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:
September 30, 2000 Commission File Number: 0-20707
COLONIAL REALTY LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware 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
September 30, 2000 and December 31, 1999 3
Consolidated Condensed Statements of Income for the
Three Months and for the Nine Months Ended
September 30, 2000 and 1999 4
Consolidated Condensed Statements of Cash Flows
for the Nine Months Ended September 30, 2000
and 1999 5
Notes to Consolidated Condensed Financial Statements 6
Report of Independent Accountants 10
Item 2. Management's Discussion and Analysis of Financial 11
Item 3. Quantitative and Qualitative Disclosures about
Market Risk 14
PART II: OTHER INFORMATION
Item 2. Changes in Securities 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
EXHIBITS 17
<PAGE>
<TABLE>
<CAPTION>
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
--------------------
(Unaudited)
September 30, December 31,
2000 1999
----------- ----------
ASSETS
<S> <C> <C>
Land, buildings, & equipment, net $1,760,502 $1,586,332
Undeveloped land and construction in progress 93,138 214,043
Cash and equivalents 2,673 4,630
Restricted cash 2,539 2,634
Accounts receivable, net 12,574 10,606
Prepaid expenses 3,237 2,371
Notes receivable 3,363 695
Deferred debt and lease costs, net 14,440 10,500
Investment in unconsolidated subsidiaries 27,314 24,623
Other assets 10,875 7,712
---------- ----------
$1,930,655 $1,864,146
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Notes and mortgages payable $1,150,517 $1,039,863
Accounts payable 7,093 15,173
Accrued interest 16,439 12,901
Accrued expenses 16,173 4,283
Tenant deposits 4,179 4,011
Unearned rent 1,223 2,820
---------- ----------
Total liabilities 1,195,624 1,079,051
---------- ----------
Redeemable units, at redemption value 288,361 255,011
Preferred units:
Series A Preferred Units 125,000 125,000
Series B Preferred Units 100,000 100,000
Partners' capital 221,670 305,084
---------- ----------
Total partners' capital 446,670 530,084
---------- ----------
$1,930,655 $1,864,146
========== ==========
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
</FN>
<PAGE>
<TABLE>
<CAPTION>
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per unit data)
---------------------
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2000 1999 2000 1999
--------- --------- --------- ---------
Revenue:
<S> <C> <C> <C> <C>
Minimum rent $ 60,374 $ 57,798 $ 175,425 $ 168,620
Percentage rent 864 483 2,258 2,103
Tenant recoveries 9,147 7,908 26,263 24,176
Other 5,535 3,946 14,841 12,596
--------- --------- --------- ---------
Total revenue 75,920 70,135 218,787 207,495
--------- --------- --------- ---------
Property operating expenses:
General operating expenses 5,566 5,243 15,549 15,402
Salaries and benefits 3,975 3,936 11,712 10,977
Repairs and maintenance 7,523 6,982 21,064 20,407
Taxes, licenses, and insurance 4,924 6,036 16,749 17,909
General and administrative 1,700 1,801 6,697 6,608
Depreciation 15,289 13,292 43,566 39,213
Amortization 1,067 563 2,938 1,645
--------- --------- --------- ---------
Total operating expenses 40,044 37,853 118,275 112,161
--------- --------- --------- ---------
Income from operations 35,876 32,282 100,512 95,334
--------- --------- --------- ---------
Other income (expense):
Interest expense (18,958) (14,829) (52,097) (42,288)
Income from unconsolidated subsidiaries 409 359 1,255 1,346
Gains (losses) from sales of property (140) 2,161 3,374 5,639
Minority interest in consolidated operating property -0- -0- -0- (82)
--------- --------- --------- ---------
Total other expense (18,689) (12,309) (47,468) (35,385)
--------- --------- --------- ---------
Income before extraordinary item 17,187 19,973 53,044 59,949
Extraordinary loss -0- (742) (418) (628)
--------- --------- --------- ---------
Net income $ 17,187 $ 19,231 $ 52,626 $ 59,321
Distributions to preferred unitholders (4,954) (4,953) (14,860) (13,578)
--------- --------- --------- ---------
Net income available to common unitholders $ 12,233 $ 14,278 $ 37,766 $ 45,743
========= ========= ========= =========
Income before extraordinary items $ 0.38 $ 0.43 $ 1.16 $ 1.30
Extraordinary income (loss) -0- (0.02) (0.01) (0.02)
--------- --------- --------- ---------
Net income per unit - basic $ 0.38 $ 0.41 $ 1.15 $ 1.28
========= ========= ========= =========
Net income per unit - diluted $ -0- $ 0.41 $ -0- $ 1.28
========= ========= ========= =========
Weighted average units outstanding 32,090 34,666 32,826 35,804
========= ========= ========= =========
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
</FN>
<PAGE>
<TABLE>
<CAPTION>
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
-------------------
Nine Months Ended
September 30,
----------------------
2000 1999
--------- ---------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 52,626 $ 59,321
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 46,504 40,858
Income from unconsolidated subsidiaries (1,255) (1,346)
Gains from sales of property (3,374) (5,639)
Other 1,071 1,513
Decrease (increase) in:
Restricted cash 95 21
Accounts and notes receivable (5,205) (151)
Prepaid expenses (629) 670
Other assets (8,250) (467)
Increase (decrease) in:
Accounts payable (8,080) 2,536
Accrued interest 3,538 (370)
Accrued expenses and other 10,592 10,598
--------- ---------
Net cash provided by operating activities 87,633 107,544
--------- ---------
Cash flows from investing activities:
Acquisition of properties (26,512) (44,417)
Development expenditures (78,151) (132,742)
Tenant improvements (17,784) (6,957)
Capital expenditures (11,946) (12,622)
Proceeds from sales of property, net of selling costs 40,615 120,795
Distributions from unconsolidated subsidiaries 3,419 8,004
Capital contributions to unconsolidated subsidiaries (4,855) (5,228)
--------- ---------
Net cash used in investing activities (95,214) (73,167)
--------- ---------
Cash flows from financing activities:
Principal reductions of debt (32,302) (59,156)
Proceeds from additional borrowings 128,568 136,200
Net change in revolving credit balances 14,257 (31,564)
Cash contributions 9,269 101,726
Capital distributions (74,084) (80,606)
Purchase of treasury units (37,875) (99,614)
Payment of debt financing cost (1,791) (1,472)
Other, net (418) (628)
--------- ---------
Net cash provided by (used in) financing activities 5,624 (35,114)
--------- ---------
Decrease in cash and equivalents (1,957) (737)
Cash and equivalents, beginning of period 4,630 4,582
--------- ---------
Cash and equivalents, end of period $ 2,673 $ 3,845
========= =========
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
</FN>
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
September 30, 2000
(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, 1999, and with
the information filed with the Securities and Exchange Commission on Form 10-Q
for the quarters ended March 31 and June 30, 2000. The December 31, 1999 balance
sheet data presented herein was derived from audited financial statements but
does not include all disclosures required by generally accepted accounting
principles.
In July 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133 (SFAS 133), Accounting for Derivative
Instruments and Hedging Activities, which addresses the accounting for
derivative instruments, including certain derivative instruments embedded in
other contracts, and hedging activities. Under SFAS 133, CRLP will be required
to account for derivative financial instruments, if any, at their fair market
value, and make certain required disclosures. CRLP is required to adopt SFAS 133
for all periods beginning after January 1, 2001.
Note 2 -- Capital Structure
At September 30, 2000, the Company controlled CRLP as the sole general
partner and as the holder of 64.9% of the common units of CRLP ("Redeemable
Units") and 55.6% of the preferred Units (the "Series A Preferred Units"). The
limited partners of CRLP who hold units, are those persons (including certain
officers and directors) who, at the time of the Initial Public Offering, elected
to hold all or a portion of their interest in the form of Units rather than
receiving shares of common stock of the Company, or individuals from whom the
Company acquired certain properties, who elected to receive Units in exchange
for the properties. Each Unit may be redeemed by the holder thereof for either
one share of Common Stock or cash equal to the fair market value thereof at the
time of such redemption, at the option of CRLP. Additionally, in 1999, CRLP
issued $100 million of Series B Cumulative Redeemable Perpetual Preferred Units
("Series B Units") in a private placement, that are exchangeable for Series B
Preferred Shares of the Company after ten years at the option of the holders of
the Series B Units.
The Board of Trustees of the Company manages CRLP by directing the
affairs of the Company. The Company's interests in CRLP entitle it to share in
cash distributions from, and in the profits and losses of, CRLP in proportion to
the Company's percentage interest therein and entitle the Company to vote on all
matters requiring a vote of the limited partners.
<PAGE>
Note 3 -- Acquisition
Temple Mall --On August 1, 2000, CRLP acquired the Temple Mall, a
575,000 square-foot mall in Temple, Texas for a total purchase price of $26.2
million. The mall anchors include JC Penney, Dillards, Foley's, and Stein Mart.
The purchase price was partially funded through the proceeds received from the
disposition of assets, and an advance on the CRLP's unsecured line of credit.
Note 4 -- Net Income Per Unit
The following table sets forth the computation of basic and diluted
earnings per unit:
<TABLE>
<CAPTION>
(Amounts in thousands,
except per unit data)
------------------------------------------------------------
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September September September September
30, 30, 30, 30,
2000 1999 2000 1999
------------ ------------ ------------ ------------
Numerator:
Numerator for basic and diluted net
income per unit - net income
<S> <C> <C> <C> <C>
available to common unitholders $ 12,233 $ 14,278 $ 37,766 $ 45,743
============ ============ ============ ============
Denominator:
Denominator for basic net income
Effect of dilutive securities:
Trustee and employee share options 53 21 32 21
------------ ------------ ------------ ------------
Denominator for diluted net income
per unit - adjusted weighted
average common units 32,143 34,687 32,858 35,825
============ ============ ============ ============
Basic net income per unit $ .38 $ .41 $ 1.15 $ 1.28
============ ============ ============ ============
Diluted net income per unit $ .38 $ .41 $ 1.15 $ 1.28
============ ============ ============ ============
</TABLE>
Options to purchase 388,083 common shares at a weighted average exercise price
of $28.79 per share were outstanding during 2000 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.
Note 5 -- Segment Information
CRLP is organized into, and manages its business based on the
performance of three separate and distinct operating divisions: Multifamily,
Office, and Retail. Each division has a separate management team that is
responsible for acquiring, developing, managing, and leasing properties within
each division. The applicable accounting policies of the segments are
substantially the same as those described in the "Summary of Significant
Accounting Policies" in CRLP's 1999 Annual Report. However, the pro rata portion
of the revenues, net operating income ("NOI"), and assets of the partially owned
entities and joint ventures that CRLP has entered into are included in the
applicable segment information. Subsequently, in the reconciliation to total
revenues, total NOI, and total assets, the amounts are eliminated, as the
investment in the partially owned entities and joint ventures are reflected in
the consolidated financial statements as investments accounted for under the
equity method.
Management evaluates the performance of its segments and allocates resources to
them based on NOI. NOI consists of revenues in excess of general operating
expenses, salaries and wages, repairs and maintenance, taxes, licenses, and
insurance. Segment information for the three and nine months ended September 30,
2000 and 1999 is as follows:
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
As of and for the
Three Months Ended
September 30, 2000 Multifamily Office Retail Total
--------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
Total Divisional Revenues $ 29,882 $ 12,566 $ 35,496 $ 77,944
NOI 20,287 8,910 25,529 54,726
Divisional assets 756,686 322,839 859,078 1,938,603
------------------------------------------------------------------------------------------------------------
Three Months Ended
September 30, 1999 Multifamily Office Retail Total
--------------------------------------------------------------------
(in thousands)
Total Divisional Revenues $ 30,329 $ 10,435 $ 31,637 $ 72,401
NOI 19,351 7,258 22,543 49,152
------------------------------------------------------------------------------------------------------------
Nine Months Ended
September 30, 2000 Multifamily Office Retail Total
--------------------------------------------------------------------
(in thousands)
Total Divisional Revenues $ 87,949 $ 36,564 $ 101,538 $ 226,051
NOI 58,475 25,790 72,902 157,167
------------------------------------------------------------------------------------------------------------
Nine Months Ended
September 30, 1999 Multifamily Office Retail Total
--------------------------------------------------------------------
(in thousands)
Total Divisional Revenues $ 87,632 $ 30,105 $ 96,348 $ 214,085
NOI 56,837 21,040 68,575 146,452
------------------------------------------------------------------------------------------------------------
For the Period Ended
December 31, 1999
(in thousands) Multifamily Office Retail Total
--------------------------------------------------------------------
Divisional assets $ 777,436 $ 293,545 $ 794,109 $ 1,865,090
------------------------------------------------------------------------------------------------------------
</TABLE>
A reconciliation of total segment revenues to total revenues, total segment NOI
to income from operations, for the three and nine months ended September 30,
2000 and 1999, and total divisional assets to total assets, for the periods
ended September 30, 2000 and December 31, 1999, is presented below:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
As of and for the As of and for the As of and for the As of and for the
Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended
(in thousands) September 30, 2000 September 30, 1999 September 30, 2000 September 30, 1999
Revenues
----------------------------------------------------------------------------------- ---------------------- --------------------
<S> <C> <C> <C> <C>
Total divisional revenues $ 77,944 $ 72,401 $ 226,051 $ 214,085
Unallocated corporate revenues 1,149 220 2,115 961
Partially-owned subsidiaries (3,173) (2,486) (9,379) (7,551)
----------------------------------------------------------------------------------- ---------------------- --------------------
Total Revenues $ 75,920 $ 70,135 $ 218,787 $ 207,495
----------------------------------------------------------------------------------- ---------------------- --------------------
NOI
----------------------------------------------------------------------------------- ---------------------- --------------------
Total divisional NOI $ 54,726 $ 49,152 $ 157,167 $ 146,452
Unallocated corporate revenues 1,149 220 2,115 961
Partially-owned subsidiaries (1,898) (1,448) (5,532) (4,531)
General and administrative expenses (1,700) (1,801) (6,697) (6,608)
Depreciation (15,289) (13,292) (43,566) (39,213)
Amortization (1,067) (563) (2,938) (1,645)
Other (45) 14 (37) (82)
----------------------------------------------------------------------------------- ---------------------- --------------------
Income from operations $ 35,876 $ 32,282 $ 100,512 $ 95,334
---------------------------------------------------------------------------------------------------------------------------------
For the Period Ended For the Period Ended
Assets September 30, 2000 December 31, 1999
-----------------------------------------------------------------------------------
Total divisional assets $ 1,938,603 $ 1,865,090
Unallocated corporate assets (1) 81,314 66,542
Partially-owned subsidiaries (89,262) (67,486)
-----------------------------------------------------------------------------------
Total assets $ 1,930,655 $ 1,864,146
-----------------------------------------------------------------------------------
</TABLE>
[FN]
(1) Includes the Company's investment in partially owned entities of $27,314 as
of September 30, 2000, and $24,649 as of December 31, 1999.
</FN>
<PAGE>
Note 6 -- Subsequent Events
Quarterly Distributions
On October 17, 2000, a cash distribution was declared to partners of
CRLP in the amount of $0.60 per unit, totaling $19.2 million. The distribution
was declared to partners of record as of October 27, 2000, and was paid on
November 3, 2000.
Interest Rate SWAP Transactions
On October 25, 2000, CRLP terminated its two reverse interest rate swap
agreements totaling $50 million on its medium-term notes. With the termination,
CRLP received approximately $1.5 million, which will be amortized over the
remaining life of the original swap agreement. Additionally, subsequent to
September 30, 2000, CRLP entered into an interest rate swap agreement for $125
million of its line of credit at a fixed one-year LIBOR rate of 6.456% plus 115
basis points, with a one-year term. Also, CRLP entered into a forward treasury
rate lock of $25 million on its future financings at a fixed rate of 5.778% for
a term of 45 days.
Disposition
On October 27, 2000, CRLP sold its interest in the Anderson Block
Properties Partnership, of which CRLP maintained a 33.33% ownership interest.
The entire partnership was sold for a total purchase price of $1.1 million, of
which $1.0 million was used to repay outstanding secured loans. The remaining
proceeds retained by CRLP were used to repay a portion of the borrowings under
CRLP's unsecured line of credit.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
Colonial Properties Trust:
We have reviewed the accompanying consolidated condensed balance sheet
of Colonial Realty Limited Partnership (the "Partnership") as of September 30,
2000, and the related consolidated condensed statements of income for the
three-month and nine-month periods ended September 30, 2000 and 1999, and the
consolidated condensed statements of cash flows for the nine-month periods ended
September 30, 2000 and 1999. 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 consolidated condensed 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, 1999, 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 17, 2000, except for Note 16, as to which the date is February 29, 2000,
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, 1999, 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
November 3, 2000
<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, office
buildings, retail malls and shopping centers. The Company is organized as a real
estate investment trust (REIT) and owns and operates properties in nine states
in the Sunbelt region of the United States. As of September 30, 2000, CRLP's
real estate portfolio consisted of 54 multifamily communities, 18 office
properties, and 43 retail properties.
CRLP is one of the largest diversified REITs in the United States.
Consistent with its diversified strategy, Colonial manages its business with
three separate and distinct operating divisions: Multifamily, Office, and
Retail. 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.
Constant communication among the Executive Vice Presidents and centralized
functions of accounting, information technology, due diligence and
administrative services provide CRLP with unique synergy allowing CRLP to take
advantage of a variety of investment opportunities. Decisions for investments in
acquisitions and developments and for dispositions are also centralized.
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 1999 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.
<PAGE>
Results of Operations -- Three Months Ended September 30, 2000 and 1999
Revenue -- Total revenue increased by $5.8 million, or 8.3%, for the
third quarter of 2000 when compared to the third quarter of 1999. The majority
of this increase, $3.1 million, represents revenues generated by properties
acquired or developed during 2000 and the second half of 1999, net of revenues
from properties disposed. The remaining increase primarily relates to increases
in rental rates at existing properties and certain lease cancellations that
occurred during the third quarter of 2000.
Operating Expenses -- Total operating expenses increased by $2.2
million, or 5.8%, for the third quarter of 2000 when compared to the third
quarter of 1999. The majority of this increase, $1.6 million, relates to
additional operating expenses associated with properties that were acquired or
developed during 2000 and the second half of 1999, net of operating expenses
associated with properties disposed. The remaining increase primarily relates to
increases in operating expenses at existing properties.
Other Income and Expense -- Interest expense increased by $4.1 million,
or 27.8%, for the third quarter of 2000 when compared to the third quarter of
1999. The increase in interest expense is primarily attributable to the
increased usage of CRLP's revolving credit agreement in conjunction with the
financing of acquisitions, developments, and CRLP's Common Unit Repurchase
Program, and the issuance of $132.5 million of unsecured medium term notes
through its subsidiary CRLP during the third quarter of 1999 and first quarter
of 2000.
Results of Operations -- Nine Months Ended September 30, 2000 and 1999
Revenue -- Total revenue increased by $11.3 million, or 5.4%, for the
nine months ended September 30, 2000 when compared to the nine months ended
September 30, 1999. This majority of this increase, $9.5 million, represents
revenues generated by properties acquired or developed during 2000 and the
second half of 1999, net of revenues from properties disposed. The remaining
increase primarily relates to increases in rental rates at existing properties
and certain lease cancellations that occurred during 2000.
Operating Expenses -- Total operating expenses increased by $6.1
million, or 5.5%, for the nine months ended September 30, 2000 when compared to
the nine months ended September 30, 1999. The majority of this increase, $4.5
million, relates to additional operating expenses associated with properties
that were acquired or developed during 2000 and the second half of 1999, net of
operating expenses associated with properties disposed. 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 $9.8 million,
or 23.2%, for the nine months ended September 30, 2000 when compared to the nine
months ended September 30, 1999. The increase in interest expense is primarily
attributable to the increased usage of CRLP's revolving credit agreement in
conjunction with the financing of acquisitions, developments, and CRLP's Common
Unit Repurchase Program, and the issuance of $132.5 million of unsecured medium
term notes through its subsidiary CRLP during the third quarter of 1999 and
first quarter of 2000.
<PAGE>
Liquidity and Capital Resources
During the third quarter of 2000, CRLP invested $56.5 million in the
acquisition and development of properties. CRLP financed this growth through
advances on its unsecured bank line of credit, sale of certain properties,
financing of certain properties, and cash from operations. As of September 30,
2000, CRLP had an unsecured bank line of credit providing for total borrowings
of $300 million. The line, which is used by CRLP primarily to finance property
acquisitions and development, bears interest at LIBOR plus 115 basis points, and
is renewable on April 14, 2003 and provides for a two-year amortization in the
case of non-renewal. The line of credit agreement includes a competitive bid
feature that will allow CRLP to convert up to $150 million under the line of
credit to a fixed rate, for a fixed term not to exceed 90 days. The balance
outstanding on this line at September 30, 2000, was $242.6 million.
Management intends to replace significant borrowings that may
accumulate under the bank line of credit with funds generated from the sale of
additional equity securities 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 of Colonial Realty Limited
Partnership 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, and
dividends to shareholders in accordance with Internal Revenue Code requirements
applicable to real estate investment trusts.
Common Unit Repurchase Program
During 1999, the Board of Trustees authorized a unit repurchase program
under which CRLP may repurchase up to $150 million of its currently outstanding
common units from time to time at the discretion of management in open market
and negotiated transactions. During the third quarter of 2000, CRLP repurchased
707,189 units at an all-in cost of approximately $19.8 million, which completed
CRLP's current common unit repurchase program. To date, CRLP has repurchased
5,557,314 units at an all-in cost of approximately $150 million, which
represents an average purchase price of $26.99 per share.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
CRLP is exposed to interest rate changes primarily as a result of its
line of credit and long-term debt used to maintain liquidity and fund capital
expenditures and expansion of CRLP's real estate investment portfolio and
operations. CRLP's interest rate risk management objective is to limit the
impact of interest rate changes on earnings and cash flows and to lower its
overall borrowing costs. To achieve its objectives, CRLP borrows primarily at
fixed rates and may enter into derivative financial instruments such as interest
rate swaps, caps and treasury locks in order to mitigate its interest rate risk
on a related financial instrument. CRLP does not enter into derivative or
interest rate transactions for speculative purposes.
The table below presents the principal amounts, weighted average
interest rates, fair values and other terms required by year of expected
maturity to evaluate the expected cash flows and sensitivity to interest rate
changes. Also included is a summary of CRLP's swap contracts and rate caps at
September 30, 2000.
<TABLE>
<CAPTION>
Estimated
Fair
(amounts in thousands) 2000 2001 2002 2003 2004 Thereafter Total Value
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed Rate Debt $ 7,772 78,031 58,090 108,914 100,000 471,810 824,617 818,028
Average interest rate
at September 30, 2000 7.9% 7.7% 7.9% 7.2% 7.3% 7.6% 7.5% -
Variable Debt $ - - - 242,594 - 83,307 325,901 325,901
Average interest rate
at September 30, 2000 - - - 7.6% - 5.9% 7.2% -
Interest Rate SWAPs
Fixed to variable $ - - - - - 50,000 50,000 1,240
Average pay rate - - - - - 1 month 1 month -
LIBOR LIBOR
Interest Rate Cap $ - - - 30,379 - - 30,379 1
Interest Rate - - - 11.2% - - 11.2% -
</TABLE>
The table incorporates only those exposures that exist as of September 30, 2000;
it does not consider those exposures or positions, which could arise after that
date. Moreover, because firm commitments are not presented in the table above,
the information presented therein has limited predictive value. As a result,
CRLP's ultimate realized gain or loss with respect to interest rate fluctuations
will depend on the exposures that arise during the period, CRLP's hedging
strategies at that time, and interest rates.
<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 Third Amended and Restated Agreement of Limited
Partnership, each time the Company issues Common Shares pursuant to the
foregoing plans, CRLP issues to Colonial Properties Trust, 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 September 30, 2000, CRLP
issued 6,296 Units in such transactions for an aggregate of approximately
$174,000.
During the third quarter of 2000, CRLP repurchased a total of 110,089
Units from two limited partners for an aggregate purchase price of $3.1 million.
Additionally, during the third quarter of 2000, CRLP issued 12,477 limited
partnership units to acquire a parcel of land for approximately $325,000.
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
None
<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 Trust,
its general partner
Date: November 13, 2000 By: /s/ Howard B. Nelson, Jr.
-------------------------
Howard B. Nelson, Jr.
Chief Financial Officer
(Duly Authorized Officer
and Principal Financial Officer)
Date: November 13, 2000 /s/ Kenneth E. Howell
---------------------
Kenneth E. Howell
Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer)
<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
September 30, 2000 and 1999, was 1.70 and 1.88, respectively. CRLP's ratio of
earnings to fixed charges for the nine months ended September 30, 2000 and 1999,
was 1.68 and 1.98, 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
(excluding interest costs capitalized). Fixed charges consist of interest
expense (including interest costs capitalized) and the amortization of debt
issuance costs.
<PAGE>
Securities and Exchange Commission
450 Fifth Street, N. W.
Washington, D. C. 20549
Re: Colonial Realty Limited Partnership
(File No. 0-20707)
Registrations on Form S-3
We are aware that our report dated November 3, 2000 on our review of interim
financial information of Colonial Realty Limited Partnership for the three-month
and nine-month periods ended September 30, 2000 and 1999 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) and Form
S-3 related to the Shelf Registration filed on May 26, 2000 (File No.
333-37922). 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
November 13, 2000
