<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-12080
--------------------------------------
POST PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Georgia 58-1550675
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
3350 CUMBERLAND CIRCLE, SUITE 2200, ATLANTA, GEORGIA 30339
(Address of principal executive offices -- zip code)
(770) 850-4400
(Registrant's telephone number, including area code)
-------------------------
Securities registered pursuant to section 12(b) of the Act:
<TABLE>
<S> <C>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ----------------
Common Stock, $.01 par value New York Stock Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act: None
-------------------------
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [x] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the shares of common stock held by
non-affiliates (based upon the closing sale price on the New York Stock
Exchange) on March 1, 1996 was approximately $709,237,766. As of March 1,
1996, there were 21,656,115 shares of common stock, $.01 par value,
outstanding.
-------------------------
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement in connection with its
Annual Meeting of Shareholders to be held May 16, 1996 are incorporated by
reference in Part III.
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<PAGE> 2
PART I
ITEM 1. BUSINESS
THE COMPANY
The Company is one of the largest developers and operators of upscale
multifamily apartment communities in the Southeastern United States. The
Company currently owns 42 stabilized communities (the "Communities") containing
14,962 apartment units located primarily in metropolitan Atlanta, Georgia and
Tampa, Florida. In addition, the Company currently has under construction or
in initial lease-up eight new communities and an addition to one existing
community in the Atlanta, Tampa, Northern Virginia, Nashville and Charlotte
metropolitan areas that will contain an aggregate of 3,052 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.
Since founded in 1971, the Company has pursued three distinctive core business
strategies that, for 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 operating them
for periods that are relatively long by the standards of the apartment
industry. Key elements of the Company's investment building strategy include
instilling a disciplined team approach to development decisions; selecting
sites in niche and infill locations in strong primary markets; consistently
constructing new apartment communities with a uniformly high quality; and
conducting ongoing property improvements.
Promotion of the Post(R) Brand Name
The Post(R) brand name strategy has been integral to the success of the Company
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 work, a company must develop and implement systems to achieve
uniformly high quality and value throughout its operations. As a result of the
Company's efforts in developing and maintaining its communities, the Company
believes that the Post(R) brand name is synonymous with quality upscale
apartment communities that are situated in desirable locations and provide
superior resident service. Key elements in implementing the Company's brand
name strategy include extensively utilizing the trademarked brand name;
adhering to quality in all aspects of the Company's operations; developing and
implementing leading edge training programs; and coordinating the Company's
advertising programs to increase brand name recognition.
Service Orientation
The Company's mission statement is: "To provide the superior apartment living
experience for our residents." By striving to provide a superior product and
superior service, the Company believes that it will be able to achieve its
long-term goals. The Company believes that it provides its residents with
superior product and superior service through its uniformly high quality
construction, award winning landscaping and numerous amenities, including on
site business centers, on site courtesy officers, urban vegetable gardens and
state of the art fitness centers.
The Company believes that with the implementation of these strategies,
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 growth, population growth and household
formation growth in the Company's primary markets have exceeded and are
forecasted to continue to exceed national averages.
The Company is a self-administered and self-managed equity real estate
investment trust (a "REIT"). On July 22, 1993 the Company completed an initial
public offering of 10,580,000 shares of Common Stock (the "Initial Offering")
and a business combination involving entities under varying common ownership
(the "Formation Transactions"). On February 7, 1994 the Company completed a
second public offering of 3,000,000 shares of Common Stock (the "Second
Offering"). On October 20, 1995 the Company completed a third public offering
of 3,710,500 additional shares of Common Stock (the "Third
1
<PAGE> 3
Offering"). Proceeds from the Initial Offering were used by the Company (i) to
acquire a controlling interest in Post Apartment Homes, L.P. (The "Operating
Partnership"), the Company's principal operating subsidiary, which was formed
to succeed to substantially all of the ownership interest in a portfolio of 40
Post(R) multifamily apartment communities (the "Initial Properties"), all of
which were developed by the Company and owned by affiliates of the Company, and
to the development, leasing, landscaping and management business of the Company
and certain other affiliates and (ii) to pay down existing indebtedness on
certain communities. Proceeds of the Second and Third Offerings were used by
the Company to pay down existing indebtedness. The Company is the sole general
partner of, and controls a majority of the limited partnership interests in,
the Operating Partnership. The Company conducts all of its business through
the Operating Partnership and its subsidiaries.
The Company's executive offices are located at 3350 Cumberland Circle, Atlanta,
Georgia 30339 and its telephone number is (770) 850-4400. Post Properties,
Inc., a Georgia corporation, was incorporated on January 25, 1984, and is the
successor by merger to the original Post Properties, Inc., a Georgia
corporation, which was formed in 1971. The Operating Partnership is a Georgia
limited partnership that was formed in July 1993 for the purpose of
consolidating the operating and development businesses of the Company and the
Post(R) apartment portfolio described herein.
THE OPERATING PARTNERSHIP
The Operating Partnership, through the operating divisions and subsidiaries
described below, is the entity through which all of the Company's operations
are conducted. At December 31, 1995, the Company controlled the Operating
Partnership as the sole general partner and as the holder of an 80.8% interest
in the Operating Partnership. The other limited partners of the Operating
Partnership are those persons (including certain officers and directors of the
Company) who, at the time of the Initial Offering, elected to hold all or a
portion of their interest in the Company in the form of units in the Operating
Partnership ("Units") rather than receiving shares of Common Stock. Each Unit
may be redeemed by the holder thereof for either one share of Common Stock or
cash equal to the fair market value thereof at the time of such redemption, at
the option of the Company. The Company presently anticipates that it will elect
to issue shares of Common Stock in connection with each such redemption rather
than paying cash (and has done so in all redemptions to date). With each
redemption of outstanding Units for Common Stock, the Company's percentage
ownership interest in the Operating Partnership will increase. In addition,
whenever the Company issues shares of Common Stock, the Company will contribute
any net proceeds therefrom to the Operating Partnership and the Operating
Partnership will issue an equivalent number of Units to the Company.
As sole general partner, the Company has the exclusive power under the
agreement of limited partnership of the Operating Partnership to manage and
conduct the business of the Operating Partnership, subject to the consent of
the holders of the Units in connection with the sale of all or substantially
all of the assets of the Operating Partnership or in connection with a
dissolution of the Operating Partnership. The board of directors of the Company
manages the affairs of the Company by directing the affairs of the Operating
Partnership. The Operating Partnership cannot be terminated, except in
connection with a sale of all or substantially all of the assets of the
Company, for a period of 50 years without a vote of limited partners of the
Operating Partnership. The Company's limited and general partner interests in
the Operating Partnership entitle it to share in cash distributions from, and
in the profits and losses of, the Operating Partnership in proportion to the
Company's percentage interest therein and entitle the Company to vote on all
matters requiring a vote of the limited partners.
As part of the formation of the Operating Partnership, a new holding company,
Post Services, Inc. ("Post Services") was organized as a separate corporate
subsidiary of the Operating Partnership. Post Services, in turn, owns all the
outstanding stock of three operating subsidiaries, RAM Partners, Inc. ("RAM"),
Post Asset Management, Inc. ("Post Asset Management") and Post Landscape
Services, Inc. ("Post Landscape"). Certain officers and directors of the
Company received 99%, collectively, of the voting common stock of Post
Services, and the Operating Partnership received 1% of the voting common stock
and 100% of the nonvoting common stock of Post Services. The voting and
nonvoting common stock of Post Services held by the Operating Partnership
represents 99% of the equity interests therein. The voting common stock held by
officers and directors in Post Services is subject to an agreement that is
designed to ensure that the stock will be held by one or more officers of Post
Services. The by-laws of Post Services provide that a majority of the board of
directors of Post Services must be persons who are not employees, members of
management or affiliates of the Company or its subsidiaries. This by-law
provision cannot be amended without the vote of 100% of the outstanding voting
common stock of Post Services. Post Services currently has the same board of
directors as the Company.
2
<PAGE> 4
OPERATING DIVISIONS
The major operating divisions of the Company include:
Post Management Services
Post Management Services is responsible for the day-to-day operations of all
the Post(R) communities and is itself comprised of two divisions: one
responsible for community leasing, property management and personnel
recruiting, training and development, and the other for maintenance and
security. Post Management Services also conducts short-term leasing activities.
The division is the largest in the Company with approximately 430 full-time
employees.
Post Apartment Development
Post Apartment Development conducts the development and construction activities
of the Company. Development activities include site selection, zoning and
regulatory approvals, project design, and the full range of construction
management services. The division is currently comprised of approximately 100
full-time employees.
Post Landscape Operations
This division works closely with Post Apartment Development in the initial
design of each Post(R) community and then has primary responsibility for
maintaining each community's landscape. The division maintains each community's
grounds on a cost effective basis for seasonal impact and has earned national
recognition for the Company. It is comprised of approximately 50 full-time and
part-time employees with professionals specializing in landscape architecture,
horticulture, floriculture, and general landscape maintenance.
Post Corporate Services
Post Corporate Services provides executive direction and control to the
Company's other divisions and subsidiaries and has responsibility for the
creation and implementation of all Company financing and capital strategies.
All accounting, management reporting, and insurance services required by the
Company and all of its affiliates are centralized in Post Corporate Services.
The division currently employs approximately 45 full-time employees.
OPERATING SUBSIDIARIES
The operating subsidiaries of the Company, each of which is wholly owned by
Post Services, include:
RAM
RAM provides third party asset management and leasing services for multifamily
properties that do not operate under the Post(R) name. RAM's clients include
pension funds, independent private investors, financial institutions and
insurance companies. RAM's asset management contracts generally are subject to
annual renewal or are terminable upon specified notice. As of February 29,
1996, RAM managed 40 properties (located in Georgia, California, Florida, North
Carolina, and Virginia) with approximately 9,900 units under management. RAM
currently has approximately 295 full-time employees.
Post Asset Management
Post Asset Management currently provides management services to three Post(R)
communities (866 apartment units) owned by third parties, which were originally
developed by the Company but sold prior to the Initial Offering. Use of the
Post(R) name and other of the Company's federally registered service marks in
connection with each such community is limited to the period during which the
Company continues to manage the community. Post Asset Management employs
approximately 50 full-time employees.
Post Landscape
As a result of the reputation the Company developed in connection with the
landscaping of Post(R) communities, in 1990 the Company began providing third
party landscape services for clients other than Post(R) communities. Projects
with third parties include the maintenance and design of the landscape for
office parks, commercial buildings and other commercial enterprises, and
private residences. Post Landscape provides such third party landscape services
and it employs approximately 110 full-time employees.
3
<PAGE> 5
HISTORY OF POST PROPERTIES, INC.
The Company and its affiliates have developed a total of 67 Post(R) upscale
garden and mid-rise apartment communities containing approximately 21,200
apartment units. Of these communities, 42 communities comprising 14,962
apartment units are owned by the Operating Partnership in fee simple or
pursuant to a long-term ground lease, and are operated by the Operating
Partnership. The Company and its affiliates sold 25 communities between 1972
and 1995 to parties not affiliated with the Company, three of which the Company
continues to manage under the Post(R) name. Eight additional Post(R)
communities and additions to an existing community are currently under
construction and are owned and operated by the Operating Partnership.
During the five-year period from January 1, 1991 through December 31, 1995, the
Company and its affiliates developed and completed 2,953 apartment units in 15
apartment communities and sold three apartment communities containing an
aggregate of 568 apartment units. The Company has developed its apartment
communities to the Company's specifications as opposed to buying and
refurbishing existing properties built by others. The Company and its
affiliates have sold apartment communities after holding them for investment
periods that typically have been seven to twelve years after development. The
following table shows the results of the Company's developments during this
period:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
-------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Units completed . . . . . . . . . . . . . . . . . . . 685 575 182 556 955
Total units owned by Company affiliates
at end of year . . . . . . . . . . . . . . . . . . 14,962 14,845 14,270 14,088 13,532
Total apartment rental income (in
thousands) . . . . . . . . . . . . . . . . . . . . $133,817 $115,309 $104,482 $94,754 $85,688
</TABLE>
4
<PAGE> 6
CURRENT DEVELOPMENT ACTIVITY
The Company currently has, under construction or in initial lease-up, eight new
communities and additions to one existing community that will contain an
aggregate of 3,052 units. The Company's communities under development or in
initial lease up are summarized in the following chart:
<TABLE>
<CAPTION>
ACTUAL OR ACTUAL OR
ESTIMATED ESTIMATED
QUARTER OF QUARTER FIRST QUARTER OF
# OF CONSTRUCTION UNITS STABILIZED
METROPOLITAN AREA UNITS COMMENCEMENT AVAILABLE OCCUPANCY
----------------- ----- ------------ ------------- ----------
<S> <C> <C> <C> <C>
ATLANTA, GA
Post Dunwoody -- phase II . . . . . . . . . . . . . 328 4Q'94 3Q'95 3Q'96
Post Terrace . . . . . . . . . . . . . . . . . . . 296 2Q'95 1Q'96 4Q'96
Post Crest . . . . . . . . . . . . . . . . . . . . 410 1Q'95 1Q'96 1Q'97
Post Collier Hills . . . . . . . . . . . . . . . . 392 4Q'95 3Q'96 4Q'97
-----
1,426
-----
TAMPA, FL
Post Rocky Point . . . . . . . . . . . . . . . . . 452 1Q'94 1Q'95 1Q'96
Post Hyde Park -- I and II . . . . . . . . . . . . 270 3Q'94 2Q'95 2Q'96
-----
722
-----
FAIRFAX, VA
Post Corners at Trinity Centre . . . . . . . . . . 336 2Q'94 1Q'95 1Q'96
-----
NASHVILLE, TN
Post Green Hills . . . . . . . . . . . . . . . . . 166 4Q'94 3Q'95 1Q'96
-----
CHARLOTTE, NC
Post South Park . . . . . . . . . . . . . . . . . . 402 4Q'95 3Q'96 3Q'97
-----
3,052
=====
</TABLE>
The Company has also acquired two parcels in Atlanta on which it plans to build
new communities. Construction is expected to begin on one of these parcels in
1996. The Home Depot, Inc. is constructing its corporate headquarters campus
and extensive infrastructure improvements are being made by the county adjacent
to the other 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.
COMPETITION
All of the Communities are located in developed areas that include other
upscale apartments. The number of competitive upscale apartment properties in a
particular area could have a material effect on the Company's ability to lease
apartment units at the Communities or at any newly developed or acquired
communities and on the rents charged. The Company may be competing with others
that have greater resources than the Company. In addition, other forms of
residential properties, including single family housing, provide housing
alternatives to potential residents of upscale apartment communities.
5
<PAGE> 7
AMERICANS WITH DISABILITIES ACT
The Communities and any newly acquired apartment communities must comply with
Title III of the Americans with Disabilities Act (the "ADA") to the extent that
such properties are "public accommodations" and/or "commercial facilities" as
defined by the ADA. Compliance with the ADA requirements could require removal
of structural barriers to handicapped access in certain public areas of the
Company's Communities where such removal is readily achievable. The ADA does
not, however, consider residential properties, such as apartment communities,
to be public accommodations or commercial facilities, except to the extent
portions of such facilities, such as the leasing office, are open to the
public. The Company believes that its properties comply with all present
requirements under the ADA and applicable state laws. Noncompliance could
result in imposition of fines or an award of damages to private litigants. If
required to make material additional changes, the Company's results of
operations could be adversely affected.
ENVIRONMENTAL REGULATIONS
The Company is subject to Federal, state and local environmental regulations
that apply to the development of real property, including construction
activities, the ownership of real property, and the operation of multifamily
apartment communities.
In developing properties and constructing apartments, the Company utilizes
environmental consultants to determine whether there are any flood plains,
wetlands or environmentally sensitive areas that are part of the property to be
developed. If flood plains are identified, development and construction is
planned so that flood plain areas are preserved or alternative flood plain
capacity is created in conformance with Federal and local flood plain
management requirements.
Stormwater discharge from a construction facility is evaluated in connection
with the requirements for stormwater permits under the Clean Water Act. This is
an evolving program in most states. The Company currently anticipates it will
be able to obtain stormwater permits for existing or new development.
The Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. sec. 9601 et seq. ("CERCLA"), and applicable state superfund laws
subject the owner of real property to claims or liability for the costs of
removal or remediation of hazardous substances that are disposed of on real
property in amounts that require removal or remediation. Liability under CERCLA
and applicable state superfund laws can be imposed on the owner of real
property or the operator of a facility without regard to fault or even
knowledge of the disposal of hazardous substances on the property or at the
facility. The presence of hazardous substances in amounts requiring response
action or the failure to undertake remediation where it is necessary may
adversely affect the owner's ability to sell real estate or borrow money using
such real estate as collateral. In addition to claims for cleanup costs, the
presence of hazardous substances on a property could result in a claim by a
private party for personal injury or a claim by an adjacent property owner for
property damage.
The Company has instituted a policy that requires an environmental
investigation of each property that it considers for purchase or that it owns
and plans to develop. The environmental investigation is conducted by a
qualified environmental consultant. If there is any indication of
contamination, sampling of the property is performed by the environmental
consultant. The environmental investigation report is reviewed by the Company
and counsel prior to purchase of any property. If necessary, remediation of
contamination, including underground storage tanks, is undertaken prior to
development.
The Company has not been notified by any governmental authority of any
noncompliance, claim, or liability in connection with any of the Communities.
The Company has not been notified of a claim for personal injury or property
damage by a private party in connection with any of the Communities in
connection with environmental conditions. The Company is not aware of any other
environmental condition with respect to any of the Communities that could be
considered to be material.
6
<PAGE> 8
ITEM 2. PROPERTIES
The Communities consist of stabilized Post(R) multifamily apartment communities
located in the following metropolitan areas:
<TABLE>
<CAPTION>
METROPOLITAN AREA COMMUNITIES # OF UNITS % OF TOTAL
----------------- ----------- ---------- ----------
<S> <C> <C> <C>
Atlanta, GA . . . . . . . . . . . . . . . . . . . . 32 11,214 75.0%
Tampa, FL . . . . . . . . . . . . . . . . . . . . . 5 1,540 10.3%
Orlando, FL . . . . . . . . . . . . . . . . . . . . 2 1,248 8.3%
Pompano Beach, FL . . . . . . . . . . . . . . . . . 1 416 2.8%
Fairfax, VA . . . . . . . . . . . . . . . . . . . . 1 364 2.4%
Boca Raton, FL . . . . . . . . . . . . . . . . . . 1 180 1.2%
---- ------ -----
42 14,962 100.0%
==== ====== =====
</TABLE>
The Company developed and currently manages all of the Communities.
Twenty-eight of the Communities have in excess of 300 apartment units, with
the largest Community having a total of 770 apartment units. The oldest of the
Communities was first occupied in 1977 and 37 of the 42 Communities, comprising
approximately 90% of such Communities' apartment units, were completed after
January 1, 1986. The average economic occupancy rate for communities stabilized
for each of the entire years ended December 31, 1995 and 1994 was 96.0% and
96.5% respectively. The average monthly rental rate per unit (stabilized
communities) during 1995 and 1994 was $710 and $668, respectively. See
"Selected Financial Information".
7
<PAGE> 9
<TABLE>
<CAPTION>
COMMUNITY INFORMATION
DECEMBER
1995
AVERAGE 1995
AVERAGE RENTAL AVERAGE
YEAR UNIT SIZE NUMBER OF RATES ECONOMIC
COMMUNITY LOCATION(1) ZIP CODE COMPLETED (SQUARE FEET) UNITS PER UNIT OCCUPANCY(2)
- ----------------------------- ----------- -------- --------- ------------ ----- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
GEORGIA
Post Ashford . . . . . . . . Atlanta 30319 1987 872 222 $743 97.1%
Post Bridge . . . . . . . . . Atlanta 30067 1986 847 354 631 98.3%
Post Brook . . . . . . . . . Atlanta 30033 1984 916 130 736 96.0%
Post Brookhaven . . . . . . . Atlanta 30319 1990-92 (3) 991 735 898 96.8%
Post Canyon . . . . . . . . . Atlanta 30350 1986 899 494 678 95.8%
Post Chase . . . . . . . . . Atlanta 30084 1987 938 410 673 97.0%
Post Chastain . . . . . . . . Atlanta 30342 1990 965 558 936 95.9%
Post Corners . . . . . . . . Atlanta 30092 1986 860 460 653 97.0%
Post Court . . . . . . . . . Atlanta 30136 1988 838 446 659 97.5%
Post Crossing . . . . . . . . Atlanta 30346 1995 1,067 354 1,004 N/A (4)
Post Dunwoody . . . . . . . . Atlanta 30328 1989 941 202 764 95.4% (6)
Post Lane . . . . . . . . . . Atlanta 30067 1988 840 166 686 97.7%
Post Lenox Park . . . . . . . Atlanta 30319 1995 1,030 206 987 N/A (4)
Post Mill . . . . . . . . . . Atlanta 30067 1985 952 398 681 96.9%
Post Oak . . . . . . . . . . Atlanta 30324 1993 1,003 182 896 98.8%
Post Oglethorpe . . . . . . . Atlanta 30319 1994 1,205 250 1,182 97.9%
Post Park . . . . . . . . . . Atlanta 30341 1988-90 (3) 904 770 772 96.0%
Post Parkwood . . . . . . . . Atlanta 30339 1995 1,071 125 889 N/A (4)
Post Peachtree Hills . . . . Atlanta 30305 1992-94 (3) 982 300 916 98.7%
Post Pointe . . . . . . . . . Atlanta 30083 1988 835 360 628 96.1%
Post Renaissance(5) . . . . . Atlanta 30308 1992-94 (3) 890 342 855 93.7% (6)
Post River . . . . . . . . . Atlanta 30339 1991 983 125 1,132 96.2%
Post Summit . . . . . . . . . Atlanta 30033 1990 957 148 785 96.3%
Post Valley . . . . . . . . . Atlanta 30080 1988 854 496 628 98.7%
Post Village . . . . . . . . Atlanta 30030 906 687 96.2%
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 . . . . . . . . Atlanta 30080 1989-91 (3) 964 403 759 96.7%
Post Walk . . . . . . . . . . Atlanta 30033 1987 932 346 768 98.0%
Post Woods . . . . . . . . . Atlanta 30339 1977-83 (3) 1,057 494 783 97.8%
----- ------ --- ----
Subtotal -- Atlanta . . . . 935 11,214 771 96.6%
----- ------ --- ----
FLORIDA
Post Bay . . . . . . . . . . Tampa 33716 1988 782 312 639 95.0%
Post Court . . . . . . . . . Tampa 34625 1991 1,018 228 740 92.0%
Post Crossing . . . . . . . . Pompano 33069 1989 847 416 764 92.8%
Post Fountains . . . . . . . Orlando 32822 1988 835 508 582 93.7%
Post Gardens . . . . . . . . Boca Raton 33433 1989 956 180 853 92.3%
Post Lake . . . . . . . . . . Orlando 32703 1988 850 740 605 96.4%
Post Village . . . . . . . . Tampa 33614 941 707 94.2%
The Arbors . . . . . . . . 1991 967 304
The Lakes . . . . . . . . . 1989 895 360
The Oaks . . . . . . . . . 1991 968 336
----- ------ --- ----
Subtotal -- Florida . . . . 885 3,384 677 94.2%
----- ------ --- ----
VIRGINIA
Post Forest . . . . . . . . . Fairfax 22030 1990 889 364 873 93.8%
----- ------ --- ----
TOTAL . . . . . . . . . . 923 14,962 752 96.0%
===== ====== === ====
- ----------
</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.
(3) These dates represent the respective completion dates for multiple
phases of a Community.
(4) During 1995, this Community was in the lease-up phase and, therefore,
is not included.
(5) The Company has a leasehold interest in the land underlying Post
Renaissance pursuant to a ground lease that expires on January 1, 2040.
(6) Represents amounts only for the first phase of the Community since the
second phase of this Community was in the lease-up phase during the
year ended December 31, 1995.
8
<PAGE> 10
POST PROPERTIES, INC.
COMMUNITY AMENITY SUMMARY
<TABLE>
<CAPTION>
COMMUNITY/APARTMENT AMENITIES
-----------------------------
CONTROLLED PATIO, PORCH WASHER
ACCESS GUEST COVERED BALCONY OR + DRYER
COMMUNITY LOCATION UNITS ENTRY GATE APT. GARAGES SUN ROOM HOOK-UPS
- --------- -------- ----- ---------- ---- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Atlanta, Georgia
The Arbors of Post Village*........ Atlanta 301 Yes No 6 300 (100%) 260 (87%)
The Fountains of Post Village*..... Atlanta 352 Yes Yes 207 52 (100%) 162 (46%)
The Gardens of Post Village*....... Atlanta 494 Yes No 10 494 (100%) 268 (54%)
The Hills of Post Village*......... Atlanta 241 Yes No 8 240 (100%) 160 (67%)
The Meadows of Post Village*....... Atlanta 350 Yes No 20 350 (100%) 146 (42%)
Post Ashford....................... Atlanta 222 Yes No 17 222 (100%) 122 (55%)
Post Bridge........................ Atlanta 354 Yes No 20 354 (100%) 166 (47%)
Post Brook......................... Atlanta 130 Yes No 35 130 (100%) 80 (62%)
Post Brookhaven.................... Atlanta 735 Yes Yes 547 35 (100%) 637 (87%)
Post Canyon........................ Atlanta 494 Yes No 264 94 (100%) 284 (57%)
Post Chase......................... Atlanta 410 Yes Yes 374 10 (100%) 270 (56%)
Post Chastain...................... Atlanta 558 Yes Yes 452 558 (100%) 408 (73%)
Post Corners....................... Atlanta 460 Yes No 26 60 (100%) 242 (53%)
Post Court......................... Atlanta 446 Yes Yes 39 446 (100%) 266 (60%)
Post Crossing...................... Atlanta 354 Yes No 15 354 (100%) 322 90%
Post Dunwoody...................... Atlanta 202 Yes Yes 152 02 (100%) 168 (83%)
Post Lane.......................... Atlanta 166 Yes No 18 166 (100%) 134 (81%)
Post Lenox Park.................... Atlanta 206 Yes No 12 206 (100%) 192 (93%)
Post Mill.......................... Atlanta 398 Yes No 0 398 (100%) 258 (65%)
Post Oak........................... Atlanta 182 Yes No 21 182 (100%) 154 (85%)
Post Oglethorpe***................. Atlanta 250 Yes No 250 250 (100%) 250 (100%)
Post Park.......................... Atlanta 770 Yes Yes 53 770 (100%) 634 (82%)
Post Parkwood...................... Atlanta 125 Yes No 18 125 (100%) 101 (80%)
Post Peachtree Hills............... Atlanta 300 Yes Yes 22 300 (100%) 244 (81%)
Post Pointe........................ Atlanta 360 Yes No 38 360 (100%) 260 (72%)
Post Renaissance................... Atlanta 342 Yes Yes 345 342 (100%) 252 (74%)
Post River......................... Atlanta 125 Yes Yes 205 125 (100%) 90 (72%)
Post Summit........................ Atlanta 148 Yes No 10 148 (100%) 124 (84%)
Post Valley........................ Atlanta 496 Yes No 34 496 (100%) 324 (65%)
Post Vinings....................... Atlanta 403 Yes Yes 35 403 (100%) 323 (80%)
Post Walk.......................... Atlanta 346 Yes No 27 346 (100%) 214 (62%)
Post Woods......................... Atlanta 494 Yes No 11 494 (100%) 434 (88%)
Florida
The Arbors at Post Village*........ Tampa 304 Yes No 39 304 (100%) 240 (79%)
The Lakes at Post Village*......... Tampa 360 Yes Yes 8 360 (100%) 252 (70%)
The Oaks at Post Village*.......... Tampa 336 Yes No 40 336 (100%) 264 (79%)
Post Bay........................... Tampa 312 Yes Yes 5 312 (100%) 192 (62%)
Post Court......................... Tampa 228 Yes Yes 60 228 (100%) 204 (89%)
Post Crossing...................... Pompano 416 Yes Yes 127 416 (100%) 300 (72%)
Post Fountains..................... Orlando 508 Yes Yes 11 508 (100%) 296 (58%)
Post Gardens....................... Boca Raton 180 Yes No 23 180 (100%) 140 (78%)
Post Lake.......................... Orlando 740 Yes Yes 12 740 (100%) 448 (61%)
Northern, Virginia
Post Forest........................ Fairfax 364 Yes Yes 52 364 (100%) 324 (89%)
</TABLE>
<TABLE>
<CAPTION>
RECREATIONAL AMENITIES
----------------------
VAULTED ACTIVITY SWIMMING FITNESS
LOCATION FIREPLACE CEILINGS ROOM POOL(S)+ CENTER(S) JACUZZI
-------- --------- --------- ---- ------- --------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Atlanta, Georgia
The Arbors of Post Village*........ Atlanta 102 (34%) 24 (8%) Yes Yes(1) Yes No
The Fountains of Post Village*..... Atlanta 25 (7%) 39 (11%) Yes Yes(1) Yes No
The Gardens of Post Village*....... Atlanta 84 (17%) 0 (0%) Yes Yes(3) Yes No
The Hills of Post Village*......... Atlanta 48 (20%) 0 (0%) Yes Yes(1) Yes No
The Meadows of Post Village*....... Atlanta 25 (11%) 56 (25%) Yes Yes(1) Yes Yes
Post Ashford....................... Atlanta 44 (20%) 40 (18%) No Yes(1) No No
Post Bridge........................ Atlanta 46 (13%) 0 (0%) Yes Yes(1) Yes Yes
Post Brook......................... Atlanta 0 (0%) 0 (0%) No Yes(1) No No
Post Brookhaven.................... Atlanta 74 (10%) 0 (0%) Yes Yes(3) Yes No
Post Canyon........................ Atlanta 80 (16%) 0 (0%) Yes Yes(3) Yes Yes
Post Chase......................... Atlanta 41 (10%) 0 (0%) Yes Yes(1) Yes Yes
Post Chastain...................... Atlanta 58 (10%) 148 (27%) Yes Yes(2) Yes Yes
Post Corners....................... Atlanta 74 (16%) 0 (0%) Yes Yes(2) Yes Yes
Post Court......................... Atlanta 31 (7%) 40 (9%) Yes Yes(2) Yes No
Post Crossing...................... Atlanta 61 (6%) 156 (44%) Yes Yes(1) Yes No
Post Dunwoody...................... Atlanta 8 (4%) 4 (22%) No Yes(1) Yes No
Post Lane.......................... Atlanta 0 (0%) 65 (39%) No Yes(1) No No
Post Lenox Park.................... Atlanta 27 (13%) 60 (29%) No Yes(1) Yes No
Post Mill.......................... Atlanta 64 (16%) 0 (0%) Yes Yes(3) Yes No
Post Oak........................... Atlanta 18 (10%) 48 (26%)** Yes Yes(1) Yes No
Post Oglethorpe***................. Atlanta 56 (22%) 125 (50%) Yes Yes(1) Yes No
Post Park.......................... Atlanta 77 (10%) 169 (22%) Yes Yes(3) Yes No
Post Parkwood...................... Atlanta 16 (12%) 36 (28%) Yes Yes(1) Yes No
Post Peachtree Hills............... Atlanta 30 (10%) 72 (24%)** Yes Yes(2) Yes No
Post Pointe........................ Atlanta 0 (0%) 128 (36%) Yes Yes(1) Yes Yes
Post Renaissance................... Atlanta 33 (10%) 84 (25%)** Yes Yes(2) Yes No
Post River......................... Atlanta 30 (24%) 21 (17%)** Yes Yes(1) Yes No
Post Summit........................ Atlanta 20 (14%) 36 (24%)** No Yes(1) Yes No
Post Valley........................ Atlanta 24 (5%) 20 (4%) Yes Yes(2) Yes No
Post Vinings....................... Atlanta 58 (14%) 104 (26%) Yes Yes(2) Yes No
Post Walk.......................... Atlanta 35 (10%) 48 (14%) Yes Yes(1) Yes No
Post Woods......................... Atlanta 40 (8%) 0 (0%) Yes Yes(2) Yes No
Florida
The Arbors at Post Village*........ Tampa 24 (8%) 88 (29%) No Yes(1) Yes No
The Lakes at Post Village*......... Tampa 0 (0%) 104 (29%) Yes Yes(1) Yes Yes
The Oaks at Post Village*.......... Tampa 20 (6%) 96 (29%) No Yes(1) No No
Post Bay........................... Tampa 0 (0%) 69 (22%) No Yes(1) Yes Yes
Post Court......................... Tampa 50 (22%) 68 (30%) No Yes(1) Yes No
Post Crossing...................... Pompano 0 (0%) 146 (35%) Yes Yes(2) Yes Yes
Post Fountains..................... Orlando 31 (6%) 56 (11%) Yes Yes(2) Yes Yes
Post Gardens....................... Boca Raton 0 (0%) 56 (31%) No Yes(1) Yes Yes
Post Lake.......................... Orlando 44 (6%) 104 (14%) Yes Yes(2) Yes Yes
Northern, Virginia
Post Forest........................ Fairfax 277 (76%) 113 (31%) Yes Yes(1) Yes Yes
</TABLE>
<TABLE>
<CAPTION>
PICNIC CAR TENNIS VOLLEY
LOCATION AREA(S)+ WASH(ES)+ COURT(S)+ BALL OTHER
-------- ------- --------- --------- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Atlanta, Georgia
The Arbors of Post Village*........ Atlanta Yes(7) Yes(1) Yes(2) No nature preserve, jogging trail
The Fountains of Post Village*..... Atlanta Yes(3) Yes(1) Yes(3) No nature preserve, jogging trail
The Gardens of Post Village*....... Atlanta Yes(7) Yes(2) Yes(3) No nature preserve, jogging trail
The Hills of Post Village*......... Atlanta Yes(5) Yes(1) Yes(2) No nature preserve, jogging trail
The Meadows of Post Village*....... Atlanta Yes(6) Yes(1) Yes(2) No nature preserve, jogging trail
Post Ashford....................... Atlanta Yes(3) Yes(1) Yes(1) No
Post Bridge........................ Atlanta Yes(4) Yes(1) Yes(2) No
Post Brook......................... Atlanta Yes(4) Yes(1) Yes(1) No
Post Brookhaven.................... Atlanta Yes(17) Yes(4) Yes(4) No
Post Canyon........................ Atlanta Yes(7) Yes(2) Yes(3) No
Post Chase......................... Atlanta Yes(6) Yes(2) Yes(2) Yes
Post Chastain...................... Atlanta Yes(6) Yes(2) Yes(2) No nature preserve
Post Corners....................... Atlanta Yes(5) Yes(2) Yes(3) No
Post Court......................... Atlanta Yes(6) Yes(2) Yes(2) No
Post Crossing...................... Atlanta Yes(5) Yes(1) Yes(2) No urban chess
Post Dunwoody...................... Atlanta Yes(4) Yes(1) Yes(1) No nature preserve, jogging trail
Post Lane.......................... Atlanta Yes(3) Yes(1) Yes(1) No
Post Lenox Park.................... Atlanta Yes(5) Yes(6) Yes(1) No
Post Mill.......................... Atlanta Yes(9) Yes(1) Yes(2) No
Post Oak........................... Atlanta Yes(3) Yes(1) Yes(1) No urban vegetable garden
Post Oglethorpe***................. Atlanta Yes(6) Yes(1) Yes(2) No
Post Park.......................... Atlanta Yes(12) Yes(4) Yes(4) No
Post Parkwood...................... Atlanta Yes(3) Yes(1) Yes(6) No
Post Peachtree Hills............... Atlanta Yes(5) Yes(2) Yes(2) Yes urban vegetable garden
Post Pointe........................ Atlanta Yes(7) Yes(1) Yes(2) No nature preserve, lake
Post Renaissance................... Atlanta Yes(10) Yes(1) Yes(1) No boccie ball courts(2)
Post River......................... Atlanta Yes(3) No No No
Post Summit........................ Atlanta Yes(3) Yes(1) Yes(1) No croquet lawn
Post Valley........................ Atlanta Yes(7) Yes(2) Yes(3) No
Post Vinings....................... Atlanta Yes(9) Yes(2) Yes(2) Yes
Post Walk.......................... Atlanta Yes(6) Yes(2) Yes(2) No
Post Woods......................... Atlanta Yes(12) Yes(2) Yes(3) No jogging trail, lakes(2)
Florida
The Arbors at Post Village*........ Tampa Yes(3) Yes(2) Yes(1) No nature preserve, jogging trail
The Lakes at Post Village*......... Tampa Yes(5) Yes(3) Yes(2) Yes nature preserve, jogging trail
The Oaks at Post Village*.......... Tampa Yes(3) No No Yes nature preserve, jogging trail
Post Bay........................... Tampa Yes(3) Yes(1) No Yes
Post Court......................... Tampa Yes(4) Yes(1) Yes(1) Yes
Post Crossing...................... Pompano Yes(3) Yes(1) Yes(2) Yes lake, video rental, jogging trail
Post Fountains..................... Orlando Yes(6) Yes(3) Yes(2) Yes
Post Gardens....................... Boca Raton Yes(2) Yes(1) No Yes
Post Lake.......................... Orlando Yes(8) Yes(3) Yes(4) Yes
Northern, Virginia
Post Forest........................ Fairfax Yes(4) Yes(2) Yes(2) No jogging trail
</TABLE>
__________
+ Number in parentheses represents the number of the in
recreational amenity located at a particular Community.
* The respective properties within the Post Village apartment
communities in Atlanta and Tampa share certain recreational
amenities.
** Not vaulted, but raised ceilings.
*** All units are carriage homes with attached one or two car
garages.
9
<PAGE> 11
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
None.
ITEM X. EXECUTIVE OFFICERS OF THE REGISTRANT
The persons who are executive officers of the company and its affiliates and
their positions are as follows:
<TABLE>
<CAPTION>
NAME POSITIONS 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
William F. Leseman . . . . . . . . . . Executive Vice President--RAM Partners, Inc.
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
</TABLE>
The following is a biographical summary of the experience of the executive
officers of the company:
John A. Williams. Mr. Williams is the Chairman of the Board and Chief
Executive Officer of the Company. Mr. Williams founded the business of the
Company in 1971 and since that time has acted as Chairman and Chief Executive
Officer. Mr. Williams is currently serving on the board of directors of
Barnett Banks, Inc., the Atlanta Regional Commission, and the Advisory Board of
the Atlanta Committee for the Olympic Games. Mr. Williams is 53 years old.
John T. Glover. Mr. Glover is the President, Chief Operating Officer and
Treasurer of the Company and a director. Mr. Glover joined the Company in
1984 and since that time has acted as its President. Mr. Glover is a Director
of SunTrust Banks of Georgia Inc., and SunTrust Bank, Atlanta, N.A. In
addition, he is a member of the Board of Governors of the National Association
of Real Estate Investment Trusts and Vice Chairman of the National Realty
Committee and a member of the board of directors of the National Multi-Housing
Council. Mr. Glover is 49 years old.
W. Daniel Faulk, Jr. Mr. Faulk has been with the Company for eight years.
Since April 1993, he has been President of Post Apartment Development, which is
responsible for the development and construction of all Post apartment
communities. Prior thereto, Mr. Faulk was President of Post Atlanta since
February 1987. Mr. Faulk is currently on the board of directors of Mountain
National Bank. Mr. Faulk is 53 years old.
10
<PAGE> 12
Jeffrey A. Harris. Mr. Harris has been with the Company for eleven years.
Since October 1995, he has been President of Post Management Services and
President of Post Landscape. Prior thereto, Mr. Harris was President of Post
Management Division from March 1995, Executive Vice President of Post
Management Division from April 1993 and Senior Vice President from 1989. Mr.
Harris is 38 years old.
William F. Leseman. Mr. Leseman has been with the Company for six years.
Since October 1995, he has been Executive Vice President of RAM responsible for
day-to-day operations of such division. Prior thereto, Mr. Leseman was Senior
Vice President of Post Management Services since January 1994 and an Area Vice
President of Post Management Services since 1989. Mr. Leseman is 36 years old.
Martha J. Logan. Ms. Logan has been with the Company since 1991. Since
October 1995, she has been President of Post Management Division. Prior
thereto, Ms. Logan was President of RAM since July 1994, Executive Vice
President of RAM from January 1994 and was Vice President of RAM since 1991.
Prior to joining RAM in 1991, Ms. Logan was an Executive with Pilot Property
Company, a multi-family property management company. Ms. Logan is 41 years
old.
Terry L. Chapman. Mr. Chapman has been with the Company for twenty-two years
and is currently, and has been for more than five years, an Executive Vice
President of Post Management Services responsible for maintenance, quality
assurance, security, and preventive maintenance for all Post(R) communities.
Mr. Chapman is 49 years old.
Richard A. Denny, III. Mr. Denny has been with the Company for fifteen years.
Since July 1993, he has been an Executive Vice President of Post Apartment
Development responsible for construction of all Post(R) apartment communities.
Prior thereto, he was a Senior Vice President of Post Atlanta since June 1987.
Mr. Denny is 38 years old.
John D. Hooks. Mr. Hooks has been with the Company for seventeen years. Since
July 1993, he has been an Executive Vice President of Post Landscape
responsible for landscape design, installation and maintenance on all Post(R)
communities. Prior thereto, he was the Senior Vice President of Landscape
since January 1987. Mr. Hooks is 41 years old.
Donald J. Rutzen. Mr. Rutzen has been with the Company for seventeen years.
Since 1993, he has been Executive Vice President of Post Landscape Services,
Inc. responsible for the day-to-day landscape design, installation and
maintenance for third party accounts. Prior thereto, he was Senior Vice
President of Post Landscape Services, Inc. since April 1992 and Vice President
since January 1985. Mr. Rutzen is 48 years old.
Sherry W. Cohen. Ms. Cohen has been with the Company for eleven years. Since
July 1993, she has been a Senior Vice President of Post Corporate Services
responsible for supervising and coordinating legal affairs and insurance.
Prior thereto, Ms. Cohen was a Vice President of Post Properties, Inc. since
April 1990, as well as Corporate Secretary. Ms. Cohen is 41 years old.
Judy M. Denman. Ms. Denman has been with the Company for twenty years. Since
July 1993, she has been a Senior Vice President of Post Corporate Services
responsible for day-to-day accounting functions and cash management reporting.
Prior thereto, she was a Vice President of Post Properties, Inc. since June
1984. Ms. Denman is 49 years old.
R. Gregory Fox. Mr. Fox has been with the Company since February 1996 and he
serves as Senior Vice President of Post Corporate Services and the Company's
Chief Accounting Officer. Prior to joining the Company, he was a senior
manager in the audit division of Price Waterhouse LLP where he was employed for
ten years. Mr. Fox is a Certified Public Accountant. Mr. Fox is 36 years old.
Leona McElroy. Ms. McElroy has been with the Company for twenty-four years.
Since July 1993, she has been a Senior Vice President of Post Corporate
Services responsible for special projects. Prior thereto, Ms. McElroy was Vice
President of Post Properties, Inc. since June 1984. Ms. McElroy is 71 years
old.
11
<PAGE> 13
John B. Mears. Mr. Mears has been with the Company since November 1993. Since
July 1994, he has been a Senior Vice President of Post Apartment Development
responsible for acquiring new development sites in the Company's primary market
outside of Atlanta, GA. Prior to joining the Company, Mr. Mears was an
associate in the Real Estate Investment Banking Group at Merrill Lynch and
Company. Mr. Mears is 32 years old.
Timothy A. Peterson. Mr. Peterson has been with the Company for six years.
Since April 1993, he has been a Senior Vice President of Post Corporate
Services, responsible for accounting and capital markets since November 1995,
and for Capital Markets from April 1993 to November 1995. Prior thereto, Mr.
Peterson was Vice President of Post Corporate Services since January 1993, and
he was responsible for planning and reporting services since 1989. Mr.
Peterson is a Certified Public Accountant. Mr. Peterson is 30 years old.
Janie S. Maddox. Ms. Maddox has been with the Company for twenty years. Since
November 1995, she has been a Vice President of the Company in charge of
community relations. Prior thereto, she was a Senior Vice President of Post
Management Services primarily responsible for human resources since 1990. Ms.
Maddox is 48 years old.
12
<PAGE> 14
PART II
ITEM 5. MARKET FOR THE REGISTRANTS COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The Common Stock has been traded on the New York Stock Exchanges ("NYSE") under
the symbol "PPS" since the Company's Initial Offering. The following table set
forth the quarterly high and low sales prices per share reported on the NYSE.
<TABLE>
<CAPTION>
DIVIDENDS
QUARTER ENDED HIGH LOW DECLARED
------------- ---- --- ---------
<S> <C> <C> <C>
1994
First Quarter . . . . . . . . . . . . . $33.250 $27.375 $0.45
Second Quarter . . . . . . . . . . . . 32.875 28.750 0.45
Third Quarter . . . . . . . . . . . . . 31.625 29.375 0.45
Fourth Quarter . . . . . . . . . . . . 32.875 28.250 0.45
1995
First Quarter . . . . . . . . . . . . . $31.875 $28.500 $0.49
Second Quarter . . . . . . . . . . . . 32.250 28.750 0.49
Third Quarter . . . . . . . . . . . . . 32.000 29.625 0.49
Fourth Quarter . . . . . . . . . . . . 32.250 29.250 0.49
</TABLE>
On March 1, 1996 the Company had 822 shareholders of record.
The Company pays regular quarterly dividends to holders of shares of Common
Stock. Future distributions by the Company will be at the discretion of the
board of directors and will depend on the actual funds from operations of the
Company, the Company's financial condition and capital requirements, the annual
distribution requirements under the REIT provisions of the Internal Revenue
Code (the "Code") and such other factors as the board of directors deems
relevant.
For a discussion of the Company's credit agreements and their restrictions on
dividend payments, see Liquidity and Capital Resources at Management's
Discussion and Analysis of Financial Condition and Results of Operations.
13
<PAGE> 15
ITEM 6. SELECTED FINANCIAL DATA
SELECTED FINANCIAL DATA
POST PROPERTIES, INC. AND PREDECESSOR
POST PROPERTIES, INC.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenue:
Rental . . . . . . . . . . . . . . . . . . $133,817 $115,309 $104,482 $ 94,754 $ 85,688
Property management (1) . . . . . . . . . . 2,764 2,508 3,057 2,793 2,296
Landscape services (1) . . . . . . . . . . 4,647 3,799 3,829 2,240 1,794
Other . . . . . . . . . . . . . . . . . . . 3,477 3,123 2,879 2,750 2,581
-------- -------- -------- -------- --------
Total revenue . . . . . . . . . . . . . . 144,705 124,739 114,247 102,537 92,359
Property operating and maintenance
expense (exclusive of depreciation
and amortization) . . . . . . . . . . . . 49,912 43,376 41,209 39,080 35,626
Depreciation . . . . . . . . . . . . . . . . 20,819 20,208 19,730 19,280 19,407
Property management expenses (1) . . . . . . 2,166 2,229 2,453 2,057 1,518
Landscape services expenses (1) . . . . . . . 3,950 3,098 3,151 1,998 1,544
Interest expense . . . . . . . . . . . . . . 22,698 19,231 34,309 41,548 43,074
Amortization of deferred loan costs, interest
rate protection agreement and swap gain,
net. . . . . . . . . . . . . . . . . . . . 1,967 1,999 969 2,105 2,920
General and administrative . . . . . . . . . 6,071 6,269 4,384 5,015 3,987
REIT formation expense . . . . . . . . . . . - - 2,783 - -
Minority interest in consolidated
property partnership . . . . . . . . . . . 451 680 692 655 617
-------- -------- -------- -------- --------
Income (loss) before minority interest
of unitholders, gain on sale of real
estate assets, net of income taxes and
extraordinary item . . . . . . . . . . . 36,671 27,649 4,567 (9,201) (16,334)
Minority interest of unitholders in
Operating Partnership . . . . . . . . . . (8,429) (6,951) (1,935) - -
Gain on sale of real estate assets, net of
income taxes . . . . . . . . . . . . . . . 1,746 1,494 - - -
-------- -------- -------- -------- --------
Income (loss) before extraordinary item . . . 29,988 22,192 2,632 (9,201) (16,334)
Extraordinary item, net of minority
interest . . . . . . . . . . . . . . . . . (870)(2) (3,293) (2) (7,855)(2) - -
-------- -------- -------- -------- --------
Net income (loss) . . . . . . . . . . . . . . $ 29,118 $ 18,899 $ (5,223) $ (9,201) $(16,334)
======== ======== ======== ======== ========
</TABLE>
(Selected financial data continued on following page)
14
<PAGE> 16
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1995 1994 1993 1992 1991
----- ----- ---------- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Income before extraordinary item . . . . $1.63 $1.32 $ 0.34 N/A N/A
Net income (loss) . . . . . . . . . . . . $1.58 $1.12 $(0.67) N/A N/A
Dividends declared . . . . . . . . . . . $1.96 $1.80 $ 0.77 (3) N/A N/A
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Real estate, before accumulated
depreciation . . . . . . . . . . . . . $937,924 $828,585 $722,266 $616,289 $588,416
Real estate, net of accumulated
depreciation . . . . . . . . . . . . . 781,100 686,009 599,898 513,651 505,058
Total assets . . . . . . . . . . . . . 812,984 710,973 627,322 536,961 527,498
Total debt . . . . . . . . . . . . . . 349,719 362,045 357,809 540,900 519,538
Shareholders' equity (deficit) . . . . 343,624 240,196 177,864 (25,812) (9,050)
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------------
1995 1994 1993 1992 1991
---------- -------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
OTHER DATA:
Cash flow provided from (used in):
Operating activities . . . . . . . $ 57,362 $ 43,807 $ 2,412 $ 11,400 $ 6,373
Investing activities . . . . . . . $ (114,531) $ (99,364) $ (51,152) $(28,696) $(43,555)
Financing activities . . . . . . . $ 60,885 $ 46,508 $ 49,647 $ 19,902 $ 31,600
Funds from operations (4) . . . . . . . $ 59,457 $ 49,856 $ 25,266 $ 12,184 $ 5,993
Weighted average common shares
outstanding . . . . . . . . . . . . 18,382,299 16,847,999 7,824,311 N/A N/A
Weighted average shares and units
outstanding . . . . . . . . . . . . 23,541,639 22,125,890 13,574,767 N/A N/A
Total stabilized communities
(at end of period) . . . . . . . . . 42 42 41 40 38
Total stabilized apartment units
(at end of period) . . . . . . . . . 14,962 14,845 14,270 14,088 13,532
Average economic occupancy
(stabilized communities) (5) . . . . 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) The extraordinary item 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 calculated
on the basis of weighted average Units outstanding for the year.
15
<PAGE> 17
(3) 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).
(4) The Company considers funds from operations, as defined by the National
Association of Real Estate Investment Trusts ("NAREIT"), to be an
appropriate measure of the performance of an equity REIT. For periods
ended prior to January 1, 1996, funds from operations was defined by NAREIT
to mean net income (loss) determined in accordance with GAAP, excluding
gains (or losses) from debt restructuring and sales of property, plus
depreciation and amortization, and after adjustment for unconsolidated
partnerships and joint ventures. Funds from operations should not be
considered as an alternative to net income (as determined in accordance
with GAAP) as an indicator of the Company's financial performance or to
cash flows 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. Adjustments
for all periods, as applicable, consisted only of minority interest of
unitholders in the Operating Partnership, gain on sale of real estate
assets (net of income taxes), depreciation and amortization, amortization
of deferred swap gain and extraordinary items. In March 1995, the NAREIT
modified the definition of funds from operations ("FFO"), among other
things, to eliminate amortization of deferred financing costs and
depreciation of non-real estate assets as items added back to net income
when computing FFO. The modified definition of FFO became effective for
periods ended after December 31, 1995. Under the modified definition, FFO
for the year ended December 31, 1995 and 1994 would have been $56,798 and
$47,616 respectively. FFO presented herein (whether defined under the old
or modified NAREIT definition) 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 modified NAREIT
definition.
(5) 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, taking account of these amounts, would have been 95.5% and 95.9%
for the year ended December 31, 1995 and 1994, respectively). For the year
ended December 31, 1995, concessions were $296 and employee discounts were
$213. 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 (ii) one year after completion of
construction.
16
<PAGE> 18
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND APARTMENT UNIT
DATA)
OVERVIEW
The following discussion should be read in conjunction with all of the
financial statements appearing elsewhere in this report. The following
discussion is based primarily on the Consolidated Financial Statements of Post
Properties, Inc.
During the fourth quarter of 1995, the Company completed a public equity
offering (the "Third Offering") of 3,710,500 shares of Common Stock. The net
proceeds of $105,278 were used to reduce debt. As of December 31, 1995, there
were 26,716,879 units outstanding, of which 21,577,636, or 80.8%, were owned by
the Company and 5,139,243, or 19.2% were owned by other limited partners
(including certain officers and directors of the Company).
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 expense as a result of the repayment
or economic defeasance of debt with proceeds of the Initial Offering and the
Second Offering.
COMMUNITY OPERATIONS
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.
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
operating communities which it had previously developed and operated.
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 revenue in
excess of specified expense on a comparative basis for all of its operating
communities combined and for communities which have reached stabilization prior
to January 1, 1994. The Company has
17
<PAGE> 19
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 each period are included and,
accordingly, different communities may be included in each period.
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 - -
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 - -
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.
(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.
18
<PAGE> 20
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.
19
<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 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>
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
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. (Average economic occupancy, taking account of 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.
20
<PAGE> 22
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>
21
<PAGE> 23
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.
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 cancelled effective in
January 1996. The Company expects income from Post Asset Management to
continue to decline as contracts are cancelled and not replaced.
22
<PAGE> 24
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 revenue . . . . . . . . . . . . . . . . . . . . $4,647 $3,799 22.3% $3,799 $3,829 (0.8)%
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 9 66.7% 9 0 -
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>
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
Depreciation expense increased from 1993 to 1994 and from 1994 to 1995
primarily due to the completion of new communities.
Interest expense increased from 1994 to 1995 due to additional outstanding
borrowings until the time of the Third Offering. The decrease from 1993 to
1994 is primarily due to the repayment or economic defeasance of debt with
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 the 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 a public company, write-off of costs ($282) relating to abandoned
development projects and additional incentive based executive compensation.
REIT formation 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.
23
<PAGE> 25
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 ($18,063) resulting from retirements of debt with contributions from
the Company 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 expense ($2,783), and increased from $43,807 in 1994 to $57,362 in
1995, principally due to increased property operating income. 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 of $15,152 from the sale of real
estate assets. 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 contributions from the Company of proceeds from the Initial and
Second Offering 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 the Third
Offering, the Company's dividend reinvestment plan ("DRIP"), additional
borrowings and dividend payments. During 1995, the Company received $16,171
through its DRIP.
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 December 31, 1995, the Company had total indebtedness of $349,719 and cash
and cash equivalents of $9,008. The Company's indebtedness includes
approximately $58,545 in conventional mortgages payable and $145,174 in
tax-exempt bond indebtedness secured by communities, senior unsecured notes of
$100,000, and borrowings under an unsecured line of credit totalling
approximately $46,000.
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 sale of properties
and the issuance of debt securities or additional equity securities of the
Company, 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 by the Company 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.
Line 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%. 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 Company's rating on senior
unsecured debt. On June 4, 1996, the Company received an upgrade on its senior
unsecured corporate credit rating, which furthur reduced the interest rate on
the Revolver to LIBOR plus 0.80%. 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
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 Operating Partnership 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. At December 31, 1995
the Company had $134,000 available under the Revolver to fund future
development and general corporate obligations.
In addition, the Company has a $3,000 facility to provide letters of credit for
general business purposes.
24
<PAGE> 26
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 (1.25% over the corresponding treasury rate on the date
such rate was set) and matures on June 7, 2000; and the second, aggregating
$20,000 carries an interest rate of 8.37% per annum (1.35% over the
corresponding treasury rate on the date such rate was set) 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 (1.10%
over the corresponding treasury rate on the date such rate was set). 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 four bond issues, aggregating
$39,795, which were concurrently reissued, and has agreed, subject to
certain conditions, to provide credit enhancement through June 1, 2025 for up
to an additional $114,733 ($9,354 of which is currently defeased) with respect
to eleven other bond issues which mature and may be refunded in 1996 through
1998. Under this agreement, on January 1, 1996, the Post Mill bonds were
refunded in the amount of $12,880 ($3,864 of which had previously been
defeased) with an issue enhanced by FNMA and maturing on June 1, 2025. The
agreement with FNMA contains representations, covenants, and events of default
customary to such secured loans.
Offering
On October 20, 1995, the Company completed a public offering of 3,175,000
shares of its Common Stock and a concurrent offering of 220,000 shares of its
Common Stock to certain executive officers. In connection with the public
offering, the Company granted the underwriters an option to purchase
additional shares to cover over-allotments. On November 8, 1995, the
underwriters exercised their over-allotment option and the Company issued an
additional 315,500 shares of its Common Stock, bringing the total shares issued
in this offering to 3,710,500. The net proceeds from the Third Offering of
$105,278 were used to repay certain secured indebtedness and to pay down the
Revolver.
Dividend Reinvestment Plan
The Dividend Reinvestment Plan ("DRIP") is available to all shareholders of
PPI. Under the DRIP, shareholders may elect for their dividends to be used to
acquire additional shares of PPI's Common Stock directly from PPI, for 95% of
the market price on the date of purchase.
25
<PAGE> 27
Schedule of Indebtedness
The following table reflects the Company's indebtedness at December 31, 1995.
<TABLE>
<CAPTION>
Maturity Principal
Community Location Interest Rate Date(1) Balance
- ---------------------------------------- ----------- ---------------------- ----------- -------
<S> <C> <C> <C> <C>
TAX EXEMPT FIXED RATE (SECURED)
Post Mill) . . . . . . . . . . . . . . Atlanta, GA 8.25% + 1.075% (3)(4) 01/01/96(5)(2) $ 9,016
Post Canyon . . . . . . . . . . . . . . Atlanta, GA 7.4% + .575% (3)(4) 07/01/96(5) 16,845
Post Corners . . . . . . . . . . . . . Atlanta, GA 7.4% + .575% (3)(4) 08/01/96(5) 14,760
Post Bridge . . . . . . . . . . . . . . Atlanta, GA 7.5% + .575% (3)(4) 01/01/97(5) 9,960
Post Village (Atlanta) Gardens . . . . Atlanta, GA 7.5% + .575% (3)(4) 01/01/97(5) 14,500
Post Chase . . . . . . . . . . . . . . Atlanta, GA 7.5% + .575% (3)(4) 07/01/97(5) 12,000
Post Walk . . . . . . . . . . . . . . . Atlanta, GA 7.5% + .575% (3)(4) 07/01/97(5) 15,000
Post Court . . . . . . . . . . . . . . Atlanta, GA 7.5% + .575% (3)(4) 06/01/98(5) 13,298
--------
105,379
--------
CONVENTIONAL FIXED RATE (SECURED)
Post Brookhaven:
(Phase III) . . . . . . . . . . . . . Atlanta, GA 6.00% 03/15/96(6) 8,050
(Phase I & II) . . . . . . . . . . . Atlanta, GA 8.80% 03/15/96(6) 17,050
Post Village (Atlanta) Arbors . . . . . Atlanta, GA 8.16% 02/10/97 7,728
Post Summit . . . . . . . . . . . . . . Atlanta, GA 7.72% 02/01/98 5,376
Post River . . . . . . . . . . . . . . Atlanta, GA 7.72% 03/01/98 5,941
--------
44,145
--------
TAX EXEMPT FLOATING RATE (SECURED)
Post Ashford Series 1995 . . . . . . . Atlanta, GA "AAA" NON-AMT + .575% (3)(4) 06/01/2025 9,895
Post Valley Series 1995 . . . . . . . . Atlanta, GA "AAA" NON-AMT + .575% (3)(4) 06/01/2025 18,600
Post Brook Series 1995 . . . . . . . . Atlanta, GA "AAA" NON-AMT + .575% (3)(4) 06/01/2025 4,300
Post Village (Atlanta) Hills . . . . .
Series 1995 . . . . . . . . . . . . . Atlanta, GA "AAA" NON-AMT + .575% (3)(4) 06/01/2025 7,000
--------
39,795
--------
CONVENTIONAL FLOATING RATE (SECURED)
Post Renaissance (Phase I and II) . . . Atlanta, GA LIBOR + .85% 07/01/98 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
--------
LINE OF CREDIT (UNSECURED)
Revolver . . . . . . . . . . . . . . . N/A LIBOR + 1.50% or prime minus .25% (7) 05/01/98(7) 46,000
--------
46,000
--------
TOTAL . . . . . . . . . . . . . . . . . $349,719
========
</TABLE>
26
<PAGE> 28
- ----------------
(1) All of the debt 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) On January 1, 1996, this bond was refunded with an issue having a maturity
date of June 1, 2025 and an interest rate of SunTrust Bank, Atlanta
Non-AMT "AAA" tax free rate plus a credit enhancement fee of .575%.
(3) Bond Financed (interest rate on bonds + credit enhancement fees).
(4) These bonds are cross collateralized and 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.
(5) Subject to certain conditions at re-issuance, the credit enhancement runs
to June 1, 2025.
(6) On March 15, 1996, this mortgage was repaid with proceeds drawn on the
Revolver.
(7) On March 1, 1996, the Line of Credit was amended to reduce the interest
rate to LIBOR plus 0.95% or prime minus 0.25% and extend the maturity to
May 1, 1999. On June 4, 1996, the Company received an upgrade on its
senior unsecured corporate credit rating, which further reduced the
interest rate on the Line of Credit to LIBOR plus 0.80%.
Refundable Tax Exempt Bonds
The Company has previously issued tax-exempt bonds, secured by certain
communities, totalling $235,880, of which $90,706 has been economically
defeased at December 31, 1995, leaving $145,174 of principal amount of
tax-exempt bonds outstanding at December 31, 1995. As of December 31, 1995,
$39,795 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. On
January 1, 1996, the Post Mill bonds were refunded in the amount of $12,880
($3,864 of which had previously been defeased) with an issue enhanced by FNMA
and maturing on June 1, 2025. 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 December 31, 1995, 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) $ 3,864 $ 40,621 $ 44,485
1997 5,490 51,460 56,950
1998 81,352 13,298 94,650
Thereafter - 39,795 39,795
------- -------- --------
$90,706 $145,174 $235,880
======= ======== ========
</TABLE>
(1) 1996 amounts include Post Mill bonds which matured on January 1, 1996.
27
<PAGE> 29
Current Development Activity
The Company's communities under development or in initial lease-up are
summarized in the following table:
<TABLE>
<CAPTION>
ACTUAL OR ACTUAL OR UNITS
ESTIMATED CONSTRUCTION ESTIMATED ESTIMATED LEASED
CONSTRUCTION COST QUARTER OF QUARTER QUARTER AS OF
# OF COST EXPENDED TO DATE CONSTRUCTION FIRST UNITS OF STABILIZED MARCH 1,
METROPOLITAN AREA UNITS (MILLIONS)(1) (MILLIONS)(2) COMMENCEMENT AVAILABLE OCCUPANCY 1996
- ----------------- ----- ------------- ---------------- ------------ ----------- ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Atlanta, GA
Post Dunwoody - phase II 328 $ 23 $ 17 4Q'94 3Q'95 3Q'96 236
Post Terrace 296 25 11 2Q'95 1Q'96 4Q'96 86
Post Crest 410 31 15 1Q'95 1Q'96 1Q'97 177
Post Collier Hills (3) 392 31 8 4Q'95 3Q'96 4Q'97 N/A
----- ------ ----- -----
1,426 110 51 499
----- ------ ----- -----
Tampa, FL
Post Rocky Point 452 29 28 1Q'94 1Q'95 1Q'96 416
Post Hyde Park I & II 270 21 18 3Q'94 2Q'95 2Q'96 248
----- ------ ----- -----
722 50 46 664
Fairfax, VA
Post Corners at Trinity
Centre 336 28 27 2Q'94 1Q'95 1Q'96 302
----- ------ ----- -----
Nashville, TN
Post Green Hills 166 16 14 4Q'94 3Q'95 1Q'96 164
----- ------ ----- -----
Charlotte, NC
Post South Park 402 31 5 4Q'95 3Q'96 3Q'97 N/A
----- ------ ----- -----
3,052 $ 235 $ 143 1,629
===== ====== ===== =====
</TABLE>
(1) Represents estimated total development costs, including capitalized
construction costs, lease-up deficits, and all construction period interest
(whether expensed or capitalized for financial reporting purposes.)
(2) Construction cost expended to date includes all costs associated with the
development and lease-up of the community, as of December 31, 1995,
including interest and other start-up costs which are expensed in the
Company's consolidated financial statements. The costs which were
expensed amounted to approximately $2,451 at December 31, 1995.
(3) Community classified as land held for future development on the December
31, 1995 consolidated balance sheet.
Land
The Company has acquired three parcels of land on which it plans to build new
communities. One of the parcels contained existing apartment buildings which
were demolished after year-end. The Company is also currently conducting
feasibility and other pre-development studies for possible new Post(R)
communities in its primary market areas.
28
<PAGE> 30
Other Activities
As of September 1, 1995, the Company acquired the 49.99% interest in Post Woods
that was held by a third party. The third party exercised its right to require
the Company to purchase its interest, and the Company purchased the interest
for $10,149 in cash and the assumption of the third party's share of
partnership liabilities.
On September 13, 1995, the Company sold three communities located in Florida
for an aggregate purchase price of approximately $22,645. The sale of these
communities in Daytona, Boynton Beach and Merritt Island, Florida, is
consistent with the Company's strategy of selling communities that no longer
meet the Company's existing ownership criteria. The communities will not be
managed by the Company and hence, will no longer be operated under the Post(R)
name.
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 year ended
December 31, 1995 and 1994 are summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
12/31/95 12/31/94
------------- ------------
<S> <C> <C>
New community development and acquisition activity $ 132,922 $ 102,956
Nonrecurring capital expenditures
Vehicle access control gates 428 1,302
Resident garages 859 -
Recurring capital expenditures
Carpet replacements 897 729
Other community additions and improvements 803 1,087
Corporate additions and improvements 1,267 783
------------- ------------
$ 137,176 $ 106,857
============= ============
</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 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.
NEW ACCOUNTING PRONOUNCEMENTS
For information on new accounting pronouncements, see Note 1 of Notes to
Consolidated Financial Statements.
FUNDS FROM OPERATIONS AND CASH AVAILABLE FOR DISTRIBUTION
Historical Funds from Operations
The Company considers funds from operations ("FFO") an appropriate measure of
performance of an equity REIT. For
29
<PAGE> 31
periods ended prior to January 1, 1996, funds from operations was defined to
mean net income (loss) determined in accordance with GAAP, excluding gains (or
losses) from debt restructuring and sales of property, plus depreciation and
amortization, and after adjustment for unconsolidated partnerships and joint
ventures. Funds from operations 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. 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, funds from operations
and cash available for distribution should be examined in conjunction with net
income as presented in the consolidated financial statements and data included
elsewhere in this report.
Funds from operations and cash available for distribution for the year ended
December 31, 1995 and 1994 presented on a historical basis are summarized in
the following table:
Calculations of Funds from Operations and Cash Available for Distribution
<TABLE>
<CAPTION>
Year ended
December 31,
----------------------------------------
1995 1994 1993
----------- ---------- ----------
<S> <C> <C> <C>
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,118 $ 18,899 $ (5,223)
Extraordinary item, net of minority interest . . . . . . . . . . . . . . . 870 3,293 7,855
Gain on sale of real estate assets . . . . . . . . . . . . . . . . . . . . (1,746) (2,832) -
Income tax related to gain on sale of real estate assets . . . . . . . . . - 1,338 -
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,429 6,951 1,935
----------- ---------- ----------
Adjusted net income. . . . . . . . . . . . . . . . . . . . . . . . . . . 36,671 27,649 4,567
Depreciation of real estate assets . . . . . . . . . . . . . . . . . . . 20,127 19,967 19,427
Depreciation of non-real estate assets . . . . . . . . . . . . . . . . . 692 241 303
Amortization of deferred loan costs,
interest rate protection agreement and swap gain, net . . . . . . . . 1,967 1,999 969
----------- ---------- ----------
Funds from Operations (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,457 49,856 25,266
Recurring capital expenditures (2) . . . . . . . . . . . . . . . . . . . . (2,967) (2,599) (2,047)
Non-recurring capital expenditures (3) . . . . . . . . . . . . . . . . . . (1,287) (1,302) (706)
Loan amortization payments . . . . . . . . . . . . . . . . . . . . . . . . (199) (184) (149)
----------- ---------- ----------
Cash Available for Distribution . . . . . . . . . . . . . . . . . . . . . . . . $ 55,004 $ 45,771 $ 22,364
=========== ========== ==========
Cash Flow Provided From (Used In):
Operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 57,362 $ 43,807 $ 2,412
Investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . (114,531) (99,364) (51,152)
Financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,885 46,508 49,647
Weighted average shares outstanding . . . . . . . . . . . . . . . . . . . . . . 18,382,299 16,847,999 7,824,311
=========== ========== ==========
Weighted average shares and units outstanding . . . . . . . . . . . . . . . . . 23,541,639 22,125,890 13,574,767
=========== ========== ==========
</TABLE>
30
<PAGE> 32
(1) In March 1995, NAREIT modified the definition of FFO, among
other things, to eliminate amortization of deferred financing
costs and depreciation of non-real estate assets as items added
back to net income when computing FFO. The modified definition
of FFO became effective for periods ended after December 31,
1995. Under the modified definition, FFO for the year ended
December 31, 1995 and 1994 would have been $56,798 and $47,616,
respectively. Since all companies do not calculate FFO in
accordance with NAREIT's modified definition, the Company's FFO
is only comparable to those companies using NAREIT's modified
definition.
(2) Recurring capital expenditures consisted primarily of $897 and
$729 of carpet replacement, $803 and $1,087 of other additions
and improvements to existing communities, $1,267 and $783 of
capitalized expenditures at the corporate level for the year
ended December 31, 1995 and 1994, respectively.
(3) Non-recurring capital expenditures consisted of the additions of
vehicle access control gates to communities of $428 and $1,302
and the additions of resident garages to certain communities
of $859 and $0, for the years ended December 31, 1995 and
1994, respectively.
Disclosure Regarding Forward-Looking Statements
The Company considers this information to be forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of The
Securities Exchange Act of 1934. Although the Company believes that the
expectations reflected in such forward-looking statements are based upon
reasonable assumptions, it can give no assurance that its expectations will be
achieved.
31
<PAGE> 33
ITEM 8. FINANCIAL STATEMENT AND SUPPLEMENTARY DATA
The financial statements are listed under Item 14(a) and are filed as part of
this report on the pages indicated. The supplementary data are included in
Note 13 of the Notes to Consolidated Financial Statements.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The sections under the heading "Election of Directors" entitled "Nominees for
Election -- Term Expiring 1996," "Incumbent Directors -- Term Expiring 1997,"
and "Incumbent Directors -- Term Expiring 1998" of the Proxy Statement for
Annual Meeting of Shareholders to be held May 16, 1996 (the Proxy Statement")
are incorporated herein by reference for information on Directors of the
Registrant. See Item X in Part I hereof for information regarding executive
officers of the Registrant. The section under the heading "Other Matters"
entitled "Compliance with Section 16(a) of the Securities Exchange Act of 1934"
of the Proxy Statement is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The section under the heading "Election of Directors" entitled "Compensation of
Directors" of the Proxy Statement and the sections under the heading titled
"Executive Compensation" entitled "Compensation Committee Interlocks and
Insider Participation" of the Proxy Statement are incorporated herein by
reference.
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the compensation
paid to the Company's Named Executive Officers whose salary and bonus
compensation for the year ended December 31, 1995 exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
AWARDS
OTHER SECURITIES
NAME AND ANNUAL UNDERLYING
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION(1) OPTIONS(#)
------------------ ---- --------- -------- --------------- -----------
<S> <C> <C> <C> <C> <C>
John A. Williams. . . . . . . . . . . . 1995 225,000 143,640 74,606 36,791
Chairman of the Board. . . . . . . . 1994 225,000 157,500 ----- 28,640
of Directors and Chief . . . . . . . 1993 171,923 ----- ----- 40,000
Executive Officer
John T. Glover. . . . . . . . . . . . . 1995 225,000 143,640 39,470 36,791
President, Chief . . . . . . . . . . 1994 225,000 157,500 ----- 28,640
Operating Officer. . . . . . . . . . 1993 171,923 ----- ----- 40,000
and Treasurer
W. Daniel Faulk, Jr. . . . . . . . . . 1995 160,000 87,144 ----- 22,322
President--Post . . . . . . . . . . 1994 140,000 98,000 ----- 17,820
Apartment Development . . . . . . . . 1993 117,887 30,000 ----- 25,000
Jeffrey A. Harris . . . . . . . . . . . 1995 130,000 66,394 ----- 17,005
President--Post . . . . . . . . . . . 1994 104,800 84,000 ----- 15,280
Management Services . . . . . . . . . 1993 92,056 40,000 ----- 15,000
Richard A. Denny III . . . . . . . . . 1995 115,000 45,885 ----- 11,753
Executive Vice President. . . . . . . 1994 94,849 75,000 ----- 13,640
Post Apartment Development. . . . . . 1993 78,688 4,000 ----- 15,000
R. Field Hooks(2) . . . . . . . . . . . 1995 160,000 66,608 ----- -----
President--Post . . . . . . . . . . . 1994 140,000 98,000 ----- 17,820
Management Services . . . . . . . . . 1993 117,887 45,000 ----- 25,000
</TABLE>
- ------------------
(1) Amounts shown for Messr. Williams and Glover for 1995 include (i) the cost
of tax and financial planning advice by third parties in the amounts of
$49,000 and $29,600, respectively and (ii) personal use of the corporate
aircraft in the amounts of $25,606 and $9,870, respectively.
(2) Mr. Hooks resigned from the Company on October 4, 1995.
FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth certain information with respect to the
value of unexercised in-the-money options held by the Named Executive Officers
of the Company at December 31, 1995. No options were exercised by the Named
Executive Officers of the Company during 1995.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Securities Underlying Value of
Number of Unexercised
Unexercised In-The-Money
Options Options
at FY-End(#) at FY-End($)
Exercisable/ Exercisable/
Name Unexercisable Unexercisable(1)
- ----- ------------- ----------------
<S> <C> <C>
John A. Williams ................................. 26,666/29,974 $13,167/$67,527
John T. Glover.................................... 26,666/29,974 $13,167/$67,527
W. Daniel Faulk, Jr. ............................. 16,666/26,154 $8,333/$42,034
Jeffrey A. Harris................................. 10,000/20,280 $5,000/$34,970
Richard A. Denny III ............................. 10,000/18,640 $5,000/$31,485
R. Fred Hooks(2).................................. 16,666/26,154 $8,333/$42,034
</TABLE>
- -------------------
(1) Based on closing price of $31.875 per share of Common Stock on December 31,
1995.
(2) Mr. Hooks resigned from the Company on October 4, 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The section under the heading "Common Stock Ownership by Management and
Principal Shareholders" of the Proxy Statement is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The section under the heading "Certain Transactions" of the Proxy Statement is
incorporated herein by reference.
32
<PAGE> 34
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. and 2. FINANCIAL STATEMENT AND SCHEDULES
The financial statement and schedules listed below are filed as part
of this annual report on the pages indicated.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
POST PROPERTIES, INC.
Consolidated Financial Statements:
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Consolidated Balance Sheets as of December 31, 1995 and 1994 . . . . . . . . . . . . . . . . 38
Consolidated Statements of Operations for the Years Ended December 31, 1995,
1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Consolidated Statements of Shareholders' Equity and Accumulated Deficit for the
Years Ended December 31, 1995, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . 40
Consolidated Statements of Cash Flows for the Years Ended December 31, 1995,
1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 42
Schedule III:
Consolidated Real Estate and Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . 55
All other schedules are omitted because they are not applicable or not required.
</TABLE>
33
<PAGE> 35
POST PROPERTIES, INC. - 1995 NON-QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
The following Financial Statements were included in the Company's Annual Report
on Form 10-K and are deemed to be included herein:
Report of Independent Accountants
Statement of Net Assets Available for Plan Benefits as of December 31, 1995
Statement of Changes in Net Assets Available for Plan Benefits for the year
ended December 31, 1995
Notes to Financial Statements
3. EXHIBITS
Certain of the exhibits required by Item 601 of Regulation S-K have been filed
with previous reports by the registrant and are herein incorporated by
reference thereto.
The Registrant agrees to furnish a copy of all agreements relating to long-term
debt upon request of the Commission.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- ---------------------------------------------------------------------------------------------
<S> <C>
3.1* -- Articles of Incorporation of the Company
3.2* -- Bylaws of the Company
10.1** -- Agreement of Limited Partnership of the Operating Partnership
10.2** -- Registration Rights and Lock-Up Agreement among the Company and the persons named therein
10.3** -- Employee Stock Plan
10.4** -- Noncompetition Agreement between the Company, the Operating Partnership and John A. Williams
10.5** -- Noncompetition Agreement between the Company, the Operating Partnership and John T. Glover
10.6** -- Employment Agreement between the Company and John A. Williams
10.7** -- Employment Agreement between the Company and John T. Glover
10.8** -- Employment Agreement between the Operating Partnership and John A. Williams
10.9** -- Employment Agreement between the Operating Partnership and John T. Glover
10.10** -- Employment Agreement between Post Services, Inc. and John A. Williams
10.11** -- Employment Agreement between Post Services, Inc. and John T. Glover
10.12** -- Option and Transfer Agreement among the Operating Partnership, Post Services, John A. Williams
and John T. Glover
10.13** -- Promissory Note made by Post Services, Inc. in favor of RAM Partners, Inc.
10.14* -- Form of officers and directors Indemnification Agreement
10.15* -- Form of Option Agreement to be entered into between the Operating Partnership and the owners
of four parcels of undeveloped land
10.16* -- Profit Sharing Plan of the Company
10.17** -- Form of General Partner 1% Exchange Agreement
10.18+ -- Employee Stock Purchase Plan
10.19++ -- Dividend Reinvestment and Stock Purchase Plan
10.20- -- Credit Agreement dated as of February 1, 1995 among Post Apartment Homes, L.P., Wachovia
Bank of Georgia, N.A., as administrative agent, First Union National Bank of Georgia, as
Co-Agent, and the banks listed on the signature pages thereto (the "Credit Agreement")
</TABLE>
34
<PAGE> 36
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- -------- --------------------------------------------------------------------------------------------
<S> <C>
10.21+++ -- First Amendment to Credit Agreement and Release of Subsidiary Guarantors dated July 26, 1995
10.22+++ -- Second Amendment to Credit Agreement dated October 27, 1995
10.23+++ -- Third Amendment to Credit Agreement dated February 29, 1996
21.1 +++ -- List of Subsidiaries
23.1 -- Consent of Price Waterhouse LLP for Registration Statement on Form S-8 (No. 33-85712)
23.2 -- Consent of Price Waterhouse LLP for Registration Statement on Form S-8 (No. 33-86674)
23.3 -- Consent of Price Waterhouse LLP for Registration Statement on Form S-3 (No. 33-81772)
23.4 -- Consent of Price Waterhouse LLP for Registration Statement on Form S-3 (No. 33-85714)
</TABLE>
- ------------
* Filed as an exhibit to the Registration Statement on Form S-11 (SEC
File No. 33-61936), as amended, of the Registrant.
** Filed as an exhibit to the Registration Statement on Form S-11 (SEC
File No. 33-71650), as amended, of the Registrant.
+ Filed as an exhibit to the Registration Statement on Form S-8 (SEC
File No. 33-86674) of the Registrant.
++ Filed as part of the Registration Statement on Form S-3 (SEC File No.
33-81772) of the Registrant.
+++ Filed as an exhibit to the Annual Report on Form 10-K for the year
ended December 31, 1995.
The registrant's proxy statement was filed with the Commission on
or about March 31, 1996.
- - Filed as an exhibit to the Annual Report on Form 10-K for the year
ended December 31, 1994.
(b) REPORTS ON FORM 8-K
There have been no reports filed on Form 8-K by the registrant during
the fourth quarter of 1995.
35
<PAGE> 37
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
POST PROPERTIES, INC.
(Registrant)
July 23, 1996 John T. Glover
---------------------------------------
John T. Glover, President,
Chief Operating Officer, Treasurer
and a Director
(Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
* Chairman of the Board, July 23, 1996
-------------------------- Chief Executive Officer and
John A. Williams Director
John T. Glover President, Chief Operating July 23, 1996
-------------------------- Officer, Treasurer, Principal
John T. Glover Financial Officer, and Director
R. Gregory Fox Senior Vice President, July 23, 1996
-------------------------- Chief Accounting Officer
R. Gregory Fox
* Director July 23, 1996
--------------------------
Arthur M. Blank
* Director July 23, 1996
--------------------------
Herschel M. Bloom
* Director July 23, 1996
--------------------------
Virginia C. Crawford
* Director July 23, 1996
--------------------------
Russell R. French
Director July 23, 1996
--------------------------
William A. Parker, Jr.
Director July 23, 1996
--------------------------
J.C. Shaw
</TABLE>
*By: Timothy A. Peterson
-------------------
Timothy A. Peterson
Attorney-in-fact
36
<PAGE> 38
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Post Properties, Inc.
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a) 1. and 2. on page 33 present fairly, in all material
respects, the financial position of Post Properties, Inc. at December 31, 1995
and 1994, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the management of Post Properties, Inc.; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Atlanta, Georgia
March 8, 1996
37
<PAGE> 39
POST PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1994
--------- --------
<S> <C> <C>
ASSETS
Real estate assets
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 118,988 $ 114,971
Building and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 589,869 561,264
Furniture, fixtures and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,354 66,257
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149,514 68,972
Land held for future development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,199 17,121
--------- ---------
937,924 828,585
Less: accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (156,824) (142,576)
--------- ---------
Operating real estate assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 781,100 686,009
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,008 5,292
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,146 8,357
Deferred charges, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,241 5,812
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,489 5,503
--------- ---------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 812,984 $ 710,973
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 349,719 $ 362,045
Accrued interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,965 5,136
Dividend payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,573 7,737
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,023 15,602
Deferred swap income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331 576
Security deposits and prepaid rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,366 4,153
--------- ---------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384,977 395,249
--------- ---------
Minority interest of unitholders in Operating Partnership . . . . . . . . . . . . . . . . . . 84,383 75,528
--------- ---------
Commitments and contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Preferred stock, $.01 par value, 20,000,000
authorized, 0 shares issued and outstanding . . . . . . . . . . . . . . . . . . . . . . . - -
Common stock, $.01 par value, 100,000,000
authorized, 21,577,636 and 17,193,556 shares
issued and outstanding at December 31, 1995
and December 31, 1994, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . 216 172
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343,408 256,377
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - (16,353)
--------- ---------
Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343,624 240,196
--------- ---------
Total liabilities and shareholders' equity . . . . . . . . . . . . . . . . . . . . . . $ 812,984 $ 710,973
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
38
<PAGE> 40
POST PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1995 1994 1993
----------- ----------- ----------
<S> <C> <C> <C>
REVENUES
Rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 133,817 $ 115,309 $ 104,482
Property management . . . . . . . . . . . . . . . . . . . . . . . . . . 2,764 2,508 3,057
Landscape services . . . . . . . . . . . . . . . . . . . . . . . . . . 4,647 3,799 3,829
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 593 442 469
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,884 2,681 2,410
----------- ----------- ----------
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . 144,705 124,739 114,247
----------- ----------- ----------
EXPENSES
Property operating and maintenance (exclusive of items
shown separately below) . . . . . . . . . . . . . . . . . . . . . . . . 49,912 43,376 41,209
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,819 20,208 19,730
Property management . . . . . . . . . . . . . . . . . . . . . . . . . . 2,166 2,229 2,453
Landscape services . . . . . . . . . . . . . . . . . . . . . . . . . . 3,950 3,098 3,151
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,698 19,231 34,309
Amortization of deferred loan costs, interest rate protection agreement
and swap gain, net . . . . . . . . . . . . . . . . . . . . . . . . 1,967 1,999 969
General and administrative . . . . . . . . . . . . . . . . . . . . . . 6,071 6,269 4,384
REIT formation expense . . . . . . . . . . . . . . . . . . . . . . . . - - 2,783
Minority interest in consolidated property partnership . . . . . . . . 451 680 692
----------- ----------- ----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 108,034 97,090 109,680
----------- ----------- ----------
Income before gain on sale of real estate assets and related income tax,
minority interest of unitholders in Operating Partnership
and extraordinary item . . . . . . . . . . . . . . . . . . . . . . . 36,671 27,649 4,567
Gain on sale of real estate assets . . . . . . . . . . . . . . . . . . 1,746 2,832 -
Income tax related to gain on sale of real estate assets . . . . . . . - (1,338) -
Minority interest of unitholders in Operating Partnership . . . . . .
(8,429) (6,951) (1,935)
----------- ----------- ----------
Income before extraordinary item . . . . . . . . . . . . . . . . . . . 29,988 22,192 2,632
Extraordinary item, net of minority interest of unitholders
in Operating Partnership . . . . . . . . . . . . . . . . . . . . . . (870) (3,293) (7,855)
----------- ----------- ----------
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,118 $ 18,899 $ (5,223)
=========== =========== ==========
PER SHARE DATA:
Weighted average common shares outstanding . . . . . . . . . . . . . . 18,382,299 16,847,999 7,824,311
=========== =========== ==========
Income before extraordinary item . . . . . . . . . . . . . . . . . . . $ 1.63 $ 1.32 $ 0.34
=========== =========== ==========
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.58 $ 1.12 $ (0.67)
=========== =========== ==========
Dividends declared . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.96 $ 1.80 $ 0.77
=========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
39
<PAGE> 41
POST PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND
ACCUMULATED (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON PAID-IN ACCUMULATED
SHARES CAPITAL (DEFICIT) TOTAL
------- --------- ----------- ---------
<S> <C> <C> <C> <C>
PARTNERS' AND OWNERS' DEFICIT,
DECEMBER 31, 1992 . . . . . . . . . . . . . . . . . . . . $ - $ - $ (25,812) $ (25,812)
Capital contributions . . . . . . . . . . . . . . . . - - 3,043 3,043
Capital distributions . . . . . . . . . . . . . . . . - - (10,640) (10,640)
Shareholder and partner notes exchanged for . . . . .
shares or units . . . . . . . . . . . . . . . . . . - - 3,426 3,426
Shares issued in exchange for interest in
entities included in PPG at date of Initial
Offering . . . . . . . . . . . . . . . . . . . . . . 29 - (29) -
Proceeds of Initial Offering, net of underwriting
discount and offering costs of $23,205 . . . . . . . 106 246,479 - 246,585
Acquisition of non-controlled interests in
entities included in PPG where cash
consideration was involved . . . . . . . . . . . . . - 53,773 - 53,773
Adjustment for minority interest of unitholders
in Operating Partnership at date of Initial
Offering and at subsequent conversions of units
to shares . . . . . . . . . . . . . . . . . . . . . 5 (76,476) (15) (76,486)
Net loss . . . . . . . . . . . . . . . . . . . . . . . - - (5,223) (5,223)
Dividends paid . . . . . . . . . . . . . . . . . . . . - (4,489) - (4,489)
Dividends declared . . . . . . . . . . . . . . . . . . - (6,313) - (6,313)
------- --------- ----------- ---------
SHAREHOLDERS' EQUITY AND ACCUMULATED
(DEFICIT), DECEMBER 31, 1993 . . . . . . . . . . . . . . . 140 212,974 (35,250) 177,864
Proceeds of Second Offering, net of underwriting
discount and offering costs of $5,550, and
costs of Shelf Registration of $269 . . . . . . . . 30 82,651 - 82,681
Adjustment for minority interest of unitholders
in Operating Partnership at date of Second Offering - (8,345) - (8,345)
Conversions of units to shares . . . . . . . . . . . . 2 - (2) -
Net income . . . . . . . . . . . . . . . . . . . . . . - - 18,899 18,899
Dividends paid . . . . . . . . . . . . . . . . . . . . - (23,166) - (23,166)
Dividends declared . . . . . . . . . . . . . . . . . . - (7,737) - (7,737)
------- --------- ----------- ---------
SHAREHOLDERS' EQUITY AND ACCUMULATED
(DEFICIT), DECEMBER 31, 1994 . . . . . . . . . . . . . . . 172 256,377 (16,353) 240,196
Proceeds of Third Offering, net of underwriting
discount and offering costs of $6,501 . . . . . . . 37 105,241 - 105,278
Adjustment for minority interest of unitholders in
Operating Partnership at date of Third Offering . . - (10,598) - (10,598)
Proceeds from Dividend
Reinvestment Plan . . . . . . . . . . . . . . . . . . 6 16,165 - 16,171
Conversion of units to shares . . . . . . . . . . . . 1 - (1) -
Net income . . . . . . . . . . . . . . . . . . . . . . - - 29,118 29,118
Dividends paid . . . . . . . . . . . . . . . . . . . . - (22,071) (3,897) (25,968)
Dividends declared . . . . . . . . . . . . . . . . . . - (1,706) (8,867) (10,573)
------- --------- ----------- ---------
SHAREHOLDERS' EQUITY AND ACCUMULATED
(DEFICIT), DECEMBER 31, 1995 . . . . . . . . . . . . . . . $ 216 $ 343,408 $ - $ 343,624
======= ========= =========== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
40
<PAGE> 42
POST PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,118 $ 18,899 $ (5,223)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Minority interest of unitholders in Operating Partnership . . . . . . . . . . . . 8,175 5,819 (3,838)
Gain on sale of real estate assets, net of related income tax . . . . . . . . . . (1,746) (1,488) -
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,819 20,208 19,730
Write-off of deferred swap income . . . . . . . . . . . . . . . . . . . . . . . . - (1,485) (2,503)
Write-off of deferred financing costs . . . . . . . . . . . . . . . . . . . . . . 1,120 1,139 1,865
Amortization of deferred loan costs, interest rate protection agreement and swap gain 1,967 1,999 969
Changes in assets, (increase) decrease in:
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,211 (7,211) (301)
Organization costs and other deferred charges . . . . . . . . . . . . . . . . . . (90) 134 -
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,122) (1,655) (3,379)
Changes in liabilities, increase (decrease) in:
Accrued interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,171) 3,058 (6,801)
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . 868 4,143 1,265
Security deposits and prepaid rents . . . . . . . . . . . . . . . . . . . . . . . 213 247 628
-------- -------- --------
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . 57,362 43,807 2,412
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Construction of real estate assets, and land acquisitions,
net of payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (117,120) (99,529) (25,733)
Proceeds from sale of real estate assets . . . . . . . . . . . . . . . . . . . . . . 22,645 7,493 -
Capitalized interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,653) (3,427) (666)
Recurring capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,967) (2,599) (2,047)
Non-recurring capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . (1,287) (1,302) (706)
Purchase of minority interests in property partnerships . . . . . . . . . . . . . . . (10,149) - (22,000)
-------- -------- --------
Net cash (used in) investing activities . . . . . . . . . . . . . . . . . . . . . . . (114,531) (99,364) (51,152)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,614) (1,385) (193)
Purchase of interest rate protection agreement . . . . . . . . . . . . . . . . . . . - - (3,265)
Debt proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 362,196 140,122 44,692
Debt payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (374,522) (135,886) (221,319)
Due to (from) shareholders and partners, net . . . . . . . . . . . . . . . . . . . . - - (3,038)
Offering proceeds, net of underwriters discount and offering costs . . . . . . . . . 105,278 82,681 246,585
Proceeds from Dividend Reinvestment Plan . . . . . . . . . . . . . . . . . . . . . . 16,171 - -
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - 3,043
Capital distributions to unitholders or partners . . . . . . . . . . . . . . . . . . (9,919) (9,545) (12,369)
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (33,705) (29,479) (4,489)
-------- -------- --------
Net cash provided by financing activities . . . . . . . . . . . . . . . . . . . . . . 60,885 46,508 49,647
-------- -------- --------
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . 3,716 (9,049) 907
Cash and cash equivalents, beginning of period . . . . . . . . . . . . . . . . . . . 5,292 14,341 13,434
-------- -------- --------
Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . . . . . . . $ 9,008 $ 5,292 $ 14,341
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
41
<PAGE> 43
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
1. ORGANIZATION AND FORMATION OF THE COMPANY
ORGANIZATION AND FORMATION OF THE COMPANY
Post Properties, Inc. (the "Company") which was incorporated on January 25,
1984 is the successor by merger to the original Post Properties, Inc., a
Georgia Corporation which was formed in 1971. The Company was formed to
develop, lease and manage upscale multi-family apartment communities. On July
22, 1993, the Company completed the Initial Offering and a business combination
involving entities under varying common ownership ("Formation Transactions").
The entities included in the business combination are collectively referred to
as Post Properties Group ("PPG"). Proceeds from the Initial Offering were used
to acquire a controlling interest in the Post Apartment Homes, L.P. (the
"Operating Partnership") which was formed to succeed to substantially all of
the ownership interest in the Initial Communities and to the development,
leasing, landscaping and management business of the Company and certain other
affiliates.
On February 7, 1994, the Company completed the Second Offering. The net
proceeds from the Second Offering were used to repay or economically defease
certain mortgage and construction indebtedness on the Communities.
On October 20, 1995, the Company completed the Third Offering. The net
proceeds from the Third Offering were used to repay certain mortgage
indebtedness and to repay borrowings under a line of credit.
The Company elected to be taxed as a real estate investment trust ("REIT") for
Federal income tax purposes beginning with the taxable year ended December 31,
1993. A corporate REIT is a legal entity which holds real estate interest and,
through payments of dividends to shareholders, is permitted to reduce or avoid
the payment of Federal income taxes at the corporate level.
The Company currently owns and manages or is in the process of developing
apartment communities located in the Atlanta, Tampa, Northern Virginia,
Nashville and Charlotte metropolitan areas. Approximately 75.0% and 10.3% (on
a unit basis) of the Company's properties are located in the Atlanta and Tampa
metropolitan areas, respectively.
BASIS OF PRESENTATION
For the periods after the Initial Offering, the accompanying consolidated
financial statements include the consolidated accounts of the Company and the
Operating Partnership. For the periods prior to the Initial Offering, the
accompanying consolidated financial statements reflect the combined accounts of
PPG. For 1993, the year of the business combination, predecessor and successor
operations are combined since there was a high degree of common ownership
before and after the transaction.
The business combination was structured to allow the partners and owners of the
entities in PPG the option of retaining their existing ownership interest,
receiving shares of the common stock of the Company, or receiving limited
partnership interests ("Units") in the Operating Partnership. The entities in
PPG were either limited partnerships or S corporations with a high degree of
common ownership. (Units can be exchanged, with certain restrictions, for cash
or for shares of the Company on a one-for-one basis at the Company's option).
Purchase accounting was applied to the acquisition of all non-controlled
interests in which cash consideration was paid. The acquisition of all other
interests was accounted for as a reorganization of entities under common
control and, accordingly, was reflected at historical cost in a manner similar
to that in pooling of interests accounting.
All significant intercompany accounts and transactions have been eliminated in
consolidation. The consolidated financial statements of Post Properties, Inc.
have been adjusted for the effect of a minority interest in one property
partnership. The consolidated financial statements of the Company for the
periods ending after the Initial Offering have been adjusted for the minority
interest of unitholders in the Operating Partnership. Since units can be
redeemed for shares of the Company on a one-for-one basis at the Company's
option, minority interest of unitholders in the Operating Partnership is
calculated based on the weighted average of shares and units outstanding during
the period. For purposes of this calculation, shares of
42
<PAGE> 44
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
common stock issued at the date of the Initial Offering in exchange for
interests in entities included in PPG are treated as if such shares of common
stock were outstanding at the beginning of the period. Shares of common stock
issued to the public in the Initial Offering, Second Offering and Third
Offering and upon subsequent conversions of units for shares are assumed
outstanding from the date of issuance.
Certain items in the Consolidated Financial Statements were reclassified for
comparative purposes.
NEW ACCOUNTING PRONOUNCEMENTS
In the first quarter of 1996, the Company intends to adopt SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of". This statement requires that long-lived assets and certain
identified intangibles to be held and used by an entity be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The statement requires the
use of undiscounted estimated gross cash flows expected from the asset's
operations and eventual disposition. If the sum of the expected future cash
flows are less than the carrying value of the asset, an impairment loss is
recognized based on the fair value of the asset, less cost to sell. The
current estimated undiscounted future operating cash flows and eventual
proceeds from disposition of each of the Company's real estate assets are
greater than the carrying value of each of these assets. As a result,
management anticipates there should be no effect on the Company's consolidated
statement of operations or shareholder's equity upon adoption.
During 1996, the Company will adopt SFAS 123, "Accounting for Stock-Based
Compensation". This statement provides entities a choice between fair value
based or intrinsic value based, the Company's existing method, accounting for
stock based compensation such as stock options and employee stock purchase
plans. Entities electing to remain with the existing method of accounting must
make pro forma disclosures of net income and earnings per share as if the fair
value method had been applied. The Company intends to choose the existing
method of accounting for its stock-based compensation plans. As a result, this
statement will not have a material effect on the Company's consolidated
statements of operations or shareholders' equity upon adoption.
REAL ESTATE ASSETS AND DEPRECIATION
Real estate assets are stated at the lower of depreciated cost or net
realizable value. Ordinary repairs and maintenance are expensed as incurred;
major replacements and betterments are capitalized and depreciated over their
estimated useful lives. Depreciation is computed on a straight-line basis over
the useful lives of the properties (buildings and components and related land
improvements -- 20-40 years; furniture, fixtures and equipment -- 5 years).
REVENUE RECOGNITION
Rental -- Residential properties are leased under operating leases with terms
of generally one year or less. Rental income is recognized when earned, which
is not materially different from revenue recognition on a straight line basis.
Property management and landscaping services -- Income is recognized when
earned for property management and landscaping services provided to third
parties.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, all investments purchased with an
original maturity of three months or less are considered to be cash
equivalents.
43
<PAGE> 45
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
RESTRICTED CASH
Restricted cash generally is comprised of resident security deposits for
communities located in Florida and required maintenance reserves for
communities located in DeKalb County, Georgia. At December 31, 1994, restricted
cash also included amounts received from the advance refunding of certain bond
indebtedness which was held in escrow to repay the original bonds on January 1,
1995. When these bonds were retired, a portion ($3,150) of the defeasance
escrow was released back to the Company.
ORGANIZATION COSTS AND AMORTIZATION
Certain entities included in PPG incurred legal fees and other costs associated
with their formation. These costs were capitalized and amortized over 60
months. However, in connection with the Formation Transactions all unamortized
portions of these costs were written off.
DEFERRED FINANCING COSTS
Deferred financing costs are amortized using the interest method over the terms
of the related debt.
INTEREST AND REAL ESTATE TAXES
Interest and real estate taxes incurred during the construction period are
capitalized and depreciated over the lives of the constructed assets. Interest
paid (net of capitalized amounts of $5,653, $3,427 and $666 during 1995, 1994
and 1993, respectively, and interest rate protection receipts of $1,539 and
$384 during 1995 and 1994) aggregated $28,343, $21,234 and $41,776 for the
years ended December 31, 1995, 1994 and 1993, respectively.
INTEREST RATE SWAP AGREEMENTS
Swap receipts and payments under interest rate swap agreements designated as a
hedge are recognized as adjustments to interest expense when earned and are
reflected as operating activities in the statement of cash flows. Settlement
payments or receipts on terminated interest rate swap agreements are deferred
and amortized over the remaining original period of the swap, as long as the
hedged borrowing is still outstanding. Settlement payments or receipts on
terminated interest rate swap agreements are reflected as financing activities
in the statement of cash flows.
INTEREST RATE PROTECTION AGREEMENTS
Premiums paid to purchase interest rate protection agreements are capitalized
and amortized over the terms of those agreements using the interest method.
Unamortized premiums are included in other assets in the consolidated balance
sheet. Amounts receivable under the interest rate protection agreements are
accrued as a reduction of interest expense.
PER SHARE DATA
Earnings per share with respect to the Company for the years ended December 31,
1995, 1994 and 1993 is computed based upon the weighted average number of
shares outstanding during the period.
44
<PAGE> 46
POST PROPERTIES, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
PARTNERS' CAPITAL CONTRIBUTIONS, DISTRIBUTIONS AND PROFIT AND LOSS WITH RESPECT
TO ENTITIES INCLUDED IN PPG
Partners' capital contributions, distributions and profit and loss are
allocated in accordance with the terms of individual partnership agreements.
Generally, these items are allocated in proportion to respective ownership
interest. Certain agreements also provide for preference return to limited
partners.
USE OF ESTIMATES IN FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
45
<PAGE> 47
POST PROPERTIES, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- -------------------------------------------------------------------------------
2. DEFERRED CHARGES
Deferred charges consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1995 1994
-------- ---------
<S> <C> <C>
Deferred financing costs . . . . . . . . . . $ 15,411 $ 16,236
Other . . . . . . . . . . . . . . . . . . . . 1,340 1,867
-------- --------
16,751 18,103
Less: accumulated amortization . . . . . . . (9,510) (12,291)
-------- --------
$ 7,241 $ 5,812
======== ========
</TABLE>
3. NOTES PAYABLE
The Company's indebtedness consists of the following:
<TABLE>
<CAPTION>
December 31,
----------------------------
1995 1994
------- -------
<S> <C> <C>
Tax-Exempt Fixed Rate (Secured) ..................... $105,379 $109,229
Conventional Fixed Rate (Secured).................... 44,145 57,761
Tax-Exempt Floating Rate (Secured)................... 39,795 39,795
Conventional Floating Rate (Secured)................. 14,400 122,608
Senior Notes (Unsecured) ............................ 100,000 --
Line of Credit (Secured)............................. -- 32,652
Line of Credit (Unsecured) .......................... 46,000 --
------- -------
TOTAL $349,719 $362,045
======== ========
</TABLE>
CONVENTIONAL MORTGAGES PAYABLE
Conventional mortgages payable were comprised of five loans at December 31,
1995 and twenty-one loans at December 31, 1994 each of which is collateralized
by an apartment community included in real estate assets. The mortgages payable
are generally due in monthly installments of interest only and mature at
various dates through 1998. Fixed rate mortgages payable aggregated $44,145 and
$57,761 at December 31, 1995 and 1994, respectively, ranged from approximately
6.0% to 8.8% (weighted average of 7.9% at December 31, 1995). Variable rate
mortgages payable aggregated $14,400 and $122,608 at December 31, 1995 and
1994, respectively. The interest rate was at .85% above the London Interbank
Offered Rate ("LIBOR") at December 31, 1995. At December 31, 1995, LIBOR
ranged from 5.43% to 5.69% for one, three, six, and twelve month indices.
On March 15, 1996, fixed rate mortgages totaling $25,100 were repaid with
proceeds drawn on the Revolver.
BOND INDEBTEDNESS
Certain of the apartment communities are encumbered to secure tax-exempt
housing bonds. Such bonds are generally payable in monthly or semi-annual
installments of interest only and mature at various dates through 2025. Bond
indebtedness aggregating $105,379 and $109,229 at December 31, 1995 and 1994,
respectively, have fixed rates of interest ranging from 7.40% to 8.25%
(weighted average of 7.53% at December 31, 1995). Floating rate indebtedness
reissued in 1995 in the aggregate amount of $39,795 at December 31, 1995, bears
interest at the "AAA" non-AMT tax exempt rate, set weekly, which was 5.05% at
December 31, 1995 (average of 3.87% for 1995). The Company pays certain credit
enhancement fees with respect to such bonds, ranging from .575% to 1.075% of
the amount of such bonds or the amount of such letters of credit, as the case
may be.
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 for such
bonds. Under the terms of such agreement, FNMA has provided replacement credit
enhancement
46
<PAGE> 48
POST PROPERTIES, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- -------------------------------------------------------------------------------
through 2025 for four bond issues, aggregating $39,795, which were concurrently
reissued, and has agreed, subject to certain conditions, to provide credit
enhancement through June 1, 2025 for up to an additional $114,733 ($9,354 of
which is currently defeased) with respect to eleven other bond issues which
mature and may be refunded in 1996 through 1998. Under this agreement, on
January 1, 1996, the Post Mill bonds were refunded in the amount of $12,880
($3,864 of which had previously been defeased) with an issue enhanced by FNMA
and maturing on June 1, 2025. The agreement also contains a provision whereby
the Company may request FNMA to evaluate the enhancement of an additional
$81,352 of bonds which are currently defeased and not part of the agreement.
The agreement with FNMA contains representations, covenants, and events of
default customary to such secured loans.
DEBT DEFEASED
The Company applied a portion of the net proceeds of the Initial Offering and
Second Offering to pay in full thirteen fixed rate obligations totaling
$132,470 and economically defease in full six tax exempt bond financings
totaling $52,700. In addition, the Company paid $43,108 to partially prepay
eleven variable rate obligations and $51,956 to economically defease portions
of eight tax exempt bond financings. The above amounts do not include
aggregate prepayment penalties and defeasance escrow requirements in excess of
principal defeased of $18,077. The balance of debt fully or partially
economically defeased aggregated $90,706 at December 31, 1995.
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.
The line initially bore interest at LIBOR plus 1.50% or prime minus
.25%. On March 1, 1996 the Revolver was amended to reduce the interest rate of
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 Company's rating. On June 4, 1996, the Company
received an upgrade on its senior unsecured corporate credit rating, which
further reduced the interest rate on the Revolver to LIBOR plus 0.80%. At
December 31, 1995, LIBOR ranged from 5.43% to 5.69% for one, three, six and
twelve months indices and the prime rate was at 8.50%. The facility 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 agreement) exclusive of distributions of capital gains for such
year. The agreement contains exceptions to these limitations to allow the
Operating Partnership to make any distributions to allow the Company to
maintain its status as a REIT. The Company does not anticipate that this
covenant will adversely effect the ability of the Operating Partnership to make
distributions, or the Company to declare dividends under its current policy.
At December 31, 1995 the Company had $46,000 outstanding under the Revolver
with $134,000 available under the Revolver to fund future development an
general corporate obligations.
In addition, the Company has a $3,000 facility to provide letters of credit for
general business purposes.
SENIOR UNSECURED NOTES
On June 7, 1995, the Company privately placed $50,000 of unsecured senior notes
with The Northwestern Mutual Life Insurance Company. The notes were in two
tranches: the first, totalling $30,000, carries an interest rate of 8.21% per
annum (1.25% over the corresponding treasury rate on the date such rate was
set) and matures on June 7, 2000; and the second, totalling $20,000 carries an
interest rate of 8.37% per annum (1.35% over the corresponding treasury rate on
the date such rate was set) and matures on June 7, 2002. Proceeds from the
notes were used to reduce other secured indebtedness and to pay down the
Revolver. The note agreements pursuant to which the notes were purchased
contain customary representations, covenants and events of default similar to
those contained in the note agreement for the Revolver.
On September 29, 1995, the Company privately placed $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
(1.10% over the corresponding treasury rate on the date such rate was set).
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.
47
<PAGE> 49
POST PROPERTIES, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
The aggregate maturities of the above conventional mortgages payable, bond
indebtedness, line of credit and senior unsecured notes (after giving effect to
the refunding of the Post Mill bonds and the extension of the Revolver) are as
follows:
<TABLE>
<S> <C>
1996 . . . . . . . . . . . . . . . . . . . . . . . . . $ 31,605
1997 . . . . . . . . . . . . . . . . . . . . . . . . . 59,188
1998 . . . . . . . . . . . . . . . . . . . . . . . . . 39,015
1999 . . . . . . . . . . . . . . . . . . . . . . . . . 96,100
2000 . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Thereafter . . . . . . . . . . . . . . . . . . . . . . 93,811
--------
$349,719
========
</TABLE>
INTEREST RATE SWAP AGREEMENTS
During 1992, PPG entered into six interest rate swap agreements with a
financial institution to effectively change the interest cost on certain debt
from fixed to variable rates. The agreements, with a total notional principal
amount aggregating $99,425, were terminated during 1992. At termination, PPG
received payments aggregating $6,782, of which $331 was deferred at December
31, 1995.
INTEREST RATE PROTECTION AGREEMENTS
As discussed in Note 1, the Company used proceeds from the Initial Offering to
purchase certain interest rate protection agreements (aggregate premiums
amounted to $3,265) that will eliminate the Company's exposure to increases in
LIBOR over 3.50% per annum and increases in TENR(R) over 3.00% per annum on its
long-term debt. The agreements provide interest rate protection on variable
rate long-term indebtedness up to $62,395 with maturities from six to 24
months.
The Company is exposed to credit losses in the event of nonperformance by the
counterparties to its interest rate caps and nonderivative financial assets but
has no off-balance sheet credit risk of accounting loss. The Company
anticipates, however, the counterparties will be able to fully satisfy their
obligations under the contracts. The Company does not obtain collateral or
other security to support financial instruments subject to credit risk but
monitors the credit standing of counterparties.
PLEDGED ASSETS
The aggregate net book value at December 31, 1995 of property pledged as
collateral for indebtedness amounted to approximately $267,697.
EXTRAORDINARY ITEM
The extraordinary item for the year ended December 31, 1995 resulted from the
write-off of deferred financing costs on the mortgage debt satisfied. The
extraordinary item is net of minority interest ($250) of the unitholders
calculated on the basis of weighted average units and shares outstanding for
the year ended December 31, 1995.
The extraordinary item for the year ended December 31, 1994 resulted from
mortgage prepayment penalties and defeasance escrow requirements ($4,274), the
administrative costs for bond indebtedness defeased ($485), the write-off of
deferred financing costs on the mortgage debt satisfied ($1,139) and the
recognition of the gain previously deferred ($1,485) from the termination of
the interest rate swap agreements for which the related debt has been repaid or
defeased. The extraordinary
48
<PAGE> 50
POST PROPERTIES, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- -------------------------------------------------------------------------------
item is net of the minority interest ($1,120) of the unitholders calculated on
the basis of weighted average units and shares outstanding for the year ended
December 31, 1994.
The extraordinary item for the year ended December 31, 1993 resulted from
mortgage prepayment penalties and defeasance escrow requirements ($13,803), the
administrative costs for bond indebtedness defeased ($565), the write-off of
deferred financing costs on the mortgage debt satisfied ($1,763) and the
recognition of the gain previously deferred ($2,503) from the termination of
the interest rate swap agreements for which the related debt has been repaid or
defeased. The extraordinary item is net of the minority interest ($5,773) of
the unitholders calculated on the basis of weighted average units and shares
outstanding for the year ended December 31, 1993.
4. INCOME TAXES
Prior to the Initial Offering, the entities included in the combined financial
statements were either limited partnerships or S Corporations and were not
subject to Federal and state income taxes. Accordingly, no recognition has
been given to income taxes in the accompanying financial statements of PPG
since the income or loss of the entities were included in the tax returns of
the individual owners. The tax returns of the entities are subject to
examination by Federal and state taxing authorities. If such examinations
result in adjustments to distributive shares of taxable income or loss, the tax
liability of the owners would be adjusted accordingly.
The Company has elected to be taxed as a REIT under the Internal Revenue Code
of 1986, as amended (the "Code") commencing with the taxable year ended
December 31, 1993. In order for the Company to qualify as a REIT, it must
distribute annually at least 95% of its REIT taxable income, as defined in the
Code, to its shareholders and satisfy certain other requirements. As a result,
the Company generally will not be subject to Federal income taxation at the
corporate level on the income it distributes to the shareholders. Although Post
Properties, Inc. has elected to be taxed as a REIT, Post Services, Inc. ("Post
Services") was formed as a subsidiary of the Operating Partnership to provide
through its subsidiaries asset management, leasing and landscaping services to
third parties. The consolidated taxable income of these companies, if any, will
be subject to tax at regular corporate rates.
During 1994, Post Services sold three parcels of land. One of the parcels of
land was sold to the Operating Partnership resulting in an intercompany gain
which was eliminated in the consolidated financial statements. The other two
parcels were sold to a third party resulting in a pre-tax gain of $2,832. As a
result of these transactions, Post Services recorded and paid income tax
expense of $1,338 in the current period. Income tax expense for the period
ending December 31, 1994 was determined using current statutory federal and
state tax rates.
As of December 31, 1995 the net basis for Federal income tax purposes, taking
into account the special allocation of gain to the partners contributing
property to the Operating Partnership, exceeded the net assets as reported in
the Company's consolidated financial statements by approximately $167,718.
5. RELATED PARTY TRANSACTIONS
The Company provides landscaping services for executive officers, employees,
directors and other related parties. For the years ended December 31, 1995,
1994 and 1993, the Company received landscaping fees of $1,758, $1,968 and $660
for such services. These amounts include reimbursements of direct expenses in
the amount of $1,111, $1,507 and $341, which are not included in landscape
services revenue; accordingly, these transactions resulted in the Company
recording landscape services net fees in excess of direct expenses of $647,
$461 and $319 in the accompanying financial statements for the years ended
December 31, 1995, 1994 and 1993, respectively.
The Company provides accounting and administrative services to entities
controlled by certain executive officers of the
49
<PAGE> 51
POST PROPERTIES, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- -------------------------------------------------------------------------------
Company. Fees under this arrangement aggregated $32, $60 and $179 for the years
ended December 31, 1995, 1994 and 1993, respectively.
During the year ended December 31, 1995 the Company completed a contract to
assist in the development of an apartment complex being constructed by a former
executive and current shareholder. Fees under this arrangement were $317 in
1995 and $140 in 1994.
On May 22, 1995, the Company purchased for a nominal amount the outstanding
capital stock of A.T. Aviation, Inc. ("A.T. Aviation"), an entity formed and
owned by John A. Williams, Chairman of the Board of Directors of the Company,
and John T. Glover, President and a Director of the Company. In connection
with the acquisition, the Company assumed certain obligations of A.T. Aviation.
At the time of the acquisition, A.T. Aviation had entered into a purchase
agreement for a used aircraft, leased certain property improvements related
thereto, and obtained a line of credit in the amount of $7,500 to fund such
acquisitions. In connection with the acquisition, the Company assumed and
repaid such line of credit, which had been guaranteed by such officers, and
such line and guarantees were terminated.
6. EMPLOYEE BENEFIT PLANS
The employees of the Company are participants in a profit sharing plan pursuant
to Section 401 of the Internal Revenue Code. Contributions are made based on a
discretionary amount determined by the Company's management. Contributions, if
any, are allocated to each participant based on the relative compensation of
the participant to the compensation of all participants. Contributions of $145,
$147 and $136 were made in 1995, 1994 and 1993, respectively.
During 1995, the Company adopted the Employee Stock Purchase Plan ("ESPP") to
encourage stock ownership by eligible directors and employees. To participate
in the ESPP, (i) directors must not be employed by the Company or the Operating
Partnership and must have been a member of the Board of Directors for at least
one month and (ii) an employee must have been employed full-time by the Company
or the Operating Partnership for at least one month. The purchase price of
shares of Common Stock under the ESPP is equal to 85% of the lesser of the
closing price per share of Common Stock on the first or last day of the trading
period, as defined.
7. DIVIDEND REINVESTMENT PLAN
The Dividend Reinvestment Plan ("DRIP") is available to all shareholders of
PPI. Under the DRIP, shareholders may elect for their dividends to be used to
acquire additional shares of PPI's Common Stock directly from PPI, for 95% of
the market price on the date of purchase.
50
<PAGE> 52
POST PROPERTIES, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- -------------------------------------------------------------------------------
8. STOCK OPTION PLAN
The Company has established an Employee Stock Plan (the "Plan") under which
1,200,000 shares of the Company's Common Stock are reserved for issuance. Of
this amount, 550,000 shares are available for grants of restricted stock. Any
key employee or officer is limited in that the amount of options they can
receive in a year cannot exceed 50,000 shares of Common Stock. Option prices
are equal to market value of the Company's Common Stock at the date of grant
and have a term of ten years from the grant date. Activity under the Company's
Stock Option Plan is summarized as follows:
<TABLE>
<CAPTION>
GRANTED AND
AUTHORIZED OUTSTANDING AVAILABLE
---------- ----------- ---------
<S> <C> <C> <C>
Balance at 12/31/92 - - -
Authorized 600,000 - 600,000
Granted - 376,444 (376,444)
--------- ------- --------
Balance at 12/31/93 600,000 376,444 223,556
Granted - 1,900 (1,900)
--------- ------- --------
Balance at 12/31/94 600,000 378,344 221,656
Authorized 600,000 - 600,000
Granted - 248,500 (248,500)
Exercised (361) (361) -
Forfeited - (9,060) 9,060
--------- ------- --------
Balance at 12/31/95 1,199,639 617,423 582,216
========= ======= ========
</TABLE>
At December 31, 1995, options yet to be exercised are as follows:
<TABLE>
<CAPTION>
TOTAL EXERCISE
OPTIONS PRICE DATE
OPTION GRANT DATE OUTSTANDING PER SHARE EXERCISABLE
----------------- ----------- --------- -----------
<S> <C> <C> <C>
July 22, 1993 1,083 $27.625 (1)
October 28, 1993 375,000 $31.375 (2)
May 12, 1994 628 $31.875 (1)
December 31, 1994 1,272 $31.500 (1)
February 23, 1995 48,500 $29.750 (3)
February 23, 1995 190,940 $29.750 (4)
</TABLE>
(1) Option became exercisable upon grant date.
(2) Options become exercisable one-third per year over a three year period.
(3) Options are exercisable beginning one year from the grant date.
(4) Options are exercisable in one-third installments based on certain
performance criteria of the Company's Common Stock.
During the year ended December 31, 1995, 361 options were exercised at an
option price of $27.625 per share.
On February 23, 1996, options to purchase 309,029 shares of the Company's
Common Stock at an exercise price of $32.250 per share were granted to certain
eligible directors, officers and employees of the Company.
51
<PAGE> 53
POST PROPERTIES, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- -------------------------------------------------------------------------------
9. COMMITMENTS AND CONTINGENCIES
LAND, OFFICE AND EQUIPMENT LEASES
The Company is party to two ground leases relating to an operating community
with terms expiring in years 2040 and 2043 and to office, equipment and other
operating leases with terms expiring in years 1996 through 2004. Future minimum
lease payments for noncancellable land, office and equipment leases at December
31, 1995 are as follows:
<TABLE>
<S> <C>
1996 . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,458
1997 . . . . . . . . . . . . . . . . . . . . . . . . . 1,417
1998 . . . . . . . . . . . . . . . . . . . . . . . . . 1,394
1999 . . . . . . . . . . . . . . . . . . . . . . . . . 1,284
2000 . . . . . . . . . . . . . . . . . . . . . . . . . 195
2001 and thereafter . . . . . . . . . . . . . . . . . . 6,923
-------
$12,671
=======
</TABLE>
The Company incurred $2,034, $1,911 and $1,721 of rent expense for the years
ended December 31, 1995, 1994 and 1993, respectively.
CONTINGENCIES
The Company is party to various legal actions which are incidental to its
business. Management believes that these actions will not have a material
adverse affect on the consolidated balance sheets and statements of operations.
10. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosures of estimated fair value were determined by management
using available market information and appropriate valuation methodologies.
Considerable judgment is necessary to interpret market data and develop
estimated fair value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts the Company could realize on disposition
of the financial instruments. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts.
Cash equivalents, rents and landscape service receivables, interest rate
protection agreement, accounts payable, accrued expenses, notes payable and
other liabilities are carried at amounts which reasonably approximate their
fair values.
Disclosure about fair value of financial instruments are based on pertinent
information available to management as of December 31, 1995. Although
management is not aware of any factors that would significantly affect the
reasonable fair value amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since that date and current
estimates of fair value may differ significantly from the amounts presented
herein.
52
<PAGE> 54
POST PROPERTIES, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
11. EARNINGS PER SHARE
Primary earnings (loss) per share for income before extraordinary item and net
income (loss) has been computed by dividing income before extraordinary item
and net income (loss) by the weighted average number of shares outstanding.
This method derives the same per share information as the "two-class" method
prescribed for REIT's. The weighted average number of shares outstanding
utilized in the calculations are 18,382,299, 16,847,999 and 7,824,311 for the
years ended December 31, 1995, 1994 and 1993, respectively.
The non-recurring REIT formation expense of $2,783, less minority interest
portion of $1,179, recognized in the year ended December 31, 1993 had the
effect of reducing primary earnings per share by $.21 based on the weighted
average number of shares outstanding.
The non-recurring extraordinary items recognized in the years ended December
31, 1995, 1994 and 1993 had the effect of reducing primary earnings per share
by $.05, $.20 and $1.01, respectively, based on the weighted average number of
shares outstanding.
12. SUPPLEMENTAL CASH FLOW INFORMATION
Non-cash investing and financing activities for the years ended December 31,
1995, 1994 and 1993 are as follows:
(a) As discussed in Note 1, purchase accounting was applied during 1993 to the
acquisition of certain noncontrolled interests resulting in an increase of
$53,773 in the historical cost basis of the related real estate assets.
(b) On the date of the Initial Offering, Second Offering and Third Offering,
holders of 5,928,216, 5,401,185 and 5,139,243 Units of the Operating
Partnership, respectively, were allocated capital on a pro rata basis in
proportion to their Units over total Units outstanding in the Operating
Partnership. During 1995, 1994 and 1993, holders of 97,201, 159,373 and
532,399 Units in the Operating Partnership, respectively, exercised their
option to convert their units to shares of the Company on a one-for-one
basis. The net effect of the capital allocated to the unitholders of the
Operating Partnership on the dates of those offerings and the subsequent
conversion to shares of the Company by unitholders resulted in a net
reclassification of shareholders' equity to minority interest in the amount
of $10,598, $8,345 and $76,486, respectively.
(c) The Operating Partnership committed to distribute $13,091, $10,094 and
$8,744 for the quarters ended December 31, 1995, 1994 and 1993,
respectively. As a result, the Company declared dividends of $10,573,
$7,737 and $6,313 for the quarters ended December 31, 1995, 1994 and 1993,
respectively. The remaining distributions from the Operating Partnership in
the amount of $2,518, $2,357 and $2,431 are distributed to minority
interest unitholders in the Operating Partnership.
(d) In conjunction with the Initial Offering and Formation Transactions as
discussed in Note 1, advances due to shareholders and partners in the
amount of $3,426 were exchanged for Units or shares.
53
<PAGE> 55
POST PROPERTIES, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
13. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Quarterly financial information for the years ended 1995 and 1994 are as
follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1995 *
-------------------------------
FIRST SECOND THIRD FOURTH
-------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . $ 33,163 $ 35,650 $ 37,480 $ 38,412
Income before gain on sale of land net of related
income tax, minority interest of unitholders in
Operating Partnership and extraordinary
item . . . . . . . . . . . . . . . . . . . . . 7,965 8,526 8,999 11,181
Gain on sale of land, net of related taxes . . - - 1,746 -
Minority interest of unitholders in Operating
Partnership . . . . . . . . . . . . . . . . . (1,842) (1,923) (2,410) (2,254)
Extraordinary item . . . . . . . . . . . . . . (120) (502) (189) (59)
Net income . . . . . . . . . . . . . . . . . . 6,003 6,101 8,146 8,868
Earnings per share:
Income before extraordinary item . . . . . . 0.35 0.37 0.47 0.43
Net income . . . . . . . . . . . . . . . . . 0.35 0.34 0.46 0.43
<CAPTION>
YEARS ENDED DECEMBER 31, 1994 *
-------------------------------
FIRST SECOND THIRD FOURTH
------- ------- ------ -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . $ 29,485 $ 30,819 $ 31,803 $ 32,632
Income before gain on sale of land net of related
income tax, minority interest of unitholders
in. . . . . . . . . . . . . . . . . . . . . . 5,415 6,492 8,017 7,725
Operating Partnership and extraordinary item
Gain on sale of land, net of related taxes . . 1,520 (32) 6
Minority interest of unitholders in Operating
Partnership . . . . . . . . . . . . . . . . . (1,376) (1,898) (1,872) (1,805)
Extraordinary item . . . . . . . . . . . . . . (3,293)
- - -
Net income . . . . . . . . . . . . . . . . . . 746 6,114 6,113 5,926
Earnings per share:
Income before extraordinary item . . . . . . 0.26 0.36 0.36 0.34
Net income . . . . . . . . . . . . . . . . . 0.05 0.36 0.36 0.34
</TABLE>
* The total of the four quarterly amounts for minority interest of
unitholders in Operating Partnership, extraordinary item, net income
(loss) and earnings per share may not equal the total for the year.
These differences result from the use of a weighted average to compute
minority interest in the Operating Partnership and average number of
shares outstanding.
54
<PAGE> 56
SCHEDULE III
POST PROPERTIES, INC.
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
INITIAL COSTS COSTS
------------------------- CAPITALIZED
RELATED BUILDING AND SUBSEQUENT
ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION
------------ ------ ---------------- --------------
<S> <C> <C> <C> <C>
ATLANTA, GEORGIA
Post Ashford $ 9,895 (2) $1,906 $ - $ 7,405
Post Bridge 9,960 (2) 868 - 10,749
Post Brook 4,300 (2) 584 - 3,545
Post Brookhaven 25,100 7,921 - 29,988
Post Canyon 16,845 (2) 931 - 15,271
Post Chase 12,000 (2) 1,438 - 13,800
Post Chastain - 6,352 - 37,654
Post Collier Hills - 6,487 - 1,483
Post Corners 14,760 (2) 1,473 - 13,345
Post Court 13,298 (2) 1,769 - 15,510
Post Crest - 4,733 - 12,322
Post Crossing - 3,951 - 19,275
Post Dunwoody - 4,917 - 24,131
Post Lane - 1,512 - 7,940
Post Lenox Park - 3,132 - 10,526
Post Mill 9,016 (2) 915 - 11,034
Post Oak - 2,028 - 8,055
Post Oglethorpe - 3,662 - 16,741
Post Park - 6,253 - 38,647
Post Parkwood - 1,331 - 7,231
Post Peachtree Hills - 4,215 - 13,441
Post Pointe - 2,417 - 15,190
Post Renaissance 14,400 - - 19,250
Post River 5,941 1,011 - 9,349
Post Summit 5,376 1,575 - 6,013
Post Terrace - 4,131 - 8,840
Post Valley 18,600 (2) 1,117 - 17,024
Post Vinings - 4,322 - 20,989
Post Village
The Arbors 7,728 384 - 15,466
The Fountains and The Meadows - (2) 611 - 32,961
The Gardens 14,500 (2) 187 - 24,450
The Hills 7,000 (2) 91 - 11,800
Post Walk 15,000 (2) 2,370 - 12,527
Post Woods - 1,378 - 21,691
CHARLOTTE, NORTH CAROLINA
Post Park at Phillips Place - 4,685 - 357
</TABLE>
<TABLE>
<CAPTION>
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF PERIOD
---------------------------------- DEPRECIABLE
BUILDING AND ACCUMULATED DATE OF DATE LIVES
LAND IMPROVEMENTS TOTAL (1) DEPRECIATION CONSTRUCTION ACQUIRED YEARS
------- ------------ --------- ------------ ------------ -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ATLANTA, GEORGIA
Post Ashford $ 1,906 $ 7,405 $ 9,311 $2,320 4/86 - 6/87 6/87 5 - 40 Years
Post Bridge 868 10,749 11,617 3,604 9/84 - 12/86 9/84 5 - 40 Years
Post Brook 584 3,545 4,129 1,490 8/83 - 7/84 8/83 5 - 40 Years
Post Brookhaven 7,921 29,988 37,909 6,314 7/89 - 12/92 3/89 5 - 40 Years
Post Canyon 931 15,271 16,202 5,498 4/84 - 4/86 10/81 5 - 40 Years
Post Chase 1,438 13,800 15,238 4,448 6/85 - 4/87 6/85 5 - 40 Years
Post Chastain 6,779 37,227 44,006 8,084 6/88 - 10/90 6/88 5 - 40 Years
Post Collier Hills 6,487 1,483 7,970 - 10/95 (4) 6/95 -
Post Corners 1,473 13,345 14,818 4,695 8/84 - 4/86 8/84 5 - 40 Years
Post Court 1,769 15,510 17,279 4,616 6/86 - 4/88 12/85 5 - 40 Years
Post Crest 4,733 12,322 17,055 2 9/95 (4) 10/94 5 - 40 Years
Post Crossing 3,951 19,275 23,226 222 4/94 - 8/95 11/93 5 - 40 Years
Post Dunwoody 4,917 24,131 29,048 2,423 11/88 (4) 12/84&8/94 (5) 5 - 40 Years
Post Lane 2,067 7,385 9,452 1,951 4/87 - 5/88 1/87 5 - 40 Years
Post Lenox Park 3,132 10,526 13,658 249 3/94 - 5/95 3/94 5 - 40 Years
Post Mill 915 11,034 11,949 4,167 5/83 - 5/85 5/81 5 - 40 Years
Post Oak 2,028 8,055 10,083 821 9/92 - 12/93 9/92 5 - 40 Years
Post Oglethorpe 3,662 16,741 20,403 616 3/93 - 10/94 3/93 5 - 40 Years
Post Park 8,830 36,070 44,900 8,370 6/87 - 9/90 6/87 5 - 40 Years
Post Parkwood 1,331 7,231 8,562 87 7/94 - 8/95 6/94 5 - 40 Years
Post Peachtree Hills 4,857 12,799 17,656 1,030 2/92 - 9/94 2&11/92 (5) 5 - 40 Years
Post Pointe 3,027 14,580 17,607 4,064 4/87 - 12/88 12/86 5 - 40 Years
Post Renaissance - 19,250 19,250 2,068 7/91 - 12/94 6/91&1/94 (5) 5 - 40 Years
Post River 1,011 9,349 10,360 1,752 9/90 - 1/92 7/90 5 - 40 Years
Post Summit 1,575 6,013 7,588 1,492 1/90 - 12/90 1/90 5 - 40 Years
Post Terrace 4,131 8,840 12,971 1 10/94 (4) 3/94 5 - 40 Years
Post Valley 1,117 17,024 18,141 4,968 3/86 - 4/88 12/85 5 - 40 Years
Post Vinings 5,668 19,643 25,311 4,469 5/88 - 9/91 5/88 5 - 40 Years
Post Village
The Arbors 774 15,076 15,850 4,132 4/82 - 10/83 3/82 5 - 40 Years
The Fountains and The Meadows 907 32,665 33,572 7,851 8/85 - 5/88 8/85 5 - 40 Years
The Gardens 348 24,289 24,637 5,578 6/88 - 7/89 5/84 5 - 40 Years
The Hills 165 11,726 11,891 3,100 5/84 - 4/86 4/83 5 - 40 Years
Post Walk 2,370 12,527 14,897 3,852 3/86 - 8/87 6/85 5 - 40 Years
Post Woods 3,041 20,028 23,069 6,519 3/76 - 9/83 6/76 5 - 40 Years
CHARLOTTE, NORTH CAROLINA
Post Park at Phillips Place 4,685 357 5,042 - 1/96 (4) 11/95 -
</TABLE>
<PAGE> 57
<TABLE>
<CAPTION>
INITIAL COSTS COSTS
---------------------------- CAPITALIZED
RELATED BUILDING AND SUBSEQUENT
ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION
------------ -------- ------------ --------------
<S> <C> <C> <C> <C>
FLORIDA
Post Bay - 2,203 - 13,258
Post Court - 2,083 - 9,532
Post Crossing - 5,480 - 19,466
Post Fountains - (2) 3,856 - 19,441
Post Gardens - 2,963 - 9,514
Post Hyde Park - 3,498 - 15,096
Post Lake - (2) 6,113 - 29,476
Post Rocky Point - 4,634 - 22,254
Post Village
The Arbors - 2,063 - 13,594
The Lakes - 2,813 - 15,490
The Oaks - 3,229 - 15,115
NASHVILLE, TENNESSEE
Post Green Hills - 2,464 - 12,579
NORTHERN VIRGINIA
Post Corners at Trinity Centre - 4,404 - 22,650
Post Forest - 8,590 - 23,295
MISCELLANEOUS INVESTMENTS - 12,395 - 5,719
-------- -------- ----------- --------
TOTAL $203,719 $157,445 $ - $780,479
======== ======== =========== ========
</TABLE>
<TABLE>
<CAPTION>
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF PERIOD
------------------------------ DEPRECIABLE
BUILDING AND ACCUMULATED DATE OF DATE LIVES
LAND IMPROVEMENTS TOTAL (1) DEPRECIATION CONSTRUCTION ACQUIRED YEARS
-------- ------------ --------- ------------ ------------ -------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
FLORIDA
Post Bay 2,573 12,888 15,461 3,515 5/87 - 12/88 5/87 5 - 40 Years
Post Court 2,083 9,532 11,615 2,261 4/90 - 5/91 10/87 5 - 40 Years
Post Crossing 5,764 19,182 24,946 4,846 6/87 - 9/89 6/87 5 - 40 Years
Post Fountains 3,856 19,441 23,297 5,682 12/85 - 3/88 12/85 5 - 40 Years
Post Gardens 2,963 9,514 12,477 2,402 6/88 - 7/89 4/87 5 - 40 Years
Post Hyde Park 3,498 15,096 18,594 - 9/94 (4) 7/94 -
Post Lake 6,724 28,865 35,589 8,200 11/85 - 3/88 10/85 5 - 40 Years
Post Rocky Point 4,634 22,254 26,888 1 4/94 (4) 2/94 5 - 40 Years
Post Village
The Arbors 2,446 13,211 15,657 2,237 6/90 - 12/91 11/90 5 - 40 Years
The Lakes 3,387 14,916 18,303 4,101 7/88 - 12/89 5/88 5 - 40 Years
The Oaks 3,855 14,489 18,344 2,982 11/89 - 7/91 12/89 5 - 40 Years
NASHVILLE, TENNESSEE
Post Green Hills 2,464 12,579 15,043 - 9/94 (4) 7/94 -
NORTHERN VIRGINIA
Post Corners at Trinity Centre 4,404 22,650 27,054 2 6/94 (4) 6/94 5 - 40 Years
Post Forest 9,106 22,779 (3) 31,885 5,986 1/89 - 12/90 3/88 5 - 40 Years
MISCELLANEOUS INVESTMENTS 12,395 5,719 18,114 3,756
-------- -------- -------- --------
TOTAL $169,550 $768,374 $937,924 $156,824
======== ======== ======== ========
</TABLE>
- -------------------------
(1) The aggregate cost for Federal income tax purposes to PPI was
approximately $1,041,000 at December 31, 1995,
taking into account the special allocation of gain to the partners
contributing property to the Company.
(2) These properties serve as collateral for the Federal National Mortgage
Association credit enhancement.
(3) Balance includes an allowance for possible loss of $3,700 which was taken
in prior years.
(4) Construction still in process as of December 31, 1995.
(5) Additional land was acquired for construction of a second phase.
<TABLE>
A summary of activity for real estate investments Year Ended December, 31
and accumulated depreciation is as follows: -------------------------------------------------
1995 1994 1993
-------- -------- ------------
<S> <C> <C> <C>
Real estate investments:
Balance at beginning of year $828,585 $722,266 $616,289
Purchase of minority interests in certain property partnerships 10,149 - 75,773 [1]
Improvements 127,150 106,319 30,204
Disposition of property (27,960) - -
-------- -------- --------
Balance at end of year $937,924 $828,585 $722,266
======== ======== ========
Accumulated depreciation:
Balance at beginning of year $142,576 $122,368 $102,638
Depreciation 20,681 [2] 20,208 19,730
Depreciation on disposed property (6,433) - -
-------- -------- --------
Balance at end of year $156,824 $142,576 $122,368
======== ======== ========
</TABLE>
[1] Amount represents increase in basis due to purchase method of accounting
for minority interest acquired in operating partnerships at the time of the
Initial Offering.
[2] Depreciation expense in the Consolidated Statements of Operations, includes
$138 of depreciation expense on other assets.
<PAGE> 58
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NO. DESCRIPTION NO.
------- ----------- ----
<S> <C>
3.1* -- Articles of Incorporation of the Company
3.2* -- Bylaws of the Company
10.1** -- Agreement of Limited Partnership of the Operating Partnership
10.2** -- Registration Rights and Lock-Up Agreement among the Company and the persons named therein
10.3** -- Employee Stock Plan
10.4** -- Noncompetition Agreement between the Company, the Operating Partnership and John A.
Williams
10.5** -- Noncompetition Agreement between the Company, the Operating Partnership and John T. Glover
10.6** -- Employment Agreement between the Company and John A. Williams
10.7** -- Employment Agreement between the Company and John T. Glover
10.8** -- Employment Agreement between the Operating Partnership and John A. Williams
10.9** -- Employment Agreement between the Operating Partnership and John T. Glover
10.10** -- Employment Agreement between Post Services, Inc. and John A. Williams
10.11** -- Employment Agreement between Post Services, Inc. and John T. Glover
10.12** -- Option and Transfer Agreement among the Operating Partnership, Post Services, John A.
Williams and John T. Glover
10.13** -- Promissory Note made by Post Services, Inc. in favor of RAM Partners, Inc.
10.14* -- Form of officers and directors Indemnification Agreement
10.15* -- Form of Option Agreement to be entered into between the Operating Partnership and the
owners of four parcels of undeveloped land
10.16* -- Profit Sharing Plan of the Company
10.17** -- Form of General Partner 1% Exchange Agreement
10.18+ -- Employee Stock Purchase Plan
10.19++ -- Dividend Reinvestment and Stock Purchase Plan
10.20- -- Credit Agreement dated as of February 1, 1995 among Post Apartment Homes, L.P., Wachovia
Bank of Georgia, N.A., as administrative agent, First Union National Bank of Georgia, as
Co-Agent, and the banks listed on the signature pages thereto (the"Credit Agreement")
10.21+++ -- First Amendment to Credit Agreement and Release of Subsidiary Guarantors dated July 26, 1995
10.22+++ -- Second Amendment to Credit Agreement dated October 27, 1995
10.23+++ -- Third Amendment to Credit Agreement dated February 29, 1996
21.1+++ -- List of Subsidiaries
23.1 -- Consent of Price Waterhouse LLP for Registration Statement on Form S-8 (No. 33-85712)
23.2 -- Consent of Price Waterhouse LLP for Registration Statement on Form S-8 (No. 33-86674)
23.3 -- Consent of Price Waterhouse LLP for Registration Statement on Form S-3 (No. 33-81772)
23.4 -- Consent of Price Waterhouse LLP for Registration Statement on Form S-3 (No. 33-85714)
24.1 -- Power of Attorney
</TABLE>
61
<PAGE> 59
* Filed as an exhibit to the Registration Statement on Form S-11 (SEC File
No. 33-61936), as amended, of the Registrant.
** Filed as an exhibit to the Registration Statement on Form S-11 (SEC File
No. 33-71650), as amended, of the Registrant.
+ Filed as an exhibit to the Registration Statement on Form S-8 (SEC File
No. 33-86674) of the Registrant.
++ Filed as part of the Registration Statement on Form S-3 (SEC File No.
33-81772) of the Registrant.
+++ Filed as an exhibit to the Annual Report on Form 10-K for the year ended
December 31, 1995.
The registrant's proxy statement was filed with the Commission on or
about March 31, 1996.
- - Filed as an exhibit to the Annual Report on Form 10-K for the year ended
December 31, 1994.
(b) REPORTS ON FORM 8-K
There have been no reports filed on Form 8-K by the registrant during
the fourth quarter of 1995.
62
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-85712) of Post Properties, Inc. of our report
dated March 8, 1996 appearing on Page 37 of this Form 10-K/A.
Price Waterhouse LLP
Atlanta Georgia
July 19, 1996
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-86674) of Post Properties, Inc. of our report
dated March 8, 1996 appearing on Page 37 of this Form 10-K/A.
Price Waterhouse LLP
Atlanta Georgia
July 19, 1996
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 33-81772) of
Post Properties, Inc. of our report dated March 8, 1996 appearing on Page 37 of
this Form 10-K/A.
Price Waterhouse LLP
Atlanta Georgia
July 19, 1996
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 33-85714) of
Post Properties, Inc. of our report dated March 8, 1996 appearing on Page 37 of
this Form 10-K/A.
PRICE WATERHOUSE LLP
Atlanta Georgia
July 19, 1996
<PAGE> 1
EXHIBIT 24.1
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
POST PROPERTIES, INC.
(Registrant)
June 17, 1996 John T. Glover
---------------------------------------
John T. Glover, President,
Chief Operating Officer, Treasurer
and a Director
(Principal Financial Officer)
POWER OF ATTORNEY
We, the undersigned directors and officers of Post Properties, Inc., do hereby
constitute and appoint John T. Glover, Timothy A. Peterson and Sherry W. Cohen,
and each and any of them our true and lawful attorneys-in-fact and agents, to do
any and all acts and things in our names and on our behalf in our capacities as
directors and officers and to execute any and all instruments for us and in our
name in the capacities indicated below, which said attorneys and agents, or any
of them, may deem necessary or advisable to enable said Corporation to comply
with the Securities Exchange Act of 1934 and any rules, regulations and
requirements of the Securities and Exchange Commission, in connection with this
Annual Report, including specifically, but without limitation, power and
authority to sign for us and any of us in our names and in the capacities
indicated below, any and all amendments hereto; and we do hereby ratify and
confirm all that said attorneys and agents, or any of them, shall do or cause to
be done by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
John A. Williams Chairman of the Board, June 17, 1996
-------------------------- Chief Executive Officer and
John A. Williams Director
John T. Glover President, Chief Operating June 17, 1996
-------------------------- Officer, Treasurer, Principal
John T. Glover Financial Officer, and Director
R. Gregory Fox Senior Vice President, June 17, 1996
-------------------------- Chief Accounting Officer
R. Gregory Fox
Arthur M. Blank Director June 17, 1996
--------------------------
Arthur M. Blank
Hershel M. Bloom Director June 17, 1996
--------------------------
Herschel M. Bloom
Virginia C. Crawford Director June 17, 1996
--------------------------
Virginia C. Crawford
Russell R. French Director June 17, 1996
--------------------------
Russell R. French
Director June 17, 1996
--------------------------
William A. Parker, Jr.
Director June 17, 1996
--------------------------
J.C. Shaw
</TABLE>
