<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
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 numbers 1-12080 and 0-28226
------------------------
POST PROPERTIES, INC.
POST APARTMENT HOMES, L.P.
(Exact name of registrant as specified in its charter)
GEORGIA 58-1550675
GEORGIA 58-2053632
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
4401 NORTHSIDE PARKWAY, SUITE 800, ATLANTA, GEORGIA 30327
(Address of principal executive offices -- zip code)
(404) 846-5000
(Registrant's telephone number, including area code)
3350 CUMBERLAND CIRCLE, SUITE 2200, ATLANTA, GEORGIA 30339
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrants (1) have 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) have been subject to
such filing requirements for the past 90 days.
Post Properties, Inc. Yes X No
----- -----
Post Apartment Homes, L.P. Yes X No
----- -----
------------------------
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
37,310,561 shares of common stock outstanding as of November 10, 1998.
================================================================================
<PAGE> 2
POST PROPERTIES, INC.
POST APARTMENT HOMES, L.P.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
POST PROPERTIES, INC.
Consolidated Balance Sheets as of September 30, 1998 and December 31, 1997...................... 3
Consolidated Statements of Operations for the three and nine months ended
September 30, 1998 and 1997.................................................................. 4
Consolidated Statement of Shareholders' Equity and Accumulated Earnings for the
nine months ended September 30, 1998......................................................... 5
Consolidated Statements of Cash Flows for the nine months ended
September 30, 1998 and 1997.................................................................. 6
Notes to Consolidated Financial Statements...................................................... 7
POST APARTMENT HOMES, L.P.
Consolidated Balance Sheets as of September 30, 1998 and December 31, 1997...................... 9
Consolidated Statements of Operations for the three and nine months ended
September 30, 1998 and 1997.................................................................. 10
Consolidated Statement of Partners' Equity for the nine months ended
September 30, 1998........................................................................... 11
Consolidated Statements of Cash Flows for the nine months ended
September 30, 1998 and 1997.................................................................. 12
Notes to Consolidated Financial Statements ..................................................... 13
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS................................................................................. 15
PART II OTHER INFORMATION
ITEM 5 OTHER INFORMATION.......................................................................... 32
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K........................................................... 32
SIGNATURES.......................................................................................... 33
</TABLE>
<PAGE> 3
POST PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Real estate:
Land .............................................................. $ 248,924 $ 234,011
Building and improvements ......................................... 1,383,214 1,255,118
Furniture, fixtures and equipment ................................. 102,767 89,251
Construction in progress .......................................... 409,003 342,071
Land held for future development .................................. 23,853 15,560
------------- -----------
2,167,761 1,936,011
Less: accumulated depreciation ...................................... (235,032) (201,095)
------------- -----------
Real estate assets ................................................ 1,932,729 1,734,916
Cash and cash equivalents ........................................... 14,233 10,879
Restricted cash ..................................................... 1,089 1,542
Deferred charges, net ............................................... 17,333 12,629
Other assets ........................................................ 18,767 20,597
------------- -----------
Total assets ...................................................... $ 1,984,151 $ 1,780,563
============= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable ....................................................... $ 787,328 $ 821,209
Accrued interest payable ............................................ 10,935 7,505
Dividends and distributions payable ................................. 26,817 21,327
Accounts payable and accrued expenses ............................... 46,463 53,101
Security deposits and prepaid rents ................................. 8,839 8,117
------------- -----------
Total liabilities ................................................. 880,382 911,259
------------- -----------
Minority interest of unitholders in Operating Partnership ........... 121,165 112,384
------------- -----------
Commitments and contingencies ....................................... -- --
Shareholders' equity
Preferred stock, $.01 par value, 20,000,000 authorized:
8 1/2% Series A Cumulative Redeemable Shares, liquidation
preference $50 per share, 1,000,000 shares issued and outstanding 10 10
7 5/8% Series B Cumulative Redeemable Shares, liquidation
preference $25 per share, 2,000,000 shares issued and
outstanding ..................................................... 20 20
7 5/8% Series C Cumulative Redeemable Shares, liquidation
preference $25 per share, 2,000,000 shares issued and
outstanding ..................................................... 20 --
Common stock, $.01 par value, 100,000,000 authorized,
36,041,895 and 30,626,592 shares issued and outstanding at
September 30, 1998 and December 31, 1997, respectively .......... 360 306
Additional paid-in capital .......................................... 982,194 756,584
Accumulated earnings ................................................ -- --
------------- -----------
Total shareholders' equity ........................................ 982,604 756,920
------------- -----------
Total liabilities and shareholders' equity ........................ $ 1,984,151 $ 1,780,563
============= ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
- 3 -
<PAGE> 4
POST PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES
Rental .................................................. $ 71,310 $ 43,857 $ 202,162 $ 127,988
Property management - third party ....................... 792 604 2,309 1,696
Landscape services - third party ........................ 1,765 1,327 4,945 3,792
Interest ................................................ 83 15 387 30
Other ................................................... 3,019 1,692 9,606 4,655
------------ ------------ ------------ ------------
Total revenues ........................................ 76,969 47,495 219,409 138,161
------------ ------------ ------------ ------------
EXPENSES
Property operating and maintenance (exclusive of
items shown separately below) ......................... 25,814 16,247 73,946 47,401
Depreciation (real estate assets) ....................... 11,498 6,333 33,307 18,897
Depreciation (non-real estate assets) ................... 467 262 939 758
Property management - third party ....................... 659 488 1,857 1,298
Landscape services - third party ........................ 1,571 1,068 4,372 3,086
Interest ................................................ 7,795 5,652 23,488 16,722
Amortization of deferred loan costs ..................... 318 195 876 747
General and administrative .............................. 1,869 1,467 5,701 4,867
Minority interest in consolidated property partnership .. 153 -- 351 --
------------ ------------ ------------ ------------
Total expenses ........................................ 50,144 31,712 144,837 93,776
------------ ------------ ------------ ------------
Income before net gain on sale of assets, loss on unused
treasury locks, minority interest of unitholders in
Operating Partnership and extraordinary item .......... 26,825 15,783 74,572 44,385
Net gain on sale of assets .............................. -- -- -- 3,512
Loss on unused treasury locks ........................... -- -- (1,944) --
Minority interest of unitholders in
Operating Partnership ................................. (3,022) (2,811) (8,434) (8,562)
------------ ------------ ----------- ------------
Income before extraordinary item ........................ 23,803 12,972 64,194 39,335
Extraordinary item, net of minority interest of
unitholders in Operating Partnership .................. -- -- -- (75)
------------ ------------ ----------- ------------
Net income ............................................ 23,803 12,972 64,194 39,260
Dividend to preferred shareholders .................... (2,969) (1,062) (8,504) (3,187)
------------ ------------ ------------ ------------
Net income available to common shareholders ........... $ 20,834 $ 11,910 $ 55,690 $ 36,073
============ ============ ============ ============
EARNINGS PER COMMON SHARE - BASIC
Income before extraordinary item (net of preferred dividend) $ 0.58 $ 0.54 $ 1.62 $ 1.64
Extraordinary item ......................................... -- -- -- --
------------ ------------ ------------ ------------
Net income available to common shareholders ................ $ 0.58 $ 0.54 $ 1.62 $ 1.64
============ ============ ============ ============
Weighted average common shares outstanding ................. 36,007,167 22,117,032 34,351,747 22,032,237
============ ============ ============ ============
EARNINGS PER COMMON SHARE - DILUTED
Income before extraordinary item (net of preferred dividend) $ 0.57 $ 0.53 $ 1.60 $ 1.63
Extraordinary item ......................................... -- -- -- (0.01)
============ ============ ============ ============
Net income available to common shareholders ................ $ 0.57 $ 0.53 $ 1.60 $ 1.62
============ ============ ============ ============
Weighted average common shares outstanding ................. 36,433,862 22,296,705 34,823,164 22,213,592
============ ============ ============ ============
Dividends declared ......................................... $ 0.65 $ 0.595 $ 1.95 $ 1.785
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
- 4 -
<PAGE> 5
POST PROPERTIES, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY AND
ACCUMULATED EARNINGS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
ADDITIONAL
PREFERRED COMMON PAID-IN ACCUMULATED
SHARES SHARES CAPITAL EARNINGS TOTAL
-------- -------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
SHAREHOLDERS' EQUITY AND ACCUMULATED
EARNINGS, DECEMBER 31, 1997.................................. $ 30 $ 306 $ 756,584 $ -- $ 756,920
Proceeds from Dividend Reinvestment and
Employee Stock Purchase Plans ........................... -- 4 14,337 -- 14,341
Proceeds from sale of common shares, net
of underwriting discount and offering
costs of $11,105 ........................................ -- 50 186,843 -- 186,893
Proceeds from sale of preferred shares, net
of underwriting discount and offering
costs of $1,716 ......................................... 20 -- 48,264 -- 48,284
Adjustment for minority interest of unitholders
in Operating Partnership at dates of capital
transactions ............................................ -- -- (10,518) (10,518)
Net income ................................................ -- -- -- 64,194 64,194
Dividends to preferred shareholders ....................... -- -- -- (8,504) (8,504)
Dividends to common shareholders .......................... -- -- (13,316) (55,690) (69,006)
------- ----- -------- --------- ----------
SHAREHOLDERS' EQUITY AND ACCUMULATED
EARNINGS, SEPTEMBER 30, 1998 ................................ $ 50 $ 360 $ 982,194 $ -- $ 982,604
======= ===== ========= ========= ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
- 5 -
<PAGE> 6
POST PROPERTIES, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------------
1998 1997
--------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ................................................................................ $ 64,194 $ 39,260
Adjustments to reconcile net income to net cash provided by operating activities:
Net gain on sale of assets .............................................................. -- (3,512)
Loss on unused treasury locks ........................................................... 1,944 --
Minority interest of unitholders in Operating Partnership ............................... 8,434 8,562
Extraordinary item, net of minority interest of unitholders in Operating Partnership .... -- 75
Depreciation ............................................................................ 34,246 19,655
Amortization of deferred loan costs ..................................................... 876 747
Write off of deferred loan costs ........................................................ -- (6)
Other ................................................................................... 168 --
Changes in assets, (increase) decrease in:
Restricted cash ......................................................................... 453 (293)
Other assets ............................................................................ 1,830 4,581
Deferred charges ........................................................................ (5,325) --
Changes in liabilities, increase (decrease) in:
Accrued interest payable ................................................................ 3,430 4,379
Accounts payable and accrued expenses ................................................... (7,496) 7,550
Security deposits and prepaid rents ..................................................... 722 93
--------- ---------
Net cash provided by operating activities ................................................. 103,476 81,091
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Construction and acquisition of real estate assets,
net of payables ........................................................................ (194,837) (117,177)
Proceeds from sale of assets .............................................................. -- 23,111
Capitalized interest ...................................................................... (11,123) (5,879)
Payment for unused treasury lock .......................................................... (1,944) --
Recurring capital expenditures ............................................................ (4,952) (2,932)
Corporate additions and improvements ...................................................... (7,772) (1,185)
Non-recurring capital expenditures ........................................................ (1,098) (534)
Revenue generating capital expenditures ................................................... (11,842) (4,775)
--------- ---------
Net cash used in investing activities ..................................................... (233,568) (109,371)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of financing costs ................................................................ -- (2,352)
Debt proceeds ............................................................................. 111,227 212,440
Proceeds from sale of notes ............................................................... 150,000 131,000
Proceeds from issuance of preferred shares ................................................ 48,284 --
Proceeds from issuance of common shares ................................................... 186,893 --
Debt payments ............................................................................. (295,108) (267,122)
Distributions to unitholders .............................................................. (9,886) (9,028)
Proceeds from Dividend Reinvestment and Employee Stock Purchase Plans ..................... 14,341 6,934
Dividends paid to preferred shareholders .................................................. (8,504) (3,187)
Dividends paid to common shareholders ..................................................... (63,801) (38,019)
--------- ---------
Net cash provided by financing activities ................................................. 133,446 30,666
--------- ---------
Net increase in cash and cash equivalents ................................................. 3,354 2,386
Cash and cash equivalents, beginning of period ............................................ 10,879 233
--------- ---------
Cash and cash equivalents, end of period .................................................. $ 14,233 $ 2,619
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
- 6 -
<PAGE> 7
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.
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 REIT is a legal entity which holds real estate
interests and, through payments of dividends to shareholders, in practical
effect is not subject to Federal income taxes at the corporate level.
BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared by the
Company's management in accordance with generally accepted accounting
principles for interim financial information and applicable rules and
regulations of the Securities and Exchange Commission. Accordingly, they do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting only of normally
recurring adjustments) considered necessary for a fair presentation have
been included. The results of operations for the nine month period ended
September 30, 1998 are not necessarily indicative of the results that may
be expected for the full year. These financial statements should be read in
conjunction with the Company's audited financial statements and notes
thereto included in the Post Properties, Inc. Annual Report on Form 10-K
for the year ended December 31, 1997. Certain 1997 amounts have been
reclassified to conform to the current year's financial statement
presentation.
2. NOTES PAYABLE
Post Apartment Homes, L.P. (the "Operating Partnership") has established a
program for the sale of up to $344,000 aggregate principal amount of
Medium-Term Notes due nine months or more from date of issue (the "MTN
Program"). On March 12, 1998, the Operating Partnership issued $100,000 of
6.85% Mandatory Par Put Remarketed Securities ("MOPPRS") under the MTN
Program. The net proceeds in the amount of $99,087 from the sale of the
MOPPRS were used to repay outstanding indebtedness. In connection with the
MOPPRS transaction, Merrill Lynch & Co. purchased an option to remarket the
securities as of March 16, 2005 (the "Remarketing Date"). The Operating
Partnership will have an effective borrowing rate through the Remarketing
Date of approximately 6.59%. In anticipation of the offering, the Operating
Partnership entered into forward-treasury-lock agreements in the fall of
1997. As a result of the termination of these agreements, the effective
borrowing rate will be approximately 6.85%, the coupon rate on the MOPPRS.
On April 8, 1998, the Operating Partnership sold $50,000 of Remarketed
Reset Notes (the "Reset Notes") due April 7, 2009. The Reset Notes bear an
interest rate of LIBOR plus the applicable spread with the spread being
reset from time to time. The initial spread is equal to .40% for a period
of one year. The Company has entered into an interest rate swap for the
entire term of the Reset Notes to fix the interest rate index. Under the
terms of the swap, the Company pays a fixed rate of 6.02% and receives
LIBOR. Net proceeds from the Reset Notes in the amount of $49,825 were used
to repay outstanding indebtedness. As of September 30, 1998, the Operating
Partnership had $281,000 aggregate principal amount of notes outstanding
under the MTN Program.
3. EXTRAORDINARY ITEM
The extraordinary item for the nine months ended September 30, 1997
resulted from costs associated with the early extinguishment of
indebtedness. The extraordinary item is net of minority interest of
unitholders of $18, calculated on the basis of weighted average units and
shares outstanding for the period.
- 7 -
<PAGE> 8
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
4. EARNINGS PER SHARE
For the three and nine months ended September 30, 1998 and 1997, a
reconciliation of the numerator and denominator used in the computation of
basic and diluted earnings per share is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------- --------------------------------
1998 1997 1998 1997
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
Basic and diluted income available to common
shareholders (numerator):
Income before extraordinary item ..................... $ 23,803 $ 12,972 $ 64,194 $ 39,335
Less: Preferred stock dividends .................... (2,969) (1,062) (8,504) (3,187)
------------ ------------ ------------ ------------
Income available to common shareholders
before extraordinary item .......................... $ 20,834 $ 11,910 $ 55,690 $ 36,148
============ ============ ============ ============
Common shares (denominator):
Weighted average shares outstanding-basic ............ 36,007,167 22,117,032 34,351,747 22,032,237
Incremental shares from assumed conversion
of options ......................................... 426,695 179,673 471,417 181,355
------------ ------------ ------------ ------------
Weighted average shares outstanding - diluted ........ 36,433,862 22,296,705 34,823,164 22,213,592
============ ============ ============ ============
</TABLE>
5. SUPPLEMENTAL CASH FLOW INFORMATION
Non-cash investing and financing activities for the three and nine months
ended September 30, 1998 and 1997 were as follows:
(a) During the nine months ended September 30, 1998 and 1997, holders of
750 and 6,519 units, respectively, in the Operating Partnership
exercised their option to convert their units to shares of Common
Stock of the Company on a one-for-one basis. The net effect of these
conversions and adjustments to minority interest for the dilutive
impact of the equity offerings and the Dividend Reinvestment and
Employee Stock Purchase Plans was a reclassification increasing
minority interest and decreasing shareholders' equity in the amount of
$10,518 and $651 for the nine months ended September 30, 1998 and
1997, respectively.
6. NEW ACCOUNTING PRONOUNCEMENT
On June 15, 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (FAS 133). FAS 133 is
effective for all fiscal quarters of all fiscal years beginning after June
15, 1999 (January 1, 2000 for the Company). FAS 133 requires that all
derivative instruments be recorded on the balance sheet at their fair
value. Changes in the fair value of derivatives are recorded each period in
current earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and, if it is, the
type of hedge transaction. Management of the Company anticipates that, due
to its limited use of derivative instruments, the adoption of FAS 133 will
not have a significant effect on the Company's results of operations or its
financial position.
7. SUBSEQUENT EVENT
On November 4, 1998, the Company issued 1.15 million shares (including
exercise of underwriter's 150,000 share over-allotment option) of common
stock at a price of $38.6875 per share. The net proceeds of approximately
$42,200 were contributed to the Operating Partnership and used to pay down
the outstanding balances on the Company's lines of credit.
- 8 -
<PAGE> 9
POST APARTMENT HOMES, L.P.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
--------------- --------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Real estate:
Land.................................................................. $ 248,924 $ 234,011
Building and improvements............................................. 1,383,214 1,255,118
Furniture, fixtures and equipment..................................... 102,767 89,251
Construction in progress.............................................. 409,003 342,071
Land held for future development...................................... 23,853 15,560
------------- --------------
2,167,761 1,936,011
Less: accumulated depreciation.......................................... (235,032) (201,095)
------------- --------------
Operating real estate assets.......................................... 1,932,729 1,734,916
Cash and cash equivalents............................................... 14,233 10,879
Restricted cash......................................................... 1,089 1,542
Deferred charges, net................................................... 17,333 12,629
Other assets............................................................ 18,767 20,597
------------- -------------
Total assets............................................................ $ 1,984,151 $ 1,780,563
============= =============
LIABILITIES AND PARTNERS' EQUITY
Notes payable........................................................... $ 787,328 $ 821,209
Accrued interest payable................................................ 10,935 7,505
Distributions payable................................................... 26,817 21,327
Accounts payable and accrued expenses................................... 46,463 53,101
Security deposits and prepaid rents..................................... 8,839 8,117
------------- -------------
Total liabilities..................................................... 880,382 911,259
------------- -------------
Commitments and contingencies........................................... -- --
Partners' equity........................................................ 1,103,769 869,304
------------- -------------
Total liabilities and partners' equity................................ $ 1,984,151 $ 1,780,563
============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
- 9 -
<PAGE> 10
POST APARTMENT HOMES, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES
Rental .................................................. $ 71,310 $ 43,857 $ 202,162 $ 127,988
Property management - third party ....................... 792 604 2,309 1,696
Landscape services - third party ........................ 1,765 1,327 4,945 3,792
Interest ................................................ 83 15 387 30
Other ................................................... 3,019 1,692 9,606 4,655
------------ ------------ ------------ ------------
Total revenues ........................................ 76,969 47,495 219,409 138,161
------------ ------------ ------------ ------------
EXPENSES
Property operating and maintenance (exclusive of
items shown separately below) ......................... 25,814 16,247 73,946 47,401
Depreciation (real estate assets) ....................... 11,498 6,333 33,307 18,897
Depreciation (non-real estate assets) ................... 467 262 939 758
Property management - third party ....................... 659 488 1,857 1,298
Landscape services - third party ........................ 1,571 1,068 4,372 3,086
Interest ................................................ 7,795 5,652 23,488 16,722
Amortization of deferred loan costs ..................... 318 195 876 747
General and administrative .............................. 1,869 1,467 5,701 4,867
Minority interest in consolidated property partnership 153 -- 351 --
------------ ------------ ------------ ------------
Total expenses ........................................ 50,144 31,712 144,837 93,776
------------ ------------ ------------ ------------
Income before net gain on sale of assets, loss on unused
treasury locks and extraordinary item ................. 26,825 15,783 74,572 44,385
Net gain on sale of assets .............................. -- -- -- 3,512
Loss on unused treasury locks ........................... -- -- (1,944) --
------------ ------------ ------------ ------------
Income before extraordinary item ........................ 26,825 15,783 72,628 47,897
Extraordinary item ...................................... -- -- -- (93)
------------ ------------ ------------ ------------
Net income ................................................. 26,825 15,783 72,628 47,804
Distributions to preferred unitholders ..................... (2,969) (1,062) (8,504) (3,187)
------------ ------------ ------------ ------------
Net income available to common unitholders ............ $ 23,856 $ 14,721 $ 64,124 $ 44,617
============ ============ ============ ============
EARNINGS PER COMMON UNIT - BASIC
Income before extraordinary item (net of preferred
distributions) ........................................ $ 0.58 $ 0.54 $ 1.62 $ 1.64
Extraordinary item ...................................... -- -- -- --
------------ ------------ ------------ ------------
Net income available to common unitholders .............. $ 0.58 $ 0.54 $ 1.62 $ 1.64
============ ============ ============ ============
Weighted average common units outstanding ............... 41,222,891 27,333,506 39,567,512 27,249,259
============ ============ ============ ============
EARNINGS PER COMMON UNIT - DILUTED
Income before extraordinary item (net of preferred
distributions) ........................................ $ 0.57 $ 0.53 $ 1.60 $ 1.63
Extraordinary item ...................................... -- -- -- (0.01)
------------ ------------ ------------ ------------
Net income available to common unitholders ................. $ 0.57 $ 0.53 $ 1.60 $ 1.62
============ ============ ============ ============
Weighted average common units outstanding .................. 41,649,586 27,513,179 40,038,929 27,430,614
============ ============ ============ ============
Distributions declared ..................................... $ 0.65 $ 0.595 $ 1.95 $ 1.785
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
- 10 -
<PAGE> 11
POST APARTMENT HOMES, L.P.
CONSOLIDATED STATEMENT OF PARTNERS' EQUITY
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNER PARTNERS TOTAL
-------- ----------- -----------
<S> <C> <C> <C>
PARTNERS' EQUITY, DECEMBER 31, 1997 .................................... $ 9,085 $ 860,219 $ 869,304
Contributions from the Company related to Dividend
Reinvestment and Employee Stock Purchase Plans ................... 143 14,198 14,341
Contributions from the Company related to the sale
of common shares ................................................. 1,869 185,024 186,893
Contributions from the Company related to the sale
of preferred shares............................................... -- 48,284 48,284
Distributions to preferred unitholders ............................. -- (8,504) (8,504)
Distributions to common unitholders ................................ (792) (78,385) (79,177)
Net income ......................................................... 726 71,902 72,628
-------- ----------- -----------
PARTNERS' EQUITY, SEPTEMBER 30, 1998 ................................... $ 11,031 $ 1,092,738 $ 1,103,769
======== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
- 11 -
<PAGE> 12
POST APARTMENT HOMES, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------
1998 1997
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ................................................................................... $ 72,628 $ 47,804
Adjustments to reconcile net income to net cash provided by
operating activities:
Net gain on sale of assets .............................................................. -- (3,512)
Loss on unused treasury locks ........................................................... 1,944 --
Extraordinary item ...................................................................... -- 93
Depreciation ............................................................................ 34,246 19,655
Amortization of deferred loan costs ..................................................... 876 747
Write-off of deferred loan costs ........................................................ -- (6)
Other ................................................................................... 168 --
Changes in assets, (increase) decrease in:
Restricted cash ......................................................................... 453 (293)
Other assets ............................................................................ 1,830 4,581
Deferred charges ........................................................................ (5,325) --
Changes in liabilities, increase (decrease) in:
Accrued interest payable ................................................................ 3,430 4,379
Accounts payable and accrued expenses ................................................... (7,496) 7,550
Security deposits and prepaid rents ..................................................... 722 93
--------- ---------
Net cash provided by operating activities ................................................. 103,476 81,091
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Construction and acquisition of real estate assets, net of payables ....................... (194,837) (117,177)
Proceeds from sale of assets .............................................................. -- 23,111
Capitalized interest ...................................................................... (11,123) (5,879)
Payment for unused treasury locks ......................................................... (1,944) --
Recurring capital expenditures ............................................................ (4,952) (2,932)
Corporate additions and improvements ...................................................... (7,772) (1,185)
Non-recurring capital expenditures ........................................................ (1,098) (534)
Revenue generating capital expenditures ................................................... (11,842) (4,775)
--------- ---------
Net cash used in investing activities ..................................................... (233,568) (109,371)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of financing costs ................................................................ -- (2,352)
Debt proceeds ............................................................................. 111,227 212,440
Proceeds from sale of notes ............................................................... 150,000 131,000
Proceeds from issuance of preferred units ................................................. 48,284 --
Proceeds from issuance of common units .................................................... 186,893 --
Debt payments ............................................................................. (295,108) (267,122)
Proceeds from contributions from PPI related to Dividend
Reinvestment and Employee Stock Purchase Plans .......................................... 14,341 6,934
Distributions paid to preferred unitholders ............................................... (8,504) (3,187)
Distributions paid to common unitholders .................................................. (73,687) (47,047)
--------- ---------
Net cash provided by financing activities ................................................. 133,446 30,666
--------- ---------
Net increase in cash and cash equivalents ................................................. 3,354 2,386
Cash and cash equivalents, beginning of period ............................................ 10,879 233
--------- ---------
Cash and cash equivalents, end of period .................................................. $ 14,233 $ 2,619
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
- 12 -
<PAGE> 13
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
1. ORGANIZATION AND FORMATION OF THE COMPANY
ORGANIZATION AND FORMATION OF THE COMPANY
Post Apartment Homes, L.P. (the "Operating Partnership"), a Georgia limited
partnership, was formed on January 22, 1993, to conduct the business
of developing, leasing and managing upscale multi-family apartment
communities for Post Properties, Inc. (the "Company").
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 REIT is a legal entity which holds real estate
interests and, through payments of dividends to shareholders, in practical
effect is not subject to Federal income taxes at the corporate level.
BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared by the
Company's management in accordance with generally accepted accounting
principles for interim financial information and applicable rules and
regulations of the Securities and Exchange Commission. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting only of normally
recurring adjustments) considered necessary for a fair presentation have
been included. The results of operations for the nine month period ended
September 30, 1998 are not necessarily indicative of the results that may
be expected for the full year. These financial statements should be read
in conjunction with the Company's audited financial statements and notes
thereto included in the Post Apartment Homes, L.P. Annual Report on Form
10-K for the year ended December 31, 1997. Certain 1997 amounts have been
reclassified to conform to the current year's financial statement
presentation.
2. NOTES PAYABLE
The Operating Partnership has established a program for the sale of up to
$344,000 aggregate principal amount of Medium-Term Notes due nine months
or more from date of issue (the "MTN Program"). On March 12, 1998, the
Operating Partnership issued $100,000 of 6.85% Mandatory Par Put
Remarketed Securities ("MOPPRS") under the MTN Program. The net proceeds
in the amount of $99,087 from the sale of the MOPPRS were used to repay
outstanding indebtedness. In connection with the MOPPRS transaction,
Merrill Lynch & Co. purchased an option to remarket the securities as of
March 16, 2005 (the "Remarketing Date"). The Operating Partnership will
have an effective borrowing rate through the Remarketing Date of
approximately 6.59%. In anticipation of the offering, the Operating
Partnership entered into forward-treasury-lock agreements in the fall of
1997. As a result of the termination of these agreements, the effective
borrowing rate will be approximately 6.85%, the coupon rate on the MOPPRS.
On April 8, 1998, the Operating Partnership sold $50,000 of Remarketed
Reset Notes (the "Reset Notes") due April 7, 2009. The Reset Notes bear an
interest rate of LIBOR plus the applicable spread with the spread being
reset from time to time. The initial spread is equal to .40% for a period
of one year. The Company has entered into an interest rate swap for the
entire term of the Reset Notes to fix the interest rate index. Under the
terms of the swap, the Company pays a fixed rate of 6.02% and receives
LIBOR. Net proceeds from the Reset Notes in the amount of $49,825 were
used to repay outstanding indebtedness. As of September 30, 1998, the
Operating Partnership had $281,000 aggregate principal amount of notes
outstanding under the MTN Program.
- 13 -
<PAGE> 14
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
3. EXTRAORDINARY ITEM
The extraordinary item for the nine months ended September 30, 1997
resulted from costs associated with the early extinguishment of
indebtedness.
4. EARNINGS PER UNIT
For the three and nine months ended September 30, 1998 and 1997, a
reconciliation of the numerator and denominator used in the computation of
basic and diluted earnings per share is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- -----------------------------
1998 1997 1998 1997
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
Basic and diluted income available to common
unitholders (numerator):
Income before extraordinary item ......................... $ 26,825 $ 15,783 $ 72,628 $ 47,897
Less: Preferred stock distributions .................... (2,969) (1,062) (8,504) (3,187)
------------ ------------ ------------ ------------
Income available to common unitholders
before extraordinary item .............................. $ 23,856 $ 14,721 $ 64,124 $ 44,710
============ ============ ============ ============
Common shares (denominator):
Weighted average shares outstanding - basic .............. 41,222,891 27,333,506 39,567,512 27,249,259
Incremental shares from assumed conversion
of options ............................................. 426,695 179,673 471,417 181,355
------------ ------------ ------------ ------------
Weighted average shares outstanding - diluted ............ 41,649,586 27,513,179 40,038,929 27,430,614
============ ============ ============ ============
</TABLE>
5. NEW ACCOUNTING PRONOUNCEMENT
On June 15, 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (FAS 133). FAS 133 is
effective for all fiscal quarters of all fiscal years beginning after June
15, 1999 (January 1, 2000 for the Company). FAS 133 requires that all
derivative instruments be recorded on the balance sheet at their fair
value. Changes in the fair value of derivatives are recorded each period
in current earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and, if it is, the
type of hedge transaction. Management of the Company anticipates that, due
to its limited use of derivative instruments, the adoption of FAS 133 will
not have a significant effect on the Company's results of operations or
its financial position.
6. SUBSEQUENT EVENT
On November 4, 1998, the Company issued 1.15 million shares (including
exercise of underwriter's 150,000 share over-allotment option) of common
stock at a price of $38.6875 per share. The net proceeds of approximately
$42,200 were contributed to the Operating Partnership and used to pay down
the outstanding balances on the Company's lines of credit.
- 14 -
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT APARTMENT UNIT DATA)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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. (the "Company") and Post Apartment Homes, L.P. (the "Operating
Partnership"). Except for the effect of minority interest in the Operating
Partnership, the following discussion with respect to the Company is the same
for the Operating Partnership.
As of September 30, 1998, there were 41,257,619 units in the Operating
Partnership outstanding, of which 36,041,895, or 87.4%, were owned by the
Company and 5,215,724, or 12.6% were owned by other limited partners (including
certain officers and directors of the Company). As of September 30, 1998, there
were 5,000,000 Perpetual Preferred Units outstanding, all of which were owned
by the Company.
On October 24, 1997 Columbus Realty Trust ("Columbus"), a Texas real estate
investment trust, was merged into a wholly owned subsidiary of the Company.
Pursuant to the merger agreement, each outstanding share of Columbus common
stock was converted into .615 shares of common stock of the Company, which
resulted in the issuance of approximately 8,400,000 shares of common stock of
the Company.
RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998
AND 1997
The Company recorded net income available to common shareholders of $20,834 and
$55,690 for the three and nine months ended September 30, 1998, respectively,
an increase of 74.9% and 54.4% over the corresponding periods in 1997 primarily
as a result of the merger with Columbus and additional units placed in service
through the development of new communities.
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.
As of September 30, 1998, the Company's portfolio of apartment communities
consisted of the following: (i) 64 communities which were completed and
stabilized for all of the current and prior year, (ii) seven communities which
achieved full stabilization during the prior year and (iii) 25 communities
either stabilized in the current year or presently in the development or
lease-up stages.
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
- 15 -
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT APARTMENT UNIT DATA)
treats each unit in an apartment community separately for cost accumulation,
capitalization and expense recognition purposes. Prior to the commencement of
leasing activities, interest and other construction costs are capitalized and
reflected on the balance sheet as construction in progress. Once a unit is
placed in service, all operating expenses allocated to that unit, including
interest, are expensed as incurred. During the lease-up phase, the sum of
interest expense on completed units and other operating expenses (including
pre-opening marketing expenses) will typically exceed rental revenues,
resulting in a "lease-up deficit," which continues until such time as rental
revenues exceed such expenses.
Therefore, in order to evaluate the operating performance of its communities,
the Company has presented financial information which summarizes the operating
income on a comparative basis for all of its operating communities combined and
for communities which have reached stabilization prior to January 1, 1997. The
Company has also presented quarterly financial information reflecting the
dilutive impact of lease-up deficits incurred for communities in the
development and lease-up stage and not yet operating at break-even. In this
presentation, only those communities which were dilutive during the period are
included and, accordingly, different communities may be included in each
period.
- 16 -
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT APARTMENT UNIT DATA)
ALL OPERATING COMMUNITIES
The operating performance for all of the Company's apartment communities
combined for the three and nine months ended September 30, 1998 and 1997 is
summarized as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------------- ---------------------------------
1998 1997 % CHANGE 1998 1997 % CHANGE
--------- --------- -------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Rental and other revenue:
Mature communities (1) ............................... $ 53,301 $ 51,201 4.1% $ 157,534 $ 151,579 3.9%
Adjustment for acquired mature communities (2) ....... -- (11,145) n/m -- (32,909) n/m
Communities stabilized during 1997 ................... 6,406 2,008 219.0% 18,815 3,555 429.3%
Development and lease-up communities (3) ............. 11,131 2,603 327.6% 25,327 6,467 291.6%
Sold communities (4) ................................. -- -- n/m -- 1,484 n/m
Other revenue (5) .................................... 3,491 882 295.8% 10,092 2,467 309.1%
--------- --------- ---------- ---------
74,329 45,549 63.2% 211,768 132,643 59.7%
--------- --------- ---------- ---------
Property operating and maintenance expense (exclusive
of depreciation and amortization):
Mature communities (1) ............................... 17,036 16,736 1.8% 50,270 48,941 2.7%
Adjustment for acquired mature communities (2) ....... -- (3,723) n/m -- (11,017) n/m
Communities stabilized during 1997 ................... 2,006 628 219.4% 5,886 1,519 287.5%
Development and lease-up communities (3) ............. 4,699 969 384.9% 11,310 2,459 359.9%
Sold communities(4) .................................. -- -- n/m -- 653 n/m
Other expenses (6) ................................... 2,073 1,637 26.6% 6,480 4,846 33.7%
--------- --------- ---------- ---------
25,814 16,247 58.9% 73,946 47,401 56.0%
--------- --------- ---------- ---------
Revenue in excess of specified expense ............... $ 48,515 $ 29,302 65.6% $ 137,822 $ 85,242 61.7%
========= ========= ========== =========
Recurring capital expenditures: (7)
Carpet ............................................. $ 645 $ 384 68.0% $ 1,849 $ 1,040 77.8%
Other .............................................. 1,266 644 96.6% 3,103 1,892 64.0%
--------- --------- ---------- ---------
Total .............................................. $ 1,911 $ 1,028 85.9% $ 4,952 $ 2,932 68.9%
========= ========= ========== =========
Average apartment units in service ................... 27,779 18,541 49.8% 27,127 18,387 47.5%
========= ========= ========== =========
Recurring capital expenditures per
apartment unit....................................... $ 69 $ 55 25.5% $ 183 $ 159 15.1%
========= ========= ========== =========
</TABLE>
(1) Communities which reached stabilization prior to January 1, 1997.
Includes mature communities acquired through the merger with Columbus.
(2) The adjustment for acquired mature communities represents the operating
results of the mature communities owned by Columbus prior to the
merger.
(3) Communities in the "construction", "development" or "lease-up" stage
during 1997 and, therefore, not considered fully stabilized for all of
the periods presented.
(4) Includes one community, containing 416 units, which was sold on May 22,
1997.
(5) Other revenue includes revenue from furnished apartment rentals above
the unfurnished rental rates, revenue from commercial properties and
other revenue not directly related to property operations.
(6) Other expenses includes certain indirect central office operating
expenses related to management, grounds maintenance, costs associated
with furnished apartment rentals and operating expenses from
commercial properties.
(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.
n/m - Not meaningful.
For the three and nine months ended September 30, 1998, rental and other
revenue increased $28,780, or 63.2%, and $79,125, or 59.7%, respectively,
compared to the same periods in the prior year primarily as a result of an
increase in units
- 17 -
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT APARTMENT UNIT DATA)
placed in service through the merger with Columbus ($20,446 and $59,224) and
the completion of new communities. For the three and nine months ended
September 30, 1998, property operating and maintenance expenses increased
$9,567, or 58.9%, and $26,545, or 56.0%, respectively, compared to the same
period in the prior year, primarily as a result of an increase in the number of
units placed in service through the merger with Columbus ($7,228 and $20,203)
and the completion of new communities.
For the three and nine months ended September 30, 1998, recurring capital
expenditures increased $883, or 85.9% ($14, or 25.5% on a per apartment unit
basis) and $2,020, or 68.9% ($24, or 15.1% on a per apartment unit basis),
respectively, compared to the same period in the prior year, primarily due to
the increase in the average number of apartment units in service as a result of
the merger with Columbus, the completion of new communities and the timing of
capital expenditures.
- 18 -
<PAGE> 19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT APARTMENT UNIT DATA)
MATURE COMMUNITIES
The Company defines mature communities as those which have reached
stabilization prior to the beginning of the previous calendar year.
The operating performance of the 64 communities containing an aggregate of
21,819 units which were fully stabilized as of January 1, 1997, is summarized
as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------------- ---------------------------------
1998 1997 % CHANGE 1998 1997 % CHANGE
--------- --------- -------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Rental and other revenue (1) ................. $ 53,301 $ 51,201 4.1% $ 157,534 $ 151,579 3.9%
Adjustment for acquired mature communities (2) -- (11,145) n/m -- (32,909) n/m
--------- -------- ---------- ---------
Rental and other revenue (3) ................. 53,301 40,056 33.1% 157,534 118,670 32.7%
--------- -------- ---------- ---------
Property operating and maintenance expense
(exclusive of depreciation and
amortization) (1) .......................... 17,036 16,736 1.8% 50,270 48,941 2.7%
Adjustment for acquired mature communities (2) -- (3,723) n/m -- (11,017) n/m
--------- -------- ---------- ---------
Property operating and maintenance expense
(exclusive of depreciation and amortization)
historical (3) ............................. 17,036 13,013 30.9% 50,270 37,924 32.6%
--------- -------- ---------- ---------
Revenue in excess of specified expense ....... $ 36,265 $ 27,043 34.1% $ 107,264 $ 80,746 32.8%
========= ======== ========== =========
Recurring capital expenditures: (4)
Carpet .................................... $ 603 $ 382 57.9% $ 1,720 $ 1,010 70.3%
Other ..................................... 1,119 569 96.7% 2,776 1,699 63.4%
--------- -------- ---------- ---------
Total ................................... $ 1,722 $ 951 81.1% $ 4,496 $ 2,709 66.0%
========= ======== ========== =========
Recurring capital expenditures per
apartment unit (5) ........................ $ 79 $ 56 41.1% $ 206 $ 160 28.8%
========= ======== ========== =========
Average economic occupancy (6) ............... 97.1% 95.5% 1.6% 96.8% 94.7% 2.1%
========= ======== ========== =========
Average monthly rental rate per
apartment unit (7) ......................... $ 820 $ 802 2.2% $ 813 $ 798 1.9%
========= ======== ========== =========
Apartment units in service ................... 21,819 16,937 28.8% 21,819 16,937 28.8%
========= ======== ========== =========
</TABLE>
(1) Communities which reached stabilization prior to January 1, 1997.
Includes mature communities acquired through the merger with Columbus.
(2) The adjustment for acquired mature communities represents the
operations results of the mature communities owned by Columbus prior
to the merger. This adjustment was included to reduce the rental and
other revenue of mature communities to the historical results in order
to provide a more meaningful analysis of the mature communities
results.
(3) Represents the Company's historical results of operations for mature
communities.
(4) 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.
(5) In addition to such capitalized expenditures, the Company expensed
$174 and $164 per unit on building maintenance (inclusive of direct
salaries) and $53 and $58 per unit on landscaping (inclusive of direct
salaries) for the three months ended September 30, 1998 and 1997,
respectively.
(6) Average economic occupancy is defined as gross potential rent less
vacancy losses, model expenses and bad debt divided by gross potential
rent for the period, expressed as a percentage. The calculation of
average economic occupancy does not include a deduction for
concessions and employee discounts. Average economic occupancy,
including these amounts would have been 95.5% and 94.4%
- 19 -
<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT APARTMENT UNIT DATA)
for the three months ended September 30, 1998 and 1997, respectively.
For the three months ended September 30, 1998 and 1997, concessions
were $712 and $348, respectively, and employee discounts were $116 and
$89, respectively. For the three months ended September 30, 1997,
average economic occupancy for all mature communities, including
mature communities acquired through the merger with Columbus which
were deducted pursuant to footnote (2) above, was 95.7%.
(7) Average monthly rental rate is defined as the average of the gross
actual rental rates for occupied units and the anticipated rental
rates for unoccupied units.
n/m - Not meaningful.
For the three and nine months ended September 30, 1998, rental and other
revenue increased $13,245, or 33.1%, and $38,864, or 32.7%, respectively,
compared to the same period in the prior year, due to increase in units in
service as a result of the merger with Columbus and increased rental rates and
occupancy for mature communities owned prior to the merger with Columbus. For
the three and nine months ended September 30, 1998, property operating and
maintenance expenses (exclusive of depreciation and amortization) increased
$4,023, or 30.9%, and $12,346 or 32.6%, respectively, compared to the same
period in the prior year, primarily as a result of an increase in units in
service as a result of the merger with Columbus.
LEASE-UP DEFICITS
As noted in the overview of Community Operations, the Company has adopted an
accounting policy related to communities in the development and lease-up stage
whereby substantially all operating expenses (including pre-opening marketing
expenses) are expensed as incurred. The Company treats each unit in an
apartment community separately for cost accumulation, capitalization and
expense recognition purposes. Prior to the commencement of leasing activities,
interest as well as other construction costs are capitalized and reflected on
the balance sheet as construction in progress. Once a unit is placed in
service, all expenses allocated to that unit, including interest, are expensed
as incurred. During the lease-up phase, the sum of interest expense on
completed units and other operating expenses (including pre-opening marketing
expenses) will typically exceed rental revenues, resulting in a "lease-up
deficit," which continues until rental revenues exceed such expenses.
In this presentation, only those communities which were dilutive for the
respective period are included and, accordingly, different communities may be
included in different quarters.
For the three and nine months ended September 30, 1998 and 1997, respectively,
the "lease-up deficit" charged to and included in results of operations is
summarized as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ -------------------------
1998 1997 1998 1997
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Rental and other revenue.................................. $ 2,100 $ 111 $ 4,792 $ 111
Property operating and maintenance expense (exclusive of
depreciation and amortization).......................... 1,374 119 4,044 184
-------- --------- -------- ---------
Revenue (expense) in excess of specified
expense/revenue......................................... 726 (8) 748 (73)
Interest expense.......................................... 853 80 2,245 135
-------- --------- -------- ---------
Lease-up deficit.......................................... $ (127) $ (88) $ (1,497) $ (208)
======== ========= ======== =========
</TABLE>
- 20 -
<PAGE> 21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT APARTMENT UNIT DATA)
THIRD PARTY SERVICES
THIRD PARTY MANAGEMENT SERVICES
The Company provides asset management, leasing and other consulting services to
non-related owners of apartment communities through its subsidiary, RAM
Partners, Inc. ("RAM"). The operating performance of RAM for the three and nine
months ended September 30, 1998 and 1997 is summarized as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------------- -----------------------------------
1998 1997 %CHANGE 1998 1997 %CHANGE
--------- ---------- ------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Property management and other
revenue........................... $ 792 $ 625 26.7% $ 2,309 $ 1,698 36.0%
Property management expense......... 447 316 41.5% 1,277 894 42.8%
General and administrative expense.. 212 154 37.7% 580 353 64.3%
Depreciation expense................ 9 9 -- 27 34 (20.6)%
-------- --------- ---------- ----------
Revenue in excess of specified
expense........................... $ 124 $ 146 (15.1)% $ 425 $ 417 1.9%
======== ========= ========== ==========
Average apartment units managed..... 11,621 8,461 37.3% 11,107 8,470 31.1%
======== ========= ========== ==========
</TABLE>
The increase in property management and other revenue and expense and general
and administrative expense for the three and nine months ended September 30,
1998 compared to the same periods in the prior year is primarily attributable
to an increase in the average number of units managed.
THIRD PARTY LANDSCAPE SERVICES
The Company provides landscape maintenance, design and installation services to
non-related parties through a subsidiary, Post Landscape Group, Inc., formerly
Post Landscape Services, Inc. ("Post Landscape Group").
The operating performance of Post Landscape Group for the three and nine months
ended September 30, 1998 and 1997 is summarized as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------------- ----------------------------------
1998 1997 %CHANGE 1998 1997 %CHANGE
--------- --------- ------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Landscape services and other
revenue.............................. $ 1,765 $ 1,327 33.0% $ 4,945 $ 3,792 30.4%
Landscape services expense............ 1,347 935 44.1% 3,718 2,675 39.0%
General and administrative expense.... 224 133 68.4% 654 411 59.1%
Depreciation expense.................. 53 33 60.6% 118 89 32.6%
--------- --------- --------- ---------
Revenue in excess of specified
expense............................. $ 141 $ 226 (37.6)% $ 455 $ 617 (26.3)%
========= ========= ========= =========
</TABLE>
The increase in landscape services and other revenue and expense for the three
and nine months ended September 30, 1998 compared to the same periods in 1997
is primarily due to increases in landscape contracts. General and
administrative expense increased due to costs incurred in preparation for
future growth plans.
- 21 -
<PAGE> 22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT APARTMENT UNIT DATA)
OTHER EXPENSES
Depreciation expense increased $5,370, or 81.4% and $14,591, or 74.2%,
respectively, and interest expense increased $2,143, or 37.9% and $6,766, or
40.5%, respectively, from the three and nine months ended September 30, 1998
compared to the same period in the prior year, primarily as a result of an
increase in units in service as a result of the merger with Columbus.
General and administrative expense increased $402 and $834, respectively, from
the three and nine months ended September 30, 1998 compared to the same period
in the prior year, primarily due to the merger with Columbus. As a result,
general and administrative expense as a percent of total revenues decreased
from 3.1% and 3.5% for the three and nine months ended September 30, 1997 to
2.4% and 2.6% for the three and nine months ended September 30, 1998 due to
economies of scale gained as a result of the merger with Columbus.
The loss on unused treasury locks for the nine months ended September 30, 1998
of $1,944 resulted from the termination of treasury locks intended for debt
securities that were not issued by the Operating Partnership.
The extraordinary item of $75 for the nine months ended September 30, 1997, net
of minority interest portion, resulted from the costs associated with the early
retirement of debt.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
The Company's net cash provided by operating activities increased from $81,091
for the nine months ended September 30, 1997 to $103,476 for the nine months
ended September 30, 1998, principally due to the increase in net income
(primarily as a result of the merger with Columbus). Net cash used in investing
activities increased from $109,371 in the nine months ended September 30, 1997
to $233,568 in the nine months ended September 30, 1998, principally due to an
increase in construction spending. The Company's net cash provided by financing
activities increased from $30,666 in the nine months ended September 30, 1997
to $133,446 in the nine months ended September 30, 1998, primarily due to
proceeds from the sale of preferred stock and common stock and increased debt
proceeds.
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. The Company generally will not be subject to Federal income tax on net
income.
At September 30, 1998, the Company had total indebtedness of $787,328, a
decrease of $33,881 from its total indebtedness at December 31, 1997, and cash
and cash equivalents of $14,233. At September 30, 1998, the Company's
indebtedness included approximately $43,448 in conventional mortgages payable
secured by individual communities, tax-exempt bond indebtedness of $235,880,
senior unsecured notes of $456,000 and borrowings under unsecured lines of
credit of $52,000.
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 and the issuance of debt
securities or additional equity securities of the Company, sales of
communities, 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.
- 22 -
<PAGE> 23
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT APARTMENT UNIT DATA)
Lines Of Credit
The Company has three unsecured lines of credit totaling $245,000. At September
30, 1998, there was $52,000 outstanding under these lines of credit.
On June 30, 1998, the Company entered into a $25,000 Loan Sales Line of Credit
with a bank. The interest rate and maturity date related to each draw on this
facility shall be agreed to between the Company and the bank prior to each such
draw. This facility expires on June 29, 1999.
Medium Term Notes
The Operating Partnership has established a program for the sale of up to
$344,000 aggregate principal amount of Medium- Term Notes due nine months or
more from date of issue (the "MTN Program"). On March 12, 1998, the Operating
Partnership issued $100,000 of 6.85% Mandatory Par Put Remarketed Securities
("MOPPRS") under the MTN Program. The net proceeds in the amount of $99,087
from the sale of the MOPPRS were used to repay outstanding indebtedness. In
connection with MOPPRS transaction, Merrill Lynch & Co. purchased an option to
remarket the securities as of March 16, 2005 (the "Remarketing Date"). The
Operating Partnership will have an effective borrowing rate through the
Remarketing Rate of approximately 6.59%. In anticipation of the offering, the
Operating Partnership entered into forward-treasury-lock agreements in the fall
of 1997. As a result of the termination of these agreements, the effective
borrowing rate will be approximately 6.85%, the coupon rate on the MOPPRS.
On April 8, 1998, the Operating Partnership sold $50,000 of Remarketed Reset
Notes due April 7, 2009. The notes bear an interest rate of LIBOR plus the
applicable spread with the spread being reset from time to time. The initial
spread is equal to .40% for a period of one year. The Company has entered into
an interest rate swap for the entire term of the notes to fix the interest rate
index. Under the terms of the swap, the Company pays a fixed rate of 6.02% and
receives LIBOR. Net proceeds in the amount of $49,825 were used to repay
outstanding indebtedness. As of September 30, 1998, the Operating Partnership
had $281,000 aggregate principle amount of notes outstanding under the MTN
Program.
Tax Exempt Bonds
On June 29, 1995, the Company replaced the bank letters of credit providing
credit enhancement for its outstanding tax-exempt bonds. Under an agreement
with the Fannie Mae ("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 the bond issues, aggregating $235,880, which were
reissued. The agreement with FNMA contains representations, covenants, and
events of default customary to such secured loans. Effective October 1, 1998,
the Company obtained fee reductions related to these loans totaling .08% per
annum. Of this savings, .06% was a reduction in the credit enhancement fee.
This fee reduction will result in approximately $181 of annual interest savings
for the remaining term of these loans.
On June 1, 1998 the Operating Partnership refunded its last single property
tax-exempt bond issuance on Post Court(R) in Atlanta. Of the Company's $787,328
in outstanding debt, $235,880 is tax-exempt, AAA Fannie Mae credit enhanced
debt maturing in 2025.
- 23 -
<PAGE> 24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT APARTMENT UNIT DATA)
Schedule of Indebtedness
The following table reflects the Company's indebtedness at September 30, 1998:
<TABLE>
<CAPTION>
Maturity Principal
Description Location Interest Rate Date(1) Balance
- ----------------------------------------- --------------- --------------------------- ---------------- ---------
<S> <C> <C> <C> <C>
CONVENTIONAL FIXED RATE (SECURED)
Post Hillsboro Village................... Nashville, TN 9.20% 10/01/01 $ 2,976
Parkwood Townhomes(TM)................... Dallas, TX 7.375% 04/01/14 872
--------
3,848
--------
CONVENTIONAL FLOATING RATE
Addison Circle Apartment Homes
by Post(TM)- Phase I................. Dallas, TX LIBOR + .75% 06/01/99 22,192
The Rice.............................. Houston, TX LIBOR + 1.90% 08/01/99 17,408
--------
39,600
--------
TAX EXEMPT FLOATING RATE (SECURED)
Post Ashford(R)Series 1995............. Atlanta, GA "AAA" NON-AMT + .515% (2)(3) 06/01/25 9,895
Post Valley(R)Series 1995.............. Atlanta, GA "AAA" NON-AMT + .515% (2)(3) 06/01/25 18,600
Post Brook(R)Series 1995............... Atlanta, GA "AAA" NON-AMT + .515% (2)(3) 06/01/25 4,300
Post Village(R)(Atlanta) Hills
Series 1995........................ Atlanta, GA "AAA" NON-AMT + .515% (2)(3) 06/01/25 7,000
Post Mill(R)Series 1995................ Atlanta, GA "AAA" NON-AMT + .515% (2)(3) 06/01/25 12,880
Post Canyon(R)Series 1996.............. Atlanta, GA "AAA" NON-AMT + .515% (2)(3) 06/01/25 16,845
Post Corners(R)Series 1996............. Atlanta, GA "AAA" NON-AMT + .515% (2)(3) 06/01/25 14,760
Post Bridge(R).......................... Atlanta, GA "AAA" NON-AMT + .515% (2)(3) 06/01/25 12,450
Post Village(R)(Atlanta) Gardens....... Atlanta, GA "AAA" NON-AMT + .515% (2)(3) 06/01/25 14,500
Post Chase(R)........................... Atlanta, GA "AAA" NON-AMT + .515% (2)(3) 06/01/25 15,000
Post Walk(R)............................ Atlanta, GA "AAA" NON-AMT + .515% (2)(3) 06/01/25 15,000
Post Lake(R)............................ Orlando, FL "AAA" NON-AMT + .515% (2)(3) 06/01/25 28,500
Post Fountains at Lee Vista(R).......... Orlando, FL "AAA" NON-AMT + .515% (2)(3) 06/01/25 21,500
Post Village(R)(Atlanta) Fountains
and Meadows.......................... Atlanta, GA "AAA" NON-AMT + .515% (2)(3) 06/01/25 26,000
Post Court(R)........................... Atlanta, GA "AAA" NON-AMT + .515% (2)(3) 06/01/25 18,650
--------
235,880
SENIOR NOTES (UNSECURED) --------
Medium Term Notes..................... N/A 6.58% 12/31/99 16,000
Medium Term Notes..................... N/A LIBOR + .25% 03/03/00 30,000
Northwestern Mutual Life.............. N/A 8.21% 06/07/00 30,000
Medium Tern Notes..................... N/A 7.02% 04/02/01 37,000
Northwestern Mutual Life.............. N/A 8.37% 06/07/02 20,000
Senior Notes.......................... N/A 7.32% 10/01/03 100,000
Medium Term Notes..................... N/A 7.30% 04/01/04 13,000
Medium Term Notes..................... N/A 7.04% 09/22/04 10,000
Medium Term Notes..................... N/A 7.05% 09/22/05 25,000
Senior Notes.......................... N/A 7.05% 10/01/06 25,000
Mandatory Par Put Remarketed Securities N/A 6.85%(5) 03/16/15 100,000
Remarketed Reset Notes................ N/A LIBOR + .40%(6) 02/07/09 50,000
--------
456,000
--------
</TABLE>
- 24 -
<PAGE> 25
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT APARTMENT UNIT DATA)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
LINES OF CREDIT (UNSECURED)
Loan Sales Line....................... N/A 6.50% 06/29/99 7,000
Revolver ............................. N/A LIBOR + .675% or prime minus .25%(7) 03/30/01 25,000
Cash Management Line.................. N/A LIBOR + .675% or prime minus .25% 03/31/99 20,000
--------
52,000
--------
TOTAL................................. $787,328
========
</TABLE>
(1) All of the mortgages can be prepaid at any time, subject to certain
prepayment penalties.
(2) Bond financed (interest rate on bonds + credit enhancement fees
effective October 1, 1998).
(3) These bonds are cross collateralized. The Company has purchased an
interest rate cap that limits the Company's exposure to increases in
the base rate to 5%.
(4) Subject to certain conditions at re-issuance, the credit enhancement
runs to June 1, 2025.
(5) The annual interest rate on these securities to March 16, 2005 (the
"Remarketing Date") is 6.85%. On the Remarketing Date, they are
subject to mandatory tender for remarketing.
(6) Represents rate through April 7, 1999. After this date, the spread
will be reset quarterly.
(7) Represents stated rate. The Company may also make "money market" loans
of up to $100,000 at rates below the stated rate.
Preferred Stock Offering
On February 9, 1998, the Company issued two million non-convertible 7 5/8%
Series C Cumulative Redeemable Shares (the "Series C Perpetual Preferred
Shares") at a price of $25 per share. Net proceeds of $48,284 from the sale of
Series C Perpetual Preferred Shares were contributed to the Operating
Partnership in exchange for two million Series C Perpetual Preferred Units and
used by the Operating Partnership to repay outstanding indebtedness.
Common Stock Offering
On November 4, 1998, the Company issued 1.15 million shares (including exercise
of underwriter's 150,000 share over-allotment option) of common stock at a price
of $38.6875 per share. The net proceeds of approximately $42,200 were
contributed to the Operating Partnership and used to pay down the outstanding
balances on the Company's lines of credit.
On May 28, 1998, the Company issued 373,250 shares of its common stock at a
price of $40.1875 per share. The shares were deposited into a registered UIT,
the Paine Webber Equity Trust Reit Series 1. Net proceeds of $13,662 from this
offering were contributed to the Operating Partnership and were used to fund
development and other operating cash flow needs.
On April 29, 1998, the Company issued approximately 1.1 million shares of its
common stock at a price of $40.5625 per share. The shares were deposited into a
registered unit investment trust ("UIT"), the Equity Investor Fund Cohen &
Steers Realty Majors Portfolio. Net proceeds in the amount of $44,059 were
contributed to the Operating Partnership and used to repay outstanding
indebtedness.
On March 4, 1998, the Company issued 3.5 million shares of common stock at a
price of $39 per share. The net proceeds from this offering of $129,179 were
contributed to the Operating Partnership in exchange for 3.5 million common
units and used by the Operating Partnership to repay outstanding indebtedness.
Dividend Reinvestment Plan
The Dividend Reinvestment Plan ("DRIP") is available to all shareholders of the
Company. Under the DRIP, shareholders may elect for their dividends to be used
to acquire additional shares of the Company's Common Stock directly from the
Company for 95% of the market price on the date of purchase. For the nine
months ended September 30, 1998, contributions from the DRIP were $14,341.
- 25 -
<PAGE> 26
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT APARTMENT UNIT DATA)
Current Development Activity
The Company's apartment communities under development or in initial lease-up
are summarized in the following table:
<TABLE>
<CAPTION>
ACTUAL OR ACTUAL OR UNITS
ESTIMATED ESTIMATED LEASED
QUARTER OF QUARTER QUARTER AS OF
# OF CONSTRUCTION FIRST UNITS OF STABILIZED NOVEMBER 2,
METROPOLITAN AREA UNITS COMMENCEMENT AVAILABLE OCCUPANCY 1998
- ----------------- ----- ------------ ----------- ------------- ------------
Atlanta, GA
- -----------
<S> <C> <C> <C> <C> <C>
Post Lindbergh(TM) 395 3Q'96 4Q'97 1Q'99 331
Post Gardens(R) 397 3Q'96 4Q'97 1Q'99 346
Riverside by Post(TM) 536 3Q'96 2Q'98 1Q'00 166
Post Ridge II 202 2Q'98 4Q'98 2Q'99 71
Post Briarcliff(TM)- Phase I 388 2Q'97 2Q'98 2Q'99 247
Post Briarcliff(TM)- Phase II 300 2Q'98 2Q'99 2Q'00 n/a
----- -----
2,218 1,161
----- -----
Charlotte, NC
- -------------
Charlotte Uptown 236 3Q'98 4Q'99 1Q'01 n/a
----- -----
Tampa, FL
- ---------
Post Rocky Point(R)- Phase III 290 2Q'97 2Q'98 1Q'99 151
Post Hyde Park III 119 2Q'98 1Q'99 3Q'99 n/a
Post Harbour Island(TM) 206 3Q'97 3Q'98 2Q'99 21
----- -----
615 172
----- -----
Dallas, TX
- ----------
Addison Circle - Phase II 473 1Q'98 1Q'99 1Q'00 n/a
The Gallery of State-Thomas by Post 204 4Q'97 4Q'98 2Q'99 13
Block 588 127 4Q'98 3Q'99 1Q'00 n/a
Wilson Building 135 2Q'98 2Q'99 4Q'99 n/a
----- -----
939 13
----- -----
Houston, TX
- -----------
The Rice 312 1Q'97 2Q'98 4Q'98 296
Midtown - Phase I 479 2Q'98 2Q'99 2Q'00 n/a
----- -----
791 296
----- -----
Denver, CO
- ----------
Denver Uptown 454 1Q'98 2Q'99 2Q'00 n/a
----- -----
Phoenix, AZ
- -----------
Deck Park 438 4Q'98 3Q'99 3Q'00 n/a
----- -----
Nashville, TN
- -------------
Bennie Dillon Building 86 2Q'98 1Q'99 3Q'99 n/a
----- -----
5,777 1,642
===== =====
</TABLE>
The Company is also currently conducting feasibility and other pre-development
studies for possible new Post(R) communities in its primary market areas.
- 26 -
<PAGE> 27
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT APARTMENT UNIT DATA)
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 three and
nine months ended September 30, 1998 and 1997 are summarized as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- --------------------------
1998 1997 1998 1997
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
New community development and acquisition activity.......... $ 49,096 $ 45,013 $ 205,960 $ 123,056
Non-recurring capital expenditures:
Revenue generating additions and improvements............. 4,052 1,279 11,842 4,775
Other community additions and improvements................ 210 41 1,098 534
Recurring capital expenditures:
Carpet replacements....................................... 645 384 1,849 1,040
Community additions and improvements...................... 1,266 644 3,103 1,892
Corporate additions and improvements...................... 3,645 414 7,772 1,185
----------- ----------- ---------- ----------
$ 58,914 $ 47,775 $ 231,624 $ 132,482
=========== =========== ========== ==========
</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
On June 15, 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (FAS 133). FAS 133 is effective for all
fiscal quarters of all fiscal years beginning after June 15, 1999 (January 1,
2000 for the Company). FAS 133 requires that all derivative instruments be
recorded on the balance sheet at their fair value. Changes in the fair value
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of a hedge
transaction and, if it is, the type of hedge transaction. Management of the
Company anticipates that, due to its limited use of derivative instruments, the
adoption of FAS 133 will not have a significant effect on the Company's results
of operations or its financial position.
- 27 -
<PAGE> 28
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT APARTMENT UNIT DATA)
YEAR 2000
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. The Company's computer
equipment and software and devices with imbedded technology that are time-
sensitive may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to engage in similar normal business activities.
The Company has created a specially formed Year 2000 project team to evaluate
and coordinate the Company's Year 2000 initiatives, which are intended to
ensure that its computer equipment and software will function properly with
respect to dates in the Year 2000 and thereafter. For this purpose, the term
"computer equipment and software" includes systems that are commonly thought of
as IT systems, including property management and accounting software, data
processing, and telephone/PBX systems and other miscellaneous systems, as well
as systems that are not commonly thought of as IT systems, such as elevators,
alarm systems, fax machines, or other miscellaneous systems. Both IT and non-IT
systems may contain imbedded technology, which complicates the Company's Year
2000 identification, assessment, remediation, and testing efforts. Based upon
its identification and assessment efforts to date, the Company believes that
certain of the computer equipment and software it currently uses will require
replacement or modification. In addition, in the ordinary course of replacing
computer equipment and software, the Company attempts to obtain replacements
that are Year 2000 compliant. Utilizing both internal and external resources to
identify and assess needed Year 2000 remediation, the Company currently
anticipates that its Year 2000 identification, assessment, remediation and
testing efforts will be completed by June 30, 1999, and that such efforts will
be completed prior to any currently anticipated impact on its computer
equipment and software. The Company estimates that as of September 30, 1998, it
had completed approximately 50% of the initiatives that it believes will be
necessary to fully address potential Year 2000 issues relating to its computer
equipment and software. The projects comprising the remaining 50% of the
initiatives are in process and expected to be completed on or about June 30,
1999.
The Company is also in the process of mailing letters to its significant
suppliers, contractors and third party service providers to determine the
extent to which interfaces with such entities are vulnerable to Year 2000
issues and whether the products and services purchased from or by such entities
are Year 2000 compliant. A follow-up mailing to significant suppliers,
contractors and third party service providers that do not initially respond, or
whose responses are deemed unsatisfactory by the Company, is planned for
January, 1999.
At this time, the Company cannot estimate the aggregate cost of its Year 2000
identification, assessment, remediation and testing efforts, or costs expected
to be incurred by the Company with respect to Year 2000 issues of third
parties. Expenditures related to the Company's Year 2000 initiatives will be
funded from operating cash flows. As of September 30, 1998, the Company had
incurred costs of approximately $2,000 related to its Year 2000 identification,
assessment, remediation and testing efforts, all of which relates to analysis,
repair or replacement of existing software, upgrades of existing software, or
evaluation of information received from significant suppliers, contractors and
other third party service providers. Other non-Year 2000 IT efforts have not
been materially delayed or impacted by Year 2000 initiatives. The Company
presently believes that the Year 2000 issue will not pose significant
operational problems for the Company. However, if all Year 2000 issues are not
properly identified, or assessment, remediation and testing are not effected
timely with respect to Year 2000 problems that are identified, there can be no
assurance that the Year 2000 issue will not materially adversely impact the
Company's results of operations or adversely affect the Company's relationships
with suppliers, contractors or others. Additionally, there can be no assurance
that the Year 2000 issues of other entities will not have a material adverse
impact on the Company's business or results of operations.
The Company has begun, but not yet completed, a comprehensive analysis of the
operational problems and costs (including loss of revenues) that would be
reasonably likely to result from the failure by the Company and certain third
parties to complete efforts necessary to achieve Year 2000 compliance on a
timely basis. Risks involved with not solving the Year
- 28 -
<PAGE> 29
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT APARTMENT UNIT DATA)
2000 issue include, but are not limited to, the following: loss of local or
regional electric power, loss of telecommunications services, delays or
cancellations of shipping or transportation to major building suppliers,
general deterioration of economic conditions resulting from Year 2000 issues,
and inability of banks, vendors and other third parties with whom the Company
does business to resolve Year 2000 problems. A contingency plan has not been
developed for dealing with the most reasonably likely worst case scenario, and
such scenario has not yet been clearly identified. The Company currently plans
to complete such analysis and contingency planning by December 31, 1999.
The Company has engaged an independent expert to evaluate its Year 2000
identification, assessment, remediation and testing efforts.
The costs of the Company's Year 2000 identification, assessment, remediation
and testing efforts and the dates on which the Company believes it will
complete such efforts are based upon management's best estimates, which were
derived using numerous assumptions regarding future events, including the
continued availability of certain resources, third-party remediation plans, and
other factors. There can be no assurance that these estimates will prove to be
accurate, and actual results could differ materially from those currently
anticipated. Specific factors that could cause such material differences
include, but are not limited to, the availability and cost of relevant computer
codes and embedded technology, and similar uncertainties. In addition,
variability of definitions of "compliance with Year 2000" and the myriad of
different products and services, and combinations thereof, sold by the Company
may lead to claims whose impact on the Company is not currently estimable.
There can be no assurance that the aggregate cost of defending and resolving
such claims, if any, will not materially adversely affect the Company's results
of operations. Although some of the Company's agreements with suppliers and
contractors contain provisions requiring such parties to indemnify the Company
under some circumstances, there can be no assurance that such indemnification
arrangements will cover all of the Company's liabilities and costs related to
claims by third parties related to the Year 2000 issue.
- 29 -
<PAGE> 30
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT APARTMENT UNIT DATA)
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. Funds from operations is defined to mean net
income (loss) available to common shareholders determined in accordance with
GAAP, excluding gains (or losses) from debt restructuring and sales of
property, plus depreciation of real estate assets, and after adjustment for
unconsolidated partnerships and joint ventures. FFO should not be considered as
an alternative to net income (determined in accordance with GAAP) as an
indicator of the Company's financial performance or to cash flow from operating
activities (determined in accordance with GAAP) as a measure of the Company's
liquidity, nor is it necessarily indicative of sufficient cash flow to fund all
of the Company's needs. Cash available for distribution ("CAD") is defined as
FFO less capital expenditures funded by operations and loan amortization
payments. The Company believes that in order to facilitate a clear
understanding of the consolidated historical operating results of the Company,
FFO and CAD should be examined in conjunction with net income as presented in
the consolidated financial statements and data included elsewhere in this
report.
FFO and CAD for the three and nine months ended September 30, 1998 and 1997
presented on a historical basis are summarized in the following table:
Calculations of Funds from Operations and Cash Available for Distribution
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net income available to common shareholders ................ $ 20,834 $ 11,910 $ 55,690 $ 36,073
Extraordinary item, net of minority interest ............ -- -- -- 75
Net gain on sale of assets .............................. -- -- -- (3,512)
Minority interest ....................................... 3,022 2,811 8,434 8,562
Loss on unused treasury locks ........................... -- -- 1,944 --
------------ ------------ ------------ ------------
Adjusted net income ........................................ 23,856 14,721 66,068 41,198
Depreciation of real estate assets ....................... 11,498 6,333 33,307 18,897
------------ ------------ ------------ ------------
Funds from Operations(1) ................................... 35,354 21,054 99,375 60,095
Recurring capital expenditures(2) ....................... (1,911) (1,028) (4,952) (2,932)
Non-recurring capital expenditures(3) ................... (210) (41) (1,098) (534)
Loan amortization payments .............................. (19) (47) (55) (149)
------------ ------------ ------------ ------------
Cash Available for Distribution ............................ $ 33,214 $ 19,938 $ 93,270 $ 56,480
============ ============ ============ ============
Revenue generating capital expenditures(4) ................. $ 4,052 $ 1,279 $ 11,842 $ 4,775
============ ============ ============ ============
Cash Flow Provided By (Used In):
Operating activities ....................................... $ 40,896 $ 27,241 $ 103,476 $ 81,091
Investing activities ....................................... $ (58,913) $ (47,775) $ (233,568) $ (109,371)
Financing activities ....................................... $ 28,333 $ 21,382 $ 133,446 $ 30,666
Weighted average common shares outstanding - basic ......... 36,007,167 22,117,032 34,351,747 22,032,237
============ ============ ============ ============
Weighted average common shares and units outstanding - basic 41,222,891 27,333,506 39,567,512 27,249,259
============ ============ ============ ============
Weighted average common shares outstanding - diluted ....... 36,433,862 22,296,705 34,823,164 22,213,592
============ ============ ============ ============
Weighted average common shares and units outstanding
- diluted............................................... 41,649,586 27,513,179 40,038,929 27,430,614
============ ============ ============ ============
</TABLE>
- 30 -
<PAGE> 31
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT APARTMENT UNIT DATA)
(1) The Company uses the National Association of Real Estate Investment
Trusts ("NAREIT") definition of FFO. FFO for any period means the
Consolidated Net Income of the Company and its subsidiaries for such
period excluding gains or losses from debt restructuring and sales of
property plus depreciation of real estate assets, and after adjustment
for unconsolidated partnerships and joint ventures, all determined on
a consistent basis in accordance with generally accepted accounting
principles. FFO presented herein is not necessarily comparable to FFO
presented by other real estate companies due to the fact that not all
real estate companies use the same definition. However, the Company's
FFO is comparable to the FFO of real estate companies that use the
current NAREIT definition.
(2) Recurring capital expenditures consisted primarily of $645 and $384 of
carpet replacement and $1,266 and $644 of other additions and
improvements to existing communities for the three months ended
September 30, 1998 and 1997, respectively and $1,849 and $1,040 of
carpet replacement and $3,103 and $1,892 of other additions and
improvements to existing communities for the nine months ended
September 30, 1998 and 1997, respectively. Since the Company does not
add back the depreciation of non-real estate assets in its calculation
of FFO, capital expenditures of $3,645 and $414 for the three months
ended September 30, 1998 and 1997, respectively, and $7,772 and $1,185
for the nine months ended September 30, 1998 and 1997, respectively,
are excluded from the calculation of CAD.
(3) Non-recurring capital expenditures consisted of community additions
and improvements of $210 and $41 for the three months ended September
30, 1998 and 1997, respectively, and $1,098 and $534 for the nine
months ended September 30, 1998 and 1997, respectively.
(4) Revenue generating capital expenditures included a major renovation of
communities in the amount of $4,038 and $556, for the three months
ended September 30, 1998 and 1997, respectively, and $11,283 and
$3,137 for the nine months ended September 30, 1998 and 1997,
respectively, and submetering of water service to communities in the
amount of $14 and $723 for the three months ended September 30, 1998
and 1997, respectively, and $559 and $1,638 for the nine months ended
September 30, 1998 and 1997, respectively.
- 31 -
<PAGE> 32
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
On November 10, 1998, the Company announced the resignation of
Robert Shaw, President of the Post West division and former Chief
Executive Officer for Columbus Realty Trust, the Dallas-based
company acquired by the Company in October 1997. Shaw, who will also
vacate his position on the Company's Board of Directors, will leave
the Company on November 30 to return to entrepreneurial pursuits in
the Dallas area.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule for the Company - Third Quarter 1998
(for SEC filing purposes only)
27.2 Restated Financial Data Schedule for the Company - Third
Quarter 1997 (for SEC filing purposes only)
27.3 Financial Data Schedule for the Operating Partnership - Third
Quarter 1998 (for SEC filing purposes only)
27.4 Restated Financial Data Schedule for the Operating Partnership
- Third Quarter 1997 (for SEC filing purposes only)
The registrants agree to furnish a copy of all agreements relating
to long-term debt upon request of the Commission.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed by either registrant during
the three month period ended September 30, 1998.
- 32 -
<PAGE> 33
SIGNATURES
Pursuant to the requirements 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.
November 12, 1998 /s/John T. Glover
- ----------------- -----------------------------
(Date) John T. Glover, President
(Principal Financial Officer)
November 12, 1998 /s/ R. Gregory Fox
- ----------------- -----------------------------
(Date) R. Gregory Fox
Senior Vice President, Chief
Accounting Officer
- 33 -
<PAGE> 34
SIGNATURES
Pursuant to the requirements 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 APARTMENT HOMES L.P.
By: Post GP Holdings, Inc., as General Partner
November 12, 1998 /s/John T. Glover
- ----------------- -----------------------------
(Date) John T. Glover, President
(Principal Financial Officer)
November 12, 1998 /s/ R. Gregory Fox
- ----------------- -----------------------------
(Date) R. Gregory Fox
Senior Vice President, Chief
Accounting Officer
- 34 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF POST PROPERTIES, INC. FOR THE PERIOD ENDED SEPTEMBER 30,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000903127
<NAME> POST PROPERTIES, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 15,322,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,167,761,000
<DEPRECIATION> 235,032,000
<TOTAL-ASSETS> 1,984,151,000
<CURRENT-LIABILITIES> 0
<BONDS> 787,328,000
0
50,000
<COMMON> 360,000
<OTHER-SE> 982,194,000
<TOTAL-LIABILITY-AND-EQUITY> 1,984,151,000
<SALES> 0
<TOTAL-REVENUES> 219,409,000
<CGS> 0
<TOTAL-COSTS> 113,482,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,488,000
<INCOME-PRETAX> 74,572,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 55,690,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 55,690,000
<EPS-PRIMARY> 1.62
<EPS-DILUTED> 1.60
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF POST PROPERTIES, INC. FOR THE PERIOD ENDED SEPTEMBER
30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000903127
<NAME> POST PROPERIES, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 4,060,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,228,647,000
<DEPRECIATION> 191,632,000
<TOTAL-ASSETS> 1,063,141,000
<CURRENT-LIABILITIES> 0
<BONDS> 510,637,000
0
10,000
<COMMON> 221,000
<OTHER-SE> 401,771,000
<TOTAL-LIABILITY-AND-EQUITY> 1,063,141,000
<SALES> 0
<TOTAL-REVENUES> 138,161,000
<CGS> 0
<TOTAL-COSTS> 70,682,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,722,000
<INCOME-PRETAX> 44,385,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 36,148,000
<DISCONTINUED> 0
<EXTRAORDINARY> 75,000
<CHANGES> 0
<NET-INCOME> 36,073,000
<EPS-PRIMARY> 1.64
<EPS-DILUTED> 1.62
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF POST APARTMENT HOMES, L.P. FOR THE PERIOD ENDED
SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001012271
<NAME> POST APARTMENT HOMES, L.P.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 15,322,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,167,761,000
<DEPRECIATION> 235,032,000
<TOTAL-ASSETS> 1,984,151,000
<CURRENT-LIABILITIES> 0
<BONDS> 787,328,000
0
0
<COMMON> 0
<OTHER-SE> 1,103,769,000
<TOTAL-LIABILITY-AND-EQUITY> 1,984,151,000
<SALES> 0
<TOTAL-REVENUES> 219,409,000
<CGS> 0
<TOTAL-COSTS> 113,482,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,488,000
<INCOME-PRETAX> 74,572,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 64,124,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 64,124,000
<EPS-PRIMARY> 1.62
<EPS-DILUTED> 1.60
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF POST APARTMENT HOMES, L.P. FOR THE PERIOD ENDED
SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001012271
<NAME> POST APARTMENT HOMES, L.P.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 4,060,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,228,647,000
<DEPRECIATION> 191,632,000
<TOTAL-ASSETS> 1,063,141,000
<CURRENT-LIABILITIES> 0
<BONDS> 510,637,000
0
0
<COMMON> 0
<OTHER-SE> 485,327,000
<TOTAL-LIABILITY-AND-EQUITY> 1,063,141,000
<SALES> 0
<TOTAL-REVENUES> 138,161,000
<CGS> 0
<TOTAL-COSTS> 70,682,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,722,000
<INCOME-PRETAX> 44,385,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 44,710,000
<DISCONTINUED> 0
<EXTRAORDINARY> 93,000
<CHANGES> 0
<NET-INCOME> 44,617,000
<EPS-PRIMARY> 1.64
<EPS-DILUTED> 1.62
</TABLE>
