KOGER EQUITY INC, DEF 14A, 1997-04-25

KOGER EQUITY INC
DEF 14A, 1997-04-25
REAL ESTATE INVESTMENT TRUSTS

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<PAGE>

SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant [ x ]

Filed by a Party other than the Registrant [ ]

Check the appropriate box
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of te Commission
Only (as Permitted by Ruel 14a-6(c)(2))
[ x ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule
14a-11(c) or Rule 14a-12

Koger Equity, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[ x ] No fee required.
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(l) and 0-11.
(1) Title of each class of securities to which transaction applies:
- ---------------
(2) Aggregate number of securities to which transaction applies:
- ---------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined);
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.

<PAGE>

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.

(1) Amount Previously Paid:

- --------------------------------------------------------------------------------
(2) Form Schedule or Registration Statement No.:
N/A
- --------------------------------------------------------------------------------
(3) Filing Party:

- --------------------------------------------------------------------------------
(4) Date Filed:
April 18, 1997
- --------------------------------------------------------------------------------

<PAGE>

KOGER EQUITY, INC.
3986 Boulevard Center Drive
Jacksonville, Florida 32207
(904) 398-3403

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

The Annual Meeting of Shareholders of Koger Equity, Inc. (the "Company") will be
held on Tuesday, May 20, 1997, at 11:00 a.m., Eastern Daylight Saving Time, at
the Omni Jacksonville Hotel, 245 Water Street, Jacksonville, Florida, for the
following purposes:

1. To elect a board of twelve (12) directors to serve for the ensuing year
or until their respective successors are duly elected and qualified;
and

2. To transact such other business as may properly come before the meeting
or any adjournment thereof.

The close of business on March 13, 1997 was fixed as the record date for
the determination of shareholders entitled to receive notice of, and to vote at,
this meeting and any adjournment thereof. All shareholders of record at that
time are entitled to vote at this meeting and any adjournment thereof.

A copy of the Company's Annual Report for the year ended December 31, 1996,
which report contains consolidated financial statements and other information of
interest with respect to the Company and its subsidiaries, is included herewith.

SHAREHOLDERS ARE REQUESTED TO MARK, DATE, SIGN AND RETURN THE ENCLOSED
PROXY. AN ENVELOPE IS ENCLOSED HEREWITH FOR YOUR CONVENIENCE. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.

By order of the Board of Directors
W. Lawrence Jenkins, Secretary

April 18, 1997

<PAGE>

KOGER EQUITY, INC.
3986 Boulevard Center Drive
Jacksonville, Florida 32207
(904) 398-3403
---------------

PROXY STATEMENT
April 18, 1997
---------------

INTRODUCTION

The enclosed proxy is solicited on behalf of and by the Board of Directors
(the "Board of Directors") of Koger Equity, Inc., a Florida corporation (the
"Company"), for use at the Company's Annual Meeting of Shareholders to be held
on Tuesday, May 20, 1997 (the "Annual Meeting"), and any adjournment thereof.
This Proxy Statement and the enclosed proxy have first been mailed or otherwise
given to shareholders on or about April 18, 1997.

If the enclosed proxy is executed and returned, it will be voted at the
Annual Meeting and any adjournment thereof, and where a choice has been
specified thereon, will be voted in accordance with such specifications, and
where no choice has been specified thereon, will be voted FOR the election of
the directors named herein. If any other matters properly come before the Annual
Meeting or any adjournment thereof, the holders of the proxies are expected to
vote in accordance with their judgement on such matters. A proxy may be revoked
at any time to the extent that it has not been exercised. A shareholder may
revoke his or her proxy by writing the Secretary of the Company a letter of
proxy revocation, executing a subsequently dated proxy, or attending the Annual
Meeting or any adjournment thereof and voting his or her Shares (as defined
below) personally.

The close of business on March 13, 1997 was fixed as the record date for
determination of the shareholders entitled to vote at the Annual Meeting and any
adjournment thereof.

The number of the Company's Shares of common stock, par value $.01 per
share (the "Shares"), outstanding at the close of business on March 13, 1997 was
20,989,370. There is no other class of voting securities of the Company
outstanding, and each Share is entitled to one (1) vote. A majority of the
Shares issued and outstanding as of the record date represented at the Annual
Meeting or any adjournment thereof, either in person or by proxy, shall
constitute a quorum. Victor A. Hughes, Jr., J. C. Teagle and W. Lawrence Jenkins
have, and each of them has, been designated to vote the proxies solicited
hereby. The Shares are not subject to cumulative voting.

MATTERS TO BE CONSIDERED

The Company's shareholders will consider and act upon (i) a proposal to
elect twelve (12) directors for the following year, and (ii) such other business
as may properly come before the Annual Meeting or any adjournment thereof.

ELECTION OF DIRECTORS

Nominees

The twelve (12) nominees listed in the table below are proposed for
election as directors for the ensuing year or until their successors have been
duly elected and qualified.

<PAGE>

While management expects that all of the nominees will be able to serve as
directors, if, at the time of the Annual Meeting or any adjournment thereof, a
situation should arise making it impossible for any nominee to serve, the
proxies will be voted in accordance with the best judgement of the holders
thereof for another person recommended by the present Board of Directors in lieu
of such original nominee.

Each nominee has served in the principal occupations indicated in the table
below with the respective employers indicated in such table during the five-year
period ended on December 31, 1996. The table below also sets forth information
concerning each nominee to the Board of Directors, based on information
furnished by such nominee.

The Board of Directors recommends a vote "FOR" the election of each of the
following nominees.
<TABLE>
<CAPTION>

Beneficial
Principal Occupation Ownership
Five-year Employment Year First of Shares at
History and Other Became a February 20, 1997(1)
Name Directorships Director Age (Percent of Class)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
D. Pike Aloian(2) Managing Director of Rothschild 1993 42 2,479
Realty, Inc. ( a real estate investment (.012%)
management and advisory service
firm); Director, Charter Oak Group,
Ltd. (a privately held retail properties
real estate management company);
Director, Angeles Corporation (a firm
specializing in the liquidation of
loans to and equity interests in various
real estate investment partnerships);
former Vice President of The Harlan
Company, Inc. (a real estate
development and advisory service firm)

Benjamin C. Bishop, Jr.(2) Chairman of the Board of Allen C. 1991 65 21,618
Ewing & Co. (an investment banking (.103%)
company); former Director of Grubb &
Ellis Company (a national commercial
real estate brokerage company); former
Trustee of GMR Properties (a real
estate investment trust); former
Director of Cousins Properties, Inc. (a
real estate investment trust)

Irvin H. Davis Vice Chairman of Koger Equity, Inc.; 1991 67 181,592(3)
former President and Chief Executive (.859%)
Officer of Koger Equity, Inc.

<PAGE>

David B. Hiley(4) (5) Self-employed as a consultant; former 1993 58 5,078
managing Director of Berkshire Capital (.024%)
Corporation (an investment banking
services firm); Director and former
Senior Executive Vice President of
Thomson McKinnon Securities, Inc. (a
securities broker-dealer); consultant,
Director and former Executive Vice
President of Thomson McKinnon, Inc. (a
financial services holding company);
Director of Newcity Communications,
Inc. (a communications firm)

Victor A. Hughes, Jr. Chairman, President, Chief Executive 1992 61 234,765(6)
Officer and Chief Financial Officer of (1.109%)
Koger Equity, Inc.; former Senior Vice
President and an Assistant Secretary of
Koger Equity, Inc.; Director, Chairman,
President, Chief Executive Officer and
Chief Financial Officer of Koger Realty
Services, Inc. (a Koger Equity, Inc.
related entity and manager in five markets)

G. Christian Lantzsch(2) (4) Retired Director of Duquesne Light 1989 72 5,493(7)
Company; retired Vice Chairman of the (.026%)
Board of Directors and Treasurer of
Mellon Bank Corp.; retired Vice
Chairman and Chief Financial Officer of
Mellon Bank, N.A.

William L. Mack Senior Partner of Apollo Real Estate 1996 57 412(8)
Advisors (manager of two real estate (.002%)
investment funds); President and a Senior
Partner of the Mack Organization
(national owner, developer and investor
in office and industrial buildings and
other real estate investments); Director of
Capital Apartment Properties, Inc.
(owner and manager of apartment
communities); Chairman of the Board of
Metropolis Realty Trust, Inc. (owner of
high rise office buildings); Director of
Vail Resorts, Inc. (owner and operator of
ski resorts)

<PAGE>

Lee S. Neibart(2) Partner in charge of portfolio and asset 1996 46 412(8)
management at Apollo Real Estate (.002%)
Advisors (manager of two real estate
investment funds); former Executive
Vice President and Chief Operating
Officer of the Robert Martin Company (a
real estate development and management
firm); Director of Allright Corporation
(owner and operator of parking
facilities); Director of Capital Apartment
Properties, Inc. (owner and manager of
apartment communities); Director of
Metropolis Realty Trust, Inc. (owner of
high rise office buildings); Director of
NextHealth, Inc. (operator of wellness
and spa facilities) and Director of Roland
International, Inc. (a land
development company)

W. Edward Scheetz(4) Partner in charge of acquisitions and new 1996 32 412(8)
investments at Apollo Real Estate (.002%)
Advisors (manager of two real estate
investment funds); a former employee of
Trammell Crow Company (real estate
development and management company),
most recently as a Principal with
Trammell Crow Ventures (manager of
real estate investment funds); Director of
Allright Corporation (owner and operator
of parking facilities); Director of Atlantic
Gulf Communities, Inc. (a land
development company); Director of Capital
Apartment Properties, Inc. (owner and
manager of apartment communities);
Director of Koll Management Services,
Inc. (national commercial property
management company); Director of
Metropolis Realty Trust, Inc. (owner of
high rise office buildings); Director of
NextHealth, Inc. (operator of wellness
and spa facilities) and Director of Roland
International, Inc. (land development
company)
<PAGE>

George F. Staudter(4) Managerial and financial consultant; 1993 65 5,045
Director of Waterhouse Investors Cash (.024%)
Management Fund, Inc. (a family of
mutual funds); former Director of
Waterhouse Investor Services, Inc. (a
securities broker-dealer); former
President, Chief Executive Officer and
Director of Family Steak Houses of
Florida, Inc. (a restaurant chain); former
Principal of Douglas Capital
Management (a registered investment
advisor); former Vice President and
Treasurer of Revlon, Inc. (a cosmetic
manufacturer and marketer)

S. D. Stoneburner Director of Koger Equity, Inc.; former 1988 78 16,813(9)
Chairman of the Board of Directors of (.080%)
Koger Equity, Inc.

James C. Teagle(12) Director, Executive Vice President and 1996 55 82,482(10)
Chief Operating Officer of Koger Equity, (.392%)
Inc.; former Senior Vice President of
Koger Equity, Inc.; former Vice
President of Koger Equity, Inc.; former
Vice President of Koger Properties, Inc.;
Director, Executive Vice President and
Chief Operating Officer of Koger Realty
Services, Inc. (a Koger Equity, Inc.
related entity and manager in five
markets)

All Executive Officers(12) 629,296(8) (11)
and Director Nominees as (2.930%)
a Group (14 persons)
- --------------------------
</TABLE>

(1) Unless otherwise noted, all Shares are owned directly, with sole voting
and dispositive power or with voting and dispositive power shared with
spouse.

(2) Member of the Audit Committee.

(3) Includes 166,333 Shares which are subject to presently exercisable
options, or options which are exercisable within 60 days.

(4) Member of the Compensation Committee.

<PAGE>

(5) Mr. Hiley was a director and executive officer of Thomson McKinnon,
Inc., a financial service holding company, and its subsidiary Thomson
McKinnon Securities, Inc. ("TMSI"), a broker-dealer, both of which filed
for protection under Chapter 11 of the federal bankruptcy code in 1990.
In a proceeding instituted by the State of Alabama claiming unregistered
sales of securities by an Alabama branch of TMSI, TMSI admitted to a
criminal violation of the Alabama securities statute in 1993.

(6) Includes 200,000 Shares which are subject to presently exercisable
options, or options which are exercisable within 60 days.

(7) Includes 47 Shares which are subject to presently exercisable warrants
to purchase Shares.

(8) Excludes 4,713,598 Shares of Common Stock of Koger Equity, Inc., owned
by AREIF II Realty Trust, Inc. ("ARTI"), a subsidiary of Apollo Real
Estate Investment Fund II, L. P. (AREIF II). The general partner of
AREIF II is Apollo Real Estate Advisors II, L. P. ("ARE Advisors II").
The general partner of ARE Advisors II is Apollo Real Estate Capital
Advisors II, Inc. ("ARECAII"). Messrs. Neibart, Scheetz and Mack are
officers of ARECAII and limited partners of ARE Advisors II. Each of
Messrs. Neibart, Scheetz and Mack disclaim beneficial ownership of all
securities owned by ARTI, AREIF II and any of their affiliates.

(9) Includes 8,000 Shares which are held in a trust of which Mr. Stoneburner
is the beneficiary.

(10) Includes 73,111 Shares which are subject to presently exercisable
options, or options which are exercisable within 60 days.

(11) Sole voting and dispositive power as to 623,804 Shares, and shared
voting and dispositive power as to 5,493 Shares. Includes 503,791 Shares
which are subject to presently exercisable options, or options which are
exercisable within 60 days. Includes 84 Shares which are subject to
presently exercisable warrants to purchase Shares.

(12) Koger Properties, Inc., a Florida corporation ("KPI"), filed for
protection from creditors under Chapter 11 of the United States
Bankruptcy Code on September 25, 1991; on December 21, 1993, KPI was
merged with and into the Company (the "Merger"). Mr. Teagle was a former
Vice President of KPI and W. Lawrence Jenkins was a former Vice
President and Corporate Secretary of KPI. Both Messrs. Teagle and
Jenkins became officers of the Company after the Merger.

Corporate Governance

The Board of Directors of the Company held 13 meetings during the last
fiscal year. The Board of Directors maintains an Audit Committee (the "Audit
Committee") and a Compensation Committee (the "Compensation Committee"), the
members of which are elected by the Board of Directors. The Board of Directors
does not have a nominating committee.

The Audit Committee is composed exclusively of directors who are not
officers or employees of the Company. It recommends to the Board of Directors
the selection of independent auditors, reviews the scope of the audit procedures
and the results of the audit, reviews the matter of independence of the
auditors, including non-audit services provided by the auditors and considers
and makes recommendations to the Board of Directors on matters referred to it
relating to the audit function, such as financial and accounting standards and
principles and internal accounting, auditing and financial controls. The Audit
Committee held two (2) meetings during the last fiscal year and members of the
Audit Committee consulted with the officers of the Company and the independent
auditors at various times throughout the year.

<PAGE>

The Compensation Committee is composed exclusively of directors who are not
officers or employees of the Company. It sets the total compensation of the
Company's Chief Executive Officer and the Executive Vice President and Chief
Operating Officer, and reviews the compensation proposed by management for all
other executive officers of the Company. The Compensation Committee is also
responsible for (i) making grants under the Company's stock option plans, (ii)
making contributions, subject to approval by the Board of Directors, under the
401(k) Plan and any other plan or plans as may be determined by the Board of
Directors, and (iii) approving participation in the Company's Supplemental
Executive Retirement Plan (the "SERP"). The Compensation Committee held five (5)
meetings during the last fiscal year.

Each of the directors attended at least 75% of the Board of Directors
meetings and meetings held by committees of the Board of Directors of which they
were members, except Mr. William L. Mack who became a director of the Company on
October 10, 1996. The Board of Directors held two meetings since the election of
Mr. Mack of which Mr. Mack attended only one meeting.

Directors of the Company who are not officers receive a monthly retainer of
$1,667, plus fees of $2,000 for each meeting of the Board of Directors attended
and $500 for each meeting of any committee of the Board of Directors attended,
together with expenses of attendance. Mr. Stoneburner, who served as the
Chairman of the Board during a portion of 1996, received an additional quarterly
retainer of $5,000 until he stepped down as Chairman on June 21, 1996. In 1997,
the Vice Chairman of the Board will receive an additional quarterly retainer of
$2,500. Directors who are officers of the Company are not paid a director's fee
or retainer. Directors may elect payment of part or all of their monthly
retainer, up to a monthly limit of $1,700, in Shares by participation in the
Stock Investment Plan. For more information concerning the Stock Investment
Plan, reference is made to the section "Executive Compensation--Stock Investment
Plan" of this Proxy Statement.

<PAGE>

EXECUTIVE COMPENSATION

Summary Compensation Table

The table below sets forth information concerning the annual and long-term
compensation of the President and Chief Executive Officer (the "CEO") and the
other named executive officers whose salary and bonus for the fiscal year ended
December 31, 1996 exceeded $100,000 (collectively with the CEO, the "Executive
Officers").
<TABLE>
<CAPTION>

Long-Term(13) All Other
Annual Compensation Compensation Compensation
------------------- ------------ ------------

Awards
------

Name and Principal Year Salary Bonus Securities ($)
Position Underlying
Options/SARs
($) ($) (#) (3) (4)
----------------- ---- -------- ----------- --------- -------

<S> <C> <C> <C> <C> <C> <C>
Irvin H. Davis(1) 1996 $241,333 $ 54,808(5) 20,000(6) $95,340
Vice Chairman 1995 $229,200 $104,408(5) - 0 - $26,340
of the Board, 1994 $179,200 $ 57,207(5) 58,333 $26,340
Former Chief
Executive Officer

Victor A. Hughes, Jr.(1) 1996 $230,917(2) $240,533(7) 135,833(8) $15,318
Chairman of the Board, 1995 $204,200(2) $110,227(5) - 0 - $35,771
President, Chief 1994 $156,200 $ 49,864(5) 56,667 $18,789
Executive Officer and
Chief Financial Officer

James C. Teagle 1996 $166,667(2) $173,590(9) 96,250(10) $13,050
Executive Vice 1995 $141,750(2) $ 27,546 - 0 - $28,415
President and Chief 1994 $123,833 $ 2,366 53,750 $14,601
Operating Officer

W. Lawrence Jenkins 1996 $112,917(2) $ 57,363(5) 28,840(11) $10,120
Vice President and 1995 $107,500(2) $ 20,316 - 0 - $22,729
Corporate Secretary 1994 $103,333 $ 1,923 26,807 $12,110

James L. Stephens 1996 $103,990(2) $ 49,346(5) 29,916(12) $44,873
Vice President and 1995 $ 97,331(2) $ 5,219 - 0 - $25,029
Chief Accounting 1994 $ 86,875 $ 1,731 - 0 - $13,179
Officer

</TABLE>

- ---------------

(1) Mr. Davis served the Company as its Chief Executive Officer ("CEO")
until June 20, 1996. Mr. Hughes began serving the Company as its CEO on
June 21, 1996.

(2) Includes an amount equal to 10% of salary paid for 1996 and for 1995,
from August 1, 1995 through December 31, 1995, which amount was paid by
KRSI.

(3) For information concerning the number and market value of Shares
subject to the Company's stock option plans as to the Executive
Officers, reference is made to the "Option/SAR Grants in Last Fiscal
Year" table and "Option/SAR Exercises and Year-End Values" table and
the notes thereto.

(4) Includes the taxable portion of certain excess life insurance premiums
(as defined by the Internal Revenue Code) paid by the Company on behalf
of each qualifying employee, including the Executive Officers (the
"Life Insurance Premiums") and 401(k) Plan contributions, each of which
were Company benefits which did not discriminate in scope, terms or
operation in favor of the Executive Officers and were available
generally to all salaried employees of the Company.

For 1996, includes (i) a profit sharing contribution partially in the
form of cash and partially in the form of Shares made by the Company to
the account of each qualifying employee, including each Executive
Officer, under the 401(k) Plan, which contribution was equal to 3% of
such employee's taxable wages, subject to certain limitations, and was
based on the market value of the Shares on December 31, 1996, which was
$18.75 per Share; and (ii) a matching contribution in the form of
Shares made by the Company to the account of each qualifying employee,
including each Executive Officer, under the 401(k) Plan, which
contribution was equal to 50% of such employee's contributions to his
or her account under the 401 (k) Plan, subject to a maximum employee
contribution of 6% of eligible compensation, and was based on the
market value of the Shares on December 31, 1996, which was $18.75 per
Share (the "401(k) Contribution").

As to Mr. Davis, includes Life Insurance Premiums in the amount of
$11,340, and a 401(k) Contribution in the amount of $9,000. For 1996,
includes $75,000 of income associated with the exercise on February 22,
1996, of options on 12,000 Shares at an exercise price of $5.125, which
Shares were valued at $11.375 on the date of exercise.

As to Mr. Hughes, includes Life Insurance Premiums in the amount of
$6,318, and a 401(k) Contribution in the amount of $9,000.

As to Mr. Teagle, includes Life Insurance Premiums in the amount of
$4,050, and a 401(k) Contribution in the amount of $9,000.

As to Mr. Jenkins, includes Life Insurance Premiums in the amount of
$1,700, and a 401(k) Contribution in the amount of $8,420.

As to Mr. Stephens, includes Life Insurance Premiums in the amount of
$358, and a 401(k) Contribution in the amount of $8,198. For 1996,
includes $36,317 of income associated with the exercise of options on a
total of 4,710 Shares, all at an exercise price of $5.125, at various
times from January 15, 1996 to August 28, 1996, which Shares were
valued at prices ranging from $11.375 to $15.875 on the dates of
exercise.

(5) Includes a cash bonus which was earned in the year reported, but which
was paid in the following calendar year.

(6) These options were granted to Mr. Davis on May 6, 1996 and became 100%
exercisable six months after the date of grant. These options terminate
seven years from the date of grant and are exercisable at a per Share
price of $11.50.

(7) Includes a bonus earned by Mr. Hughes for calendar year 1996 in the
amount of $235,724, the value of which was paid in Shares, net of
taxes, by the issuance of 9,013 Shares on January 6, 1997.

(8) Of the total options granted to Mr. Hughes in 1996, 35,833 options were
granted on May 6, 1996, for a 10-year term, became 100% exercisable six
months after the date of grant at a per Share price of $11.50; 94,144
options were granted on December 9, 1996, for a ten-year term and will
be exercisable at the annual rate of 33 1/3% commencing six months from
the date of grant at a per Share price of $15.375; and 5,856 options
were granted on December 9, 1996, for a 7-year term and will be
exercisable at an annual rate of 33 1/3% commencing six months from the
date of grant at a per Share price of $15.375.

<PAGE>

(9) Includes a bonus earned by Mr. Teagle for calendar year 1996 in the
amount of $170,128 the value of which was paid in Shares, net of taxes,
by the issuance of 6,442 Shares on January 6, 1997.

(10) Of the total options granted to Mr. Teagle in 1996, 46,250 options were
granted on May 6, 1996, for a 10-year term, became 100% exercisable six
months after the date of grant at a per Share price of $11.50; and
50,000 options were granted on December 9, 1996, for a 10-year term,
and will be exercisable at the annual rate of 33 1/3% commencing six
months from the date of grant at a per Share exercise price of $15.375.

(11) Of the total options granted to Mr. Jenkins in 1996, 1,340 were granted
on May 6, 1996, became 100% exercisable six months after the date of
grant, terminate 10 years from the date of grant and are exercisable at
a per Share price of $11.50; and 27,500 were granted on December 9,
1996, become 20% exercisable annually, terminate 10 years from the date
of grant and are exercisable at a per Share price of $15.375.

(12) Of the total options granted to Mr. Stephens in 1996, 2,416 were
granted on May 6, 1996, became 100% exercisable six months after the
date of grant, terminate 10 years from the date of grant and are
exercisable at a per Share price of $11.50; and 27,500 were granted on
December 9, 1996, become 20% exercisable annually, terminate 10 years
from the date of grant and are exercisable at a per Share price of
$15.375.

(13) There were no restricted stock awards or long term incentive plan
payouts for any of the last three fiscal years.

Option/Stock Appreciation Rights Grants

During the fiscal year ended December 31, 1996, the following options were
granted to the Executive Officers.
<TABLE>
<CAPTION>

OPTION/SAR GRANTS IN LAST FISCAL YEAR

Individual Grants

Percent of
Number of Total Potential Realizable Value at
Securities Options/SARs Exercise Assumed Annual Rates of
Underlying Granted to or Base Stock Price Appreciation for
Option/SARs Employees Price Expiration Option Term
Name Granted (#) in Fiscal Year ($/Sh) Date 5% ($) 10% ($)
--------------------- ----------- -------------- ------- ---------- -----------------------------

<S> <C> <C> <C> <C> <C> <C>
Irvin H. Davis 20,000 2.16% $11.50 5/5/2003 $ 93,633 $ 218,205

Victor A. Hughes, Jr. 35,833 3.88% $11.50 5/5/2006 $259,155 $ 656,749
5,856 .64% $15.375 12/8/2003 $ 36,654 $ 85,419
94,144 10.19% $15.375 12/8/2006 $910,302 $2,306,885

James C. Teagle 46,250 5.01% $11.50 5/5/2006 $334,493 $ 847,672
50,000 5.41% $15.375 12/8/2006 $483,463 $1,225,190

W. Lawrence Jenkins 1,340 .15% $11.50 5/5/2006 $ 9,691 $ 24,560
27,500 2.98% $15.375 12/8/2006 $265,905 $ 673,854

James L. Stephens 2,416 .26% $11.50 5/5/2006 $ 17,473 $ 44,281
27,500 2.98% $15.375 12/8/2006 $265,905 $ 673,854

</TABLE>

<PAGE>

Option/Stock Appreciation Rights Exercises and Year-End Values

The table below sets forth information with respect to (i) the aggregate number
of options/stock appreciation rights exercised, and the values realized in
respect thereof, by the Executive Officers during the fiscal year ended December
31, 1996 and (ii) the aggregate number of options/stock appreciation rights, and
the value of the in-the-money options/stock appreciation rights, in each case
held by the Executive Officers at the end of such fiscal year.
<TABLE>
<CAPTION>

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES

Number of
Securities
Underlying Value of Unexercised
Unexercised in-the-Money
Options/SARs Options/SARs
Shares Value at Fiscal Year-End at FY-End ($)
Acquired on Realized (#) Exercisable/ Exercisable/
Name Exercise (#) ($) Unexercisable Unexercisable (1)
- -------------- ------------ ------- ---------------- ----------------------

<S> <C> <C> <C> <C>
Irvin H. Davis 12,000 $75,000 166,333 / 25,000 $1,992,955 / $340,625

Victor A. Hughes, Jr. - 0 - - 0 - 178,500 / 121,500 $2,061,960 / $630,438

James C. Teagle - 0 - - 0 - 67,750 / 82,250 $ 574,500 / $527,531

W. Lawrence Jenkins - 0 - - 0 - 12,063 / 43,584 $ 129,006 / $271,749

James L. Stephens 4,710 $36,317 37,952 / 38,250 $ 501,694 / $239,281
- -----------------

</TABLE>

(1) The value reported herein is based on a per Share price of $18.75,
which is the closing price of the Shares on December 31, 1996, as
reported on the American Stock Exchange.

Long-Term Incentive Plan Awards

The Company made no long-term incentive plan awards to any Executive
Officer during the fiscal year ended December 31, 1996.

Executive Employment Agreements

On June 21, 1996, the Company entered into three-year Employment Agreements
with both Messrs. Hughes and Teagle providing for an annual base salary of
$250,000 for Mr. Hughes and $180,000 for Mr. Teagle, to be increased from time
to time by the Board in its sole discretion. The Agreements provide that the
officers (1) serve the Company on a full-time basis, (2) perform such duties and
responsibilities as may be designated by the Board and (3) devote substantially
all of their business time and best efforts, business judgement, skill and
knowledge exclusively to the advancement of the business and interests of the
Company.

In the event of an early termination of employment other than for cause,
each agreement provides that, at the officer's option, (1) he may either
continue to receive his base salary for the term of the agreement or its present
value in a lump sum, and (2) continue to participate in the Company's medical
and life insurance arrangement for employees during the term of the Agreement or
be paid a lump sum present value of the cost of such insurance coverage. The
officer will also be deemed to have satisfied the vesting requirements for
benefits under the SERP and all stock options which would otherwise become
vested during the term of the Employment Agreement will be immediately vested in
the event of an early termination of employment other than for cause.

<PAGE>

Supplemental Executive Retirement Plan

The Supplemental Executive Retirement Plan (the "SERP") provides additional
retirement benefits for key executive employees (the "Participants"). In the
case of Messrs. Davis, Hughes and Teagle, the SERP provides (i) such Participant
with a lifetime benefit of 50% of final average annual base salary, less social
security benefits (except in the case of Mr. Davis, whose benefits are not
reduced by the amount of his social security benefits) and the annuitized
equivalent of profit sharing contributions by the Company to the account of such
Participant under the 401(k) Plan, and (ii) the surviving spouse of such
Participant with a lifetime benefit of 50% of such Participant's benefit. The
SERP also provides Messrs. Davis, Hughes and Teagle and their spouses, with
lifetime medical coverage (which is intended to be roughly equivalent to that
provided by the Company for the Executive Officers). In the case of each other
Participant, the SERP provides a 15-year benefit (reduced in any case in which
such Participant has less than 20 years of service) equal to 40% of final
average annual base salary, less social security benefits and the annuitized
equivalent of profit sharing contributions by the Company to the account of such
Participant under the 401(k) Plan. Benefits under the SERP generally vest only
if the applicable Participant remains in the Company's employ for a period
ranging from two to five years after commencement of his participation in the
SERP (depending upon such Participant's age at the commencement of his
participation in the SERP). However, if a change of control of the Company (as
defined in the SERP) occurs and a Participant leaves the employ of the Company
under certain circumstances, then (a) in the case of Messrs. Hughes and Teagle,
such Participant would be entitled to his benefits, commencing immediately and
without regard to the vesting requirement, and (b) in the case of each other
Participant, such Participant, at his option, would be entitled to either a
continuation of his base salary for a period of 18 months or his vested benefits
under the SERP. As Mr. Davis retired on December 31, 1996, he is currently
receiving payments pursuant to the SERP.

The table below sets forth information with respect to the estimated annual
benefit (determined before any reduction for social security benefits and 401(k)
Plan contributions as described above) payable upon retirement based upon
specified compensation under the SERP and the years of service classifications
under the SERP.

PENSION PLAN TABLE

Years of Service
Final Average
Annual
Remuneration 15 20 25 30 35
-------- ------- ------- ------- ------- -------
$125,000 $37,500 $50,000 $50,000 $50,000 $50,000
150,000 45,000 60,000 60,000 60,000 60,000
175,000 52,500 70,000 70,000 70,000 70,000
200,000 100,000 100,000 100,000 100,000 100,000
225,000 112,500 112,500 112,500 112,500 112,500
250,000 125,000 125,000 125,000 125,000 125,000
300,000 150,000 150,000 150,000 150,000 150,000

<PAGE>

The compensation base used by the SERP is average base salary for the final
three years of employment. As of December 31, 1996, the base salary and
estimated years of service credit for each Executive Officer are listed below:

Mr. Davis $250,000 29 years
Mr. Hughes $250,000 14 years
Mr. Teagle $180,000 24 years
Mr. Jenkins $115,000 26 years
Mr. Stephens $107,000 10 years

Because the SERP generally provides a 50% gross benefit to Messrs. Davis,
Hughes and Teagle and a 40% gross benefit to the other Participants, the Pension
Plan Table above reflects a 50% benefit for salaries above $175,000 and a 40%
benefit for salaries up to and including $175,000. The benefits shown in the
Pension Plan Table above will be reduced by (i) the amount of social security
benefits received by the applicable Participant and (ii) the annuitized
equivalent of profit sharing contributions made by the Company to the account of
such Participant under the 401(k) Plan. At retirement, benefits under the SERP
are paid in annuity form. Messrs. Davis, Hughes and Teagle are expected to
receive benefits in lifetime 50% spousal joint and survivor annuity form. The
other Participants are expected to receive benefits in 15-year certain annuity
form.

Stock Investment Plan

The Company has a Stock Investment Plan (the "SIP") pursuant to which
participating employees and directors of the Company may purchase Shares. Under
the SIP, the Company is authorized to purchase up to an aggregate of 200,000
Shares on behalf of such participating employees and directors. Each
participating employee pays for his or her Shares pursuant to a monthly payroll
deduction plan established by the participating employees, and each
participating director pays for his Shares pursuant to a deduction from such
director's retainer. However, pursuant to the SIP and subject to certain
limitations, the Company contributes a portion of the purchase price of such
Shares, which contribution equals the following percentage of the aggregate
monthly deduction from such employee's pay or such director's retainer: (i) 25%
of each monthly deduction less than or equal to $50; (ii) 20% of each monthly
deduction greater than $50 but less than or equal to $100; and (iii) 15% of each
monthly deduction greater than $100 but less than or equal to $1,700. The
Company also pays all commissions and related expenses of the SIP. The Company's
contribution and expenses incurred in administering the SIP totaled
approximately $36,700 for the year ended December 31, 1996.

During 1996, the Company paid the following amounts on behalf of the
following directors:

Director Stock Investment Plan
Name Company Contribution
---- --------------------
D. Pike Aloian $ 1,585
Benjamin C. Bishop, Jr. $ 3,090
David B. Hiley $ 3,090
G. Christian Lantzsch $ 3,090
William L. Mack $ 685
Lee S. Neibart $ 685
W. Edward Scheetz $ 685
George F. Staudter $ 2,402
S. D. Stoneburner $ 3,090
-------

Total Contributed on
behalf of Directors $18,402

<PAGE>

Compensation Committee Report on Executive Compensation

Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the following report and
the information included under the "Shareholder Return Performance Presentation"
including the performance graph which follows shall not be deemed to be
incorporated by reference into any such filings.

The Compensation Committee consists of David B. Hiley, G. Christian
Lantzsch, W. Edward Scheetz and George F. Staudter, Chairman, all of whom are
outside directors of the Company. The Compensation Committee is responsible for
setting the total compensation of the Chief Executive Officer (the "CEO") and
the Executive Vice President and Chief Operating Officer (the "COO") and for
reviewing the compensation, including year-end bonuses, proposed by management
for all other Executive Officers of the Company. It has been the practice of the
Compensation Committee to have the Board of Directors ratify the salaries and
bonuses of the CEO and the COO. The Compensation Committee is also responsible
for (i) making grants under the Company's stock option plans, (ii) making
contributions, subject to approval by the Board of Directors, under the 401(k)
Plan and any other plan or plans as may be determined by the Board of Directors,
and (iii) approving participation in the SERP. It is the Committee's objective
to structure executive compensation packages that have and will continue to
provide incentives to create shareholder value. Through stock options and other
stock related awards, the Compensation Committee has sought to forge a strong
link between Share performance and Executive Compensation. In addition, the
Company believes that the Executive Compensation program should attract, retain
and motivate a quality, performance-oriented management team.

Since the amendment on August 15, 1996, by the Securities and Exchange
Commission of Rule 16b-3 under the Securities Exchange Act of 1934, as amended,
any grant by the Company to, or reacquisition by the Company from, its Executive
Officers of securities or interests in securities is subject to certain
prohibitions on short-swing profits set forth in the new Rule 16b-3 unless such
transaction has been approved by (a) a committee consisting of two or more
"non-employee" directors, (b) the entire Board of Directors, or (c) a majority
of the shareholders voting at a shareholders meeting. Mr. Hiley does not qualify
as a "non-employee" director under new Rule 16b-3 because of the consulting fees
he receives from the Company. Accordingly, since August 15, 1996, Mr. Hiley has
not participated in the granting of any options to purchase securities, or the
awarding of any securities, to any Executive Officers.

Currently, the key elements of the Company's compensation package for the
Executive Officers are base salary, bonuses, contributions to the 401(k) Plan,
stock options, and participation in the SERP.

In determining the compensation paid to the Executive Officers in 1996, the
Compensation Committee took into consideration a number of factors, including
among others, the following: (i) increase in shareholder value; (ii) the
improvement in the Company's operations, including increases in percent leased
rates and rental revenues and the material reduction in the Company's
indebtedness; (iii) the higher levels of indebtedness that the Company was
required to assume in connection with the merger of Koger Properties, Inc. with
and into the Company (the "Merger") and the successful refinancing of such
indebtedness; and (iv) the establishment of an alliance with a strategic
investor.

In December 1996, the Company refinanced the $190 million of restructured
debt it assumed upon its Merger with KPI and thereby eliminated the restrictive
debt covenants. As a result, the Company can now begin new construction and
development activities and make strategic acquisitions in the suburban office
market.

<PAGE>

The Company's strategy has been to stabilize and then improve its financial
condition by increasing occupancy and revenues and reducing and refinancing
indebtedness. The Company has made significant progress in these areas. During
1996, the Company continued to improve its operating efficiencies by (i)
increasing the percent leased rate of its buildings to approximately 92%, and by
(ii) increasing its rental revenues by approximately $3.5 million. In October
1996, the Company received $42.5 million in net proceeds from the sale of three
million Shares. The Company also reduced indebtedness by approximately $51.9
million, from approximately $254.9 million at the beginning of 1996 to
approximately $203 million at the end of the year. The Company's debt-to-total
market capitalization ratio improved from approximately 57% as of the end of
1995 to 34% as of the end of 1996.

During 1996, the Company commenced construction of two new office buildings
on some of its existing inventory of land held for development. Upon completion
in late 1997, the two new office buildings will contain approximately 106,000
net rentable square feet.

While the Compensation Committee considered all of the foregoing and
although the Committee has from time to time reviewed the executive compensation
levels of other real estate investment trusts and referred to other available
information concerning the salaries of executive officers in peer group
companies, it did not, and has not as yet, set any specific criteria in arriving
at any particular executive's compensation. Accordingly, based on the above, the
Compensation Committee made a subjective determination in setting the
compensation of the Executive Officers.

Through June 20, 1996, Irvin H. Davis served as Chief Executive Officer of
the Company. Under his leadership, rents improved and a strong office park
management team was developed. He was instrumental in designing the strategic
plan under which the Company currently operates. Mr. Davis retired as CEO on
June 20, 1996 and retired as an employee of the Company on December 31, 1996. He
remains Vice Chairman of the Board of Directors and serves as a consultant to
the Company. In arriving at the compensation paid to Mr. Davis, the Compensation
Committee considered his long experience in the development and management of
office parks and his proven ability to maintain high occupancy rates,
emphasizing and realizing increased return on the Company's assets. For
information concerning Mr. Davis' compensation paid by, and consulting agreement
with, the Company, reference is made to "Executive Compensation" and "Certain
Relationships and Transactions," respectively.

Effective June 21, 1996, Victor A. Hughes, Jr., President and Chief
Financial Officer of the Company (the "CFO") was elected Chairman of the Board
of Directors and CEO of the Company. In arriving at the compensation paid the
current CEO, the Compensation Committee considered the outstanding performance
of the Company under his leadership as both CEO and CFO, as well as his
experience in corporate finance. It should also be noted that during 1996, the
Company was able to maintain above average percent leased rates (approximately
92% of net rentable square feet at December 31, 1996), and to increase the
average annual rent per square foot leased by approximately 3.8%, from $13.72 at
December 31, 1995 to $14.24 at December 31, 1996. It should also be noted that
during 1996, shareholder value increased by 76%, from $10.625 per Share at
December 31, 1995 to $18.75 per Share at December 31, 1996.

In connection with his election as CEO, and in recognition of his
outstanding performance as CFO, Mr. Hughes' annual salary was increased to
$250,000 in June 1996, from $229,200 in 1995. In addition, in November 1996, he
was awarded a bonus of $235,725, which bonus was paid in January 1997 in 9,013
Shares and $73,476 in cash. Also during 1996, Mr. Hughes was granted options to
purchase 35,833 Shares and 100,000 Shares at exercise prices of $11.50 and
$15.375, respectively, the corresponding market prices of the Shares on the
respective dates of grant. The option to purchase the 35,833 Shares became
exercisable six months after the date of grant, and the option to purchase the
100,000 Shares is exercisable at the annual cumulative rate of 33 1/3% of the
Shares commencing six months from the date of grant.

The Company also entered into three-year employment agreements commencing
June 21, 1996, with both the CEO and COO. For information concerning these
contracts reference is made to "Executive Compensation -- Executive Employment
Agreements."

<PAGE>

Conclusion. The Compensation Committee believes that the compensation
packages of the Company's Executive Officers have been generally commensurate
with the Company's financial performance and the total value received by its
shareholders. The Compensation Committee intends to continue review of Executive
Officers compensation with the assistance of an outside compensation consultant
and will make such modifications in its approach to executive compensation as it
determines to be appropriate in light of the Company's financial condition, the
performance of its officers and peer group analysis.

The foregoing report has been furnished by the Compensation Committee.

David B. Hiley
G. Christian Lantzsch
W. Edward Scheetz
George F. Staudter, Chairman

Shareholder Return Performance Presentation

The line graph below sets forth the cumulative total shareholder return on
the Shares as compared with the cumulative total return of each of the American
Stock Exchange Market Value Index and the NAREIT Total Return Index, in each
case (i) on an annual basis for the period commencing December 31, 1991 and
ending December 31, 1996 and (ii) assuming that $100 was invested on December
31, 1991 and that all dividends were reinvested.

(graph appears here charting the data shown below.)

KE = Koger Equity, Inc.
AMEX = American Stock Exchange Market Value Index
NAREIT = NAREIT Total Return Index

1991 1992 1993 1994 1995 1996
- --------------------------------------------------------------------------------
KE $100 $116 $213 $181 $266 $469
AMEX $100 $101 $121 $110 $139 $148
NAREIT $100 $112 $133 $134 $159 $215
- --------------------------------------------------------------------------------

<PAGE>

The Company has used a different industry group for compensation
comparisons from that used for its shareholder return performance presentation.

Compensation Committee Interlocks and Insider Participation

David B. Hiley, a director who is not an officer or employee of the
Company, served on the Compensation Committee during 1996. Beginning in 1996,
the Company entered into a consulting agreement with Mr. Hiley pursuant to which
Mr. Hiley provides advice with respect to the financial aspects of the Company's
strategic plan (the "Hiley Consulting Agreement").

Pursuant to the Hiley Consulting Agreement, which agreement is subject to
periodic evaluation by the Board of Directors, Mr. Hiley was paid a fee of
$146,100 in 1996. Mr. Hiley also received from the Company a fee of $204,000 for
his role in negotiating the sale of three million Shares to Apollo Real Estate
Investment Fund II, L.P. (For information concerning this transaction, reference
is made to "Certain Relationships and Transactions" in this Proxy Statement.)

CERTAIN RELATIONSHIPS AND TRANSACTIONS

From its organization in 1988, the Company's business involved the
acquisition from KPI and its affiliates of completed and substantially leased
commercial office buildings and the operation of such properties for the
production of rents. As of December 31, 1996, the Company owned 215 commercial
properties in 13 metropolitan areas in the southeastern and southwestern United
States. A total of 126 buildings was acquired from KPI or its affiliates through
1990. During 1993, an additional 93 buildings were acquired from KPI as the
result of the Merger, which was consummated on December 21, 1993 as part of the
Plan of Reorganization in the KPI Bankruptcy. As a result of the Merger, the
Company also assumed property management agreements to manage (i) 20 office
buildings owned by Centoff Realty Company, Inc., a subsidiary of Morgan Guaranty
Trust Company of New York, and (ii) 92 office buildings owned by The Koger
Partnership, Ltd. ("TKP").

During 1995, TKP sold its 92 buildings and parcels of related land to Koala
Miami Realty Holding, Inc., Koala Norfolk Realty Holding, Inc., Koala Raleigh
Realty Holding, Inc., Koala Richmond Realty Holding, Inc., and Koala Tampa
Realty Holding, Inc., (each a "Koala Entity"), all of which are wholly-owned
subsidiaries of a co- mingled pension trust for which Morgan Guaranty Trust
Company of New York is the trustee and J. P. Morgan Investment Management Inc.
is the investment manager.

Simultaneously with the sale by TKP of its properties, the Company sold to
certain Koala Entities three buildings and certain parcels of related land
located in or contiguous to office centers substantially owned by TKP. A certain
Koala Entity exercised an option to purchase from the Company two additional
parcels of land in Miami, Florida, in February 1997 for a purchase price of
$2.97 million.

In connection with the acquisition by the Koala Entities from TKP and the
Company of the properties described above, Koala entered into a Management
Agreement with Koger Realty Services, Inc., a Delaware corporation ("KRSI"), in
which the Company has a significant economic interest, pursuant to which KRSI
will manage such properties for five years.

KRSI was incorporated to provide, among other things, leasing and property
management services to owners of commercial office buildings. The Company owns
all of the preferred stock of KRSI, which currently represents in excess of 95%
(by value) of the economic benefits of KRSI. Such preferred stock is nonvoting
stock and is not convertible into the common stock of KRSI while held by the
Company. All of the outstanding common stock of KRSI was acquired by officers
and employees of KRSI, including: Victor A. Hughes, Jr., James C. Teagle, W.
Lawrence Jenkins, James L. Stephens (officers of the Company) and certain other
employees of KRSI who are not employed by the Company. In addition to serving as
officers of KRSI, Messrs. Hughes, Teagle and Jenkins comprise the Board of
Directors of KRSI. In the event that any of the forgoing persons leave the
employ of KRSI, KRSI has the right to reacquire any Shares of common stock of
KRSI held by such officer or employee.

<PAGE>

The Company accounts for its investment in the preferred stock of KRSI
using the equity method. During 1996, KRSI received approximately $5.3 million
in management fees from the Koala Entities and other entities for which it
performs services.

Messrs. Mack, Neibart and Scheetz were elected to the Company's Board under
the terms of an agreement dated October 10, 1996 between the Company and an
affiliate of Apollo Real Estate Investment Fund II, L. P. ("Apollo") pursuant to
which Apollo purchased three million Shares from the Company for $43.5 million
($14.50 per share). Apollo has been granted registration rights and a
conditional exemption from certain of the Company's takeover defenses and
provides that for a period of three years (subject to earlier termination under
certain circumstances): (i) Apollo may purchase up to 25% of the Company's
outstanding stock; (ii) Apollo will be entitled to Board representation of up to
three directors on a board of not more than 12 (depending upon Apollo's level of
ownership of the common stock); and (iii) Apollo will not acquire more than 25%
of the Company's outstanding stock and will vote its Shares as to certain
matters either in accordance with the recommendation of the Board or
proportionately with other shareholders, unless the Company breaches its
agreements or, without Apollo's consent, the Company takes certain significant
actions such as certain amendments of the Company's organizational documents,
liquidation, termination of REIT status, sale of the Company, acquisitions or
dispositions over a certain size, issuance of more than 9.8% of the outstanding
common stock to a person or group or failure by the Company to employ its
takeover defenses against another person who holds (or tenders for) 15% or more
of the common stock.

In connection with the above transaction, Rothschild Realty, Inc., which
employs Mr. Aloian as a Managing Director, provided a fairness opinion to the
Company's Board of Directors, for which Rothschild received a fee from the
Company of $350,000. Also, Mr. Hiley received from the Company a fee of $204,000
for his role in negotiating the transaction.

Pursuant to a Consulting Agreement with the Company, which was subject to
periodic evaluation by the Board of Directors, Mr. Hiley provided advice with
respect to the financial aspects of the Company's strategic plan and was paid a
fee of $146,100 for 1996.

Mr. Davis retired as an employee of the Company on December 31, 1996, but
continues to serve the Company as a consultant. Pursuant to the Consulting
Agreement between Mr. Davis and the Company, he will receive a consulting fee of
$50,000 per year through December 31, 1999.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934 requires that the
Company's directors and executive officers file with the Securities and Exchange
Commission (the "SEC") and the American Stock Exchange initial reports of
ownership and reports of changes in ownership of the Company's equity
securities. Directors and executive officers are required by regulations of the
SEC to furnish the Company with copies of all Section 16(a) forms they file.

To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports not previously reported were required, during the fiscal year ended
December 31, 1996, its directors and executive officers complied with all
Section 16(a) filing requirements.

<PAGE>

SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Beneficial Owners

The table below sets forth certain information with respect to the
beneficial ownership of Shares as of February 20, 1997 by each person known to
the Company to be the beneficial owner of more than 5% of the Shares. Each of
the persons listed has sole dispositive and voting power with respect to the
Shares indicated. The information contained in the table below is based upon
information contained in Schedule 13D filings with the Securities and Exchange
Commission which filings were supplied to the Company.

Name and Address of Number of Shares
Beneficial Owner Percent of Class Beneficially Owned
---------------- ---------------- ------------------
Apollo Real Estate Investment
Fund II, L. P.
130 Avenue of the Americas
New York, New York 10019 22.5% 4,713,598

Alliance Capital Management, Inc.
787 Seventh Avenue
New York, New York 10019 11.7% 2,452,574

Security Ownership of Management

The table below sets forth certain information with respect to the
beneficial ownership of Shares held as of February 20, 1997 (i) individually by
each Executive Officer and each director of the Company and (ii) by all
Executive Officers and directors of the Company. Except as noted below, each of
the persons listed below has (a) sole dispositive and voting power or (b) shared
dispositive and voting power with a spouse, in each case with respect to the
Shares indicated. The address of each Executive Officer and director listed
below is in care of the Company. The information contained in the table below is
based upon information supplied to the Company by the individuals named below.

Number of Shares(1) (2) (3)
Percent Beneficially
Name of Beneficial Owner of Class Owned
- ------------------------ -------- -----
D. Pike Aloian .012% 2,479
Benjamin C. Bishop, Jr .103% 21,618
Irvin H. Davis .859% 181,592
David B. Hiley .024% 5,078
Victor A. Hughes, Jr 1.109% 234,765
G. Christian Lantzsch .026% 5,493
William L. Mack .002% 412
Lee S. Neibart .002% 412
W. Edward Scheetz .002% 412
George F. Staudter .024% 5,045
S. D. Stoneburner .080% 16,813
James C. Teagle .392% 82,482
W. Lawrence Jenkins .095% 19,969
James L. Stephens .251% 52,726
---- ------

Total Shares Held by all
Executive Officers and
Directors as a Group
(14 persons) 2.930% 629,296
- -----------------

<PAGE>

(1) Includes for Messrs. Davis, Hughes, Teagle, Jenkins and Stephens
166,333, 200,000, 73,111, 17,424 and 46,922 Shares, respectively, which
such Executive Officers have the right to acquire pursuant to the
exercise of the options held by them under the 1988, 1993 and 1996
Stock Option Plans. Also includes 37 Shares which Mr. Stephens has the
right to acquire and 47 Shares which Mr. Lantzsch has the right to
acquire, each upon the exercise of warrants.

(2) Includes for Messrs. Davis, Hughes, Teagle, Jenkins and Stephens 3,259,
3,252, 2,928, 2,545, and 2,212 Shares, respectively, allocated to the
participant's account under the 401(k) Plan.

(3) For more informaiton concerning the Shares held by the Company's
officers and directors, reference is made to "Election of Directors --
Nominees."

INDEPENDENT PUBLIC ACCOUNTANTS

During the year ended December 31, 1996, the Company engaged Deloitte &
Touche LLP to provide certain audit services. The services included the audit of
the annual financial statements, a review of the quarterly data furnished by the
Company to the SEC for the quarters ended March 31, June 30, and September 30,
1996, services performed in connection with filing of this Proxy Statement and
the Annual Report on Form 10-K by the Company with the SEC, attendance at
meetings with the Audit Committee and consultation on matters relating to
accounting, tax and financial reporting. The Audit Committee approved all
services performed by Deloitte & Touche LLP in advance of their performance.
Deloitte & Touche LLP has acted as independent public accountants for the
Company since its organization on June 21, 1988. Neither Deloitte & Touche LLP
nor any of its associates have any relationship to the Company or any of its
subsidiaries except in its capacity as auditors.

It is expected that representatives of the independent public accountants
will attend the Annual Meeting and be available to respond to appropriate
questions and be permitted to make a statement concerning the Company should
they desire.

As of the date hereof, the Board of Directors has not selected independent
public accountants to audit the books and accounts of the Company for the fiscal
year ending December 31, 1997. It is anticipated that auditors will be selected
later in the fiscal year.

OTHER BUSINESS

It is not anticipated that there will be presented to the Annual Meeting any
business other than the election of directors. A reasonable time before this
solicitation of proxies, the Board of Directors was not aware of any other
matters to be presented for action at the Annual Meeting or any adjournment
thereof. If any other business should properly come before the Annual Meeting or
any Adjournment thereof, the persons named on the enclosed proxy will have
discretionary authority to vote such proxy in accordance with their best
judgement.

SHAREHOLDER PROPOSALS

Proposals of shareholders to be presented at the 1998 Annual Meeting of
Shareholders of the Company must be received at the Company's executive offices
by December 19, 1997, to be considered for inclusion in the Company's proxy
materials relating to such meeting. Such proposals must comply with the SEC
proxy rules relating to shareholder proposals in order to be included in the
Company's proxy material.

<PAGE>

GENERAL

The Company will bear the costs of solicitation of proxies. In addition to
the use of the mails, proxies may be solicited by personal interview, telephone
and telegram by directors, officers and employees of the Company, and no
additional compensation will be paid to such individuals. The Company also has
retained Morrow & Co., Inc., 909 Third Avenue, New York, New York 10022 to
solicit proxies by mail, personal interview, telephone, or telegraph, for which
service the Company anticipates a cost not in excess of $5,000 plus reasonable
out-of-pocket expenses. Arrangements may also be made with the stock transfer
agent and with brokerage houses and other custodians, nominees, and fiduciaries
who are record holders of Shares for the forwarding of solicitation material to
the beneficial owners of Shares. The Company will, upon the request of any such
entity, pay such entity's reasonable expenses for completing the mailing of such
material to such beneficial owners.

Consistent with state law and pursuant to the Company's bylaws, a majority
of the Shares entitled to vote on a particular matter, present in person or
represented by proxy, constitutes a quorum as to such matter.

The twelve nominees for election as directors at the Annual Meeting who
receive the greatest number of votes properly cast for the election of directors
shall be elected directors. A majority of the votes properly cast is necessary
to approve any other matter which comes before the Annual Meeting, except as
otherwise required by law, the Articles of Incorporation, or the Company's
bylaws.

The Company will count the total number of votes cast "for" approval of
proposals, other than the election of directors, for purposes of determining
whether sufficient affirmative votes have been cast. The Company will count
Shares represented by proxies that withhold authority to vote for a nominee for
election as a director or that reflects abstentions and "broker non-votes"
(i.e., Shares represented at the Annual Meeting held by brokers or nominees as
to which (i) instructions have not been received from the beneficial owners or
persons entitled to vote and (ii) the broker or nominee does not have the
discretionary voting power) only as Shares that are present and entitled to vote
on the matter for purposes of determining the presence of a quorum, but neither
abstentions nor broker non-votes will have any effect on the outcome of voting
on the matter.

The Company's Annual Report to Shareholders for the fiscal year ended
December 31, 1996, which contains financial statements and other information, is
being mailed to shareholders with this Proxy Statement, but it is not to be
regarded as proxy soliciting material.

AN ADDITIONAL COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FILED WITH THE
SEC MAY BE OBTAINED, WITHOUT CHARGE, BY ANY SHAREHOLDER UPON WRITTEN REQUEST TO
THE CORPORATE SECRETARY, KOGER EQUITY, INC., POST OFFICE BOX 4339, JACKSONVILLE,
FLORIDA 32201; PROVIDED, HOWEVER, THAT A COPY OF THE EXHIBITS TO SUCH ANNUAL
REPORT ON FORM 10-K, FOR WHICH THERE MAY BE A REASONABLE CHARGE, WILL NOT BE
SUPPLIED TO SUCH SHAREHOLDER UNLESS SPECIFICALLY REQUESTED.

<PAGE>
APPENDIX

KOGER EQUITY, INC.
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS

The undersigned hereby appoints Victor A. Hughes, Jr., James C. Teagle, and W.
Lawrence Jenkins, and each of them, his (their) true and lawful agents and
proxies with full power of substitution in each, and hereby authorizes them to
vote at the Annual Meeting of Shareholders of Koger Equity, Inc. to be held at
the Omni Jacksonville Hotel, 245 Water Street, Jacksonville, Florida on Tuesday,
May 20, 1997 at 11:00 A.M., Eastern Daylight Saving Time, and any adjournment
thereof, all shares of Common Stock of Koger Equity, Inc. that the undersigned
would be entitled to vote if personally present. The undersigned instructs such
proxies, or their substitutes, to vote as specified herein by the undersigned
and to vote in such manner as they may determine on any other matters that may
properly come before the meeting or any adjournment thereof.

Dated: ______________________________________, 1997

_______________________________________________
(Signature)
_______________________________________________
(Signature if held jointly)

THIS PROXY MUST BE SIGNED EXACTLY
AS THE NAME(S) APPEARS HEREON

Executors, administrators, trustees, etc.
should give full title as such. If the signer
is a corporation, please sign full corporate
name by duly authorized officer. If shares are
held jointly, signature should include both
names.
<PAGE>

KOGER EQUITY, INC.
ANNUAL MEETING OF SHAREHOLDERS, MAY 20, 1997
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS

This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder(s). If no direction is made, this proxy will be
voted for Proposal 1.

1. ELECTION OF DIRECTORS

FOR ALL NOMINEES LISTED BELOW (OR) WITHHOLD AUTHORITY
(except as marked to to vote for all nominees
the contrary below) [ ] listed below [ ]

INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below:

NOMINEES: [D. Pike Aloian; Benjamin C. Bishop, Jr.; Irvin H. Davis; David B.
Hiley; Victor A. Hughes, Jr.; G. Christian Lantzsch; William L. Mack; Lee S.
Neibart; W. Edward Scheetz; George F. Staudter; S. D. Stoneburner; and James C.
Teagle]

2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE

<PAGE>

1996 was a year of very significant achievement for Koger Equity. During
the year, the Company enjoyed excellent operating results from its existing
portfolio of suburban office properties, initiated construction of new buildings
in several of its markets and completed two major capital transactions which
will enable it to take full advantage of new investment opportunities in the
years ahead. For 1997 and beyond, we are very pleased with our growing pipeline
of new development and acquisition opportunities and look forward to utilizing
our improved financial capacity to accelerate our favorable earnings momentum.

Review of 1996

During 1996, Koger Equity continued to enjoy growth and improvement of
rental revenues, with annualized rents passing $100 million early in the fourth
quarter. Occupancy in company-owned buildings exceeded 92%. New leases in
existing buildings totaled 679,000 feet, with rates on these leases averaging
$15.44 per foot (up 7.7%), as compared to an average rental rate of $14.33 for
the prior year. The weighted average term of these new leases increased to 46
months, up 21% from the comparable figure of 38 months for the prior year. We
enjoyed one of the highest retention rates in the industry by renewing leases
(63%) totaling 1,163,000 feet, with a 6.2% increase in rates.

Significant leasing activity for 1996 included:

+ a 142,800 square foot lease commencing in mid-1997 with Wellspring Resources
and a 142,800 square foot lease renewal with Blue Cross and Blue Shield of
Florida in Jacksonville, Florida.

+ a 217,547 square foot lease for renewal and expansion with the State of
Florida - Department of Labor and Employment Security in Tallahassee,
Florida.

+ a 57,650 square foot lease with Federal Emergency Management Agency of the
United States Government in Atlanta, Georgia.

+ a 51,275 square foot lease with ITT Hartford in San Antonio, Texas.

+ a 20,688 square foot lease with Compsource Acquisition in Charlotte, North
Carolina. Property operating expenses were stable at approximately 42% of
total rental revenues. Recurring expenditures for tenant and building
improvements declined by 8.9% at the same time the leased percentage was
improving.

During the fourth quarter, the Company completed a $190 million debt
refinancing with The Northwestern Mutual Life Insurance Company which eliminated
restrictive loan covenants that have limited our ability to grow. With the
private placement of $43.5 million of common stock with a strategic investor,
Apollo Real Estate Investment Fund II, L.P., in October, and a $50 million
revolving credit facility with First Union National Bank of Florida and Morgan
Guaranty Trust Company, Koger Equity now has the financial flexibility to
capitalize on an environment of improving market conditions. We began
construction of new buildings totaling 125,000 gross square feet in Charlotte
and Memphis late in the year.

The Company continued to reduce debt during 1996 by approximately $51.9
million (20.4%) from $254.9 million to $203 million and improved its
debt-to-total market capitalization ratio from 57% to 34%. Our strategy of
reducing debt and retaining earnings has been rewarded by the securities market.
The Company's common stock, traded on the American Stock Exchange, increased
76.5% from $10 5/8 to $18 3/4 per share, outperforming both NAREIT's total
return index for all companies (35.3%) and for office REITs (51.8%).

Funds from operations totaled $33.2 million for 1996, compared to $23.6
million for 1995 (excluding interest revenue associated with the TKPL mortgage
notes which Koger Equity acquired in 1995 and which were retired by TKPL in
1995). This $9.6 million increase in FFO represents a 40% improvement over
comparable 1995 results.

<PAGE>

In December, the Company's Board of Directors reinstated the payment of a
regular quarterly dividend. The payment commenced on February 10, 1997, at the
quarterly rate of $0.05 per share. Outlook for 1997

As we look forward to 1997, the nation's economy is displaying a nearly
ideal combination of reasonable inflation and moderate growth. New construction
appears to be in balance with potential tenant demand, and we have witnessed a
tightening of office markets in virtually all areas of the Company's activities.
In response to this condition, to serve our customers and to meet pent-up
demand, we have, since the beginning of the year, already approved construction
starts on four new buildings: two in Jacksonville, one in Atlanta and one in
Greenville, totaling 358,000 gross square feet. At this time, we have an
existing additional pipeline of development and acquisition prospects in our
markets of about 800,000 gross square feet.

We fully expect to continue these favorable trends throughout 1997. We will
continue to utilize existing cash, revolving credit arrangements, and additional
equity, when appropriate, to fund growth. Koger Equity currently holds a land
inventory of 151 acres which is debt-free, generally contiguous to the Company's
existing operating suburban centers and ready for new buildings. With this
investment, we have the ability to add $26 million to our existing annualized
rent stream of $100 million. As we analyze our options and implement our
strategic growth plan in various markets through construction and acquisitions,
I remain very optimistic about the future business opportunities for your
Company.

Respectfully,

/s/VICTOR A. HUGHES, JR.
------------------------
Victor A. Hughes, Jr.
Chairman and
Chief Executive Officer

The foregoing message to the Shareholders contains forward- looking statements
concerning 1997. The actual results of operations for 1997 could differ
materially from those projected because of factors affecting the financial
markets, reactions of the Company's existing and prospective investors, the
ability of the Company to identify and execute development projects and
acquisition opportunities, the ability of the Company to renew and enter into
new leases on favorable terms, and other risk factors. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Cautionary Statement Relevant to Forward-Looking Information for Purpose of the
'Safe Harbor' Provisions of the Private Securities Litigation Reform Act of
1995" in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996.

(Included with the following listing and key is a graphic representation of
locations plotted on a regional map of the United States of America) Serving the
Office Space Needs of Corporate America.)

1 Atlanta
2601 Flowers Road South
Atlanta, Georgia 30341
770/458-7231

1 Austin
3420 Executive Center Drive
Austin, Texas 78731
512/345-1893

1 Charlotte
4 East Center
5500 Executive Center Drive
Charlotte, North Carolina 28212
704/535-2203

Carmel Center
6701 Carmel Road
Charlotte, North Carolina 28226
704/535-2203

2 Columbia
201 Executive Center Drive
Columbia, South Carolina 29210
803/731-9440

1 El Paso
444 Executive Center Boulevard
El Paso, Texas 79902
915/532-3456

1 Greensboro
2211 West Meadowview Road
Greensboro, North Carolina 27407
910/294-6785

1 Greenville
150 Executive Center Drive
Greenville, South Carolina 29615
864/288-5250

1 Jacksonville
4 Beach Boulevard Center
4505 Beach Boulevard
Jacksonville, Florida 32207
904/398-9701
Baymeadows Center
8375 Dix Ellis Trail
Jacksonville, Florida 32256
904/398-9701

2 Little Rock
10809 Executive Center Drive
Little Rock, Arkansas 72211
501/224-1200

1 Memphis
65 Germantown Court
Cordova, Tennessee 38018
901/757-8118

3 Miami
8300 Northwest 53rd Street
Miami, Florida 33166
305/592-0681

2 Nashville
278 Franklin Road
Brentwood, Tennessee 37027
615/373-2773

3 Norfolk
#2 The Koger Center
Norfolk, Virginia 23502
757/461-9477

1 Orlando
4 Fashion Square Center
930 Woodcock Road
Orlando, Florida 32803
407/894-5851

University Center
3452 Lake Lynda Drive
Orlando, Florida 32817
407/894-5851

3 Raleigh
4 Glenwood Center
3700 National Drive
Raleigh, North Carolina 27612
919/782-4240

Crossroads Center
5540 Centerview Drive
Raleigh, North Carolina 27606
919/782-4240

3 Richmond
1500 Forest Avenue
Richmond, Virginia 23229
804/282-5461

1 St. Petersburg
877 Executive Center Drive W.
St. Petersburg, Florida 33702
813/576-1400

1 San Antonio
4538 Centerview Drive
San Antonio, Texas 78228
210/736-2494

1 Tallahassee
1311 Executive Center Drive
Tallahassee, Florida 32301
904/877-3151

3 Tampa
5415 Mariner Street
Tampa, Florida 33609
813/286-7921

1 Tulsa
9726 East 42nd Street
Tulsa, Oklahoma 74146
918/628-0810

1 Owned and managed by Koger Equity, Inc.
2 Managed by Koger Equity, Inc.
3 Managed by Koger Realty Services, Inc.
4 In multi-center cities the management office
is at this address.

Corporate Offices
3986 Boulevard Center Drive
Jacksonville, Florida 32207
904/398-3403

<PAGE>
Board of Directors
D. Pike Aloian
Benjamin C. Bishop, Jr.
Irvin H. Davis
David B. Hiley
Victor A. Hughes, Jr.
G. Christian Lantzsch
William L. Mack
Lee S. Neibart
W. Edward Scheetz
George F. Staudter
S. D. Stoneburner
James C. Teagle

Executive Officers
Victor A. Hughes, Jr.,
Chairman of the Board,
Chief Executive Officer,
President
and Chief Financial Officer

James C. Teagle,
Executive Vice President
and Chief Operating Officer

James L. Stephens,
Vice President
and Chief Accounting Officer

W. Lawrence Jenkins,
Vice President
and Corporate Secretary

Counsel
Martin, Ade, Birchfield & Mickler, P.A.
Jacksonville, Florida

Boling & McCart
Jacksonville, Florida

Ropes & Gray
Boston, Massachusetts

Independent Accountants
Deloitte & Touche LLP

Stock Listing
American Stock Exchange
Common Stock Symbol: KE
Warrant Symbol: KE.WS

Common Stock and Warrant Transfer Agent,
Dividend Paying Agent and Registrar
First Union National Bank of North Carolina
230 South Tryon Street
Charlotte, North Carolina 28288-1153
(800) 829-8432

Dividend Reinvestment Plan Stockholders may elect to have dividends
automatically reinvested in additional shares of Koger Equity, Inc. common
stock. For information about dividend reinvestment, contact First Union
National Bank of North Carolina at (800) 829-8432.

Automatic Dividend Deposit Stockholders may elect to have dividends
automatically deposited into the financial institution of their choice. For
information about automatic dividend deposit, contact First Union National
Bank of North Carolina at (800) 829-8432.

Koger Equity, Inc.
Corporate Office
Post Office Box 4339 (Zip 32201)
3986 Boulevard Center Drive
Jacksonville, Florida 32207
(904) 398-3403
Internet address: www.koger.com

<PAGE>

(in thousands except per share data)

The following unaudited selected financial data sets forth certain financial
information of Koger Equity, Inc. as of and for each of the three years in the
period ended December 31, 1996.

1996 1995 1994
---- ---- ----

Rental revenues $ 98,342 $ 94,865 $ 93,132
Interest revenues $ 1,951 $ 14,440(a) $ 1,062
Gain on TKPL note to Southeast $ 292 $11,288 -
Total revenues $104,072 $125,750 $100,376
Property operating expenses $ 41,597 $ 40,830 $ 39,711
Depreciation and amortization $ 21,127 $ 19,102 $ 16,728
Mortgage and loan interest $ 18,701 $ 23,708 $ 25,872
Net income $ 10,501 $ 28,990(a)(b) $ 4,215
-------- -------- --------

Earnings per common share:
Primary $ 0.54 $ 1.61 $ 0.24
Fully diluted $ 0.54 $ 1.60 $ 0.24
-------- -------- --------

Weighted average shares outstanding:
Primary 19,500 18,011 17,719
Fully diluted 19,576 18,091 17,719
------ ------ ------

Funds from operations $ 33,154 $ 36,707(a) $ 23,475

Closing Price of the Koger Equity
Common Stock as reported on the
American Stock Exchange on
December 31 $18 3/4 $10 5/8 $7 1/4
------- ------- ------

(a) Includes $13,066 of interest revenue associated with the TKPL mortgage notes
which Koger Equity, Inc. acquired during 1995. These mortgage notes were
retired by TKPL during 1995.

(b) Includes $11,288 gain associated with the repayment of a TKPL note to a
wholly-owned subsidiary of the Company.