POST PROPERTIES INC
424B2, 1996-09-27
REAL ESTATE INVESTMENT TRUSTS
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<PAGE>   1
                                                Filed Pursuant To Rule 424(b)(2)
                                                Registration No. 333-03555
                                                                 333-03555-01
 
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED AUGUST 9, 1996)
 
                               1,000,000 SHARES
                         (LOGO)POST PROPERTIES, INC.
            8 1/2% SERIES A CUMULATIVE REDEEMABLE PREFERRED SHARES
                         (PAR VALUE $0.01 PER SHARE)
           (LIQUIDATION PREFERENCE EQUIVALENT TO $50.00 PER SHARE)
                                      
 
                           ------------------------
 
    Dividends on the 8 1/2% Series A Cumulative Redeemable Preferred Shares,
$.01 par value per share (the "Preferred Shares"), of Post Properties, Inc. (the
"Company") will be cumulative from the date of original issue and will be
payable quarterly on or about the last day of March, June, September and
December of each year, commencing December 31, 1996, at the rate of 8 1/2% of
the liquidation preference per annum (equivalent to $4.25 per annum per share).
 
    The Preferred Shares are not redeemable prior to October 1, 2026. On or
after October 1, 2026, the Preferred Shares may be redeemed for cash at the
option of the Company in whole or in part, at a redemption price of $50.00 per
share, plus accrued and unpaid dividends, if any, thereon. The redemption price
(other than the portion thereof consisting of accrued and unpaid dividends) is
payable solely out of the sale proceeds of other capital stock of the Company,
which may include other series of preferred shares. The Preferred Shares have no
stated maturity and will not be subject to any sinking fund or mandatory
redemption and will not be convertible into any other securities of the Company.
See "Description of Preferred Shares -- Redemption." In order to maintain its
qualification as a real estate investment trust for federal income tax purposes,
the Company's Amended and Restated Articles of Incorporation impose limitations
on the number of shares of capital stock, including Preferred Shares, that may
be owned by any single person or affiliated groups. See "Description of
Preferred Shares -- Restrictions on Transfer."
 
    Application will be made to list the Preferred Shares on the New York Stock
Exchange ("NYSE"). If such application is approved, trading of the Preferred
Shares on the NYSE is expected to commence within a 30-day period after the date
of initial delivery of the Preferred Shares. While the Underwriter has advised
the Company that it intends to make a market in the Preferred Shares prior to
commencement of trading on the NYSE, it is under no obligation to do so and no
assurance can be given that a market for the Preferred Shares will exist prior
to commencement of trading. See "Underwriting."
                            ------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
 EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
  AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
   ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO
     WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
     OFFENSE.
                            ------------------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
    MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
 
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
                                                                        UNDERWRITING      PROCEEDS TO
                                                   PRICE TO PUBLIC(1)    DISCOUNT(2)     COMPANY(1)(3)
- ---------------------------------------------------------------------------------------------------------
<S>                                                <C>               <C>               <C>
Per Share..........................................       $50.00           $1.25             $48.75
- ---------------------------------------------------------------------------------------------------------
Total(4)...........................................    $50,000,000       $1,250,000       $48,750,000
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
 
(1) Plus accrued dividends, if any, from the date of original issue.
(2) The Company has agreed to indemnify the Underwriter against certain
    liabilities, including liabilities under the Securities Act of 1933. See
    "Underwriting."
(3) Before deducting expenses payable by the Company estimated at $50,000.
(4) The Company has granted the Underwriter an option to purchase up to an
    additional 150,000 shares to cover over-allotments. If all such shares are
    purchased, the total Price to Public, Underwriting Discount and Proceeds to
    Company will be $57,500,000, $1,437,500, and $56,062,500, respectively. See
    "Underwriting."
                            ------------------------
    The Preferred Shares are being offered by the Underwriter, subject to prior
sale, when, as and if delivered to and accepted by it, subject to approval of
certain legal matters by counsel for the Underwriter and certain other
conditions. The Underwriter reserves the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of the Preferred Shares will be made in New York, New York on or about
October 1, 1996.
                            ------------------------
                              MERRILL LYNCH & CO.
                            ------------------------
         The date of this Prospectus Supplement is September 26, 1996.
<PAGE>   2
 
                            POST PROPERTIES, INC.
 
        [The graphic material to be included is (i) a map of the southeastern
part of the United States identifying the primary markets in which the Company
(as defined) owns or operates communities and (ii) a map of the Atlanta 
Metropolitan Area identifying the location of the communities owned or operated 
by the Company in that market.]
 
        IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
PREFERRED SHARES OFFERED HEREBY AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED
AT ANY TIME.

 
                                       S-2
<PAGE>   3
 
                         PROSPECTUS SUPPLEMENT SUMMARY
 
     The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information appearing elsewhere in this
Prospectus Supplement and the accompanying Prospectus or incorporated herein and
therein by reference. Unless indicated otherwise, the information contained in
this Prospectus assumes that the Underwriter's over-allotment option is not
exercised. The offering of 1,000,000 shares of 8 1/2% Series A Cumulative
Redeemable Preferred Stock, par value $0.01 per share (the "Preferred Shares"),
pursuant to this Prospectus is referred to herein as the "Offering." As used
herein, the term "Company" includes Post Properties, Inc., Post Apartment Homes,
L.P. and their predecessors and subsidiaries, unless the context indicates
otherwise.
 
                                  THE COMPANY
 
     The Company is one of the largest developers and operators of upscale
multifamily apartment communities in the Southeastern United States. As of
September 1, 1996, the Company owned 46 stabilized communities (the
"Communities") containing 17,144 apartment units located primarily in
metropolitan Atlanta, Georgia and Tampa, Florida. In addition, as of September
1, 1996 the Company had under construction or in initial lease-up nine new
communities in the Atlanta, Tampa and Charlotte metropolitan areas that will
contain an aggregate of 3,280 apartment units when completed. For the six months
ended June 30, 1996, the average economic occupancy rate of the 41 Communities
and the first phase of an additional Community stabilized for the entire period
was 95.6%. The average monthly rental rate per apartment unit at these
Communities for the same period was $745. The Company also manages through
affiliates one community under the Post(R) brand name for a third party and
approximately 9,700 additional apartment units owned by third parties. The
Company is a fully-integrated organization with multifamily development,
acquisition, operation and asset management expertise and has approximately
1,100 employees, none of whom is a party to a collective bargaining agreement.
 
     All of the Company's operations are conducted through, and the Company's
interests in the Communities are held by, Post Apartment Homes, L.P. (together
with its subsidiaries, the "Operating Partnership"). The Company controls the
Operating Partnership as the sole general partner and holder, as of June 30,
1996, of 81.1% of the outstanding partnership interests in the Operating
Partnership.
 
                                THE COMMUNITIES
 
     As of September 1, 1996, the Communities consisted of 46 stabilized Post(R)
multifamily apartment communities located in the following metropolitan areas:
 
<TABLE>
<CAPTION>
                                                                              NUMBER    PERCENT
                        METROPOLITAN AREA                      COMMUNITIES   OF UNITS   OF TOTAL
    ---------------------------------------------------------  -----------   --------   --------
    <S>                                                        <C>           <C>        <C>
    Atlanta, GA..............................................       33        12,352       72.0%
    Tampa, FL................................................        7         2,262       13.2
    Orlando, FL..............................................        2         1,248        7.3
    Fairfax, VA..............................................        2           700        4.1
    Pompano Beach, FL........................................        1           416        2.4
    Nashville, TN............................................        1           166        1.0
                                                                    --
                                                                              ------      -----
                                                                    46        17,144      100.0%
                                                                    ==        ======      =====
</TABLE>
 
     The Company developed and currently manages all of the Communities.
Thirty-two of the Communities have in excess of 300 apartment units, with the
largest Community having a total of 810 apartment units. As of September 1,
1996, the average age of the Communities was seven years and 41 of the 46
Communities, comprising approximately 90.9% of the total number of the
Communities' apartment units, were completed after January 1, 1986.
 
                                       S-3
<PAGE>   4
 
                                  THE OFFERING
 
Securities Offered.........  1,000,000 shares of 8 1/2% Series A Cumulative
                               Redeemable Preferred Shares.
 
Use of Proceeds............  The net proceeds to the Company from the Offering
                               (approximately $48.7 million) will be used to pay
                               down existing indebtedness and for general
                               corporate purposes.
 
Ranking....................  With respect to the payment of dividends and
                               amounts upon liquidation, the Preferred Shares
                               offered hereby will rank pari passu with any
                               other preferred shares which are not by their
                               terms subordinated to the Preferred Shares and
                               will rank senior to the Common Stock and any
                               other shares of the Company which by their terms
                               rank junior to the Preferred Shares. See
                               "Description of Preferred Stock -- Rank" in the
                               accompanying Prospectus.
 
Dividends..................  Dividends on the Preferred Shares offered hereby
                               are cumulative from the date of issue and are
                               payable quarterly on or about the last day of
                               March, June, September and December of each year,
                               commencing on December 31, 1996, at the rate of
                               8 1/2% of the liquidation preference per annum
                               (equivalent to $4.25 per annum per share).
                               Dividends on the Preferred Shares will accrue
                               whether or not the Company has earnings, whether
                               or not there are funds legally available for the
                               payment of such dividends and whether or not such
                               dividends are declared.
 
Liquidation Rights.........  The Preferred Shares will have a liquidation
                               preference of $50.00 per share, plus an amount
                               equal to accrued and unpaid dividends. See
                               "Description of Preferred Shares -- Liquidation
                               Preference."
 
Redemption.................  The Preferred Shares are not redeemable prior to
                               October 1, 2026. On and after October 1, 2026,
                               the Preferred Shares will be redeemable for cash
                               at the option of the Company, in whole or in
                               part, at $50.00 per share, plus accrued and
                               unpaid dividends, if any, thereon. The redemption
                               price (other than the portion thereof consisting
                               of accrued and unpaid dividends) is payable
                               solely out of the sale proceeds of other capital
                               stock of the Company which may include other
                               series of preferred shares, and from no other
                               source. See "Description of Preferred
                               Shares -- Redemption."
 
Voting Rights..............  If dividends on the Preferred Shares are in arrears
                               for six or more quarterly periods, whether or not
                               such quarterly periods are consecutive, holders
                               of the Preferred Shares (voting separately as a
                               class with all other series of preferred shares
                               upon which like voting rights have been conferred
                               and are exercisable) will be entitled to vote for
                               the election of two additional Directors to serve
                               on the Board of Directors of the Company until
                               all distribution arrearages have been paid. See
                               "Description of Preferred Shares -- Voting
                               Rights."
 
Conversion.................  The Preferred Shares are not convertible or
                               exchangeable for any other property or securities
                               of the Company.
 
Ownership Limits...........  The Preferred Shares will be subject to certain
                               restrictions on transfer intended to preserve the
                               Company's status as a REIT for federal income tax
                               purposes. In general, under such restrictions, a
                               holder may not acquire or own Preferred Shares to
                               the extent that such ownership
 
                                       S-4
<PAGE>   5
 
                               causes an individual (as specially defined under
                               the Internal Revenue Code of 1986, as amended
                               (the "Code") to include certain charitable
                               organizations) to own more than 6% of the value
                               of the outstanding series of Preferred Shares,
                               taking into account applicable constructive
                               ownership rules of the Code. Under these rules,
                               Preferred Shares held by entities such as
                               corporations, mutual funds, insurance companies
                               and pension trusts would be treated as owned by
                               their ultimate individual beneficial owners for
                               purposes of applying the 6% ownership limit. See
                               "Description of Preferred Shares -- Restrictions
                               on Transfer."
 
Trading....................  Application will be made to list the Preferred
                               Shares on the New York Stock Exchange ("NYSE").
                               If such application is approved, trading of the
                               Preferred Shares on the NYSE is expected to
                               commence within a 30-day period after the date of
                               initial delivery of the Preferred Shares. While
                               the Underwriter has advised the Company that it
                               intends to make a market in the Preferred Shares
                               prior to commencement of trading on the NYSE, it
                               is under no obligation to do so and no assurance
                               can be given that a market for the Preferred
                               Shares will exist prior to commencement of
                               trading. See "Underwriting."
 
                                       S-5
<PAGE>   6
 
                            BUSINESS AND COMMUNITIES
 
     The Company is a self-administered and self-managed equity REIT that was
founded in 1971 and since inception has focused on the development, management,
and ownership of upscale multifamily apartment communities, primarily in
metropolitan Atlanta, Georgia. During the last nine years, the Company has
expanded its focus to include metropolitan Tampa, Florida, other Florida
markets, Nashville, Tennessee, Charlotte, North Carolina and Fairfax County,
Virginia. The Company and its affiliates have developed a total of 71 Post(R)
upscale garden and mid-rise apartment communities containing approximately
22,726 apartment units. Of these communities, 46 comprising 17,144 apartment
units are owned by the Company in fee simple or pursuant to a long-term ground
lease, and are operated by the Company. The Company and affiliates have sold 26
communities between 1972 and 1996 to parties not affiliated with the Company,
one of which the Company continues to manage under the Post(R) brand name. Three
contiguous Atlanta apartment communities containing a total of 810 units which
the Company developed in the early 1980s and sold in 1986 have been reacquired
and are currently operated as one community, Post Creek(TM). The Company's
executive offices are located at 3350 Cumberland Circle, Atlanta, Georgia 30339
and its telephone number is (770) 850-4400.
 
     The Company has benefitted, and expects to continue to benefit, from the
following competitive advantages:
 
     - Implementing distinctive core business strategies: investment building,
      promotion of the Post(R) brand name and a service orientation.
 
     - Demonstrating a consistent record of operating performance.
 
     - Promoting growth through maintenance of a disciplined development
      philosophy in superior primary markets.
 
     - Maintaining a flexible and conservative capital structure to provide
      continued access to capital markets on favorable terms.
 
     - Investing in upscale multifamily communities of a quality level
      synonymous with the Post(R) brand name reputation.
 
     DISTINCTIVE CORE BUSINESS STRATEGIES.  The Company benefits from the
pursuit of three distinctive core business strategies that, for almost 25 years,
have remained substantially unchanged:
 
          Investment Building.  Investment building means taking a long-term
     view of the assets the Company creates. The Company develops communities
     with the intention of owning and operating them for periods that are
     relatively long by the standard of the apartment industry.
 
        - The Company's approach to development activities has been
         characterized by a solid record of building apartment communities on
         time, and with a uniformly high quality.
 
        - Since 1988, the Company has focused its strategy on a limited number
         of markets that have shown and are forecasted to continue to show
         employment, population and household formation growth that generally
         exceed national averages. Within these limited markets, the Company has
         focused on building in infill, mature locations, where land for
         competing uses is scarce.
 
        - The Company uses a disciplined team approach to development decisions.
         Both the development division and the management division are involved
         in the process by which a potential development site is evaluated, the
         market is analyzed, the product is designed, and both construction and
         operating feasibility are assessed.
 
        - The Company conducts an annual asset maintenance program, which
         involves an annual review of each apartment community. In addition, the
         Company conducts a regular periodic program of preventative maintenance
         in each apartment unit pursuant to which appliances, heating and
         cooling systems and apartment interiors are inspected, cleaned and
         serviced or repaired, as appropriate, at least two times per year. The
         Company believes that these programs lower
 
                                       S-6
<PAGE>   7
 
         operating costs over the life of the Communities, increase the
         long-term value of the Communities and contribute to maintaining the
         upscale market position of the Communities.
 
          Promotion of the Post(R) Brand Name.  The Post(R) brand name strategy
     is widely known and admired within the Company's primary markets and, to
     the knowledge of the Company, has not been successfully duplicated within
     the multifamily real estate industry in any major U.S. market. For such a
     strategy to be effective, a company must develop and implement systems to
     achieve uniformity, outstanding quality and value through its operations.
 
        - The Company exclusively owns the federally registered Post(R) service
         and trade marks, which it uses extensively in the marketing of its
         Communities.
 
        - The Post(R) brand name is synonymous with quality upscale apartment
         communities which are situated in desirable locations and provide
         superior resident service. This has been achieved in part by the
         Company's strategy of developing a superior product in established
         infill locations.
 
        - The Company believes that a comprehensive program for continuing
         training of all employees and a commitment to "promoting from within"
         enhance the performance of the Company's personnel and reduce employee
         turnover. Bonuses and other financial incentives, motivational seminars
         and Company-wide recognition programs also promote employee
         performance. The Company has created professional, long-term career
         paths for its employees, especially for its field personnel (such as
         construction managers, leasing consultants and landscape field
         employees). The Company believes that time spent at its Communities by
         "main office" employees provides valuable information and experience
         for employees throughout its organization.
 
        - The Company coordinates its advertising programs to increase brand
         name recognition in its primary markets and to attract a more desirable
         resident profile.
 
          A Service Orientation.  The Company's mission statement is: "To
     provide the superior apartment living experience for our residents." A
     superior product delivered with superior service is the surest way to
     achieve the Company's long-term goals. The Post(R) brand name has great
     value because of the Company's dedication to and success in carrying out
     its mission statement.
 
     CONSISTENT OPERATING PERFORMANCE.  The successful implementation of the
Company's distinctive core business strategies accounts for the Company's
consistent operating performance. Focus on the operations of the existing
portfolio, adherence to a disciplined development philosophy and a continuing
focus on quality and service are necessary to realize consistent, sustained
earnings growth. The Company's operating performance demonstrates the successful
implementation of its operating approach:
 
     - Average economic occupancy of communities stabilized for both the current
      and prior respective periods was 96.0%, 96.4% and 94.7% for the years
      ended December 31, 1995, 1994 and 1993, respectively, and 95.5% and 96.0%
      for the six months ended June 30, 1996 and 1995, respectively.
 
     - Rental revenues have steadily increased from $104.5 million in 1993 to
      $115.3 million in 1994 and $133.8 million in 1995, increases of 10.3% and
      16.0%, respectively. Rental revenues continued to increase during the
      first half of 1996, increasing from $63.9 million for the six months ended
      June 30, 1995 to $75.6 million for the six months ended June 30, 1996, an
      increase of 18.3%.
 
     - Direct property operating expenses as a percentage of rental revenues
      have steadily decreased from 39.4% in 1993 to 37.6% in 1994 and 37.3% in
      1995, decreases of 4.6% and 0.8%, respectively, and continued to decrease
      in the first half of 1996 from 37.9% at June 30, 1995 to 36.0% at June 30,
      1996, a decrease of 5.0%.
 
     - Funds from Operations ("FFO") increased 12.1%, on a per share basis, from
      the year ended December 31, 1994 to the year ended December 31, 1995 and
      13.7%, on a per share basis, from the six months ended June 30, 1995 to
      the six months ended June 30, 1996. FFO for any period means the
      consolidated net income of the Company and its subsidiaries for such
      period excluding gains or losses from debt restructuring and sales of
      property, plus depreciation of real estate assets, and after
 
                                       S-7
<PAGE>   8
 
      adjustment for unconsolidated partnerships and joint ventures, all
      determined on a consistent basis in accordance with generally accepted
      accounting principles.
 
     - The Company's payout ratio, based on FFO, has decreased from 83.7% to
      81.3% for the years ended December 31, 1994 and 1995, respectively, and
      from 83.8% to 81.2% for the six months ended June 30, 1995 and 1996,
      respectively.
 
     DEVELOPMENT PHILOSOPHY.  The Company uses a team approach to development
decisions. Both the development division and the management division are
involved in the process by which a potential development site is evaluated, the
market is analyzed, the product is designed, and both construction and operating
feasibility are assessed.
 
     The Company believes that multifamily properties in its primary markets
have the potential over the long term to provide investment returns that exceed
national averages. According to recent market surveys, employment, population
and household formation growth in the Company's primary markets have shown and
are forecasted to continue to show growth that generally exceeds national
averages.
 
<TABLE>
<CAPTION>
                                                              EMPLOYMENT   POPULATION     HOUSEHOLD
                                                                GROWTH       GROWTH        GROWTH
                          MARKETS                             (1990-1995)  (1990-1995)   (1990-1995)
- ------------------------------------------------------------  ----------   -----------   -----------
<S>                                                           <C>          <C>           <C>
Atlanta.....................................................     18.6%         15.2%         16.4%
Nashville...................................................     18.9          10.6          11.7
Charlotte...................................................     13.7          10.3          12.0
Tampa Bay...................................................     13.1           5.0           6.0
Northern Virginia...........................................      9.3           9.0          10.5
Top 50 Metropolitan Statistical Areas.......................      7.1           9.2           9.6
</TABLE>
 
<TABLE>
<CAPTION>
                                                              FORECASTED   FORECASTED    FORECASTED
                                                              EMPLOYMENT   POPULATION     HOUSEHOLD
                                                                GROWTH       GROWTH        GROWTH
                          MARKETS                             (1995-2005)  (1995-2005)   (1995-2005)
- ------------------------------------------------------------  ----------   -----------   -----------
<S>                                                           <C>          <C>           <C>
Atlanta.....................................................     29.1%         25.2%         28.1%
Nashville...................................................     31.3          21.9          25.0
Charlotte...................................................     27.7          23.4          23.7
Tampa Bay...................................................     28.1          16.0          18.6
Northern Virginia...........................................     16.2          18.8          22.2
Top 50 Metropolitan Statistical Areas.......................     13.1           9.4          10.7
</TABLE>
 
- ---------------
 
Source: For the historical data -- the U.S. Census Bureau (Population Growth and
Household Growth) and the U.S. Bureau of Labor Statistics (Employment Growth).
For the forecasted data -- Siegel & Associates (Northern Virginia) and Dr.
Donald Ratajczak of Georgia State University (Atlanta, Nashville, Charlotte,
Tampa Bay and Top 50 Metropolitan Statistical Areas).
 
     In addition, the Company expects that the multifamily housing market in its
primary markets will be positively affected by the following trends: (i)
lifestyle changes that are resulting in an older, more affluent and more
demanding renter; and (ii) a decline in home price appreciation in recent years,
which changes the economic advantages of home ownership. The Company believes
that these trends will offset to some extent the general trend of a decline in
the growth rate of the adult population in the prime rental population of 20-35
year olds and the current low interest rates for home mortgages.
 
     Within these primary markets, the Company has concentrated on building in
infill, mature locations where land for competing uses is scarce. The Company
believes this strategy reduces the amount of potential competition faced by the
Company's apartment communities and believes that these locations are more
desirous places to live, which enables the Company to charge rents that result
in higher returns on costs. The Company also believes that these sites have a
higher land appreciation over time.
 
                                       S-8
<PAGE>   9
 
     FLEXIBLE AND CONSERVATIVE CAPITAL STRUCTURE.  The Company has and plans to
continue to maintain a flexible and conservative capital structure that enhances
its access to the capital markets on favorable terms and promotes future
earnings growth.
 
     Since formation in July 1993, the Company has concentrated on enhancing its
financial flexibility by improving its capital structure. The $180 million
unsecured revolving line of credit (the "Revolver") with a bank syndicate, the
issuance of $50 million of unsecured senior notes to the Northwestern Mutual
Life Insurance Company (the "NML Notes"), the agreement with the Federal
National Mortgage Association ("FNMA") to provide credit enhancement for the
Company's outstanding tax-exempt bonds (including reissuance at maturity) and
certain of its economically defeased bonds until June 2025, the issuance of $50
million of unsecured senior notes to Wachovia Bank of Georgia, N.A. (the
"Wachovia Notes") and the $20 million unsecured revolving line of credit with
Wachovia Bank of Georgia, N.A. (the "Cash Management Line") all demonstrate the
Company's successful efforts to maintain a flexible and conservative capital
structure. The Company's policy is that it will not borrow funds; provided that
the foregoing shall not be construed to limit the Company's ability to incur
liabilities for short-term trade payables, employee compensation payables,
dividends payable or similar payables that will be paid in the ordinary course
of the Company's business. Indebtedness will be incurred by the Operating
Partnership to the extent necessary to fund the business activities conducted by
the Operating Partnership and its subsidiaries.
 
     The Company's financial position reflects its conservative financial
strategy:
 
     - As of June 30, 1996, the Company had 33 Communities unencumbered by
      mortgage debt with over $700 million of undepreciated book value
      supporting the Company's unsecured debt. Net operating income from these
      unencumbered Communities as a percentage of total net operating income for
      all Communities increased from 42.7% at June 30, 1995 to 63.9% at June 30,
      1996.
 
     - Since January 1, 1995, the Company has greatly extended and staggered
      debt maturities. FNMA has provided replacement credit enhancement through
      2025 for seven bond issues which were reissued, and has agreed, subject to
      certain conditions, to provide credit enhancement through June 1, 2025
      with respect to eight other bond issues which mature and may be refunded
      in 1997 and 1998. As of December 31, 1994, the weighted average maturity
      of the Company's debt was 2.0 years. At June 30, 1996, the weighted
      average maturity of the Company's debt had increased to 12.4 years. After
      giving effect to the Debt Offering (as defined below), the Cash Management
      Line and the reissuance of the Post Canyon(R) and Post Corners(R) bonds
      which matured and were refunded on July 1, 1996 and August 1, 1996,
      respectively, the Company's weighted average maturity would have been 13.8
      years.
 
     - Total debt to total market capitalization ratio of 30.7% at June 30,
      1996.
 
     - Total debt as a percentage of undepreciated real estate assets of 40.7%
      at June 30, 1996.
 
     - Interest coverage for the six month period ending June 30, 1996 was 4.4x.
 
     MANAGEMENT EXPERIENCE IN DEVELOPING AND OPERATING UPSCALE MULTIFAMILY
APARTMENT COMMUNITIES. Since 1971, the Company has developed a total of 71
upscale garden and mid-rise apartment communities containing approximately
22,726 apartment units. The Company believes that its unique business strategy
and disciplined development philosophy have produced the highest quality
multifamily communities in its primary markets. Uniform systems in construction,
landscaping, and on-site management; superior locations; superior asset quality;
superior resident amenities and services; luxurious landscaping; and a
responsive 48-hour maintenance program are all examples of the upscale nature of
the Company's multifamily communities. See "The Communities." The 17 members of
the Company's senior management team have an average tenure with the Company of
14 years. As of September 1, 1996, the executive officers and directors of the
Company owned approximately 20.0% of the Common Stock of the Company assuming
the exercise of all vested options held by executive officers and directors and
an exchange for Common Stock of all Operating Partnership units.
 
                                       S-9
<PAGE>   10
 
THE COMMUNITIES
 
     The Company developed and currently manages all of the Communities.
Thirty-two of the Communities have in excess of 300 apartment units, with the
largest Community having a total of 810 apartment units. As of September 1,
1996, the average age of the Communities was seven years and 41 of the 46
Communities, comprising approximately 90.9% of the total number of the
Communities' apartment units, were completed after January 1, 1986.
 
     The average economic occupancy rate for Communities stabilized for the six
months ended June 30, 1996 was 95.6% and the average monthly rental rate per
apartment unit at these Communities for the same period was $745. A Community is
considered by the Company to have achieved stabilized occupancy on the earlier
to occur of (i) attainment of 95% physical occupancy on the first day of any
month or (ii) one year after completion of construction.
 
                             COMMUNITY INFORMATION
 
<TABLE>
<CAPTION>
                                                                                                           AVERAGE ECONOMIC
                                                                                                            OCCUPANCY FOR
                                                                                                                 THE
                                                   YEAR           AVERAGE                   JUNE 1996         SIX MONTHS
                                                COMPLETED/       UNIT SIZE      NUMBER    AVERAGE RENTAL        ENDED
           COMMUNITY              LOCATION(1)    ACQUIRED      (SQUARE FEET)   OF UNITS   RATE PER UNIT    JUNE 30, 1996(2)
- --------------------------------  -----------   ----------     -------------   --------   --------------   ----------------
<S>                               <C>           <C>            <C>             <C>        <C>              <C>
GEORGIA
Post Ashford(R).................  Atlanta         1987               872           222        $  745             97.5%
Post Bridge(R)..................  Atlanta         1986               847           354           646             95.9
Post Brook(R)...................  Atlanta         1984               916           130           749             99.0
Post Brookhaven(R)..............  Atlanta        1990-92 (3)         991           735           934             96.9
Post Canyon(R)..................  Atlanta         1986               899           494           690             93.5
Post Chase(R)...................  Atlanta         1987               938           410           687             95.3
Post Chastain(R)................  Atlanta         1990               965           558           959             96.7
Post Corners(R).................  Atlanta         1986               860           460           662             95.3
Post Court(R)...................  Atlanta         1988               838           446           667             96.1
Post Creek(TM)(4)...............  Atlanta         1996             1,180           810           867              N/A
Post Crossing(R)................  Atlanta         1995             1,067           354         1,034             95.1
Post Dunwoody(R)(5).............  Atlanta         1989               941           530           837             92.8
Post Lane(R)....................  Atlanta         1988               840           166           701             97.5
Post Lenox Park(TM).............  Atlanta         1995             1,030           206         1,034             97.6
Post Mill(R)....................  Atlanta         1985               952           398           695             98.1
Post Oak(TM)....................  Atlanta         1993             1,003           182           923             98.8
Post Oglethorpe(R)..............  Atlanta         1994             1,205           250         1,204             96.7
Post Park(R)....................  Atlanta        1988-90 (3)         904           770           781             94.0
Post Parkwood(TM)...............  Atlanta         1995             1,071           125           908             99.3
Post Peachtree Hills(R).........  Atlanta        1992-94 (3)         982           300           952             99.3
Post Pointe(R)..................  Atlanta         1988               835           360           647             94.5
Post Renaissance(R)(6)..........  Atlanta        1992-94 (3)         890           342           877             99.4
Post River(R)...................  Atlanta         1991               983           125         1,132             93.9
Post Summit(R)..................  Atlanta         1990               957           148           810             97.1
Post Valley(R)..................  Atlanta         1988               854           496           644             97.2
Post Village(R).................  Atlanta                            906                         704             94.4
  The Arbors....................                  1983             1,063           301
  The Fountains.................                  1987               850           352
  The Gardens...................                  1986               891           494
  The Hills.....................                  1984               953           241
  The Meadows...................                  1988               817           350
Post Vinings(R).................  Atlanta        1989-91 (3)         964           403           778             94.7
Post Walk(R)....................  Atlanta         1987               932           346           785             97.0
Post Woods(R)...................  Atlanta        1977-83 (3)       1,057           494           810             98.7
                                                                   -----         -----        ------             ----
        Subtotal -- Atlanta.....                                     942        12,352           799             96.1
                                                                   -----         -----        ------             ----
FLORIDA
Post Bay(R).....................  Tampa           1988               782           312           650             96.8
Post Court(R)...................  Tampa           1991             1,018           228           737             92.9
Post Crossing(R)(7).............  Pompano         1989               847           416           763             93.8
Post Fountains(TM)..............  Orlando         1988               835           508           574             92.7
Post Hyde Park(R)...............  Tampa           1996             1,009           270           897              N/A
Post Lake(R)....................  Orlando         1988               850           740           604             95.0
Post Rocky Point(R).............  Tampa           1996             1,018           452           845              N/A
Post Village(R).................  Tampa                              941                         706             92.7
  The Arbors....................                  1991               967           304
  The Lakes.....................                  1989               895           360
  The Oaks......................                  1991               968           336
                                                                   -----         -----        ------             ----
        Subtotal -- Florida.....                                     921         3,926           702             93.9(8)
                                                                   -----         -----        ------             ----
</TABLE>
 
                                      S-10
<PAGE>   11
 
<TABLE>
<CAPTION>
                                                                                                           AVERAGE ECONOMIC
                                                                                                            OCCUPANCY FOR
                                                                                                                 THE
                                                   YEAR           AVERAGE                   JUNE 1996         SIX MONTHS
                                                COMPLETED/       UNIT SIZE      NUMBER    AVERAGE RENTAL        ENDED
           COMMUNITY              LOCATION(1)    ACQUIRED      (SQUARE FEET)   OF UNITS   RATE PER UNIT    JUNE 30, 1996(2)
- --------------------------------  --------      ----------         -----         -----        ------             ----
<S>                               <C>           <C>            <C>             <C>        <C>              <C>
VIRGINIA
Post Corners(R) at Trinity
  Centre........................  Fairfax         1996             1,030           336           919              N/A
Post Forest(R)..................  Fairfax         1990               889           364           872             92.0
                                                                   -----         -----        ------             ----
        Subtotal -- Virginia....                                     960           700           894             92.0
                                                                   -----         -----        ------             ----
TENNESSEE
Post Green Hills(R).............  Nashville       1996             1,056           166         1,078              N/A
                                                                   -----         -----        ------             ----
        Total...................                                     970        17,144        $  824             95.6%(8)
                                                                   =====         =====        ======             ====
</TABLE>
 
- ---------------
 
(1) Refers to greater metropolitan areas of cities indicated.
(2) Average economic occupancy is defined as gross potential rent less vacancy
     losses, model expenses and bad debt divided by gross potential rent for the
     period, expressed as a percentage. Includes only communities which were
     stabilized for the entire period.
(3) These dates represent the respective completion dates for multiple phases of
     a Community.
(4) On May 7, 1996, the Company reacquired three contiguous Atlanta apartment
     communities containing a total of 810 units which the Company developed in
     the early 1980's and managed under the Post(R) brand name through mid-1993.
     The Company's capital investment, including expenditures to add perimeter
     fencing and steel entry gates and construction of a new centralized leasing
     office, will be approximately $48 million. The community was previously
     operated as Dunwoody Crossing and, following the Company's purchase, has
     been operated as Post Creek(TM). Average economic occupancy for Post
     Creek(TM) from May 7, 1996 through June 30, 1996 was 88.0%.
(5) Average economic occupancy rate for the first phase of the Community.
(6) The Company has a leasehold interest in the land underlying Post
     Renaissance(R) pursuant to a ground lease that expires on January 1, 2040.
     The Company owns the remaining Communities in fee simple.
(7) Currently listed for sale.
(8) Includes Post Gardens(R) which was sold on July 19, 1996. The average
     economic occupancy for the six months ended June 30, 1996 for Post Gardens
     was 96.1%.
 
                                      S-11
<PAGE>   12
 
                              RECENT DEVELOPMENTS
 
DEVELOPMENT ACTIVITY
 
     As of September 1, 1996, the Company had under construction or in initial
lease-up nine new communities that will contain an aggregate of 3,280 units. The
Company's communities under development or in initial lease-up are summarized in
the following chart:
 
<TABLE>
<CAPTION>
                                                                              ESTIMATED
                                                              ACTUAL OR        QUARTER    UNITS LEASED
                                  NUMBER    QUARTER OF    ESTIMATED QUARTER      OF          AS OF
                                    OF     CONSTRUCTION      FIRST UNITS      STABILIZED  SEPTEMBER 7,
         METROPOLITAN AREA        UNITS    COMMENCEMENT       AVAILABLE       OCCUPANCY       1996
    ----------------------------  ------   ------------   -----------------   ---------   ------------
    <S>                           <C>      <C>            <C>                 <C>         <C>
    ATLANTA, GA
    Post Terrace(R).............    296        2Q'95            1Q'96           4Q'96          296
    Post Crest(R)...............    410        1Q'95            1Q'96           1Q'97          340
    Post Collier Hills(TM)......    396        4Q'95            4Q'96           4Q'97          N/A
    Post Glen(R)................    312        1Q'96            1Q'97           1Q'98          N/A
    Post Gardens(R).............    397        3Q'96            3Q'97           3Q'98          N/A
    Post Lindbergh(TM)..........    396        3Q'96            3Q'97           3Q'98          N/A
    Riverside Village by
      Post(TM)..................    537        3Q'96            4Q'97           1Q'99          N/A
                                  -----                                                       ----
                                  2,744                                                        636
                                  -----                                                       ----
    TAMPA, FL
    Post Walk at Hyde
      Park(TM)..................    134        1Q'96            4Q'96           3Q'97          N/A
                                  -----                                                       ----
    CHARLOTTE, NC
    Post Park at Phillips
      Place(TM).................    402        4Q'95            4Q'96           4Q'97          N/A
                                  -----                                                       ----
                                  3,280                                                        636
                                  =====                                                       ====
</TABLE>
 
     The Company has also acquired two parcels, one in Tampa and one in Atlanta,
on which it plans to build new communities. Construction is expected to begin on
the Tampa parcel in the fourth quarter of 1996. The Home Depot, Inc. is
constructing its corporate headquarters campus and extensive infrastructure
improvements are being made by the county adjacent to the Atlanta parcel. The
Company will review its development plan for this parcel closer to completion of
these improvements. The Company is also currently conducting feasibility and
other pre-development studies for possible new Post(R) communities in its
primary market areas. In addition, the Company continually reviews acquisition
opportunities in its primary market areas.
 
ACQUISITION ACTIVITY
 
     On May 7, 1996, the Company reacquired three contiguous Atlanta apartment
communities containing a total of 810 units which the Company developed in the
early 1980's and managed under the Post(R) brand name through mid-1993. The
Company's capital investment, including planned expenditures to add perimeter
fencing and steel entry gates and construction of a new centralized leasing
office, will be approximately $48 million. At the time of acquisition the
community was operated as Dunwoody Crossing and is now operated by the Company
as Post Creek(TM).
 
     On August 26, 1996, the Company acquired a 3.2 acre tract of land in
Nashville, Tennessee, with two existing apartment buildings containing 101 units
(the "Vanderbilt Washington Apartments") and a 1.1 acre tract of land in
Nashville, Tennessee, with one existing apartment building containing 80 units.
The Company also has two tracts of land adjacent to the Vanderbilt Washington
Apartments under contract and expects to close on the purchase of those two
tracts early in November. In early 1997, the Vanderbilt Washington Apartments
will be completely renovated and additional apartment buildings will be built on
the two tracts under contract, with the entire development being operated as one
apartment community.
 
                                      S-12
<PAGE>   13
 
DISPOSITION ACTIVITY
 
     In April 1996 the Company listed two communities in Florida, containing a
total of 596 units, for sale. On July 19, 1996, one of the communities,
containing 180 units, was sold. Post Crossing remains listed for sale. These
dispositions are consistent with the Company's strategy of selling communities
when the market demographics for a community are no longer consistent with the
Company's existing ownership strategy.
 
FINANCING ACTIVITY
 
     Pursuant to the agreement with FNMA to provide credit enhancement for
certain tax-exempt bonds, on July 1, 1996 and August 1, 1996, the Company
refunded two bonds with issues having a maturity of June 1, 2025 and an interest
rate of SunTrust Non-AMT "AAA" tax free rate plus a credit enhancement fee of
 .575%.
 
     On July 26, 1996, the Company closed the $20 million Cash Management Line
with Wachovia Bank of Georgia, N.A. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
 
     On September 25, 1996, the Operating Partnership offered in an underwritten
offering $100,000,000 7 1/4% Notes due October 1, 2003 and $25,000,000 7 1/2%
Notes due October 1, 2006 (collectively, the "Debt Offering"). The Debt Offering
is expected to be consummated on September 30, 1996. Interest on the Notes is
payable semi-annually on April 1 and October 1 of each year, commencing April 1,
1997. The Notes are redeemable at any time at the option of the Operating
Partnership, in whole or in part, at a redemption price equal to the sum of (i)
the principal of the Notes being redeemed plus accrued interest to the
redemption date and (ii) a make-whole amount, if any. The Notes are unsecured
obligations of the Operating Partnership and will rank pari passu with each
other and all other unsecured and unsubordinated indebtedness of the Operating
Partnership.
 
                                USE OF PROCEEDS
 
     The net cash proceeds to the Company from the sale of the Preferred Shares
offered hereby are expected to be approximately $48.7 million. The Company
intends to contribute or otherwise transfer the net proceeds of the sale of the
Preferred Shares to the Operating Partnership in exchange for 8 1/2% Series A
Preferred Units in the Operating Partnership, the economic terms of which will
be substantially identical to the Preferred Shares. The Operating Partnership
will be required to make all required distributions on the Series A Preferred
Units (which will mirror the payments of distributions, including accrued and
unpaid distributions upon redemption, and of the liquidation preference amount
on the Preferred Shares) prior to any distribution of cash or assets to the
holders of Units or to the holders of any other interests in the Operating
Partnership, except for any other series or preference units ranking on a parity
with the Series A Preferred Units as to distributions and/or liquidation rights
and except for distributions required to enable the Company to maintain its
qualification as a REIT. The Company expects to use the net proceeds to pay down
existing indebtedness currently outstanding on the Company's Revolver and Cash
Management Line and for general corporate purposes. The Revolver terminates on
May 1, 1999 and borrowings thereunder bear interest, at the option of the
Company, at LIBOR plus .80% or prime minus .25%. As of September 1, 1996,
interest accrued on borrowings outstanding under the Revolver at a weighted
average interest rate of 6.23% per annum. The Cash Management Line terminates on
July 25, 1997 and borrowings thereunder bear interest, at the option of the
Company, at LIBOR plus .75% or prime minus .25%. As of September 1, 1996,
interest accrued on borrowings outstanding under the Cash Management Line at a
weighted average interest rate of 6.18% per annum.
 
                                      S-13
<PAGE>   14
 
                                 CAPITALIZATION
 
     The following table sets forth the capitalization of the Company as of June
30, 1996 and as adjusted to give effect to the Cash Management Line, the Debt
Offering and the Offering and the application of the net proceeds therefrom. The
information set forth in the following table should be read in conjunction with
the financial and other information included elsewhere and incorporated by
reference in this Prospectus Supplement and the Prospectus.
 
<TABLE>
<CAPTION>
                                                                               JUNE 30, 1996
                                                                          ------------------------
                                                                          HISTORICAL   AS ADJUSTED
                                                                          ----------   -----------
                                                                               (IN THOUSANDS)
<S>                                                                       <C>          <C>
DEBT:
  Notes payable.........................................................   $ 421,378    $ 374,200
                                                                            --------     --------
          Total debt....................................................   $ 421,378    $ 374,200
                                                                            --------     --------
SHAREHOLDERS' EQUITY:
  Preferred stock, $.01 par value, 20,000,000 authorized, 8 1/2% Series
     A Cumulative Redeemable Preferred Shares, liquidation preference
     $50 per share, no shares outstanding (1,000,000 as adjusted).......   $      --    $      10
  Common stock, $.01 par value, 100,000,000 authorized, 21,774,940
     outstanding........................................................         218          218
  Additional paid-in capital............................................     344,821      393,511
  Accumulated earnings..................................................          --           --
                                                                            --------     --------
          Total shareholders' equity....................................     345,039      393,739
                                                                            --------     --------
          Total capitalization..........................................   $ 766,417    $ 767,939
                                                                            ========     ========
</TABLE>
 
                                      S-14
<PAGE>   15
 
                         SELECTED FINANCIAL INFORMATION
                             (DOLLARS IN THOUSANDS)
 
     The following table sets forth certain financial and operating information
for (i) the Company and its subsidiaries, for periods after the initial public
offering (completed on July 22, 1993) of the Company (the "Initial Offering")
and (ii) the portfolio of 40 Post(R) multifamily apartment communities (the
"Initial Properties") and other assets transferred to the Company and its
subsidiaries in connection with the business combination effected at the time of
the Initial Offering (the "Formation Transactions"), for periods prior to the
Initial Offering. The financial information of the Company and predecessor for
each of the five years in the five year period ended December 31, 1995 have been
derived from the Company's financial statements audited by Price Waterhouse LLP,
independent accountants. The consolidated financial information of the Company
for the six months ended June 30, 1996 and 1995 have been derived from the
consolidated quarterly unaudited financial statements of the Company. In the
opinion of management, the operating data for the six months ended June 30, 1996
and 1995 include all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the information set forth therein. The
results of operations for the six months ended June 30, 1996 are not necessarily
indicative of results that may be expected for the full year. The following
should be read in conjunction with Management's Discussion and Analysis of
Financial Condition and Results of Operations and all of the financial
statements and notes thereto included and incorporated by reference in this
Prospectus Supplement and the Prospectus.
 
<TABLE>
<CAPTION>
                                          SIX MONTHS
                                        ENDED JUNE 30,                   YEAR ENDED DECEMBER 31,
                                       -----------------   ----------------------------------------------------
                                        1996      1995       1995       1994       1993       1992       1991
                                       -------   -------   --------   --------   --------   --------   --------
                                          (UNAUDITED)
<S>                                    <C>       <C>       <C>        <C>        <C>        <C>        <C>
OPERATING DATA:
Revenue:
  Rental.............................  $75,569   $63,877   $133,817   $115,309   $104,482   $ 94,754   $ 85,688
  Property management -- third
    party(1).........................    1,466     1,216      2,764      2,508      3,057      2,793      2,296
  Landscape services -- third
    party(1).........................    2,221     2,149      4,647      3,799      3,829      2,240      1,794
  Other..............................    2,527     1,571      3,477      3,123      2,879      2,750      2,581
                                       -------   -------   --------   --------   --------   --------   --------
         Total revenues..............   81,783    68,813    144,705    124,739    114,247    102,537     92,359
Property operating and maintenance
  expense (exclusive of depreciation
  and amortization)..................   27,169    24,212     49,912     43,376     41,209     39,080     35,626
Depreciation (real estate assets)....   10,796    10,128     20,127     19,967     19,427     19,085     19,172
Depreciation (non-real estate
  assets)............................      513       221        692        241        303        195        235
Property management -- third
  party(1)...........................    1,050     1,033      2,166      2,229      2,453      2,057      1,518
Landscape services -- third
  party(1)...........................    1,863     1,754      3,950      3,098      3,151      1,998      1,544
Interest.............................   10,768    10,836     22,698     19,231     34,309     41,548     43,074
Amortization of deferred loan costs,
  interest rate protection agreement
  and swap gain, net.................      732       996      1,967      1,999        969      2,105      2,920
General and administrative...........    4,017     2,760      6,071      6,269      4,384      5,015      3,987
Formation Transaction expense........       --        --         --         --      2,783         --         --
Minority interest in consolidated
  property partnership(2)............       --       382        451        680        692        655        617
                                       -------   -------   --------   --------   --------   --------   --------
Income (loss) before minority
  interest, gain on sale of real
  estate assets, net of income taxes,
  and extraordinary item.............   24,875    16,491     36,671     27,649      4,567     (9,201)   (16,334)
Gain on sale of real estate assets,
  net of income taxes................       --        --      1,746      1,494         --         --         --
Minority interest of unitholders in
  Operating Partnership..............   (4,746)   (3,765)    (8,429)    (6,951)    (1,935)        --         --
                                       -------   -------   --------   --------   --------   --------   --------
Income (loss) before extraordinary
  item...............................   20,129    12,726     29,988     22,192      2,632     (9,201)   (16,334)
Extraordinary item, net of minority
  interest(3)........................       --      (622)      (870)    (3,293)    (7,855)        --         --
                                       -------   -------   --------   --------   --------   --------   --------
Net income (loss)....................  $20,129   $12,104   $ 29,118   $ 18,899   $ (5,223)  $ (9,201)  $(16,334)
                                       =======   =======   ========   ========   ========   ========   ========
</TABLE>
 
                                      S-15
<PAGE>   16
 
<TABLE>
<CAPTION>
                                SIX MONTHS
                              ENDED JUNE 30,                            YEAR ENDED DECEMBER 31,
                         -------------------------   -------------------------------------------------------------
                            1996          1995          1995          1994          1993         1992       1991
                         -----------   -----------   -----------   -----------   -----------   --------   --------
                                (UNAUDITED)
<S>                      <C>           <C>           <C>           <C>           <C>           <C>        <C>
PER SHARE DATA:
Income before
  extraordinary item...        $0.93         $0.73         $1.63         $1.32        $ 0.34        N/A        N/A
Net income.............         0.93          0.69          1.58          1.12         (0.67)       N/A        N/A
Dividends declared.....         1.08          0.98          1.96          1.80          0.77(4)     N/A        N/A
</TABLE>
 
<TABLE>
<CAPTION>
                                 JUNE 30,                                    DECEMBER 31,
                         -------------------------   -------------------------------------------------------------
                            1996          1995          1995          1994          1993         1992       1991
                         -----------   -----------   -----------   -----------   -----------   --------   --------
                                (UNAUDITED)
<S>                      <C>           <C>           <C>           <C>           <C>           <C>        <C>
BALANCE SHEET DATA:
Real estate, before
  accumulated
  depreciation.........  $ 1,034,809   $   895,807   $   937,924   $   828,585   $   722,266   $616,289   $588,416
Real estate, net of
  accumulated
  depreciation.........      866,829       742,883       781,100       686,009       599,898    513,651    505,058
Total assets...........      892,590       780,804       812,984       710,973       627,322    536,961    527,498
Total debt.............      421,378       420,781       349,719       362,045       357,809    540,900    519,538
Shareholders' and
  owners' equity
  (deficit)............      345,039       247,619       343,624       240,196       177,864    (25,812)    (9,050)
</TABLE>
 
<TABLE>
<CAPTION>
                                SIX MONTHS
                              ENDED JUNE 30,                            YEAR ENDED DECEMBER 31,
                         -------------------------   -------------------------------------------------------------
                            1996          1995          1995          1994          1993         1992       1991
                         -----------   -----------   -----------   -----------   -----------   --------   --------
                                (UNAUDITED)
<S>                      <C>           <C>           <C>           <C>           <C>           <C>        <C>
OTHER DATA:
Cash flow provided from
  (used in):
  Operating
    activities.........  $    43,408   $    33,856   $    57,362   $    43,807   $     2,412   $ 11,400   $  6,373
  Investing
    activities.........  $   (98,170)  $   (67,606)  $  (114,531)  $   (99,364)  $   (51,152)  $(28,696)  $(43,555)
  Financing
    activities.........  $    47,378   $    49,262   $    60,885   $    46,508   $    49,647   $ 19,902   $ 31,600
Funds from
  operations(5)........  $    35,671   $    26,619   $    56,798   $    47,616   $    26,777   $  9,884   $  2,838
Consolidated income
  available for debt
  service(6)...........  $    47,684   $    39,054   $    82,606   $    69,767   $    60,267   $ 54,387   $ 49,684
Debt service
  coverage(7)..........         4.4x          3.6x          3.6x          3.6x          1.8x       1.3x       1.2x
Weighted average common
  shares outstanding...   21,700,779    17,504,808    18,382,299    16,847,999     7,824,311        N/A        N/A
Weighted average common
  shares and units
  outstanding..........   26,818,135    22,684,488    23,541,639    22,125,890    13,574,767        N/A        N/A
Total stabilized
  communities (at end
  of period)...........           47            42            42            42            41         40         38
Total stabilized
  apartment units (at
  end of period).......       16,996        15,051        14,962        14,845        14,270     14,088     13,532
Average economic
  occupancy (stabilized
  communities)(8)......         95.5%         96.0%         96.0%         96.4%         94.7%      93.0%      92.8%
</TABLE>
 
- ---------------
 
(1) Consists of revenues and expenses from property management and landscape
     services provided to properties owned by third parties (including services
     provided to third-party owners of properties previously developed and sold
     by the Company that operate under the Post(R) name).
(2) Relates to the 49.99% interest in Post Woods(R) not owned by the Company. On
     September 1, 1995, the Company purchased the 49.99% interest in Post
     Woods(R). Prior to the purchase, the Company owned a 50.01% interest.
 
                                      S-16
<PAGE>   17
 
(3) The extraordinary items resulted from costs associated with the early
     extinguishment of indebtedness. The extraordinary item has been reduced by
     the portion related to the minority interest of the unitholders in the
     Operating Partnership calculated on the basis of weighted average Operating
     Partnership units outstanding for the respective period.
(4) The dividend paid by the Company for the portion of the quarter ended
     September 30, 1993 after the Initial Offering was $.320 per share of Common
     Stock, which is an amount equivalent to a quarterly distribution of $.415
     per share (which, if annualized, would equal $1.66 per share).
(5) The Company uses the National Association of Real Estate Investment Trust
     ("NAREIT") definition of FFO, which was adopted for periods beginning after
     January 1, 1996. FFO for any period means the consolidated net income of
     the Company and its subsidiaries for such period excluding gains or losses
     from debt restructuring and sales of property, plus depreciation of real
     estate assets, and after adjustment for unconsolidated partnerships and
     joint ventures, all determined on a consistent basis in accordance with
     generally accepted accounting principles ("GAAP"). FFO presented herein is
     not necessarily comparable to FFO presented by other real estate companies
     due to the fact that not all real estate companies use the same definition.
     However, the Company's FFO is comparable to the FFO of real estate
     companies that use the current NAREIT definition. FFO should not be
     considered as an alternative to net income (determined in accordance with
     GAAP) as an indicator of the Company's financial performance or to cash
     flow from operating activities (determined in accordance with GAAP) as a
     measure of the Company's liquidity, nor is it necessarily indicative of
     sufficient cash flow to fund all of the Company's needs or ability to
     service indebtedness or make distributions.
(6) Consolidated income available for debt service represents earnings before
     interest, income taxes, depreciation and amortization and extraordinary
     items. Consolidated income available for debt service is relevant to an
     understanding of the economics of the Company because it indicates cash
     flow available from the operations of the Company to service fixed
     obligations. Consolidated income available for debt service should not be
     considered as an alternative to net income, as determined in accordance
     with GAAP, as an indicator of the Company's operating performance, or to
     cash flows from operating activities, as determined in accordance with
     GAAP, as a measure of liquidity.
(7) Debt service coverage is defined as consolidated income available for debt
     service divided by interest expense.
(8) Amount represents average economic occupancy for communities stabilized for
     both the current and prior respective periods. Average economic occupancy
     is defined as gross potential rent less vacancy losses, model expenses and
     bad debt divided by gross potential rent for the period, expressed as a
     percentage. The calculation of average economic occupancy does not include
     a deduction for concessions and employee discounts. (Average economic
     occupancy, including these amounts, would have been 95.0% and 95.5% for the
     six months ended June 30, 1996 and 1995, respectively, and 95.5% for the
     year ended December 31, 1995.) For the six months ended June 30, 1996 and
     1995 and the year ended December 31, 1995, concessions were $143, $141 and
     $296, respectively, and employee discounts were $136, $122 and $213,
     respectively. A community is considered by the Company to have achieved
     stabilized occupancy on the earlier to occur of (i) attainment of 95%
     physical occupancy on the first day of any month or (ii) one year after
     completion of construction.
 
                                      S-17
<PAGE>   18
 
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS
               (DOLLARS IN THOUSANDS, EXCEPT APARTMENT UNIT DATA)
 
OVERVIEW
 
     The following discussion should be read in conjunction with all of the
financial statements appearing elsewhere and incorporated by reference into this
Prospectus Supplement. The following discussion is based primarily on the
Consolidated Financial Statements of Post Properties, Inc.
 
     As of June 30, 1996, there were 26,859,783 units in the Operating
Partnership outstanding, of which 21,774,940, or 81.1%, were owned by the
Company and 5,084,843, or 18.9%, were owned by other limited partners (including
certain officers and directors of the Company).
 
     The Company's net income is generated primarily from the operation of its
apartment communities. For purposes of evaluating comparative operating
performance, the Company categorizes its operating communities based on the
period each community reaches stabilized occupancy. A community is generally
considered by the Company to have achieved stabilized occupancy on the earlier
to occur of (i) attainment of 95% physical occupancy on the first day of any
month or (ii) one year after completion of construction.
 
     For communities with respect to which construction is completed and the
community has become fully operational, all property operating and maintenance
expenses are expensed as incurred and those recurring and non-recurring
expenditures relating to acquiring new assets, materially enhancing the value of
an existing asset, or substantially extending the useful life of an existing
asset are capitalized. (See "Capitalization of Fixed Assets and Community
Improvements").
 
     The Company has adopted an accounting policy related to communities in the
development and lease-up stage whereby substantially all operating expenses
(including pre-opening marketing expenses) are expensed as incurred. The Company
treats each unit in an apartment community separately for cost accumulation,
capitalization and expense recognition purposes. Prior to the commencement of
leasing activities, interest and other construction costs are capitalized and
reflected on the balance sheet as construction in progress. Once a unit is
placed in service, all operating expenses allocated to that unit, including
interest, are expensed as incurred. During the lease-up phase, the sum of
interest expense on completed units and other operating expenses (including
pre-opening marketing expenses) will typically exceed rental revenues, resulting
in a "lease-up deficit," which continues until such time as rental revenues
exceed such expenses.
 
     Therefore, in order to evaluate the operating performance of its
communities, the Company has presented financial information which summarizes
the operating income on a comparative basis for all of its operating communities
combined and for communities which have reached stabilization prior to January
1, 1995. The Company has also presented quarterly financial information
reflecting the dilutive impact of lease-up deficits incurred for communities in
the development and lease-up stage and not yet operating at break-even. In this
presentation, only those communities which were dilutive during the period are
included and, accordingly, different communities may be included in each period.
 
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1996, AND 1995
 
     The Company recorded net income of $20,129 for the six months ended June
30, 1996, an increase of $8,025 over the prior corresponding period primarily as
a result of increased rental rates for fully stabilized communities and an
increase in apartment units placed in service.
 
COMMUNITY OPERATIONS
 
     At June 30, 1996, the Company's portfolio of apartment communities consists
of thirty-seven communities and the first phase of two additional communities
which were completed and stabilized for all of the current and prior year, three
communities and the second phase of an existing community which achieved full
stabilization during the prior year, four communities and the second phase of an
existing community which
 
                                      S-18
<PAGE>   19
 
reached stabilization during 1996, one community which was acquired during 1996
and six communities in the development or lease-up stage.
 
ALL OPERATING COMMUNITIES
 
     The operating performance for all of the Company's apartment communities
combined for the three and six months ended June 30, 1996 and 1995 is summarized
as follows:
 
<TABLE>
<CAPTION>
                                           THREE MONTHS ENDED             SIX MONTHS ENDED
                                                JUNE 30,                      JUNE 30,
                                       ---------------------------   ---------------------------
                                        1996      1995     %CHANGE    1996      1995     %CHANGE
                                       -------   -------   -------   -------   -------   -------
    <S>                                <C>       <C>       <C>       <C>       <C>       <C>
    Rental and other revenue:
      Fully stabilized
         communities(1)..............  $31,500   $29,880      5.4%   $62,569   $59,214      5.7%
      Communities stabilized during
         1995........................    2,351     1,518     54.9%     4,647     2,279    103.9%
      Acquired communities(2)........    1,115        --      N/A      1,115        --      N/A
      Development and lease-up                                                                 
         communities(3)..............    4,802       490      N/A      8,179       540      N/A
      Sold communities(4)............       --     1,034      N/A         --     2,083      N/A
      Other revenue(5)...............      658       663     (0.8)%    1,347     1,207     11.6%
                                       -------   -------             -------   -------
                                        40,426    33,585     20.4%    77,857    65,323     19.2%
                                       -------   -------             -------   -------
    Property operating and
      maintenance expense (exclusive
      of depreciation and
      amortization):
      Fully stabilized communities...   10,782    10,491      2.8%    20,568    19,784      4.0%
      Communities stabilized during
         1995........................      674       505     33.5%     1,289       902     42.9%
      Acquired communities...........      342        --      N/A        342        --      N/A
      Development and lease-up                                                                 
         communities.................    1,699       521      N/A      3,203       844      N/A
      Sold communities...............       --       479      N/A         --       894      N/A
      Other expenses(6)..............      876       796     10.1%     1,767     1,788     (1.2)%
                                       -------   -------             -------   -------
                                        14,373    12,792     12.4%    27,169    24,212     12.2%
                                       -------   -------             -------   -------
    Revenue in excess of specified
      expense........................  $26,053   $20,793     25.3%   $50,688   $41,111     23.3%
                                       =======   =======             =======   =======
    Recurring capital
      expenditures:(7)
      Carpet.........................  $   236   $   241     (2.1)%  $   410   $   433     (5.3)%
      Other..........................      690       163    323.3%       982       333    194.9%
                                       -------   -------             -------   -------
              Total..................  $   926   $   404    129.2%   $ 1,392   $   766     81.7%
                                       =======   =======             =======   =======
    Average apartment units in
      service........................   17,155    15,665      9.5%    16,856    15,468      9.0%
                                       =======   =======             =======   =======
    Recurring capital expenditures
      per apartment unit.............  $    54   $    26    107.7%   $    83   $    50     66.0%
                                       =======   =======             =======   =======
</TABLE>
 
- ---------------
 
(1) Communities which reached stabilization prior to January 1, 1995.
(2) On May 7, 1996, the Company reacquired three contiguous Atlanta apartment
     communities containing a total of 810 units which the Company now operates
     as a single community.
(3) Communities in the "construction", "development" or "lease-up" stage during
     1996 and, therefore, not considered fully stabilized for all of the periods
     presented.
(4) Three communities, containing 568 units, which were sold on September 13,
     1995.
(5) Other revenue includes revenue on furnished apartment rentals above the
     unfurnished rental rates and any revenue not directly related to property
     operations.
 
                                      S-19
<PAGE>   20
 
(6) Other expenses includes certain indirect central office operating expenses
     related to management, grounds maintenance, and costs associated with
     furnished apartment rentals.
(7) In addition to those expenses which relate to property operations, the
     Company incurs recurring and nonrecurring expenditures relating to
     acquiring new assets, materially enhancing the value of an existing asset,
     or substantially extending the useful life of an existing asset, all of
     which are capitalized.
 
     For the three and six months ended June 30, 1996, rental and other revenue
increased $6,841, or 20.4% and $12,534, or 19.2%, respectively, compared to the
same period in the prior year, primarily as a result of increased rates for
fully stabilized communities, an increase in units placed in service and the
acquisition of a community, partially offset by a decrease in rental and other
revenue due to the sale of three communities during the third quarter of 1995.
For the three and six months ended June 30, 1996, rental and other revenue from
communities stabilized prior to January 1, 1995, increased $1,620, or 5.4%, and
$3,355, or 5.7%, respectively, compared to the same periods in the prior year,
primarily as a result of higher rental rates. For the three and six months ended
June 30, 1996, rental and other revenue from communities stabilized during 1995,
development and lease-up communities and acquired communities increased, in the
aggregate, $6,260 and $11,122, respectively, compared to the same periods in the
prior year, primarily due to additional units placed in service through the
development and acquisition of communities. The historical operating results
include, for the six months ended June 30, 1995, revenues and expenses related
to three communities sold on September 13, 1995, all of which had previously
been included in the fully stabilized communities group.
 
     For the six months ended June 30, 1996, property operating and maintenance
expenses (exclusive of depreciation and amortization) increased, compared to the
same period in the prior year, primarily due to the increase in the units placed
in service through the development and acquisition of communities.
 
                                      S-20
<PAGE>   21
 
FULLY STABILIZED COMMUNITIES
 
     The Company defines fully stabilized communities as those which have
reached stabilization prior to the beginning of the previous calendar year.
 
     The operating performance of the 37 communities and the first phase of two
additional communities containing an aggregate of 14,160 units which were fully
stabilized as of January 1, 1995, is summarized as follows:
 
<TABLE>
<CAPTION>
                                           THREE MONTHS ENDED                SIX MONTHS ENDED
                                                JUNE 30,                         JUNE 30,
                                      ----------------------------     ----------------------------
                                       1996      1995     % CHANGE      1996      1995     % CHANGE
                                      -------   -------   --------     -------   -------   --------
    <S>                               <C>       <C>       <C>          <C>       <C>       <C>
    Rental and other revenue........  $31,500   $29,880       5.4%     $62,569   $59,214       5.7%
    Property operating and
      maintenance expense (exclusive
      of depreciation and
      amortization).................   10,782    10,491       2.8%      20,568    19,784       4.0%
                                      -------   -------                -------   -------
    Revenue in excess of specified
      expense.......................  $20,718   $19,389       6.9%     $42,001   $39,430       6.5%
                                      =======   =======                =======   =======
    Recurring capital
      expenditures:(1)
      Carpet........................  $   231   $   229       0.9%     $   405   $   400       1.3%
      Other.........................      651       153     325.5%         938       263     256.7%
                                      -------   -------                -------   -------
              Total.................  $   882   $   382     130.9%     $ 1,343   $   663     102.6%
                                      =======   =======                =======   =======
    Recurring capital expenditures
      per apartment unit(2).........  $    62   $    27                $    95   $    47
                                      =======   =======                =======   =======
    Average economic occupancy(3)...    95.7%     96.1%                  95.5%     96.0%
                                      =======   =======                =======   =======
    Average monthly rental rate per
      apartment unit(4).............  $   752   $   717       4.9%     $   749   $   712       5.2%
                                      =======   =======                =======   =======
    Apartment units in service......   14,160    14,160                 14,160    14,160
                                      =======   =======                =======   =======
</TABLE>
 
- ---------------
 
(1) In addition to those expenses which relate to property operations, the
     Company incurs recurring and nonrecurring expenditures relating to
     acquiring new assets, materially enhancing the value of an existing asset,
     or substantially extending the useful life of an existing asset, all of
     which are capitalized.
(2) In addition to such capitalized expenditures, the Company expensed $160 and
     $280 per unit on building maintenance (inclusive of direct salaries) and
     $72 and $115 per unit on landscaping (inclusive of direct salaries) for the
     three and six months ended June 30, 1996, respectively.
(3) Average economic occupancy is defined as gross potential rent less vacancy
     losses, model expenses and bad debt divided by gross potential rent for the
     period, expressed as a percentage. The calculation of average economic
     occupancy does not include a deduction for concessions and employee
     discounts. (Average economic occupancy, including these amounts, would have
     been 95.2% and 95.6% and 95.0% and 95.5% for the three and six months ended
     June 30, 1996 and 1995, respectively.) For the three month period ended
     June 30, 1996 and 1995, concessions were $81 and $79 and employee discounts
     were $65 and $63, respectively. Concessions were $143 and $141 and employee
     discounts were $136 and $122, for the six months ended June 30, 1996 and
     1995, respectively.
(4) Average monthly rental rate is defined as the average of the gross actual
     rental rates for occupied units and the anticipated rental rates for
     unoccupied units.
 
     For the three and six months ended June 30, 1996, rental and other revenue
increased, compared to the same periods in the prior year, due to higher rental
rates. For the three and six months ended June 30, 1996, property operating and
maintenance expenses (exclusive of depreciation and amortization) increased
$291, or 2.8%, and $784, or 4.0%, respectively, compared to the same period in
the prior year, primarily as a result of an increase in ad valorem real estate
taxes.
 
                                      S-21
<PAGE>   22
 
     The increase in recurring capital expenditures per apartment unit for the
three and six months ended June 30, 1996, compared to the same period in the
prior year, is primarily due to the refurbishment of leasing offices and other
common areas within the communities.
 
LEASE-UP DEFICITS
 
     As noted in the overview of Community Operations, the Company has adopted
an accounting policy related to communities in the development and lease-up
stage whereby substantially all operating expenses (including pre-opening
marketing expenses) are expensed as incurred. The Company treats each unit in an
apartment community separately for cost accumulation, capitalization and expense
recognition purposes. Prior to the commencement of leasing activities, interest
as well as other construction costs are capitalized and reflected on the balance
sheet as construction in progress. Once a unit is placed in service, all
expenses allocated to that unit, including interest, are expensed as incurred.
During the lease-up phase, the sum of interest expense on completed units and
other operating expenses (including pre-opening marketing expenses) will
typically exceed rental revenues, resulting in a "lease-up deficit," which
continues until rental revenues exceed such expenses.
 
     In this presentation, only those communities which were dilutive for the
respective period are included and, accordingly, different communities may be
included in different quarters.
 
     For the quarters ended March 31 and June 30, 1996, the "lease-up deficit"
charged to and included in results of operations is summarized as follows:
 
<TABLE>
<CAPTION>
                                                                             SIX MONTHS
                                                                           ENDED JUNE 30,
                                                                                1996
                                                                           ---------------
                                                                           QTR 1     QTR 2
                                                                           -----     -----
    <S>                                                                    <C>       <C>
    Rental and other revenue.............................................  $ 574     $ 294
    Property operating and maintenance expense (exclusive of depreciation
      and amortization)..................................................    469       189
                                                                           -----      ----
    Revenue in excess of specified expense...............................    105       105
    Interest expense.....................................................    338       196
                                                                           -----      ----
    Lease-up deficit.....................................................  $(233)    $ (91)
                                                                           =====      ====
</TABLE>
 
THIRD PARTY MANAGEMENT SERVICES
 
     The Company provides asset management, leasing and other consulting
services to non-related owners of apartment communities through two of its
subsidiaries, RAM Partners, Inc. ("RAM") and Post Asset Management, Inc. ("Post
Asset Management").
 
     The operating performance of RAM and Post Asset Management for the three
and six months ended June 30, 1996 and 1995 is summarized as follows:
 
RAM PARTNERS, INC.
 
<TABLE>
<CAPTION>
                                              THREE MONTHS ENDED           SIX MONTHS ENDED
                                                   JUNE 30,                    JUNE 30,
                                           -------------------------   -------------------------
                                            1996     1995    %CHANGE    1996     1995    %CHANGE
                                           ------   ------   -------   ------   ------   -------
    <S>                                    <C>      <C>      <C>       <C>      <C>      <C>
    Property management and other
      revenue............................  $  649   $  531     22.2%   $1,309   $1,059     23.6%
    Property management expense..........     297      264     12.5%      653      582     12.2%
    General and administrative expense...     113      104      8.7%      231      223      3.6%
                                           ------   ------             ------   ------
    Revenue in excess of specified
      expense............................  $  239   $  163     46.6%   $  425   $  254     67.3%
                                           ======   ======             ======   ======
    Average apartment units managed......   9,814    9,440      4.0%    9,829    9,440      4.1%
                                           ======   ======             ======   ======
</TABLE>
 
                                      S-22
<PAGE>   23
 
     The increase in property management revenues and expenses from each of the
1995 to 1996 periods is primarily attributable to the increase in the average
number and the average gross revenues of units managed.
 
POST ASSET MANAGEMENT
 
<TABLE>
<CAPTION>
                                              THREE MONTHS ENDED            SIX MONTHS ENDED
                                                   JUNE 30,                     JUNE 30,
                                          --------------------------   --------------------------
                                           1996     1995    % CHANGE    1996     1995    % CHANGE
                                          ------   ------   --------   ------   ------   --------
    <S>                                   <C>      <C>      <C>        <C>      <C>      <C>
    Property management and other
      revenue...........................  $   88   $  130     (32.3)%  $  169   $  256     (34.0)%
    Property management expense.........      60       85     (29.4)%     142      194     (26.8)%
    General and administrative
      expense...........................      11       14     (21.4)%      25       34     (26.5)%
                                          ------   ------              ------   ------
    Revenue in excess of specified
      expense...........................  $   17   $   31     (45.2)%  $    2   $   28     (92.9)%
                                          ======   ======              ======   ======
    Average apartment units managed.....     866    1,256     (31.1)%     866    1,256     (31.1)%
                                          ======   ======              ======   ======
</TABLE>
 
     Property management revenues and the related expenses decreased for each of
the periods in 1996, compared to the same periods in 1995, primarily due to the
reduction in the average number of apartment units managed. This reduction was
primarily due to two management contracts which were cancelled effective January
1996. The Company expects income from Post Asset Management to continue to
decline as contracts are cancelled and not replaced.
 
THIRD PARTY LANDSCAPE SERVICES
 
     The Company provides landscape maintenance, design and installation
services to non-related parties through a subsidiary, Post Landscape Services,
Inc. ("Post Landscape Services").
 
     The operating performance of Post Landscape Services for the three and six
months ended June 30, 1996 and 1995 is summarized as follows:
 
<TABLE>
<CAPTION>
                                            THREE MONTHS ENDED              SIX MONTHS ENDED
                                                 JUNE 30,                       JUNE 30,
                                        --------------------------     --------------------------
                                         1996     1995    % CHANGE      1996     1995    % CHANGE
                                        ------   ------   --------     ------   ------   --------
    <S>                                 <C>      <C>      <C>          <C>      <C>      <C>
    Landscape services and other
      revenue.........................  $1,356   $1,342       1.0%     $2,268   $2,156       5.2%
    Landscape services expense........     991      884      12.1%      1,658    1,476      12.3%
    General and administrative
      expense.........................     104      182     (42.9)%       205      278     (26.3)%
                                        ------   ------                ------   ------
    Revenue in excess of specified
      expense.........................  $  261   $  276      (5.4)%    $  405   $  402       0.7%
                                        ======   ======                ======   ======
</TABLE>
 
     The increase in landscape services revenue and landscape service expense
for each of the periods ended June 30, 1996, compared to the same period in
1995, is primarily due to increases in landscape contracts.
 
OTHER INCOME AND EXPENSES
 
     General and administrative expense increased for the three and six months
ended June 30, 1996, compared to the same period in the prior year, primarily as
a result of increased travel expenses and personnel costs.
 
     The extraordinary item of $502 and $622 for the three and six months ended
June 30, 1995, respectively, net of minority interest, resulted from the costs
associated with the early retirement of debt.
 
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
 
     The Company recorded net income of $29,118 for the year ended December 31,
1995 primarily as a result of increased rental rates for fully stabilized
communities and an increase in units placed in service. This is compared to net
income of $18,899 for the year ended December 31, 1994 and a net loss of
($5,223) for the year ended December 31, 1993. The increase in net income in
1994 was primarily due to lower interest
 
                                      S-23
<PAGE>   24
 
expense as a result of the repayment or economic defeasance of debt with
contributions from the Company resulting from proceeds of the Initial Offering
and the public offering completed by the Company on February 7, 1994 (the
"Second Offering").
 
COMMUNITY OPERATIONS
 
     At December 31, 1995, the Company's portfolio of apartment communities
consisted of thirty-four communities and the first phase of two additional
communities which were completed and stabilized for all of the current and prior
year, three communities which achieved full stabilization during the prior year,
three communities and the second phase of an existing community which reached
stabilization during the current year and eight communities and a second phase
of an existing community in the development or lease-up stage. In addition,
during the third quarter of 1995, the Company sold three of its communities
which it had previously developed and operated.
 
ALL OPERATING COMMUNITIES
 
     The operating performance for all of the Company's apartment communities
combined for the years ended December 31, 1995, 1994 and 1993 is summarized as
follows:
 
<TABLE>
<CAPTION>
                                               YEAR ENDED                         YEAR ENDED
                                              DECEMBER 31,                       DECEMBER 31,
                                     ------------------------------     ------------------------------
                                       1995       1994     % CHANGE       1994       1993     % CHANGE
                                     --------   --------   --------     --------   --------   --------
<S>                                  <C>        <C>        <C>          <C>        <C>        <C>
Rental and other revenue:
  Fully stabilized
     communities(1)................  $112,048   $106,421       5.3%     $106,421   $ 99,853       6.6%
  Communities stabilized less than
     two years(2)..................     8,417      5,364      56.9%        5,364      1,015     428.5%
  Development and lease-up
     communities(3)................    10,852        133       N/A           133         --       N/A
  Sold communities(4)..............     2,926      3,998     (26.8)%       3,998      3,854       3.7%
  Other revenue(5).................     2,458      2,074      18.5%        2,074      2,170      (4.4)%
                                     --------   --------                --------   --------
                                      136,701    117,990      15.9%      117,990    106,892      10.4%
                                     --------   --------                --------   --------
Property operating and maintenance
  expense (exclusive of
  depreciation and amortization):
  Fully stabilized communities.....    38,460     36,699       4.8%       36,699     35,724       2.7%
  Communities stabilized less than
     two years.....................     2,306      1,780      29.6%        1,780        544     227.2%
  Development and lease-up
     communities...................     4,450        515       N/A           515         --       N/A
  Sold communities.................     1,279      1,722     (25.7)%       1,722      1,788      (3.7)%
  Other expenses(6)................     3,417      2,660      28.5%        2,660      3,153     (15.6)%
                                     --------   --------                --------   --------
                                       49,912     43,376      15.1%       43,376     41,209       5.3%
                                     --------   --------                --------   --------
Revenue in excess of specified
  expense..........................  $ 86,789   $ 74,614      16.3%     $ 74,614   $ 65,683      13.6%
                                     ========   ========                ========   ========
Recurring capital expenditures(7):
  Carpet...........................  $    897   $    729      23.0%     $    729   $    742      (1.8)%
  Other............................       803      1,087     (26.1)%       1,087        979      11.0%
                                     --------   --------                --------   --------
          Total....................  $  1,700   $  1,816      (6.4)%    $  1,816   $  1,721       5.5%
                                     ========   ========                ========   ========
Average apartment units in
  service..........................    15,519     14,619       6.2%       14,619     14,179       3.1%
                                     ========   ========                ========   ========
</TABLE>
 
- ---------------
 
(1) Communities which reached stabilization prior to January 1, 1994.
(2) Communities which reached stabilization during the year ended December 31,
     1994.
 
                                      S-24
<PAGE>   25
 
(3) Communities in the "construction", "development" or "lease-up" stage during
     1995 and, therefore, not considered fully stabilized for all of the periods
     presented.
(4) Communities which were sold on September 13, 1995.
(5) Other revenue includes revenue on furnished apartment rentals above the
     unfurnished rental rates and any revenue not directly related to property
     operations.
(6) Other expenses includes certain indirect central office operating expenses
     related to management, grounds maintenance, and costs associated with
     furnished apartment rentals.
(7) In addition to those expenses which relate to property operations, the
     Company incurs recurring and non-recurring expenditures relating to
     acquiring new assets, materially enhancing the value of an existing asset,
     or substantially extending the useful life of an existing asset, all of
     which are capitalized.
 
     Rental and other revenue increased for 1995 and 1994 primarily as a result
of increased rates for fully stabilized communities and an increase in units
placed in service. Rental and other revenue from communities stabilized since
January 1, 1994, increased $5,627 from 1994 to 1995 primarily as a result of
higher rental rates. Rental and other revenue from all other communities
increased by $12,700 from 1994 to 1995 primarily due to additional units placed
in service. On September 13, 1995, the Company sold three communities, all of
which had been previously included in the fully stabilized community group and
are now shown separately.
 
     Property operating and maintenance expenses (exclusive of depreciation and
amortization) increased from 1993 to 1994 and 1994 to 1995 primarily due to the
increase in the units placed in service.
 
FULLY STABILIZED COMMUNITIES
 
     The Company defines fully stabilized communities as those which have
reached stabilization prior to the beginning of the previous calendar year.
 
     The operating performance of the 34 communities and the first phase of two
additional communities containing an aggregate of 13,428 units which were fully
stabilized as of January 1, 1994, are summarized as follows:
 
<TABLE>
<CAPTION>
                                            YEAR ENDED                       YEAR ENDED
                                           DECEMBER 31,                     DECEMBER 31,
                                  ------------------------------   ------------------------------
                                    1995       1994     % CHANGE     1994       1993     % CHANGE
                                  --------   --------   --------   --------   --------   --------
    <S>                           <C>        <C>        <C>        <C>        <C>        <C>
    Rental and other revenue....  $112,048   $106,421      5.3%    $106,421   $ 99,853      6.6%
    Property operating and
      maintenance expense
      (exclusive of depreciation
      and amortization)(1)......    38,460     36,699      4.8%      36,699     35,724      2.7%
                                   -------    -------               -------    -------
    Revenue in excess of
      specified expense.........  $ 73,588   $ 69,722      5.5%    $ 69,722   $ 64,129      8.7%
                                   =======    =======               =======    =======
    Average economic
      occupancy(2)..............     96.0%      96.5%                 96.5%      94.6%
                                   =======    =======               =======    =======
    Average monthly rental rate
      per apartment unit(3).....  $    710   $    668      6.3%    $    668   $    628      6.4%
                                   =======    =======               =======    =======
    Apartment units in
      service...................    13,428     13,428       --       13,428     13,428       --
                                   =======    =======               =======    =======
</TABLE>
 
- ---------------
 
(1) In addition to those expenses which relate to property operations, the
     Company incurs recurring and non-recurring expenditures relating to
     acquiring new assets, materially enhancing the value of an existing asset,
     or substantially extending the useful life of an existing asset, all of
     which are capitalized. For the year ended December 31, 1995 and 1994,
     recurring expenditures were $1,601 and $1,470, or $119 and $109 on a per
     apartment unit basis, respectively.
(2) Average economic occupancy is defined as gross potential rent less vacancy
     losses, model expenses and bad debt divided by gross potential rent for the
     period, expressed as a percentage. The calculation of average economic
     occupancy does not include a deduction for concessions and employee
     discounts.
 
                                      S-25
<PAGE>   26
 
     (Average economic occupancy, including these amounts would have been 95.5%,
     96.1% and 93.8% for the year ended December 31, 1995, 1994 and 1993,
     respectively.) For the year ended December 31, 1995, concessions were $296
     and employee discounts were $213.
(3) Average monthly rental rate is defined as the average of the gross actual
     rental rates for leased units and the average of the anticipated rental
     rates for unoccupied units.
 
     Rental and other revenue increased from 1994 to 1995 due to higher rental
rates with occupancy slightly declining. Property operating and maintenance
expenses (exclusive of depreciation and amortization) increased $1,761, or 4.8%.
Ad valorem real estate taxes increased from $9,376 in 1994 to $10,340 in 1995,
an increase of 10.3%. This increase alone accounted for 55% of the overall
operating expense increase. The remaining increase was primarily due to modest
increases in utilities, advertising and promotion and building repairs and
maintenance offset by a modest decrease in landscaping and grounds and
maintenance expense.
 
     Rental and other revenue increased from 1993 to 1994 as a result of
increased rental rates and occupancy. The modest increase in property and
maintenance expense from 1993 to 1994 was primarily due to increases in real
estate taxes, insurance and personnel costs which were partially offset by
reductions in advertising and promotion expense due to lower vacancies. In
addition, utilities expense remained relatively flat despite rising rates due to
the effect of installation of cost saving devices and implemented cost controls.
Building repairs and maintenance increased from 1993 to 1994 due to various cost
reduction programs implemented at the communities and cost savings achieved as
grounds matured during the period.
 
LEASE-UP DEFICITS
 
     As noted in the overview of Community Operations, the Company has adopted
an accounting policy related to communities in the development and lease-up
stage whereby substantially all operating expenses (including pre-opening
marketing expenses) are expensed as incurred. The Company treats each unit in an
apartment community separately for cost accumulation, capitalization and expense
recognition purposes. Prior to the commencement of leasing activities, interest
as well as other construction costs are capitalized and reflected on the balance
sheet as construction in progress. Once a unit is placed in service, all
expenses allocated to that unit, including interest, are expensed as incurred.
During the lease-up phase, the sum of interest expense on completed units and
other operating expenses (including pre-opening marketing expenses) will
typically exceed rental revenues, resulting in a "lease-up deficit," which
continues until rental revenues exceed such expenses.
 
     In this presentation, only those communities which were dilutive during
each period are included in that period and, accordingly, different communities
may be included in different periods.
 
     For each quarter of the year ended December 31, 1995, the "lease-up
deficit" charged to and included in results of operations are summarized as
follows:
 
<TABLE>
<CAPTION>
                                                                       YEAR ENDED
                                                                   DECEMBER 31, 1995
                                                             ------------------------------
                                                             QTR 1   QTR 2   QTR 3    QTR 4
                                                             -----   -----   ------   -----
    <S>                                                      <C>     <C>     <C>      <C>
    Rental and other revenue...............................  $ 282   $ 591   $1,591   $ 863
    Property operating and maintenance expense (exclusive
      of depreciation and amortization)....................    450     631      840     501
                                                             ------  ------  ------   ------
    Revenue in excess of specified expense.................   (168)    (40)     751     362
    Interest expense.......................................    175     347    1,002     548
                                                             ------  ------  ------   ------
    Lease-up deficit.......................................  $(343)  $(387)  $ (251)  $(186)
                                                             ======  ======  ======   ======
</TABLE>
 
THIRD PARTY MANAGEMENT SERVICES
 
     The Company provides asset management, leasing and other consulting
services to non-related owners of apartment communities through two of its
subsidiaries, RAM and Post Asset Management.
 
                                      S-26
<PAGE>   27
 
     The operating performance of RAM and Post Asset Management for the years
ended December 31, 1995, 1994 and 1993 are summarized as follows:
 
RAM PARTNERS, INC.
 
<TABLE>
<CAPTION>
                                                  YEAR ENDED                   YEAR ENDED
                                                 DECEMBER 31,                 DECEMBER 31,
                                           ------------------------     ------------------------
                                                               %                            %
                                            1995     1994    CHANGE      1994     1993    CHANGE
                                           ------   ------   ------     ------   ------   ------
    <S>                                    <C>      <C>      <C>        <C>      <C>      <C>
    Property management and other
      revenue............................  $2,331   $2,184     6.7%     $2,184   $2,318    (5.8 )%
    Property management expense..........   1,213    1,278    (5.1)%     1,278    1,388    (7.9 )%
    General and administrative expense...     467      433     7.9%        433      492   (12.0 )%
                                           ------   ------              ------   ------
    Revenue in excess of specified
      expense............................  $  651   $  473    37.6%     $  473   $  438     8.0 %
                                           ======   ======              ======   ======
    Average apartment units in service...   8,798    8,488     3.7%      8,488    9,488   (10.5 )%
                                           ======   ======              ======   ======
</TABLE>
 
     The change in property management revenues and expenses from 1994 to 1995
and 1993 to 1994 is primarily attributable to the change in the average number
and the average gross revenues of units managed.
 
POST ASSET MANAGEMENT
 
<TABLE>
<CAPTION>
                                                  YEAR ENDED                   YEAR ENDED
                                                 DECEMBER 31,                 DECEMBER 31,
                                           ------------------------     ------------------------
                                                               %                            %
                                            1995     1994    CHANGE      1994     1993    CHANGE
                                           ------   ------   ------     ------   ------   ------
    <S>                                    <C>      <C>      <C>        <C>      <C>      <C>
    Property management and other
      revenue............................  $  550   $  578    (4.8 )%   $  578   $1,001   (42.3 )%
    Property management expense..........     392      408    (3.9 )%      408      431    (5.3 )%
    General and administrative expense...      94      110   (14.5 )%      110      142   (22.5 )%
                                           ------   ------              ------   ------
    Revenue in excess of specified
      expense............................  $   64   $   60     6.7 %    $   60   $  428   (86.0 )%
                                           ======   ======              ======   ======
    Average apartment units in service...   1,061    1,498   (29.2 )%    1,498    2,145   (30.2 )%
                                           ======   ======              ======   ======
</TABLE>
 
     The decreases in property management revenues and the related expenses for
1995 to 1994 were primarily due to the reduction in the average number of
apartment units managed during the periods. These reductions were primarily due
to cancellation of three management contracts during 1993 and one during 1994
for communities developed by the Company and sold to third-party owners prior to
the Initial Offering. Two additional contracts were canceled effective in
January 1996. The Company expects income from Post Asset Management to continue
to decline as contracts are canceled and not replaced.
 
THIRD PARTY LANDSCAPE SERVICES
 
     The Company provides landscape maintenance, design and installation
services to non-related parties through a subsidiary, Post Landscape.
 
     The operating performance of Post Landscape for the years ended December
31, 1995, 1994 and 1993 are summarized as follows:
 
<TABLE>
<CAPTION>
                                                    YEAR ENDED                 YEAR ENDED
                                                   DECEMBER 31,               DECEMBER 31,
                                             ------------------------   ------------------------
                                                                 %                          %
                                              1995     1994    CHANGE    1994     1993    CHANGE
                                             ------   ------   ------   ------   ------   ------
    <S>                                      <C>      <C>      <C>      <C>      <C>      <C>
    Landscape services and other revenue...  $4,662   $3,808    22.4%   $3,808   $3,829    (0.5)%
    Landscape services expense.............   3,255    2,685    21.2%    2,685    2,703    (0.7)%
    General and administrative expense.....     695      413    68.3%      413      448    (7.8)%
                                             ------   ------            ------   ------
    Revenue in excess of specified
      expense..............................  $  712   $  710     0.3%   $  710   $  678     4.7%
                                             ======   ======            ======   ======
</TABLE>
 
                                      S-27
<PAGE>   28
 
     The change in landscape services revenue, landscape services expense and
general and administrative expense from 1994 to 1995 is primarily due to an
increase in landscape contracts. Revenues and expenses for 1993 and 1994
remained consistent.
 
OTHER INCOME AND EXPENSES
 
     Interest expense increased from 1994 to 1995 due to additional outstanding
borrowings until the time of the public offering completed by the Company on
October 20, 1995 (the "Third Offering"). The decrease from 1993 to 1994 is
primarily due to the repayment or economic defeasance of debt with contributions
made by the Company from proceeds of the Initial Offering and Second Offering.
 
     Amortization of deferred loan costs, interest rate protection agreement and
swap gain increased from 1993 to 1994 due to lower amortization of swap gain
from the extinguishment of debt with contributions made by the Company from
proceeds of the Initial Offering and Second Offering.
 
     General and administrative expense remained relatively consistent from 1994
to 1995. The increase from 1993 to 1994 is due to increased costs associated
with operating the Company as a public company, write-off of costs ($282)
relating to abandoned development projects and additional incentive based
executive compensation.
 
     Formation Transaction expense was incurred during the year ended December
31, 1993 relating to legal, accounting and other costs arising in connection
with the business combination completed at the time of the Initial Offering.
 
     Gain on sale of real estate assets during 1995 and 1994 resulted from the
sale of three communities and a parcel of land, respectively.
 
     The extraordinary item of $870, $3,293 and $7,855 for the years ended
December 31, 1995, 1994 and 1993, net of minority interest portion, resulted
from the costs associated with the early retirement of debt.
 
LIQUIDITY AND CAPITAL RESOURCES
 
LIQUIDITY
 
     The Company's net cash provided by operating activities increased from
$2,412 in 1993 to $43,807 in 1994, principally due to decreased interest expense
($18,603) resulting from retirements of debt due to the effect of proceeds from
the Initial and Second Offerings, increased property revenue in excess of
specified expenses ($8,931) and 1993 non-recurring payments for debt prepayment
penalties ($13,803) and REIT formation expenses ($2,783), and increased from
$43,807 in 1994 to $57,362 in 1995, principally due to increased property
revenue in excess of specified expenses, and increased from $33,856 in the six
months ended June 30, 1995 to $43,408 in the six months ended June 30, 1996,
principally due to increased property revenue in excess of specified expenses.
Net cash used in investing activities increased from $51,152 in 1993 to $99,364
in 1994, principally due to the increase in spending on new community
development, and increased from $99,364 in 1994 to $114,531 in 1995, principally
due to a $27,740 increase in spending on new community development and
acquisition activity offset by an increase in net proceeds from the sale of real
estate assets of $15,152. Net cash used in investing activities increased from
$67,606 in the six months ended June 30, 1995 to $98,170 in the six months ended
June 30, 1996 principally due to the increase in construction activities
relating to new development and acquisition of new communities. The Company's
net cash provided by financing activities decreased from $49,647 in 1993 to
$46,508 in 1994, principally due to the effects of proceeds from the Initial and
Second Offerings and the payment of dividends in 1994, and increased from
$46,508 in 1994 to $60,885 in 1995, primarily due to the effects of proceeds
from the Third Offering and dividend reinvestment plan and the Company's
additional borrowings and dividends paid, and decreased from $49,262 in the six
months ended June 30, 1995 to $47,378 in the six months ended June 30, 1996 due
to an increase in net borrowing activity to fund development offset by a
decrease in cash proceeds from the dividend reinvestment plan and an increase in
dividends paid for the six months ended June 30, 1996.
 
                                      S-28
<PAGE>   29
 
     The Company has elected to be taxed as a Real Estate Investment Trust
("REIT") under Sections 856 through 860 of the Internal Revenue Code of 1986, as
amended, commencing with its taxable year ended December 31, 1993. REITs are
subject to a number of organizational and operational requirements, including a
requirement that they currently distribute 95% of their ordinary taxable income.
As a REIT, the Company generally will not be subject to Federal income tax on
net income.
 
     At June 30, 1996, the Company had total indebtedness of $421,378 and cash
and cash equivalents of $1,624. The Company's indebtedness includes
approximately $33,340 in conventional mortgages payable secured by individual
communities, tax-exempt bond indebtedness of $149,038, senior unsecured notes of
$100,000 and borrowings under an unsecured line of credit of approximately
$139,000.
 
     The Company expects to meet its short-term liquidity requirements generally
through its net cash provided by operations and borrowings under credit
arrangements and expects to meet certain of its long-term liquidity
requirements, such as scheduled debt maturities, repayment of financing of
construction and development activities and possible property acquisitions,
through long-term secured and unsecured borrowings, possible sales of properties
and the issuance of debt securities or additional equity securities, or,
possibly in connection with acquisitions of land or improved properties, Units
of the Operating Partnership. The Company believes that its net cash provided by
operations will be adequate and anticipates that it will continue to be adequate
to meet both operating requirements and payment of dividends in accordance with
REIT requirements in both the short and the long term. The budgeted expenditures
for improvements and renovations to certain of the communities are expected to
be funded from property operations.
 
LINES OF CREDIT
 
     On February 1, 1995, the Company closed a 39-month unsecured revolving line
of credit (the "Revolver") in the amount of $180,000 with a bank syndicate to
provide funding for future construction, acquisitions and general business
obligations. Borrowings under the Revolver initially bore interest at LIBOR plus
1.50% or prime minus .25% and had a maturity date of May 1, 1998. On March 1,
1996 the Revolver was amended to reduce the interest rate to LIBOR plus 0.95% or
prime minus .25% and to extend the maturity to May 1, 1999. The amendment also
provides for the rate to be adjusted up or down based on changes in the credit
ratings on the Company's senior unsecured debt. On June 4, 1996, the rating on
the Operating Partnership's senior unsecured debt by Standard & Poor's was
raised to BBB+ which further reduced the interest rate on the Revolver to its
current rate of LIBOR plus .80% or prime minus .25%. The credit agreement for
the Revolver contains customary representations, covenants and events of
default, including covenants which restrict the ability of the Operating
Partnership to make distributions in excess of stated amounts, which in turn
restricts the discretion of the Company to declare and pay dividends. In
general, during any fiscal year the Operating Partnership may only distribute up
to 100% of the Operating Partnership's consolidated income available for
distribution (as defined in the credit agreement) exclusive of distributions of
up to $30,000 of capital gains for such year. The credit agreement contains
exceptions to these limitations to allow the Company to make distributions
necessary to allow the Company to maintain its status as a REIT. The Company
does not anticipate that this covenant will adversely affect the ability of the
Operating Partnership to make distributions or the Company to declare dividends,
under the Company's current dividend policy.
 
     On July 26, 1996, the Company closed a $20,000 unsecured line of credit
with Wachovia Bank of Georgia, N.A. (the "Cash Management Line"), which was
fully funded and used to pay down the outstanding balance on the Revolver. The
Cash Management Line bears interest at LIBOR plus .75% or prime minus .25% and
has a maturity date of July 25, 1997. The Company has an automatic daily sweep
which applies all available cash to reduce the outstanding balance on the Cash
Management Line.
 
NORTHWESTERN MUTUAL UNSECURED LOANS
 
     On June 7, 1995, the Company issued $50,000 of unsecured senior notes with
The Northwestern Mutual Life Insurance Company (the "NML Notes"). The NML Notes
were in two tranches: the first, aggregating $30,000, carries an interest rate
of 8.21% per annum and matures on June 7, 2000; and the second, aggregating
 
                                      S-29
<PAGE>   30
 
$20,000, carries an interest rate of 8.37% per annum and matures on June 7,
2002. Proceeds from the issuance of the NML Notes were used to reduce secured
indebtedness and to pay down the Revolver. The note agreements pursuant to which
the NML Notes were purchased contain representations, covenants and events of
default similar to those contained in the note agreement for the Revolver.
 
WACHOVIA UNSECURED LOANS
 
     On September 29, 1995, the Company issued $50,000 of unsecured senior notes
with Wachovia Bank of Georgia, N.A. (the "Wachovia Notes"). The Wachovia Notes
were in two tranches: the first tranche, aggregating $25,000, will mature on
September 29, 1999; the second tranche, aggregating $25,000, will mature on
September 29, 2001. Both tranches bear interest at 7.15% per annum. Proceeds
from the issuance of the Wachovia Notes were used to reduce indebtedness
outstanding on the Revolver. The credit agreement for the notes contain
representations, covenants and events of default similar to those contained in
the note agreement for the Revolver.
 
TAX EXEMPT BONDS
 
     On June 29, 1995, the Company replaced the bank letters of credit providing
credit enhancement for twelve of its outstanding tax-exempt bonds and three of
its economically defeased tax-exempt bonds. Under an agreement with the Federal
National Mortgage Association ("FNMA"), FNMA now provides, directly or
indirectly through other bank letters of credit, credit enhancement with respect
to such bonds. Under the terms of such agreement, FNMA has provided replacement
credit enhancement through 2025 for five bond issues, aggregating $52,675, which
were reissued, and has agreed, subject to certain conditions, to provide credit
enhancement through June 1, 2025 for up to an additional $101,853 with respect
to ten other bond issues which mature and may be refunded in 1996 through 1998.
The agreement with FNMA contains representations, covenants, and events of
default customary to such secured loans.
 
OTHER ACTIVITIES
 
     On May 7, 1996, the Company reacquired three contiguous Atlanta apartment
communities containing a total of 810 units which the Company developed in the
early 1980's and managed under the Post(R) brand name through mid-1993. The
Company's capital investment, including expenditures to add perimeter fencing
and steel entry gates and construction of a new centralized leasing office, will
be approximately $48 million. At the time of acquisition the community was
operated as Dunwoody Crossing and is now operated by the Company as Post
Creek(TM).
 
     In April 1996, the Company listed two communities in Florida, containing a
total of 596 units, for sale. On July 19, 1996, one of the communities,
containing 180 units, was sold.
 
DIVIDEND REINVESTMENT PLAN
 
     The Dividend Reinvestment Plan ("DRIP") is available to all shareholders of
the Company. Under the DRIP, shareholders may elect for their dividends to be
used to acquire additional shares of the Company's Common Stock directly from
the Company, for 95% of the market price on the date of purchase.
 
                                      S-30
<PAGE>   31
 
SCHEDULE OF INDEBTEDNESS
 
     The following table reflects the Company's indebtedness at June 30, 1996:
 
<TABLE>
<CAPTION>
                                                                                              MATURITY         PRINCIPAL
                 COMMUNITY                    LOCATION              INTEREST RATE             DATE(1)           BALANCE
- ------------------------------------------- ------------  ---------------------------------  ----------        ---------
<S>                                         <C>           <C>                                <C>               <C>
TAX EXEMPT FIXED RATE (SECURED)
Post Canyon................................ Atlanta, GA          7.4% + .575%(2)(3)            07/01/96(4)(5)  $  16,845
Post Corners............................... Atlanta, GA          7.4% + .575%(2)(3)            08/01/96(4)(6)     14,760
Post Bridge................................ Atlanta, GA          7.5% + .575%(2)(3)            01/01/97(4)         9,960
Post Village (Atlanta) Gardens............. Atlanta, GA          7.5% + .575%(2)(3)            01/01/97(4)        14,500
Post Chase................................. Atlanta, GA          7.5% + .575%(2)(3)            07/01/97(4)        12,000
Post Walk.................................. Atlanta, GA          7.5% + .575%(2)(3)            07/01/97(4)        15,000
Post Court................................. Atlanta, GA          7.5% + .575%(2)(3)            06/01/98(4)        13,298
                                                                                                                --------
                                                                                                                  96,363
                                                                                                                --------
CONVENTIONAL FIXED RATE (SECURED)
Post Village (Atlanta) Arbors.............. Atlanta, GA                 8.16%                  02/10/97            7,684
Post Summit................................ Atlanta, GA                 7.72%                  02/01/98            5,347
Post River................................. Atlanta, GA                 7.72%                  03/01/98            5,909
                                                                                                                --------
                                                                                                                  18,940
                                                                                                                --------
TAX EXEMPT FLOATING RATE (SECURED)
Post Ashford Series 1995................... Atlanta, GA      "AAA" NON-AMT + .575%(2)(3)     06/01/2025            9,895
Post Valley Series 1995.................... Atlanta, GA      "AAA" NON-AMT + .575%(2)(3)     06/01/2025           18,600
Post Brook Series 1995..................... Atlanta, GA      "AAA" NON-AMT + .575%(2)(3)     06/01/2025            4,300
Post Village (Atlanta) Hills Series 1995... Atlanta, GA      "AAA" NON-AMT + .575%(2)(3)     06/01/2025            7,000
Post Mill Series 1995...................... Atlanta, GA      "AAA" NON-AMT + .575%(2)(3)     06/01/2025           12,880
                                                                                                                --------
                                                                                                                  52,675
                                                                                                                --------
CONVENTIONAL FLOATING RATE (SECURED)
Post Renaissance (Phase I and II).......... Atlanta, GA             LIBOR + .55%               07/01/99           14,400
                                                                                                                --------
                                                                                                                  14,400
                                                                                                                --------
SENIOR NOTES (UNSECURED)
Wachovia Bank of Georgia...................     N/A                     7.15%                  09/29/99           25,000
Northwestern Mutual Life...................     N/A                     8.21%                06/07/2000           30,000
Wachovia Bank of Georgia...................     N/A                     7.15%                09/29/2001           25,000
Northwestern Mutual Life...................     N/A                     8.37%                06/07/2002           20,000
                                                                                                                --------
                                                                                                                 100,000
                                                                                                                --------
LINES OF CREDIT (UNSECURED)
Revolver...................................     N/A       LIBOR + .80% or prime minus .25%     05/01/99          139,000
                                                                                                                --------
                                                                                                                 139,000
                                                                                                                --------
Total......................................                                                                    $ 421,378
                                                                                                                ========
</TABLE>
 
- ---------------
 
(1) All of the mortgages can be prepaid at any time, subject to certain
     prepayment penalties. All dates listed are final maturity dates assuming
     the exercise of any available extension option by the Company.
(2) Bond financed (interest rate on bonds + credit enhancement fees).
(3) These bonds are also secured by Post Fountains at Lee Vista, Post Lake
     (Orlando) and the Fountains and Meadows of Post Village for which the
     Company has economically defeased their respective bond indebtedness.
(4) Subject to certain conditions at re-issuance, the credit enhancement runs to
     June 1, 2025.
(5) On July 1, 1996, this bond was refunded with an issue having a maturity of
     June 1, 2025 and an interest rate of SunTrust Non-AMT "AAA" tax free rate
     plus a credit enhancement fee of .575%.
(6) On August 1, 1996, this bond was refunded with an issue having a maturity of
     June 1, 2025 and an interest rate of SunTrust Non-AMT "AAA" tax free rate
     plus a credit enhancement fee of .575%.
 
                                      S-31
<PAGE>   32
 
REFUNDABLE TAX EXEMPT BONDS
 
     The Company has previously issued tax-exempt bonds, secured by certain
communities, totaling $235,880, of which $86,842 has been economically defeased,
leaving $149,038 of principal amount of tax-exempt bonds outstanding at June 30,
1996. As of June 30, 1996, $52,675 of the bonds outstanding have been reissued
with a maturity of June 1, 2025. The remaining outstanding bonds, together with
the economically defeased bonds, mature and may be reissued, during the years
1996 through 1998. The Company has chosen economic defeasance of the bond
obligations rather than a legal defeasance in order to preserve the legal right
to refund such obligations on a tax-exempt basis at the stated maturity if the
Company then determines that such refunding is beneficial to the Company.
 
     The following table shows the amount of bonds (both defeased and
outstanding) at June 30, 1996, which the Company may reissue during the years
1996 through 2025:
 
<TABLE>
<CAPTION>
                                                           DEFEASED   OUTSTANDING   TOTAL REISSUE
                                                           PORTION      PORTION       CAPACITY
                                                           --------   -----------   -------------
    <S>                                                    <C>        <C>           <C>
    1996(1)..............................................  $     --    $  31,605      $  31,605
    1997.................................................     5,490       51,460         56,950
    1998.................................................    81,352       13,298         94,650
    Thereafter                                                   --       52,675         52,675
                                                            -------     --------       --------
                                                           $ 86,842    $ 149,038      $ 235,880
                                                            =======     ========       ========
</TABLE>
 
- ---------------
 
(1) 1996 amounts include Post Canyon and Post Corners bonds which matured and
     were refunded on July 1, 1996 and August 1, 1996, respectively.
 
CAPITALIZATION OF FIXED ASSETS AND COMMUNITY IMPROVEMENTS
 
     The Company has established a policy of capitalizing those expenditures
relating to acquiring new assets, materially enhancing the value of an existing
asset, or substantially extending the useful life of an existing asset. All
expenditures necessary to maintain a community in ordinary operating condition
are expensed as incurred. During the first five years of a community (which
corresponds to the estimated depreciable life), carpet replacements are expensed
as incurred. Thereafter, carpet replacements are capitalized.
 
     Acquisition of assets and community improvement expenditures for the six
months ended June 30, 1996 and 1995 are summarized as follows:
 
<TABLE>
<CAPTION>
                                                                         SIX MONTHS ENDED
                                                                             JUNE 30,
                                                                         -----------------
                                                                          1996      1995
                                                                         -------   -------
    <S>                                                                  <C>       <C>
    New community development and acquisition activity.................  $95,664   $65,748
    Non-recurring capital expenditures:
      Vehicle access control gates.....................................       32       323
      Other............................................................      743       362
    Recurring capital expenditures:
      Carpet replacements..............................................      410       433
      Community additions and improvements.............................      982       333
      Corporate additions and improvements.............................      339       407
                                                                         -------   -------
                                                                         $98,170   $67,606
                                                                         =======   =======
</TABLE>
 
INFLATION
 
     Substantially all of the leases at the communities allow, at the time of
renewal, for adjustments in the rent payable thereunder, and thus may enable the
Company to seek increases in rents. The substantial majority of these leases are
for one year or less and the remaining leases are for up to two years. At the
expiration of a lease term, the Company's lease agreements provide that the term
will be extended unless either the Company
 
                                      S-32
<PAGE>   33
 
or the lessee gives at least sixty (60) days written notice of termination; in
addition, the Company's policy permits the earlier termination of a lease by a
lessee upon thirty (30) days written notice to the Company and the payment of
one month's additional rent as compensation for early termination. The
short-term nature of these leases generally serves to reduce the risk to the
Company of the adverse effect of inflation.
 
FUNDS FROM OPERATIONS AND CASH AVAILABLE FOR DISTRIBUTION
 
     Historical Funds from Operations.  The Company considers FFO an appropriate
measure of performance of an equity REIT. The Company uses the National
Association of Real Estate Investment Trust ("NAREIT") definition of FFO, which
was adopted for periods beginning after January 1, 1996. FFO for any period
means the consolidated net income of the Company and its subsidiaries for such
period excluding gains or losses from debt restructuring and sales of property,
plus depreciation of real estate assets, and after adjustment for unconsolidated
partnerships and joint ventures, all determined on a consistent basis in
accordance with generally accepted accounting principles ("GAAP"). FFO presented
herein is not necessarily comparable to FFO presented by other real estate
companies due to the fact that not all real estate companies use the same
definition. However, the Company's FFO is comparable to the FFO of real estate
companies that use the current NAREIT definition. FFO should not be considered
as an alternative to net income (determined in accordance with GAAP) as an
indicator of the Company's financial performance or to cash flow from operating
activities (determined in accordance with GAAP) as a measure of the Company's
liquidity, nor is it necessarily indicative of sufficient cash flow to fund all
of the Company's needs or ability to service indebtedness or make distributions.
Cash available for distribution is defined as FFO less capital expenditures
funded by operations and loan amortization payments. The Company believes that
in order to facilitate a clear understanding of the consolidated historical
operating results of the Company, FFO and cash available for distribution should
be examined in conjunction with net income as presented in the consolidated
financial statements and data included elsewhere and incorporated by reference
in this Prospectus Supplement and the Prospectus.
 
     FFO and cash available for distribution for the six months ended June 30,
1996 and 1995, and FFO for the years ended December 31, 1995, 1994 and 1993
presented on a historical basis are summarized in the following tables:
 
<TABLE>
<CAPTION>
                                  SIX MONTHS ENDED
                                      JUNE 30,                    YEAR ENDED DECEMBER 31,
                              -------------------------   ---------------------------------------
                                 1996          1995          1995          1994          1993
                              -----------   -----------   -----------   -----------   -----------
    <S>                       <C>           <C>           <C>           <C>           <C>
    Net income............... $    20,129   $    12,104   $    29,118   $    18,899   $    (5,223)
      Extraordinary item.....          --           622           870         3,293         7,855
      Minority interest......       4,746         3,765         8,429         6,951         1,935
      Gain on sale of real
         estate assets.......          --            --        (1,746)       (2,832)           --
      Income tax related to
         gain on sale of real
         estate assets.......          --            --            --         1,338            --
      Formation Transaction
         expense.............          --            --            --            --         2,783
                              -----------   -----------   -----------   -----------   -----------
         Adjusted net
           income............      24,875        16,491        36,671        27,649         7,350
         Depreciation (real
           estate assets)....      10,796        10,128        20,127        19,967        19,427
                              -----------   -----------   -----------   -----------   -----------
    Funds from operations....      35,671        26,619        56,798        47,616        26,777
      Recurring capital
         expenditures(1).....      (1,392)         (766)       (2,967)       (2,599)       (2,047)
      Non-recurring capital
         expenditures(2).....        (775)         (685)       (1,287)       (1,302)         (706)
      Loan amortization
         payments............        (105)         (103)         (199)         (184)         (149)
                              -----------   -----------   -----------   -----------   -----------
    Cash available for
      distribution........... $    33,399   $    25,065   $    52,345   $    43,531   $    23,875
                              ===========   ===========   ===========   ===========   ===========
</TABLE>
 
                                      S-33
<PAGE>   34
 
<TABLE>
<CAPTION>
                                  SIX MONTHS ENDED
                                      JUNE 30,                    YEAR ENDED DECEMBER 31,
                                 1996          1995          1995          1994          1993
                              -----------   -----------   -----------   -----------   -----------
    <S>                       <C>           <C>           <C>           <C>           <C>
    Cash flow provided from
      (used in):
      Operating activities... $    43,408   $    33,856   $    57,362   $    43,807   $     2,412
      Investing activities... $   (98,170)  $   (67,606)  $  (114,531)  $   (99,364)  $   (51,152)
      Financing activities... $    47,378   $    49,262   $    60,885   $    46,508   $    49,647
    Weighted average shares
      outstanding............  21,700,779    17,504,808    18,382,299    16,847,999     7,824,311
    Weighted average shares
      and units
      outstanding............  26,818,135    22,684,488    23,541,639    22,125,890    13,574,767
</TABLE>
 
- ---------------
 
(1) Recurring capital expenditures consisted primarily of $410 and $433 of
     carpet replacement, $982 and $333 of other additions and improvements to
     existing communities for the six months ended June 30, 1996 and 1995,
     respectively. Since the Company does not add back the depreciation of
     non-real estate assets in its calculation of FFO, capital expenditures of
     $339 and $407 are excluded from the calculation of cash available for
     distribution for the six months ended June 30, 1996 and 1995, respectively.
(2) Non-recurring capital expenditures consisted of community additions and
     improvements of $743 and $362 for the six months ended June 30, 1996 and
     1995, respectively, and the addition of vehicle access control gates to
     communities of $32 and $323 for the six months ended June 30, 1996 and
     1995, respectively.
 
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
 
     This Prospectus Supplement and the accompanying Prospectus, including
documents incorporated by reference herein and therein, contain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements are inherently subject to risks and uncertainties,
many of which cannot be predicted with accuracy and some of which might not even
be anticipated. Future events and actual results, financial and otherwise, may
differ materially from the results discussed in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in "Management's Discussion and Analysis of Results of
Operations and Financial Condition" included and incorporated by reference
herein.
 
                                      S-34
<PAGE>   35
 
                                   MANAGEMENT
 
     The directors and executive officers of the Company and their positions are
as follows:
 
<TABLE>
<CAPTION>
          NAME                             POSITION AND OFFICES HELD
- -------------------------  ----------------------------------------------------------
<S>                        <C>
John A. Williams.........  Chairman of the Board, Chief Executive Officer and
                           Director
John T. Glover...........  President, Chief Operating Officer, Treasurer and Director
W. Daniel Faulk, Jr......  President -- Post Apartment Development
Jeffrey A. Harris........  President -- Post Management Services
Martha J. Logan..........  President -- Post Management Division
Terry L. Chapman.........  Executive Vice President -- Post Management Services
Richard A. Denny, III....  Executive Vice President -- Post Apartment Development
John D. Hooks............  Executive Vice President -- Post Management Services
Donald J. Rutzen.........  Executive Vice President -- Post Landscape Services, Inc.
Sherry W. Cohen..........  Senior Vice President -- Post Corporate Services and
                           Secretary
Judy M. Denman...........  Senior Vice President -- Post Corporate Services
R. Gregory Fox...........  Senior Vice President -- Post Corporate Services
Leona J. McElroy.........  Senior Vice President -- Post Corporate Services
John B. Mears............  Senior Vice President -- Post Apartment Development
Timothy A. Peterson......  Senior Vice President -- Post Corporate Services
Janie S. Maddox..........  Vice President -- Post Corporate Services
Arthur M. Blank..........  Director; President and Chief Operating Officer -- The
                           Home Depot, Inc.
Herschel M. Bloom........  Director; Partner -- King & Spalding
Virginia C. Crawford.....  Director; Chairman of the Executive Committee and Vice
                           President -- Crawford & Company
Russell R. French........  Director; General Partner -- Noro-Moseley Partners, L.P.
William A. Parker, Jr....  Director; Chairman of the Board -- Seminole Investment
                           Company, L.L.C.
J.C. Shaw................  Director; Chairman Emeritus of the Board -- Shaw
                           Industries, Inc.
</TABLE>
 
                                      S-35
<PAGE>   36
 
                        DESCRIPTION OF PREFERRED SHARES
 
     This description of the particular terms of the Preferred Shares offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Preferred Shares set
forth in the accompanying Prospectus, to which description reference is hereby
made.
 
GENERAL
 
     The Company is authorized to issue up to 20,000,000 shares of preferred
stock, $.01 par value per share, in one or more series, with such designations,
powers, preferences and rights of the shares of such series and the
qualifications, limitations or restrictions thereon, including, but not limited
to, the fixing of the dividend rights, dividend rate or rates, conversion
rights, voting rights and terms of redemption (including sinking fund
provisions), the redemption price or prices, and the liquidation preferences, in
each case, if any, as the Board of Directors of the Company may determine by
adoption of an applicable articles of amendment (a "Designating Amendment") to
the Company's Amended and Restated Articles of Incorporation (the "Articles of
Incorporation"), without any further vote or action by the shareholders. See
"Description of Preferred Stock -- Terms" in the accompanying Prospectus.
 
     On September 26, 1996, a form of Designating Amendment was adopted
determining the terms of a series of preferred stock consisting of up to
1,150,000 shares, designated 8 1/2% Series A Cumulative Redeemable Preferred
Shares. The following summary of the terms and provisions of the Preferred
Shares does not purport to be complete and is qualified in its entirety by
reference to the pertinent sections of the Articles of Incorporation and the
Designating Amendment designating the Preferred Shares, each of which is
available from the Company.
 
     The Company intends to contribute or otherwise transfer the net proceeds of
the sale of the Preferred Shares to the Operating Partnership in exchange for
8 1/2% Series A Preferred Units in the Operating Partnership, the economic terms
of which will be substantially identical to the Preferred Shares. The Operating
Partnership will be required to make all required distributions on the Series A
Preferred Units (which will mirror the payments of distributions, including
accrued and unpaid distributions upon redemption, and of the liquidation
preference amount of the Preferred Shares) prior to any distribution of cash or
assets to the holders of the Units or to the holders of any other interests in
the Operating Partnership, except for any other series of preference units
ranking on a parity with the Series A Preferred Units as to distributions and/or
liquidation rights and except for distributions required to enable the Company
to maintain its qualification as a REIT.
 
     None of the Preferred Shares, the Series A Preferred Units or any of the
indebtedness of the Operating Partnership contain any provisions affording
holders of the Preferred Shares protection in the event of a highly leveraged or
other transaction that might adversely affect holders of Preferred Shares.
 
     The registrar, transfer agent and dividends disbursing agent for the
Preferred Shares will be Wachovia Bank of North Carolina, N.A.
 
DIVIDENDS
 
     Holders of the Preferred Shares shall be entitled to receive, when and as
authorized by the Board of Directors, out of funds legally available for the
payment of dividends, cumulative cash dividends at the rate of 8 1/2% of the
liquidation preference per annum (equivalent to $4.25 per annum per share). Such
dividends shall accrue and be cumulative from the date of original issue and
shall be payable quarterly in arrears on or about the last day of each March,
June, September and December or, if not a business day, the succeeding business
day (each, a "Dividend Payment Date"). The first dividend on the Preferred
Shares will be paid on December 31, 1996. Any dividend payable on the Preferred
Shares for any partial dividend period will be computed on the basis of a
360-day year consisting of twelve 30-day months. Dividends will be payable to
holders of record as they appear in the share records of the Company at the
close of business on the applicable record date, which shall be the 15th day of
the calendar month in which the applicable Dividend Payment Date falls or such
other date designated by the Board of Directors of the Company for the payment
of
 
                                      S-36
<PAGE>   37
 
dividends that is not more than 30 nor less than 10 days prior to such Dividend
Payment Date (each, a "Dividend Record Date").
 
     No dividends on the Preferred Shares shall be authorized by the Board of
Directors of the Company or be paid or set apart for payment by the Company at
such time as the terms and provisions of any agreement of the Company (or the
Operating Partnership, as to the Series A Preferred Units), including any
agreement relating to its indebtedness, prohibits such authorization, payment or
setting apart for payment or provides that such authorization, payment or
setting apart for payment would constitute a breach thereof or a default
thereunder, or if such authorization or payment shall be restricted or
prohibited by law.
 
     Notwithstanding the foregoing, dividends on the Preferred Shares will
accrue whether or not the Company has earnings, whether or not there are funds
legally available for the payment of such dividends and whether or not such
dividends are authorized. Accrued but unpaid dividends on the Preferred Shares
will not bear interest and holders of the Preferred Shares will not be entitled
to any dividends in excess of full cumulative dividends as described above. See
"Description of Preferred Stock -- Dividends" in the accompanying Prospectus.
 
     The Operating Partnership will be required to make all required
distributions to the Company that will mirror the Company's payment of dividends
on the Preferred Shares (including accrued and unpaid dividends upon redemption,
and of the liquidation preference amount of the Preferred Shares) prior to any
distribution of cash or assets to the holders of the Units or to the holders of
any other interests in the Operating Partnership, except for distributions
required in connection with any other shares of the Company ranking senior to or
on a parity with the Preferred Shares as to dividends and/or liquidation rights
and except for distributions required to enable the Company to maintain its
qualification as a REIT. The credit agreement for the Revolver includes
covenants which restrict the ability of the Operating Partnership to make
distributions, in excess of stated amounts, which in turn restricts the
discretion of the Company to declare and pay dividends. In general, during any
fiscal year the Operating Partnership may only distribute up to 100% of the
Operating Partnership's consolidated income available for distribution (as
defined in the credit agreement), exclusive of distributions of up to $30.0
million of capital gains for such year. The credit agreement contains exceptions
to these limitations to allow the Operating Partnership to make distributions
necessary to allow the Company to maintain its status as a REIT. The Company
does not believe that this covenant will adversely affect the ability of the
Operating Partnership to make distributions in an amount sufficient to permit
the Company to pay dividends with respect to the Preferred Shares.
 
     Any dividend payment made on the Preferred Shares shall first be credited
against the earliest accrued but unpaid dividend due with respect to such shares
which remains payable.
 
LIQUIDATION PREFERENCE
 
     In the event of any liquidation, dissolution or winding up of the affairs
of the Company, the holders of the Preferred Shares are entitled to be paid out
of the assets of the Company legally available for distribution to its
shareholders liquidating distributions in cash or property at its fair market
value as determined by the Company's Board of Directors in the amount of a
liquidation preference of $50.00 per share, plus an amount equal to any accrued
and unpaid dividends to the date of such liquidation, dissolution or winding up,
before any distribution of assets is made to holders of Common Stock or any
other capital shares that rank junior to the Preferred Shares as to liquidation
rights. After payment of the full amount of the liquidating distributions to
which they are entitled, the holders of Preferred Shares will have no right or
claim to any of the remaining assets of the Company. The consolidation or merger
of the Company with or into any other entity or the sale, lease, transfer or
conveyance of all or substantially all of the property or business of the
Company shall not be deemed to constitute a liquidation, dissolution or winding
up of the Company. For further information regarding the rights of the holders
of Preferred Shares upon the liquidation, dissolution or winding up of the
Company, see "Description of Preferred Stock -- Liquidation Preference" in the
accompanying Prospectus.
 
                                      S-37
<PAGE>   38
 
REDEMPTION
 
     The Preferred Shares are not redeemable prior to October 1, 2026. On and
after October 1, 2026, the Company, at its option upon not less than 30 nor more
than 60 days' written notice, may redeem the Preferred Shares, in whole or in
part, at any time or from time to time, in cash at a redemption price of $50.00
per share, plus accrued and unpaid dividends thereon to the date fixed for
redemption (except as provided below), without interest, to the extent the
Company will have funds legally available therefor. The redemption price of the
Preferred Shares (other than any portion thereof consisting of accrued and
unpaid dividends) shall be paid solely from the sale proceeds of other capital
stock of the Company and not from any other source. For purposes of the
preceding sentence, "capital stock" means any common stock, preferred stock,
depositary shares, interests, participation, or other ownership interests
(however designated) and any rights (other than debt securities convertible into
or exchangeable for equity securities) or options to purchase any of the
foregoing. Holders of Preferred Shares to be redeemed shall surrender such
shares at the place designated in such notice and shall be entitled to the
redemption price and any accrued and unpaid dividends payable upon such
redemption following such surrender. If notice of redemption of any Preferred
Shares has been given and if the funds necessary for such redemption have been
set aside by the Company in trust for the benefit of the holders of any
Preferred Shares so called for redemption, then from and after the redemption
date dividends will cease to accrue on such Preferred Shares, such shares shall
no longer be deemed outstanding and all rights of the holders of such shares
will terminate, except the right to receive the redemption price. If fewer than
all of the outstanding Preferred Shares are to be redeemed, the Preferred Shares
to be redeemed shall be selected pro rata (as nearly as may be practicable
without creating fractional Preferred Shares) or by any other equitable method
determined by the Company. See "Description of Preferred Stock -- Redemption" in
the accompanying Prospectus.
 
     Notice of redemption will be given by publication in a newspaper of general
circulation in the City of New York, such publication to be made once a week for
two successive weeks commencing not less than 30 nor more than 60 days prior to
the redemption date. A similar notice furnished by the Company will be mailed by
the registrar, postage prepaid, not less than 30 nor more than 60 days prior to
the redemption date, addressed to the respective holders of record of the
Preferred Shares to be redeemed at their respective addresses as they appear on
the share transfer records of the registrar. No failure to give such notice or
any defect thereto or in the mailing thereof shall affect the validity of the
proceedings for the redemption of any Preferred Shares except as to the holder
to whom notice was defective or not given. Each notice shall state: (i) the
redemption date; (ii) the redemption price; (iii) the number of Preferred Shares
to be redeemed; (iv) the place or places where the Preferred Shares are to be
surrendered for payment of the redemption price; and (v) that dividends on the
shares to be redeemed will cease to accrue on such redemption date. If fewer
than all the Preferred Shares held by any holder are to be redeemed, the notice
mailed to such holder shall also specify the number of Preferred Shares to be
redeemed from such holder.
 
     The holders of Preferred Shares at the close of business on a Dividend
Record Date will be entitled to receive the dividend payable with respect to the
Preferred Shares on the corresponding Dividend Payment Date notwithstanding the
redemption thereof between such Dividend Record Date and the corresponding
Dividend Payment Date or the Company's default in the payment of the dividend
due. Except as provided above, the Company will make no payment or allowance for
unpaid dividends, whether or not in arrears, on Preferred Shares to be redeemed.
 
     The Preferred Shares have no stated maturity and will not be subject to any
sinking fund or mandatory redemption provisions (except as provided under
"-- Restrictions on Transfer" below).
 
VOTING RIGHTS
 
     Except as indicated below or in the accompanying Prospectus, or except as
otherwise from time to time required by applicable law, the holders of Preferred
Shares will have no voting rights.
 
     On any matter on which the Preferred Shares are entitled to vote (as
expressly provided herein or as may be required by law), including any action by
written consent, each Preferred Share shall be entitled to one vote. With
respect to each Preferred Share the holder thereof may designate a proxy, with
each such proxy having the right to vote on behalf of such holder.
 
                                      S-38
<PAGE>   39
 
     If dividends on the Preferred Shares are in arrears for six or more
quarterly periods, whether or not such quarterly periods are consecutive,
holders of the Preferred Shares (voting separately as a class with all other
series of preferred shares upon which like voting rights have been conferred and
are exercisable) will be entitled to vote for the election of two additional
Directors to serve on the Board of Directors of the Company until all dividend
arrearages have been paid. For further information regarding the voting rights
of the holders of the Preferred Shares, see "Description of Preferred
Stock -- Voting Rights" in the accompanying Prospectus.
 
CONVERSION
 
     The Preferred Shares are not convertible into or exchangeable for any other
property or securities of the Company.
 
RESTRICTIONS ON TRANSFER
 
     Ownership Limits.  The Designating Amendment contains certain restrictions
on the number of Preferred Shares that a single shareholder may own. For the
Company to qualify as a REIT under the Code, no more than 50% in value of its
outstanding Preferred Shares and Common Stock may be owned, actually and
constructively under the applicable constructive ownership provisions of the
Code, by five or fewer individuals (as defined in the Code to include certain
entities) during the last half of a taxable year (other than the first year) or
during a proportionate part of a shorter taxable year. The Preferred Shares and
Common Stock must also be beneficially owned by 100 or more persons during at
least 335 days of a taxable year (other than the first year) or during a
proportionate part of a shorter taxable year. Because the Company has elected to
be treated as a REIT, the Articles of Incorporation and the Designating
Amendment of the Company contain restrictions on the acquisition of Preferred
Shares and Common Stock intended to ensure compliance with these requirements.
 
     Subject to certain exceptions specified in the Designating Amendment, no
person who is an "individual" within the meaning of Section 542(a)(2) of the
Code may own, after taking account the applicable constructive ownership
provisions of the Code, more than 6% (the "Ownership Limit") of the outstanding
Preferred Shares. Under the constructive ownership rules, Preferred Shares owned
by an entity, including a corporation, life insurance company, mutual fund or
pension trust, are treated as owned by the ultimate individual beneficial owners
of the entity. In addition, a holder is prohibited from acquiring any Preferred
Shares if such acquisition would cause five individuals to own (actually and
constructively under the applicable constructive ownership of the Code) in the
aggregate more than 50% in value of the outstanding Preferred Shares and Common
Stock.
 
     If any shareholder purports to transfer shares to a person and either the
transfer would result in the Company failing to qualify as a REIT, or the
shareholder knows that such transfer would cause the transferee to hold more
than the applicable Ownership Limit, the purported transfer will be null and
void as to that number of shares the transfer of which would cause a violation
of the applicable limit, and the shareholder will be deemed not to have
transferred such excess shares. In addition, if any person holds Preferred
Shares in excess of the applicable Ownership Limit, such person will be deemed
to hold the shares that cause the limit to be exceeded in trust for the Company,
and will not receive dividends or distributions with respect to such shares and
will not be entitled to exercise any voting rights with respect to such shares.
The person will be required to sell such shares to the Company for the lesser of
the amount paid for the shares or the average of the last reported sales prices
for the ten trading days immediately preceding the redemption or to sell such
shares at the direction of the Company, in which case the Company will be
reimbursed for its expenses in connection with the sale plus any remaining
amount of such proceeds that exceeds the amount such person paid for the shares
and such person will be entitled to receive only the Operating Partnership
balance of the proceeds. If the Company repurchases such shares, it may elect to
pay for the shares with Operating Partnership Units.
 
     All certificates representing Preferred Shares will bear a legend referring
to the restrictions described above.
 
     The Designating Amendment provides that each shareholder shall upon demand
be required to disclose to the Company in writing such information as the
Company may request in good faith in order to determine the Company's status as
a REIT.
 
                                      S-39
<PAGE>   40
 
                   CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
 
     The following summary of certain federal income tax considerations is based
on current law, is for general information only, and is not tax advice. This
discussion does not purport to deal with all aspects of taxation that may be
relevant to particular shareholders in light of their personal investment or tax
circumstances, or to certain types of shareholders (including insurance
companies, tax-exempt organizations, financial institutions or broker dealers,
foreign corporations and persons who are not citizens or residents of the United
States) subject to special treatment under the federal income tax laws. In
addition, this section does not discuss foreign, state, or local taxation.
 
     This Prospectus Supplement does not address the taxation of the Company or
the impact on the Company of its election to be taxed as a REIT. Such matters
are addressed in the accompanying Prospectus under "Federal Income Tax
Considerations -- Taxation of the Company." Prospectus investors should consult,
and must depend on, their own tax advisors regarding the state, local, foreign
and other tax consequences of holding and disposing of Preferred Shares.
 
     Dividends and Other Distributions.  For a discussion regarding the taxation
of dividends and other distributions, see "Federal Income Tax
Considerations -- Taxation of Shareholders" in the accompanying Prospectus. In
determining the extent to which a distribution on the Preferred Shares
constitutes a dividend for tax purposes, the earnings and profits of the Company
will be allocated first to distributions with respect to the Preferred Shares
and then to distributions with respect to the Common Stock.
 
     Backup Withholding.  For a discussion of backup withholding, see "Federal
Income Tax Considerations -- Taxation of Shareholders -- Backup Withholding" in
the accompanying Prospectus.
 
     Sale or Exchange of Preferred Shares.  Upon the sale or exchange of
Preferred Shares to a party other than the Company, a holder of Preferred Shares
will realize a capital gain or loss (provided the Preferred Shares are held as a
capital asset) measured by the difference between the amount realized on the
sale or other disposition and the holder's adjusted tax basis in the Preferred
Shares. Such gain or loss will be a long-term capital gain or loss if the
holder's holding period with respect to the Preferred Shares is more than one
year at the time of the sale or exchange. Further, any loss on a sale of
Preferred Shares which were held by the holder for six months or less and with
respect to which a capital gain dividend was received will be treated as a long
term capital loss, up to the amount of the capital gain dividend received with
respect to such shares.
 
     Redemption of Preferred Shares.  The treatment to be accorded to any
redemption by the Company of Preferred Shares can only be determined on the
basis of particular facts as to each holder of Preferred Shares at the time of
redemption. In general, a holder of Preferred Shares will recognize capital gain
or loss (provided the Preferred Shares are held as a capital asset) measured by
the difference between the amount realized by the holder upon the redemption and
such holder's adjusted tax basis in the Preferred Shares redeemed if such
redemption (i) results in a "complete termination" of the holder's interest in
all classes of shares of the Company under Section 302(b)(3) of the Code, (ii)
is "substantially disproportionate" with respect to the holder's interest in the
Company under Section 302(b)(2) of the Code (which will not be the case if only
Preferred Shares are redeemed, since they generally do not have voting rights)
or (iii) is "not essentially equivalent to a dividend" with respect to the
holder of Preferred Shares under Section 302(b)(1) of the Code. In determining
whether any of these tests have been met, shares considered to be owned by the
holder by reason of certain constructive ownership rules set forth in the Code,
as well as shares actually owned, generally must be taken into account. Because
the determination as to whether any of the alternative tests of Section 302(b)
of the Code will be satisfied with respect to any particular holder of Preferred
Shares depends upon the facts and circumstances at the time when the
determination must be made, prospective investors are advised to consult their
own tax advisors to determine such tax treatment.
 
                                      S-40
<PAGE>   41
 
                                  UNDERWRITING
 
     Subject to the terms and conditions contained in the terms agreement and
related purchase agreement (collectively, the "Underwriting Agreement"), the
Company has agreed to sell to Merrill Lynch, Pierce Fenner & Smith Incorporated
(the "Underwriter"), and the Underwriter has agreed to purchase, the entire
amount of the Preferred Shares offered hereby. The Underwriting Agreement
provides that the obligations of the Underwriter are subject to certain
conditions precedent, and that the Underwriter will be obligated to purchase all
of the Preferred Shares if any are purchased.
 
     The Underwriter has advised the Company that it proposes initially to offer
the Preferred Shares to the public at the public offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers at such price
less a concession not in excess of $.75 per share. The Underwriter may allow,
and such dealers may reallow, a discount not in excess of $.50 to certain other
dealers. After the initial public offering, the public offering price,
concession and discount may be changed.
 
     The Company has granted an option to the Underwriter, exercisable during
the 30-day period after the date of this Prospectus Supplement, to purchase up
to 150,000 additional Preferred Shares at the price to the public set forth on
the cover page of this Prospectus Supplement, less the underwriting discount.
 
     The Company and the Operating Partnership have agreed to indemnify the
Underwriter against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or to contribute to payments the Underwriter
may be required to make in respect thereof.
 
     Application will be made to list the Preferred Shares on the NYSE. If such
application is approved, trading of the Preferred Shares on the NYSE is expected
to commence within a 30 day period after the date of initial delivery of the
Preferred Shares. While the Underwriter has advised the Company that it intends
to make a market in the Preferred Shares prior to commencement of trading on the
NYSE, it is under no obligation to do so and no assurance can be given that a
market for the Preferred Shares will exist prior to commencement of trading.
 
     Merrill Lynch has from time to time provided investment banking and
financial advisory services to the Company and the Operating Partnership.
Merrill Lynch acted as representative of various underwriters in connection with
public offerings of the Company's Common Stock in 1993, 1994 and 1995 and the
Debt Offering in September 1996.
 
                                 LEGAL MATTERS
 
     The validity of the Preferred Shares offered pursuant to this Prospectus
Supplement and the Prospectus will be passed upon for the Company by King &
Spalding, Atlanta, Georgia. Herschel M. Bloom, a member of King & Spalding, is a
director of the Company.
 
     Certain legal matters related to the Offering will be passed upon for the
Underwriters by Hogan & Hartson L.L.P., Washington, D.C.
 
                                      S-41
<PAGE>   42
 
PROSPECTUS
 
                                 $600,000,000
 
                            [LOGO]POST PROPERTIES, INC.
             COMMON STOCK, PREFERRED STOCK AND DEPOSITARY SHARES
                                      
                          POST APARTMENT HOMES, L.P.
                               DEBT SECURITIES
                           ------------------------
                                      
     Post Properties, Inc. (the "Company") may from time to time offer in one or
more series or classes (i) shares of its common stock, par value $0.01 per share
(the "Common Stock"), (ii) shares of its preferred stock, par value $0.01 per
share (the "Preferred Stock") and (iii) shares of Preferred Stock represented by
Depositary Shares (the "Depositary Shares"), with an aggregate public offering
price of up to $300,000,000 (or its equivalent in another currency based on the
exchange rate at the time of sale) in amounts, at prices and on terms to be
determined at the time of offering. Post Apartment Homes, L.P. (the "Operating
Partnership") may from time to time offer in one or more series unsecured non-
convertible debt securities ("Debt Securities"), with an aggregate public
offering price of up to $300,000,000 (or its equivalent in another currency
based on the exchange rate at the time of sale) in amounts, at prices and on
terms to be determined at the time of offering. The Common Stock, Preferred
Stock, Depositary Shares and Debt Securities (collectively, the "Securities")
may be offered, separately or together, in separate series in amounts, at prices
and on terms to be set forth in one or more supplements to this Prospectus
(each, a "Prospectus Supplement").
 
     The specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in the applicable Prospectus Supplement and
will include, where applicable (i) in the case of Common Stock, any initial
public offering price; (ii) in the case of Preferred Stock, the specific title
and stated value, any dividend, liquidation, redemption, conversion, voting and
other rights, and any initial public offering price; (iii) in the case of
Depositary Shares, the fractional share of Preferred Stock represented by each
such Depositary Share; and (iv) in the case of Debt Securities, the specific
title, aggregate principal amount, currency, form (which may be registered or
bearer, or certificated or global), authorized denominations, maturity, rate (or
manner of calculation thereof) and time of payment of interest, terms for
redemption at the option of the Operating Partnership or repayment at the option
of the holder, terms for sinking fund payments, covenants and any initial public
offering price. In addition, such specific terms may include limitations on
direct or beneficial ownership and restrictions on transfer of the Securities,
in each case as may be appropriate to preserve the status of the Company as a
real estate investment trust ("REIT") for Federal income tax purposes.
 
     The applicable Prospectus Supplement will also contain information, where
applicable, about certain United States Federal income tax considerations
relating to, and any listing on a securities exchange of, the Securities covered
by such Prospectus Supplement.
 
     The Securities may be offered directly, through agents designated from time
to time by the Company or the Operating Partnership, or to or through
underwriters or dealers. If any agents or underwriters are involved in the sale
of any of the Securities, their names, and any applicable purchase price, fee,
commission or discount arrangement between or among them, will be set forth, or
will be calculable from the information set forth, in the applicable Prospectus
Supplement. See "Plan of Distribution." No Securities may be sold without
delivery of the applicable Prospectus Supplement describing the method and terms
of the offering of such series of Securities.
                            ------------------------
 
 THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
      EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
          SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
           COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
              PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A 
                              CRIMINAL OFFENSE.
 
  THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED
  THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
                            ------------------------
 
                 The date of this Prospectus is August 9, 1996.

<PAGE>   43
 
                             AVAILABLE INFORMATION
 
     The Company and the Operating Partnership are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith file reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information filed by the Company and the
Operating Partnership may be examined without charge at, or copies obtained upon
payment of prescribed fees from, the Public Reference Section of the Commission
at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and are also
available for inspection and copying at the regional offices of the Commission
located at Seven World Trade Center, New York, New York 10048 and at 500 West
Madison Street, Chicago, Illinois 60661-2511. In addition, the Company's Common
Stock is listed on the New York Stock Exchange and such material can also be
inspected and copied at the offices of the New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10005.
 
     The Company and the Operating Partnership have filed with the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549, a Registration Statement on Form
S-3 under the Securities Act of 1933, as amended (the "Securities Act"), and the
rules and regulations promulgated thereunder, with respect to the Securities.
This Prospectus, which is part of the Registration Statement, does not contain
all of the information set forth in the Registration Statement and the exhibits
and financial schedules thereto. For further information concerning the Company,
the Operating Partnership and the Securities, reference is made to the
Registration Statement and the exhibits and schedules filed therewith, which may
be examined without charge at, or copies obtained upon payment of prescribed
fees from, the Commission and its regional offices at the locations listed
above. Any statements contained herein concerning the provisions of any document
are not necessarily complete, and, in each instance, reference is made to the
copy of such document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference.
 
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
     The following documents heretofore filed by the Company (File No. 1-12080)
and the Operating Partnership (File No. 0-28226) with the Commission are
incorporated herein by reference:
 
          (a) the Company's Annual Report on Form 10-K for the year ended
     December 31, 1995, as amended by Forms 10-K/A for the year ended December
     31, 1995 as filed on June 17, 1996 and July 23, 1996;
 
          (b) the Company's Quarterly Report on Form 10-Q for the quarter ended
     March 31, 1996, as amended by Form 10-Q/A for the quarter ended March 31,
     1996 as filed on June 17, 1996;
 
          (c) the description of the Common Stock of the Company included in the
     Company's Registration Statement on Form 8-A, dated July 22, 1993; and
 
          (d) the Operating Partnership's Report on Form 10, dated April 15,
     1996, as amended on June 17, 1996 and July 23, 1996.
 
     All documents filed by the Company and/or the Operating Partnership
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of this Prospectus and prior to the termination of the Offering shall
be deemed to be incorporated by reference in this Prospectus and made a part
hereof from the date of the filing of such documents. Any statement contained in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other document subsequently
filed with the Commission which also is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
 
     The Company and the Operating Partnership will provide without charge to
each person, including any beneficial owner, to whom this Prospectus is
delivered, upon the written or oral request of such person, a copy of any or all
of the documents incorporated by reference herein (not including the exhibits to
such documents, unless such exhibits are specifically incorporated by reference
in such documents). Request for such copies should be directed to: Post
Properties, Inc., 3350 Cumberland Circle, Suite 2200, Atlanta, Georgia 30339,
Attention: Secretary, telephone (770) 850-4400.
 
                                        2
<PAGE>   44
 
                   THE COMPANY AND THE OPERATING PARTNERSHIP
 
     The Company is a self-administered and self-managed equity real estate
investment trust (a "REIT") and is one of the largest developers and operators
of upscale multifamily apartment communities in the Southeastern United States.
As of June 1, 1996, the Company owned 47 stabilized communities (the
"Communities") containing 16,996 apartment units located primarily in
metropolitan Atlanta, Georgia and Tampa, Florida. In addition, as of June 1,
1996, the Company had under construction or in initial lease-up six new
communities and an addition to an existing community in the Atlanta, Tampa and
Charlotte metropolitan areas that will contain an aggregate of 2,274 apartment
units when completed. For the year ended December 31, 1995, the average economic
occupancy rate of the 37 Communities and the first phase of two additional
Communities stabilized for the entire period was 96.0%. The average monthly
rental rate per apartment unit at these Communities for the same period was
$710. The Company also manages through affiliates three communities with 866
apartment units under the Post(R) brand name for third parties and approximately
9,900 additional apartment units owned by third parties. The Company is a
fully-integrated organization with multifamily development, acquisition,
operation and asset management expertise and has approximately 1,100 employees,
none of whom is a party to a collective bargaining agreement.
 
     The Company is the sole general partner of, and controls a majority of the
limited partnership interests in, the Operating Partnership. As of March 31,
1996, the Company owned 80.8% of the outstanding partnership interests in the
Operating Partnership. The Company conducts all its business through the
Operating Partnership and its subsidiaries.
 
     As of March 31, 1996, the Company and the Operating Partnership had
outstanding indebtedness of $354.4 million. Any applicable Prospectus Supplement
relating to offered securities will set forth the outstanding indebtedness of
the issuer and its subsidiaries as of a recent date.
 
     The Company is a Georgia corporation that was founded in 1971. The
Operating Partnership is a Georgia limited partnership that was formed in 1993.
The Company's and the Operating Partnership's executive offices are located at
3350 Cumberland Circle, Suite 2200, Atlanta, Georgia 30339 and their telephone
number is (770) 850-4400.
 
                                USE OF PROCEEDS
 
     The Company is required, by the terms of the partnership agreement of the
Operating Partnership, to invest the net proceeds of any sale of Common Stock,
Preferred Stock or Depositary Shares in the Operating Partnership in exchange
for additional Units. Unless otherwise indicated in the applicable Prospectus
Supplement, the Company and the Operating Partnership intend to use such net
proceeds and the net proceeds from the sale of Debt Securities for general
corporate purposes including, without limitation, the acquisition and
development of multi-family communities and the repayment of debt. Pending
application of the net proceeds, the Operating Partnership will invest such
proceeds in interest-bearing accounts and short-term, interest-bearing
securities, which are consistent with the Company's intention to continue to
qualify for taxation as a REIT. Such investments may include, for example,
obligations of the Government National Mortgage Association, other government
and government agency securities, certificates of deposit, interest-bearing bank
deposits and mortgage loan participations.
 
                       RATIO OF EARNINGS TO FIXED CHARGES
 
     The Company's and the Operating Partnership's ratios of earnings to fixed
charges for the three months ended March 31, 1996 were 2.7, for the year ended
December 31, 1995 were 2.1, for the year ended December 31, 1994 were 2.1 and
for the year ended December 31, 1993 were 1.1. There was no preferred stock
outstanding for any of the periods shown above. Accordingly, the ratio of
earnings to combined fixed charges and preferred stock dividends is identical to
the ratio of earnings to fixed charges.
 
     For purposes of computing these ratios, earnings have been calculated by
adding fixed charges, excluding capitalized interest, to pre-tax income from
continuing operations. Fixed charges consist of interest costs, whether expensed
or capitalized, the interest component of rental expense and amortization of
debt issuance costs.
 
                                        3
<PAGE>   45
 
     Prior to the completion of the Company's reorganization in July 1993, the
Company maintained a different capital structure. As a result, although the
original properties have historically generated positive net cash flow, the
financial statements of the Company show net losses for the fiscal years ended
December 31, 1992 and 1991. Consequently, the computation of the ratio of
earnings to fixed charges for such periods indicate that earnings were
inadequate to cover fixed charges by approximately $10.0 million and $17.8
million for the fiscal years ended December 31, 1992 and 1991, respectively.
 
     The recapitalization of the Company effected in connection with the
reorganization permitted the Company to significantly deleverage, resulting in
an improved ratio of earnings to fixed charges for periods subsequent to the
reorganization.
 
                         DESCRIPTION OF DEBT SECURITIES
 
     The Debt Securities will be issued under an Indenture (the "Indenture"),
between the Operating Partnership and a Trustee (the "Trustee") chosen by the
Operating Partnership and qualified to act as Trustee under the Trust Indenture
Act of 1939, as amended (the "TIA"). The Indenture has been filed as an exhibit
to the Registration Statement of which this Prospectus is a part and will be
available for inspection at the corporate trust office of the trustee or as
described above under "Available Information." The Indenture is subject to, and
governed by, the TIA. The statements made hereunder relating to the Indenture
and the Debt Securities to be issued thereunder are summaries of all material
provisions thereof and do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all provisions of the Indenture and
such Debt Securities. All section references appearing herein are to sections of
the Indenture.
 
GENERAL
 
     The Debt Securities will be direct, unsecured obligations of the Operating
Partnership and will rank equally with all other unsecured and unsubordinated
indebtedness of the Operating Partnership. At December 31, 1995, the total
outstanding debt of the Operating Partnership was $349.7 million, all of which
was unsubordinated indebtedness. Of such outstanding debt, $203.7 million was
secured debt. The Debt Securities may be issued without limit as to aggregate
principal amount, in one or more series, in each case as established from time
to time in or pursuant to authority granted by a resolution of the Board of
Directors of the Company as sole general partner of the Operating Partnership or
as established in one or more indentures supplemental to the Indenture. All Debt
Securities of one series need not be issued at the same time and, unless
otherwise provided, a series may be reopened, without the consent of the holders
of the Debt Securities of such series, for issuances of additional Debt
Securities of such series (Section 301).
 
     The Indenture provides that there may be more than one Trustee thereunder,
each with respect to one or more series of Debt Securities. Any Trustee under
the Indenture may resign or be removed with respect to one or more series of
Debt Securities, and a successor Trustee may be appointed to act with respect to
such series (Section 608). In the event that two or more persons are acting as
Trustee with respect to different series of Debt Securities, each such Trustee
shall be a trustee of a trust under the Indenture separate and apart from the
trust administered by any other Trustee (Section 609), and, except as otherwise
indicated herein, any action described herein to be taken by a Trustee may be
taken by each such Trustee with respect to, and only with respect to, the one or
more series of Debt Securities for which it is Trustee under the Indenture.
 
     Reference is made to the Prospectus Supplement relating to the series of
Debt Securities offered thereby for the specific terms thereof, including:
 
          (1) the title of such Debt Securities;
 
          (2) any limit on the aggregate principal amount of such Debt
     Securities that may be authenticated and delivered under the Indenture;
 
          (3) the percentage of the principal amount at which such Debt
     Securities will be issued and, if other than the principal amount thereof,
     the portion of the principal amount thereof payable upon declaration of
     acceleration of the maturity thereof;
 
          (4) the date or dates, or the method for determining such date or
     dates, on which the principal of such Debt Securities will be payable;
 
                                        4
<PAGE>   46
 
          (5) the rate or rates, or the method by which such rate or rates shall
     be determined, at which such Debt Securities will bear interest, if any,
     the date or dates, or the method for determining such date or dates, from
     which any interest will accrue, the dates on which any such interest will
     be payable, the record dates for such interest payment dates, or the method
     by which any such date shall be determined, and the basis upon which
     interest shall be calculated if other than that of a 360-day year of twelve
     30-day months;
 
          (6) the place or places where the principal of (and premium, if any),
     interest, if any, and additional amounts, if any, on such Debt Securities
     will be payable, such Debt Securities may be surrendered for registration
     of transfer or exchange and notices or demands to or upon the Operating
     Partnership in respect of such Debt Securities and the Indenture may be
     served;
 
          (7) the period or periods within which, the price or prices at which,
     the currency or currencies, currency unit or units or composite currency or
     currencies in which, and the terms and conditions upon which such Debt
     Securities may be redeemed, as a whole or in part, at the option of the
     Operating Partnership, if the Operating Partnership is to have such an
     option;
 
          (8) the obligation, if any, of the Operating Partnership to redeem,
     repay or purchase such Debt Securities pursuant to any sinking fund or
     analogous provision or at the option of a holder thereof, and the period or
     periods within which, the price or prices at which, the currency or
     currencies, currency unit or units or composite currency or currencies in
     which, and the terms and conditions upon which such Debt Securities will be
     redeemed, repaid or purchased, as a whole or in part, pursuant to such
     obligation;
 
          (9) if other than denominations of $1,000 and any integral multiple
     thereof, the denominations in which any registered Debt Securities
     ("Registered Securities") shall be issuable and, if other than
     denominations of $5,000 and any integral multiple thereof, the denomination
     or denominations in which any bearer Debt Securities ("Bearer Securities")
     shall be issuable;
 
          (10) if other than the Trustee, the identity of each security
     registrar and/or paying agent;
 
          (11) if other than the principal amount thereof, the portion of the
     principal amount of the Debt Securities that shall be payable upon
     declaration of acceleration of the maturity thereof or the method by which
     such portion shall be determined;
 
          (12) if other than U.S. dollars, the currency or currencies in which
     payment of the principal of (and premium, if any) or interest or additional
     amounts, if any, on the Debt Securities shall be payable or in which the
     Debt Securities shall be denominated;
 
          (13) whether the amount of payments of principal of (and premium, if
     any) or interest, if any, on the Debt Securities may be determined with
     reference to an index, formula or other method (which index, formula or
     method may be based, without limitation, on one or more currencies,
     currency units, composite currencies, commodities, equity indices or other
     indices), and the manner in which such amounts shall be determined;
 
          (14) whether the principal of (and premium, if any) or interest or
     additional amounts, if any, on the Debt Securities are to be payable, at
     the election of the Operating Partnership or a holder (a "Holder") thereof,
     in a currency or currencies, currency unit or units or composite currency
     or currencies other than that in which such Debt Securities are denominated
     or stated to be payable, the period or periods within which, and the terms
     and conditions upon which, such election may be made, and the time and
     manner of, and identity of the exchange rate agent with responsibility for,
     determining the exchange rate between the currency or currencies, currency
     unit or units or composite currency or currencies in which such Debt
     Securities are denominated or stated to be payable and the currency or
     currencies, currency unit or units or composite currency or currencies in
     which such Debt Securities are to be so payable;
 
          (15) provisions, if any, granting special rights to the Holders of the
     Debt Securities upon the occurrence of such events as may be specified;
 
          (16) any deletions from, modifications of or additions to the events
     of default (the "Events of Default") or covenants of the Operating
     Partnership with respect to the Debt Securities, whether or not
 
                                        5
<PAGE>   47
 
     such Events of Default or covenants are consistent with the Events of
     Default or covenants set forth in the Indenture;
 
          (17) whether the Debt Securities are to be issuable as Registered
     Securities, Bearer Securities (with or without coupons) or both, any
     restrictions applicable to the offer, sale or delivery of Bearer Securities
     and the terms upon which Bearer Securities may be exchanged for Registered
     Securities and vice versa (if permitted by applicable laws and
     regulations), whether any Debt Securities are to be issuable initially in
     temporary global form and whether any Debt Securities are to be issuable in
     permanent global form with or without coupons and, if so, whether
     beneficial owners of interests in any such permanent global Debt Security
     may exchange such interests for Debt Securities of such series and of like
     tenor of any authorized form and denomination and the circumstances under
     which any such exchanges may occur, and, if Registered Securities are to be
     issuable as a global Debt Security, the identity of the depositary for such
     series;
 
          (18) the date as of which any Bearer Securities and any temporary
     global Debt Security representing Outstanding (as hereinafter defined) Debt
     Securities shall be dated if other than the date of original issuance of
     the first Debt Security of the series to be issued;
 
          (19) the person to whom any interest on any Registered Security shall
     be payable, if other than the person in whose name that Debt Security is
     registered at the close of business on the applicable record date (the
     "Regular Record Date") for such interest, the manner in which, or the
     person to whom any interest on any Bearer Security shall be payable, if
     otherwise than upon presentation and surrender of the coupons appertaining
     thereto as they severally mature, and the extent to which, or the manner in
     which, any interest payable on a temporary global Debt Security on an
     interest payment date (an "Interest Payment Date") will be paid;
 
          (20) if the defeasance and covenant defeasance provisions described
     herein are to be inapplicable or any modification of such provisions;
 
          (21) if the Debt Securities to be issuable in definitive form (whether
     upon original issue or upon exchange of a temporary Debt Security) only
     upon receipt of certain certificates or other documents or satisfaction of
     other conditions, then the form and/or terms of such certificates,
     documents or conditions;
 
          (22) whether and under what circumstances the Operating Partnership
     will pay additional amounts on the Debt Securities to any Holder who is not
     a United States person (including any modification to the definition of
     such term) in respect of any tax, assessment or governmental charge and, if
     so, whether the Operating Partnership will have the option to redeem such
     Debt Securities rather than pay such additional amounts (and the terms of
     any such option);
 
          (23) with respect to any Debt Securities that provide for optional
     redemption or prepayment upon the occurrence of certain events (such as a
     change of control of the Operating Partnership), (i) the possible effects
     of such provisions on the market price of the Operating Partnership's or
     the Company's securities or in deterring certain mergers, tender offers or
     other takeover attempts, and the intention of the Operating Partnership to
     comply with the requirements of Rule 14e-1 under the Exchange Act and any
     other applicable securities laws in connection with such provisions; (ii)
     whether the occurrence of the specified events may give rise to
     cross-defaults on other indebtedness such that payment on such Debt
     Securities may be effectively subordinated; and (iii) the existence of any
     limitations on the Operating Partnership's financial or legal ability to
     repurchase such Debt Securities upon the occurrence of such an event
     (including, if true, the lack of assurance that such a repurchase can be
     effected) and the impact, if any, under the Indenture of such a failure,
     including whether and under what circumstances such a failure may
     constitute an Event of Default; and
 
          (24) any other terms of such Debt Securities not inconsistent with the
     terms of the Indenture.
 
     The Debt Securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
("Original Issue Discount Securities"). If material or applicable, special U.S.
Federal income tax, accounting and other considerations applicable to Original
Issue Discount Securities will be described in the applicable Prospectus
Supplement.
 
                                        6
<PAGE>   48
 
     Except as described under "Merger, Consolidation or Sale" or as may be set
forth in any Prospectus Supplement, the Indenture does not contain any other
provisions that would limit the ability of the Operating Partnership to incur
indebtedness or that would afford holders of the Debt Securities protection in
the event of (i) a highly leveraged or similar transaction involving the
Operating Partnership, the management of the Operating Partnership or the
Company, or any affiliate of any such party, (ii) a change of control, or (iii)
a reorganization, restructuring, merger or similar transaction involving the
Operating Partnership that may adversely affect the holders of the Debt
Securities. In addition, subject to the limitations set forth under "Merger,
Consolidation or Sale," the Operating Partnership may, in the future, enter into
certain transactions, such as the sale of all or substantially all of its assets
or the merger or consolidation of the Operating Partnership, that would increase
the amount of the Operating Partnership's indebtedness or substantially reduce
or eliminate the Operating Partnership's assets, which may have an adverse
effect on the Operating Partnership's ability to service its indebtedness,
including the Debt Securities. In addition, restrictions on ownership and
transfers of the Company's Common Stock and Preferred Stock are designed to
preserve its status as a REIT and, therefore, may act to prevent or hinder a
change of control. See "Description of Common Stock -- Restrictions on Transfer"
and "Description of Preferred Stock -- Restrictions on Ownership." Reference is
made to the applicable Prospectus Supplement for information with respect to any
deletions from, modifications of or additions to the events of default or
covenants that are described below, including any addition of a covenant or
other provision providing event risk or similar protection.
 
     The applicable Prospectus Supplement will summarize the nature and scope of
any event risk provisions contained in any offered Debt Security, including the
types of events protected by such provisions and any limitations on the
Operating Partnership's ability to satisfy its obligations under such
provisions. The applicable Prospectus Supplement will also summarize
anti-takeover provisions in other securities of the Operating Partnership or the
General Partner, which could have a material effect on the offered Debt
Securities. Such summary will contain a detailed and quantifiable definition of
any "change in control" provision.
 
     Reference is made to "-- Certain Covenants" below and to the description of
any additional covenants with respect to a series of Debt Securities in the
applicable Prospectus Supplement. Except as otherwise described in the
applicable Prospectus Supplement, compliance with such covenants generally may
not be waived with respect to a series of Debt Securities by the Board of
Directors of the Company as sole general partner of the Operating Partnership or
by the Trustee unless the Holders of at least a majority in principal amount of
all outstanding Debt Securities of such series consent to such waiver, except to
the extent that the defeasance and covenant defeasance provisions of the
Indenture described under "-- Discharge, Defeasance and Covenant Defeasance"
below apply to such series of Debt Securities. See "-- Modification of the
Indenture."
 
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
 
     Unless otherwise described in the applicable Prospectus Supplement, the
Debt Securities of any series which are Registered Securities, other than
Registered Securities issued in global form (which may be of any denomination),
shall be issuable in denominations of $1,000 and any integral multiple thereof
and the Debt Securities which are Bearer Securities, other than Bearer
Securities issued in global form (which may be of any denomination), shall be
issuable in denominations of $5,000 (Section 302).
 
     Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and premium, if any) and interest on any series of Debt Securities
will be payable at the corporate trust office of the Trustee, provided that, at
the option of the Operating Partnership, payment of interest may be made by
check mailed to the address of the Person entitled thereto as it appears in the
applicable Security Register or by wire transfer of funds to such Person at an
account maintained within the United States (Sections 301, 307 and 1002).
 
     Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the Regular Record Date and may
either be paid to the Person in whose name such Debt Security is registered at
the close of business on a special record date (the "Special Record Date") for
the payment of such Defaulted Interest to
 
                                        7
<PAGE>   49
 
be fixed by the Trustee, notice whereof shall be given to the Holder of such
Debt Security not less than 10 days prior to such Special Record Date, or may be
paid at any time in any other lawful manner, all as more completely described in
the Indenture.
 
     Subject to certain limitations imposed upon Debt Securities issued in book
entry form, the Debt Securities of any series will be exchangeable for other
Debt Securities of the same series and of a like aggregate principal amount and
tenor of different authorized denominations upon surrender of such Debt
Securities at the corporate trust office of the Trustee. In addition, subject to
certain limitations imposed upon Debt Securities issued in book entry form, the
Debt Securities of any series may be surrendered for registration of transfer
thereof at the corporate trust office of the Trustee. Every Debt Security
surrendered for registration of transfer or exchange shall be duly endorsed or
accompanied by a written instrument of transfer. No service charge will be made
for any registration of transfer or exchange of any Debt Securities, but the
Trustee or the Operating Partnership may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith
(Section 305). If the applicable Prospectus Supplement refers to any transfer
agent (in addition to the Trustee) initially designated by the Operating
Partnership with respect to any series of Debt Securities, the Operating
Partnership may at any time rescind the designation of any such transfer agent
or approve a change in the location through which any such transfer agent acts,
except that the Operating Partnership will be required to maintain a transfer
agent in each place of payment for such series. The Operating Partnership may at
any time designate additional transfer agents with respect to any series of Debt
Securities (Section 1002).
 
     Neither the Operating Partnership nor the Trustee shall be required (i) to
issue, register the transfer of or exchange any Debt Security if such Debt
Security may be among those selected for redemption during a period beginning at
the opening of business 15 days before selection of the Debt Securities to be
redeemed and ending at the close of business on (A) if such Debt Securities are
issuable only as Registered Securities, the day of the mailing of the relevant
notice of redemption and (B) if such Debt Securities are issuable as Bearer
Securities, the day of the first publication of the relevant notice of
redemption or, if such Debt Securities are also issuable as Registered
Securities and there is no publication, the mailing of the relevant notice of
redemption, or (ii) to register the transfer of or exchange any Registered
Security so selected for redemption in whole or in part, except, in the case of
any Registered Security to be redeemed in part, the portion thereof not to be
redeemed, or (iii) to exchange any Bearer Security so selected for redemption
except that such a Bearer Security may be exchanged for a Registered Security of
that series and like tenor, provided that such Registered Security shall be
simultaneously surrendered for redemption, or (iv) to issue, register the
transfer of or exchange any Debt Security which has been surrendered for
repayment at the option of the Holder, except the portion, if any, of such Debt
Security not to be so repaid (Section 305).
 
MERGER, CONSOLIDATION OR SALE
 
     The Operating Partnership may consolidate with, or sell, lease or convey
all or substantially all of its assets to, or merge with or into, any other
entity, provided that (a) the Operating Partnership shall be the continuing
entity, or the successor entity (if other than the Operating Partnership) formed
by or resulting from any such consolidation or merger or which shall have
received the transfer of such assets shall expressly assume payment of the
principal of (and premium, if any) and interest on all the Debt Securities and
the due and punctual performance and observance of all of the covenants and
conditions contained in the Indenture; (b) immediately after giving effect to
such transaction and treating any indebtedness which becomes an obligation of
the Operating Partnership or any subsidiary of the Operating Partnership (a
"Subsidiary") as a result thereof as having been incurred by the Operating
Partnership or such Subsidiary at the time of such transaction, no Event of
Default under the Indenture, and no event which, after notice or the lapse of
time, or both, would become such an Event of Default, shall have occurred and be
continuing; and (c) an officer's certificate and legal opinion covering such
conditions shall be delivered to the Trustee (Sections 801 and 803).
 
CERTAIN COVENANTS
 
     Existence.  Except as permitted under "Merger, Consolidation or Sale," the
Operating Partnership is required to do or cause to be done all things necessary
to preserve and keep in full force and effect its
 
                                        8
<PAGE>   50
 
existence, rights and franchises; provided, however, that the Operating
Partnership shall not be required to preserve any right or franchise if it
determines that the preservation thereof is no longer desirable in the conduct
of its business and that the loss thereof is not disadvantageous in any material
respect to the Holders of the Debt Securities (Section 1006).
 
     Maintenance of Properties.  The Operating Partnership is required to cause
all of its material properties used or useful in the conduct of its business or
the business of any Subsidiary to be maintained and kept in good condition,
repair and working order and supplied with all necessary equipment and to cause
to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Operating Partnership may be
necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that the
Operating Partnership and its Subsidiaries shall not be prevented from selling
or otherwise disposing for value their respective properties in the ordinary
course of business (Section 1007).
 
     Insurance.  The Operating Partnership is required to, and is required to
cause each of its Subsidiaries to, keep all of its insurable properties insured
against loss or damage at least equal to their then full insurable value with
financially sound and reputable insurance companies (Section 1008).
 
     Payment of Taxes and Other Claims.  The Operating Partnership is required
to pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon it or any Subsidiary or upon its income, profits or property or
that of any Subsidiary, and (ii) all lawful claims for labor, materials and
supplies which, if unpaid, might by law become a lien upon the property of the
Operating Partnership or any Subsidiary; provided, however, that the Operating
Partnership shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings (Section
1009).
 
     Provision of Financial Information.  The Holders of Debt Securities will be
provided with copies of the annual reports and quarterly reports of the
Operating Partnership. Whether or not the Operating Partnership is subject to
Section 13 or 15(d) of the Exchange Act and for so long as any Debt Securities
are outstanding, the Operating Partnership will, to the extent permitted under
the Exchange Act, be required to file with the Commission the annual reports,
quarterly reports and other documents which the Operating Partnership would have
been required to file with the Commission pursuant to such Section 13 or 15(d)
(the "Financial Statements") if the Operating Partnership were so subject, such
documents to be filed with the Commission on or prior to the respective dates
(the "Required Filing Dates") by which the Operating Partnership would have been
required so to file such documents if the Operating Partnership were so subject.
The Operating Partnership will also in any event (x) within 15 days of each
Required Filing Date (i) transmit by mail to all Holders of Debt Securities, as
their names and addresses appear in the security register for the Debt
Securities (the "Security Register"), without cost to such Holders, copies of
the annual reports and quarterly reports which the Operating Partnership would
have been required to file with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act if the Operating Partnership were subject to such Sections
and (ii) file with the Trustee copies of the annual reports, quarterly reports
and other documents which the Operating Partnership would have been required to
file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act if
the Operating Partnership were subject to such Sections and (y) if filing such
documents by the Operating Partnership with the Commission is not permitted
under the Exchange Act, promptly upon written request and payment of the
reasonable cost of duplication and delivery, supply copies of such documents to
any prospective Holder (Section 1010).
 
     Additional Covenants.  Any additional or different covenants of the
Operating Partnership with respect to any series of Debt Securities will be set
forth in the Prospectus Supplement relating thereto.
 
EVENTS OF DEFAULT, NOTICE AND WAIVER
 
     The Indenture provides that the following events are "Events of Default"
with respect to any series of Debt Securities issued thereunder: (a) default for
30 days in the payment of any installment of interest on any Debt Security of
such series; (b) default in the payment of the principal of (or premium, if any,
on) any Debt
 
                                        9
<PAGE>   51
 
Security of such series at its maturity; (c) default in making any sinking fund
payment as required for any Debt Security of such series; (d) default in the
performance of any other covenant of the Operating Partnership contained in the
Indenture (other than a covenant added to the Indenture solely for the benefit
of a series of Debt Securities issued thereunder other than such series), such
default having continued for 60 days after written notice as provided in the
Indenture; (e) default in the payment of an aggregate principal amount exceeding
$5,000,000 of any evidence of recourse indebtedness of the Operating Partnership
or any mortgage, indenture or other instrument under which such indebtedness is
issued or by which such indebtedness is secured, such default having occurred
after the expiration of any applicable grace period and having resulted in the
acceleration of the maturity of such indebtedness, but only if such indebtedness
is not discharged or such acceleration is not rescinded or annulled; (f) certain
events of bankruptcy, insolvency or reorganization, or court appointment of a
receiver, liquidator or trustee of the Operating Partnership or any Significant
Subsidiary or any of their respective property; and (g) any other Event of
Default provided with respect to a particular series of Debt Securities. The
term "Significant Subsidiary" means each significant subsidiary (as defined in
Regulation S-X promulgated under the Securities Act) of the Operating
Partnership.
 
     If an Event of Default under the Indenture with respect to Debt Securities
of any series at the time Outstanding occurs and is continuing, then in every
such case the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Debt Securities of that series may declare the principal amount
(or, if the Debt Securities of that series are Original Issue Discount
Securities or Securities, the terms of which provide that the principal amount
thereof payable at maturity may be more or less than the principal face amount
thereof at original issuance ("Indexed Securities"), such portion of the
principal amount as may be specified in the terms thereof) of all of the Debt
Securities of that series to be due and payable immediately by written notice
thereof to the Operating Partnership (and to the Trustee if given by the
Holders). However, at any time after such a declaration of acceleration with
respect to Debt Securities of such series (or of all Debt Securities then
Outstanding under the Indenture, as the case may be) has been made, but before a
judgment or decree for payment of the money due has been obtained by the
Trustee, the Holders of not less than a majority in principal amount of
Outstanding Debt Securities of such series (or of all Debt Securities then
Outstanding under the Indenture, as the case may be) may rescind and annul such
declaration and its consequences if (a) the Operating Partnership shall have
deposited with the applicable Trustee all required payments of the principal of
(and premium, if any) and interest on the Debt Securities of such series (or of
all Debt Securities then Outstanding under the Indenture, as the case may be),
plus certain fees, expenses, disbursements and advances of the Trustee and (b)
all Events of Default, other than the nonpayment of accelerated principal of (or
specified portion thereof), or premium (if any) or interest on the Debt
Securities of such series (or of all Debt Securities then Outstanding under the
Indenture, as the case may be) have been cured or waived as provided in the
Indenture (Section 502). The Indenture also provides that the Holders of not
less than a majority in principal amount of the Outstanding Debt Securities of
any series (or of all Debt Securities then Outstanding under the Indenture, as
the case may be) may waive any past default with respect to such series and its
consequences, except a default (x) in the payment of the principal of (or
premium, if any) or interest on any Debt Security or such series or (y) in
respect of a covenant or provision contained in the Indenture that cannot be
modified or amended without the consent of the Holder of each Outstanding Debt
Security affected thereby (Section 513).
 
     The Trustee will be required to give notice to the Holders of Debt
Securities within 90 days of a default under the Indenture unless such default
has been cured or waived; provided, however, that the Trustee may withhold
notice to the Holders of any series of Debt Securities of any default with
respect to such series (except a default in the payment of the principal of (or
premium, if any) or interest on any Debt Security of such series or in the
payment of any sinking fund installment in respect of any Debt Security of such
series) if specified Responsible Officers of the Trustee consider such
withholding to be in the interest of such Holders (Section 601).
 
     The Indenture provides that no Holders of Debt Securities of any series may
institute any proceedings, judicial or otherwise, with respect to the Indenture
or for any remedy thereunder, except in the case of failure of the Trustee, for
60 days, to act after it has received a written request to institute proceedings
in respect of an Event of Default from the Holders of not less than 25% in
principal amount of the Outstanding Debt
 
                                       10
<PAGE>   52
 
Securities of such series, as well as an offer of indemnity reasonably
satisfactory to it (Section 507). This provision will not prevent, however, any
holder of Debt Securities from instituting suit for the enforcement of payment
of the principal of (and premium, if any) and interest on such Debt Securities
at the respective due dates thereof (Section 508).
 
     Subject to provisions in the Indenture relating to its duties in case of
default, the Trustee is under no obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any Holders of any
series of Debt Securities then Outstanding under the Indenture, unless such
Holders shall have offered to the Trustee thereunder reasonable security or
indemnity (Section 602). The Holders of not less than a majority in principal
amount of the Outstanding Debt securities of any series (or of all Debt
Securities then Outstanding under the Indenture, as the case may be) shall have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or of exercising any trust or power
conferred upon the Trustee. However, the Trustee may refuse to follow any
direction which is in conflict with any law or the Indenture, which may involve
the Trustee in personal liability or which may be unduly prejudicial to the
holders of Debt Securities of such series not joining therein (Section 512).
 
     Within 120 days after the close of each fiscal year, the Operating
Partnership must deliver to the Trustee a certificate, signed by one of several
specified officers of the Company, stating whether or not such officer has
knowledge of any default under the Indenture and, if so, specifying each such
default and the nature and status thereof.
 
MODIFICATION OF THE INDENTURE
 
     Modifications and amendments of the Indenture will be permitted to be made
only with the consent of the Holders of not less than a majority in principal
amount of all Outstanding Debt Securities or series of Outstanding Debt
Securities which are affected by such modification or amendment; provided,
however, that no such modification or amendment may, without the consent of the
Holders of each such Debt Security affected thereby, (a) change the Stated
Maturity of the principal of, or premium (if any) or any installment of interest
on, any such Debt Security; (b) reduce the principal amount of, or the rate or
amount of interest on, or any premium payable on redemption of, any such Debt
Security, or reduce the amount of principal of an Original Issue Discount
Security that would be due and payable upon declaration of acceleration of the
maturity thereof or would be provable in bankruptcy, or adversely affect any
right of repayment of the holder of any such Debt Security; (c) change the place
of payment, or the coin or currency, for payment of principal of, premium, if
any, or interest on any such Debt Security; (d) impair the right to institute
suit for the enforcement of any payment on or with respect to any such Debt
Security; (e) reduce the above stated percentage of outstanding Debt Securities
of any series necessary to modify or amend the Indenture, to waive compliance
with certain provisions thereof or certain defaults and consequences thereunder
or to reduce the quorum or voting requirements set forth in the Indenture; or
(f) modify any of the foregoing provisions or any of the provisions relating to
the waiver of certain past defaults or certain covenants, except to increase the
required percentage to effect such action or to provide that certain other
provisions may not be modified or waived without the consent of the Holders of
such Debt Security (Section 902). A Debt Security shall be deemed outstanding
("Outstanding") if it has been authenticated and delivered under the Indenture
unless, among other things, such Debt Security has been cancelled or redeemed.
 
     The Indenture provides that the Holders of not less than a majority in
principal amount of a series of Outstanding Debt Securities have the right to
waive compliance by the Operating Partnership with certain covenants relating to
such series of Debt Securities in the Indenture (Section 1014).
 
     Modifications and amendments of the Indenture will be permitted to be made
by the Operating Partnership and the Trustee without the consent of any Holder
of Debt Securities for any of the following purposes: (i) to evidence the
succession of another Person to the Operating Partnership as obligor under the
Indenture; (ii) to add to the covenants of the Operating Partnership for the
benefit of the Holders of all or any series of Debt Securities or to surrender
any right or power conferred upon the Operating Partnership in the Indenture;
(iii) to add Events of Default for the benefit of the Holders of all or any
series of Debt Securities; (iv) to add or change any provisions of the Indenture
to facilitate the issuance of, or to liberalize certain terms of, Debt
Securities in bearer form, or to permit or facilitate the issuance of Debt
Securities in uncertificated
 
                                       11
<PAGE>   53
 
form, provided, that such action shall not adversely affect the interests of the
Holders of the Debt Securities of any series in any material respect; (v) to
change or eliminate any provisions of the Indenture, provided that any such
change or elimination shall become effective only when there are no Debt
Securities Outstanding of any series created prior thereto which are entitled to
the benefit of such provision; (vi) to secure the Debt Securities; (vii) to
establish the form or terms of Debt Securities of any series; (viii) to provide
for the acceptance of appointment by a successor Trustee or facilitate the
administration of the trusts under the Indenture by more than one Trustee; (ix)
to cure any ambiguity, defect or inconsistency in the Indenture, provided that
such action shall not adversely affect the interests of Holders of Debt
Securities of any series in any material respect; or (x) to supplement any of
the provisions of the Indenture to the extent necessary to permit or facilitate
defeasance and discharge of any series of such Debt Securities, provided that
such action shall not adversely affect the interests of the Holders of the Debt
Securities of any series in any material respect (Section 901).
 
     The Indenture provides that in determining whether the Holders of the
requisite principal amount of Outstanding Debt Securities of a series have given
any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of Holders of Debt
Securities, (i) the principal amount of an Original Issue Discount Security that
shall be deemed to be Outstanding shall be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
declaration of acceleration of the maturity thereof, (ii) the principal amount
of a Debt Security denominated in a foreign currency that shall be deemed
Outstanding shall be the U.S. dollar equivalent, determined on the issue date
for such Debt Security, of the principal amount (or, in the case of an Original
Issue Discount Security, the U.S. dollar equivalent on the issue date of such
Debt Security of the amount determined as provided in (i) above), (iii) the
principal amount of an Indexed Security that shall be deemed Outstanding shall
be the principal face amount of such Indexed Security at original issuance,
unless otherwise provided with respect to such Indexed Security pursuant to the
Indenture; and (iv) Debt Securities owned by the Operating Partnership or any
other obligor upon the Debt Securities or any affiliate of the Operating
Partnership or of such other obligor shall be disregarded.
 
     The Indenture contains provisions for convening meetings of the Holders of
Debt Securities of a series (Section 1501). A meeting will be permitted to be
called at any time by the Trustee, and also, upon request, by the Operating
Partnership or the holders of at least 10% in principal amount of the
Outstanding Debt Securities of such series, in any such case upon notice given
as provided in the Indenture (Section 1502). Except for any consent that must be
given by the Holder of each Debt Security affected by certain modifications and
amendments of the Indenture, any resolution presented at a meeting or adjourned
meeting duly reconvened at which a quorum is present will be permitted to be
adopted by the affirmative vote of the Holders of a majority in principal amount
of the Outstanding Debt Securities of that series; provided, however, that,
except as referred to above, any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action that may be
made, given or taken by the Holders of a specified percentage, which is less
than a majority, in principal amount of the Outstanding Debt Securities of a
series may be adopted at a meeting or adjourned meeting duly reconvened at which
a quorum is present by the affirmative vote of the Holders of such specified
percentage in principal amount of the Outstanding Debt Securities of that
series. Any resolution passed or decision taken at any meeting of Holders of
Debt Securities of any series duly held in accordance with the Indenture will be
binding on all Holders of Debt Securities of that series. The quorum at any
meeting called to adopt a resolution, and at any reconvened meeting, will be
Persons holding or representing a majority in principal amount of the
Outstanding Debt Securities of a series; provided, however, that if any action
is to be taken at such meeting with respect to a consent or waiver which may be
given by the Holders of not less than a specified percentage in principal amount
of the Outstanding Debt Securities of a series, the Persons holding or
representing such specified percentage in principal amount of the Outstanding
Debt Securities of such series will constitute a quorum (Section 1504).
 
     Notwithstanding the foregoing provisions, if any action is to be taken at a
meeting of Holders of Debt Securities of any series with respect to any request,
demand, authorization, direction, notice, consent, waiver or other action that
the Indenture expressly provides may be made, given or taken by the Holders of a
specified percentage in principal amount of all Outstanding Debt Securities
affected thereby, or of the Holders
 
                                       12
<PAGE>   54
 
of such series and one or more additional series: (i) there shall be no minimum
quorum requirement for such meeting and (ii) the principal amount of the
Outstanding Debt Securities of such series that vote in favor of such request,
demand, authorization, direction, notice, consent, waiver or other action shall
be taken into account in determining whether such request, demand,
authorization, direction, notice, consent, waiver or other action has been made,
given or taken under the Indenture (Section 1504).
 
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
 
     The Operating Partnership may discharge certain obligations to Holders of
any series of Debt Securities that have not already been delivered to the
Trustee for cancellation and that either have become due and payable or will
become due and payable within one year (or scheduled for redemption within one
year) by irrevocably depositing with the Trustee, in trust, funds in such
currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable in an amount sufficient to
pay the entire indebtedness on such Debt Securities in respect of principal (and
premium, if any) and interest to the date of such deposit (if such Debt
Securities have become due and payable) or to the Stated Maturity or Redemption
Date, as the case may be (Sections 1401 and 1404).
 
     The Indenture provides that, if the provisions of Article Fourteen are made
applicable to the Debt Securities of or within any series pursuant to Section
301 of the Indenture, the Operating Partnership may elect either (a) to defease
and be discharged from any and all obligations with respect to such Debt
Securities (except for the obligation to pay additional amounts, if any, upon
the occurrence of certain events of tax, assessment or governmental charge with
respect to payments on such Debt Securities and the obligations to register the
transfer or exchange of such Debt Securities, to replace temporary or mutilated,
destroyed, lost or stolen Debt Securities, to maintain an office or agency in
respect of such Debt Securities and to hold moneys for payment in trust)
("defeasance") (Section 1402) or (b) to be released from its obligations with
respect to such Debt Securities under sections 1004 to 1011, inclusive, of the
Indenture (including the restrictions described under "Certain Covenants") and
its obligations with respect to any other covenant, and any omission to comply
with such obligations shall not constitute a default or an Event of Default with
respect to such Debt Securities ("covenant defeasance") (Section 1403), in
either case upon the irrevocable deposit by the Operating Partnership with the
Trustee, in trust, of an amount, in such currency or currencies, currency unit
or units or composite currency or currencies in which such Debt Securities are
payable at the stated maturity date specified thereon ("Stated Maturity"), or
Government Obligations (as defined below), or both, applicable to such Debt
Securities which through the scheduled payment of principal and interest in
accordance with their terms will provide money in an amount sufficient to pay
the principal of (and premium, if any) and interest on such Debt Securities, and
any mandatory sinking fund or analogous payments thereon, on the scheduled due
dates therefor.
 
     Such a trust will only be permitted to be established if, among other
things, the Operating Partnership has delivered to the Trustee an Opinion of
Counsel (as specified in the Indenture) to the effect that the Holders of such
Debt Securities will not recognize income, gain or loss for U.S. Federal income
tax purposes as a result of such defeasance or covenant defeasance and will be
subject to U.S. Federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance or covenant
defeasance had not occurred, and such Opinion of Counsel, in the case of
defeasance, must refer to and be based upon a ruling of the Internal Revenue
Service or a change in applicable United States Federal income tax law occurring
after the date of the Indenture (Section 1404).
 
     "Government Obligations" means securities which are (i) direct obligations
of the United States of America or the government which issued the foreign
currency in which the Debt Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged or (ii) obligations of
a person controlled or supervised by and acting as an agency or instrumentality
of the United States of America or such government which issued the foreign
currency in which the Debt Securities of such series are payable, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such Government Obligation or a specific payment of interest on
or principal of any such
 
                                       13
<PAGE>   55
 
Government Obligation held by such custodian for the account of the holder of a
depository receipt, provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the Government Obligation or the specific payment of interest on or principal of
the Government Obligation evidenced by such depository receipt.
 
     Unless otherwise provided in the applicable Prospectus Supplement, if after
the Operating Partnership has deposited funds and/or Government Obligations to
effect defeasance or covenant defeasance with respect to Debt Securities of any
series; (a) the Holder of a Debt Security of such series is entitled to, and
does, elect pursuant to the Indenture or the terms of such Debt Security to
receive payment in a currency, currency unit or composite currency other than
that in which such deposit has been made in respect of such Debt Security, or
(b) a Conversion Event (as defined below) occurs in respect of the currency,
currency unit or composite currency in which such deposit has been made, the
indebtedness represented by such Debt Security shall be deemed to have been, and
will be, fully discharged and satisfied through the payment of the principal of
(and premium, if any) and interest on such Debt Security as they become due out
of the proceeds yielded by converting the amount so deposited in respect of such
Debt Security into the currency, currency unit or composite currency in which
such Debt Security becomes payable as a result of such election or such
Conversion Event based on the applicable market exchange rate. "Conversion
Event" means the cessation of use of (i) a currency, currency unit or composite
currency both by the government of the country which issued such currency and
for the settlement of transactions by a central bank or other public
institutions of or within the international banking community, (ii) the ECU both
within the European Monetary System and for the settlement of transactions by
public institutions of or within the European Community or (iii) any currency
unit or composite currency other than the ECU for the purposes for which it was
established.
 
     Unless otherwise provided in the applicable Prospectus Supplement, all
payments of principal of (and premium, if any) and interest on any Debt Security
that is payable in a foreign currency that ceases to be used by its government
of issuance shall be made in U.S. dollars.
 
     In the event the Operating Partnership effects covenant defeasance with
respect to any Debt Securities and such Debt Securities are declared due and
payable because of the occurrence of any Event of Default other than the Event
of Default described in clause (d) under "Events of Default, Notice and Waiver"
with respect to Sections 1004 to 1011, inclusive, of the Indenture (which
sections would no longer be applicable to such Debt Securities) or described in
clause (g) under "Events of Default, Notice and Waiver" with respect to any
other covenant as to which there has been covenant defeasance, the amount in
such currency, currency unit or composite currency in which such Debt securities
are payable, and Government Obligations on deposit with the Trustee, will be
sufficient to pay amounts due on such Debt Securities at the time of their
Stated Maturity but may not be sufficient to pay amounts due on such Debt
Securities at the time of the acceleration resulting from such event of Default.
However, the Operating Partnership would remain liable to make payment of such
amounts due at the time of acceleration.
 
     The applicable Prospectus Supplement may further describe the provisions,
if any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
 
NO CONVERSION RIGHTS
 
     The Debt Securities will not be convertible into or exchangeable for any
capital stock of the Company or equity interest in the Operating Partnership.
 
GLOBAL SECURITIES
 
     The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities (the "Global Securities") that will be
deposited with, or on behalf of, a depositary (the "Depositary") identified in
the applicable Prospectus Supplement relating to such series. Global Securities
may be issued in either registered or bearer form and in either temporary or
permanent form. The specific
 
                                       14
<PAGE>   56
 
terms of the depositary arrangement with respect to a series of Debt Securities
will be described in the applicable Prospectus Supplement relating to such
series.
 
                          DESCRIPTION OF COMMON STOCK
 
GENERAL
 
     The authorized common stock of the Company includes 100,000,000 shares of
Common Stock $.01 par value per share. Each outstanding share of Common Stock
entitles the holder to one vote on all matters presented to shareholders for a
vote. Holders of Common Stock have no preemptive rights. At December 31, 1995,
there were 21,577,636 shares of Common Stock outstanding, 5,139,243 shares
reserved for issuance upon exchange of outstanding Units and 617,423 shares
reserved for issuance upon exercise of outstanding stock options.
 
     Shares of Common Stock currently outstanding are listed for trading on the
New York Stock Exchange (the "NYSE") under the symbol "PPS." The Company will
apply to the NYSE to list the additional shares of Common Stock to be sold
pursuant to any Prospectus Supplement, and the Company anticipates that such
shares will be so listed.
 
     All shares of Common Stock issued will be duly authorized, fully paid, and
nonassessable. Distributions may be paid to the holders of Common Stock if and
when declared by the Board of Directors of the Company out of funds legally
available therefor.
 
     Under Georgia law, shareholders are generally not liable for the Company's
debts or obligations. If the Company is liquidated, subject to the right of any
holders of preferred stock, if any, to receive preferential distributions, each
outstanding share of Common Stock will be entitled to participate pro rata in
the assets remaining after payment of, or adequate provision for, all known
debts and liabilities of the Company.
 
PROVISIONS OF COMPANY'S ARTICLES OF INCORPORATION AND BYLAWS
 
     The Articles of Incorporation of the Company provide for the Board of
Directors to be divided into three classes of directors, each class to consist
as nearly as possible of one-third of the directors. At each annual meeting of
shareholders, the class of directors to be elected at such meeting will be
elected for a three-year term and the directors in the other two classes will
continue in office. The overall effect of the provisions in the Articles of
Incorporation with respect to the classified board may be to render more
difficult a change of control of the Company or removal of incumbent management.
Holders of Common Stock have no right to cumulative voting for the election of
directors. Consequently, at each annual meeting of shareholders, the holders of
a plurality of the shares of Common Stock are able to elect all of the
successors of the class of directors whose term expires at that meeting.
Directors may be removed only for cause and only with the affirmative vote of
the holders of a majority of the shares of Common Stock entitled to vote in the
election of directors.
 
OTHER MATTERS
 
     The transfer agent and registrar for the Common Stock is Wachovia Bank of
North Carolina, N.A., Winston-Salem, North Carolina.
 
     The Company may not engage in any merger, consolidation or other
combination with or into another person or sale of all or substantially all of
its assets unless such transaction includes the merger of the Operating
Partnership or sale of substantially all of the assets of the Operating
Partnership, which sale or merger must be approved by the holders of a majority
of the Units. If the Company were ever to hold less than a majority of the
Units, this voting requirement might limit the possibility for acquisition or
change in the control of the Company.
 
                                       15
<PAGE>   57
 
RESTRICTIONS ON TRANSFER
 
     Ownership Limits.  The Company's Articles of Incorporation contain certain
restrictions on the number of shares of Common Stock that a single shareholder
may own. For the Company to qualify as a REIT under the Code, no more than 50%
in value of its outstanding shares of Common Stock may be owned, actually and
constructively under the applicable attribution provisions of the Code, by five
or fewer individuals (as defined in the Code to include certain entities) during
the last half of a taxable year (other than the first year) or during a
proportionate part of a shorter taxable year. The Common Stock must also be
beneficially owned by 100 or more persons during at least 335 days of a taxable
year (other than the first year) or during a proportionate part of a shorter
taxable year. Because the Company has elected to be treated as a REIT, the
Articles of Incorporation of the Company contain restrictions on the acquisition
of Common Stock intended to ensure compliance with these requirements.
 
     Subject to certain exceptions specified in the Articles of Incorporation,
no person other than Messrs. Williams and Glover may own, or be deemed to own by
virtue of the applicable attribution provisions of the Code, more than 6% (the
"Ownership Limit") of the outstanding shares of Common Stock. Messrs. Williams
and Glover are subject to a separate limitation (referred to as the "Excluded
Holder Limit") pursuant to which they are prohibited from owning (actually and
constructively under the applicable attribution provisions of the Code) more
than 31%, in the aggregate, of the outstanding shares of Common Stock. In
addition, Messrs. Williams and Glover are prohibited from acquiring any shares
of Common Stock if such acquisition would cause five individuals to own
(actually and constructively under the applicable attribution provisions of the
Code) in the aggregate more than 50% in value of the outstanding shares of
Common Stock.
 
     If any shareholder purports to transfer shares to a person and either the
transfer would result in the Company failing to qualify as a REIT, or the
shareholder knows that such transfer would cause the transferee to hold more
than the applicable Ownership Limit or Excluded Holder Limit, the purported
transfer will be null and void as to that number of shares the transfer of which
would cause a violation of the applicable limit, and the shareholder will be
deemed not to have transferred such excess shares. In addition, if any person
holds shares of Common Stock in excess of the applicable Ownership Limit or
Excluded Holder Limit, such person will be deemed to hold the shares that cause
the applicable limit to be exceeded in trust for the Company, and will not
receive dividends or distributions with respect to such shares and will not be
entitled to vote such shares. The person will be required to sell such shares to
the Company for the lesser of the amount paid for the shares and the average of
the last reported sales prices for the ten trading days immediately preceding
the redemption or to sell such shares at the direction of the Company, in which
case the Company will be reimbursed for its expenses in connection with the sale
plus any remaining amount of such proceeds that exceeds the amount such person
paid for the shares and such person will be entitled to receive only the balance
of the proceeds. If the Company repurchases such shares, it may elect to pay for
the shares with Units.
 
     All certificates representing shares of Common Stock will bear a legend
referring to the restrictions described above.
 
     Every owner of more than 5% (or such lower percentage as may be required by
the Code or regulations thereunder) of the issued and outstanding shares of
Common Stock must file a written notice with the Company containing the
information specified in the Articles of Incorporation no later than January 30
of each year. In addition, each shareholder shall upon demand be required to
disclose to the Company in writing such information as the Company may request
in good faith in order to determine the Company's status as a REIT.
 
     The foregoing ownership limitations may have the effect of precluding
acquisition of control of the Company without the consent of the Board of
Directors.
 
                                       16
<PAGE>   58
 
                         DESCRIPTION OF PREFERRED STOCK
 
GENERAL
 
     The Company is authorized to issue 20,000,000 share of preferred stock,
$.01 par value per share, of which no Preferred Stock was outstanding at
December 31, 1995.
 
     The following description of the Preferred Stock sets forth certain general
terms and provisions of the Preferred Stock to which any Prospectus Supplement
may relate. The statements below describing the Preferred Stock are in all
respects subject to and qualified in their entirety by reference to the
applicable provisions of the Company's Articles of Incorporation (the "Articles
of Incorporation") and Bylaws and any applicable amendment to the Articles of
Incorporation designating terms of a series of Preferred Stock (a "Designating
Amendment").
 
TERMS
 
     Subject to the limitations prescribed by the Articles of Incorporation, the
Board of Directors is authorized to fix the number of shares constituting each
series of Preferred Stock and the designations and powers, preferences and
relative, participating, optional or other special rights and qualifications,
limitations or restrictions thereof, including such provisions as may be desired
concerning voting, redemption, dividends, dissolution or the distribution of
assets, conversion or exchange, and such other subjects or matters as may be
fixed by resolution of the Board of Directors. The Preferred Stock will, when
issued, be fully paid and nonassessable by the Company (except as described
under "-- Shareholder Liability" below) and will have no preemptive rights.
 
     Reference is made to the Prospectus Supplement relating to the Preferred
Stock offered thereby for specific terms thereof, including:
 
          (1) The title and stated value of such Preferred Stock;
 
          (2) The number of shares of such Preferred Stock offered, the
     liquidation preference per share and the offering price of such Preferred
     Stock;
 
          (3) The dividend rate(s), period(s) and/or payment date(s) or
     method(s) of calculation thereof applicable to such Preferred Stock;
 
          (4) The date from which dividends on such Preferred Stock shall
     accumulate, if applicable;
 
          (5) The procedures for any auction or remarketing, if any, for such
     Preferred Stock;
 
          (6) The provision for a sinking fund, if any, for such Preferred
     Stock;
 
          (7) The provision for redemption, if applicable, of such Preferred
     Stock;
 
          (8) Any listing of such Preferred Stock on any securities exchange;
 
          (9) The terms and conditions, if applicable, upon which such Preferred
     Stock will be convertible into Common Stock of the Company, including the
     conversion price (or manner of calculation thereof);
 
          (10) Whether interests in such Preferred Stock will be represented by
     Depositary Shares;
 
          (11) Any other specific terms, preferences, rights, limitations or
     restrictions of such Preferred Stock;
 
          (12) A discussion of U.S. Federal income tax considerations applicable
     to such Preferred Stock;
 
          (13) The relative ranking of preferences of such Preferred Stock as to
     dividend rights and rights upon liquidation, dissolution or winding up of
     the affairs of the Company;
 
          (14) Any limitations on issuance of any series of Preferred Stock
     ranking senior to or on a parity with such series of Preferred Stock as to
     dividend rights and rights upon liquidation, dissolution or winding up of
     the affairs of the Company; and
 
                                       17
<PAGE>   59
 
          (15) Any limitations on direct or beneficial ownership and
     restrictions on transfer, in each case an may be appropriate to preserve
     the status of the Company as a REIT.
 
     The applicable Prospectus Supplement will summarize the nature and scope of
any event risk provisions contained in any series of Preferred Stock, including
the types of events protected by such provisions and any limitations on the
Company's ability to satisfy its obligations under such provisions. The
applicable Prospectus Supplement will also summarize anti-takeover provisions in
other securities of the Operating Partnership or the General Partnership, which
could have a material effect on any series of Preferred Stock. Such summary will
contain a detailed and quantifiable definition of any "change in control"
provision.
 
RANK
 
     Unless otherwise specified in the Prospectus Supplement, the Preferred
Stock will, with respect to dividend rights and rights upon liquidation,
dissolution or winding up of the Company, rank (i) senior to all classes or
series of Common Stock of the Company, and to all equity securities ranking
junior to such Preferred Stock; (ii) on a parity with all equity securities
issued by the Company the terms of which specifically provide that such equity
securities rank on a parity with the Preferred Stock; and (iii) junior to all
equity securities issued by the Company the terms of which specifically provide
that such equity securities rank senior to the Preferred Stock. The term "equity
securities" does not include convertible debt securities.
 
DIVIDENDS
 
     Holders of the Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors of the Company, out of assets
of the Company legally available for payment, cash dividends at such rates and
on such dates as will be set forth in the applicable Prospectus Supplement. Each
such dividend shall be payable to holders of record as they appear on the share
transfer books of the Company on such record dates as shall be fixed by the
Board of Directors of the Company.
 
     Dividends on any series of the Preferred Stock may be cumulative or
non-cumulative, as provided in the applicable Prospectus Supplement. Dividends,
if cumulative, will be cumulative from and after the date set forth in the
applicable Prospectus Supplement. If the Board of Directors of the Company fails
to declare a dividend payable on a dividend payment date on any series of the
Preferred Stock for which dividends are non-cumulative, then the holders of such
series of the Preferred Stock will have no right to receive a dividend in
respect of the dividend period ending on such dividend payment date, and the
Company will have no obligation to pay the dividend accrued for such period,
whether or not dividends on such series are declared payable on any future
dividend payment date.
 
     If Preferred Stock of any series is outstanding, no dividends will be
declared or paid or set apart for payment on any capital stock of the Company of
any other series ranking, as to dividends, on a parity with or junior to the
Preferred Stock of such series for any period unless (i) if such series of
Preferred Stock has a cumulative dividend, full cumulative dividends have been
or contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for such payment on the Preferred Stock of such
series for all past dividend periods and the then current dividend period or
(ii) if such series of Preferred Stock does not have a cumulative dividend, full
dividends for the then current dividend period have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for such payment on the Preferred Stock of such series. When dividends
are not paid in full (or a sum sufficient for such full payment is not so set
apart) upon Preferred Stock of any series and the shares of any other series of
Preferred Stock ranking on a parity as to dividends with the Preferred Stock of
such series, all dividends declared upon Preferred Stock of such series and any
other series of Preferred Stock ranking on a parity as to dividends with such
Preferred Stock shall be declared pro rata so that the amount of dividends
declared per share of Preferred Stock of such series and such other series of
Preferred Stock shall in all cases bear to each other the same ratio that
accrued dividends per share on the Preferred Stock of such series (which shall
not include any accumulation in respect of unpaid dividends for prior dividend
periods if such Preferred Stock does not have a cumulative dividend) and such
other series of Preferred Stock bear to each
 
                                       18
<PAGE>   60
 
other. No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on Preferred Stock of such series
which may be in arrears.
 
     Except as provided in the immediately preceding paragraph, unless (i) if
such series of Preferred Stock has a cumulative dividend, full cumulative
dividends on the Preferred Stock of such series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for payment for all past dividend periods and the then current
dividend period, and (ii) if such series of Preferred Stock does not have a
cumulative dividend, full dividends on the Preferred Stock of such series have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for payment for the then current dividend
period, no dividends (other than in shares of Common Stock or other capital
shares ranking junior to the Preferred Stock of such series as to dividends and
upon liquidation) shall be declared or paid or set aside for payment or other
distribution shall be declared or made upon the Common Stock, or any other
capital shares of the Company ranking junior to or on a parity with the
Preferred Stock of such series as to dividends or upon liquidation, nor shall
any shares of Common Stock, or any other capital shares of the Company ranking
junior to or on a parity with the Preferred Stock of such series as to dividends
or upon liquidation be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking fund for
the redemption of any such shares) by the Company (except by conversion into or
exchange for other capital shares of the Company ranking junior to the Preferred
Stock of such series as to dividends and upon liquidation).
 
REDEMPTION
 
     If so provided in the applicable Prospectus Supplement, the Preferred Stock
will be subject to mandatory redemption or redemption at the option of the
Company, as a whole or in part, in each case upon the terms, at the times and at
the redemption prices set forth in such Prospectus Supplement.
 
     The Prospectus Supplement relating to a series of Preferred Stock that is
subject to mandatory redemption will specify the number of shares of such
Preferred Stock that shall be redeemed by the Company in each year commencing
after a date to be specified, at a redemption price per share to be specified,
together with an amount equal to all accrued and unpaid dividends thereon (which
shall not, if such Preferred Stock does not have a cumulative dividend, include
any accumulation in respect of unpaid dividends for prior dividend periods) to
the date of redemption. The redemption price may be payable in cash or other
property, as specified in the applicable Prospectus Supplement. If the
redemption price for Preferred Stock of any series is payable only from the net
proceeds of the issuance of capital shares of the Company, the terms of such
Preferred Stock may provide that, if no such capital shares shall have been
issued or to the extent the net proceeds from any issuance are insufficient to
pay in full the aggregate redemption price then due, such Preferred Stock shall
automatically and mandatorily be converted into the applicable capital shares of
the Company pursuant to conversion provisions specified in the applicable
Prospectus Supplement.
 
     Notwithstanding the foregoing, unless (i) if such series of Preferred Stock
has a cumulative dividend, full cumulative dividends on all shares of any series
of Preferred Stock shall have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for payment for
all past dividend periods and the then current dividend period, and (ii) if such
series of Preferred Stock does not have a cumulative dividend, full dividends of
the Preferred Stock of any series have been or contemporaneously are declared
and paid or declared and a sum sufficient for the payment thereof set apart for
payment for the then current dividend period, no shares of any series of
Preferred Stock shall be redeemed unless all outstanding Preferred Stock of such
series is simultaneously redeemed; provided, however, that the foregoing shall
not prevent the purchase or acquisition of Preferred Stock of such series to
preserve the REIT status of the Company or pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding Preferred Stock of
such series. In addition, unless (i) if such series of Preferred Stock has a
cumulative dividend, full cumulative dividends on all outstanding shares of any
series of Preferred Stock have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof set apart for payment
for all past dividends periods and the then current dividend period, and (ii) if
such series of Preferred Stock does not have a cumulative dividend, full
dividends on the Preferred Stock of any series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set
 
                                       19
<PAGE>   61
 
apart for payment for the then current dividend period, the Company shall not
purchase or otherwise acquire directly or indirectly any shares of Preferred
Stock of such series (except by conversion into or exchange for capital shares
of the Company ranking junior to the Preferred Stock of such series as to
dividends and upon liquidation); provided, however, that the foregoing shall not
prevent the purchase or acquisition of Preferred Stock of such series to
preserve the REIT status of the Company or pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding Preferred Stock of
such series.
 
     If fewer than all of the outstanding shares of Preferred Stock of any
series are to be redeemed, the number of shares to be redeemed will be
determined by the Company and such shares may be redeemed pro rata from the
holders of record of such shares in proportion to the number of such shares held
or for which redemption is requested by such holder (with adjustments to avoid
redemption of fractional shares) or by lot in a manner determined by the
Company.
 
     Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of Preferred Stock of
any series to be redeemed at the address shown on the share transfer books of
the Company. Each notice shall state: (i) the redemption date; (ii) the number
of shares and series of the Preferred Stock to be redeemed; (iii) the redemption
price; (iv) the place or places where certificates for such Preferred Stock are
to be surrendered for payment of the redemption price; (v) that dividends on the
shares to be redeemed will cease to accrue on such redemption date; and (vi) the
date upon which the holder's conversion rights, if any, as to such shares shall
terminate. If fewer than all the shares of Preferred Stock of any series are to
be redeemed, the notice mailed to each such holder thereof shall also specify
the number of shares of Preferred Stock to be redeemed from each such holder. If
notice of redemption of any Preferred Stock has been given and if the funds
necessary for such redemption have been set aside by the Company in trust for
the benefit of the holders of any Preferred Stock so called for redemption, then
from and after the redemption date dividends will cease to accrue on such
Preferred Stock, and all rights of the holders of such shares will terminate,
except the right to receive the redemption price.
 
LIQUIDATION PREFERENCE
 
     Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company, then, before any distribution or payment shall be
made to the holders of any Common Stock or any other class or series of capital
shares of the Company ranking junior to the Preferred Stock in the distribution
of assets upon any liquidation, dissolution or winding up of the Company, the
holders of each series of Preferred Stock shall be entitled to receive out of
assets of the Company legally available for distribution to shareholders
liquidating distributions in the amount of the liquidation preference per share
(set forth in the applicable Prospectus Supplement), plus an amount equal to all
dividends accrued and unpaid thereon (which shall not include any accumulation
in respect of unpaid dividends for prior dividend periods if such Preferred
Stock does not have a cumulative dividend). After payment of the full amount of
the liquidating distributions to which they are entitled, the holders of
Preferred Stock will have no right or claim to any of the remaining assets of
the Company. In the event that, upon any such voluntary or involuntary
liquidation, dissolution or winding up, the available assets of the Company are
insufficient to pay the amount of the liquidating distributions on all
outstanding Preferred Stock and the corresponding amounts payable on all shares
of other classes or series of capital shares of the Company ranking on a parity
with the Preferred Stock in the distribution of assets, then the holders of the
Preferred Stock and all other such classes or series of capital shares shall
share ratably in any such distribution of assets in proportion to the full
liquidating distributions to which they would otherwise be respectively
entitled.
 
     If liquidating distributions shall have been made in full to all holders of
Preferred Stock, the remaining assets of the Company shall be distributed among
the holders of any other classes or series of capital shares ranking junior to
the Preferred Stock upon liquidation, dissolution or winding up, according to
their respective rights and preferences and in each case according to their
respective number of shares. For such purposes, the consolidation or merger of
the Company with or into any other corporation, trust or entity, or the sale,
lease or conveyance of all or substantially all of the property or business of
the Company, shall not be deemed to constitute a liquidation, dissolution or
winding up of the Company.
 
                                       20
<PAGE>   62
 
VOTING RIGHTS
 
     Holders of the Preferred Stock will not have any voting rights, except as
set forth below or as otherwise from time to time required by law or as
indicated in the applicable Prospectus Supplement.
 
     Whenever dividends on any shares of Preferred Stock shall be in arrears for
six or more consecutive quarterly periods, the holders of such shares of
Preferred Stock (voting separately as a class with all other series of Preferred
Stock upon which like voting rights have been conferred and are exercisable)
will be entitled to vote for the election of two additional directors of the
Company at a special meeting called by the holders of record of at least ten
percent (10%) of any series of Preferred Stock so in arrears (unless such
request is received less than 90 days before the date fixed for the next annual
or special meeting of the shareholders) or at the next annual meeting of
shareholders, and at each subsequent annual meeting until (i) if such series of
Preferred Stock has a cumulative dividend, all dividends accumulated on such
shares of Preferred Stock for the past dividend periods and the then current
dividend period shall have been fully paid or declared and a sum sufficient for
the payment thereof set aside for payment or (ii) if such series of Preferred
Stock does not have a cumulative dividend, four consecutive quarterly dividends
shall have been fully paid or declared and a sum sufficient for the payment
thereof set aside for payment. In such case, the entire Board of Directors of
the Company will be increased by two directors.
 
     Unless provided otherwise for any series of Preferred Stock, so long as any
shares of Preferred Stock remain outstanding, the Company will not, without the
affirmative vote or consent of the holders of at least two-thirds of the shares
of each series of Preferred Stock outstanding at the time, given in person or by
proxy, either in writing or at a meeting (such series voting separately as a
class), (i) authorize or create, or increase the authorized or issued amount of,
any class or series of capital stock ranking prior to such series of Preferred
Stock with respect to payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up or reclassify any authorized capital
stock of the Company into such shares, or create, authorize or issue any
obligation or security convertible into or evidencing the right to purchase any
such shares; or (ii) amend, alter or repeal the provisions of the Company's
Articles of Incorporation or the Designating Amendment for such series of
Preferred Stock, whether by merger, consolidation or otherwise (an "Event"), so
as to materially and adversely affect any right, preference, privilege or voting
power of such series of Preferred Stock or the holder thereof; provided,
however, to the occurrence of any of the Events set forth in (ii) above, so long
as the Preferred Stock remains outstanding with the terms thereof materially
unchanged, taking into account that upon the occurrence of an Event, the Company
may not be the surviving entity, the occurrence of any such Event shall not be
deemed to materially and adversely affect such rights, preferences, privileges
or voting power of holders of Preferred Stock and provided further that (x) any
increase in the amount of the authorized Preferred Stock or the creation or
issuance of any other series of Preferred Stock, or (y) any increase in the
amount of authorized shares of such series or any other series of Preferred
Stock, in each case ranking on a parity with or junior to the Preferred Stock of
such series with respect to payment of dividends or the distribution of assets
upon liquidation, dissolution or winding up, shall not be deemed to materially
and adversely affect such rights, preferences, privileges or voting powers.
 
     The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected all outstanding shares of such series of Preferred Stock shall have
been redeemed or called for redemption and sufficient funds shall have been
deposited in trust to effect such redemption.
 
     Under Georgia law, notwithstanding anything to the contrary set forth
above, holders of each series of Preferred Stock will be entitled to vote as a
class upon any proposed amendment to the Articles of Incorporation, whether or
not entitled to vote thereon by the Articles of Incorporation, if the amendment
would (i) increase or decrease the aggregate number of authorized shares of such
series; (ii) effect an exchange or reclassification of all or part of the shares
of the series into shares of another series; (iii) effect an exchange or
reclassification, or create the right of exchange, of all or part of the shares
of another class or series into shares of the series; (iv) change the
designation, rights, preferences or limitations of all or a part of the shares
of the series; (v) change the shares of all or part of the series into a
different number of shares of the same series; (vi) create a new series having
rights or preferences with respect to distributions or dissolution
 
                                       21
<PAGE>   63
 
that are prior, superior or substantially equal to the shares of the series;
(vii) increase the rights, preferences or number of authorized shares of any
class or series that, after giving effect to the amendment, have rights or
preferences with respect to distributions or to dissolution that are prior,
superior or substantially equal to the shares of the series; (viii) limit or
deny an existing preemptive right of all or part of the shares of the series; or
(ix) cancel or otherwise affect rights to distributions or dividends that have
accumulated but have not yet been declared on all or part of the shares of the
series.
 
CONVERSION RIGHTS
 
     The terms and conditions, if any, upon which any series of Preferred Stock
is convertible into shares of Common Stock will be set forth in the applicable
Prospectus Supplement relating thereto. Such terms will include the number of
shares of Common Stock into which the shares of Preferred Stock are convertible,
the conversion price (or manner of calculation thereof), the conversion period,
provisions as to whether conversions will be at the option of the holders of the
Preferred Stock or the Company, the events requiring an adjustment of the
conversion price and provisions affecting conversion in the event of the
redemption of such series of Preferred Stock.
 
SHAREHOLDER LIABILITY
 
     As discussed below under "Description of Common Stock -- General,"
applicable Georgia law provides that no shareholder, including holders of
Preferred Stock, shall be personally liable for the acts and obligations of the
Company and that the funds and property of the Company shall be the only
recourse for such acts or obligations.
 
RESTRICTIONS ON OWNERSHIP
 
     As discussed below under "Description of Common Stock -- Restrictions on
Transfer," for the Company to qualify as a REIT under the Code, not more than
50% in value of its outstanding capital shares may be owned, directly or
indirectly, by five or fewer individuals (as defined in the Code to include
certain entities) during the last half of a taxable year. To assist the Company
in meeting this requirement, the Company may take certain actions to limit the
beneficial ownership, directly or indirectly, by a single person of the
Company's outstanding equity securities, including any Preferred Stock of the
Company. Therefore, the Designating Amendment for each series of Preferred Sock
may contain provisions restricting the ownership and transfer of the Preferred
Stock. The applicable Prospectus Supplement will specify any additional
ownership limitation relating to a series of Preferred Stock.
 
REGISTRAR AND TRANSFER AGENT
 
     The Registrar and Transfer Agent for the Preferred Stock will be set forth
in the applicable Prospectus Supplement.
 
                        DESCRIPTION OF DEPOSITARY SHARES
 
GENERAL
 
     The Company may issue receipts ("Depositary Receipts") for Depositary
Shares, each of which will represent a fractional interest of a share of a
particular series of Preferred Stock, as specified in the applicable Prospectus
Supplement. Shares of Preferred Stock of each series represented by Depositary
Shares will be deposited under a separate deposit agreement (each, a "Deposit
Agreement") among the Company, the depositary named therein (a "Preferred Stock
Depositary") and the holders from time to time of the Depositary Receipts.
Subject to the terms of the applicable Deposit Agreement, each owner of a
Depositary Receipt will be entitled, in proportion to the fractional interest of
a share of a particular series of Preferred Stock represented by the Depositary
Shares evidenced by such Depositary Receipt, to all the rights and preferences
of the Preferred Stock represented by such Depositary Shares (including
dividend, voting, conversion, redemption and liquidation rights).
 
                                       22
<PAGE>   64
 
     The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the issuance
and delivery of the Preferred Stock by the Company to a Preferred Stock
Depositary, the Company will cause such Preferred Stock Depositary to issue, on
behalf of the Company, the Depositary Receipts. Copies of the applicable form of
Deposit Agreement and Depositary Receipt may be obtained from the Company upon
request, and the statements made hereunder relating to Deposit Agreements and
the Depositary Receipts to be issued thereunder are summaries of certain
anticipated provisions thereof and do not purport to be complete and are subject
to, and qualified in their entirety by reference to, all of the provisions of
the applicable Deposit Agreement and related Depositary Receipts.
 
DIVIDENDS AND OTHER DISTRIBUTIONS
 
     A Preferred Stock Depositary will be required to distribute all cash
dividends or other cash distributions received in respect of the applicable
Preferred Stock to the record holders of Depositary Receipts evidencing the
related Depositary Shares in proportion to the number of such Depositary
Receipts owned by such holders, subject to certain obligations of holders to
file proofs, certificates and other information and to pay certain charges and
expenses to such Preferred Stock Depositary.
 
     In the event of a distribution other than in cash, a Preferred Stock
Depositary will be required to distribute property received by it to the record
holders of Depositary Receipts entitled thereto, subject to certain obligations
of holders to file proofs, certificates and other information and to pay certain
charges and expenses to such Preferred Stock Depositary, unless such Preferred
Stock Depositary determines that it is not feasible to make such distribution,
in which case such Preferred Stock Depositary may, with the approval of the
Company, sell such property and distribute the net proceeds from such sale to
such holders.
 
     No distribution will be made in respect of any Depositary Share to the
extent that it represents any Preferred Stock which has been converted or
exchanged.
 
WITHDRAWAL OF STOCK
 
     Upon surrender of the Depositary Receipts at the corporate trust office of
the applicable Preferred Stock Depositary (unless the related Depositary Shares
have previously been called for redemption or converted), the holders thereof
will be entitled to delivery at such office, to or upon each such holder's
order, of the number of whole or fractional shares of the applicable Preferred
Stock and any money or other property represented by the Depositary Shares
evidenced by such Depositary Receipts. Holders of Depositary Receipts will be
entitled to receive whole or fractional shares of the related Preferred Stock on
the basis of the proportion of Preferred Stock represented by each Depositary
Share as specified in the applicable Prospectus Supplement, but holders of such
shares of Preferred Stock will not thereafter be entitled to receive Depositary
Shares therefor. If the Depositary Receipts delivered by the holder evidence a
number of Depositary Shares in excess of the number of Depositary Shares
representing the number of shares of Preferred Stock to be withdrawn, the
applicable Preferred Stock Depositary will be required to deliver to such holder
at the same time a new Depositary Receipt evidencing such excess number of
Depositary Shares.
 
REDEMPTION OF DEPOSITARY SHARES
 
     Whenever the Company redeems shares of Preferred Stock held by a Preferred
Stock Depositary, such Preferred Stock Depositary will be required to redeem as
of the same redemption date the number of Depositary Shares representing shares
of the Preferred Stock so redeemed, provided the Company shall have paid in full
to such Preferred Stock Depositary the redemption price of the Preferred Stock
to be redeemed plus an amount equal to any accrued and unpaid dividends thereon
to the date fixed for redemption. The redemption price per Depositary Share will
be equal to the redemption price and any other amounts per share payable with
respect to the Preferred Stock. If fewer than all the Depositary Shares are to
be redeemed, the Depositary Shares to be redeemed will be selected pro rata (as
nearly as may be practicable without creating fractional Depositary Shares) or
by any other equitable method determined by the Company that preserves the REIT
status of the Company.
 
                                       23
<PAGE>   65
 
     From and after the date fixed for redemption, all dividends in respect of
the shares of Preferred Stock so called for redemption will cease to accrue, the
Depositary Shares so called for redemption will no longer be deemed to be
outstanding and all rights of the holders of the Depositary Receipts evidencing
the Depositary Shares so called for redemption will cease, except the right to
receive any moneys payable upon such redemption and any money or other property
to which the holders of such Depositary Receipts were entitled upon such
redemption upon surrender thereof to the applicable Preferred Stock Depositary.
 
VOTING OF THE PREFERRED STOCK
 
     Upon receipt of notice of any meeting at which the holders of the
applicable Preferred Stock are entitled to vote, a Preferred Stock Depositary
will be required to mail the information contained in such notice of meeting to
the record holders of the Depositary Receipts evidencing the Depositary Shares
which represent such Preferred Stock. Each record holder of Depositary Receipts
evidencing Depositary Shares on the record date (which will be the same date as
the record date for the Preferred Stock) will be entitled to instruct such
Preferred Stock Depositary as to the exercise of the voting rights pertaining to
the amount of Preferred Stock represented by such holder's Depositary Shares.
Such Preferred Stock Depositary will be required to vote the amount of Preferred
Stock represented by such Depositary Shares in accordance with such
instructions, and the Company will agree to take all reasonable action which may
be deemed necessary by such Preferred Stock Depositary in order to enable such
Preferred Stock Depositary to do so. Such Preferred Stock Depositary will be
required to abstain from voting the amount of Preferred Stock represented by
such Depositary Shares to the extent it does not receive specific instructions
from the holders of Depositary Receipts evidencing such Depositary Shares. A
Preferred Stock Depositary will not be responsible for any failure to carry out
any instruction to vote, or for the manner or effect of any such vote made, as
long as any such action or non-action is in good faith and does not result from
negligence or willful misconduct of such Preferred Stock Depositary.
 
LIQUIDATION PREFERENCE
 
     In the event of the liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, the holders of each Depositary Receipt will be
entitled to the fraction of the liquidation preference accorded each share of
Preferred Stock represented by the Depositary Share evidenced by such Depositary
Receipt, as set forth in the applicable Prospectus Supplement.
 
CONVERSION OF PREFERRED STOCK
 
     The Depositary Shares, as such, will not be convertible into Common Stock
or any other securities or property of the Company. Nevertheless, if so
specified in the applicable Prospectus Supplement relating to an offering of
Depositary Shares, the Depositary Receipts may be surrendered by holders thereof
to the applicable Preferred Stock Depositary with written instructions to such
Preferred Stock Depositary to instruct the Company to cause conversion of the
Preferred Stock represented by the Depositary Shares evidenced by such
Depositary Receipts into whole shares of Common Stock, other shares of Preferred
Stock of the Company or other shares of stock, and the Company will agree that
upon receipt of such instructions and any amounts payable in respect thereof, it
will cause the conversion thereof utilizing the same procedures as those
provided for delivery of Preferred Stock to effect such conversion. If the
Depositary Shares evidenced by a Depositary Receipt are to be converted in part
only, a new Depositary Receipt or Receipts will be issued for any Depositary
Shares not to be converted. No fractional shares of Common Stock will be issued
upon conversion, and if such conversion will result in a fractional share being
issued, an amount will be paid in cash by the Company equal to the value of the
fractional interest based upon the closing price of the Common Stock on the last
business day prior to the conversion.
 
AMENDMENT AND TERMINATION OF A DEPOSIT AGREEMENT
 
     Any form of Depositary Receipt evidencing Depositary Shares which will
represent Preferred Stock and any provision of a Deposit Agreement will be
permitted at any time to be amended by agreement between the Company and the
applicable Preferred Stock Depositary. However, any amendment that materially
and adversely alters the rights of the holders of Depositary Receipts or that
would be materially and adversely
 
                                       24
<PAGE>   66
 
inconsistent with the rights granted to the holders of the related Preferred
Stock will not be effective unless such amendment has been approved by the
existing holders of at least two-thirds of the applicable Depositary Shares
evidenced by the applicable Depositary Receipts then outstanding. No amendment
shall impair the right, subject to certain anticipated exceptions in the Deposit
Agreements, of any holders of Depositary Receipts to surrender any Depositary
Receipt with instructions to deliver to the holder the related Preferred Stock
and all money and other property, if any, represented thereby, except in order
to comply with law. Every holder of an outstanding Depositary Receipt at the
time any such amendment becomes effective shall be deemed, by continuing to hold
such Depositary Receipt, to consent and agree to such amendment and to be bound
by the applicable Deposit Agreement as amended thereby.
 
     A Deposit Agreement will be permitted to be terminated by the Company upon
not less than 30 days' prior written notice to the applicable Preferred Stock
Depositary if (i) such termination is necessary to preserve the Company's status
as a REIT or (ii) a majority of each series of Preferred Stock affected by such
termination consents to such termination, whereupon such Preferred Stock
Depositary will be required to deliver or make available to each holder of
Depositary Receipts, upon surrender of the Depositary Receipts held by such
holder, such number of whole or fractional shares of Preferred Stock as are
represented by the Depositary Shares evidenced by such Depositary Receipts
together with any other property held by such Preferred Stock Depositary with
respect to such Depositary Receipts. The Company will agree that if a Deposit
Agreement is terminated to preserve the Company's status as a REIT, then the
Company will use its best efforts to list the Preferred Stock issued upon
surrender of the related Depositary Shares on a national securities exchange. In
addition, a Deposit Agreement will automatically terminate if (i) all
outstanding Depositary Shares thereunder shall have been redeemed, (ii) there
shall have been a final distribution in respect of the related Preferred Stock
in connection with any liquidation, dissolution or winding up of the Company and
such distribution shall have been distributed to the holders of Depositary
Receipts evidencing the Depositary Shares representing such Preferred Stock or
(iii) each share of the related Preferred Stock shall have been converted into
stock of the Company not so represented by Depositary Shares.
 
CHARGES OF A PREFERRED STOCK DEPOSITARY
 
     The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of a Deposit Agreement. In addition, the
Company will pay the fees and expenses of a Preferred Stock Depositary in
connection with the performance of its duties under a Deposit Agreement.
However, holders of Depositary Receipts will pay the fees and expenses of a
Preferred Stock Depositary for any duties requested by such holders to be
performed which are outside of those expressly provided for in the applicable
Deposit Agreement.
 
RESIGNATION AND REMOVAL OF DEPOSITARY
 
     A Preferred Stock Depositary will be permitted to resign at any time by
delivering to the Company notice of its election to do so, and the Company will
be permitted at any time to remove a Preferred Stock Depositary, any such
resignation or removal to take effect upon the appointment of a successor
Preferred Stock Depositary. A successor Preferred Stock Depositary will be
required to be appointed within 60 days after delivery of the notice of
resignation or removal and will be required to be a bank or trust company having
its principal office in the United States and having a combined capital and
surplus of at least $50,000,000.
 
MISCELLANEOUS
 
     A Preferred Stock Depositary will be required to forward to holders of
Depositary Receipts any reports and communications from the Company which are
received by such Preferred Stock Depositary with respect to the related
Preferred Stock.
 
     Neither a Preferred Stock Depositary nor the Company will be liable if it
is prevented from or delayed in, by law or any circumstances beyond its control,
performing its obligations under a Deposit Agreement. The obligations of the
Company and a Preferred Stock Depositary under a Deposit Agreement will be
limited to performing their duties thereunder in good faith and without
negligence (in the case of any action or inaction
 
                                       25
<PAGE>   67
 
in the voting of Preferred Stock represented by the applicable Depositary
Shares), gross negligence or willful misconduct, and neither the Company nor any
applicable Preferred Stock Depositary will be obligated to prosecute or defend
any legal proceeding in respect of any Depositary Receipts, Depositary Shares or
shares of Preferred Stock represented thereby unless satisfactory indemnity is
furnished. The Company and any Preferred Stock Depositary will be permitted to
rely on written advice of counsel or accountants, or information provided by
persons presenting shares of Preferred Stock represented thereby for deposit,
holders of Depositary Receipts or other persons believed in good faith to be
competent to give such information, and on documents believed in good faith to
be genuine and signed by a proper party.
 
     In the event a Preferred Stock Depositary shall receive conflicting claims,
requests or instructions from any holders of Depositary Receipts, on the one
hand, and the Company on the other hand, such Preferred Stock Depositary shall
be entitled to act on such claims, requests or instructions received from the
Company.
 
                       FEDERAL INCOME TAX CONSIDERATIONS
 
INTRODUCTORY NOTES
 
     This discussion summarizes the material Federal income tax considerations
that may be relevant to a prospective holder of the securities. This discussion
is based on current law. The discussion is not exhaustive of all possible tax
considerations and does not give a detailed discussion of any state, local, or
foreign tax considerations. It also does not discuss all of the aspects of
Federal income taxation that may be relevant to a prospective holder of
securities in light of his particular circumstances or to certain types of
holders (including insurance companies, tax-exempt entities, financial
institutions or broker-dealers, foreign corporations and persons who are not
citizens or residents of the United States) who are subject to special treatment
under the Federal income tax laws. As used in this section, the term "Company"
refers solely to Post Properties, Inc.
 
     EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT WITH HIS OWN TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OF THE PURCHASE, OWNERSHIP AND
SALE OF SECURITIES IN AN ENTITY ELECTING TO BE TAXED AS A REAL ESTATE INVESTMENT
TRUST, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER TAX CONSEQUENCES
OF SUCH PURCHASE, OWNERSHIP, SALE, AND ELECTION AND OF POTENTIAL CHANGES IN
APPLICABLE TAX LAWS.
 
TAXATION OF THE COMPANY
 
     General.  The Company had made an election to be taxed as a REIT under
Sections 856 through 860 of the Code effective for its short taxable year ending
on December 31, 1993. The Company's qualification and taxation as a REIT depends
upon the Company's ability to meet on a continuing basis, through actual annual
operating results, distribution levels and diversity of stock ownership, the
various qualification tests and organizational requirements imposed under the
Code, as discussed below. The Company believes that it is organized and has
operated in such a manner as to qualify under the Code for taxation as a REIT
commencing with its 1993 taxable year, and the Company intends to continue to
operate in such a manner. No assurance, however, can be given that the Company
will operate in a manner so as to qualify or remain qualified as a REIT. See
"Failure to Qualify" below.
 
     In the opinion of King & Spalding, the Company met the requirements for
qualification and taxation as a REIT for its taxable years ended December 31,
1993, 1994 and 1995, and its current and proposed method of operation should
enable it to continue to meet the requirements for qualification and taxation as
a REIT. This opinion is based on various assumptions relating to the
organization and operation of the Operating Partnership and the partnerships in
which the Operating Partnership owns or has owned an interest (referred to
herein as "Subsidiary Partnerships") and is conditioned upon certain
representations made by the Company as to certain relevant factual matters
relating to the organization and expected manner of operation of the Company,
the Operating Partnership, and the Subsidiary Partnerships. King & Spalding is
not aware of any facts or circumstances that are inconsistent with these
assumptions and representations. Moreover, such qualification and taxation as a
REIT will depend upon the Company's ability to meet on a continuing basis,
 
                                       26
<PAGE>   68
 
through actual annual operating results, distribution levels and diversity of
stock ownership, the various qualification tests imposed under the Code
discussed below. King & Spalding will not review compliance with these tests on
a continuing basis. No assurance can be given that the Company will satisfy such
tests on a continuing basis. See "Failure to Qualify" below.
 
     The following is a general summary of the Code provisions that govern the
Federal income tax treatment of a REIT and its shareholders. These provisions of
the Code are highly technical and complex. This summary is qualified in its
entirety by the applicable Code provisions, the regulations promulgated
thereunder ("Treasury Regulations"), and administrative and judicial
interpretations thereof.
 
     If the Company qualifies for taxation as a REIT, it generally will not be
subject to Federal corporate income taxes on net income that it currently
distributes to shareholders. This treatment substantially eliminates the "double
taxation" (at the corporate and shareholder levels) that generally results from
investment in a corporation. Notwithstanding its REIT election, however, the
Company will be subject to Federal income tax in the following circumstances.
First, the Company will be taxed at regular corporate rates on any undistributed
taxable income, including undistributed net capital gains. Second, under certain
circumstances, the Company may be subject to the "alternative minimum tax" on
its items of tax preference. Third, if the Company has (i) net income from the
sale or other disposition of "foreclosure property" (which is, in general,
property acquired by foreclosure or otherwise on default of a loan secured by
the property) which is held primarily for sale to customers in the ordinary
course of business or (ii) other non-qualifying income from foreclosure
property, it will be subject to tax at the highest corporate rate on such
income. Fourth, if the Company has net income from prohibited transactions
(which are, in general, certain sales or other dispositions of property (other
than foreclosure property) held primarily for sale to customers in the ordinary
course of business), such income will be subject to a 100% tax. Fifth, if the
Company should fail to satisfy the 75% gross income test or the 95% gross income
test (as discussed below), and has nonetheless maintained its qualification as a
REIT because certain other requirements have been met, it will be subject to a
100% tax on the net income attributable to the greater of the amount by which
the Company fails the 75% or 95% test, multiplied by a fraction intended to
reflect the Company's profitability. Sixth, if the Company should fail to
distribute during each calendar year at least the sum of (i) 85% of its REIT
ordinary income for such year, (ii) 95% of its REIT capital gain net income for
such year, and (iii) any undistributed taxable income from prior years, the
Company would be subject to a 4% excise tax on the excess of such required
distribution over the amounts actually distributed. Seventh, if the Company
acquires any asset from a C corporation (i.e., a corporation generally subject
to full corporate level tax) in a transaction in which the basis of the asset in
the Company's hands is determined by reference to the basis of the asset (or any
other property) in the hands of the C corporation, and the Company recognizes
gain on the disposition of such asset during the 10-year period beginning on the
date on which such asset was acquired by the Company, then, to the extent of
such property's "built-in" gain (the excess of the fair market value of such
property at the time of acquisition by the Company over the adjusted basis of
such property at such time), such gain will be subject to tax at the highest
regular corporate rate applicable (as provided in IRS regulations that have not
yet been promulgated).
 
     Requirements for Qualification.  The Code defines a REIT as a corporation,
trust or association (1) which is managed by one or more trustees or directors;
(2) the beneficial ownership of which is evidenced by transferable shares or by
transferable certificates of beneficial interest; (3) which would be taxable as
a domestic corporation but for Sections 856 through 859 of the Code; (4) which
is neither a financial institution nor an insurance company subject to certain
provisions of the Code; (5) the beneficial ownership of which is held by 100 or
more persons; (6) during the last half of each taxable year not more than 50% in
value of the outstanding stock of which is owned, directly or indirectly, by
five or fewer individuals (as defined in the Code to include certain entities);
and (7) which meets certain other tests, described below, regarding the nature
of its income and assets. The Code provides that conditions (1) through (4),
inclusive, must be met during the entire taxable year and that condition (5)
must be met during at least 335 days of a taxable year of 12 months, or during a
proportionate part of a taxable year of less than 12 months. Conditions (5) and
(6) will not apply until after the first taxable year for which an election is
made to be taxed as a REIT. The Company has issued sufficient shares of Common
Stock with sufficient diversity of ownership to allow the Company to satisfy
requirements (5) and (6). In addition, the Company's Articles of Incorporation
contain restrictions regarding
 
                                       27
<PAGE>   69
 
the transfer of its shares that are intended to assist the Company in continuing
to satisfy the share ownership requirements described in (5) and (6) above. See
"Capital Stock of the Company -- Restrictions on Transfer."
 
     In addition, a corporation may not elect to become a REIT unless its
taxable year is the calendar year. The Company's taxable year is the calendar
year.
 
     In the case of a REIT which is a partner in a partnership, Treasury
Regulations provide that the REIT will be deemed to own its proportionate share
of the assets of the partnership and will be deemed to be entitled to the income
of the partnership attributable to such share. In addition, the character of the
assets and gross income of the partnership will retain the same character in the
hands of the REIT for purposes of Section 856 of the Code, including satisfying
the gross income tests and asset tests (as discussed below). Thus, the Company's
proportionate share of the assets, liabilities and items of income of the
Operating Partnership and any subsidiary partnerships are treated as assets,
liabilities and items of the Company for purposes of applying the requirements
described herein.
 
     Income Tests.  In order to maintain qualification as a REIT, three gross
income requirements must be satisfied annually. First, at least 75% of the
REIT's gross income (excluding gross income from prohibited transactions) for
each taxable year must be derived directly or indirectly from investments
relating to real property or mortgages on real property (including "rents from
real property" and, in certain circumstances, interest) or from certain types of
temporary investments. Second, at least 95% of the REIT's gross income
(excluding gross income from prohibited transactions) for each taxable year must
be derived from such real property investments described above, and from
dividends, interest and gain from the sale or disposition of stock or
securities, or from any combination of the foregoing. Third, short-term gain
from the sale or other disposition of stock or securities, gain from prohibited
transactions and gain on the sale or other disposition of real property held for
less than four years (apart from involuntary conversions and sales of
foreclosure property) must represent less than 30% of the REIT's gross income
(including gross income from prohibited transactions) for each taxable year. For
purposes of applying the 30% gross income test, the holding period of
Communities held by Operating Partnership on the date of the Initial Offering
will be deemed to have commenced on such date.
 
     Rents received by the Company will qualify as "rents from real property" in
satisfying the above gross income tests only if several conditions are met.
First, the amount of rent must not be based in whole or in part on the income or
profits of any person. However, an amount received or accrued generally will not
be excluded from "rents from real property" solely by reason of being based on a
fixed percentage or percentages of receipts or sales. Second, rents received
from a resident will not qualify as "rents from real property" if the Company,
or an owner of 10% or more of the Company, directly or constructively owns 10%
or more of such resident (a "Related Party Tenant"). Third, if rent attributable
to personal property that is leased in connection with a lease of real property
is greater than 15% of the total rent received under the lease, then the portion
of rent attributable to such personal property will not qualify as "rents from
real property." The Company does not charge, and does not anticipate charging,
rent for any portion of any Community that is based in whole or in part on the
income or profits of any person, and the Company does not receive, and does not
anticipate receiving, any rents from Related Party Tenants. Finally, for rents
received to qualify as "rents from real property," the Company generally must
not operate or manage the property or furnish or render services to residents,
other than through an "independent contractor" from whom the Company derives no
revenue. The "independent contractor" requirement, however, does not apply to
the extent the services provided by the Company are "usually or customarily
rendered" in connection with the rental of space for occupancy only and are not
otherwise considered "rendered to the occupant." The Operating Partnership
provides certain services with respect to its Communities, and the Company has
received a ruling from the IRS that the provision of such services will not
cause the rents received with respect to the Communities to fail to qualify as
"rents from real property." Based on the IRS ruling and the Operating
Partnership's knowledge of the apartment markets in the geographic regions in
which it operates, the Operating Partnership believes that all services that are
provided to the tenants of the Communities will be considered "usually or
customarily" rendered in connection with the rental of apartment communities
comparable to the Communities. Further, any noncustomary services will be
provided only through qualifying independent contractors.
 
                                       28
<PAGE>   70
 
     The Operating Partnership receives fees in consideration of the performance
of management, landscaping and administrative services with respect to
properties that are not wholly owned, directly or indirectly, by the Operating
Partnership. A portion of such fees (corresponding to that portion of any such
property owned by a third party) generally will not qualify under the 75% or 95%
gross income tests. The Company will also receive certain other types of
non-qualifying income, including its allocable share of any dividends paid by
Post Services to the Operating Partnership (which qualify under the 95% gross
income test but not under the 75% gross income test). The Company believes,
however, that the aggregate amount of such fees and other non-qualifying income
in any taxable year will not cause the Company to exceed the limits on
non-qualifying income under the 75% and 95% gross income tests.
 
     If the Company fails to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, it may nevertheless qualify as a REIT for such year
if it is entitled to relief under certain provisions of the Code. These relief
provisions generally will be available if the Company's failure to meet such
tests was due to reasonable cause and not due to willful neglect, the Company
attaches a schedule of the sources of its income to its return, and any income
information on the schedules was not due to fraud with intent to evade tax. It
is not possible, however, to state whether in all circumstances the Company
would be entitled to the benefit of these relief provisions. As discussed above
in "General," even if these relief provisions were to apply, a tax would be
imposed with respect to the excess net income.
 
     Asset Tests.  At the close of each quarter of its taxable year, the Company
must also satisfy three tests relating to the nature of its assets. First, at
least 75% of the value of the Company's total assets must be represented by real
estate assets (including (i) its allocable share of real estate assets held by
the Operating Partnership and the Subsidiary Partnerships and (ii) stock or debt
instruments held for not more than one year purchased with the proceeds of a
stock offering or long-term (at least five years) debt offering of the Company),
cash, cash items and government securities. Second, not more than 25% of the
Company's total assets may be represented by securities other than those in the
75% asset class. Third, of the investments included in the 25% asset class, the
value of any one issuer's securities owned by the Company may not exceed 5% of
the value of the Company's total assets, and the Company may not own more than
10% of any one issuer's outstanding voting securities. The 5% test must
generally be met for any quarter in which a REIT acquires securities of an
issuer. Thus, this requirement must be satisfied not only on the date that the
Company initially acquired an interest in securities in Post Services, but also
each time the Company increases its ownership interest in securities of Post
Services (e.g., as limited partners exercise their redemption rights).
 
     As described above, the Operating Partnership owns 100% of the nonvoting
stock and 1% of the voting stock of Post Services. In addition, the Operating
Partnership also holds a note of Post Services. By virtue of its ownership of
Units, the Company is deemed to own its pro rata share of assets of the
Operating Partnership and any subsidiary partnerships, including the securities
of Post Services. The Operating Partnership does not own more than 10% of the
voting securities of Post Services, and therefore the Company does not own more
than 10% of the voting securities of Post Services. In addition, based upon its
analysis of the estimated value of the debt and equity securities of Post
Services owned by the Operating Partnership relative to the estimated value of
the other assets owned by the Operating Partnership, the Company believes that
its pro rata share of the debt and equity securities of Post Services held by
the Operating Partnership at all relevant times has been and is less than 5% of
the total value of the Company's assets, and King & Spalding in rendering its
opinion as to the Company's qualification as a REIT is relying on the Company's
representation with respect to the value of Post Services and its wholly owned
subsidiaries. However, no independent appraisals have been obtained to support
this conclusion, and King & Spalding, in rendering its opinion as to the
Company's qualification as a REIT, is relying on the Company's representation
with respect to the value of Post Services and its wholly-owned subsidiaries.
After reasonable inquiry, King & Spalding is not aware of any facts inconsistent
with such representation. Although the Company plans to take steps to ensure
that it satisfies the 5% value test for any quarter with respect to which any
such acquisition is to occur, there can be no assurance that such steps will
always be successful or will not require a reduction in the Operating
Partnership's overall interest in Post Services.
 
                                       29
<PAGE>   71
 
     Annual Distribution Requirements.  The Company, in order to qualify as a
REIT, is required to distribute dividends (other than capital gain dividends) to
its shareholders in an amount at least equal to (A) the sum of (i) 95% of the
Company's "REIT taxable income" (computed without regard to the dividends paid
deduction and the REIT's net capital gain) and (ii) 95% of the net income (after
tax), if any, from foreclosure property, minus (B) the sum of certain items of
noncash income. Such distributions must be paid in the taxable year to which
they relate, or in the following taxable year if declared before the Company
timely files its tax return for such year and if paid on or before the first
regular dividend payment after such declaration. To the extent that the Company
does not distribute all of its net capital gain or distributes at least 95%, but
less than 100%, of its "REIT taxable income," as adjusted, it will be subject to
tax on the undistributed amount at regular capital gains and ordinary corporate
tax rates. Furthermore, if the Company should fail to distribute during each
calendar year at least the sum of (i) 85% of its REIT ordinary income for such
year, (ii) 95% of its REIT capital gain income for such year, and (iii) any
undistributed taxable income from prior periods, the Company will be subject to
a 4% excise tax on the excess of such required distribution over the amounts
actually distributed.
 
     The Company has made and intends to continue to make timely distributions
sufficient to satisfy the annual distribution requirements. In this regard, the
Partnership Agreement authorizes the Company, as general partner, to take such
steps as may be necessary to cause the Operating Partnership to distribute to
its partners an amount sufficient to permit the Company to meet these
distribution requirements. It is possible, however, that the Company, from time
to time, may not have sufficient cash or other liquid assets to meet the
distribution requirements due to timing differences between the actual receipt
of income and actual payment of deductible expenses and the inclusion of such
income and deduction of such expenses in arriving at taxable income of the
Company, or if the amount of nondeductible expenses such as principal
amortization or capital expenditures exceed the amount of noncash deductions. In
the event that such timing differences occur, in order to meet the distribution
requirements, the Company may cause the Operating Partnership to arrange for
short-term, or possibly long-term, borrowing to permit the payment of required
dividends. If the amount of nondeductible expenses exceeds noncash deductions,
the Operating Partnership may refinance its indebtedness to reduce principal
payments and borrow funds for capital expenditures.
 
     Under certain circumstances, the Company may be able to rectify a failure
to meet the distribution requirement for a year by paying "deficiency dividends"
to shareholders in a later year that may be included in the Company's deduction
for dividends paid for the earlier year. Thus, the Company may be able to avoid
being taxed on amounts distributed as deficiency dividends; however, the Company
will be required to pay interest to the IRS based upon the amount of any
deduction taken for deficiency dividends.
 
     Failure to Qualify.  If the Company fails to qualify for taxation as a REIT
in any taxable year and no relief provisions apply, the Company will be subject
to tax (including any applicable alternative minimum tax) on its taxable income
at regular corporate rates. Distributions to shareholders in any year in which
the Company fails to qualify will not be deductible by the Company, nor will
they be required to be made. In such event, to the extent of current and
accumulated earnings and profits, all distributions to shareholders will be
taxable as ordinary income, and, subject to certain limitations in the Code,
corporate distributees may be eligible for the dividends received deduction.
Unless entitled to relief under specific statutory provisions, the Company also
will be disqualified from taxation as a REIT for the four taxable years
following the year during which qualification was lost. It is not possible to
state whether in all circumstances the Company would be entitled to such
statutory relief.
 
TAXATION OF SHAREHOLDERS
 
     Taxation of Taxable Domestic Shareholders.  As long as the Company
qualifies as a REIT, distributions made to the Company's taxable domestic
shareholders out of current or accumulated earnings and profits (and not
designated as capital gain dividends) will be taken into account by them as
ordinary income, and corporate shareholders will not be eligible for the
dividends received deduction as to such amounts. Distributions that are
designated as capital gain dividends will be taxed as long-term capital gains
(to the extent they do not exceed the Company's actual net capital gain for the
taxable year) without regard to the period for which the shareholder has held
his shares. However, corporate shareholders may be required to treat up to 20%
of certain
 
                                       30
<PAGE>   72
 
capital gain dividends as ordinary income. Distributions in excess of current
and accumulated earnings and profits will not be taxable to a shareholder to the
extent that they do not exceed the adjusted basis of the shareholder's shares of
Common Stock, but rather will reduce the adjusted basis of such shares. To the
extent that such distributions exceed the adjusted basis of a shareholder's
shares of Common Stock, they will be included in income as long-term capital
gain (or short-term capital gain if the shares have been held for one year or
less), assuming the shares are a capital asset in the hands of the shareholder.
In addition, any dividend declared by the Company in October, November or
December of any year payable to a shareholder of record on a specific date in
any such month shall be treated as both paid by the Company and received by the
shareholder on December 31 of such year, provided that the dividend is actually
paid by the Company during January of the following calendar year. Shareholders
may not include in their individual income tax returns any net operating losses
or capital losses of the Company.
 
     In general, any loss upon a sale or exchange of shares of Common Stock by a
shareholder who has held such shares for six months or less (after applying
certain holding period rules) will be treated as a long-term capital loss to the
extent of distributions from the Company required to be treated by such
shareholder as long-term capital gain.
 
     Backup Withholding.  The Company will report to its domestic shareholders
and the IRS the amount of dividends paid during each calendar year, and the
amount of tax withheld, if any, with respect thereto. Under the backup
withholding rules, a shareholder may be subject to backup withholding at the
rate of 31% with respect to dividends paid unless such holder (a) is a
corporation or comes within certain other exempt categories and, when required,
demonstrates this fact, or (b) provides a taxpayer identification number,
certifies as to no loss of exemption from backup withholding, and otherwise
complies with applicable requirements of the backup withholding rules. A
shareholder who does not provide the Company with its correct taxpayer
identification number may also be subject to penalties imposed by the IRS. Any
amount paid as backup withholding will be creditable against the shareholder's
income tax liability. In addition, the Company may be required to withhold a
portion of capital gain distributions made to any shareholders who fail to
certify their non-foreign status to the Company. See "Taxation of Foreign
Shareholders" below.
 
     Taxation of Tax-Exempt Shareholders.  The IRS has ruled that amounts
distributed by a REIT to a tax-exempt employees' pension trust do not constitute
"unrelated business taxable income" ("UBTI"). Based upon this ruling and subject
to the discussion below regarding qualified pension trust investors,
distributions by the Company to a shareholder that is a tax-exempt entity should
not constitute UBTI, provided that the tax-exempt entity has not financed the
acquisition of its shares with "acquisition indebtedness" within the meaning of
the Code and the shares of Common Stock are not otherwise used in an unrelated
trade or business of the tax-exempt entity. Revenue rulings, however, are
interpretative in nature and subject to revocation or modification by the IRS.
 
     A "qualified trust" (defined to be any trust described in section 401(a) of
the Code and exempt from tax under section 501(a) of the Code) that holds more
than 10% of the value of the shares of a REIT may be required, under certain
circumstances, to treat a portion of distributions from the REIT as UBTI. This
requirement will apply for a taxable year only if (i) the REIT satisfies the
requirement that not more than 50% of the value of its shares be held by five or
fewer individuals (the "five or fewer requirement") by relying on a special
"look-through" rule under which shares held by qualified trust shareholders are
treated as held by the beneficiaries of such trusts in proportion to their
actuarial interests therein, and (ii) the REIT is "predominantly held" by
qualified trusts. A REIT is "predominantly held" if either (i) a single
qualified trust holds more than 25% of the value of the REIT shares or (ii) one
or more qualified trusts, each owning more than 10% of the value of the REIT
shares, hold in the aggregate more than 50% of the value of the REIT shares. If
the foregoing requirements are met, the percentage of any REIT dividend treated
as UBTI to a qualified trust that owns more than 10% of the value of the REIT
shares is equal to the ratio of (a) the UBTI earned by the REIT (treating the
REIT as if it were a qualified trust and therefore subject to tax on its UBTI)
to (b) the total gross income (less certain associated expenses) of the REIT. A
de minimis exception applies where the ratio set forth in the preceding sentence
is less than 5% for any year.
 
                                       31
<PAGE>   73
 
     The provisions requiring qualified trusts to treat a portion of REIT
distributions as UBTI will not apply if the REIT is able to satisfy the five or
fewer requirement without relying upon the "look-through" rule. The restrictions
on ownership of Common Shares in the Articles should prevent application of the
foregoing provisions to qualified trusts purchasing Common Stock pursuant to the
Offering, absent a waiver of the restrictions by the Board of Directors.
 
     Taxation of Foreign Shareholders.  The rules governing U.S. Federal income
taxation of nonresident alien individuals, foreign corporations, foreign
partnerships and other foreign shareholders (collectively, "Non-U.S.
Shareholders") are complex, and no attempt will be made herein to provide more
than a limited summary of such rules. Prospective Non-U.S. Shareholders should
consult with their own tax advisors to determine the impact of U.S. Federal,
state and local income tax laws with regard to an investment in Common Stock,
including any reporting requirements.
 
     Distributions that are not attributable to gain from sales or exchanges by
the Company of U.S. real property interests and not designated by the Company as
capital gain dividends will be treated as dividends of ordinary income to the
extent that they are made out of current or accumulated earnings and profits of
the Company. Such distributions, ordinarily, will be subject to a withholding
tax equal to 30% of the gross amount of the distribution unless an applicable
tax treaty reduces that tax. However, if income from the investment in the
shares of Common Stock is treated as effectively connected with the Non-U.S.
Shareholder's conduct of a U.S. trade or business, the Non-U.S. Shareholder
generally will be subject to a tax at graduated rates, in the same manner as
U.S. shareholders are taxed with respect to such dividends (and may also be
subject to the 30% branch profits tax if the shareholder is a foreign
corporation). The Company expects to withhold U.S. income tax at the rate of 30%
on the gross amount of any dividends paid to a Non-U.S. Shareholder that are not
designated as capital gain dividends unless (i) a lower treaty rate applies and
the required form evidencing eligibility for that reduced rate is filed with the
Company or (ii) the Non-U.S. Shareholder files an IRS Form 4224 with the Company
claiming that the distribution is "effectively connected" income. Distributions
in excess of current and accumulated earnings and profits of the Company will
not be taxable to a shareholder to the extent that they do not exceed the
adjusted basis of the shareholder's shares of Common Stock, but rather will
reduce the adjusted basis of such shares. To the extent that such distributions
exceed the adjusted basis of a Non-U.S. Shareholder's shares, they will give
rise to tax liability if the Non-U.S. Shareholder would otherwise be subject to
tax on any gain from the sale or disposition of his shares of Common Stock as
described below. If it cannot be determined at the time a distribution is made
whether or not such distribution will be in excess of current and accumulated
earnings and profits, the distribution will be subject to withholding at the
rate applicable to dividends. However, the Non-U.S. Shareholder may seek a
refund of such amounts from the IRS if it is subsequently determined that such
distribution was, in fact, in excess of current and accumulated earnings and
profits of the Company.
 
     For any year in which the Company qualifies as a REIT, distributions that
are attributable to gain from sales or exchanges by the Company of U.S. real
property interests will be taxed to a Non-U.S. Shareholder under the provisions
of the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA"). Under
FIRPTA, these distributions are taxed to a Non-U.S. Shareholder as if such gain
were effectively connected with a U.S. business. Thus, Non-U.S. Shareholders
will be taxed on such distributions at the normal capital gain rates applicable
to U.S. shareholders (subject to applicable alternative minimum tax and a
special alternative minimum tax in the case of nonresident alien individuals).
Also, distributions subject to FIRPTA may be subject to a 30% branch profits tax
in the hands of a corporate Non-U.S. Shareholder not entitled to treaty relief
or exemption. The Company is required by applicable Treasury Regulations to
withhold 35% of any distribution that could be designated by the Company as a
capital gain dividend. This amount is creditable against the Non-U.S.
Shareholder's FIRPTA tax liability.
 
     Gain recognized by a Non-U.S. Shareholder upon a sale of Common Stock
generally will not be taxed under FIRPTA if the Company is a "domestically
controlled REIT," defined generally as a REIT in which at all times during a
specified testing period less than 50% in value of the stock was held directly
or indirectly by foreign persons. The Company believes that it currently
qualifies as a "domestically controlled REIT," and that the sale of Common Stock
will not therefore be subject to tax under FIRPTA. Because the Company is
publicly traded, however, no assurance can be given that the Company will
continue to be a domestically
 
                                       32
<PAGE>   74
 
controlled REIT. If the Company were not a domestically controlled REIT, whether
a Non-U.S. Shareholder's gain would be taxed under FIRPTA would depend on
whether the Common Stock were regularly traded on an established securities
market and on the size of the selling shareholder's interest in the Company. In
addition, gain not subject to FIRPTA will be taxable to a Non-U.S. Shareholder
if (i) the investment in Common Stock is treated as effectively connected with
the Non-U.S. Shareholder's U.S. trade or business, in which case the Non-U.S.
Shareholder will be subject to the same treatment as U.S. shareholders with
respect to such gain, or (ii) the Non-U.S. Shareholder is a nonresident alien
individual who was present in the United States for 183 days or more during the
taxable year and has a "tax home" in the United States, in which case the
nonresident alien individual will be subject to a 30% tax on the individual's
capital gains. If the gain on the sale of Common Stock were to be subject to tax
under FIRPTA, the Non-U.S. Shareholder would be subject to the same treatment as
U.S. shareholders with respect to such gain (subject to applicable alternative
minimum tax and a special alternative minimum tax in the case of nonresident
alien individuals).
 
OTHER TAX CONSIDERATIONS
 
     Tax Status of Operating Partnership and Other Partnerships' Effect on REIT
Qualification.  All of the Company's investments have been made through the
Operating Partnership, which in turn holds an interest in a subsidiary
partnership (the "Subsidiary Partnership").
 
TAX STATUS OF THE OPERATING PARTNERSHIP
 
     In the opinion of King & Spalding, which is based on certain
representations of the Operating Partnership and Subsidiary Partnership, the
Operating Partnership and the Subsidiary Partnership each qualify as a
partnership for Federal income tax purposes and not as an association taxable as
a corporation or as a publicly traded partnership.
 
     A publicly traded partnership is a partnership whose interests are traded
on an established securities market or are readily tradable on a secondary
market or the substantial equivalent of a secondary market. The Treasury
Department recently issued regulations effective for taxable years beginning
after December 31, 1995 (the "PTP Regulations") that provide limited safe
harbors, which, if satisfied, will prevent a partnership's interests from being
treated as readily tradable on a secondary market or the substantial equivalent
thereof. The "private placement" safe harbor applies if (i) all interests in the
partnership were issued in a transaction (or transactions) that was not required
to be registered under the Securities Act of 1933, as amended, and (ii) the
partnership does not have more than 100 partners at any time during the
partnership's taxable year. In determining the number of partners in a
partnership, a person owning an interest in a flow-through entity (i.e., a
partnership, grantor trust, or S corporation) that owns an interest in the
partnership is treated as a partner in such partnership only if (i)
substantially all of the value of the person's interest in the flowthrough
entity is attributable to the flow-through entity's interest (direct or
indirect) in the partnership and (ii) a principal purpose of the use of the
tiered arrangement is to permit the partnership to satisfy the 100-partner
limitation. The Operating Partnership does not currently meet the private
placement safe harbor of the PTP Regulations because it has more than 100
partners.
 
     Under a special grandfather rule, an existing partnership may continue to
rely on safe harbors contained in IRS Notice 88-75 for a 10-year period. The
Company believes that the Operating Partnership has satisfied, and will continue
to satisfy, the private placement safe harbor under such Notice because, in
part, it has fewer than 500 direct and indirect partners. Upon expiration of the
grandfather period, if the Operating Partnership does not at that time satisfy
the private placement safe harbor of the PTP Regulations, it is possible that
the Operating Partnership could be classified as a publicly traded partnership.
In that event, the Operating Partnership should satisfy a special "passive
income" exception provided in Section 7704(c) of the Code and therefore should
not be subject to federal income tax at the corporate level. However, if the
Operating Partnership were classified as a publicly traded partnership, the
partners of the Operating Partnership would nevertheless be subject to special
passive loss rules in Section 469(k) of the Code.
 
     If the Operating Partnership were treated as an association taxable as a
corporation, the Company would fail the 75% asset test. Further, if the
Subsidiary Partnership were treated as a taxable corporation, then the
 
                                       33
<PAGE>   75
 
Company would cease to qualify as a REIT if the Company's ownership interest in
such partnership exceeded 10% of the partnership's voting interests or the value
of such interest exceeded 5% of the value of the Company's assets. Furthermore,
in such a situation, distributions from the Subsidiary Partnership to the
Company would be treated as dividends, which are not taken into account in
satisfying the 75% gross income test described above and which could therefore
make it more difficult for the Company to meet such test, and the Company would
not be able to deduct its share of losses generated by any of the Subsidiary
Partnerships in computing its taxable income. See "Taxation of the Company
(Failure to Qualify)" above for a discussion of the effect of the Company's
failure to meet such tests for a taxable year.
 
     Taxation of Post Services and Operating Subsidiaries.  Post Services, Inc.
and its subsidiaries file a corporate consolidated return for Federal income tax
purposes. The consolidated taxable income of these companies, if any, is subject
to tax at regular corporate rates. To the extent such entities are required to
pay Federal, state and local income taxes, the cash available to shareholders
will be correspondingly reduced.
 
     State and Local Taxes.  The Company and its shareholders may be subject to
state or local taxation in various state or local jurisdictions, including those
in which it or they transact business or reside (although shareholders who are
individuals generally should not be required to file state income tax returns
outside of their state of residence with respect to the Company's operations and
distributions). The state and local tax treatment of the Company and its
shareholders may not conform to the Federal income tax consequences discussed
above. Consequently, prospective shareholders should consult their own tax
advisors regarding the effect of state and local tax laws on an investment in
the Securities.
 
                                       34
<PAGE>   76
 
                              PLAN OF DISTRIBUTION
 
     The Company and the Operating Partnership may sell Securities to or through
underwriters, and also may sell Securities directly to other purchasers or
through agents.
 
     The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
 
     In connection with the sale of Securities, underwriters may receive
compensation from the Company, from the Operating Partnership or from purchasers
of Securities, for whom they may act as agents, in the form of discounts,
concessions, or commissions. Underwriters may sell Securities to or through
dealers, and such dealers may receive compensation in the form of discounts,
concessions, or commissions from the underwriters and/or commissions from the
purchasers for whom they may act as agents. Underwriters, dealers, and agents
that participate in the distribution of Securities may be deemed to be
underwriters, and any discounts or commissions they receive from the Company or
the Operating Partnership, and any profit on the resale of Securities they
realize may be deemed to be underwriting discounts and commissions, under the
Securities Act. Any such underwriter or agent will be identified, and any such
compensation received from the Company or the Operating Partnership will be
described, in the Prospectus Supplement.
 
     Unless otherwise specified in the related Prospectus Supplement, each
series of Securities will be a new issue with no established trading market,
other than the Common Stock which is listed on the NYSE. Any shares of Common
Stock sold pursuant to a Prospectus Supplement will be listed on such exchange,
subject to official notice of issuance. The Company or the Operating Partnership
may elect to list any series of Debt Securities, Preferred Stock or Depositary
Shares on an exchange, but neither is obligated to do so. It is possible that
one or more underwriters may make a market in a series of Securities, but will
not be obligated to do so and may discontinue any market making at any time
without notice. Therefore, no assurance can be given as to the liquidity of the
trading market for the Securities.
 
     Under agreements the Company and the Operating Partnership may enter into,
underwriters, dealers, and agents who participate in the distribution of
Securities may be entitled to indemnification by the Company or the Operating
Partnership against certain liabilities, including liabilities under the
Securities Act.
 
     Underwriters, dealers and agents may engage in transactions with, or
perform services for, or be customers of, the Company or the Operating
Partnership in the ordinary course of business.
 
     If so indicated in the applicable Prospectus Supplement, the Company or the
Operating Partnership, as the case may be, will authorize underwriters or other
persons acting as the Company's or the Operating Partnership's agents to solicit
offers by certain institutions to purchase Securities from the Company or the
Operating Partnership at the public offering price set forth in such Prospectus
Supplement pursuant to delayed delivery contracts ("Contracts") providing for
payment and delivery on the date or dates stated in such Prospectus Supplement.
Each Contract will be for an amount not less than, and the aggregate principal
amount of Securities sold pursuant to Contracts shall be not less nor more than,
the respective amounts stated in the applicable Prospectus Supplement.
Institutions with whom Contracts, when authorized, may be made include
commercial savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions, and other institutions but
will in all cases be subject to the approval of the Company or the Operating
Partnership, as the case may be. Contracts will not be subject to any conditions
except (i) the purchase by an institution of the Securities covered by its
Contracts shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject, and (ii)
if the Securities are being sold to underwriters, the Company or the Operating
Partnership, as the case may be, shall have sold to such underwriters the total
principal amount of the Securities less the principal amount thereof covered by
Contracts.
 
                                    EXPERTS
 
     The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K of Post Properties, Inc. for the
year ended December 31, 1995, as amended by Forms 10-K/A filed on June 17, 1996
and July 23, 1996, and incorporated in this Prospectus by reference to the
Report on
 
                                       35
<PAGE>   77
 
Form 10 of Post Apartment Homes, L.P. dated as of April 15, 1996, as amended on
June 17, 1996 and July 23, 1996, have been so incorporated in reliance on the
reports of Price Waterhouse LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
 
                                 LEGAL MATTERS
 
     The legality of the Securities will be passed upon for the Company by King
& Spalding, Atlanta, Georgia. Herschel M. Bloom, a member of King & Spalding, is
a director of the Company.
 
                                       36
<PAGE>   78
 
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  NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR
A SOLICITATION OF AN OFFER TO BUY, BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER TO SELL OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER AND
THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE AS OF WHICH
INFORMATION IS FURNISHED.
 
                             ---------------------
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
           PROSPECTUS SUPPLEMENT
Prospectus Supplement Summary.........   S-3
Business and Communities..............   S-6
Community Information.................  S-10
Recent Developments...................  S-12
Use of Proceeds.......................  S-13
Capitalization........................  S-14
Selected Financial Information........  S-15
Management's Discussion and Analysis
  of Financial Condition and Results
  of Operations.......................  S-18
Management............................  S-35
Description of Preferred Shares.......  S-36
Certain Federal Income Tax
  Considerations......................  S-40
Underwriting..........................  S-41
Legal Matters.........................  S-41
                 PROSPECTUS
Available Information.................     2
Incorporation of Certain Documents by
  Reference...........................     2
The Company and the Operating
  Partnership.........................     3
Use of Proceeds.......................     3
Ratio of Earnings to Fixed Charges....     3
Description of Debt Securities........     4
Description of Common Stock...........    15
Description of Preferred Stock........    17
Description of Depositary Shares......    22
Federal Income Tax Considerations.....    26
Plan of Distribution..................    35
Experts...............................    35
Legal Matters.........................    36
</TABLE>
 
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                                1,000,000 SHARES
 
                             POST PROPERTIES, INC.
 
                           8 1/2% SERIES A CUMULATIVE
                           REDEEMABLE PREFERRED STOCK
 
                          ---------------------------
 
                             PROSPECTUS SUPPLEMENT
                          ---------------------------
 
                              MERRILL LYNCH & CO.
 
                               SEPTEMBER 26, 1996
 
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