UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Quarterly Period Ended: June 30, Commission File Number: 0-20707
1998
COLONIAL REALTY LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Alabama 63-1098468
(State of organization) (IRS Employer
Identification Number)
2101 Sixth Avenue North 35203
Suite 750 (Zip Code)
Birmingham, Alabama
(Address of principal executive offices)
(205) 250-8700
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. YES X NO ___
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
INDEX TO FORM 10-Q
Page
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Condensed Balance Sheets as of
June 30, 1998 and December 31, 1997 3
Consolidated Condensed Statements of Income for the
Three Months and for the Six Months Ended June 30, 1998 4
and 1997
Consolidated Condensed Statements of Cash Flows
for the Six Months Ended June 30, 1998 and 1997 5
Notes to Consolidated Condensed Financial Statements 6
Report of Independent Accountants 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
PART II: OTHER INFORMATION
Item 2. Changes in Securities 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
EXHIBITS 16
Page 2
<PAGE>
<TABLE>
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
____________________
<CAPTION>
June 30, 1998
(Unaudited) December 31, 1997
---------- ----------
ASSETS
<S> <C> <C>
Land, buildings, and equipment, net ............ $1,483,364 $1,268,430
Undeveloped land and construction in progress .. 54,113 98,555
Cash and equivalents ........................... 2,568 4,534
Restricted cash ................................ 2,697 2,665
Accounts receivable, net ....................... 8,070 7,174
Prepaid expenses ............................... 2,940 3,038
Notes receivable ............................... 723 575
Deferred debt and lease costs, net ............. 6,711 7,031
Other assets ................................... 5,753 4,658
---------- ----------
$1,566,939 $1,396,660
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Notes and mortgages payable .................... $ 743,441 $ 702,044
Accounts payable ............................... 5,720 14,233
Accrued interest ............................... 6,812 6,526
Accrued expenses ............................... 10,439 2,700
Tenant deposits ................................ 4,031 3,715
Unearned rent .................................. 2,331 2,253
---------- ----------
Total liabilities ......................... 772,774 731,471
---------- ----------
Redeemable units, at redemption value .......... 311,073 299,492
---------- ----------
Partners' capital, excluding redeemable units .. 483,092 365,697
---------- ----------
$1,566,939 $1,396,660
========== ==========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
Page 3
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<TABLE>
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per unit data)
_____________________
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------- --------- --------- ---------
1998 1997 1998 1997
--------- --------- --------- ---------
Revenue:
<S> <C> <C> <C> <C>
Minimum rent ........................................ $ 48,822 $ 36,100 $ 96,005 $ 69,760
Percentage rent ..................................... 664 370 1,442 692
Tenant recoveries ................................... 6,958 3,785 14,239 7,205
Other ............................................... 3,139 2,568 5,957 4,336
--------- --------- --------- ---------
Total revenue ................................... 59,583 42,823 117,643 81,993
--------- --------- --------- ---------
Property operating expenses:
General operating expenses .......................... 4,396 2,949 8,706 5,617
Salaries and benefits ............................... 3,004 2,413 5,873 4,687
Repairs and maintenance ............................. 5,598 4,444 11,094 8,024
Taxes, licenses, and insurance ...................... 5,082 3,816 9,936 7,434
General and administrative ............................... 1,363 1,551 3,917 2,764
Depreciation ............................................. 10,794 7,385 20,955 14,054
Amortization ............................................. 343 371 680 725
--------- --------- --------- ---------
Total operating expenses ........................ 30,580 22,929 61,161 43,305
--------- --------- --------- ---------
Income from operations .......................... 29,003 19,894 56,482 38,688
--------- --------- --------- ---------
Other income (expense):
Interest expense .................................... (11,612) (9,374) (24,191) (17,862)
Income from unconsolidated subsidiaries ............. 28 170 37 360
Gains (losses) from sales of property ............... 65 -0- 33 (1)
Minority interest in consolidated operating property. -0- (58) -0- (114)
--------- --------- --------- ---------
Total other expense ............................. (11,519) (9,262) (24,121) (17,617)
--------- --------- --------- ---------
Income before extraordinary item ................ 17,484 10,632 32,361 21,071
Extraordinary loss from early extinguishment of debt ..... (5) (97) (400) (481)
--------- --------- --------- ---------
Net income ...................................... $ 17,479 $ 10,535 $ 31,961 $ 20,590
Distributions to preferred unitholders ................... (2,735) -0- (5,469) -0-
--------- --------- --------- ---------
Net income available to common unitholders .......... $ 14,744 $ 10,535 $ 26,492 $ 20,590
========= ========= ========= =========
Net income per unit - basic and diluted .................. $ 0.42 $ 0.38 $ 0.80 $ 0.75
========= ========= ========= =========
Weighted average units outstanding ....................... 35,021 27,724 33,240 27,420
========= ========= ========= =========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
Page 4
<PAGE>
<TABLE>
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
___________________
<CAPTION>
Six Months Ended
June 30,
---------
1998 1997
--------- ---------
Cash flows from operating activities:
<S> <C> <C>
Net income .................................................... $ 31,961 $ 20,590
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization .............................. 21,635 14,779
Income from unconsolidated subsidiaries .................... (37) (360)
Minority interest in income of property partnership ........ -0- 114
Other ...................................................... 690 787
Decrease (increase) in:
Restricted cash ............................................ (32) (143)
Accounts and notes receivable .............................. (1,396) 106
Prepaid expenses ........................................... 101 698
Other assets ............................................... (1,404) (468)
Increase (decrease) in:
Accounts payable ........................................... (8,513) (3,769)
Accrued interest ........................................... 286 1,063
Accrued expenses and other ................................. 6,779 2,589
--------- ---------
Net cash provided by operating activities .............. 50,070 35,986
--------- ---------
Cash flows from investing activities:
Acquisition of properties ...................................... (143,202) (83,412)
Development expenditures ....................................... (33,946) (52,466)
Tenant improvements ............................................ (1,420) (784)
Capital expenditures ........................................... (4,714) (4,609)
Proceeds from sales of property, net of selling costs .......... 908 -0-
Distributions from unconsolidated subsidiaries ................. 39 392
Capital contributions to unconsolidated subsidiaries ........... (21) (197)
--------- ---------
Net cash used in investing activities .................. (182,356) (141,076)
--------- ---------
Cash flows from financing activities:
Principal reductions of debt ................................... (11,869) (32,397)
Proceeds from additional borrowings ............................ -0- 50,000
Net change in revolving credit balances ........................ 47,524 72,943
Cash contributions ............................................. 137,185 44,450
Capital distributions .......................................... (42,088) (28,813)
Payment of mortgage financing cost ............................. (32) (1,021)
Other, net ..................................................... (400) (481)
--------- ---------
Net cash provided by financing activities .............. 130,320 104,681
--------- ---------
Increase (decrease) in cash and equivalents ............ (1,966) (409)
Cash and equivalents, beginning of period ........................... 4,534 3,340
--------- ---------
Cash and equivalents, end of period ................................. $ 2,568 $ 2,931
========= =========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
Page 5
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COLONIAL REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
June 30, 1998
(Unaudited)
Note 1 -- Basis of Presentation
Colonial Realty Limited Partnership ("CRLP") is the operating partnership
of Colonial Properties Trust (the "Company"), an Alabama real estate investment
trust whose shares are traded on the New York Stock Exchange. The accompanying
unaudited consolidated condensed financial statements of CRLP have been prepared
by management in accordance with generally accepted accounting principles for
interim financial reporting and in conjunction with the rules and regulations of
the Securities and Exchange Commission. In the opinion of management, all
adjustments considered necessary for a fair presentation have been included.
These financial statements should be read in conjunction with the information
included in CRLP's Annual Report as filed with the Securities and Exchange
Commission on Form 10-K for the year ended December 31, 1997, and with the
information filed with the Securities and Exchange Commission on Form 10-Q for
the quarter ended March 31, 1998. The December 31, 1997 balance sheet data
presented herein was derived from audited financial statements but does not
include all disclosures required by generally accepted accounting principles.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information (SFAS 131), which is effective for years
beginning after December 15, 1997. SFAS 131 establishes standards for the way
that public enterprises report information about operating segments in annual
financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. SFAS 131 is effective for financial
statements for fiscal years beginning after December 15, 1997, and therefore
CRLP will adopt the new requirements retroactively in 1998. Management is
currently considering the disclosure impact of the adoption of SFAS 131.
Note 2 -- Acquisitions
Ashley Plantation--On May 1, 1998, CRLP acquired Ashley Plantation, a
200-unit apartment complex developed in 1997 on approximately 21 acres of land
in Bluffton, South Carolina. The average unit size is 1,026 square feet, and the
average unit market rent is $768 per month. The purchase price of $13.7 million
was financed through an advance on CRLP's unsecured line of credit.
Orlando Fashion Square--On May 29, 1998, CRLP acquired Orlando Fashion
Square, a 1.1 million square foot regional mall (including 361,000 square feet
of tenant-owned space) in Orlando, Florida, for a total purchase price of $104
million. The mall anchors include Burdine's, Sears, Gayfers, JC Penney and
General Cinemas. The entire purchase price was funded through an advance on
CRLP's unsecured line of credit.
Note 3 -- Increase in Revolving Credit Agreement
On July 10, 1998, CRLP increased the borrowing capacity under its
unsecured line of credit from $200 million to $250 million. The credit facility,
which is used by CRLP primarily to finance additional property investments,
bears interest at a rate ranging between 80 and 135 basis points above LIBOR.
The credit facility is renewable in July 2000 with approval of all parties
involved and provides for a two-year amortization in the event of non-renewal.
Page 6
<PAGE>
Note 4 --Cash Contributions
On April 27, 1998, the Company closed an underwritten public offering of
3,046,400 shares of the Company's common shares at $30.125 per share. In
connection with this offering, CRLP issued a like amount of common units to the
Company (through Colonial Properties Holding Company, Inc.) in exchange for the
Company's proceeds from this offering. The net proceeds to CRLP were
approximately $86.8 million. CRLP used the net proceeds of the offering to repay
a portion of the outstanding balance on its unsecured line of credit.
Note 5 -- Net Income Per Unit
The following table sets forth the computation of basic and diluted
earnings per unit:
(Amounts in thousands,
except per unit data)
-----------------------------------------
Three Three Six Six
Months Months
Ended Ended Months Months
June June Ended Ended
30, 30, June June
30, 30,
1998 1997 1998 1997
-------- -------- -------- --------
Numerator:
Numerator for basic and
diluted net income per
unit - net income $ 14,744 $ 10,535 $ 26,492 $ 20,590
available to common
unitholders
======== ======== ======== ========
Denominator:
Denominator for basic
net income per unit - 35,021 27,724 33,240 27,420
weighted average common
units
Effect of dilutive
securities:
Trustee and employee 53 46 53 46
stock options
-------- ------- -------- --------
Denominator for diluted
net income per unit -
adjusted weighted 35,074 27,770 33,293 27,466
average common units
======== ======== ======== ========
Basic and diluted net $ .42 $ .38 $ .80 $ .75
income per unit
======== ======== ======== ========
Options to purchase 15,000 common shares at a weighted average exercise price of
$30.69 per share were outstanding during 1998 but were not included in the
computation of diluted net income per unit because the options' exercise price
was greater than the average market price of the common shares and, therefore,
the effect would be antidilutive.
Page 7
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Note 6 -- Pro Forma Information (Unaudited)
The following unaudited pro forma operating results for CRLP have been
presented as if the 1997 and 1998 equity and debt offerings and the 1997 and
1998 property acquisitions and dispositions had occurred on January 1, 1997.
Unaudited pro forma financial information is presented for informational
purposes only and may not be indicative of what the actual results of operations
of CRLP would have been had the events occurred as of January 1, 1997, nor does
it purport to represent the results of operations for future periods.
(Amounts in
thousands,
except per unit
data)
---------------------
Six Months Ended
June 30,
1998 1997
-------- ---------
Revenues $ 130,914 $ 113,998
======== =========
Income before preferred $ 34,878 $ 35,528
distributions
======== =========
Net income available to common $ 29,409 $ 30,059
unitholders
======== =========
Net income per unit - basic and $ .81 $ .82
diluted
======== =========
The pro forma information includes the operations of the properties acquired and
disposed in 1997, as discussed in CRLP's 1997 Form 10-K, the properties acquired
in 1998 through June 30, as discussed in CRLP's Form 10-Q for the quarter ended
March 31, 1998, and Note 2 above, and the properties acquired subsequent to June
30, 1998, as discussed in Note 7 below.
Note 7 -- Subsequent Events
Acquisitions
River Hills I--On July 1, 1998, CRLP acquired River Hills I, a 248-unit
phase of the River Hills apartment complex on approximately 30 acres of land in
Tampa, Florida. The multifamily community was developed in 1985 and was 90%
leased at the time of acquisition. The purchase price of $8.5 million was funded
through an advance on CRLP's unsecured line of credit. The average unit size is
907 square feet with average unit market rent of $549 per month.
Haverhill Apartments--On July 1, 1998, CRLP acquired a 79.8% interest in
Haverhill Apartments, a 322-unit apartment complex on approximately 19 acres of
land in San Antonio, Texas. The multifamily community was developed in 1998 and
was 90% leased at the time of acquisition. The purchase price of $17.2 million
was funded through an advance on CRLP's unsecured line of credit. The average
unit size is 1,019 square feet with average unit market rent of $857 per month.
The remaining 20.2% ownership in this property will be reflected as "minority
interest in consolidated operating property" in CRLP's balance sheet and
statement of income, and will be included in "minority interest" on CRLP's
statement of cash flows.
Page 8
<PAGE>
Mansell Overlook 200 and Shoppes at Mansell--On July 1, 1998, CRLP
completed the final phase of its merger with certain affiliates of Johnson
Development Company, LLC. The final phase included Mansell Overlook 200, a
six-story office building containing 163,000 square feet of space, and the
Shoppes at Mansell, a 21,000 square foot community shopping center.
Mansell Overlook 200 was developed in 1997 and was 95% occupied at the
time of the merger. This part of the merger, valued at $27.7 million, was funded
through the issuance of 396,365 limited partnership units valued at $11.7
million, and an advance on CRLP's unsecured line of credit.
The Shoppes at Mansell was also developed in 1997 and was 95% occupied at
the time of the merger. The merger of Shoppes at Mansell, valued at $3.7
million, was funded through the issuance of 76,809 limited partnership units
valued at $2.3 million, and an advance on CRLP's unsecured line of credit.
Shades Brook Building--On July 13, 1998, CRLP acquired the Shades Brook
Building, a three-story office building containing 35,000 square feet of space
in Birmingham, Alabama. Shades Brook was acquired for a total purchase price of
$3.1 million, which was financed through the issuance of 28,492 limited
partnership units valued at $871,000, and an advance on CRLP's unsecured line of
credit. Shades Brook was built in 1979 and was 93% occupied at the time of
acquisition.
Concourse Center--On July 23, 1998, CRLP acquired Concourse Center, an
office park comprised of four multi-tenant buildings in Tampa, Florida totaling
290,000 square feet of leasable area. The purchase price of $30.1 million was
financed through an advance on CRLP's unsecured line of credit. Concourse Center
was built between 1981 and 1985 and was 99% occupied at the time of acquisition.
In The Pines Apartments--On July 30, 1998, CRLP acquired In The Pines, a
256-unit multifamily apartment community on approximately 22 acres of land in
Augusta, Georgia. The community was developed in 1970 and 1988, and was 98%
leased at the time of acquisition. The purchase price of $8.8 million was funded
through an advance on CRLP's unsecured line of credit. The average unit size is
993 square feet with average unit market rent of $671 per month.
Debt Offering
On July 14, 1998, CRLP completed a $175 million public offering of unsecured
senior notes. The securities, which mature in July 2007, bear a coupon rate of
7.0%, and were priced to yield an effective rate of 7.09% over the nine-year
term. CRLP used the net proceeds of the offering to repay a portion of the
outstanding balance on its unsecured line of credit.
Quarterly Distributions
On July 23, 1998, a cash distribution was declared to partners of CRLP in the
amount of $0.55 per unit, totaling $19.8 million. The distribution was declared
to partners of record as of August 3, 1998, and was paid on August 10, 1998.
Page 9
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Colonial Properties Holding Company, Inc.:
We have reviewed the accompanying consolidated condensed balance sheet of
Colonial Realty Limited Partnership (the "Partnership") as of June 30, 1998, and
the related consolidated condensed statements of income for the three-month and
six-month periods ended June 30, 1998 and 1997, and the consolidated condensed
statements of cash flows for the six-month periods ended June 30, 1998 and 1997.
These financial statements are the responsibility of the Partnership's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying condensed consolidated financial statements
for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1997, and the
related consolidated statements of operations, partners' capital, and cash flows
for the year then ended (not presented herein); and in our report dated January
19, 1998, except for Note 13, as to which the date is February 17, 1998, we
expressed an unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying consolidated
condensed balance sheet as of December 31, 1997, is fairly stated in all
material respects in relation to the consolidated balance sheet from which it
has been derived.
/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Birmingham, Alabama
July 17, 1998
Page 10
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Colonial Realty Limited Partnership ("CRLP"), a Delaware limited
partnership, is the operating partnership of Colonial Properties Trust, an
Alabama real estate investment trust (the "Company") whose shares are listed on
the New York Stock Exchange. The Company is engaged in the ownership,
development, management, and leasing of multifamily communities, retail malls
and shopping centers, and office buildings. The Company is organized as a real
estate investment trust (REIT) and owns and operates properties in eight states
in the Sunbelt region of the United States. As of June 30, 1998, CRLP's real
estate portfolio consisted of 44 multifamily communities, 38 retail properties,
and 15 office properties.
CRLP manages its business with three separate and distinct operating
divisions: Multifamily, Retail, and Office. Each division has an Executive Vice
President that oversees growth and operations and has a separate management team
that is responsible for acquiring, developing, and leasing properties within
each division. This structure allows CRLP to utilize specialized management
personnel for each operating division. Although these divisions operate
independently from one another, constant communication among the Executive Vice
Presidents provides CRLP with synergy allowing it to take advantage of a variety
of investment opportunities.
The following discussion should be read in conjunction with management's
discussion and analysis of financial condition and results of operations and all
of the other information appearing in CRLP's 1997 Financial Statements as filed
with the Securities and Exchange Commission on Form 10-K and with the financial
statements included therein and the notes thereto.
Any statement contained in this report which is not a historical fact, or
which might be otherwise considered an opinion or projection concerning CRLP or
its business, whether express or implied, is meant as, and should be considered,
a forward-looking statement as that term is defined in the Private Securities
Litigation Reform Act of 1996. Forward-looking statements are based upon
assumptions and opinions concerning a variety of known and unknown risks,
including but not limited to changes in market conditions, the supply and demand
for leasable real estate, interest rates, increased competition, changes in
governmental regulations, and national and local economic conditions generally,
as well as other risks more completely described in CRLP's prospectuses and
annual reports filed with the Securities and Exchange Commission. If any of
these assumptions or opinions prove incorrect, any forward-looking statements
made on the basis of such assumptions or opinions may also prove materially
incorrect in one or more respects.
Results of Operations -- Three Months Ended June 30, 1998 and 1997 Revenue --
Total revenue increased by $16.8 million, or 39.1%, for the
second quarter of 1998 when compared to the second quarter of 1997. The majority
of this increase, $15.4 million, represents revenues generated by properties
acquired or developed during 1998 and the second half of 1997, net of revenues
from properties disposed of in 1997. The remaining increase primarily relates to
increases in rental rates at existing properties.
Operating Expenses -- Total operating expenses increased by $7.7 million,
or 33.4%, for the second quarter of 1998 when compared to the second quarter of
1997. The majority of this increase, $7.2 million, relates to additional
operating expenses associated with properties that were acquired or developed
during 1998 and the second half of 1997, net of operating expenses associated
with properties disposed of in 1997. The remaining increase primarily relates to
increases in operating expenses at existing properties.
Page 11
<PAGE>
Other Income and Expense -- Interest expense increased by $2.2 million, or
23.9%, for the second quarter of 1998 when compared to the second quarter of
1997. The increase in interest expense is primarily attributable to the
assumption of acquisition-related debt, and the increased usage of CRLP's
revolving credit agreement in conjunction with the financing of acquisitions and
developments.
Results of Operations -- Six Months Ended June 30, 1998 and 1997 Revenue --
Total revenue increased by $35.7 million, or 43.5%, for the
six months ended June 30, 1998 when compared to the six months ended June 30,
1997. This majority of this increase, $31.6 million, represents revenues
generated by properties acquired or developed during 1998 and the second half of
1997, net of revenues from properties disposed of in 1997. The remaining
increase primarily relates to increases in rental rates at existing properties.
Operating Expenses -- Total operating expenses increased by $17.9 million,
or 41.2%, for the six months ended June 30, 1998 when compared to the six months
ended June 30, 1997. The majority of this increase, $14.6 million, relates to
additional operating expenses associated with properties that were acquired or
developed during 1998 and the second half of 1997, net of operating expenses
associated with properties disposed of in 1997. The remaining increase primarily
relates to increases in operating expenses at existing properties and overall
increases in corporate overhead and personnel costs associated with CRLP's
continued growth.
Other Income and Expense -- Interest expense increased by $6.3 million, or
35.4%, for the six months ended June 30, 1998 when compared to the six months
ended June 30, 1997. The increase in interest expense is primarily attributable
to the assumption of acquisition-related debt, and the increased usage of CRLP's
revolving credit agreement in conjunction with the financing of acquisitions and
developments.
Liquidity and Capital Resources
During the second quarter of 1998, CRLP invested $142.7 million in the
acquisition and development of properties. CRLP financed this growth through the
issuance of limited partnership units, advances on its bank line of credit, and
cash from operations. As of June 30, 1998, CRLP had one bank line of credit with
a balance outstanding of $164.6 million. On July 10, 1998, CRLP increased its
line of credit to provide for total borrowings of up to $250 million. The
increased line, which is used by CRLP primarily to finance property acquisitions
and development, bears interest at a rate ranging between LIBOR plus 80 to LIBOR
plus 135 basis points, expires in July 2000, and provides for a two-year
amortization in the event of non-renewal.
Page 12
<PAGE>
On July 14, 1998, CRLP completed a $175 million public offering of
unsecured senior notes. The securities, which mature in July 2007, bear a coupon
rate of 7.0%, and were priced to yield an effective rate of 7.09% over the
nine-year term. CRLP used the net proceeds of the offering to repay a portion of
the outstanding balance on its unsecured line of credit.
Management intends to replace significant borrowings that may accumulate
under the bank line of credit with funds generated from the sale of additional
limited partnership units to Colonial Properties Trust in connection with public
offerings of securities by the Company, and/or permanent financing, as market
conditions permit. Management believes that these potential sources of funds,
along with the possibility of issuing limited partnership units in exchange for
properties, will provide CRLP with the means to finance additional acquisitions.
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, distributions to unitholders, and dividends to
shareholders in accordance with Internal Revenue Code requirements applicable to
real estate investment trusts.
CRLP is aware of the potential issues associated with the data conversion
and system upgrades necessary for its computer systems to be year 2000
compliant. CRLP currently believes that, with modifications to existing software
at the corporate level and upgrading operational systems at the property level,
the year 2000 issue will not have a material impact on the operations of CRLP.
At the current time, CRLP has not determined the cost that will ultimately be
incurred to be year 2000 compliant.
Page 13
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
PART II -- OTHER INFORMATION
Item 2. Changes in Securities.
The Company from time to time issues common shares of beneficial interest
("Common Shares") pursuant to its Dividend Reinvestment and Share Purchase Plan,
its Non-Employee Trustee Share Option Plan, its Non-Employee Trustee Share Plan,
and its Employee Share Option and Restricted Share Plan, in transactions that
are registered under the Securities Act of 1933, as amended (the "Act").
Pursuant to CRLP's Second Amended and Restated Agreement of Limited Partnership,
each time the Company issues Common Shares pursuant to the foregoing plans, CRLP
issues to Colonial Properties Holding Company, Inc., its general partner, an
equal number of Units for the same price at which the Common Shares were sold,
in transactions that are not registered under the Act in reliance on Section
4(2) of the Act. During the quarter ended June 30, 1998, CRLP issued 84,122
Units in such transactions for an aggregate of $2.4 million.
On May 1, 1998, CRLP redeemed a total of 7,222 Units from two limited
partners, in exchange for an equal amount of common shares of beneficial
interest of Colonial Properties Trust.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
12. Ratio of Earnings to Fixed Charges
15. Letter re: Unaudited Interim Financial Information
27. Financial Data Schedule (EDGAR Version Only)
(b) Reports on Form 8-K
Form 8-K dated June 11, 1998, reported certain property acquisitions
during 1998 up to June 11, 1998, under Item 5, "Other Events."
Subsequent to quarter end, Form 8-K dated July 8, 1998, reported
certain property acquisitions during 1998 up to July 8, 1998, under
Item 5, "Other Events," and Form 8-K dated July 20, 1998, filed
certain documents related to CRLP's debt offering under Item 5,
"Other Events."
Page 14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned hereunto duly authorized.
COLONIAL REALTY LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Colonial Properties Holding Company, Inc.,
its general partner
Date: August 12, 1998 By: /s/ Howard B. Nelson, Jr.
-------------------------
Howard B. Nelson, Jr.
Chief Financial Officer
(Duly Authorized Officer
and Principal Financial Officer)
Date: August 12, 1998 /s/ Kenneth E. Howell
---------------------
Kenneth E. Howell
Vice President and Controller of
Colonial Properties Holding Company,
Inc.
(Principal Accounting Officer)
Page 15
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
EXHIBIT 12 - Ratio of Earnings to Fixed Charges
CRLP's ratio of earnings to fixed charges for the three months ended June
30, 1998 and 1997, was 2.16 and 1.99, respectively. CRLP's ratio of earnings to
fixed charges for the six months ended June 30, 1998 and 1997, was 2.06 and
2.01, 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),
distributions to preferred unitholders, and the amortization of debt issuance
costs.
Page 16
<PAGE>
Securities and Exchange Commission
450 Fifth Street, N. W.
Washington, D. C. 20549
Re: Colonial Realty Limited Partnership
(File No. 0-20707)
Registration on Form S-3
We are aware that our report dated July 17, 1998 on our review of interim
financial information of Colonial Realty Limited Partnership for the three-month
and six-month periods ended June 30, 1998 and 1997 and included in the
Partnership's quarterly report on Form 10-Q for the periods then ended, is
incorporated by reference in the registration statement on Form S-3 related to
the Shelf Registration filed on December 11, 1997 (File No. 333-42049). Pursuant
to Rule 436(c) under the Securities Act of 1933, this report should not be
considered a part of the registration statement prepared or certified by us
within the meaning of Sections 7 and 11 of that Act.
/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Birmingham, Alabama
August 12, 1998
Page 17
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
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