt Securities of a series; provided, however, that if any action
is to be taken at such meeting with respect to a consent or waiver which may
be given by the Holders of not less than a specified percentage in principal
amount of the Outstanding Debt Securities of a series, the persons holding or
representing such specified percentage in principal amount of the Outstanding
Debt Securities of such series will constitute a quorum.
Notwithstanding the foregoing provisions, the Indenture provides that if any
action is to be taken at a meeting of Holders of Debt Securities of any series
with respect to any request, demand, authorization, direction, notice,
consent, waiver and other action that the Indenture expressly provides may be
made, given or taken by the Holders of a specified percentage in principal
amount of all Outstanding Debt Securities affected thereby, or the Holders of
such series and one or more additional series: (i) there shall be no minimum
quorum requirement
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for such meeting, and (ii) the principal amount of the Outstanding Debt
Securities of such series that vote in favor of such request, demand,
authorization, direction, notice, consent, waiver or other action shall be
taken into account in determining whether such request, demand, authorization,
direction, notice, consent, waiver or other action has been made, given or
taken under the Indenture.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company may be permitted under the Indenture to discharge certain
obligations to Holders of any series of Debt Securities issued thereunder that
have not already been delivered to the Trustee for cancellation and that
either have become due and payable or will become due and payable within one
year (or scheduled for redemption within one year) by irrevocably depositing
with the Trustee, in trust, funds in such currency or currencies, currency
unit or units or composite currency or currencies in which such Debt
Securities are payable in an amount sufficient to pay the entire indebtedness
on such Debt Securities in respect of principal (and premium, if any) and
interest to the date of such deposit (if such Debt Securities have become due
and payable) or to the stated maturity or redemption date, as the case may be.
The Indenture provides that, if the provisions of Article Fourteen are made
applicable to the Debt Securities of or within any series pursuant to Section
301 of the Indenture, the Company may elect either (a) to defease and be
discharged from any and all obligations with respect to such Debt Securities
(except for the obligation to pay additional amounts, if any, upon the
occurrence of certain events of tax, assessment or governmental charge with
respect to payments on such Debt Securities, and the obligations to register
the transfer or exchange of such Debt Securities, to replace temporary or
mutilated, destroyed, lost or stolen Debt Securities, to maintain an office or
agency in respect of such Debt Securities and to hold moneys for payment in
trust) ("defeasance") (Section 1402) or (b) to be released from its
obligations with respect to such Debt Securities under certain specified
sections of Article Ten of the Indenture as specified in the applicable
Prospectus Supplement and any omission to comply with such obligations shall
not constitute an Event of Default with respect to such Debt Securities
("covenant defeasance") (Section 1403), in either case upon the irrevocable
deposit by the Company with the Trustee, in trust, of an amount, in such
currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable at stated maturity, or
Government Obligations (as defined below), or both, applicable to such Debt
Securities which through the scheduled payment of principal and interest in
accordance with their terms will provide money in an amount sufficient without
reinvestment to pay the principal of (and premium, if any) and interest on
such Debt Securities, and any mandatory sinking fund or analogous payments
thereon, on the scheduled due dates therefor.
Such a trust may only be established if, among other things, the Company has
delivered to the Trustee an opinion of counsel (as specified in the Indenture)
to the effect that the Holders of such Debt Securities will not recognize
income, gain or loss for federal income tax purposes as a result of such
defeasance or covenant defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such defeasance or covenant defeasance had not occurred, and such
opinion of counsel, in the case of defeasance, will be required to refer to
and be based upon a ruling of the Internal Revenue Service or a change in
applicable U.S. federal income tax law occurring after the date of the
Indenture (Section 1404).
"Government Obligations" means securities which are (i) direct obligations
of the United States of America or the government which issued the foreign
currency in which the Debt Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged or (ii) obligations
of a person controlled or supervised by and acting as an agency or
instrumentality of the United States of America or such government which
issued the foreign currency in which the Debt Securities of such series are
payable, the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation of the United States of America or such
government, which, in either case, are not callable or redeemable at the
option of the issuer thereof, and shall also include a depository receipt
issued by a bank or trust company as custodian with respect to any such
Government Obligation or a specific payment of interest on or principal of any
such Government Obligation held by such custodian for the account of the
Holder of a depository receipt, provided that (except as required by
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law) such custodian is not authorized to make any deduction from the amount
payable to the Holder of such depository receipt from any amount received by
the custodian in respect of the Government Obligation or the specific payment
of interest on or principal of the Government Obligation evidenced by such
depository receipt (Section 101).
Unless otherwise provided in the applicable Prospectus Supplement, if, after
the Company has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any
series, (a) the Holder of a Debt Security of such series is entitled to, and
does, elect pursuant to the Indenture or the terms of such Debt Security to
receive payment in a currency, currency unit or composite currency other than
that in which such deposit has been made in respect of such Debt Security, or
(b) a Conversion Event (as defined below) occurs in respect of the currency,
currency unit or composite currency in which such deposit has been made, the
indebtedness represented by such Debt Security will be deemed to have been,
and will be, fully discharged and satisfied through the payment of the
principal of (and premium, if any) and interest on such Debt Security as they
become due out of the proceeds yielded by converting the amount so deposited
in respect of such Debt Security into the currency, currency unit or composite
currency in which such Debt Security becomes payable as a result of such
election or such cessation of usage based on the applicable market exchange
rate. "Conversion Event" means the cessation of use of (i) a currency,
currency unit or composite currency both by the government of the country
which issued such currency and for the settlement of transactions by a central
bank or other public institutions of or within the international banking
community, (ii) the ECU both within the European Monetary System and for the
settlement of transactions by public institutions of or within the European
Communities or (iii) any currency unit or composite currency other than the
ECU for the purposes for which it was established. Unless otherwise provided
in the applicable Prospectus Supplement, all payments of principal of (and
premium, if any) and interest on any Debt Security that is payable in a
foreign currency that ceases to be used by its government of issuance shall be
made in U.S. dollars.
In the event the Company effects covenant defeasance with respect to any
Debt Securities and such Debt Securities are declared due and payable because
of the occurrence of any Event of Default other than the Event of Default
described in clause (iv) under "Events of Default, Notice and Waiver" with
respect to certain specified sections of Article Ten of the Indenture (which
sections would no longer be applicable to such Debt Securities as a result of
such covenant defeasance) or described in clause (vii) under "Events of
Default, Notice and Waiver" with respect to any other covenant as to which
there has been covenant defeasance, the amount in such currency, currency unit
or composite currency in which such Debt Securities are payable, and
Government Obligations on deposit with the Trustee, will be sufficient to pay
amounts due on such Debt Securities at the time of their stated maturity but
may not be sufficient to pay amounts due on such Debt Securities at the time
of the acceleration resulting from such Default. However, the Company would
remain liable to make payment of such amounts due at the time of acceleration.
The applicable Prospectus Supplement may further describe the provisions, if
any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
REDEMPTION OF SECURITIES
The Indenture provides that the Debt Securities may be redeemed at any time
at the option of the Company, in whole or in part, at the Redemption Price,
except as may otherwise be provided in connection with any Debt Securities or
series thereof.
From and after notice has been given as provided in the Indenture, if funds
for the redemption of any Debt Securities called for redemption shall have
been made available on such redemption date, such Debt Securities will cease
to bear interest on the date fixed for such redemption specified in such
notice, and the only right of the Holders of the Debt Securities will be to
receive payment of the Redemption Price.
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Notice of any optional redemption of any Debt Securities will be given to
Holders at their addresses, as shown in the Security Register, not more than
60 nor less than 30 days prior to the date fixed for redemption. The notice of
redemption will specify, among other items, the Redemption Price and the
principal amount of the Debt Securities held by such Holder to be redeemed.
If the Company elects to redeem Debt Securities, it will notify the Trustee
at least 45 days prior to the redemption date (or such shorter period as is
satisfactory to the Trustee) of the aggregate principal amount of Debt
Securities to be redeemed and the redemption date. If less than all the Debt
Securities are to be redeemed, the Trustee shall select the Debt Securities to
be redeemed pro rata, by lot or in such manner as it shall deem fair and
appropriate.
NO CONVERSION RIGHTS
The Debt Securities will not be convertible into or exchangeable for any
capital stock of Colonial or equity interest in the Company.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities (the "Global Securities") that will be
deposited with, or on behalf of, a depository identified in the applicable
Prospectus Supplement relating to such series. Global Securities may be issued
in either registered or bearer form and in either temporary or permanent form.
The specific terms of the depository arrangement with respect to a series of
Debt Securities will be described in the applicable Prospectus Supplement
relating to such series.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities to or through underwriters for
public offer and sale by them, and also may sell the Debt Securities offered
hereby to investors directly or through agents. Any such underwriter or agent
involved in the offer and sale of the Debt Securities will be named in the
applicable Prospectus Supplement.
Underwriters may offer and sell the Debt Securities at a fixed price or
prices, which may be changed, at prices related to the prevailing market
prices at the time of sale or at negotiated prices. The Company may also offer
and sell the Debt Securities in exchange for one or more of its then
outstanding issues of debt or convertible debt securities. The Company also
may, from time to time, authorize underwriters acting as the Company's agents
to offer and sell the Debt Securities upon terms and conditions set forth in
the applicable Prospectus Supplement. In connection with the sale of the Debt
Securities, underwriters may be deemed to have received compensation from the
Company in the form of underwriting discounts or commissions and may also
receive commissions from purchasers of the Debt Securities for whom they may
act as agent. Underwriters may sell the Debt Securities to or through dealers,
and such dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters and/or commissions from the
purchasers for whom they may act as agent.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of the Debt Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable Prospectus Supplement. Underwriters,
dealers and agents participating in the distribution of the Debt Securities
may be deemed to be underwriters, and any discounts and commissions received
by them and any profit realized by them on resale of the Debt Securities may
be deemed to be underwriting discounts and commissions under the Securities
Act. Underwriters, dealers and agents may be entitled, under agreements to be
entered into with the Company, to indemnification against and contribution
toward certain civil liabilities, including liabilities under the Securities
Act.
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<PAGE>
If so indicated in the applicable Prospectus Supplement, the Company will
authorize underwriters or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase Debt Securities from the
Company at the public offering price set forth in such Prospectus Supplement
pursuant to delayed delivery contracts ("Contracts") providing for payment and
delivery on the date or dates stated in such Prospectus Supplement. Each
Contract will be for an amount not less than, and the aggregate principal
amount of Debt Securities sold pursuant to Contracts shall be not less nor
more than, the respective amounts stated in the applicable Prospectus
Supplement. Institutions with whom Contracts, when authorized, may be made
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions, and other
institutions but will in all cases be subject to the approval of the Company.
Contracts will not be subject to any conditions except (i) the purchase by an
institution of the Debt Securities covered by its Contracts shall not at the
time of delivery be prohibited under the laws of any jurisdiction in the
United States to which such institution is subject, and (ii) if the Debt
Securities are being sold to underwriters, the Company shall have sold to such
underwriters the total principal amount of the Debt Securities less the
principal amount thereof covered by Contracts.
Certain of the underwriters and their affiliates may be customers of, engage
in transactions with and perform services for the Company and its Subsidiaries
in the ordinary course of business.
AVAILABLE INFORMATION
Upon effectiveness of its Registration Statement on the General Form for
Registration of Securities on Form 10, as amended ("Form 10"), the Company
will be subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith,
will file reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information filed by the Company with the Commission in accordance with the
Exchange Act can be inspected at the Public Reference Section maintained by
the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549
and the following regional offices of the Commission: 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511 and Seven World Trade Center, 13th
Floor, New York, New York 10048. Copies of such material can be obtained from
the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.
The Company has filed with the Commission a registration statement on Form
S-3 (the "Registration Statement"), of which this Prospectus is a part, under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Debt Securities offered hereby. This Prospectus does not contain all of
the information set forth in the Registration Statement, certain portions of
which have been omitted as permitted by the rules and regulations of the
Commission. Statements contained in this Prospectus as to the contents of any
contract or other documents are not necessarily complete, and in each
instance, reference is made to the copy of such contract or documents filed as
an exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference and the exhibits and schedules thereto. For
further information regarding the Company and the Debt Securities, reference
is hereby made to the Registration Statement and such exhibits and schedules
which may be obtained from the Commission at its principal office in
Washington, D.C. upon payment of the fees prescribed by the Commission. The
Commission maintains a "web site' that contains reports, proxy and information
statements and other information regarding issuers that file electronically
with the Commission. The address of such site is "http://www.sec.gov".
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
A Form 10, File No. 000-20707, has been filed by the Company under the
Exchange Act with the Commission and is incorporated herein by reference.
18
<PAGE>
All documents filed by the Company subsequent to the date of this Prospectus
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to
termination of the offering of all Debt Securities to which this Prospectus
relates shall be deemed to be incorporated by reference in this Prospectus and
shall be part hereof from the date of filing of such document.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained in
this Prospectus (in the case of a statement in a previously filed document
incorporated or deemed to be incorporated by reference herein), in any
accompanying Prospectus Supplement relating to a specific offering of Debt
Securities or in any other subsequently filed document that is also
incorporated or deemed to be incorporated by reference herein, modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus or any accompanying Prospectus Supplement. Subject to the
foregoing, all information appearing in this Prospectus and each accompanying
Prospectus Supplement is qualified in its entirety by the information
appearing in the documents incorporated by reference.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon their
written or oral request, a copy of the Form 10 and any or all other documents
incorporated herein by reference (other than exhibits to such documents,
unless such exhibits are specifically incorporated by reference in such
documents). Written requests for such copies should be addressed to Douglas B.
Nunnelley, Colonial Properties Holding Company, Inc.'s Senior Vice President
and Chief Financial Officer, at 2101 Sixth Avenue North, Suite 750,
Birmingham, Alabama 35203, telephone number(205) 250-8700.
LEGAL MATTERS
The legality of the Debt Securities offered hereby will be passed upon for
the Company by Hogan & Hartson L.L.P., Washington, D.C.
EXPERTS
The consolidated and combined financial statements and the related financial
statement schedules of the Company for the years ended December 31, 1995,
1994, and 1993; the combined historical summary of revenues and direct
operating expenses of Acquisition Properties--Crowne Chase Apartments and
Crowne Point Apartments for the year ended December 31, 1995; the historical
summary of revenues and direct operating expenses of Acquired Property--
Northdale Court for the year ended December 31, 1994; the combined historical
summaries of revenues and direct operating expenses of Acquired Properties--
Rime Properties for the nine months ended September 30, 1994 and the year
ended December 31, 1993; and the combined historical summary of revenues and
direct operating expenses of Acquired Properties--Epoch Properties for the
year ended December 31, 1993; all of which are included in the Company's Form
10 (incorporated herein by reference), have been audited by Coopers & Lybrand
L.L.P., independent accountants, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing.
The historical summary of revenues and direct operating expenses of
Acquisition Property--Briarcliffe Mall for the year ended December 31, 1995,
which is included in the Company's Form 10 (incorporated herein by reference),
has been audited by Margolin, Winer and Evens LLP, independent accountants,
and is included herein in reliance upon the authority of said firm as experts
in accounting and auditing.
19
<PAGE>
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS SUPPLE-
MENT AND THE PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDER-
WRITERS. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OF-
FER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE NOTES IN ANY JURISDIC-
TION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SO-
LICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPEC-
TUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IM-
PLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF.
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TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Supplement Summary............................................ S-3
The Company.............................................................. S-7
Recent Developments...................................................... S-9
Use of Proceeds.......................................................... S-11
Capitalization........................................................... S-12
Selected Financial and Operating Information............................. S-13
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... S-14
Properties............................................................... S-16
Description of the Notes................................................. S-26
Underwriting............................................................. S-32
Legal Matters............................................................ S-33
Experts.................................................................. S-33
Prospectus
The Company.............................................................. 2
Risk Factors............................................................. 2
Use of Proceeds.......................................................... 5
Ratios of Earnings to Fixed Charges...................................... 5
Description of Debt Securities........................................... 5
Plan of Description...................................................... 17
Available Information.................................................... 18
Incorporation of Certain Documents by Reference.......................... 18
Legal Matters............................................................ 19
Experts.................................................................. 19
</TABLE>
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UNTIL , 1996, ALL DEALERS EFFECTING TRANSACTIONS IN THE NOTES, WHETHER OR
NOT PARTICIPANT IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER THIS PROSPEC-
TUS SUPPLEMENT AND THE PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER THIS PROSPECTUS SUPPLEMENT AND THE PRO-
SPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS
OR SUBSCRIPTIONS.
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$125,000,000
[LOGO OF COLONIAL REALTY APPEARS HERE]
COLONIAL REALTY LIMITED PARTNERSHIP
$ ,000,000 % SENIOR NOTES DUE 2001
$ ,000,000 % SENIOR NOTES DUE 2006
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PROSPECTUS SUPPLEMENT
JULY , 1996
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LEHMAN BROTHERS
MERRILL LYNCH & CO.
DEAN WITTER REYNOLDS INC.
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