<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSMISSION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER 1-12080
COMMISSION FILE NUMBER 0-28226
------------------------------
POST PROPERTIES, INC.
POST APARTMENT HOMES, L.P.
(Exact name of registrants as specified in their charters)
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)
------------------------------
Securities registered pursuant to section 12(b) of the Act:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ----------------
<S> <C>
Common Stock, $.01 par value New York Stock Exchange
8 1/2% Series A Cumulative New York Stock Exchange
Redeemable Preferred Shares,
$.01 par value
7 5/8% Series B Cumulative New York Stock Exchange
Redeemable Preferred Shares,
$.01 par value
7 5/8% Series C Cumulative New York Stock Exchange
Redeemable Preferred Shares,
$.01 par value
</TABLE>
Securities registered pursuant to Section 12(g) of the Act: None
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ----------------
<S> <C>
Units of Limited Partnership None
</TABLE>
------------------------------
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 Registrants were 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the shares of common stock held by
non-affiliates (based upon the closing sale price on the New York Stock
Exchange) on March 10, 1999 was approximately $1,362,264,000. As of March 10,
1999, there were 38,172,011 shares of common stock, $.01 par value, outstanding.
------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement in connection with its Annual
Meeting of Shareholders to be held May 7, 1999 are incorporated by reference
in Part III.
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<PAGE> 2
POST PROPERTIES, INC.
POST APARTMENT HOMES, L.P.
TABLE OF CONTENTS
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
ITEM PAGE
NO. NO.
- ---- ----
PART I
<S> <C> <C>
1 Business .................................................................... 1
2 Properties .................................................................. 7
3 Legal Proceedings ........................................................... 10
4 Submission of Matters to a Vote of Security Holders ......................... 10
X Executive Officers of the Registrant ........................................ 10
PART II
5 Market Price of the Registrant's Common Stock and Related Stockholder Matters 13
6 Selected Financial Data ..................................................... 14
7 Management's Discussion and Analysis of Financial Condition
and Results of Operations ................................................... 18
7A Quantitative and Qualitative Disclosures about Market Risk .................. 31
8 Financial Statements and Supplementary Data ................................. 32
9 Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure .................................................... 32
PART III
10 Directors and Executive Officers of the Registrant .......................... 33
11 Executive Compensation ...................................................... 33
12 Security Ownership of Certain Beneficial Owners and Management .............. 33
13 Certain Relationships and Related Transactions .............................. 33
PART IV
14 Exhibits, Financial Statements, Schedules and Reports on Form 8-K ........... 34
</TABLE>
<PAGE> 3
PART I
ITEM 1. BUSINESS
THE COMPANY
Post Properties, Inc. (the "Company") is one of the largest developers and
operators of upscale multifamily apartment communities in the Southeastern and
Southwestern United States. The Company currently owns 84 stabilized
communities (the "Communities") containing 27,963 apartment units located
primarily in metropolitan Atlanta, Georgia; Dallas, Texas and Tampa, Florida.
In addition, the Company currently has under construction or in initial
lease-up 12 new communities and additions to five existing communities in the
Atlanta, Georgia; Dallas and Houston, Texas; Tampa, Florida; Denver, Colorado;
Charlotte, North Carolina; Phoenix, Arizona and Nashville, Tennessee
metropolitan areas that will contain an aggregate of 4,758 apartment units
upon completion. For the year ended December 31, 1998, the average economic
occupancy rate (defined as gross potential rent less vacancy losses, model
expenses and bad debt divided by gross potential rent) of the 71 Communities
stabilized for the entire year was 96.5%. The average monthly rental rate per
apartment unit at these Communities for December 1998 was $834. The Company
also manages through affiliates approximately 11,754 additional apartment
units owned by third parties. The Company is a fully-integrated organization
with multifamily development, acquisition, operation and asset management
expertise. The Company has approximately 1,860 employees, none of whom is a
party to a collective bargaining agreement.
Since its founding in 1971, the Company has pursued three distinctive core
business strategies that, for over 25 years, have remained substantially
unchanged:
Investment Building
Investment building means taking a long-term view of the assets the Company
creates. The Company develops communities with the intention of operating them
for periods that are relatively long by the standards of the apartment
industry. Key elements of the Company's investment building strategy include
instilling a disciplined team approach to development decisions; selecting
sites in niche and infill locations in strong primary markets; consistently
constructing new apartment communities with a uniformly high quality; and
conducting ongoing property improvements.
Promotion of the Post(R) Brand Name
The Post(R) brand name strategy has been integral to the success of the
Company and, to the knowledge of the Company, has not been successfully
duplicated within the multifamily real estate industry in any major U.S.
market. For such a strategy to work, a company must develop and implement
systems to achieve uniformly high quality and value throughout its operations.
As a result of the Company's efforts in developing and maintaining its
communities, the Company believes that the Post(R) brand name is synonymous
with quality upscale apartment communities that are situated in desirable
locations and provide superior resident service. Key elements in implementing
the Company's brand name strategy include extensively utilizing the
trademarked brand name; adhering to quality in all aspects of the Company's
operations; developing and implementing leading edge training programs; and
coordinating the Company's advertising programs to increase brand name
recognition.
Service Orientation
The Company's mission statement is: "To provide the superior apartment living
experience for our residents." By striving to provide a superior product and
superior service, the Company believes that it will be able to achieve its
long-term goals. The Company believes that it provides its residents with
superior product and superior service through its uniformly high quality
construction, selective locations, award winning landscaping and numerous
amenities, including, for example, on site business centers, on site courtesy
officers, urban vegetable gardens and state of the art fitness centers.
The Company believes that with the implementation of these strategies,
multifamily properties in its primary markets have the potential over the long
term to provide investment returns that exceed national averages. According to
recent market surveys, employment growth, population growth and household
formation growth in the Company's primary markets have exceeded, and are
forecasted to continue to exceed, national averages.
1
<PAGE> 4
The Company is a self-administered and self-managed equity real estate
investment trust (a "REIT"). In 1993, the Company completed an initial public
offering of its Common Stock (the "Initial Offering") and a business
combination involving entities under varying common ownership. Proceeds from
the Initial Offering were used by the Company, in part, (i) to acquire a
controlling interest in Post Apartment Homes, L.P. (the "Operating
Partnership"), the Company's principal operating subsidiary, which was formed
to succeed to substantially all of the ownership interest in a portfolio of 40
Post(R) multifamily apartment communities, all of which were developed by the
Company and owned by affiliates of the Company, and to the development,
leasing, landscaping and management business of the Company and certain other
affiliates.
The Company, through wholly owned subsidiaries, is the sole general partner
of, and controls a majority of the limited partnership interests in, the
Operating Partnership. The Company conducts all of its business through the
Operating Partnership and its subsidiaries.
The Company's and the Operating Partnership's executive offices are located at
4401 Northside Parkway, Suite 800, Atlanta, Georgia 30327 and their telephone
number is (404) 846-5000. Post Properties, Inc., a Georgia corporation, was
incorporated on January 25, 1984, and is the successor by merger to the
original Post Properties, Inc., a Georgia corporation, which was formed in
1971. The Operating Partnership is a Georgia limited partnership that was
formed in July 1993 for the purpose of consolidating the operating and
development businesses of the Company and the Post(R) apartment portfolio
described herein.
THE OPERATING PARTNERSHIP
The Operating Partnership, through the operating divisions and subsidiaries
described below, is the entity through which all of the Company's operations
are conducted. At December 31, 1998, the Company, through wholly owned
subsidiaries, controlled the Operating Partnership as the sole general partner
and as the holder of 87.9% of the common units in the Operating Partnership
("Units") and 100% of the preferred Units (the "Perpetual Preferred Units").
The other limited partners of the Operating Partnership are those persons
(including certain officers and directors of the Company) who, at the time of
the Initial Offering, elected to hold all or a portion of their interest in
the form of Units rather than receiving shares of Common Stock. Each Unit may
be redeemed by the holder thereof for either one share of Common Stock or cash
equal to the fair market value thereof at the time of such redemption, at the
option of the Operating Partnership. The Operating Partnership presently
anticipates that it will cause shares of Common Stock to be issued in
connection with each such redemption rather than paying cash (as has been done
in all redemptions to date). With each redemption of outstanding Units for
Common Stock, the Company's percentage ownership interest in the Operating
Partnership will increase. In addition, whenever the Company issues shares of
stock, the Company will contribute any net proceeds therefrom to the Operating
Partnership and the Operating Partnership will issue an equivalent number of
Units or Perpetual Preferred Units, as appropriate, to the Company.
As the sole shareholder of the Operating Partnership's sole general partner, the
Company has the exclusive power under the agreement of limited partnership of
the Operating Partnership to manage and conduct the business of the Operating
Partnership, subject to the consent of the holders of the Units in connection
with the sale of all or substantially all of the assets of the Operating
Partnership or in connection with a dissolution of the Operating Partnership.
The board of directors of the Company manages the affairs of the Operating
Partnership by directing the affairs of the Company. The Operating Partnership
cannot be terminated, except in connection with a sale of all or substantially
all of the assets of the Company, for a period of 50 years without a vote of
limited partners of the Operating Partnership. The Company's indirect limited
and general partner interests in the Operating Partnership entitle it to share
in cash distributions from, and in the profits and losses of, the Operating
Partnership in proportion to the Company's percentage interest therein and
indirectly entitle the Company to vote on all matters requiring a vote of the
limited partners.
As part of the formation of the Operating Partnership, a new holding company,
Post Services, Inc. ("Post Services") was organized as a separate corporate
subsidiary of the Operating Partnership. Post Services, in turn, owns all the
outstanding stock of two operating subsidiaries, RAM Partners, Inc. ("RAM") and
Post Landscape Services, Inc. ("Post Landscape"). Certain officers and directors
of the Company received 99%, collectively, of the voting common stock of Post
Services, and the Operating Partnership received 1% of the voting common stock
and 100%
2
<PAGE> 5
of the nonvoting common stock of Post Services. The voting and nonvoting
common stock of Post Services held by the Operating Partnership represents 99%
of the equity interests therein. The voting common stock held by officers and
directors in Post Services is subject to an agreement that is designed to
ensure that the stock will be held by one or more officers of Post Services.
The by-laws of Post Services provide that a majority of the board of directors
of Post Services must be persons who are not employees, members of management
or affiliates of the Company or its subsidiaries. This by-law provision cannot
be amended without the vote of 100% of the outstanding voting common stock of
Post Services. Post Services currently has the same board of directors as the
Company.
OPERATING DIVISIONS
The major operating divisions of the Operating Partnership include:
Post Apartment Management
Post Apartment Management is responsible for the day-to-day operations of all
the Post(R) communities including community leasing, property management and
personnel recruiting, training and development, maintenance and security. Post
Apartment Management also conducts short-term corporate apartment leasing
activities and is the largest division in the Company.
Post Apartment Development
Post Apartment Development conducts the development and construction
activities of the Company. These activities include site selection, zoning and
regulatory approvals, project design, and the full range of construction
management services.
Post Corporate Services
Post Corporate Services provides executive direction and control to the
Company's other divisions and subsidiaries and has responsibility for the
creation and implementation of all Company financing and capital strategies.
All accounting, management reporting, information systems, human resources,
legal and insurance services required by the Company and all of its affiliates
are centralized in Post Corporate Services.
OPERATING SUBSIDIARIES
The operating subsidiaries of the Operating Partnership, each of which is wholly
owned by Post Services, include:
RAM
RAM provides third party asset management and leasing services for multifamily
properties that do not operate under the Post(R) name. RAM's clients include
pension funds, independent private investors, financial institutions and
insurance companies. RAM's asset management contracts generally are subject to
annual renewal or are terminable upon specified notice. As of December 31,
1998, RAM managed 60 properties (located in Georgia, Florida, Tennessee,
Kansas, Missouri, North Carolina, Texas and Virginia) with approximately 11,754
units under management.
Post Landscape Group
As a result of the reputation the Company developed in connection with the
landscaping of Post(R) communities, in 1990, the Company began providing third
party landscape services for clients other than Post(R) communities. Projects
with third parties include the maintenance and design of the landscape for
office parks, commercial buildings and other commercial enterprises, and
private residences. Post Landscape Group provides such third party landscape
services.
HISTORY OF POST PROPERTIES, INC.
During the five-year period from January 1, 1994 through December 31, 1998,
the Company and affiliates have developed and completed 7,671 apartment units
in 24 apartment communities, acquired 7,186 units in 28 apartment communities
(26 communities containing 6,296 apartment units were as a result of the
merger with Columbus Realty Trust [the "Merger"]) and sold five apartment
communities containing an aggregate of 1,164 apartment units. Historically,
the Company has primarily developed its apartment communities to the Company's
3
<PAGE> 6
specifications as opposed to buying or refurbishing existing properties built
by others. The Company and its affiliates have sold apartment communities
after holding them for investment periods that typically have been seven to
twelve years after development. The following table shows the results of the
Company's developments during this period:
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
-------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Units completed ....................... 2,025 2,128 2,258 685 575
Units acquired(1) ..................... -- 6,296 890 -- --
Units sold ............................ -- (416) (180) (568) --
Total units owned by Company affiliates
at February 28, 1999 ................. 27,963 25,938 17,930 14,962 14,845
Total apartment rental income (in
thousands) ........................... $275,755 $ 186,126 $ 158,618 $ 133,817 $115,309
</TABLE>
(1) As part of the Merger, the Company acquired 26 communities containing 6,296
units. Of the communities acquired in the Merger, 14 communities containing
3,916 units were built by Columbus and 12 communities containing 2,380 units
were acquired by Columbus.
4
<PAGE> 7
CURRENT DEVELOPMENT ACTIVITY
The Company currently has under construction or in initial lease-up 12 new
communities and additions to five existing communities that will contain an
aggregate of 4,758 units upon completion. The Company's communities under
development or in initial lease-up are summarized in the following table:
<TABLE>
<CAPTION>
ACTUAL OR ACTUAL OR
ESTIMATED ESTIMATED
QUARTER OF QUARTER QUARTER OF
# OF CONSTRUCTION FIRST UNITS STABILIZED
METROPOLITAN AREA UNITS COMMENCEMENT AVAILABLE OCCUPANCY
----- ------------- -------------- ---------------
<S> <C> <C> <C> <C>
ATLANTA, GA
Parkside by Post(TM) ..................... 188 1Q'99 4Q'99 2Q'00
Riverside by Post(TM)- Phase II .......... 328 1Q'98 1Q'99 2Q'00
Post Ridge(R)- Phase II .................. 202 2Q'98 3Q'98 2Q'99
Post Briarcliff(TM)- Phase I ............. 388 2Q'97 2Q'98 2Q'99
Post Briarcliff(TM)- Phase II ............ 300 2Q'98 2Q'99 2Q'00
-----
1,406
-----
CHARLOTTE, NC
Uptown Place by Post(TM) ................. 227 3Q'98 4Q'99 3Q'00
-----
DALLAS, TX
Lofts By Post ............................ 127 4Q'98 3Q'99 2Q'00
The Wilson Building by Post(TM) .......... 135 2Q'98 2Q'99 3Q'99
Addison Circle by Post(TM)
- Phase II ............................ 610 1Q'98 1Q'99 3Q'00
The Heights of State Thomas
by Post(TM)- Phase II ................. 204 4Q'97 4Q'98 3Q'99
-----
1,076
-----
HOUSTON, TX
Midtown Square by Post ................... 479 1Q'98 3Q'99 4Q'00
-----
TAMPA, FL
Post Rocky Point(R)- Phase III ........... 290 2Q'97 2Q'98 2Q'99
Harbour Island City Apartment
Homes by Post(TM) ..................... 206 3Q'97 3Q'98 2Q'99
Post Hyde Park(TM)- Phase III ............ 119 2Q'98 1Q'99 3Q'99
-----
615
-----
DENVER, CO
Uptown Square by Post(TM) ................ 454 1Q'98 3Q'99 4Q'00
-----
NASHVILLE, TN
Bennie Dillon by Post(TM) ................ 86 2Q'98 2Q'99 3Q'99
-----
PHOENIX, AZ
Roosevelt Square by Post ................. 415 4Q'98 4Q'99 1Q'01
-----
TOTAL .................................... 4,758
=====
</TABLE>
The Company is also currently conducting feasibility and other pre-development
studies for possible new Post(R) communities in its primary market areas.
5
<PAGE> 8
COMPETITION
All of the Communities are located in developed areas that include other
upscale apartments. The number of competitive upscale apartment properties in
a particular area could have a material effect on the Company's ability to
lease apartment units at the Communities or at any newly developed or acquired
communities and on the rents charged. The Company may be competing with others
that have greater resources than the Company. In addition, other forms of
residential properties, including single family housing, provide housing
alternatives to potential residents of upscale apartment communities.
AMERICANS WITH DISABILITIES ACT
The Communities and any newly acquired apartment communities must comply with
Title III of the Americans with Disabilities Act (the "ADA") to the extent
that such properties are "public accommodations" and/or "commercial
facilities" as defined by the ADA. Compliance with the ADA requirements could
require removal of structural barriers to handicapped access in certain public
areas of the Company's Communities where such removal is readily achievable.
The ADA does not, however, consider residential properties, such as apartment
communities, to be public accommodations or commercial facilities, except to
the extent portions of such facilities, such as the leasing office, are open
to the public. The Company believes that its properties comply with all
present requirements under the ADA and applicable state laws. Noncompliance
could result in imposition of fines or an award of damages to private
litigants. If required to make material additional changes, the Company's
results of operations could be adversely affected.
ENVIRONMENTAL REGULATIONS
The Company is subject to Federal, state and local environmental regulations
that apply to the development of real property, including construction
activities, the ownership of real property, and the operation of multifamily
apartment communities.
In developing properties and constructing apartments, the Company utilizes
environmental consultants to determine whether there are any flood plains,
wetlands or environmentally sensitive areas that are part of the property to
be developed. If flood plains are identified, development and construction is
planned so that flood plain areas are preserved or alternative flood plain
capacity is created in conformance with Federal and local flood plain
management requirements.
Storm water discharge from a construction facility is evaluated in connection
with the requirements for storm water permits under the Clean Water Act. This
is an evolving program in most states. The Company currently anticipates it
will be able to obtain storm water permits for existing or new development.
The Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. sec. 9601 et seq. ("CERCLA"), and applicable state superfund laws
subject the owner of real property to claims or liability for the costs of
removal or remediation of hazardous substances that are disposed of on real
property in amounts that require removal or remediation. Liability under
CERCLA and applicable state superfund laws can be imposed on the owner of real
property or the operator of a facility without regard to fault or even
knowledge of the disposal of hazardous substances on the property or at the
facility. The presence of hazardous substances in amounts requiring response
action or the failure to undertake remediation where it is necessary may
adversely affect the owner's ability to sell real estate or borrow money using
such real estate as collateral. In addition to claims for cleanup costs, the
presence of hazardous substances on a property could result in a claim by a
private party for personal injury or a claim by an adjacent property owner for
property damage.
The Company has instituted a policy that requires an environmental
investigation of each property that it considers for purchase or that it owns
and plans to develop. The environmental investigation is conducted by a
qualified environmental consultant. If there is any indication of
contamination, sampling of the property is performed by the environmental
consultant. The environmental investigation report is reviewed by the Company
and counsel prior to purchase of any property. If necessary, remediation of
contamination, including underground storage tanks, is undertaken prior to
development.
6
<PAGE> 9
The Company has not been notified by any governmental authority of any
noncompliance, claim, or liability in connection with any of the Communities.
The Company has not been notified of a claim for personal injury or property
damage by a private party in connection with any of the Communities in
connection with environmental conditions. The Company is not aware of any
other environmental condition with respect to any of the Communities that
could be considered to be material.
ITEM 2. PROPERTIES
At February 28, 1999, the Communities consisted of 84 stabilized Post(R)
multifamily apartment communities located in the following metropolitan areas:
<TABLE>
<CAPTION>
METROPOLITAN AREA COMMUNITIES # OF UNITS % OF TOTAL
----------------- ----------- ---------- ----------
<S> <C> <C> <C>
Atlanta, GA............................ 40 15,079 53.9%
Dallas, TX............................. 24 6,225 22.3%
Houston, TX............................ 1 309 1.1%
Tampa, FL.............................. 8 2,570 9.2%
Jackson, MS............................ 3 983 3.5%
Orlando, FL............................ 2 1,248 4.5%
Fairfax, VA............................ 2 700 2.5%
Nashville, TN.......................... 3 447 1.6%
Charlotte, NC.......................... 1 402 1.4%
--------- --------- ---------
84 27,963 100.0%
========= ========= =========
</TABLE>
The Company or its predecessors developed all but 14 of the Post(R) Communities
and currently manages all of the Communities. Forty-seven of the Communities
have in excess of 300 apartment units, with the largest Community having a total
of 907 apartment units. Seventy-six of the eighty-four Communities, comprising
approximately 90% of the Communities' apartment units, were completed after
January 1, 1986. The average age of the Communities is approximately eight
years. The average economic occupancy rate was 96.5% and 95.2%, respectively,
and the average monthly rental rate per apartment unit was $816 and $790,
respectively, for communities stabilized for each of the entire years ended
December 31, 1998 and 1997. See "Selected Financial Information".
7
<PAGE> 10
COMMUNITY INFORMATION
<TABLE>
<CAPTION>
DECEMBER 1998 1998
AVERAGE NUMBER AVERAGE AVERAGE
YEAR UNIT SIZE OF RENTAL RATES ECONOMIC
COMMUNITIES LOCATION(1) COMPLETED (SQUARE FEET) UNITS PER UNIT OCCUPANCY(2)
- ----------- ----------- --------- ------------- ----- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
GEORGIA
Post Ashford(R) .......................... Atlanta 1987 872 222 $ 788 96.7%
Post Bridge(R) ........................... Atlanta 1986 847 354 687 96.8%
Post Brookhaven(R) ....................... Atlanta 1990-92 (3) 991 735 952 96.4%
Post Canyon(R) ........................... Atlanta 1986 899 494 712 97.5%
Post Chase(R) ............................ Atlanta 1987 938 410 703 95.2%
Post Chastain(R) ......................... Atlanta 1990 965 558 1,008 96.1%
Post Collier Hills(R) .................... Atlanta 1997 967 396 1,009 97.2%
Post Corners(R) .......................... Atlanta 1986 860 460 704 96.2%
Post Court(R) ............................ Atlanta 1988 838 446 674 96.6%
Post Creek(TM) ........................... Atlanta 1983 (5) 1,180 810 895 96.2%
Post Crest(R) ............................ Atlanta 1996 1,073 410 991 97.4%
Post Crossing(R) ......................... Atlanta 1995 1,067 354 1,059 97.0%
Post Dunwoody(R) ......................... Atlanta 1989-96 (3) 941 530 947 96.1%
Post Gardens(R) .......................... Atlanta 1998 1,066 397 1,198 N/A (4)
Post Glen(R) ............................. Atlanta 1997 1,113 314 1,179 97.5%
Post Lane(R) ............................. Atlanta 1988 840 166 734 97.6%
Post Lenox Park(TM) ...................... Atlanta 1995 1,030 206 1,108 97.1%
Post Lindbergh ........................... Atlanta 1998 960 395 1,072 N/A (4)
Post Mill(R) ............................. Atlanta 1985 952 398 731 97.7%
Post Oak(TM) ............................. Atlanta 1993 1,003 182 1,026 97.3%
Post Oglethorpe(R) ....................... Atlanta 1994 1,205 250 1,262 96.8%
Post Park(R) ............................. Atlanta 1988-90 (3) 904 770 785 96.6%
Post Parkwood(R) ......................... Atlanta 1995 1,071 125 948 96.5%
Post Peachtree Hills(R) .................. Atlanta 1992-94 (3) 982 300 1,045 96.2%
Post Pointe(R) ........................... Atlanta 1988 835 360 683 95.6%
Post Renaissance(R)(6) ................... Atlanta 1992-94 (3) 890 342 961 95.6%
Post Ridge(R) ............................ Atlanta 1998 1,045 232 1,052 N/A (4)
Post River(R) ............................ Atlanta 1991-98 (3) 1,015 213 1,226 N/A (4)
Post Summit(R) ........................... Atlanta 1990 957 148 883 96.0%
Post Terrace(R) .......................... Atlanta 1996 1,144 296 1,094 95.3%
Post Valley(R) ........................... Atlanta 1988 854 496 671 97.1%
Post Village(R) .......................... Atlanta 736 95.1%
The Arbors .............................. 1983 1,063 301
The Fountains ........................... 1987 850 352
The Gardens ............................. 1986 891 494
The Hills ............................... 1984 953 241
The Meadows ............................. 1988 817 350
Post Vinings(R) .......................... Atlanta 1989-91 (3) 964 403 809 97.1%
Post Walk(R) ............................. Atlanta 1984-87 (3) 932 476 827 94.6%
Post Woods(R) ............................ Atlanta 1977-83 (3) 1,057 494 888 95.5%
Riverside by Post(TM) .................... Atlanta 1998 989 199 1,385 N/A (4)
----- -------- ------ ----
Subtotal/Average-- Georgia .............. 971 15,079 887 96.3%
----- -------- ------ ----
TEXAS
Addison Circle Apartment Homes
by Post(TM)- Phase I ................... Dallas 1998 896 460 894 N/A (4)
The American Beauty Mill by Post(TM) ..... Dallas 1998 980 80 979 N/A (4)
Cole's Corner(TM) ........................ Dallas 1998 796 186 949 N/A (4)
Columbus Square by Post(TM) .............. Dallas 1996 861 218 1,108 96.5%
Villas of Parkway Village(TM) ............ Dallas 1986 1,308 136 1,087 94.8%
Post Parkwood(R) ......................... Dallas 1962-70 (3) 1,042 96 946 97.5%
Post Ascension(TM) ....................... Dallas 1985-95 (3) 929 165 798 97.0%
Post Hackberry Creek(TM) ................. Dallas 1988-96 (3) 865 432 793 95.7%
Post Lakeside(TM) ........................ Dallas 1986 791 327 801 96.1%
Post Reflections(TM) ..................... Dallas 1986 797 198 655 93.3%
Post Townlake(TM)/Parks .................. Dallas 1986-87 (3) 869 398 729 98.2%
Post White Rock(TM) ...................... Dallas 1988 659 207 701 96.3%
Post Winsted(TM) ......................... Dallas 1996 728 314 739 96.6%
The Shores by Post(TM) ................... Dallas 1988-97 (3) 874 907 884 96.5%
The Abbey of State-Thomas by Post(TM) .... Dallas 1996 1,276 34 1,919 97.1%
The Commons at Turtle Creek by Post(TM) .. Dallas 1985 645 158 755 97.8%
The Heights of State-Thomas by Post(TM) .. Dallas 1998 813 198 992 N/A (4)
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION> DECEMBER 1998 1998
AVERAGE NUMBER AVERAGE AVERAGE
YEAR UNIT SIZE OF RENTAL RATES ECONOMIC
COMMUNITIES LOCATION(1) COMPLETED (SQUARE UNITS PER UNIT OCCUPANCY(2)
- ----------- ----------- --------- -------- ----- -------- ------------
FEET)
-----
<S> <C> <C> <C> <C> <C> <C>
TEXAS CONTINUED
The Meridian of State-Thomas by
Post(TM)........................ Dallas 1991 798 132 1,058 97.4%
The Residences on McKinney by
Post(TM)........................ Dallas 1986 749 196 1,015 96.6%
The Rice by Post(TM)................ Houston 1998 977 309 1,347 N/A (4)
The Vineyard by Post(TM)............ Dallas 1996 728 116 886 96.2%
The Vintage by Post(TM)............. Dallas 1993 781 161 892 97.7%
The Worthington of State-Thomas Dallas 1993 818 332 1,132 97.3%
by Post(TM)......................
Uptown Village by Post(TM).......... Dallas 1995 767 300 873 97.9%
Post Windhaven(TM)(7).............. Dallas 1991 825 474 531 100.0%
----- ----- ----- -----
Subtotal/Average-- Texas........ 863 6,534 880 96.9%
----- ----- ----- -----
FLORIDA
Post Bay(R)........................ Tampa 1988 782 312 703 95.3%
Post Court(R)...................... Tampa 1991 1,018 228 800 95.4%
Post Fountains at Lee Vista(R)..... Orlando 1988 835 508 668 95.9%
Post Hyde Park(R).................. Tampa 1996 1,009 270 1,001 99.3%
Post Lake(R)....................... Orlando 1988 850 740 666 96.9%
Post Rocky Point(R)................ Tampa 1996-98 (3) 1,018 626 1,462 N/A (4)
Post Village(R).................... Tampa 744 95.5%
The Arbors...................... 1991 967 304
The Lakes....................... 1989 895 360
The Oaks........................ 1991 968 336
Post Walk(R) at
Old Hyde Park Village........... Tampa 1997 984 134 1,215 97.6%
----- ------ ------ -----
Subtotal/Average-- Florida...... 933 3,818 871 94.6%
----- ------ ------ -----
MISSISSIPPI
Post Mark(TM)....................... Jackson 1984 988 256 615 96.6%
Post Pointe(R)..................... Jackson 1997 812 241 617 94.4%
Post Trace(R)...................... Jackson 1989-95 (3) 734 486 580 96.1%
----- ------ ----- -----
Subtotal/Average-- Mississippi 845 983 598 95.8%
----- ------ ----- -----
VIRGINIA
Post Corners(R)at Trinity Centre.. Fairfax 1996 1,030 336 980 98.6%
Post Forest(R)..................... Fairfax 1990 889 364 936 98.7%
----- ------ ----- -----
Subtotal/Average-- Virginia..... 960 700 957 98.7%
----- ------ ----- -----
NORTH CAROLINA
Post Park at Phillips Place(R).... Charlotte 1998 912 402 1,110 N/A (4)
----- ------ ----- -----
TENNESSEE
Post Hillsboro Village(R)......... Nashville 1998 910 201 1,057 N/A (4)
Post Green Hills(R)............... Nashville 1996 1,056 166 1,103 95.6%
The Lee Apartments .............. Nashville 1924 (8) 808 80 663 97.3%
----- ------ ------ -----
Subtotal/Average-- Tennessee 925 447 1,004 95.9%
----- ------ ------ -----
TOTAL......................... 915 27,963 $ 880 96.5%
===== ====== ====== =====
</TABLE>
(1) Refers to greater metropolitan areas of cities indicated.
(2) Average economic occupancy is defined as gross potential rent less
vacancy losses, model expenses and bad debt divided by gross potential
rent for the period, expressed as a percentage.
(3) These dates represent the respective completion dates for multiple
phases of a community.
(4) During 1998, this community or a phase in this community was in
lease-up and, therefore, is not included.
(5) This community was completed by the Company in 1983, sold during 1986,
managed by the Company through 1993 and reacquired by the Company in
1996.
(6) The Company has a leasehold interest in the land underlying Post
Renaissance pursuant to a ground lease that expires on January 1,
2040.
(7) Post Windhaven(TM) is subject to a master lease with Electronic Data
Systems.
(8) This community was acquired by the Company in 1996.
9
<PAGE> 12
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM X. EXECUTIVE OFFICERS OF THE REGISTRANT
The persons who are executive officers of the Company and its affiliates and
their positions are as follows:
<TABLE>
<CAPTION>
NAME POSITIONS AND OFFICES HELD
---- --------------------------
<S> <C>
John A. Williams.......................... Chairman of the Board, Chief Executive Officer and Director
John T. Glover............................ President, Chief Operating Officer, Treasurer and Director
W. Daniel Faulk, Jr....................... President--Post Apartment Development
Jeffrey A. Harris......................... President--Post Apartment Management
Arthur E. Lomenick........................ Senior Executive Vice President--Post Apartment Development
R. Byron Carlock, Jr...................... Executive Vice President and Chief Investment Officer--Post
Corporate Services
Sherry W. Cohen........................... Executive Vice President and Secretary--Post Corporate Services
James F. Duffy............................ Executive Vice President--Post Apartment Development
R. Gregory Fox............................ Executive Vice President and Chief Accounting Officer--Post
Corporate Services
Martha J. Logan........................... Executive Vice President--Post Apartment Management
John B. Mears............................. Executive Vice President--Post Apartment Development
Thomas L. Wilkes.......................... Executive Vice President--Post Apartment Management
Terry L. Chapman.......................... Senior Vice President--Post Apartment Management
Douglas S. Gray........................... Senior Vice President--Post Corporate Services
John D. Hooks............................. Senior Vice President--Post Apartment Management
Janie S. Maddox........................... Vice President--Post Corporate Services
William F. Leseman........................ Executive Vice President--RAM Partners, Inc.
William C. Lincicome...................... Executive Vice President--Post Landscape Group, Inc.
</TABLE>
The following is a biographical summary of the experience of the executive
officers of the Company:
John A. Williams. Mr. Williams is the Chairman of the Board and Chief
Executive Officer of the Company and is a Director. Mr. Williams founded the
business of the Company in 1971 and since that time has acted as Chairman and
Chief Executive Officer. Mr. Williams is currently serving on the board of
directors of Crawford & Co. and the Atlanta Regional Commission and is
Chairman of Metro Atlanta Chamber of Commerce. Mr. Williams is 56 years old.
John T. Glover. Mr. Glover is the President, Chief Operating Officer, and
Treasurer of the Company and is a Director. Mr. Glover joined the Company in
1984 and since that time has acted as its President. Mr. Glover is a Director
of SunTrust Banks of Georgia Inc., SunTrust Bank, Atlanta, N.A. and Haverty's
Furniture Companies, Inc. In addition, he is a member of the board of directors
of NAREIT, the National Realty Committee and the National Multi-Housing
Council. Mr. Glover is 52 years old.
W. Daniel Faulk, Jr. Mr. Faulk has been with the Company for twelve years.
Since April 1993, he has been President of Post Apartment Development, which
is responsible for the development and construction of all Post(R) apartment
communities. Prior thereto, Mr. Faulk was President of Post Atlanta since
February 1987. Mr. Faulk is currently on the board of directors of Mountain
National Bank. Mr. Faulk is 56 years old.
10
<PAGE> 13
Jeffrey A. Harris. Mr. Harris has been with the Company for fourteen years.
Since December 1998, he has been President of Post Apartment Management. From
October 1995 to December 1998, he was President of Post Management Services.
Prior thereto, Mr. Harris was President of Post Management Division from March
1995, Executive Vice President of Post Management Division from April 1993 and
Senior Vice President from 1989. Mr. Harris was President of and is on the
Board of Directors of the Atlanta Apartment Association. Mr. Harris is 41
years old.
Arthur E. Lomenick. Mr. Lomenick joined the Company in October 1997 and, since
December 1998, has been Senior Executive Vice President of Post Apartment
Development. From October 1997 to December 1998, he was an Executive Vice
President of Post West. He is responsible for new development in the Western
United States. Mr. Lomenick was a Senior Vice President of Columbus Realty
Trust ("Columbus") from October 1994 through October 1997 and was Vice
President from October 1993 to October 1994. Previously, Mr. Lomenick served
as Vice President, Investments, for Memphis Real Estate since January 1993. Mr.
Lomenick is 43 years old.
R. Byron Carlock, Jr. Mr. Carlock joined the Company in June 1998 as Executive
Vice President and Chief Investment Officer. Mr. Carlock was Chairman of The
Carlock Companies, Inc. from March 1998 through June 1998 and was President
and Chief Operating Officer of W.B. Johnson Properties, LLC from March 1997
through February 1998. From June 1987 through March 1997 Mr. Carlock served
the Trammell Crow organization in various capacities including Managing
Director of Crow Investment Trust, Director of Trammell Crow Capital Markets,
Associate of Trammell Crow Ventures and Development Associate of Trammell Crow
Company. Mr. Carlock is a council member of the Urban Land Institute and a
board member of CHARIS Community Housing. Mr. Carlock is 36 years old.
Sherry W. Cohen. Ms. Cohen has been with the Company for fourteen years. Since
October 1997, she has been an Executive Vice President of Post Corporate
Services responsible for supervising and coordinating legal affairs and
insurance. Since April 1990, Ms. Cohen had also been Corporate Secretary. She
was a Senior Vice President with Post Corporate Services from July 1993 to
October 1997. Prior thereto, Ms. Cohen was a Vice President of Post
Properties, Inc. since April 1990. Ms. Cohen is 44 years old.
James F. Duffy. Mr. Duffy joined the Company in October 1997 and, since
December 1998, has been Executive Vice President of Post Apartment Development.
He is responsible for the construction of all Post apartment communities
located in the Western United States. From October 1997 to December 1998 he was
an Executive Vice President of Post West. He was a Senior Vice President of
Columbus from May 1996 through October 1997. Prior to his affiliation with
Columbus, Mr. Duffy was President of the JFD Group, a business consulting firm
specializing in the commercial construction industry from 1993 to 1996. Prior
thereto, he was President of the W. B. Moore Company from 1991 to 1993. Mr.
Duffy is 54 years old.
R. Gregory Fox. Mr. Fox has been with the Company since February 1996 and,
since December 1998, has served as Executive Vice President of Post Corporate
Services and the Company's Chief Accounting Officer responsible for financial
reporting and planning, accounting, management information systems and human
resources. From February 1996 to December 1998, Mr. Fox was a Senior Vice
President. Prior to joining the Company, he was a senior manager in the audit
division of Price Waterhouse LLP where he was employed for ten years. Mr. Fox
is a Certified Public Accountant. Mr. Fox is 39 years old.
Martha J. Logan. Ms. Logan has been with the Company for seven years. Since
December 1998, she has been Executive Vice President of Post Apartment
Management. From October 1997 to December 1998, Ms. Logan was Executive Vice
President of Post Management Services. From October 1995 to October 1997, she
has been President of Post Management Services. Prior thereto, Ms. Logan was
President of RAM since July 1994, Executive Vice President of RAM from January
1994 and Vice President of RAM since 1991. Ms. Logan is 44 years old.
John B. Mears. Mr. Mears has been with the Company since November 1993 and,
since December 1998, has been Executive Vice President of Post Apartment
Development. From October 1997 to December 1998, he was an Executive Vice
President of Post East Development. He is responsible for new development in
the Eastern United States. Prior thereto, he was a Senior Vice President of
Post Apartment Development since July 1994. Prior to
11
<PAGE> 14
joining the Company, Mr. Mears was an associate in the Real Estate Investment
Banking Group at Merrill Lynch and Company since July 1992. Mr. Mears is 35
years old.
Thomas L. Wilkes. Mr. Wilkes joined the Company in October 1997 and, since
December 1998, has been an Executive Vice President and Director of Operations
for Post Apartment Management. From October 1997 to December 1998 he was an
Executive Vice President and Director of Operations of Post West. Mr. Wilkes
was a Senior Vice President of Columbus from October 1993 through October 1997.
Mr. Wilkes served as President of CRH Management Company, a multifamily
property management firm and a member of the Columbus Group, since its
formation in October 1990 to December 1993. Mr. Wilkes is a Certified Property
Manager. Mr. Wilkes is 39 years old.
Terry L. Chapman. Mr. Chapman has been with the Company for twenty-five years
and, since December 1998, has been a Senior Vice President of Post Apartment
Management. From October 1997 to December 1998, he was a Senior Vice President
of Post Management Services. Prior thereto, he was an Executive Vice President
of Post Management Services for more than five years. He is responsible for
maintenance, quality assurance, security, and preventive maintenance for all
Post(R) communities. Mr. Chapman is 52 years old.
Douglas S. Gray. Mr. Gray joined the Company in December 1997 and, since
January 1999, has been a Senior Vice President of Post Corporate Services
responsible for strategic financial planning and asset management. He was a
Vice President of Post Corporate Services from December 1997 to December 1998.
Prior to joining Post, Mr. Gray was Vice President of Dutch Institutional
Holding Co. from July 1994 to November 1997. Prior thereto, he was Director of
Property Services for The Landmarks Group from June 1988 to June 1994. Mr. Gray
is 39 years old.
John D. Hooks. Mr. Hooks has been with the Company for twenty years and since
December 1998 has been a Senior Vice President of Post Apartment Management.
From October 1997 to December 1998 Mr. Hooks was a Senior Vice President of
Post Management Services. He is responsible for landscape design, installation
and maintenance on all Post(R) communities. Prior thereto, he was an Executive
Vice President of Post Landscape since July 1993. He was the Senior Vice
President of Landscape from January 1987 to July 1993. Mr. Hooks is 44 years
old.
Janie S. Maddox. Ms. Maddox has been with the Company for twenty-two years.
Since November 1995, she has been a Vice President of Post Corporate Services
responsible for public relations. Prior thereto, she was a Senior Vice
President of Post Management Services primarily responsible for human resources
since 1990. Ms. Maddox is 51 years old.
William F. Leseman. Mr. Leseman has been with the Company for nine years. Since
October 1997, he has been Executive Vice President of RAM responsible for its
operations. Prior thereto, he was an Executive Vice President of RAM. Since
October 1995, Mr. Leseman was Senior Vice President of Post Management Services
from 1994 to 1995 and an Area Vice President of Post Management Services from
1989 to 1994. Mr. Leseman is 39 years old.
William C. Lincicome. Mr. Lincicome has been with the Company for eight years.
Since October 1997, he has been Executive Vice President of Post Landscape
Group responsible for its operations. Prior thereto, he was Executive Vice
President of Post Landscape Services since September 1996. He was an
independent architectural consultant from April 1996 to September 1996 and was
Vice President and Director of Land Planning of Post Landscape Services from
1989 to 1996. Mr. Lincicome is 46 years old.
12
<PAGE> 15
PART II
ITEM 5. MARKET PRICE OF THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The Common Stock is traded on the New York Stock Exchange ("NYSE") under the
symbol "PPS." The following table sets forth the quarterly high and low closing
sales prices per share reported on the NYSE, as well as the quarterly dividends
declared per share:
<TABLE>
<CAPTION>
DIVIDENDS
QUARTER ENDED HIGH LOW DECLARED
- ------------- ---------- --------- -------------
<S> <C> <C> <C>
1997
First Quarter ................ $ 43.37 $ 37.62 $ 0.595
Second Quarter ............... 42.00 37.25 0.595
Third Quarter ................ 41.50 37.00 0.595
Fourth Quarter ............... 40.62 36.12 0.595
1998
First Quarter ................ $ 41.25 $ 38.12 $ 0.650
Second Quarter ............... 41.25 38.50 0.650
Third Quarter ................ 40.25 36.37 0.650
Fourth Quarter ............... 40.75 36.87 0.650
</TABLE>
On March 10, 1999, the Company had 1,849 common shareholders of record.
The Company pays regular quarterly dividends to holders of shares of Common
Stock. Future distributions by the Company will be at the discretion of the
board of directors and will depend on the actual funds from operations of the
Company, the Company's financial condition and capital requirements, the
annual distribution requirements under the REIT provisions of the Internal
Revenue Code of 1986, as amended (the "Code") and such other factors as the
board of directors deems relevant.
During 1998, the Company did not sell any unregistered securities. For a
discussion of the Company's credit agreements and their restrictions on
dividend payments, see Liquidity and Capital Resources at Management's
Discussion and Analysis of Financial Condition and Results of Operations.
There is no established public trading market for the Units. As of March 10,
1999, the Operating Partnership had 121 holders of record of Units of the
Operating Partnership.
13
<PAGE> 16
ITEM 6. SELECTED FINANCIAL DATA
POST PROPERTIES, INC.
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND APARTMENT UNIT DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenue:
Rental ...................................................... $275,755 $185,732 $158,618 $133,817 $115,309
Property management - third party (1) ....................... 3,164 2,421 2,828 2,764 2,508
Landscape services - third party (1) ........................ 7,252 5,148 4,882 4,647 3,799
Other ....................................................... 12,695 6,815 5,247 3,477 3,123
-------- -------- -------- -------- --------
Total revenue ........................................... 298,866 200,116 171,575 144,705 124,739
-------- -------- -------- -------- --------
Property operating and maintenance
expense (exclusive of depreciation
and amortization) ......................................... 99,773 67,515 58,202 49,912 43,376
Depreciation (real estate assets) ........................... 45,214 27,991 22,676 20,127 19,967
Depreciation (non-real estate assets) ....................... 1,409 1,057 927 692 241
Property management expenses - third party (1) .............. 2,499 1,959 2,055 2,166 2,229
Landscape services expenses - third party (1) ............... 6,259 4,284 3,917 3,950 3,098
Interest expense ............................................ 31,297 24,658 22,131 22,698 19,231
Amortization of deferred loan costs ......................... 1,209 980 1,352 1,967 1,999
General and administrative .................................. 8,404 7,364 7,716 6,071 6,269
Minority interest in consolidated property partnership ...... 397 -- -- 451 680
-------- -------- -------- -------- --------
Total expense .......................................... 196,461 135,808 118,976 108,034 97,090
-------- -------- -------- -------- --------
Income before minority interest of unitholders,
net gain on sale of assets, loss on unused
treasury locks, loss on relocation of corporate
office and extraordinary item ............................... 102,405 64,308 52,599 36,671 27,649
Net gain on sale of assets .................................... -- 3,270 854 1,746 1,494
Loss on unused treasury locks ................................. (1,944) -- -- -- --
Loss on relocation of corporate office ........................ -- (1,500) -- -- --
Minority interest of unitholders in
Operating Partnership ....................................... (11,511) (11,131) (9,984) (8,429) (6,951)
-------- -------- -------- -------- --------
Income before extraordinary item .............................. 88,950 54,947 43,469 29,988 22,192
Extraordinary item, net of minority
interest (2) ................................................ -- (75) -- (870) (3,293)
-------- -------- -------- -------- --------
Net income .................................................... 88,950 54,872 43,469 29,118 18,899
Dividends to preferred shareholders ........................... (11,473) (4,907) (1,063) -- --
-------- -------- -------- -------- --------
NET INCOME AVAILABLE TO
COMMON SHAREHOLDERS ......................................... $ 77,477 $ 49,965 $ 42,406 $ 29,118 $ 18,899
======== ======== ======== ======== ========
PER COMMON SHARE DATA:
Income before extraordinary item
(net of preferred dividend) - basic ......................... $ 2.21 $ 2.11 $ 1.95 $ 1.63 $ 1.32
Net income available to common
shareholders - basic ........................................ 2.21 2.11 1.95 1.58 1.12
Income before extraordinary item
(net of preferred dividend) - diluted ....................... 2.18 2.09 1.94 1.63 1.32
Net income available to common
shareholders - diluted ...................................... 2.18 2.09 1.94 1.58 1.12
Dividends declared ............................................ 2.60 2.38 2.16 1.96 1.80
</TABLE>
14
<PAGE> 17
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Real estate, before accumulated
depreciation............................ $2,255,074 $1,936,011 $ 1,109,342 $ 937,924 $ 828,585
Real estate, net of accumulated
depreciation............................ 2,007,926 1,734,916 931,670 781,100 686,009
Total assets.............................. 2,066,713 1,780,563 958,675 812,984 710,973
Total debt................................ 800,008 821,209 434,319 349,719 362,045
Shareholders' equity...................... 1,051,686 756,920 398,993 343,624 240,196
<CAPTION>
DECEMBER 31,
---------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
OTHER DATA:
Cash flow provided from (used in):
Operating activities ................... $ 141,440 $ 109,544 $ 78,966 $ 57,362 $ 43,807
Investing activities ................... $ (321,038) $ (208,377) $ (166,762) $ (114,531) $ (99,364)
Financing activities ................... $ 189,873 $ 109,469 $ 79,021 $ 60,885 $ 46,508
Funds from operations (3) ................ $ 136,146 $ 87,392 $ 74,212 $ 56,798 $ 47,616
Weighted average common shares
outstanding - basic .................... 35,028,596 23,664,044 21,787,648 18,382,299 16,847,999
Weighted average common shares and
units outstanding - basic............... 40,244,351 28,880,928 26,917,723 23,541,639 22,125,890
Weighted average common shares
outstanding - diluted................... 35,473,587 23,887,906 21,879,248 18,387,894 16,848,165
Weighted average common shares and
units outstanding - diluted............. 40,689,342 29,104,790 27,009,323 23,547,234 22,126,056
Total stabilized communities
(at end of period)...................... 83 78 49 42 42
Total stabilized apartment units
(at end of period)...................... 27,568 25,938 17,930 14,962 14,845
Average economic occupancy
(fully stabilized communities) (4)...... 96.5% 94.8% 95.3% 96.0% 96.4%
</TABLE>
(1) Consists of revenues and expenses from property management and
landscape services provided to properties owned by third parties
(including services provided to third-party owners of properties
previously developed and sold by the Company that operate under the
Post(R) name).
(2) The extraordinary item resulted from costs associated with the early
extinguishment of indebtedness. The extraordinary item has been
reduced by the portion related to the minority interest of the
unitholders calculated on the basis of weighted average Units
outstanding for the year.
(3) The Company uses the National Association of Real Estate Investment
Trust ("NAREIT") definition of FFO, which was adopted for periods
beginning after January 1, 1996. FFO for any period means the
consolidated net income available to common shareholders of the
Company and its subsidiaries for such period excluding gains or losses
from debt restructuring and sales of property, plus depreciation of
real estate assets, and after adjustment for unconsolidated
partnerships and joint ventures, all determined on a consistent basis
in accordance with generally accepted accounting principles ("GAAP").
FFO presented herein is not necessarily comparable to FFO presented by
other real estate companies due to the fact that not all real estate
companies use the same definition. However, the Company's FFO is
comparable to the FFO of real estate companies that use the current
NAREIT definition. FFO should not be considered as an alternative to
net income (determined in accordance with GAAP) as an indicator of the
Company's financial performance or to cash flow from operating
activities (determined in accordance with GAAP) as a measure of the
Company's liquidity, nor is it necessarily indicative of sufficient
cash flow to fund all of the Company's needs or ability to service
indebtedness or make distributions.
(4) Amount represents average economic occupancy for communities
stabilized for both the current and prior respective periods. Average
economic occupancy is defined as gross potential rent less vacancy
losses, model expenses and bad debt divided by gross potential rent
for the period, expressed as a percentage. The calculation of average
economic occupancy does not include a deduction for concessions and
employee discounts (average economic occupancy, taking account of
these amounts, would have been 94.9% and 93.9% for the years ended
December 31, 1998 and 1997, respectively). Concessions were $2,953 and
$903 and employee discounts were $465 and $267 for the years ended
December 31, 1998 and 1997, respectively. A community is considered by
the Company to have achieved stabilized occupancy on the earlier to
occur of (i) attainment of 95% physical occupancy on the first day of
any month, or (ii) one year after completion of construction.
15
<PAGE> 18
POST APARTMENT HOMES, L.P.
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AND APARTMENT UNIT DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
------- ----- ------- ------- ------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenue:
Rental ...................................... $275,755 $185,732 $158,618 $133,817 $115,309
Property management-third party (1) ......... 3,164 2,421 2,828 2,764 2,508
Landscape services-third party (1) .......... 7,252 5,148 4,882 4,647 3,799
Other ....................................... 12,695 6,815 5,247 3,477 3,123
-------- -------- -------- -------- --------
Total revenue .......................... 298,866 200,116 171,575 144,705 124,739
-------- -------- -------- -------- --------
Property operating and maintenance
expense (exclusive of depreciation
and amortization) ........................... 99,773 67,515 58,202 49,912 43,376
Depreciation (real estate assets) ............. 45,214 27,991 22,676 20,127 19,967
Depreciation (non-real estate assets) 1,409 1,057 927 692 241
Property management expenses-third party (1) .. 2,499 1,959 2,055 2,166 2,229
Landscape services expenses-third party (1) ... 6,259 4,284 3,917 3,950 3,098
Interest expense .............................. 31,297 24,658 22,131 22,698 19,231
Amortization of deferred loan costs 1,209 980 1,352 1,967 1,999
General and administrative .................... 8,404 7,364 7,716 6,071 6,269
Minority interest in consolidated
property partnership ........................ 397 -- -- 451 680
-------- -------- -------- -------- --------
Total expenses ......................... 196,461 135,808 118,976 108,034 97,090
-------- -------- -------- -------- --------
Income before net gain on sale of assets, loss on
unused treasury locks, loss on relocation of
corporate office, and extraordinary item .... 102,405 64,308 52,599 36,671 27,649
Net gain on sale of assets .................... -- 3,270 854 1,746 1,494
Loss on unused treasury locks ................. (1,944) -- -- -- --
Loss on relocation of corporate office ........ -- (1,500) -- -- --
-------- -------- -------- -------- --------
Income before extraordinary item .............. 100,461 66,078 53,453 38,417 29,143
Extraordinary item (2) ........................ -- (93) -- (1,120) (4,413)
-------- -------- -------- -------- --------
Net income .................................... 100,461 65,985 53,453 37,297 24,730
Distributions to preferred unitholders (11,473) (4,907) (1,063) -- --
-------- -------- -------- -------- --------
NET INCOME AVAILABLE TO
COMMON UNITHOLDERS .......................... $ 88,988 $ 61,078 $ 52,390 $ 37,297 $ 24,730
======== ======== ======== ======== ========
PER COMMON UNIT DATA:
Income before extraordinary item
(net of preferred distribution) - basic...... $ 2.21 $ 2.11 $ 1.95 $ 1.63 $ 1.32
Net income available to common
unitholders - basic.......................... 2.21 2.11 1.95 1.58 1.12
Income before extraordinary item
(net of preferred distribution) -
diluted...................................... 2.18 2.09 1.94 1.63 1.32
Net income available to common
unitholders - diluted....................... 2.18 2.09 1.94 1.58 1.12
Distributions declared (3)..................... 2.60 2.38 2.16 1.96 1.80
</TABLE>
16
<PAGE> 19
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Real estate, before
accumulated $2,255,074 $1,936,011 $1,109,342 $937,924 $828,585
depreciation.........
Real estate, net of
accumulated 2,007,926 1,734,916 931,670 781,100 686,009
depreciation.........
Total assets......... 2,066,713 1,780,563 958,675 812,984 710,973
Total debt........... 800,008 821,809 434,319 349,719 362,045
Partners' equity..... 1,177,051 869,304 482,434 425,489 313,367
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
OTHER DATA:
Cash flow provided from (used in):
Operating activities................. $ 141,440 $ 109,554 $ 78,966 $ 57,362 $ 43,807
Investing activities................. $ (321,038) $ (208,377) $ (166,762) $ (114,531) $ (99,364)
Financing activities ................ $ 189,873 $ 109,469 $ 79,021 $ 60,885 $ 46,508
Funds from operations (3) ............... $ 136,146 $ 87,392 $ 74,212 $ 56,798 $ 47,616
Weighted average common Units
outstanding - basic.................. 40,244,351 28,880,928 26,917,723 23,541,639 22,125,890
Weighted average common Units
outstanding - diluted ............... 40,689,342 29,104,790 27,009,323 23,547,234 22,126,056
Total stabilized communities
(at end of period)................... 83 78 49 42 42
Total stabilized apartment units
(at end of period)................... 27,568 25,938 17,930 14,962 14,845
Average economic occupancy
(fully stabilized communities) (4)... 96.5% 94.8% 95.3% 96.0% 96.4%
</TABLE>
(1) Consists of revenues and expenses from property management and
landscape services provided to properties owned by third parties
(including services provided to third-party owners of properties
previously developed and sold by the Company that operate under the
Post(R) name).
(2) The extraordinary item resulted from costs associated with the early
extinguishment of indebtedness. The extraordinary item has been reduced
by the portion related to the minority interest of the unitholders
calculated on the basis of weighted average Units outstanding for the
year.
(3) The Company uses the National Association of Real Estate Investment
Trust ("NAREIT") definition of FFO, which was adopted for periods
beginning after January 1, 1996. FFO for any period means the
consolidated net income available to common unitholders of the Company
and its subsidiaries for such period excluding gains or losses from
debt restructuring and sales of property, plus depreciation of real
estate assets, and after adjustment for unconsolidated partnerships and
joint ventures, all determined on a consistent basis in accordance with
generally accepted accounting principles ("GAAP"). FFO presented herein
is not necessarily comparable to FFO presented by other real estate
companies due to the fact that not all real estate companies use the
same definition. However, the Company's FFO is comparable to the FFO of
real estate companies that use the current NAREIT definition. FFO
should not be considered as an alternative to net income (determined in
accordance with GAAP) as an indicator of the Company's financial
performance or to cash flow from operating activities (determined in
accordance with GAAP) as a measure of the Company's liquidity, nor is
it necessarily indicative of sufficient cash flow to fund all of the
Company's needs or ability to service indebtedness or make
distributions.
(4) Amount represents average economic occupancy for communities stabilized
for both the current and prior respective periods. Average economic
occupancy is defined as gross potential rent less vacancy losses, model
expenses and bad debt divided by gross potential rent for the period,
expressed as a percentage. The calculation of average economic
occupancy does not include a deduction for concessions and employee
discounts (average economic occupancy, taking account of these amounts,
would have been 94.9% and 93.9% for the years ended December 31, 1998
and 1997, respectively). Concessions were $2,953 and $903 and employee
discounts were $465 and $267 for the years ended December 31, 1998 and
1997, respectively. A community is considered by the Company to have
achieved stabilized occupancy on the earlier to occur of (i) attainment
of 95% physical occupancy on the first day of any month, or (ii)
one-year after completion of construction.
17
<PAGE> 20
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT APARTMENT UNIT DATA)
OVERVIEW
The following discussion should be read in conjunction with all of the financial
statements appearing elsewhere 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 December 31, 1998, there were 43,267,458 Units outstanding, of which
38,051,734 or 87.9%, were owned by the Company and 5,215,724, or 12.1% were
owned by other limited partners (including certain officers and directors of the
Company). As of December 31, 1998, there were 5,000,000 Perpetual Preferred
Units outstanding, all of which were owned by the Company.
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
The Operating Partnership recorded net income available to common unitholders of
$88,988, $61,078, and $52,390 for the years ended December 31, 1998, 1997 and
1996, respectively. The Company recorded net income available to common
shareholders of $77,477, $49,965, and $42,406 for the years ended December 31,
1998, 1997 and 1996, respectively. The Company's increase in net income
available to common shareholders of $27,512, from 1997 to 1998, and $7,559, from
1996 to 1997 were primarily related to the Merger, increased rental rates for
fully stabilized communities and an increase in units placed in service.
COMMUNITY OPERATIONS
The Company's net income is generated primarily from the operation of its
apartment communities. For purposes of evaluating comparative operating
performance, the Company categorizes its operating communities based on the
period each community reaches stabilized occupancy. A community is generally
considered by the Company to have achieved stabilized occupancy on the earlier
to occur of (i) attainment of 95% physical occupancy on the first day of any
month or (ii) one year after completion of construction.
At December 31, 1998, the Company's portfolio of apartment communities consisted
of the following: (i) 64 communities that were completed and stabilized for all
of the current and prior year, (ii) seven communities that achieved full
stabilization during the prior year, (iii) 12 communities which reached
stabilization during 1998, and (iv) 17 communities currently in the development
or lease-up stage, including additions to five existing communities.
For communities with respect to which construction is completed and the
community has become fully operational, all property operating and maintenance
expenses are expensed as incurred and those recurring and non-recurring
expenditures relating to acquiring new assets, materially enhancing the value of
an existing asset, or substantially extending the useful life of an existing
asset are capitalized. (See "Capitalization of Fixed Assets and Community
Improvements").
The Company has adopted an accounting policy related to communities in the
development and lease-up stage whereby substantially all operating expenses
(including pre-opening marketing expenses) are expensed as incurred. The Company
treats each unit in an apartment community separately for cost accumulation,
capitalization and expense recognition purposes. Prior to the commencement of
leasing activities, interest and other construction costs are capitalized and
reflected on the balance sheet as construction in progress. Once a unit is
placed in service, all operating expenses allocated to that unit, including
interest, are expensed as incurred. During the lease-up phase, the sum of
interest expense on completed units and other operating expenses (including
pre-opening marketing expenses) will initially exceed rental revenues, resulting
in a "lease-up deficit," which continues until such time as rental revenues
exceed such expenses.
18
<PAGE> 21
Therefore, in order to evaluate the operating performance of its communities,
the Company has presented financial information which summarizes the revenue in
excess of specified expense on a comparative basis for all of its operating
communities combined and for communities which have reached stabilization prior
to January 1, 1997. The Company has also presented 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.
ALL OPERATING COMMUNITIES
The operating performance for all of the Company's apartment communities
combined for the years ended December 31, 1998, 1997 and 1996 is summarized as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
---------------------------------- ------------------------------
% %
1998 1997 CHANGE 1997 1996 CHANGE
-------- -------- ------- -------- --------- ------
<S> <C> <C> <C> <C> <C> <C>
Rental and other revenue:
Fully stabilized
communities (1)........................ $210,293 $202,690 3.8% $202,690 $186,621 8.6%
Adjustment for acquired communities (2). -- (35,577) n/m (35,577) (37,953) (6.3)%
Communities stabilized during 1997...... 25,053 8,571 192.3% 8,571 69 n/m
Development and lease-up communities (3) 39,466 10,634 271.1% 10,634 5,969 78.2%
Sold communities (4).................... -- 1,494 n/m 1,494 5,309 (71.9)%
Other revenue (5)....................... 13,166 4,646 183.4% 4,646 3,524 31.8%
-------- -------- -------- --------
287,978 192,458 49.6% 192,458 163,539 17.7%
-------- -------- -------- --------
Property operating and maintenance expense
(exclusive of depreciation and
amortization):
Fully stabilized communities (1)........ 66,403 64,869 2.4% 64,869 61,325 5.8%
Adjustment for acquired
communities (2)........................ -- (12,362) n/m (12,362) (13,156) (6.0)%
Communities stabilized during 1997...... 7,712 2,819 173.6% 2,819 280 906.8%
Development and lease-up communities (3) 16,503 4,363 278.2% 4,363 2,176 100.5%
Sold communities (4).................... -- 657 n/m 657 2,033 (67.7)%
Other expenses (6)...................... 9,155 7,169 27.7% 7,169 5,544 29.3%
-------- -------- -------- --------
99,773 67,515 47.8% 67,515 58,202 16.0%
-------- -------- -------- --------
Revenue in excess of specified expense.... $188,205 $124,943 50.6% $124,943 $105,337 18.6%
======== ======== ======== ========
Recurring capital expenditures: (7)
Carpet................................... $ 2,550 $ 1,617 57.7% $ 1,617 $ 1,087 48.8%
Other.................................... 4,929 2,058 139.5% 2,058 1,874 9.8%
-------- -------- -------- --------
Total................................ $ 7,479 $ 3,675 103.5% $ 3,675 $ 2,961 24.1%
======== ======== ======== ========
Average apartment units in service........ 27,416 19,413 41.2% 19,413 17,089 13.6%
======== ======== ======== ========
</TABLE>
(1) Communities which reached stabilization prior to January 1, 1997.
Includes fully stabilized communities acquired as a result of the
Merger.
(2) The adjustment for acquired communities represents the operating
results of the fully stabilized communities owned by Columbus prior to
the Merger.
(3) Communities in the "construction", "development" or "lease-up" stage
during 1998 and, therefore, not considered fully stabilized for all of
the periods presented.
(4) Includes one community, containing 180 units, which was sold on July
19, 1996 and one community, containing 416 units, which was sold on May
22, 1997. The revenues and expenses for these communities had
previously been included in the fully stabilized group.
(5) Other revenue includes revenue on furnished apartment rentals above the
unfurnished rental rates and any revenue not directly related to
property operations.
(6) Other expenses includes certain indirect central office operating
expenses related to management, grounds maintenance, and costs
associated with furnished apartment rentals.
(7) In addition to those expenses which relate to property operations, the
Company incurs recurring and non- recurring expenditures relating to
acquiring new assets, materially enhancing the value of an existing
asset, or substantially extending the useful life of an existing asset,
all of which are capitalized.
n/m - not meaningful
For the year ended December 31, 1998, rental and other revenue increased $95,520
or 49.6% compared to 1997, primarily as a result of communities acquired in the
Merger and an increase in units placed in service, partially offset by a
decrease in rental and other revenue due to the sale of one community during the
second quarter of 1997.
19
<PAGE> 22
For the year ended December 31, 1997, rental and other revenue increased $28,919
or 17.7% compared to 1996, primarily as a result of communities acquired in the
Merger and an increase in units placed in service, partially offset by a
decrease in rental and other revenue due to the sale of one community during the
third quarter of 1996.
Property operating and maintenance expenses (exclusive of depreciation and
amortization) increased from 1997 to 1998 and from 1996 to 1997 primarily due to
the increase in the units placed in service through the development and
acquisition of communities, including the Merger.
For the years ended December 31, 1998 and 1997, recurring capital expenditures
increased $3,804 or 103.5% and $714 or 24.1%, respectively, compared to the
prior years, primarily due to additional units placed in service, due largely to
the Merger, and the timing of scheduled capital improvements.
FULLY STABILIZED COMMUNITIES
The Company defines fully stabilized communities as those which have reached
stabilization prior to the beginning of the previous calendar year. To enhance
comparability, Management has presented 1997 and 1996 rental and other revenue
and property operating and maintenance expense on a pro forma and historical
basis. The adjustment for acquired communities represents the rental and other
revenue and property operating and maintenance expenses, for the periods prior
to the date of the Merger, of the 4,882 fully stabilized apartment units
acquired through the Merger.
The operating performance of the 64 communities containing an aggregate of
21,819 units which were stabilized as of January 1, 1997 (including 4,882 units
acquired in the Merger for 1998), are summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------ ---------------------------------
% %
1998 1997 CHANGE 1997 1996 CHANGE
-------- -------- ------ -------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Rental and other and other revenue (1)........ $210,293 $202,690 3.8% $202,690 $186,621 8.6%
Adjustment for acquired communities (2)....... -- (35,577) n/m (35,577) (37,953) (6.3%)
-------- -------- -------- --------
Historical - rental and other revenue (3)..... 210,293 167,113 25.8% 167,113 148,668 12.4%
-------- -------- -------- --------
Property operating and maintenance
Expense (exclusive of depreciation
And amortization) (1)....................... 66,403 64,869 2.4% 64,869 61,325 5.8%
Adjustment for acquired communities (2)....... -- (12,362) n/m (12,362) (13,156) (6.0%)
-------- -------- -------- --------
Historical-property operating and maintenance
Expense (exclusive of depreciation and
amortization) (3)(4)........................ 66,403 52,507 26.5% 52,507 48,169 9.0%
-------- -------- -------- --------
Revenue in excess of specified expense (3).... $143,890 $114,606 25.6% $114,606 $100,499 14.0%
======== ======== ======== ========
Average economic occupancy (3)(5)............. 96.5% 94.9% 94.9% 92.3%
======== ======== ======== ========
Average monthly rental rate per apartment
Unit (3)(6)................................. $ 816 $ 801 1.9% $ 801 $ 772 3.8%
======== ======== ======== ========
Apartment units in service.................... 21,819 16,937 16,937 16,937
======== ======== ======== ========
</TABLE>
(1) Communities which reached stabilization prior to January 1, 1997.
Includes fully stabilized communities acquired in October 1997 through
the Merger. As a result, 1997 and 1996 rental and other revenue and
property operating and maintenance expense is presented on a pro forma
basis.
(2) The adjustment for acquired communities represents the operating
results of the mature communities owned by Columbus prior to the
Merger.
(3) Represents the Company's historical results of operations for fully
stabilized 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. For the years ended December 31, 1998 and
1997, recurring expenditures were $6,614 and $3,428 or $303 and $202 on
a per unit basis, respectively.
(5) Average economic occupancy is defined as gross potential rent less
vacancy losses, model expenses and bad debt divided by gross potential
rent for the period, expressed as a percentage. The calculation of
average economic occupancy does not include a deduction for concessions
and employee discounts. (Average economic occupancy, taking account of
these amounts would have been 94.9% and 93.9% for the years ended
December 31, 1998 and 1997, respectively.) Concessions were $2,953 and
$1,263 and employee discounts were $465 and $361 for the years ended
December 31, 1998 and 1997, respectively.
20
<PAGE> 23
(6) Average monthly rental rate is defined as the average of the gross
actual rental rates for leased units and the average of the anticipated
rental rates for unoccupied units.
Rental and other revenue increased from 1997 to 1998 due to the increase in
units in service as a result of the Merger and increased rental rates and
occupancy for fully stabilized communities owned prior to the Merger. The
increase in property and maintenance expense (exclusive of depreciation and
amortization) from 1997 to 1998 was primarily due to an increase in units in
service as a result of the Merger.
Rental and other revenue increased from 1996 to 1997 due to higher rental rates
and occupancy. The increase in property and maintenance expense (exclusive of
depreciation and amortization) from 1996 to 1997 was primarily due to an
increase in personnel costs which was substantially offset by a decrease in ad
valorem real estate taxes.
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.
The Company calculates "lease-up deficit" on a quarterly basis, and accumulates
the quarterly deficits to the annual deficit. Only those communities which were
dilutive during each quarter are included and, accordingly, different
communities may be included in each quarter within each year. For each of the
years ended December 31, 1996 through 1998, the "lease-up deficit" charged to
and included in results of operations are summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Rental and other revenue................................ $ 5,679 $ 1,467 $ 974
Property operating and maintenance expense (exclusive of
Depreciation and amortization)........................ 5,082 1,442 1,056
------- ------- -------
Revenue in excess of specified expense.................. 597 25 (82)
Interest expense........................................ 2,660 1,364 673
------- ------- -------
Lease-up deficit........................................ $(2,063) $(1,339) $ (755)
======= ======= =======
</TABLE>
21
<PAGE> 24
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. The
operating performance of RAM for the years ended December 31, 1998, 1997 and
1996 is summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
---------------------------------- ------------------------------
% %
1998 1997 CHANGE 1997 1996 CHANGE
------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Property management and
other revenue........................ $ 3,164 $2,444 29.5% $2,444 $2,562 (4.6)%
Property management expense........... 1,759 1,313 34.0% 1,313 1,244 5.5%
General and administrative expense.... 740 574 28.9% 574 502 14.3%
Depreciation expense.................. 34 44 (22.7)% 44 66 (33.3)%
------- ------ ------ ------
Revenue in excess of specified (31.6)%
expense.............................. $ 631 $ 513 23.0% $ 513 $ 750
======= ====== ====== ======
Average apartment units in service.... 11,046 9,061 21.9% 9,061 8,852 2.4%
======= ====== ====== ======
</TABLE>
The change in property management revenues and expenses from 1997 to 1998 and
from 1996 to 1997 is primarily attributable to the change in the average number
and average gross revenue 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 years ended December
31, 1998, 1997 and 1996 are summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------- -------------------------------
% %
1998 1997 CHANGE 1997 1996 CHANGE
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Landscape services and
other revenue...................... $7,252 $5,148 40.9% $5,148 $4,882 5.4%
Landscape services expense........... 5,394 3,675 46.8% 3,675 3,459 6.2%
General and administrative expense... 865 609 42.0% 609 458 33.0%
Depreciation expense................. 173 107 61.7% 107 76 40.8%
------ ------ ------ ------
Revenue in excess of specified
expense............................ $ 820 $ 757 8.3% $ 757 $ 889 (14.8)%
====== ====== ====== ======
</TABLE>
The change in landscape services revenue, landscape services expense and general
and administrative expense from 1997 to 1998 and 1996 to 1997 is primarily due
to an increase in landscape contracts.
OTHER INCOME AND EXPENSES
Depreciation expense increased from 1997 to 1998 and from 1996 to 1997 primarily
due to the communities acquired in the Merger and the completion of new
communities.
Interest expense increased from 1997 to 1998 and from 1996 to 1997 primarily due
to additional debt incurred in connection with the Merger and the development of
new communities.
Amortization of deferred loan costs increased from 1997 to 1998 due largely to
two public debt issuances completed by the Company in 1998. See "Liquidity and
Capital Resources" below. From 1996 to 1997, amortization of deferred loan costs
decreased primarily due to interest rate protection agreements becoming fully
amortized. General and administrative expenses increased from 1997 to 1998
primarily as a result of the Merger. General and administrative expenses
decreased from 1996 to 1997 as a result of a reduction in executive incentive
compensation.
22
<PAGE> 25
The gain on sale of assets resulted from the sale of a community in 1997 and the
sale of a community and other assets in 1996.
The loss on unused treasury locks in 1998 resulted from the termination of
treasury locks intended for debt securities that were not issued by the
Operating Partnership.
The loss on relocation of corporate office in 1997 resulted from a decision to
relocate the corporate office prior to the end of the lease term on the
Company's corporate office space.
The extraordinary item in 1997, net of the 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 $78,966
in 1996 to $109,554 in 1997 and to $141,440 in 1998, principally due to
increased property operating income. Net cash used in investing activities
increased from $166,762 in 1996 to $208,377 in 1997 and to $321,038 in 1998,
primarily due to increases in spending on construction and acquisition of real
estate assets. Net cash provided by financing activities increased from $79,021
in 1996 to $109,469 in 1997 and to $189,873 in 1998. The increase from 1996 to
1997 is primarily a result of an increase in net borrowings, while the increase
from 1997 to 1998 is primarily the result of the proceeds from the public
issuances of preferred stock and common stock during 1998.
The Company has elected to be taxed as a Real Estate Investment Trust ("REIT")
under Sections 856 through 860 of the Code commencing with its taxable year
ended December 31, 1993. REITs are subject to a number of organizational and
operational requirements, including a requirement that they currently distribute
95% of their ordinary taxable income. As a REIT, the Company generally will not
be subject to Federal income tax on net income.
At December 31, 1998, the Company had total indebtedness of $800,008 and cash
and cash equivalents of $21,154. The Company's indebtedness includes
approximately $46,128 in conventional mortgages payable and $235,880 in
tax-exempt bond indebtedness secured by communities, senior unsecured notes of
$456,000, and other unsecured debt and borrowings under unsecured lines of
credit totaling approximately $62,000. A schedule of indebtedness is included
later in this Item 7.
The Company expects to meet its short-term liquidity requirements generally
through its net cash provided by operations and borrowings under credit
arrangements and expects to meet certain of its long-term liquidity
requirements, such as scheduled debt maturities, repayment of financing of
construction and development activities and possible property acquisitions,
through long-term secured and unsecured borrowings, possible sale of properties
and the issuance of debt securities or additional equity securities of the
Company or Units of the Operating Partnership in connection with acquisitions of
land or improved properties. The Company believes that its net cash provided by
operations 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.
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 will be agreed to between the Company and the bank prior to each such
draw. This facility expires on June 29, 1999. There was no outstanding balance
on this facility at December 31, 1998.
In February 1999, the Company's syndicated line of credit (the "Revolver") was
amended, increasing its capacity to $275,000. The Revolver matures on April 30,
2001 and borrowings currently bear interest at LIBOR plus .675% or prime minus
.25%. The Revolver provides for the rate to be adjusted up or down based on
changes in the credit
23
<PAGE> 26
ratings on the Company's senior unsecured debt. The Revolver also includes a
money market competitive bid option for short-term funds up to $137,500 at rates
below the stated line rate. The credit agreement for the Revolver contains
customary representations, covenants and events of default, including covenants
which restrict the ability of the Operating Partnership to make distributions,
in excess of stated amounts, which in turn restricts the discretion of the
Company to declare and pay dividends. In general, during any fiscal year the
Operating Partnership may only distribute up to 100% of the Operating
Partnership's consolidated income available for distribution (as defined in the
credit agreement) exclusive of distributions of up to $30,000 of capital gains
for such year. The credit agreement contains exceptions to these limitations to
allow the Operating Partnership to make distributions necessary to allow the
Company to maintain its status as a REIT. The Company does not anticipate that
this covenant will adversely affect the ability of the Operating Partnership to
make distributions, or the Company to declare dividends, under the Company's
current dividend policy.
On July 26, 1996, the Company closed a $20,000 unsecured line of credit with
Wachovia Bank of Georgia, N.A. (The "Cash Management Line"), which was fully
funded and used to pay down the outstanding balance on the Revolver. The Cash
Management Line bears interest at LIBOR plus .675% or prime minus .25% and
matures on March 31, 1999. Management believes the Cash Management Line will be
renewed at maturity with similar terms. The Revolver requires three days advance
notice to repay borrowings whereas the Cash Management Line provides the Company
with an automatic daily sweep which applies all available cash to reduce the
outstanding balance. In addition, the Company has a $3,000 facility to provide
letters of credit for general business purposes.
Other Unsecured Debt
On March 1, 1998, the Company entered into a Disposition and Development
Agreement with the City of Phoenix, Arizona. Pursuant to this agreement, the
City of Phoenix loaned the Company $2,000. This loan is interest-free for the
first three years, with a 5.00% interest rate thereafter. Repayment of the loan
commences on March 1, 2001 with equal semi-annual payments due on March 1 and
September 1 of each year through March 1, 2021.
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 Federal National Mortgage Association ("FNMA"), FNMA now provides, directly
or indirectly through other bank letters of credit, credit enhancement with
respect to such bonds. Under the terms of such agreement, FNMA has provided
replacement credit enhancement through 2025 for 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
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.
Senior Unsecured Debt Offering
On June 7, 1995, the Company issued $50,000 of unsecured senior notes with The
Northwestern Mutual Life Insurance Company. The notes were in two tranches: the
first, totaling $30,000, carries an interest rate of 8.21% per annum (1.25% over
the corresponding treasury rate on the date such rate was set) and matures on
June 7, 2000; and the second, totaling $20,000 carries an interest rate of 8.37%
per annum (1.35% over the corresponding treasury rate on the date such rate was
set) and matures on June 7, 2002. Proceeds from the notes were used to reduce
other secured indebtedness and to pay down the Revolver. The note agreements
pursuant to which the notes were purchased contain customary representations,
covenants and events of default similar to those contained in the note agreement
for the Revolver.
On September 30, 1996, the Company completed a public offering of $125,000
senior unsecured debt comprised of two tranches. The first tranche, $100,000 of
7.25% Notes due on October 1, 2003 (the "2003 Notes"), was priced at 99.642% to
yield 7.316%, or 71 basis points over the rate on U.S. Treasury securities with
a comparable maturity. The second tranche, $25,000 or 7.50% Notes due on October
1, 2006 (the "2006 Notes", and together with the 2003 Notes, the "Notes"), was
priced at 99.694% to yield 7.544%, or 83 basis points over the rate on U.S.
Treasury securities with a comparable maturity. Proceeds from the Notes were
used to pay down the Revolver.
24
<PAGE> 27
Medium Term Notes and MandatOry Par Put Remarketed Securities
On January 29, 1997, the Operating Partnership established a program for the
sale of up to $175,000 aggregate principal amount of Medium-Term Notes due nine
months or more from the date of issue (the "MTNs"). On October 20, 1997, the
Company increased the amount available under this program to $344 million. As of
December 31, 1998, the Operating Partnership had $281,000 aggregate principle
amount of notes outstanding under the MTN Program. Proceeds from the MTNs were
used to (i) prepay certain outstanding notes and (ii) pay down existing
indebtedness outstanding under the Company's Revolver.
On March 12, 1998, the Operating Partnership issued $100,000 of 6.85% MandatOry
Par Put Remarketed Securities(SM) ("MOPPRS(SM)") under the MTN Program. The net
proceeds of $99,087 from the sale of the MOPPRS(SM) were used to repay
outstanding indebtedness. In connection with the MOPPRS(SM) transaction, Merrill
Lynch & Co. purchased an option to remarket the securities as of March 16, 2005
(the "Remarketing Date") reducing the effective borrowing rate through the
Remarketing Date to 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
was increased to approximately 6.85%, the coupon rate on the MOPPRS(SM).
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.
Perpetual Preferred Stock Offerings
On February 9, 1998, the Company sold two million non-convertible 7 5/8% Series
C Cumulative Redeemable Shares (the "Series C Perpetual Preferred Shares") with
a liquidation preference of $25 per share. Net proceeds of $48,284 from the sale
of Series C Perpetual Shares were contributed to the Operating Partnership in
exchange for two million Perpetual Preferred Units and used by the Operating
Partnership to repay outstanding indebtedness.
Common Stock Offerings
On December 8, 1998, the Company issued 730,000 shares of common stock at a
price of $37 per share. The net proceeds of approximately $27,000 were
contributed to the Operating Partnership and used to pay down outstanding
balances on the Company's lines of credit.
On November 4, 1998, the Company issued 1.15 million shares 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 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 unit
investment trust, the Paine Webber Equity Trust Reit Series 1. Net proceeds of
$13,662 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, the Equity Investor Fund Cohen & Steers Realty
Majors Portfolio. Net proceeds 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. Net proceeds of $129,179 were 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.
25
<PAGE> 28
Schedule of Indebtedness
The following table reflects the Company's indebtedness at December 31, 1998:
<TABLE>
<CAPTION>
MATURITY PRINCIPAL
DESCRIPTION LOCATION INTEREST RATE DATE (1) BALANCE
----------- -------- ------------- -------- -------
<S> <C> <C> <C> <C>
CONVENTIONAL FIXED RATE (SECURED)
Post Hillsboro Village & The Lee
Apartments................................ Nashville, TN 9.20% 10/01/01 $ 2,960
Parkwood Townhomes(TM).................... Dallas, TX 7.375% 04/01/14 865
--------
3,825
--------
CONVENTIONAL FLOATING RATE (SECURED)
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% 08/26/99 20,111
--------
42,303
--------
TAX EXEMPT FLOATING RATE (SECURED)
Post Ashford(R)Series 1995................ Atlanta, GA "AAA" NON-AMT + .515% 06/01/25 9,895
(2)(3)
Post Valley(R)Series 1995................. Atlanta, GA "AAA" NON-AMT + .515% 06/01/25 18,600
(2)(3)
Post Brook(R)Series 1995.................. Atlanta, GA "AAA" NON-AMT + .515% 06/01/25 4,300
(2)(3)
Post Village(R)(Atlanta) Hills Series 1995 Atlanta, GA "AAA" NON-AMT + .515% 06/01/25 7,000
(2)(3)
Post Mill(R)Series 1995................... Atlanta, GA "AAA" NON-AMT + .515% 06/01/25 12,880
(2)(3)
Post Canyon(R)Series 1996................. Atlanta, GA "AAA" NON-AMT + .515% 06/01/25 16,845
(2)(3)
Post Corners(R)Series 1996................ Atlanta, GA "AAA" NON-AMT + .515% 06/01/25 14,760
(2)(3)
Post Bridge(R)............................ Atlanta, GA "AAA" NON-AMT + .515% 06/01/25 12,450
(2)(3)
Post Village(R)(Atlanta) Gardens.......... Atlanta, GA "AAA" NON-AMT + .515% 06/01/25 14,500
(2)(3)
Post Chase(R)............................. Atlanta, GA "AAA" NON-AMT + .515% 06/01/25 15,000
(2)(3)
Post Walk(R).............................. Atlanta, GA "AAA" NON-AMT + .515% 06/01/25 15,000
(2)(3)
Post Lake(R).............................. Orlando, FL "AAA" NON-AMT + .515% 06/01/25 28,500
(2)(3)
Post Fountains at Lee Vista(R)............ Orlando, FL "AAA" NON-AMT + .515% 06/01/25 21,500
(2)(3)
Post Village(R) (Atlanta) Fountains
and Meadows............................ Atlanta, GA "AAA" NON-AMT + .515% 06/01/25 26,000
(2)(3)
Post Court(R)............................. Atlanta, GA "AAA" NON-AMT + .515% 06/01/25 18,650
(2)(3) --------
235,880
--------
SENIOR NOTES (UNSECURED)
Medium Term Notes......................... N/A 6.22% 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 Term 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 7.25% 10/01/03 100,000
Medium Term Notes......................... N/A 7.30% 04/01/04 13,000
Medium Term Notes......................... N/A 6.69% 09/22/04 10,000
Medium Term Notes......................... N/A 6.78% 09/22/05 25,000
Senior Notes.............................. N/A 7.50% 10/01/06 25,000
Mandatory Par Put Remarketed Securities... N/A 6.85% (4) 03/16/15 100,000
Remarketed Reset Notes.................... N/A LIBOR + .40% (5) 04/07/09 50,000
--------
456,000
--------
LINES OF CREDIT & OTHER UNSECURED DEBT
City of Phoenix........................... N/A 5.00% (7) 03/01/21 2,000
Revolver ................................. N/A LIBOR + .675% or prime 04/30/01 40,000
minus .25% (6)
Cash Management Line...................... N/A LIBOR + .675% or prime 03/31/99 20,000
minus .25% --------
62,000
--------
TOTAL..................................... $800,008
========
</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%.
26
<PAGE> 29
(4) 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.
(5) Represents rate through April 7, 1999. After this date, the spread
will be reset quarterly.
(6) Represents stated rate. The Company may also make "money market" loans
of up to $137,500 at rates below the stated rate. At December 31,
1998, the outstanding balance of the Revolver consisted of "money
market" loans with an average interest rate of 6.04%.
(7) This loan is interest-free for the first three years, with interest at
5.00% thereafter. Repayment is to commence on March 1, 2001 subject to
the conditions set forth in the Agreement.
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 years
ended December 31, 1998 and 1997 are summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1998 1997
--------- ---------
<S> <C> <C>
New community development and acquisition activity................. $ 288,002 $ 218,111
Revenue generating additions and improvements:
Property renovations............................................ 12,896 5,532
Submetering of water service.................................... 718 2,636
Nonrecurring capital expenditures:
Vehicle access control gates.................................... 377 115
Other community additions and improvements...................... 1,046 490
Corporate additions and improvements............................ 4,527 --
Recurring capital expenditures:
Carpet replacements............................................. 2,550 1,617
Other community additions and improvements...................... 4,929 2,058
Corporate additions and improvements............................ 4,049 3,220
--------- ---------
$ 319,094 $ 233,779
========= =========
</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.
YEAR 2000 ISSUE
The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits 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 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
27
<PAGE> 30
not commonly thought of as IT systems, such as elevators, alarm systems, or
other miscellaneous systems. Both IT and non-IT systems may contain embedded
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 December 31, 1998, it had completed approximately
60% 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 40% of the initiatives are in process and are
expected to be completed on or about June 30, 1999.
The Company has mailed 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. The
Company is following up on mailings to significant suppliers, contractors and
third party service providers that did not initially respond, or whose
responses were deemed unsatisfactory by the Company.
At this time, the Company estimates 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
to be approximately $3.6 million. Expenditures related to the Company's Year
2000 initiatives will be funded from operating cash flows. As of December 31,
1998, the Company had incurred costs of approximately $2.0 million 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. The Company currently plans to complete such analysis and
contingency planning by August 31, 1999. Risks involved with not solving the
Year 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.
The Company has engaged an independent expert to provide an ongoing evaluation
of 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
28
<PAGE> 31
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.
NEW ACCOUNTING PRONOUNCEMENTS
See Note 1 to Consolidated Financial Statements of the Company.
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. FFO is defined to mean net income 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 years ended December 31, 1998, 1997 and 1996 presented on a
historical basis are summarized in the following table:
Calculations of Funds from Operations and Cash Available for Distribution
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Net income available to common shareholders....................... $ 77,477 $ 49,965 $ 42,406
Extraordinary item, net of minority interest...................... -- 75 --
Minority interest................................................. 11,511 11,131 9,984
Net gain on sale of assets....................................... -- (3,270) (854)
Loss on unused treasury locks.................................... 1,944 -- --
Loss on relocation of corporate office........................... -- 1,500 --
------------ ------------ ------------
Adjusted net income.............................................. 90,932 59,401 51,536
Depreciation of real estate assets............................... 45,214 27,991 22,676
------------ ------------ ------------
Funds from Operations (1)......................................... 136,146 87,392 74,212
Recurring capital expenditures (2)............................... (7,479) (3,675) (2,961)
Non-recurring capital expenditures (3)........................... (1,423) (605) (1,429)
Loan amortization payments....................................... (75) (179) (228)
------------ ------------ ------------
Cash Available for Distribution................................... $ 127,169 $ 82,933 $ 69,594
============ ============ ============
Revenue generating capital expenditures (4)....................... $ 13,614 $ 8,168 $ 509
============ ============ ============
Cash Flow Provided From (Used In):
Operating activities............................................. $ 141,440 $ 109,554 $ 78,966
Investing activities............................................. $ (321,038) $ (208,377) $ (166,762)
Financing activities............................................. $ 189,873 $ 109,469 $ 79,021
Weighted average common shares outstanding - basic................ 35,028,596 23,664,044 21,787,648
============ ============ ============
Weighted average common shares outstanding - diluted.............. 35,473,587 23,887,906 21,879,248
============ ============ ============
Weighted average common shares and Units outstanding - basic...... 40,244,351 28,880,928 26,917,723
============ ============ ============
Weighted average common shares and Units outstanding - diluted.... 40,689,342 29,104,790 27,009,323
============ ============ ============
</TABLE>
(1) The Company uses the National Association of Real Estate Investment
Trusts ("NAREIT") definition of FFO which was adopted for periods
beginning after January 1, 1996. FFO for any period means the
consolidated net income available to common shareholders of
29
<PAGE> 32
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 $2,550, $1,617
and $1,087 of carpet replacement and $4,929, $2,058 and $1,874 of
other community additions and improvements to existing communities for
the years ended December 31, 1998, 1997 and 1996, respectively. Since
the Company does not add back the depreciation of non-real estate
assets in its calculation of FFO, capital expenditures of $8,576,
$3,220 and $820 are excluded from the calculation of CAD for the years
ended December 31, 1998, 1997 and 1996, respectively.
(3) Non-recurring capital expenditures consisted of the additions of
vehicle access control gates to communities of $377, $115 and $66 and
other community additions and improvements of $1,046, $490 and $1,363
for the years ended December 31, 1998, 1997 and 1996, respectively.
(4) Revenue generating capital expenditures included major renovations of
communities in the amount of $12,896, $5,532 and $509 for the years
ended December 31, 1998, 1997 and 1996, respectively, and submetering
of water service to communities in the amount of $718 and $2,636 for
the years ended December 31, 1998 and 1997.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements made in this report, and other written or oral statements
made by or on behalf of the Company, may constitute "forward-looking
statements" within the meaning of the federal securities laws. Statements
regarding future events and developments and the Company's future performance,
as well as management's expectations, beliefs, plans, estimates or projections
relating to the future, are forward-looking statements within the meaning of
these laws. Examples of such statements in this report include descriptions of
our plans with respect to the development of new apartment communities, our
plans to enter new markets, expectations relating to our continuing growth and
our ability to address Year 2000 issues. All forward-looking statements are
subject to certain risks and uncertainties that could cause actual events to
differ materially from those projected. Management believes that these
forward-looking statements are reasonable; however, you should not place undue
reliance on such statements. These statements are based on current expectations
and speak only as of the date of such statements. The Company undertakes no
obligation to publicly update or revise any forward-looking statement, whether
as a result of future events, new information or otherwise. Additional
information concerning the risk and uncertainties listed above, and other
factors that you may wish to consider, is contained elsewhere in the Company's
filings with the Securities and Exchange Commission.
The following are some of the factors that could cause the Company's actual
results to differ materially from the expected results described in the
Company's forward-looking statements:
- - conditions affecting the acquisition, development and ownership of
residential real estate, including local zoning and land use issues,
environmental regulations, the Americans with Disabilities Act, the
Fair Housing Amendments Act of 1988 and general conditions in the
multi-family residential real estate market.
- - adverse or unanticipated weather conditions, which may affect the
Company's overall level of development.
- - the Company's ability to obtain financing for the development of
additional apartment communities.
- - the impact of competition, including competition for tenants and
locations and in other important aspects of the Company's business. The
Company's primary competitors include other regional or national
apartment communities. The multifamily apartment community business is
highly competitive.
- - general economic conditions which affected consumer confidence and
purchases of new homes, including interest rates, the overall level of
economic activity, the availability of consumer credit and mortgage
financing, unemployment rates, and other factors.
- - the Company's ability to continue to qualify as a real estate
investment trust under the Code.
30
<PAGE> 33
- - the Company's ability to replace, modify or upgrade computer programs
and other systems in order to adequately address the Year 2000 issue,
and the ability of the Company's suppliers, other business partners
and other entities to address this issue.
- - changes in laws and regulations, including changes in accounting
standards, tax statutes or regulations, and environmental and land use
regulations, and uncertainties of litigation.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE SENSITIVITY
The Company and Operating Partnership's primary market risk exposure is
interest rate risk. At December 31, 1998, the Company and Operating Partnership
together had $182.3 million of variable rate debt tied to LIBOR. In addition,
they had $235.9 million in variable tax-exempt debt tied to "AAA" NON-AMT. In
addition, the Company and Operating Partnership have interest rate risk
associated with fixed rate debt at maturity.
Management has and will continue to manage interest rate risk as follows:
- - maintain a conservative ratio of fixed rate, long-term debt to total
debt such that variable rate exposure is kept at an acceptable level;
- - fix certain long-term variable rate debt through the use of interest
rate swaps or interest rate caps with appropriately matching
maturities;
- - use treasury locks where appropriate to fix rates on anticipated debt
transactions, and
- - take advantage of favorable market conditions for long-term debt
and/or equity.
Management uses various financial models and advisors to achieve these
objectives.
The table below provides information about the Company's derivative financial
instruments and other financial instruments that are sensitive to changes in
interest rates and debt obligations. For debt obligations, the table presents
principal cash flows and related weighted average interest rates by expected
maturity dates.
<TABLE>
<CAPTION>
EXPECTED MATURITY DATE
------------------------------------------------------------------------------------
THERE- FAIR
1999 2000 2001 2002 2003 AFTER TOTAL VALUE
------- ------- ------- ------- -------- -------- -------- --------
(IN MILLIONS)
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long-term Debt:
Fixed Rate ............... $16,078 $30,089 $39,899 $20,141 $100,144 $175,474 $381,825 $387,703
------- ------- ------- ------- -------- -------- -------- --------
Average interest rate.... 7.20% 7.11% 7.11% 7.02% 6.89% 6.76% 7.16%
to
Floating Rate (1) ........ 6.87%
LIBOR-based:
The Rice................. 20,111 20,111 20,111
Cash Management
Line (2)................ 20,000 20,000 20,000
Addison Circle........... 22,192 22,192 22,192
MTN (03/03/00)........... 30,000 30,000 30,000
Remarketed Reset
Notes (3)(4)............ 50,000 50,000 50,000
Revolver (2)............. 40,000 40,000 40,000
------- ------- ------- ------- -------- ------ -------- -------
Total LIBOR-based....... 62,303 30,000 40,000 -- -- 50,000 182,303 182,303
Tax-exempt (5)........... 235,880 235,880 235,880
------- ------- -------- ------- ------- -------- -------- --------
Total floating rate
debt................... 62,303 30,000 40,000 -- -- 285,880 418,183 418,183
------- ------- ------- ------- -------- -------- -------- --------
Total debt.................. $78,381 $60,089 $79,899 $20,141 $100,144 $461,354 $800,008 $805,886
======= ======= ======= ======= ======== ======== ======== ========
</TABLE>
(1) Interest on these debt instruments is based on LIBOR ranging from
LIBOR plus .25% to LIBOR plus 1.90%. At December 31, 1998, the LIBOR
rate was 5.6%. See Schedule of Indebtedness in Management's Discussion
and Analyses for rates on individual debt instruments.
31
<PAGE> 34
(2) Assumes the Company's Revolver and Cash Management Line are repaid at
the maturity date. Management believes these lines will be renewed at
maturity with similar terms.
(3) The Company has obtained a commitment from a financial institution to
provide $50,000 in 10-year fixed rate debt to replace the Remarketed
Reset Notes in March 1999.
(4) The Company had entered an interest rate swap to fix the rate on the
Remarketed Reset Notes to 6.02%. At December 31, 1998, the swap had a
fair value of ($3,022). The swap was settled in February 1999 for a
loss of $1,495.
(5) At December 31, 1999, the "AAA" NON-AMT rate was 4.0%. Interest on
these debt instruments is equal to the "AAA" NON-AMT rate plus .575%.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements are listed under Item 14(a) and are filed as part of
this report on the pages indicated. The supplementary data are included in Note
13 of the Notes to Consolidated Financial Statements.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
32
<PAGE> 35
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The sections under the headings "Election of Directors" entitled "Nominees for
Election -- Term Expiring 1999," "Incumbent Directors -- Term Expiring 2000,"
and "Incumbent Directors -- Term Expiring 2001" of the Proxy Statement for
Annual Meeting of Shareholders to be held May 7, 1999 (the "Proxy Statement")
are incorporated herein by reference for information on Directors of the
Registrant. See Item X in Part I hereof for information regarding executive
officers of the Registrant. The section under the heading "Other Matters"
entitled "Section 16(a) Beneficial Ownership Reporting Compliance" of the Proxy
Statement is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The section under the heading "Election of Directors" entitled "Compensation of
Directors" of the Proxy Statement and the sections under the heading titled
"Executive Compensation" entitled "Summary Compensation Table," Fiscal Year-End
Option Value Table," "Profit Sharing Plan," "Noncompetition and Employment
Contract," and "Compensation Committee Interlocks and Insider Participation" of
the Proxy Statement are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The section under the heading "Common Stock Ownership by Management and
Principal Shareholders" of the Proxy Statement is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The section under the heading "Certain Transactions" of the Proxy Statement is
incorporated herein by reference.
33
<PAGE> 36
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(A) 1. AND 2. FINANCIAL STATEMENTS AND SCHEDULES
The financial statements and schedules listed below are filed as part of this
annual report on the pages indicated.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
POST PROPERTIES, INC.
Consolidated Financial Statements:
Report of Independent Accountants...................................................................... 35
Consolidated Balance Sheets as of December 31, 1998 and 1997........................................... 36
Consolidated Statements of Operations for the Years Ended December 31, 1998, 1997 and 1996............. 37
Consolidated Statements of Shareholders' Equity and Accumulated Earnings for the
Years Ended December 31, 1998, 1997 and 1996......................................................... 38
Consolidated Statements of Cash Flows for the Years Ended December 31, 1998, 1997 and 1996............. 39
Notes to the Consolidated Financial Statements......................................................... 40
POST APARTMENT HOMES, L.P.
Consolidated Financial Statements:
Report of Independent Accountants...................................................................... 56
Consolidated Balance Sheets as of December 31, 1998 and 1997........................................... 57
Consolidated Statements of Operations for the Years Ended December 31, 1998, 1997 and 1996............. 58
Consolidated Statements of Partners' Equity for the Years Ended December 31, 1998, 1997 and 1996....... 59
Consolidated Statements of Cash Flows for the Years Ended December 31, 1998, 1997 and 1996............. 60
Notes to the Consolidated Financial Statements......................................................... 61
Schedule III:
Consolidated Real Estate and Accumulated Depreciation.................................................. 76
All other schedules are omitted because they are either not applicable or not
required.
POST PROPERTIES, INC. -- 1995 NON-QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
Financial Statements:
Report of Independent Accountants...................................................................... 79
Statement of Net Assets Available for Plan Benefits as of December 31, 1998 and 1997................... 80
Statement of Changes in Net Assets Available for Plan Benefits for the years ended
December 31, 1998 and 1997........................................................................... 81
Notes to Financial Statements.......................................................................... 82
</TABLE>
34
<PAGE> 37
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Post Properties, Inc.
In our opinion, the accompanying consolidated financial statements listed in the
index appearing under Item 14(a) 1. and 2. on page 34 present fairly, in all
material respects, the financial position of Post Properties, Inc. at December
31, 1998 and 1997, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1998, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the management of Post Properties, Inc.; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Atlanta, Georgia
February 26, 1999
35
<PAGE> 38
POST PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1998 1997
----------- ------------
<S> <C> <C>
ASSETS
Real estate assets
Land ................................................................... $ 250,986 $ 234,011
Building and improvements .............................................. 1,384,515 1,255,118
Furniture, fixtures and equipment ...................................... 105,065 89,251
Construction in progress ............................................... 480,703 342,071
Land held for future development ....................................... 33,805 15,560
----------- -----------
2,255,074 1,936,011
Less: accumulated depreciation ......................................... (247,148) (201,095)
----------- -----------
Real estate assets ................................................... 2,007,926 1,734,916
Cash and cash equivalents ................................................ 21,154 10,879
Restricted cash .......................................................... 1,348 1,542
Deferred charges, net .................................................... 18,686 12,629
Other assets ............................................................. 17,599 20,597
----------- -----------
Total assets ...................................................... $ 2,066,713 $ 1,780,563
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable ............................................................ $ 800,008 $ 821,209
Accrued interest payable ................................................. 7,609 7,505
Dividend and distribution payable ........................................ 25,115 21,327
Accounts payable and accrued expenses .................................... 48,214 53,101
Security deposits and prepaid rents ...................................... 8,716 8,117
----------- -----------
Total liabilities ................................................. 889,662 911,259
----------- -----------
Minority interest of unitholders in Operating Partnership ................ 125,365 112,384
----------- -----------
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, 38,051,734 and
30,626,592 shares issued and outstanding at December 31, 1998
and December 31, 1997, respectively .................................. 380 306
Additional paid-in capital ............................................. 1,051,256 756,584
Accumulated earnings ................................................... -- --
----------- -----------
Total shareholders' equity ........................................ 1,051,686 756,920
----------- -----------
Total liabilities and shareholders' equity ........................ $ 2,066,713 $ 1,780,563
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
36
<PAGE> 39
POST PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES
Rental .......................................................... $ 275,755 $ 185,732 $ 158,618
Property management - third party ............................... 3,164 2,421 2,828
Landscape services - third party ................................ 7,252 5,148 4,882
Interest ........................................................ 472 89 326
Other ........................................................... 12,223 6,726 4,921
------------ ------------ ------------
Total revenue ............................................ 298,866 200,116 171,575
------------ ------------ ------------
EXPENSES
Property operating and maintenance (exclusive of items
shown separately below) ....................................... 99,773 67,515 58,202
Depreciation (real estate assets) ............................... 45,214 27,991 22,676
Depreciation (non-real estate assets) ........................... 1,409 1,057 927
Property management - third party ............................... 2,499 1,959 2,055
Landscape services - third party ................................ 6,259 4,284 3,917
Interest ........................................................ 31,297 24,658 22,131
Amortization of deferred loan costs ............................. 1,209 980 1,352
General and administrative ...................................... 8,404 7,364 7,716
Minority interest in consolidated property partnerships ......... 397 -- --
------------ ------------ ------------
Total expenses ........................................... 196,461 135,808 118,976
------------ ------------ ------------
Income before net gain on sale of assets, loss on
unused treasury locks, loss on relocation of
Corporate office, minority interest of unitholders
in Operating Partnership and extraordinary item ................ 102,405 64,308 52,599
Net gain on sale of assets ...................................... -- 3,270 854
Loss on unused treasury locks ................................... (1,944) -- --
Loss on relocation of corporate office .......................... -- (1,500) --
Minority interest of unitholders in Operating Partnership ....... (11,511) (11,131) (9,984)
------------ ------------ ------------
Income before extraordinary item ................................ 88,950 54,947 43,469
Extraordinary item, net of minority interest of unitholders
in Operating Partnership ...................................... -- (75) --
------------ ------------ ------------
Net income ...................................................... 88,950 54,872 43,469
Dividends to preferred shareholders ............................. (11,473) (4,907) (1,063)
------------ ------------ ------------
Net income available to common shareholders ..................... $ 77,477 $ 49,965 $ 42,406
============ ============ ============
EARNINGS PER COMMON SHARE - BASIC
Income before extraordinary item (net of preferred dividends) ... $ 2.21 $ 2.11 $ 1.95
Extraordinary item .............................................. -- -- --
------------ ------------ ------------
Net income available to common shareholders ..................... $ 2.21 $ 2.11 $ 1.95
============ ============ ============
Weighted average common shares outstanding ...................... 35,028,596 23,664,044 21,787,648
============ ============ ============
Dividends declared .............................................. $ 2.60 $ 2.38 $ 2.16
============ ============ ============
EARNINGS PER COMMON SHARE - DILUTED
Income before extraordinary item (net of preferred dividends) ... $ 2.18 $ 2.09 $ 1.94
Extraordinary item .............................................. -- -- --
------------ ------------ ------------
Net income available to common shareholders ..................... $ 2.18 $ 2.09 $ 1.94
============ ============ ============
Weighted average common shares outstanding ...................... 35,473,587 23,887,906 21,879,248
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
37
<PAGE> 40
POST PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND
ACCUMULATED EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PREFERRED COMMON PAID-IN ACCUMULATED
SHARES SHARES CAPITAL EARNINGS TOTAL
--------- ------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
SHAREHOLDERS' EQUITY AND
ACCUMULATED EARNINGS,
DECEMBER 31, 1995 ....................................... $-- $216 $ 343,408 $ -- $ 343,624
Proceeds from Preferred Shares, net of underwriting
discount and offering costs of $1,387 .................. 10 -- 48,603 -- 48,613
Acquisition of real estate through issuance of
Units .................................................. -- -- 5,091 -- 5,091
Proceeds from Dividend Reinvestment and
Employee Stock Purchase Plans .......................... -- 2 9,032 -- 9,034
Conversion of Units to shares ........................... -- 1 (1) -- --
Adjustment for minority interest of Unitholders
in Operating Partnership at dates of capital
transactions ........................................... -- -- (2,680) -- (2,680)
Net income .............................................. -- -- -- 43,469 43,469
Dividends to preferred shareholders ..................... -- -- -- (1,063) (1,063)
Dividends declared and paid to common shareholders ...... -- -- (3,549) (31,708) (35,257)
Dividends declared to common shareholders ............... -- -- (1,140) (10,698) (11,838)
--- ---- ----------- -------- -----------
SHAREHOLDERS' EQUITY AND
ACCUMULATED EARNINGS,
DECEMBER 31, 1996 ...................................... 10 219 398,764 -- 398,993
Proceeds from Preferred Shares, net of
underwriting discount and offering
costs of $1,709 ...................................... 20 -- 48,271 -- 48,291
Common shares issued in connection
with Merger .......................................... -- 84 338,269 -- 338,353
Proceeds from Dividend Reinvestment and
Employee Stock Purchase Plans ........................ -- 2 9,128 -- 9,130
Conversion of Units to shares .......................... -- 1 (1) -- --
Adjustment for minority interest of
unitholders in Operating Partnership
at dates of capital transactions ..................... -- -- (30,245) -- (30,245)
Net income ............................................. -- -- -- 54,872 54,872
Dividends to preferred shareholders .................... -- -- -- (4,907) (4,907)
Dividends declared and paid to common
Shareholders ......................................... -- -- (3,273) (36,073) (39,346)
Dividends declared to common shareholders .............. -- -- (4,329) (13,892) (18,221)
--- ---- ----------- -------- -----------
SHAREHOLDERS' EQUITY AND
ACCUMULATED EARNINGS,
DECEMBER 31, 1997 ...................................... 30 306 756,584 -- 756,920
Proceeds from Preferred Shares, net of
underwriting discount and offering
costs of $1,716 ........................................ 20 -- 48,264 -- 48,284
Proceeds from Common Shares, net of
underwriting discount and offering
costs of $13,592 ....................................... -- 69 255,838 -- 255,907
Proceeds from Dividend Reinvestment and
Employee Stock Purchase Plans ........................... -- 5 18,855 -- 18,860
Adjustment for minority interest of
unitholders in Operating Partnership
at dates of capital transactions ..................... -- -- (15,031) -- (15,031)
Net income .............................................. -- -- -- 88,950 88,950
Dividends to preferred shareholders ..................... -- -- -- (11,473) (11,473)
Dividends declared and paid to common
shareholders .......................................... -- -- (13,254) (55,752) (69,006)
Dividends declared to common shareholders ............... -- -- -- (21,725) (21,725)
--- ---- ----------- -------- -----------
SHAREHOLDERS' EQUITY AND
ACCUMULATED EARNINGS,
DECEMBER 31, 1998 ...................................... $50 $380 $ 1,051,256 $ -- $ 1,051,686
=== ==== =========== ======== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
38
<PAGE> 41
POST PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1998 1997 1996
--------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income....................................................... $ 88,950 $ 54,872 $ 43,469
Adjustments to reconcile net income to net cash provided
by operating activities:
Minority interest of unitholders in Operating Partnership........ 11,511 11,131 9,984
Net gain on sale of assets....................................... -- (3,270) (854)
Loss on relocation of corporate office........................... -- 1,500 --
Loss on unused treasury locks.................................... 1,944 -- --
Extraordinary item, net of minority interest of unitholders in
Operating Partnership.......................................... -- 75 --
Depreciation..................................................... 46,623 29,048 23,603
Write-off of deferred financing costs............................ -- (93) --
Amortization of deferred loan costs.............................. 1,209 980 1,352
Other............................................................ 168 -- --
Changes in assets, (increase) decrease in:
Restricted cash................................................ 194 (394) (2)
Deferred charges............................................... (7,115) -- 1,589
Other assets................................................... 2,998 11,797 (3,281)
Changes in liabilities, increase (decrease) in:
Accrued interest payable....................................... 104 2,172 299
Accounts payable and accrued expenses.......................... (5,745) 1,341 2,089
Security deposits and prepaid rents............................ 599 395 718
--------- ---------- ----------
Net cash provided by operating activities........................ 141,440 109,554 78,966
--------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Construction and acquisition of real estate assets,
net of payables................................................ (272,295) (190,810) (168,885)
Proceeds from sale of assets..................................... -- 25,402 12,285
Acquisition of Columbus Realty Trust, net of
cash acquired.................................................. -- (17,734) --
Payment for unused treasury locks................................ (1,944) -- --
Capitalized interest............................................. (15,707) (9,567) (4,443)
Recurring capital expenditures................................... (7,479) (3,675) (2,961)
Corporate capital expenditures................................... (8,576) (3,220) (820)
Non-recurring capital expenditures............................... (1,423) (605) (1,429)
Revenue generating capital expenditures.......................... (13,614) (8,168) (509)
--------- ---------- ----------
Net cash used in investing activities............................ (321,038) (208,377) (166,762)
--------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of financing costs....................................... -- (4,208) (3,986)
Debt proceeds.................................................... 103,930 688,564 236,833
Debt payments.................................................... (275,131) (564,085) (277,233)
Proceeds from the sale of notes.................................. 150,000 -- --
Offering proceeds, net of underwriters discount
and offering costs............................................. 255,907 -- 123,438
Proceeds from Preferred Shares................................... 48,284 48,291 48,613
Proceeds from Dividend Reinvestment Plan......................... 18,860 9,130 9,034
Capital distributions to unitholders............................. (13,277) (12,132) (10,785)
Dividends paid to preferred shareholders......................... (11,473) (4,907) (1,063)
Dividends paid to common shareholders............................ (87,227) (51,184) (45,830)
--------- ---------- ----------
Net cash provided by financing activities........................ 189,873 109,469 79,021
--------- ---------- ----------
Net increase (decrease) in cash and cash equivalents............. 10,275 10,646 (8,775)
Cash and cash equivalents, beginning of period................... 10,879 233 9,008
--------- ---------- ----------
Cash and cash equivalents, end of period......................... $ 21,154 $ 10,879 $ 233
========= ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
39
<PAGE> 42
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" or "PPI") through its majority owned
subsidiary, Post Apartment Homes, L.P. (the "Operating Partnership") currently
owns and manages or is in the process of developing apartment communities
located in the Atlanta, Dallas, Tampa, Orlando, Northern Virginia, Nashville,
Houston, Phoenix, Denver and Charlotte metropolitan areas. At December 31, 1998,
approximately 53.3% and 22.6% (on a unit basis) of the Company's communities are
located in the Atlanta and Dallas metropolitan areas, respectively.
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the consolidated
accounts of the Company and the Operating Partnership. All significant
intercompany accounts and transactions have been eliminated in consolidation.
See Note 2 related to the acquisition of Columbus Realty Trust in 1997. Since
units can be redeemed for shares of the Company on a one-for-one basis at the
Operating Partnership's option, minority interest of unitholders in the
operations of the Operating Partnership is calculated based on the weighted
average of shares and units outstanding during the period.
Certain items in the consolidated financial statements were reclassified for
comparative purposes.
ACCOUNTING CHANGES
In the first quarter of 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income." This statement establishes standards for reporting and
disclosing comprehensive income and its components. Besides net income, SFAS No.
130 requires the reporting of other comprehensive income, defined as revenues,
expenses, gains and losses that under generally accepted accounting principles
are not included in net income. As of December 31, 1998, the Company had no
items of other comprehensive income and, as a result, no additional disclosure
is included.
In the fourth quarter of 1998, the Company adopted SFAS No. 131, "Disclosure
About Segments of an Enterprise and Related Information." This statement
establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
its interim financial reports issued to shareholders. It also establishes
standards for related disclosures about products and services, geographic areas
and major customers. Operating segments are defined as components of an
enterprise about which separate financial information is available that is
evaluated by the chief decision maker in deciding how to allocate resources and
in assessing performance. SFAS No. 131 also allows the aggregation of segments
which meet certain criteria. See Note 14 for the Company's disclosure of segment
information in compliance with SFAS No. 131.
NEW ACCOUNTING PRONOUNCEMENTS
In the first quarter of 2000, the Company is required to adopt SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair value. Due to the Company's limited hedging
activities, management does not believe the adoption of SFAS 133 will have a
material effect on the Company's statement of financial position, nor will it
significantly affect its financial statement disclosures.
40
<PAGE> 43
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
REAL ESTATE ASSETS AND DEPRECIATION
Real estate assets are stated at the lower of depreciated cost or fair value, if
deemed impaired. Ordinary repairs and maintenance are expensed as incurred;
major replacements and betterments are capitalized and depreciated over their
estimated useful lives. Depreciation is computed on a straight-line basis over
the useful lives of the properties (buildings and components and related land
improvements -- 20-40 years; furniture, fixtures and equipment -- 5 - 10 years).
REVENUE RECOGNITION
Rental -- Residential properties are leased under operating leases with terms of
generally one year or less. Rental income is recognized when earned, which is
not materially different from revenue recognition on a straight line basis.
Property management and landscaping services -- Income is recognized when earned
for property management and landscaping services provided to third parties.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, all investments purchased with an
original maturity of three months or less are considered to be cash equivalents.
RESTRICTED CASH
Restricted cash generally is comprised of resident security deposits for
communities located in Florida and Tennessee and required maintenance reserves
for communities located in DeKalb County, Georgia.
DEFERRED FINANCING COSTS
Deferred financing costs are amortized using the interest method over the terms
of the related debt.
INTEREST AND REAL ESTATE TAXES
Interest and real estate taxes incurred during the construction period are
capitalized and depreciated over the lives of the constructed assets. Interest
paid (including capitalized amounts of $15,707, $9,567 and $4,443 during 1998,
1997 and 1996, respectively, and interest rate protection receipts of $0, $296
and $830 during 1998, 1997 and 1996, respectively) aggregated $46,889, $39,815
and $31,563 for the years ended December 31, 1998, 1997 and 1996, respectively.
DERIVATIVES
The Company may enter into various treasury lock arrangements from time to time
in anticipation of a specific debt transaction. These arrangements are used to
manage the Company's exposure to fluctuations in interest rates. The Company
does not utilize these arrangements for trading or speculative purposes. These
arrangements, considered qualifying hedges, are not recorded in the financial
statements until the debt transaction is consummated and the arrangement is
settled. The proceeds or payments resulting from the settlement of the
arrangement are deferred and amortized over the life of the debt as an
adjustment to interest expense.
Premiums paid to purchase interest rate protection agreements are capitalized
and amortized over the terms of those agreements using the interest method.
Unamortized premiums are included in deferred charges in the consolidated
balance sheet. Amounts receivable under the interest rate protection agreements
are accrued as a reduction of interest expense.
41
<PAGE> 44
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
PER SHARE DATA
Basic earnings per common share with respect to the Company for the years ended
December 31, 1998, 1997 and 1996 is computed based upon the weighted average
number of shares outstanding during the period. Diluted earnings per common
share is based upon the weighted average number of shares outstanding during the
period and includes the effect of the potential issuance of additional shares if
stock options were exercised or converted into common stock.
USE OF ESTIMATES IN FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
2. ACQUISITION OF COLUMBUS REALTY TRUST
On October 24, 1997, Columbus Realty Trust ("Columbus") a Texas real estate
investment trust, was merged into a wholly owned subsidiary of the Company (the
"Merger") and then transferred into the Operating Partnership. At the time of
the Merger, Columbus was operating 26 completed communities containing 6,296
apartment units and had an additional 5 communities under development that would
contain 1,243 apartment units upon completion located in Dallas and Houston,
Texas. Pursuant to the merger agreement, each outstanding share of Columbus
common stock was converted into 0.615 shares of common stock of the Company,
which resulted in the issuance of approximately 8.4 million shares of common
stock of the Company. The total purchase price including liabilities assumed was
$643,268. The Merger was accounted for as a purchase. Under the purchase method
of accounting, the assets acquired and liabilities assumed of Columbus were
recorded at their estimated fair market values and its results of operations
have been included in the accompanying consolidated statements of operations
from the date of the Merger, October 24, 1997. Unaudited, supplemental pro-forma
information, assuming the Merger had occurred on January 1, 1996, is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1997 1996
-------- --------
<S> <C> <C>
Total revenue .................................... $247,295 $219,238
Net income available to common
shareholders before extraordinary items ....... $ 60,242 $ 54,071
Net income available to common
shareholders ................................... $ 60,167 $ 54,071
Earnings per share available to common
shareholders - basic ........................... $ 1.99 $ 1.79
Earnings per share available to common
shareholders - diluted ......................... $ 1.96 $ 1.77
</TABLE>
42
<PAGE> 45
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
3. DEFERRED CHARGES
Deferred charges consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1998 1997
---------- ----------
<S> <C> <C>
Deferred financing costs.............................. $ 26,568 $ 20,131
Other................................................. 4,551 2,822
---------- ----------
31,119 22,953
Less: accumulated amortization........................ (12,433) (10,324)
---------- ----------
$ 18,686 $ 12,629
========== ==========
</TABLE>
4. NOTES PAYABLE
The Company's indebtedness consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1998 1997
----------- -----------
<S> <C> <C>
Conventional fixed rate (secured)..................... $ 3,825 $ 16,956
Conventional floating rate (secured).................. 42,303 21,725
Tax-exempt fixed rate bond indebtedness (secured)..... -- 13,298
Tax-exempt floating rate bond indebtedness (secured).. 235,880 141,230
Lines of credit & other (unsecured)................... 62,000 322,000
Senior notes (unsecured).............................. 456,000 306,000
----------- -----------
Total................................................. $ 800,008 $ 821,209
=========== ===========
</TABLE>
CONVENTIONAL FIXED AND FLOATING RATE MORTGAGES PAYABLE (SECURED)
Conventional mortgages payable were comprised of four and seven loans at
December 31, 1998 and 1997, respectively, each of which is collateralized by an
apartment community included in real estate assets. The mortgages payable are
generally due in monthly installments of interest only and mature at various
dates through 2014. The interest rates on the fixed rate mortgages payable
ranged from 7.375% to 9.20% at December 31, 1998. At December 31, 1998, the
interest rates on the variable rate mortgages payable were at a range from .75%
to 1.90% above the London Interbank Offered Rate ("LIBOR"). At December 31,
1998, LIBOR ranged from 5.06% to 5.10% for one, three, six, and twelve month
indices.
TAX-EXEMPT FLOATING RATE BOND INDEBTEDNESS (SECURED)
Tax exempt floating rate bond indebtedness is comprised of AAA Fannie Mae credit
enhanced debt maturing in 2025.
Certain of the apartment communities are encumbered to secure tax-exempt housing
bonds. Such bonds are generally payable in monthly or semi-annual installments
of interest only and mature at various dates through 2025. Floating rate
indebtedness reissued in 1995 through 1998, bears interest at the "AAA" non-AMT
tax exempt rate, set weekly, which was 4.00% at December 31, 1998 (average of
3.57% for 1998). With respect to such bonds, the Company pays certain credit
enhancement fees of .575% of the amount of such bonds or the amount of such
letters of credit, as the case may be.
On January 1, 1997, the Post F&M Villages, Post Vista and Post Lake (Orlando)
bonds were refunded in the amount of $76,000 (all of which had previously been
defeased). On June 1, 1998 the Operating Partnership refunded its last single
property tax-exempt bond issuance on Post Court(R) in Atlanta.
43
<PAGE> 46
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
The Federal National Mortgage Association ("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 $181,000 of annual savings for the
remaining term of these loans.
LINES OF CREDIT AND OTHER (UNSECURED)
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 will be agreed to between the Company and the bank prior to each such
draw. This facility expires on June 29, 1999.
In February 1999, the Company's syndicated line of credit (the "Revolver") was
amended, increasing its capacity to $275,000. The Revolver matures on April 30,
2001 and borrowings currently bear interest at LIBOR plus .675% or prime minus
.25%. The Revolver provides for the rate to be adjusted up or down based on
changes in the credit ratings on the Company's senior unsecured debt. The
Revolver also includes a money market competitive bid option for short term
funds up to $137,500 at rates below the stated line rate. The credit agreement
for the Revolver contains customary representations, covenants and events of
default, including covenants which restrict the ability of the Operating
Partnership to make distributions, in excess of stated amounts, which in turn
restricts the discretion of the Company to declare and pay dividends. In
general, during any fiscal year the Operating Partnership may only distribute up
to 100% of the Operating Partnership's consolidated income available for
distribution (as defined in the credit agreement) exclusive of distributions of
up to $30,000 of capital gains for such year. The credit agreement contains
exceptions to these limitations to allow the Operating Partnership to make
distributions necessary to allow the Company to maintain its status as a REIT.
The Company does not anticipate that this covenant will adversely affect the
ability of the Operating Partnership to make distributions, or the Company to
declare dividends, under the Company's current dividend policy.
On July 26, 1996, the Company closed a $20,000 unsecured line of credit with
Wachovia Bank of Georgia, N.A. (The "Cash Management Line"), which was fully
funded and used to pay down the outstanding balance on the Revolver. The Cash
Management Line bears interest at LIBOR plus .675% or prime minus .25% and
matures on March 31, 1999. Management believes the Cash Management Line will be
renewed at maturity with similar terms. The Revolver requires three days advance
notice to repay borrowings whereas the Cash Management Line provides the Company
with an automatic daily sweep which applies all available cash to reduce the
outstanding balance.
At December 31, 1998, the outstanding balances on the Revolver and Cash
Management Line were $40,000 and $20,000, respectively. There were no
outstanding balances on any of the other facilities at December 31, 1998.
In addition, the Company has a $3,000 facility to provide letters of credit for
general business purposes.
On March 1, 1998 the Company entered into a Disposition and Development
Agreement with the City of Phoenix, Arizona. Pursuant to this agreement, the
City of Phoenix loaned the Company $2,000. This loan is interest-free for the
first three years, with a 5.00% interest rate thereafter. Repayment of the loan
commences on March 1, 2001 with equal semi-annual payments due on March 1 and
September 1 of each year through March 1, 2021. All repayment terms are subject
to the conditions set forth in the Agreement.
44
<PAGE> 47
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
SENIOR NOTES (UNSECURED)
On June 7, 1995, the Company issued $50,000 of unsecured senior notes with the
Northwestern Mutual Life Insurance Company. The notes were in two tranches: the
first, totaling $30,000, carries an interest rate of 8.21% per annum (1.25% over
the corresponding treasury rate on the date such rate was set) and matures on
June 7, 2000; and the second, totaling $20,000 carries an interest rate of 8.37%
per annum (1.35% over the corresponding treasury rate on the date such rate was
set) and matures on June 7, 2002. Proceeds from the notes were used to reduce
other secured indebtedness and to pay down the Revolver. The note agreements
pursuant to which the notes were purchased contain customary representations,
covenants and events of default similar to those contained in the note agreement
for the Revolver.
On September 30, 1996, the Company completed a $125,000 senior unsecured debt
offering comprised of two tranches. The first tranche, $100,000 of 7.25% Notes
due on October 1, 2003 (the "2003 Notes"), was priced at 99.642% to yield 7.316%
per annum (.71% over the corresponding treasury rate on the date such rate was
set). The second tranche, $25,000 of 7.50% Notes due on October 1, 2006 (the
"2006 Notes", and together with the 2003 Notes, the "Notes"), was priced at
99.694% to yield 7.544% per annum (.83% over the corresponding treasury rate on
the date such rate was set). Proceeds from the Notes were used to pay down
existing indebtedness outstanding on the Revolver.
On January 29, 1997, the Operating Partnership established a program for the
sale of up to $175,000 aggregate principal amount of Medium-Term Notes due nine
months or more from the date of issue (the "MTNs"). On October 20, 1997, the
Company increased the amount available under this program to $344 million.
Proceeds from the MTNs were used to (i) prepay certain outstanding notes and
(ii) pay down existing indebtedness outstanding under the Company's Revolver.
The following table sets forth MTNs issued and outstanding as of December 31,
1998:
<TABLE>
<CAPTION>
ISSUE INTEREST MATURITY
DATE AMOUNT RATE DATE
--------------------- -------------- ------------------- --------------
<S> <C> <C> <C>
March 3, 1997 $ 30,000 LIBOR plus .25% 03/03/2000
March 31, 1997 37,000 7.02% 04/02/2001
March 31, 1997 13,000 7.30% 04/01/2004
September 22, 1997 10,000 6.69% 09/22/2004
September 22, 1997 25,000 6.78% 09/22/2005
September 26, 1997 16,000 6.22% 12/31/1999
March 12, 1998 100,000 6.85% 03/16/2015
April 8, 1998 50,000 LIBOR plus .40% 04/07/2009
-----------
$ 281,000
===========
</TABLE>
On March 12, 1998, the Operating Partnership issued $100,000 of 6.85% MandatOry
Par Put Remarketed Securities(SM) ("MOPPRS(SM)") under the MTN Program. The net
proceeds in the amount of $99,087 from the sale of the MOPPRS(SM) were used to
repay outstanding indebtedness. In connection with the MOPPRS(SM) transaction,
Merrill Lynch & Co. purchased an option to remarket the securities as of March
16, 2005 (the "Remarketing Date") reducing the effective borrowing rate through
the Remarketing Date to 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
was increased to approximately 6.85%, the coupon rate on the MOPPRS(SM).
On April 8, 1998, the Operating Partnership sold $50,000 of Remarketed Reset
Notes due April 7, 2009 under the MTN program. 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
45
<PAGE> 48
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
pays a fixed rate of 6.02% and receives LIBOR. This swap was settled in February
1999 at a loss of $1,495. Under hedge accounting, this loss will be amortized
over the remaining term of the Remarketed Reset Notes. Net proceeds in the
amount of $49,825 were used to repay outstanding indebtedness.
The aggregate maturities of the Company's indebtedness are as follows:
<TABLE>
<S> <C>
1999............................................ $ 78,381
2000............................................ 60,089
2001............................................ 79,899
2002............................................ 20,141
2003............................................ 100,144
Thereafter...................................... 461,354
--------
$800,008
========
</TABLE>
PLEDGED ASSETS
The aggregate net book value at December 31, 1998 of property pledged as
collateral for indebtedness amounted to approximately $ 310,775.
UNUSED TREASURY LOCKS
The loss on unused treasury locks in 1998 resulted from the termination of
treasury locks intended for debt securities that were not issued by the
Operating Partnership.
EXTRAORDINARY ITEM
The extraordinary item for the year ended December 31, 1997 resulted from the
write-off of deferred financing costs on the mortgage debt satisfied. The
extraordinary item is net of $18 in minority interest of the unitholders
calculated on the basis of weighted average units and common shares outstanding
for the year ended December 31, 1997.
5. INCOME TAXES
The Company has elected to be taxed as a REIT under the Internal Revenue Code of
1986, as amended (the "Code") commencing with the taxable year ended December
31, 1993. In order for the Company to qualify as a REIT, it must distribute
annually at least 95% of its REIT taxable income, as defined in the Code, to its
shareholders and satisfy certain other requirements. As a result, the Company
generally will not be subject to Federal income taxation at the corporate level
on the income it distributes to the shareholders. Although Post Properties, Inc.
has elected to be taxed as a REIT, Post Services, Inc. ("Post Services") was
formed as a subsidiary of the Operating Partnership to provide through its
subsidiaries asset management, leasing and landscaping services to third
parties. The consolidated taxable income of Post Services, if any, will be
subject to tax at regular corporate rates.
As of December 31, 1998, the net basis for Federal income tax purposes taking
into account the special allocation of gain to the partners contributing
property to the Operating Partnership and including minority interest in the
Operating Partnership, was lower than the net assets as reported in the
Company's consolidated financial statements by $42,734.
6. RELATED PARTY TRANSACTIONS
The Company provides landscaping services for executive officers, employees,
directors and other related parties. For the years ended December 31, 1998, 1997
and 1996, the Company received landscaping fees of $961, $670 and $1,391 for
such services. These amounts include reimbursements of direct expenses in the
amount of $295, $138
46
<PAGE> 49
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
and $729 which are not included in landscape services revenue; accordingly,
these transactions resulted in the Company recording landscape services net fees
in excess of direct expenses of $666, $532 and $662 in the accompanying
financial statements for the years ended December 31, 1998, 1997 and 1996,
respectively.
The Company provides accounting and administrative services to entities
controlled by certain executive officers of the Company. Fees under this
arrangement aggregated $25, $25 and $25 for the years ended December 31, 1998,
1997 and 1996, respectively.
The Company was contracted to assist in the development of apartment complexes
constructed by a former executive and current shareholder. Fees under this
arrangement were $349, $326 and $363 for the years ended December 31, 1998, 1997
and 1996, respectively.
7. EMPLOYEE BENEFIT PLANS
The employees of the Company are participants in a defined contribution plan
pursuant to Section 401 of the Internal Revenue Code. Beginning in 1996, Company
contributions, if any, to this plan are based on the performance of the Company
and are allocated to each participant based on the relative contribution of the
participant to the total contributions of all participants. For purposes of
allocating the Company contribution, the maximum employee contribution included
in the calculation is 3% of salary. Company contributions of $179, $158 and $251
were made in 1998, 1997 and 1996, respectively.
The Company maintains an Employee Stock Purchase Plan ("ESPP") to encourage
stock ownership by eligible directors and employees. To participate in the ESPP,
(i) directors must not be employed by the Company or the Operating Partnership
and must have been a member of the Board of Directors for at least one month and
(ii) an employee must have been employed full or part-time by the Company or the
Operating Partnership for at least one month. The purchase price of shares of
Common Stock under the ESPP is equal to 85% of the lesser of the closing price
per share of Common Stock on the first or last day of the trading period, as
defined.
8. 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.
9. STOCK-BASED COMPENSATION PLANS
STOCK COMPENSATION PLANS
At December 31, 1998, the Company had two stock-based compensation plans, the
Employee Stock Plan (the "Stock Plan"), the Employee Stock Purchase Plan (the
"ESPP") and, under the Stock Plan, a stock grant program (the "Grant Plan") as
described below. The Company applies APB Opinion 25, "Accounting for Stock
Issued to Employees," and related Interpretations in accounting for its plans.
Accordingly, based upon the criteria of APB Opinion 25 no compensation cost is
required to be recognized for the Stock Plan and the ESPP. The compensation
costs which is required to be charged against income for the Grant Plan, was
$182, $209 and $129 for 1998, 1997 and 1996, respectively. Had compensation cost
for the Company's Stock Plan and ESPP been determined based on the fair value at
the grant dates for awards under the Plans consistent with the method of FASB
Statement 123, "Accounting for Stock-Based Compensation," the Company's net
income and earnings per share would have been reduced to the pro forma amounts
indicated below:
47
<PAGE> 50
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- --------
<S> <C> <C> <C>
Net income available to common
Shareholders........................As.reported..... $ 77,477 $ 49,965 $ 42,406
Pro forma...... $ 76,589 $ 49,579 $ 40,488
Net income per common share -
Basic...............................As.reported..... $ 2.21 $ 2.11 $ 1.95
Pro forma...... $ 2.19 $ 2.10 $ 1.86
Net income per common share -
Diluted.............................As.reported..... $ 2.18 $ 2.09 $ 1.94
Pro forma...... $ 2.16 $ 2.08 $ 1.85
</TABLE>
For purposes of the pro forma presentation, the fair value of each option grant
is estimated as of the date of grant using the Black-Scholes option-pricing
model. The weighted-average of all assumptions used in the calculation for
various grants under all of the Company's plans during 1998, 1997, and 1996, are
as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Dividend yield............................. 7.0% 6.5% 5.4%
Expected volatility........................ 15.3% 14.5% 14.5%
Risk-free interest rate.................... 4.7% to 5.8% 5.5% to 5.6% 5.4% to 5.7%
Expected option life....................... 5 to 7 years 5 to 7 years 5 to 7 years
</TABLE>
FIXED STOCK OPTION PLANS
Under the Stock Plan, the Company may grant to its employees and directors
options to purchase up to 6,000,000 shares of common stock. Of this amount,
550,000 shares are available for grants of restricted stock. Options granted to
any key employee or officer cannot exceed 100,000 shares a year (500,000 shares
if such key employee or officer is a member of the Company's Executive
Committee). The exercise price of each option may not be less than the market
price on the date of grant and all options have a maximum term of ten years from
the grant date.
48
<PAGE> 51
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
A summary of the status of the Company's Stock Plan as of December 31, 1998,
1997 and 1996, changes during the years then ended, and the weighted-average
fair value of options granted during the years is presented below:
<TABLE>
<CAPTION>
1998 1997 1996
-------------------------- --------------------- ---------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
---------- ---------- --------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year .......... 2,237,551 $ 31 864,105 $31 601,366 $31
Granted ................................... 1,440,784 39 243,946 39 310,067 32
Converted in connection with the
Merger ................................. -- -- 1,192,230 30 -- --
Exercised ................................. (67,326) 31 (49,406) 31 (18,993) 31
Forfeited ................................. (580,157) 39 (13,324) 38 (28,335) 31
--------- --------- -------
Outstanding at end of year ................ 3,030,852 34 2,237,551 31 864,105 31
========= ========= =======
Options exercisable at year-end ........... 2,065,438 2,000,279 797,830
========= ========= =======
Weighted-average fair value of options
granted during the year ................. $ 2.54 $ 2.85 $ 3.47
========= ========= =======
</TABLE>
At December 31, 1998, the range of exercise prices for options outstanding was
$27.625 - $40.63 and the weighted average remaining contractual life was 7
years.
10. COMMITMENTS AND CONTINGENCIES
LAND, OFFICE AND EQUIPMENT LEASES
The Company is party to two ground leases relating to an operating community
with terms expiring in years 2040 and 2043, one ground lease for a community
under development with terms expiring in year 2038 and to office, equipment and
other operating leases with terms expiring in years 1999 through 2003. Future
minimum lease payments for non-cancelable land, office, equipment and other
leases at December 31, 1998 are as follows:
<TABLE>
<S> <C>
1999......................... $1,575
2000......................... 1,527
2001......................... 1,198
2002......................... 282
2003......................... 201
2004 and thereafter.......... 6,416
</TABLE>
The Company incurred $4,915, $3,366 and $2,172 of rent expense for the years
ended December 31, 1998, 1997 and 1996, respectively.
CONTINGENCIES
The Company is party to various legal actions which are incidental to its
business. Management believes that these actions will not have a material
adverse affect on the consolidated balance sheets and statements of operations.
49
<PAGE> 52
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
11. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosures of estimated fair value were determined by management
using available market information and appropriate valuation methodologies.
Considerable judgment is necessary to interpret market data and develop
estimated fair value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts the Company could realize on disposition
of the financial instruments. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts.
Cash equivalents, rents and landscape service receivables, accounts payable,
accrued expenses, notes payable and other liabilities are carried at amounts
which reasonably approximate their fair values.
The fair values of interest rate protection agreements and an interest rate swap
(used for hedging purposes) are estimated by obtaining quotes from an investment
broker. At December 31, 1998, there were no carrying amounts related to these
arrangements in the consolidated balance sheet. As of December 31, 1998, the
expected cost to settle these contracts was approximately $1,391.
Disclosure about fair value of financial instruments is based on pertinent
information available to management as of December 31, 1998. Although management
is not aware of any factors that would significantly affect the reasonable fair
value amounts, such amounts have not been comprehensively revalued for purposes
of these financial statements since that date and current estimates of fair
value may differ significantly from the amounts presented herein.
50
<PAGE> 53
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
12. EARNINGS PER SHARE
For the years ended December 31, 1998, 1997 and 1996, basic and diluted earnings
per common share for income before extraordinary item, net of preferred
dividends, and net income available to common shareholders before extraordinary
item has been computed as follows:
<TABLE>
<CAPTION>
YEAR ENDED 1998
-----------------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
Income before extraordinary item................................ $ 88,950
Less: Preferred stock dividends................................. (11,473)
-----------
BASIC EPS
Income available to common shareholders before
extraordinary item ........................................... 77,477 35,028,596 $ 2.21
===========
EFFECT OF DILUTIVE SECURITIES
Options......................................................... -- 444,991
----------- -----------
DILUTED EPS
Income available to common shareholders + assumed
conversions before extraordinary item......................... $ 77,477 35,473,587 $ 2.18
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED 1997
-----------------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
Income before extraordinary item............................... $ 54,947
Less: Preferred stock dividends................................ (4,907)
-----------
BASIC EPS
Income available to common shareholders before
extraordinary item .......................................... 50,040 23,664,044 $ 2.11
===========
EFFECT OF DILUTIVE SECURITIES
Options........................................................ -- 223,862
----------- -----------
DILUTED EPS
Income available to common shareholders + assumed
conversions before extraordinary item........................ $ 50,040 23,887,906 $ 2.09
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED 1996
-----------------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
Income before extraordinary item............................... $ 43,469
Less: Preferred stock dividends................................ (1,063)
-----------
BASIC EPS
Income available to common shareholders before
extraordinary item .......................................... 42,406 21,787,648 $ 1.95
EFFECT OF DILUTIVE SECURITIES ==========
Options........................................................ -- 91,600
----------- -----------
DILUTED EPS
Income available to common shareholders + assumed
conversions before extraordinary item........................ $ 42,406 21,879,248 $ 1.94
=========== =========== ===========
</TABLE>
13. SUPPLEMENTAL CASH FLOW INFORMATION
Non-cash investing and financing activities for the years ended December 31,
1998, 1997 and 1996 are as follows:
(a) On the date of the Second Offering and Third Offering, holders of 5,401,185
and 5,139,243 Units of the Operating Partnership, respectively, were
allocated capital on a pro rata basis in proportion to their Units over
51
<PAGE> 54
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
total Units outstanding in the Operating Partnership. During 1998, 1997 and
1996, holders of 750, 6,519 and 54,400 Units in the Operating Partnership,
respectively, exercised their option to convert their Units to shares of the
Company on a one-for-one basis. During 1996, the Company exercised its
option to purchase land in exchange for 138,150 Units of the Operating
Partnership. The net effect of the capital allocated to the unitholders of
the Operating Partnership on the dates of the offerings, the subsequent
conversion of Units of the Operating Partnership to shares of the Company,
the adjustments to minority interest for the dilutive impact of the Dividend
Reinvestment and Employee Stock Purchase Plans and the issuance of Units of
the Operating Partnership in exchange for land was a reclassification
increasing minority interest and decreasing shareholders' equity in the
amount of $15,031, $30,245 and $2,680 for the years ended December 31, 1998,
1997 and 1996, respectively.
(b) The Operating Partnership committed to distribute $25,115, $21,327 and
$14,659 for the quarters ended December 31, 1998, 1997 and 1996,
respectively. As a result, the Company declared dividends of $21,725,
$18,221 and $11,838 for the quarters ended December 31, 1998, 1997 and 1996,
respectively. The remaining distributions from the Operating Partnership in
the amount of $3,390, $3,104 and $2,821 for the quarters ended December 31,
1998, 1997 and 1996, respectively, are distributed to minority interest
unitholders in the Operating Partnership.
(c) The Merger, which was completed in 1997, was a stock for stock transaction.
In connection with the Merger, the cash and non-cash components were are
follows:
<TABLE>
<S> <C>
Fair value of assets acquired.................. $ 643,268
Less:
Value of stock issued in exchange for
Stock of Columbus........................... 338,353
Liabilities assumed......................... 285,852
Cash acquired............................... 1,329
----------
Cash component of purchase price, net of
cash acquired............................... $ 17,734
==========
</TABLE>
52
<PAGE> 55
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
14. SEGMENT INFORMATION
SEGMENT DESCRIPTION
The Company adopted SFAS No. 131, "Disclosure About the Segments of an
Enterprise and Related Information" in the fourth quarter of 1998. SFAS No. 131
requires companies to present segment information based on the way that
management organizes the segments within the enterprise for making operating
decisions and assessing performance. The segment information is prepared on
substantially the same basis as the internally reported information used by the
Company's chief operating decision makers to manage the business.
The Company's chief operating decision makers focus on the Company's primary
sources of income which are property rental operations and third party services.
Third party services are designated as one segment. Property rental operations
are broken down into four segments based on the various stages in the property
ownership lifecycle. The Company's five segments are further described as
follows:
Property Rental Operations
- Fully stabilized communities - those apartment communities
which have been stabilized (the point at which a property
reaches 95% occupancy) for both the current and prior year.
- Communities stabilized during 1997 - communities which reached
stabilized occupancy in the prior year.
- Development and lease up communities - those communities which
are in lease-up but were not stabilized by the beginning of
the current year, including communities which stabilized
during the current year.
- Sold communities - communities which were sold in the current
or prior year.
Third Party Services - fee income and related expenses from the
Company's apartment community management, landscaping and corporate
apartment rental services.
SEGMENT PERFORMANCE MEASURE
Management uses contribution to funds from operations ("FFO") as the performance
measure for its segments. FFO is defined by the National Association of Real
Estate Investment Trusts as net income 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.
53
<PAGE> 56
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
SEGMENT INFORMATION
The following table reflects each segments contribution to FFO together with a
reconciliation of segment contribution to FFO, total FFO and income before
extraordinary item and preferred dividends. Additionally, substantially all of
the Company's assets relate to the Company's property rental operations. Asset
cost, depreciation and amortization by segment are not presented because such
information at the segment level is not reported internally.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
REVENUES
Fully stabilized communities................................. $ 210,293 $ 167,113 $ 148,668
Communities stabilized during 1997........................... 25,053 8,571 69
Development and lease-up communities......................... 39,466 10,634 5,969
Sold communities............................................. -- 1,494 5,309
Third party services......................................... 10,416 7,569 7,710
Other........................................................ 13,638 4,735 3,850
------------- ------------- -------------
Consolidated revenues........................................ $ 298,866 $ 200,116 $ 171,575
============= ============= =============
CONTRIBUTION TO FUNDS FROM OPERATIONS
Fully stabilized communities................................. $ 143,890 $ 114,606 $ 100,499
Communities stabilized during 1997........................... 17,341 5,752 (211)
Development and lease-up communities......................... 22,963 6,271 3,793
Sold communities............................................. -- 837 3,276
Third party services......................................... 1,658 1,326 1,738
------------- ------------- -------------
Contribution to FFO.......................................... 185,852 128,792 109,095
------------- ------------- -------------
Other operating income, net of expense....................... 4,483 (2,434) (1,694)
Depreciation on non-real estate assets....................... (1,409) (1,057) (927)
Minority interest in consolidated property
Partnership............................................... (397) -- --
Interest expense............................................. (31,297) (24,658) (22,131)
Amortization of deferred loan costs.......................... (1,209) (980) (1,352)
General and administrative................................... (8,404) (7,364) (7,716)
Dividends to preferred shareholders.......................... (11,473) (4,907) (1,063)
------------- ------------- -------------
Total FFO.................................................... 136,146 87,392 74,212
------------- ------------- -------------
Depreciation on real estate assets........................... (45,214) (27,991) (22,676)
Net gain on sale of assets................................... -- 3,270 854
Loss on unused treasury locks................................ (1,944) -- --
Loss on relocation of office space........................... -- (1,500) --
Minority interest of unitholders in
Operating Partnership...................................... (11,511) (11,131) (9,984)
Dividends to preferred shareholders.......................... 11,473 4,907 1,063
------------- ----------- -------------
Income before extraordinary item
and preferred dividends.................................... $ 88,950 $ 54,947 $ 43,469
============= ============= =============
</TABLE>
54
<PAGE> 57
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
15. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Quarterly financial information for the years ended 1998 and 1997 are as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998*
--------------------------------------------------------
FIRST SECOND THIRD FOURTH
--------- ---------- --------- -----------
<S> <C> <C> <C> <C>
Revenues........................................... $ 68,962 $ 73,477 $ 76,969 $ 79,458
Net income before loss on unused treasury locks and
minority interest of unitholders in Operating
Partnership..................................... 22,310 25,437 26,825 27,833
Loss on unused treasury locks...................... (1,944) -- -- --
Minority interest of unitholders in Operating
Partnership..................................... (2,510) (2,902) (3,022) (3,077)
Net income......................................... 17,856 22,535 23,803 24,756
Dividends to preferred shareholders................ (2,566) (2,969) (2,969) (2,969)
Net income available to common shareholders........ 15,290 19,566 20,834 21,787
Earnings per common share:
Net income available to common shareholders - basic
0.48 0.56 0.58 0.59
Net income available to common shareholders -
diluted......................................... 0.47 0.55 0.57 0.58
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997*
--------------------------------------------------------
FIRST SECOND THIRD FOURTH
--------- ---------- --------- -----------
<S> <C> <C> <C> <C>
Revenues........................................... $ 44,560 $ 46,107 $ 47,495 $ 61,953
Net income before net gain on sale of assets, loss
on relocation of corporate office, minority
interest of unitholders in Operating
Partnership and extraordinary item.............. 14,156 14,448 15,783 19,923
Net gain (loss) on sale of assets -- 3,512 -- (242)
Loss on relocation of corporate office............. -- -- -- (1,500)
Minority interest of unitholders in Operating
Partnership..................................... (2,515) (3,236) (2,811) (2,569)
Extraordinary item................................. (75) -- -- --
Net income......................................... 11,566 14,724 12,972 15,612
Dividends to preferred shareholders................ (1,063) (1,062) (1,062) (1,720)
Net income available to common shareholders........ 10,503 13,662 11,910 13,892
Earnings per common share:
Net income available to common shareholders - basic
0.48 0.62 0.54 0.49
Net income available to common shareholders -
diluted......................................... 0.47 0.62 0.53 0.48
</TABLE>
- --------------------
* The total of the four quarterly amounts for minority interest of unitholders
in Operating Partnership, extraordinary item, net income and earnings per share
may not equal the total for the year. These differences result from the use of a
weighted average to compute minority interest in the Operating Partnership and
average number of shares outstanding.
55
<PAGE> 58
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Post Apartment Homes, L.P.
In our opinion, the accompanying consolidated financial statements listed in the
index appearing under Item 14(a) 1. and 2. on page 34 present fairly, in all
material respects, the financial position of Post Apartment Homes, L.P. at
December 31, 1998 and 1997, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the management of Post Apartment Homes,
L.P.; our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Atlanta, Georgia
February 26, 1999
56
<PAGE> 59
POST APARTMENT HOMES, L.P.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
Real estate assets
Land............................................... $ 250,986 $ 234,011
Building and improvements.......................... 1,384,515 1,255,118
Furniture, fixtures and equipment.................. 105,065 89,251
Construction in progress........................... 480,703 342,071
Land held for future development................... 33,805 15,560
------------ ------------
2,255,074 1,936,011
Less: accumulated depreciation..................... (247,148) (201,095)
------------ ------------
Real estate assets............................... 2,007,926 1,734,916
Cash and cash equivalents............................ 21,154 10,879
Restricted cash...................................... 1,348 1,542
Deferred charges, net................................ 18,686 12,629
Other assets......................................... 17,599 20,597
------------ ------------
Total assets.................................. $ 2,066,713 $ 1,780,563
============ ===========
LIABILITIES AND PARTNERS' EQUITY
Notes payable........................................ $ 800,008 $ 821,209
Accrued interest payable............................. 7,609 7,505
Distribution payable................................. 25,115 21,327
Accounts payable and accrued expenses................ 48,214 53,101
Security deposits and prepaid rents.................. 8,716 8,117
------------ ------------
Total liabilities............................. 889,662 911,259
------------ ------------
Commitments and contingencies
Partners' equity..................................... 1,177,051 869,304
------------ -----------
Total liabilities and partners' equity........ $ 2,066,713 $ 1,780,563
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
57
<PAGE> 60
POST APARTMENT HOMES, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES
Rental ............................................................... $ 275,755 $ 185,732 $ 158,618
Property management - third party .................................... 3,164 2,421 2,828
Landscape services - third party ..................................... 7,252 5,148 4,882
Interest ............................................................. 472 89 326
Other ................................................................ 12,223 6,726 4,921
------------ ------------ ------------
Total revenue ................................................. 298,866 200,116 171,575
------------ ------------ ------------
EXPENSES
Property operating and maintenance (exclusive of items
shown separately below) ............................................. 99,773 67,515 58,202
Depreciation (real estate assets) .................................... 45,214 27,991 22,676
Depreciation (non-real estate assets) ................................ 1,409 1,057 927
Property management - third party .................................... 2,499 1,959 2,055
Landscape services - third party ..................................... 6,259 4,284 3,917
Interest ............................................................. 31,297 24,658 22,131
Amortization of deferred loan costs .................................. 1,209 980 1,352
General and administrative ........................................... 8,404 7,364 7,716
Minority interest in consolidated property partnerships .............. 397 -- --
------------ ------------ ------------
Total expenses ................................................ 196,461 135,808 118,976
------------ ------------ ------------
Income before net gain on sale of assets, loss on
unused treasury locks, loss on relocation of
corporate office and extraordinary item ............................. 102,405 64,308 52,599
Net gain on sale of assets ........................................... -- 3,270 854
Loss on unused treasury locks ........................................ (1,944) -- --
Loss on relocation of corporate office ............................... -- (1,500) --
------------ ------------ ------------
Income before extraordinary item ..................................... 100,461 66,078 53,453
Extraordinary item ................................................... -- (93) --
------------ ------------ ------------
Net income ........................................................... 100,461 65,985 53,453
Distributions to preferred Unitholders ............................... (11,473) (4,907) (1,063)
------------ ------------ ------------
Net income available to common Unitholders ........................... $ 88,988 $ 61,078 $ 52,390
============ ============ ============
EARNINGS PER COMMON UNIT - BASIC
Income before extraordinary item (net of preferred distributions) .... $ 2.21 $ 2.11 $ 1.95
Extraordinary item ................................................... -- -- --
------------ ------------ ------------
Net income available to common Unitholders ........................... $ 2.21 $ 2.11 $ 1.95
============ ============ ============
Weighted average common Units outstanding ............................ 40,244,351 28,880,928 26,917,723
============ ============ ============
Distributions declared ............................................... $ 2.60 $ 2.38 $ 2.16
============ ============ ============
EARNINGS PER COMMON UNIT - DILUTED
Income before extraordinary item (net of preferred distributions) .... $ 2.18 $ 2.09 $ 1.94
Extraordinary item ................................................... -- -- --
------------ ------------ ------------
Net income available to common Unitholders ........................... $ 2.18 $ 2.09 $ 1.94
============ ============ ============
Weighted average common Units outstanding ............................ 40,689,342 29,104,790 27,009,323
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
58
<PAGE> 61
POST APARTMENT HOMES, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNER PARTNER TOTAL
-------- ----------- -----------
<S> <C> <C> <C>
PARTNERS' EQUITY, DECEMBER 31, 1995 ........................ $ 4,648 $ 420,841 $ 425,489
Contributions from PPI related to Preferred Shares ......... 486 48,127 48,613
Acquisition of real estate through issuance of Units ....... 51 5,040 5,091
Contributions from PPI related to Dividend Reinvestment
and Employee Stock Purchase Plans ........................ 90 8,944 9,034
Distributions to preferred Unitholders ..................... (11) (1,052) (1,063)
Distributions to common Unitholders ........................ (435) (43,089) (43,524)
Distributions declared to common Unitholders ............... (147) (14,512) (14,659)
Net income ................................................. 534 52,919 53,453
-------- ----------- -----------
PARTNERS' EQUITY, DECEMBER 31, 1996 ........................ 5,216 477,218 482,434
Contributions from PPI related to Preferred Shares ......... 483 47,808 48,291
Common units issued in connection with Merger .............. 3,384 334,969 338,353
Contributions from PPI related to Dividend Reinvestment
and Employee Stock Purchase Plans ........................ 91 9,039 9,130
Distributions to preferred Unitholders ..................... (49) (4,858) (4,907)
Distributions to common Unitholders ........................ (487) (48,172) (48,659)
Distributions declared to common Unitholders ............... (213) (21,110) (21,323)
Net income ................................................. 660 65,325 65,985
-------- ----------- -----------
PARTNERS' EQUITY, DECEMBER 31, 1997 ........................ 9,085 860,219 869,304
Contributions from PPI related to Preferred Shares ......... -- 48,284 48,284
Contributions from PPI related to Common Shares ............ 2,559 253,348 255,907
Contributions from PPI related to Dividend Reinvestment
and Employee Stock Purchase Plans ........................ 189 18,671 18,860
Distributions to preferred Unitholders ..................... -- (11,473) (11,473)
Distributions to common Unitholders ........................ (792) (78,385) (79,177)
Distributions declared to common Unitholders ............... (251) (24,864) (25,115)
Net income ................................................. 1,005 99,456 100,461
-------- ----------- -----------
PARTNERS' EQUITY, DECEMBER 31, 1998 ........................ $ 11,795 $ 1,165,256 $ 1,177,051
======== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
59
<PAGE> 62
POST APARTMENT HOMES, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ............................................................. $ 100,461 $ 65,985 $ 53,453
Adjustments to reconcile net income to net cash provided
by operating activities:
Net gain on sale of assets ............................................. -- (3,270) (854)
Loss on relocation of corporate office ................................. -- 1,500 --
Loss on unused treasury locks .......................................... 1,944 -- --
Extraordinary item, net of minority interest of unitholders in
Operating Partnership ................................................ -- 93 --
Depreciation ........................................................... 46,623 29,048 23,603
Write-off of deferred financing costs .................................. -- (93) --
Amortization of deferred loan costs .................................... 1,209 980 1,352
Other .................................................................. 168 -- --
Changes in assets, (increase) decrease in:
Restricted cash ...................................................... 194 (394) (2)
Deferred charges ..................................................... (7,115) -- 1,589
Other assets ......................................................... 2,998 11,797 (3,281)
Changes in liabilities, increase (decrease) in:
Accrued interest payable ............................................. 104 2,172 299
Accounts payable and accrued expenses ................................ (5,745) 1,341 2,089
Security deposits and prepaid rents .................................. 599 395 718
--------- --------- ---------
Net cash provided by operating activities .............................. 141,440 109,554 78,966
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Construction and acquisition of real estate assets,
Net of payables ...................................................... (272,295) (190,810) (168,885)
Proceeds from sale of assets ........................................... -- 25,402 12,285
Acquisition of Columbus Realty Trust, net of cash acquired ............. -- (17,734) --
Payment for unused treasury locks ...................................... (1,944) -- --
Capitalized interest ................................................... (15,707) (9,567) (4,443)
Recurring capital expenditures ......................................... (7,479) (3,675) (2,961)
Corporate capital expenditures ......................................... (8,576) (3,220) (820)
Non-recurring capital expenditures ..................................... (1,423) (605) (1,429)
Revenue generating capital expenditures ................................ (13,614) (8,168) (509)
--------- --------- ---------
Net cash used in investing activities .................................. (321,038) (208,377) (166,762)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of financing costs ............................................. -- (4,208) (3,986)
Debt proceeds .......................................................... 103,930 688,564 236,833
Debt payments .......................................................... (275,131) (564,085) (277,233)
Proceeds from the sale of notes ........................................ 150,000 -- --
Offering proceeds, net of underwriters discount and offering costs ..... 255,907 -- 123,438
Proceeds from contributions from PPI related to Preferred Shares ....... 48,284 48,291 48,613
Proceeds from contributions from PPI related to Dividend
Reinvestment Plan .................................................... 18,860 9,130 9,034
Capital distributions to preferred Unitholders ......................... (11,473) (4,907) (1,063)
Capital distributions to common Unitholders ............................ (100,504) (63,316) (56,615)
--------- --------- ---------
Net cash provided by financing activities .............................. 189,873 109,469 79,021
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents ................... 10,275 10,646 (8,775)
Cash and cash equivalents, beginning of period ......................... 10,879 233 9,008
--------- --------- ---------
Cash and cash equivalents, end of period ............................... $ 21,154 $ 10,879 $ 233
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements
60
<PAGE> 63
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
its general partner, Post Properties, Inc. (the "Company" or "PPI"). The
Operating Partnership, through its operating divisions and subsidiaries, is the
entity through which all of the Company's operations are conducted. At December
31, 1998, the Company, through wholly owned subsidiaries, controlled the
Operating Partnership as the sole general partner and as the holder of 87.9% of
the common units in the Operating Partnership ("Units") and 100% of the
Perpetual Preferred Units. The other limited partners of the Operating
Partnership are those persons (including certain officers and directors of the
Company) who, at the time of the Initial Offering, elected to hold all or a
portion of their interest in the form of Units rather than receiving shares of
Common Stock. Each Unit may be redeemed by the holder thereof for either one
share of Common Stock or cash equal to the fair market value thereof at the time
of such redemption, at the option of the Operating Partnership. The Operating
Partnership presently anticipates that it will cause shares of Common Stock to
be issued in connection with each such redemption rather than paying cash (as
has been done in all redemptions to date). With each redemption of outstanding
Units for Common Stock, the Company's percentage ownership interest in the
Operating Partnership will increase. In addition, whenever the Company issues
shares of Common Stock, the Company will contribute any net proceeds therefrom
to the Operating Partnership and the Operating Partnership will issue an
equivalent number of Units to the Company.
The Company elected to be taxed as a real estate investment trust ("REIT") for
Federal income tax purposes beginning with the year ended December 31, 1993. A
REIT is a legal entity which holds real estate interest and, through payments of
dividends to shareholders, in practical effect is not subject to Federal income
taxes at the corporate level.
The Operating Partnership currently owns and manages or is in the process of
developing apartment communities located in the Atlanta, Dallas, Tampa, Orlando,
Northern Virginia, Nashville, Houston, Phoenix, Denver and Charlotte
metropolitan areas. At December 31, 1998, approximately 53.3% and 22.6% (on a
unit basis) of the Company's communities are located in the Atlanta and Dallas
metropolitan areas, respectively.
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the consolidated
accounts of the Operating Partnership and the Company. All significant
intercompany accounts and transactions have been eliminated in consolidation.
See Note 2 related to the acquisition of Columbus Realty Trust in 1997.
Certain items in the consolidated financial statements were reclassified for
comparative purposes.
ACCOUNTING CHANGES
In the first quarter of 1998, the Operating Partnership adopted SFAS No. 130,
"Reporting Comprehensive Income." This statement establishes standards for
reporting and disclosing comprehensive income and its components. Besides net
income, SFAS No. 130 requires the reporting of other comprehensive income,
defined as revenues, expenses, gains and losses that under generally accepted
accounting principles are not included in net income. As of December 31, 1998,
the Operating Partnership had no items of other comprehensive income and, as a
result, no additional disclosure is included.
In the fourth quarter of 1998, the Operating Partnership adopted SFAS No. 131,
"Disclosure About Segments of an Enterprise and Related Information." This
statement establishes standards for the way that public business enterprises
report information about operating segments in annual financial statements and
requires that those
61
<PAGE> 64
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
- -------------------------------------------------------------------------------
enterprises report selected information about operating segments in its interim
financial reports issued to shareholders. It also establishes standards for
related disclosures about products and services, geographic areas and major
customers. Operating segments are defined as components of an enterprise about
which separate financial information is available that is evaluated by the chief
decision maker in deciding how to allocate resources and in assessing
performance. SFAS No. 131 also allows the aggregation of segments which meet
certain criteria. See Note 14 for the Operating Partnership's disclosure of
segment information in compliance with SFAS No. 131.
NEW ACCOUNTING PRONOUNCEMENTS
In the first quarter of 2000, the Operating Partnership is required to adopt
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities."
This statement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. It requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. Due to the Operating
Partnership's limited hedging activities, management does not believe the
adoption of SFAS 133 will have a material effect on the Operating Partnership's
statement of financial position, nor will it significantly affect its financial
statement disclosures.
REAL ESTATE ASSETS AND DEPRECIATION
Real estate assets are stated at the lower of depreciated cost or fair value, if
deemed impaired. Ordinary repairs and maintenance are expensed as incurred;
major replacements and betterments are capitalized and depreciated over their
estimated useful lives. Depreciation is computed on a straight-line basis over
the useful lives of the properties (buildings and components and related land
improvements -- 20-40 years; furniture, fixtures and equipment -- 5 - 10 years).
REVENUE RECOGNITION
Rental -- Residential properties are leased under operating leases with terms of
generally one year or less. Rental income is recognized when earned, which is
not materially different from revenue recognition on a straight line basis.
Property management and landscaping services -- Income is recognized when earned
for property management and landscaping services provided to third parties.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, all investments purchased with an
original maturity of three months or less are considered to be cash equivalents.
RESTRICTED CASH
Restricted cash generally is comprised of resident security deposits for
communities located in Florida and Tennessee and required maintenance reserves
for communities located in DeKalb County, Georgia.
DEFERRED FINANCING COSTS
Deferred financing costs are amortized using the interest method over the terms
of the related debt.
INTEREST AND REAL ESTATE TAXES
Interest and real estate taxes incurred during the construction period are
capitalized and depreciated over the lives of the constructed assets. Interest
paid (including capitalized amounts of $15,707, $9,567 and $4,443 during 1998,
62
<PAGE> 65
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
- -------------------------------------------------------------------------------
1997 and 1996, respectively, and interest rate protection receipts of $0, $296
and $830 during 1998, 1997 and 1996, respectively) aggregated $46,889, $39,815
and $31,563 for the years ended December 31, 1998, 1997 and 1996, respectively.
DERIVATIVES
The Operating Partnership may enter into various treasury lock arrangements from
time to time in anticipation of a specific debt transaction. These arrangements
are used to manage the Operating Partnership's exposure to fluctuations in
interest rates. The Operating Partnership does not utilize these arrangements
for trading or speculative purposes. These arrangements, considered qualifying
hedges, are not recorded in the financial statements until the debt transaction
is consummated and the arrangement is settled. The proceeds or payments
resulting from the settlement of the arrangement are deferred and amortized over
the life of the debt as an adjustment to interest expense.
Premiums paid to purchase interest rate protection agreements are capitalized
and amortized over the terms of those agreements using the interest method.
Unamortized premiums are included in deferred charges in the consolidated
balance sheet. Amounts receivable under the interest rate protection agreements
are accrued as a reduction of interest expense.
PER UNIT DATA
Basic earnings per common Unit with respect to the Operating Partnership for the
years ended December 31, 1998, 1997 and 1996 is computed based upon the weighted
average number of units outstanding during the period. Diluted earnings per
common Unit is based upon the weighted average number of Units outstanding
during the period and includes the effect of the potential issuance of
additional Units if stock options were exercised or converted into common stock
of the Company.
USE OF ESTIMATES IN FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
2. ACQUISITION OF COLUMBUS REALTY TRUST
On October 24, 1997, Columbus Realty Trust ("Columbus") a Texas real estate
investment trust, was merged into a wholly owned subsidiary of the Company (the
"Merger") and then transferred into the Operating Partnership. At the time of
the Merger, Columbus was operating 26 completed communities containing 6,296
apartment units and had an additional 5 communities under development that would
contain 1,243 apartment units upon completion located in Dallas and Houston,
Texas. Pursuant to the merger agreement, each outstanding share of Columbus
common stock was converted into 0.615 shares of common stock of the Company,
which resulted in the issuance of approximately 8.4 million shares of common
stock of the Company. The total purchase price including liabilities assumed was
$643,268. The Merger was accounted for as a purchase. Under the purchase method
of accounting, the assets acquired and liabilities assumed of Columbus were
recorded at their estimated fair market values and its results of operations
have been included in the accompanying consolidated statements of operations
from the date of the Merger, October 24, 1997.
63
<PAGE> 66
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
- -------------------------------------------------------------------------------
Unaudited, supplemental pro forma information, assuming the Merger had occurred
on January 1, 1996, is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1997 1996
----------------- -------------
<S> <C> <C>
Total revenue......................................... $ 247,295 $ 219,238
Net income available to common
unitholders before extraordinary items.............. $ 69,978 $ 63,241
Net income available to common
unitholders......................................... $ 69,885 $ 63,241
Earnings per unit available to common
unitholders - basic................................. $ 1.99 $ 1.79
Earnings per unit available to common
unitholders - diluted............................... $ 1.96 $ 1.77
</TABLE>
3. DEFERRED CHARGES
Deferred charges consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------
1998 1997
---------------- -------------
<S> <C> <C>
Deferred financing costs.............................. $ 26,568 $ 20,131
Other................................................. 4,551 2,822
---------- ----------
31,119 22,953
Less: accumulated amortization........................ (12,433) (10,324)
---------- ----------
$ 18,686 $ 12,629
========== ==========
</TABLE>
4. NOTES PAYABLE
The Operating Partnership's indebtedness consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1998 1997
------------------ ---------------
<S> <C> <C>
Conventional fixed rate (secured)..................... $ 3,825 $ 16,956
Conventional floating rate (secured).................. 42,303 21,725
Tax-exempt fixed rate bond indebtedness (secured)..... -- 13,298
Tax-exempt floating rate bond indebtedness (secured).. 235,880 141,230
Lines of credit & other (unsecured)................... 62,000 322,000
Senior notes (unsecured).............................. 456,000 306,000
---------- --------------
Total................................................. $ 800,008 $ 821,209
========== ===========
</TABLE>
CONVENTIONAL FIXED AND FLOATING RATE MORTGAGES PAYABLE (SECURED)
Conventional mortgages payable were comprised of four and seven loans at
December 31, 1998 and 1997, respectively, each of which is collateralized by an
apartment community included in real estate assets. The mortgages payable are
generally due in monthly installments of interest only and mature at various
dates through 2014. The interest rates on the fixed rate mortgages payable
ranged from 7.375% to 9.20% at December 31, 1998. At December 31, 1998, the
interest rates on the variable rate mortgages payable were at a range from .75%
to 1.90% above the London Interbank Offered Rate ("LIBOR"). At December 31,
1998, LIBOR ranged from 5.06% to 5.10% for one, three, six, and twelve month
indices.
64
<PAGE> 67
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
- -------------------------------------------------------------------------------
TAX-EXEMPT FLOATING RATE BOND INDEBTEDNESS (SECURED)
Tax exempt floating rate bond indebtedness is comprised of AAA Fannie Mae credit
enhanced debt maturing in 2025.
Certain of the apartment communities are encumbered to secure tax-exempt housing
bonds. Such bonds are generally payable in monthly or semi-annual installments
of interest only and mature at various dates through 2025. Floating rate
indebtedness reissued in 1995 through 1998, bears interest at the "AAA" non-AMT
tax exempt rate, set weekly, which was 4.00% at December 31, 1998 (average of
3.57% for 1998). With respect to such bonds, the Operating Partnership pays
certain credit enhancement fees of .575% of the amount of such bonds or the
amount of such letters of credit, as the case may be.
On January 1, 1997, the Post F&M Villages, Post Vista and Post Lake (Orlando)
bonds were refunded in the amount of $76,000 (all of which had previously been
defeased). On June 1, 1998 the Operating Partnership refunded its last single
property tax-exempt bond issuance on Post Court(R) in Atlanta.
LINES OF CREDIT AND OTHER (UNSECURED)
On June 30, 1998, the Operating Partnership 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 will be agreed to between the Operating Partnership and
the bank prior to each such draw. This facility expires on June 29, 1999.
In February 1999, the Operating Partnership's syndicated line of credit (the
"Revolver") was amended, increasing its capacity to $275,000. The Revolver
matures on April 30, 2001 and borrowings currently bear interest at LIBOR plus
.675% or prime minus .25%. The Revolver provides for the rate to be adjusted up
or down based on changes in the credit ratings on the Operating Partnership's
senior unsecured debt. The Revolver also includes a money market competitive bid
option for short term funds up to $137,500 at rates below the stated line rate.
The credit agreement for the Revolver contains customary representations,
covenants and events of default, including covenants which restrict the ability
of the Operating Partnership to make distributions, in excess of stated amounts,
which in turn restricts the discretion of the Company to declare and pay
dividends. In general, during any fiscal year the Operating Partnership may only
distribute up to 100% of the Operating Partnership's consolidated income
available for distribution (as defined in the credit agreement) exclusive of
distributions of up to $30,000 of capital gains for such year. The credit
agreement contains exceptions to these limitations to allow the Operating
Partnership to make distributions necessary to allow the Company to maintain its
status as a REIT. The Operating Partnership does not anticipate that this
covenant will adversely affect the ability of the Operating Partnership to make
distributions, or the Company to declare dividends, under the Company's current
dividend policy.
On July 26, 1996, the Operating Partnership closed a $20,000 unsecured line of
credit with Wachovia Bank of Georgia, N.A. (The "Cash Management Line"), which
was fully funded and used to pay down the outstanding balance on the Revolver.
The Cash Management Line bears interest at LIBOR plus .675% or prime minus .25%
and matures on March 31, 1999. Management believes the Cash Management Line will
be renewed at maturity with similar terms. The Revolver requires three days
advance notice to repay borrowings whereas the Cash Management Line provides the
Operating Partnership with an automatic daily sweep which applies all available
cash to reduce the outstanding balance.
At December 31, 1998, the outstanding balances on the Revolver and Cash
Management Line were $40,000 and $20,000, respectively. There were no
outstanding balances on any of the other facilities at December 31, 1998.
In addition, the Operating Partnership has a $3,000 facility to provide letters
of credit for general business purposes.
On March 1, 1998, the Operating Partnership entered into a Disposition and
Development Agreement with the City of Phoenix, Arizona. Pursuant to this
agreement, the City of Phoenix loaned the Operating Partnership $2,000.
65
<PAGE> 68
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
- -------------------------------------------------------------------------------
This loan is interest-free for the first three years, with a 5.00% interest rate
thereafter. Repayment of the loan commences on March 1, 2001 with equal
semi-annual payments due on March 1 and September 1 of each year through March
1, 2021. All repayment terms are subject to the conditions set forth in the
Agreement.
SENIOR NOTES (UNSECURED)
On June 7, 1995, the Operating Partnership issued $50,000 of unsecured senior
notes with the Northwestern Mutual Life Insurance Company. The notes were in two
tranches: the first, totaling $30,000, carries an interest rate of 8.21% per
annum (1.25% over the corresponding treasury rate on the date such rate was set)
and matures on June 7, 2000; and the second, totaling $20,000 carries an
interest rate of 8.37% per annum (1.35% over the corresponding treasury rate on
the date such rate was set) and matures on June 7, 2002. Proceeds from the notes
were used to reduce other secured indebtedness and to pay down the Revolver. The
note agreements pursuant to which the notes were purchased contain customary
representations, covenants and events of default similar to those contained in
the note agreement for the Revolver.
On September 30, 1996, the Operating Partnership completed a $125,000 senior
unsecured debt offering comprised of two tranches. The first tranche, $100,000
of 7.25% Notes due on October 1, 2003 (the "2003 Notes"), was priced at 99.642%
to yield 7.316% per annum (.71% over the corresponding treasury rate on the date
such rate was set). The second tranche, $25,000 of 7.50% Notes due on October 1,
2006 (the "2006 Notes", and together with the 2003 Notes, the "Notes"), was
priced at 99.694% to yield 7.544% per annum (.83% over the corresponding
treasury rate on the date such rate was set). Proceeds from the Notes were used
to pay down existing indebtedness outstanding on the Revolver.
On January 29, 1997, the Operating Partnership established a program for the
sale of up to $175,000 aggregate principal amount of Medium-Term Notes due nine
months or more from the date of issue (the "MTNs"). On October 20, 1997, the
Operating Partnership increased the amount available under this program to $344
million. Proceeds from the MTNs were used to (i) prepay certain outstanding
notes and (ii) pay down existing indebtedness outstanding under the Operating
Partnership's Revolver.
The following table sets forth MTNs issued and outstanding as of December 31,
1998:
<TABLE>
<CAPTION>
ISSUE INTEREST MATURITY
DATE AMOUNT RATE DATE
--------------------- -------------- ------------------- ----------
<S> <C> <C> <C>
March 3, 1997 $ 30,000 LIBOR plus .25% 03/03/2000
March 31, 1997 37,000 7.02% 04/02/2001
March 31, 1997 13,000 7.30% 04/01/2004
September 22, 1997 10,000 6.69% 09/22/2004
September 22, 1997 25,000 6.78% 09/22/2005
September 26, 1997 16,000 6.22% 12/31/1999
March 12, 1998 100,000 6.85% 03/16/2015
April 8, 1998 50,000 LIBOR plus .40% 04/07/2009
-----------
$ 281,000
===========
</TABLE>
On March 12, 1998, the Operating Partnership issued $100,000 of 6.85% MandatOry
Par Put Remarketed Securities(SM) ("MOPPRS(SM)") under the MTN Program. The net
proceeds in the amount of $99,087 from the sale of the MOPPRS(SM) were used to
repay outstanding indebtedness. In connection with the MOPPRS(SM) transaction,
Merrill Lynch & Co. purchased an option to remarket the securities as of March
16, 2005 (the "Remarketing Date") reducing the effective borrowing rate through
the Remarketing Date to 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
was increased to approximately 6.85%, the coupon rate on the MOPPRS(SM).
66
<PAGE> 69
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
- -------------------------------------------------------------------------------
On April 8, 1998, the Operating Partnership sold $50,000 of Remarketed Reset
Notes due April 7, 2009 under the MTN program. 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
Operating Partnership 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
Operating Partnership pays a fixed rate of 6.02% and receives LIBOR. This swap
was settled in February 1999 at a loss of $1,495. Under hedge accounting, this
loss will be amortized over the remaining term of the Remarketed Reset Notes.
Net proceeds in the amount of $49,825 were used to repay outstanding
indebtedness.
The aggregate maturities of the Operating Partnership's indebtedness are as
follows:
<TABLE>
<S> <C>
1999.................................... $ 78,381
2000.................................... 60,089
2001.................................... 79,899
2002.................................... 20,141
2003.................................... 100,144
Thereafter.............................. 461,354
---------
$ 800,008
=========
</TABLE>
PLEDGED ASSETS
The aggregate net book value at December 31, 1998 of property pledged as
collateral for indebtedness amounted to approximately $ 310,775.
UNUSED TREASURY LOCKS
The loss on unused treasury locks in 1998 resulted from the termination of
treasury locks intended for debt securities that were not issued by the
Operating Partnership.
EXTRAORDINARY ITEM
The extraordinary item for the year ended December 31, 1997 resulted from the
write-off of deferred financing costs on the mortgage debt satisfied.
5. INCOME TAXES
Income or losses of the Operating Partnership are allocated to the partners of
the Operating Partnership for inclusion in their respective income tax returns.
Accordingly, no provision or benefit for income taxes has been made in the
accompanying financial statements. The Company has elected to be taxed as a REIT
under the Internal Revenue Code of 1986, as amended (the "Code") commencing with
the taxable year ended December 31, 1993. In order for the Company to qualify as
a REIT, it must distribute annually at least 95% of its REIT taxable income, as
defined in the Code, to its shareholders and satisfy certain other requirements.
As a result, the Operating Partnership generally will not be subject to Federal
income taxation at the corporate level on the income the Company distributes to
the shareholders. Although the Company has elected to be taxed as a REIT, Post
Services, Inc. ("Post Services") was formed as a subsidiary of the Operating
Partnership to provide through its subsidiaries asset management, leasing and
landscaping services to third parties. The consolidated taxable income of Post
Services, if any, will be subject to tax at regular corporate rates.
As of December 31, 1998, the net basis for Federal income tax purposes, taking
into account the special allocation of gain to the partners contributing
property to the Operating Partnership, was lower than the net assets as reported
in the Operating Partnership's consolidated financial statements by $42,734.
67
<PAGE> 70
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
- -------------------------------------------------------------------------------
6. RELATED PARTY TRANSACTIONS
The Operating Partnership provides landscaping services for executive officers,
employees, directors and other related parties. For the years ended December 31,
1998, 1997 and 1996, the Operating Partnership received landscaping fees of
$961, $670 and $1,391 for such services. These amounts include reimbursements of
direct expenses in the amount of $295, $138 and $729 which are not included in
landscape services revenue; accordingly, these transactions resulted in the
Operating Partnership recording landscape services net fees in excess of direct
expenses of $666, $532 and $662 in the Operating Partnership financial
statements for the years ended December 31, 1998, 1997 and 1996, respectively.
The Operating Partnership provides accounting and administrative services to
entities controlled by certain executive officers of the Operating Partnership.
Fees under this arrangement aggregated $25, $25 and $25 for the years ended
December 31, 1998, 1997 and 1996, respectively.
The Operating Partnership was contracted to assist in the development of
apartment complexes constructed by a former executive and current shareholder.
Fees under this arrangement were $349, $326 and $363 for the years ended
December 31, 1998, 1997 and 1996, respectively.
7. EMPLOYEE BENEFIT PLANS
Through a plan adopted by the Company, the employees of the Operating
Partnership are participants in a defined contribution plan pursuant to Section
401 of the Internal Revenue Code. Beginning in 1996, Operating Partnership
contributions, if any, to this plan are based on the performance of the Company
and are allocated to each participant based on the relative contribution of the
participant to the total contributions of all participants. For purposes of
allocating the Operating Partnership contribution, the maximum employee
contribution included in the calculation is 3% of salary. Operating Partnership
contributions of $179, $158 and $251 were made in 1998, 1997 and 1996,
respectively.
During 1995, the Company adopted the Employee Stock Purchase Plan ("ESPP") to
encourage stock ownership by eligible directors and employees. To participate in
the ESPP, (i) directors must not be employed by the Company or the Operating
Partnership and must have been a member of the Board of Directors for at least
one month and (ii) an employee must have been employed full-time by the Company
or the Operating Partnership for at least one month. The purchase price of
shares of Common Stock under the ESPP is equal to 85% of the lesser of the
closing price per share of Common Stock on the first or last day of the trading
period, as defined.
8. 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.
9. STOCK-BASED COMPENSATION PLANS
STOCK COMPENSATION PLANS
At December 31, 1998, the Company had two stock-based compensation plans, the
Employee Stock Plan (the "Stock Plan"), the Employee Stock Purchase Plan (the
"ESPP") and, under the Stock Plan, a stock grant program (the "Grant Plan") as
described below. The Operating Partnership applies APB Opinion 25 and related
Interpretations in accounting for its plans. Accordingly, based upon the
criteria of APB Opinion 25 no compensation cost is required to be recognized for
the Stock Plan and the ESPP. The compensation cost which is required to be
charged against income for the Grant Plan was $182, $209 and $129 for 1998, 1997
and 1996, respectively. Had compensation cost for the Company's Stock Plan and
ESPP been determined based on the fair value at the grant dates for awards under
the Plans consistent with the method of FASB Statement 123, the
68
<PAGE> 71
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
- -------------------------------------------------------------------------------
Operating Partnership's net income and earnings per Unit would have been reduced
to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- ---------
<S> <C> <C> <C>
Net income available to common
Unitholders.........................As reported..... $ 88,988 $ 61,078 $ 52,390
Pro forma...... $ 88,100 $ 60,692 $ 50,472
Net income per common Unit -
Basic...............................As reported..... $ 2.21 $ 2.11 $ 1.95
Pro forma...... $ 2.19 $ 2.10 $ 1.86
Net income per common Unit -
Diluted.............................As reported..... $ 2.18 $ 2.09 $ 1.94
Pro forma...... $ 2.16 $ 2.08 $ 1.85
</TABLE>
For purposes of the pro forma presentation, the fair value of each option grant
is estimated as of the date of grant using the Black-Scholes option-pricing
model. The weighted-average of all assumptions used in the calculation for
various grants under all of the Company's plans during 1998, 1997 and 1996, are
as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------------- -------------- ---------
<S> <C> <C> <C>
Dividend yield.............................. 7.0% 6.5% 5.4%
Expected volatility......................... 15.3% 14.5% 14.5%
Risk-free interest rate..................... 4.7% to 5.8% 5.5% to 5.6% 5.4% to 5.7%
Expected option life........................ 5 to 7 years 5 to 7 years 5 to 7 years
</TABLE>
FIXED STOCK OPTION PLANS
Under the Stock Plan, the Company may grant to its employees and directors
options to purchase up to 6,000,000 shares of common stock. Of this amount,
550,000 shares are available for grants of restricted stock. Options granted to
any key employee or officer cannot exceed 100,000 shares a year (500,000 shares
if such key employee or officer is a member of the Company's Executive
Committee). The exercise price of each option may not be less than the market
price on the date of grant and all options have a maximum term of ten years from
the grant date.
69
<PAGE> 72
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
- -------------------------------------------------------------------------------
A summary of the status of the Company's Stock Plan as of December 31, 1998,
1997 and 1996, changes during the years then ended, and the weighted-average
fair value of options granted during the years is presented below:
<TABLE>
<CAPTION>
1998 1997 1996
-------------------------- --------------------------- ---------------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
---------- ----------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year......... 2,237,551 $ 31 864,105 $ 31 601,366 $ 31
Granted.................................. 1,440,784 39 243,946 39 310,067 32
Converted in connection with the
Merger................................... -- -- 1,192,230 30 -- --
Exercised................................ (67,326) 31 (49,406) 31 (18,993) 31
Forfeited................................ (580,157) 39 (13,324) 38 (28,335) 31
---------- ----------- -----------
Outstanding at end of year............... 3,030,852 34 2,237,551 31 864,105 31
========== =========== ===========
Options exercisable at year-end.......... 2,065,438 2,000,279 797,830
========== =========== ===========
Weighted-average fair value of options
granted during the year................ $ 2.54 $ 2.85 $ 3.47
========== ========== ===========
</TABLE>
At December 31, 1998, the range of exercise prices for options outstanding was
$27.625 - $40.63 and the weighted average remaining contractual life was 7
years.
10. COMMITMENTS AND CONTINGENCIES
LAND, OFFICE AND EQUIPMENT LEASES
The Operating Partnership is party to two ground leases relating to an operating
community with terms expiring in years 2040 and 2043, one ground lease for a
community under development with terms expiring in year 2038 and to office,
equipment and other operating leases with terms expiring in years 1999 through
2003. Future minimum lease payments for non-cancelable land, office, equipment
and other leases at December 31, 1998 are as follows:
<TABLE>
<S> <C>
1999......................... $1,575
2000......................... 1,527
2001......................... 1,198
2002......................... 282
2003......................... 201
2004 and thereafter.......... 6,416
</TABLE>
The Operating Partnership incurred $4,915, $3,366 and $2,172 of rent expense for
the years ended December 31, 1998, 1997 and 1996, respectively.
CONTINGENCIES
The Operating Partnership is party to various legal actions which are incidental
to its business. Management believes that these actions will not have a material
adverse affect on the consolidated balance sheets and statements of operations.
70
<PAGE> 73
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
- -------------------------------------------------------------------------------
11. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosures of estimated fair value were determined by management
using available market information and appropriate valuation methodologies.
Considerable judgment is necessary to interpret market data and develop
estimated fair value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts the Operating Partnership could realize on
disposition of the financial instruments. The use of different market
assumptions and/or estimation methodologies may have a material effect on the
estimated fair value amounts.
Cash equivalents, rents and landscape service receivables, accounts payable,
accrued expenses, notes payable and other liabilities are carried at amounts
which reasonably approximate their fair values.
The fair values of interest rate protection agreements and an interest rate swap
(used for hedging purposes) are estimated by obtaining quotes from an investment
broker. At December 31, 1998, there were no carrying amounts related to these
arrangements in the consolidated balance sheet. As of December 31, 1998, the
expected cost to settle these contracts was approximately $1,391.
Disclosure about fair value of financial instruments are based on pertinent
information available to management as of December 31, 1998. Although management
is not aware of any factors that would significantly affect the reasonable fair
value amounts, such amounts have not been comprehensively revalued for purposes
of these financial statements since that date and current estimates of fair
value may differ significantly from the amounts presented herein.
71
<PAGE> 74
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
- -------------------------------------------------------------------------------
12. EARNINGS PER UNIT
For the years ended December 31, 1998, 1997 and 1996, basic and diluted earnings
per common Unit for income before extraordinary item, net of preferred
distributions, and net income available to common Unitholders before
extraordinary item has been computed as follows:
<TABLE>
<CAPTION>
YEAR ENDED 1998
------------------------------------------------
INCOME UNITS PER-UNIT
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- -----------
<S> <C> <C> <C>
Income before extraordinary item.................................... $ 100,461
Less: Preferred stock distributions................................. (11,473)
-----------
BASIC EPS
Income available to common Unitholders before extraordinary item.... 88,988 40,244,351 $ 2.21
===========
EFFECT OF DILUTIVE SECURITIES
Options............................................................. -- 444,991
----------- -----------
DILUTED EPS
Income available to common Unitholders + assumed
conversions before extraordinary item............................. $ 88,988 40,689,342 $ 2.18
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED 1997
------------------------------------------------
INCOME UNITS PER-UNIT
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- -----------
<S> <C> <C> <C>
Income before extraordinary item.................................... $ 66,078
Less: Preferred stock distributions................................. (4,907)
-----------
BASIC EPS
Income available to common Unitholders before extraordinary item.... 61,171 28,880,928 $ 2.11
===========
EFFECT OF DILUTIVE SECURITIES
Options............................................................. -- 223,862
----------- -----------
DILUTED EPS
Income available to common Unitholders + assumed
conversions before extraordinary item............................. $ 61,171 29,104,790 $ 2.09
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED 1996
------------------------------------------------
INCOME UNITS PER-UNIT
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- -----------
<S> <C> <C> <C>
Income before extraordinary item.................................... $ 53,453
Less: Preferred stock distributions................................. (1,063)
-----------
BASIC EPS
Income available to common Unitholders before extraordinary item.... 52,390 26,917,723 $ 1.95
============
EFFECT OF DILUTIVE SECURITIES
Options............................................................. -- 91,600
----------- -----------
DILUTED EPS
Income available to common Unitholders + assumed
Conversions before extraordinary item............................. $ 52,390 27,009,323 $ 1.94
=========== =========== ============
</TABLE>
72
<PAGE> 75
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
- -------------------------------------------------------------------------------
13. SUPPLEMENTAL CASH FLOW INFORMATION
Non-cash investing and financing activities for the years ended December 31,
1998, 1997 and 1996 are as follows:
(a) During 1996 the Company exercised its option to purchase land in exchange
for 138,150 Units of the Operating Partnership.
(b) The Operating Partnership committed to distribute $25,115, $21,327 and
$14,659 for the quarters ended December 31, 1998, 1997 and 1996,
respectively.
(c) The Merger, which was completed in 1997, was a stock for stock transaction.
In connection with the Merger, the cash and non-cash components were are
follows:
<TABLE>
<S> <C>
Fair value of assets acquired....................... $ 643,268
Less:
Value of stock issued in exchange for
stock of Columbus................................ 338,353
Liabilities assumed.............................. 285,852
Cash acquired.................................... 1,329
---------
Cash component of purchase price, net of
Cash acquired.................................... $ 17,734
=========
</TABLE>
14. SEGMENT INFORMATION
SEGMENT DESCRIPTION
The Operating Partnership adopted SFAS No. 131, "Disclosure About the Segments
of an Enterprise and Related Information" in the fourth quarter of 1998. SFAS
No. 131 requires companies to present segment information based on the way that
management organizes the segments within the enterprise for making operating
decisions and assessing performance. The segment information is prepared on
substantially the same basis as the internally reported information used by the
Operating Partnership's chief operating decision makers to manage the business.
The Operating Partnership's chief operating decision makers focus on the
Operating Partnership's primary sources of income which are property rental
operations and third party services. Third party services are designated as one
segment. Property rental operations are broken down into four segments based on
the various stages in the property ownership lifecycle. The Operating
Partnership's five segments are further described as follows:
Property Rental Operations
- Fully stabilized communities - those apartment communities which have
been stabilized (the point in time which a property reached 95%
occupancy) for both the current and prior year.
- Communities stabilized during 1997 - communities which reached
stabilized occupancy in the prior year.
- Development and Lease up Communities - those communities which are in
lease-up but were not stabilized by the beginning of the current year
including communities which stabilized during the current year.
- Sold communities - communities which were sold in the current or prior
year.
Third Party Services - fee income and related expenses from the Operating
Partnership's apartment community management, landscaping and corporate
apartment rental services.
73
<PAGE> 76
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
- -------------------------------------------------------------------------------
SEGMENT PERFORMANCE MEASURE
Management uses contribution to funds from operations ("FFO") as the performance
measure for its segments. FFO is defined by the National Association of Real
Estate Investment Trusts as net income available to common unitholders
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 Operating Partnership's financial
performance or to cash flow from operating activities (determined in accordance
with GAAP) as a measure of the Operating Partnership's liquidity, nor is it
necessarily indicative of sufficient cash flow to fund all of the Operating
Partnership's needs.
SEGMENT INFORMATION
The following table reflects each segments contribution to FFO together with a
reconciliation of segment contribution to FFO, total FFO and income before
extraordinary item. Additionally, substantially all of the Operating
Partnership's assets relate to the Operating Partnership's property rental
operations. Asset cost, depreciation and amortization by segment are not
presented because such information at the segment level is not reported
internally.
Summarized financial information concerning the Company's reportable segments is
shown in the following tables.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
REVENUES
Fully stabilized communities .................................. $ 210,293 $ 167,113 $ 148,668
Communities stabilized during 1997 ............................ 25,053 8,571 69
Development and lease-up communities .......................... 39,466 10,634 5,969
Sold communities .............................................. -- 1,494 5,309
Third party services .......................................... 10,416 7,569 7,710
Other ......................................................... 13,638 4,735 3,850
--------- --------- ---------
Consolidated revenues ......................................... $ 298,866 $ 200,116 $ 171,575
========= ========= =========
CONTRIBUTION TO FUNDS FROM OPERATIONS
Fully stabilized communities .................................. $ 143,890 $ 114,606 $ 100,499
Communities stabilized during 1997 ............................ 17,341 5,752 (211)
Development and lease-up communities .......................... 22,963 6,271 3,793
Sold communities .............................................. -- 837 3,276
Third party services .......................................... 1,658 1,326 1,738
--------- --------- ---------
Contribution to FFO ........................................... 185,852 128,792 109,095
--------- --------- ---------
Other operating income, net of expense ........................ 4,483 (2,434) (1,694)
Depreciation on non-real estate assets ........................ (1,409) (1,057) (927)
Minority interest in consolidated property
Partnership ................................................ (397) -- --
Interest expense .............................................. (31,297) (24,658) (22,131)
Amortization of deferred loan costs ........................... (1,209) (980) (1,352)
General and administrative .................................... (8,404) (7,364) (7,716)
Distributions to preferred unitholders ........................ (11,473) (4,907) (1,063)
--------- --------- ---------
Total FFO...................................................... 136,146 87,392 74,212
--------- --------- ---------
Depreciation on real estate assets ............................ (45,214) (27,991) (22,676)
Net gain on sale of assets .................................... -- 3,270 854
Loss on unused treasury locks ................................. (1,944) -- --
Loss on relocation of office space ............................ -- (1,500) --
Distributions to preferred unitholders ........................ 11,473 4,907 1,063
--------- --------- ---------
Income before extraordinary item and preferred distributions .. $ 100,461 $ 66,078 $ 53,453
========= ========= =========
</TABLE>
74
<PAGE> 77
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
- -------------------------------------------------------------------------------
15. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Quarterly financial information for the years ended 1998 and 1997 are as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998*
---------------------------------------------------
FIRST SECOND THIRD FOURTH
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Revenues ................................................... $ 68,962 $ 73,477 $ 76,969 $ 79,458
Net income before loss on unused treasury locks ............ 22,310 25,437 26,825 27,833
Loss on unused treasury locks .............................. (1,944) -- -- --
Net income ................................................. 20,366 25,437 26,825 27,833
Distributions to preferred Unitholders ..................... (2,566) (2,969) (2,969) (2,969)
Net income available to common Unitholders ................. 17,800 22,468 23,856 24,864
Earnings per common Unit:
Net income available to common Unitholders - basic ......... 0.48 0.56 0.58 0.59
Net income available to common Unitholders - diluted ....... 0.47 0.55 0.57 0.58
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998*
---------------------------------------------------
FIRST SECOND THIRD FOURTH
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Revenues ................................................... $ 44,560 $ 46,107 $ 47,495 $ 61,953
Net income before net gain on sale of assets, loss
on relocation of corporate office and
extraordinary item ...................................... 14,156 14,448 15,783 19,923
Net gain (loss) on sale of assets .......................... -- 3,512 -- (242)
Loss on relocation of corporate office ..................... -- -- -- (1,500)
Extraordinary item ......................................... (93) -- -- --
Net income ................................................. 14,063 17,960 15,783 18,181
Distributions to preferred Unitholders ..................... (1,063) (1,062) (1,062) (1,720)
Net income available to common Unitholders ................. 13,000 16,898 14,721 16,461
Earnings per common Unit:
Net income available to common Unitholders - basic ......... 0.48 0.62 0.54 0.49
Net income available to common Unitholders - diluted ....... 0.47 0.62 0.53 0.48
</TABLE>
- -----------------
* The total of the four quarterly amounts for earnings per Unit may not equal
the total for the year. These differences result from the use of a weighted
average to compute average number of Units outstanding.
75
<PAGE> 78
SCHEDULE III
POST PROPERTIES, INC.
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
INITIAL COSTS
=======================================
RELATED BUILDING AND
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS
=================== ===================== ============== =====================
<S> <C> <C> <C> <C>
GEORGIA
Post Ashford Apartments $9,895 (2) $1,906 $ -
Bennie Dillon Apartments - 262 449
Post Briarcliff Apartments - 18,785 -
Post Bridge Apartments 12,450 (2) 868 -
Post Brookhaven Apartments - 7,921 -
Post Canyon Apartments 16,845 (2) 931 -
Post Chase Apartments 15,000 (2) 1,438 -
Post Chastain Apartments - 6,352 -
Post Collier Hills Apartments - 6,487 -
Post Corners Apartments 14,760 (2) 1,473 -
Post Court Apartments 18,650 (2) 1,769 -
Post Creek Apartments - 10,406 36,756
Post Crest Apartments - 4,733 -
Post Crossing Apartments - 3,951 -
Post Dunwoody Apartments - 4,917 -
Post Gardens Apartments - 5,859 -
Post Glen Apartments - 5,591 -
Post Lane Apartments - 1,512 -
Post Lenox Park Apartments - 3,132 -
Post Lindbergh Apartments - 6,268 -
Post Mill Apartments 12,880 (2) 915 -
Post Oak Apartments - 2,028 -
Post Oglethorpe Apartments - 3,662 -
Post Park Apartments - 6,253 -
Post Parkwood Apartments - 1,331 -
Post Peachtree Hills Apartments - 4,215 -
Post Pointe Apartments - 2,417 -
Post Renaissance Apartments - - -
Post Ridge Apartments - 11,332 -
Post River Apartments - 1,011 -
Post River - Phase II Apartments - 5,368 -
Post Summit Apartments - 1,575 -
Post Terrace Apartments - 4,131 -
Post Valley Apartments 18,600 (2) 1,117 -
Post Vinings Apartments - 4,322 -
Post Village Apartments
The Arbors Apartments - 384 -
The Fountains and The Meadows Apartments 26,000 (2) 611 -
The Gardens Apartments 14,500 (2) 187 -
The Hills Apartments 7,000 (2) 91 -
Post Walk Apartments 19,300 (2) 2,954 -
Post Woods Apartments - 1,378 -
Riverside by Post Mixed Use - 11,130 -
<CAPTION>
GROSS AMOUNT AT WHICH
COSTS CARRIED AT CLOSE OF PERIOD
CAPITALIZED =====================================================
SUBSEQUENT BUILDING AND ACCUMULATED
TO ACQUISITION LAND IMPROVEMENTS TOTAL (1) DEPRECIATION
=================== ============= =================== =============== ==============
<C> <C> <C> <C> <C> <C>
GEORGIA $7,628 $1,906 $7,628 $9,534 $2,893
Post Ashford 0 262 449 711 -
Bennie Dillon 25,811 7,723 36,873 44,596 -
Post Briarcliff 11,880 869 11,879 12,748 4,489
Post Bridge 30,488 7,921 30,488 38,409 9,253
Post Brookhaven 17,512 931 17,512 18,443 6,688
Post Canyon 14,230 1,438 14,230 15,668 5,518
Post Chase 38,303 6,779 37,876 44,655 11,212
Post Chastain 25,038 7,183 24,342 31,525 1,205
Post Collier Hills 13,828 1,473 13,828 15,301 5,735
Post Corners 16,085 1,769 16,085 17,854 5,799
Post Court 3,176 10,442 39,896 50,338 3,830
Post Creek 24,624 4,763 24,594 29,357 2,046
Post Crest 19,370 3,951 19,370 23,321 2,243
Post Crossing 28,228 4,961 28,184 33,145 4,754
Post Dunwoody 33,491 5,910 33,440 39,350 -
Post Gardens 21,517 5,784 21,324 27,108 687
Post Glen 8,112 2,067 7,557 9,624 2,640
Post Lane 10,672 3,132 10,672 13,804 1,381
Post Lenox Park 26,693 6,688 26,273 32,961 1
Post Lindbergh 12,369 922 12,362 13,284 5,094
Post Mill 8,144 2,027 8,145 10,172 1,948
Post Oak 16,902 3,662 16,902 20,564 2,336
Post Oglethorpe 39,258 8,830 36,681 45,511 11,662
Post Park 7,315 1,331 7,315 8,646 887
Post Parkwood 13,600 4,857 12,958 17,815 2,451
Post Peachtree Hills 15,499 3,027 14,889 17,916 5,419
Post Pointe 19,557 - 19,557 19,557 4,126
Post Renaissance 23,304 5,104 29,532 34,636 1
Post Ridge 9,440 1,011 9,440 10,451 2,619
Post River 5,136 2,252 8,252 10,504 -
Post River - Phase II 6,141 1,575 6,141 7,716 2,012
Post Summit 18,763 4,148 18,746 22,894 1,357
Post Terrace 17,807 1,117 17,807 18,924 6,265
Post Valley 21,358 5,668 20,012 25,680 6,300
Post Vinings
Post Village 17,714 439 17,659 18,098 5,582
The Arbors 33,775 834 33,552 34,386 10,607
The Fountains and The Meadows 24,245 593 23,839 24,432 7,536
The Gardens 13,482 329 13,244 13,573 4,187
The Hills 16,711 2,954 16,711 19,665 6,559
Post Walk 26,420 3,070 24,728 27,798 8,756
Post Woods 85,772 8,647 88,255 96,902 20
Riverside by Post
<CAPTION>
DEPRECIABLE
DATE OF DATE LIVES
CONSTRUCTION ACQUIRED YEARS
=================== ================ ==================
<C> <C> <C> <C>
GEORGIA
Post Ashford 04/86 -06/87 06/87 5 - 40 Years
Bennie Dillon 07/98 (4) 07/98 -
Post Briarcliff 12/96 (4) 09/96 -
Post Bridge 09/84 - 12/86 09/84 5 - 40 Years
Post Brookhaven 07/89 - 12/92 03/89 5 - 40 Years
Post Canyon 04/84 - 04/86 10/81 5 - 40 Years
Post Chase 06/85 - 04/87 06/85 5 - 40 Years
Post Chastain 06/88 - 10/90 06/88 5 - 40 Years
Post Collier Hills 10/95 06/95 5 - 40 Years
Post Corners 08/84 - 04/86 08/84 5 - 40 Years
Post Court 06/86 - 04/88 12/85 5 - 40 Years
Post Creek 09/81 - 08/83 05/96 5 - 40 Years
Post Crest 09/95 10/94 5 - 40 Years
Post Crossing 04/94 - 08/95 11/93 5 - 40 Years
Post Dunwoody 11/88 12/84&8/94 (6) 5 - 40 Years
Post Gardens 07/96 (4) 05/96 -
Post Glen 07/96 05/96 5 - 40 Years
Post Lane 04/87 - 05/88 01/87 5 - 40 Years
Post Lenox Park 03/94 - 05/95 03/94 5 - 40 Years
Post Lindbergh 11/96 (4) 08/96 -
Post Mill 05/83 - 05/85 05/81 5 - 40 Years
Post Oak 09/92 - 12/93 09/92 5 - 40 Years
Post Oglethorpe 03/93 - 10/94 03/93 5 - 40 Years
Post Park 06/87 - 09/90 06/87 5 - 40 Years
Post Parkwood 07/94 - 08/95 06/94 5 - 40 Years
Post Peachtree Hills 02/92 - 09/94 02&11/92 (6) 5 - 40 Years
Post Pointe 04/87 - 12/88 12/86 5 - 40 Years
Post Renaissance 07/91 - 12/94 06/91&01/94 (6) 5 - 40 Years
Post Ridge 10/96 (4) 07/96 -
Post River 09/90 - 01/92 07/90 5 - 40 Years
Post River - Phase II 12/96 (4) 07/90 -
Post Summit 01/90 - 12/90 01/90 5 - 40 Years
Post Terrace 10/94 03/94 5 - 40 Years
Post Valley 03/86 - 04/88 12/85 5 - 40 Years
Post Vinings 05/88 - 09/91 05/88 5 - 40 Years
Post Village
The Arbors 04/82 - 10/83 03/82 5 - 40 Years
The Fountains and The Meadows 08/85 - 05/88 08/85 5 - 40 Years
The Gardens 06/88 - 07/89 05/84 5 - 40 Years
The Hills 05/84 - 04/86 04/83 5 - 40 Years
Post Walk 03/86 - 08/87 06/85 5 - 40 Years
Post Woods 03/76 - 09/83 06/76 5 - 40 Years
Riverside by Post 07/96 (4) 01/96 -
</TABLE>
76
<PAGE> 79
<TABLE>
<CAPTION>
INITIAL COSTS
=======================================
RELATED BUILDING AND
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS
=================== ===================== ============== =====================
<S> <C> <C> <C> <C>
TEXAS
Addison Circle Apartment Homes
by Post - Phase I Mixed Use 22,192 2,885 41,482
Addison Circle Apartment Homes
by Post - Phase II Mixed Use - - 1,128
American Beauty Mill Apartments - 234 2,786
Block 580 Apartments - 3,334 2,536
Block 588 Apartments - - 48
Clyde Lane Apartments - 2,765 895
Cole's Corner Apartments - 1,886 18,006
Columbus Square by Post Apartments - 4,565 24,595
Fort Worth Apartments - - 123
Heights of State-Thomas Apartments - 2,615 15,559
Mattingly Site Apartments - 824 11
Midtown - Phase I Apartments - 2,456 1,134
Midtown - Phase II Apartments - 2,093 278
Parkway Village Apartments - 1,020 4,024
Post Parkwood Apartments 865 306 2,592
Post Ascension Apartments - 1,230 8,976
Post Hackberry Creek Apartments - 7,269 23,579
Post Lakeside Apartments - 3,924 20,334
Post Reflections Apartments - 1,188 10,005
Post Town Lake/Parks Apartments - 2,985 19,464
Post White Rock Apartments - 1,560 9,969
Post Winsted Apartments - 2,826 18,632
Post Windhaven Apartments - 4,029 23,385
The Shores by Post Apartments - 11,572 69,794
Springstead Condos Apartments - 225 948
The Abbey of State-Thomas Apartments - 575 6,276
The Commons at Turtle Creek Apartments - 1,406 7,938
The Meridian at State-Thomas Apartments - 1,535 11,605
The Residences on McKinney Apartments - 1,494 18,022
The Rice Apartments 20,111 - 13,393
The Vineyard of Uptown Apartments - 1,133 8,560
The Vintage of Uptown Apartments - 2,614 12,188
The Worthington of State-Thomas Apartments - 3,744 34,700
Thomas Tract Apartments - - 68
Uptown Village Apartments - 3,955 22,120
Villas at Valley Ranch Apartments - 212 899
Wilson Building Apartments - 2,766 689
Campus Circle Retail - 1,045 3,084
Towne Crossing Retail - 3,703 10,721
Post & Paddock Retail - 2,352 7,383
FLORIDA
Post Bay Apartments - 2,203 -
Post Court Apartments - 2,083 -
Post Fountains Apartments 21,500 (2) 3,856 -
Post Harbour Island Apartments - 3,854 -
Post Hyde Park Apartments - 3,498 -
Post Lake Apartments 28,500 (2) 6,113 -
Post Rocky Point Apartments - 4,634 -
Post Rocky Point - Phase III Apartments - 7,425 -
Post Village Apartments
The Arbors Apartments - 2,063 -
The Lakes Apartments - 2,813 -
The Oaks Apartments - 3,229 -
Post Walk at Hyde Park Apartments - 1,943 -
<CAPTION>
GROSS AMOUNT AT WHICH
COSTS CARRIED AT CLOSE OF PERIOD
CAPITALIZED ============================================================
SUBSEQUENT BUILDING AND
TO ACQUISITION LAND IMPROVEMENTS TOTAL (1)
===================== ============== ====================== ==================
<C> <C> <C> <C> <C>
TEXAS
Addison Circle Apartment Homes
by Post - Phase I 2,727 3,094 44,000 47,094
Addison Circle Apartment Homes
by Post - Phase II 39,766 3,417 37,477 40,894
American Beauty Mill 3,706 191 6,535 6,726
Block 580 17,048 2,943 19,975 22,918
Block 588 3,373 1,278 2,143 3,421
Clyde Lane 37 1,627 2,070 3,697
Cole's Corner 1,305 1,912 19,285 21,197
Columbus Square by Post 341 4,565 24,936 29,501
Fort Worth 10 - 133 133
Heights of State-Thomas 4,056 474 21,756 22,230
Mattingly Site 168 675 328 1,003
Midtown - Phase I 8,303 2,012 9,881 11,893
Midtown - Phase II 373 1,796 948 2,744
Parkway Village 77 1,020 4,101 5,121
Post Parkwood 4,429 864 6,463 7,327
Post Ascension 130 1,230 9,106 10,336
Post Hackberry Creek 231 7,269 23,810 31,079
Post Lakeside 296 3,924 20,630 24,554
Post Reflections 244 1,188 10,249 11,437
Post Town Lake/Parks 294 2,985 19,758 22,743
Post White Rock 331 1,560 10,300 11,860
Post Winsted 119 2,826 18,751 21,577
Post Windhaven 262 4,029 23,647 27,676
The Shores by Post 1,576 11,572 71,370 82,942
Springstead Condos (1,173) 0 0 0
The Abbey of State-Thomas 1,563 575 7,839 8,414
The Commons at Turtle Creek 178 1,406 8,116 9,522
The Meridian at State-Thomas 191 1,535 11,796 13,331
The Residences on McKinney 228 1,494 18,250 19,744
The Rice 18,612 32,005 32,005
The Vineyard of Uptown 50 1,133 8,610 9,743
The Vintage of Uptown 144 2,614 12,332 14,946
The Worthington of State-Thomas 447 3,744 35,147 38,891
Thomas Tract 2,559 2,627 2,627
Uptown Village 224 3,955 22,344 26,299
Villas at Valley Ranch (1,111) 0
Wilson Building 5,254 8,709 8,709
Campus Circle 55 1,045 3,139 4,184
Towne Crossing 149 3,703 10,870 14,573
Post & Paddock 176 2,352 7,559 9,911
FLORIDA
Post Bay 15,113 2,573 14,743 17,316
Post Court 9,791 2,083 9,791 11,874
Post Fountains 23,249 3,856 23,249 27,105
Post Harbour Island 13,863 2,281 15,436 17,717
Post Hyde Park 19,465 4,401 18,562 22,963
Post Lake 30,781 6,724 30,170 36,894
Post Rocky Point 38,299 6,892 36,041 42,933
Post Rocky Point - Phase III 17,775 3,602 21,598 25,200
Post Village
The Arbors 15,315 3,100 14,278 17,378
The Lakes 16,194 3,391 15,617 19,007
The Oaks 14,692 3,197 14,724 17,921
Post Walk at Hyde Park 10,800 1,974 10,769 12,743
<CAPTION>
DEPRECIABLE
ACCUMULATED DATE OF DATE LIVES
DEPRECIATION CONSTRUCTION ACQUIRED YEARS
=================== =================== ================ ==================
<C> <C> <C> <C> <C>
TEXAS
Addison Circle Apartment Homes
by Post - Phase I 758 10/97 10/97 -
Addison Circle Apartment Homes
by Post - Phase II - 10/97 (4) 10/97 -
American Beauty Mill - 10/97 (4) 10/97 -
Block 580 - 10/97 (4) 10/97 -
Block 588 - 10/97 (4) 10/97 -
Clyde Lane - 10/97 (4) 10/97 -
Cole's Corner 497 n/a 10/97 5 - 40 Years
Columbus Square by Post 771 n/a 10/97 5 - 40 Years
Fort Worth 356 10/97 (4) 10/97 -
Heights of State-Thomas - 10/97 10/97 5 - 40 Years
Mattingly Site - 10/97 (4) 10/97 -
Midtown - Phase I - 10/97 (4) 10/97 -
Midtown - Phase II - 10/97 (4) 10/97 -
Parkway Village 179 n/a 10/97 5 - 40 Years
Post Parkwood 213 n/a 10/97 5 - 40 Years
Post Ascension 340 n/a 10/97 5 - 40 Years
Post Hackberry Creek 845 n/a 10/97 5 - 40 Years
Post Lakeside 867 n/a 10/97 5 - 40 Years
Post Reflections 431 n/a 10/97 5 - 40 Years
Post Town Lake/Parks 826 n/a 10/97 5 - 40 Years
Post White Rock 402 n/a 10/97 5 - 40 Years
Post Winsted 583 n/a 10/97 5 - 40 Years
Post Windhaven 840 n/a 10/97 5 - 40 Years
The Shores by Post 2,446 n/a 10/97 5 - 40 Years
Springstead Condos - n/a 10/97 5 - 40 Years
The Abbey of State-Thomas 236 n/a 10/97 5 - 40 Years
The Commons at Turtle Creek 359 n/a 10/97 5 - 40 Years
The Meridian at State-Thomas 423 n/a 10/97 5 - 40 Years
The Residences on McKinney 810 n/a 10/97 5 - 40 Years
The Rice 1 10/97 (4) 10/97 -
The Vineyard of Uptown 267 n/a 10/97 5 - 40 Years
The Vintage of Uptown 421 n/a 10/97 5 - 40 Years
The Worthington of State-Thomas 1,205 n/a 10/97 5 - 40 Years
Thomas Tract - 10/97 (4) -
Uptown Village 731 n/a 10/97 5 - 40 Years
Villas at Valley Ranch - n/a 10/97 -
Wilson Building - 10/97 (4) -
Campus Circle 94 n/a 10/97 5 - 40 Years
Towne Crossing 325 n/a 10/97 5 - 40 Years
Post & Paddock 224 n/a 10/97 5 - 40 Years
FLORIDA
Post Bay 4,708 05/87 - 12/88 05/87 5 - 40 Years
Post Court 3,069 04/90 - 05/91 10/87 5 - 40 Years
Post Fountains 7,188 12/85 - 03/88 12/85 5 - 40 Years
Post Harbour Island - 03/97 (4) 01/97 -
Post Hyde Park 1,528 09/94 07/94 5 - 40 Years
Post Lake 10,531 11/85 - 03/88 10/85 5 - 40 Years
Post Rocky Point 2,452 04/94 02/94&09/96 (6) 5 - 40 Years
Post Rocky Point - Phase III - 11/96 (4) 09/96 -
Post Village
The Arbors 4,223 06/90 - 12/91 11/90 5 - 40 Years
The Lakes 4,619 07/88 - 12/89 05/88 5 - 40 Years
The Oaks 4,355 11/89 - 07/91 12/89 5 - 40 Years
Post Walk at Hyde Park 773 10/95-09/97 09/95 5 - 40 Years
</TABLE>
77
<PAGE> 80
<TABLE>
<CAPTION>
INITIAL COSTS COSTS
=========================== CAPITALIZED
RELATED BUILDING AND SUBSEQUENT
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION
================ ================= =========== =============== ===============
<S> <C> <C> <C> <C> <C>
MISSISSIPPI
Post Mark Apartments - 716 13,879 251
Post Pointe Apartments - 723 14,091 371
Post Trace Apartments - 1,944 24,616 374
VIRGINIA
Post Corners at Trinity Centre Apartments - 4,404 - 23,369
Post Forest Apartments - 8,590 - 23,640
NORTH CAROLINA
Post Park at Phillips Place Mixed Use - 4,685 - 34,808
TENNESSEE
Post Green Hills Apartments - 2,464 - 13,676
Post Hillsboro Village Apartments 2,960 2,255 2,555 15,907
The Lee Apartments Apartments - 720 2,125 115
COLORADO
Denver St. Lukes Apartments - 580 15,016
MISCELLANEOUS INVESTMENTS - 15,560 - 48,010
----------- ----------- ------------- ---------------
TOTAL $282,008 $335,073 $572,980 $1,347,021
=========== =========== ============= ===============
<CAPTION>
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF PERIOD
============================================== DEPRECIABLE
BUILDING AND ACCUMULATED DATE OF
LAND IMPROVEMENTS TOTAL (1) DEPRECIATION CONSTRUCTION
========= ================ ============ =================== ===================
<C> <C> <C> <C> <C> <C>
MISSISSIPPI
Post Mark 717 14,129 14,846 639 n/a
Post Pointe 723 14,462 15,185 433 n/a
Post Trace 1,944 24,990 26,934 883 n/a
VIRGINIA
Post Corners at Trinity Centre 4,493 23,280 27,773 2,116 06/94
Post Forest 9,106 23,124 (3) 32,230 8,281 01/89 - 12/90
NORTH CAROLINA
Post Park at Phillips Place 4,305 35,188 39,493 1,366 01/96
TENNESSEE
Post Green Hills 2,505 13,635 16,140 1,350 09/94
Post Hillsboro Village 5,000 15,717 20,717 231 12/96
The Lee Apartments 720 2,240 2,960 125 n/a (5)
COLORADO
Denver St. Lukes 1,530 14,066 15,596 - 10/97 (4)
MISCELLANEOUS INVESTMENTS 45,840 17,730 63,570 6,730
--------- ---------------- --------------- -------------------
TOTAL $357,940 $1,897,134 $2,255,074 $247,148
========= ================ =============== ===================
<CAPTION>
DEPRECIABLE
DATE LIVES
ACQUIRED YEARS
============= ==============
<C> <C> <C>
MISSISSIPPI
Post Mark 10/97 5 - 40 Years
Post Pointe 10/97 5 - 40 Years
Post Trace 10/97 5 - 40 Years
VIRGINIA
Post Corners at Trinity Centre 06/94 5 - 40 Years
Post Forest 03/88 5 - 40 Years
NORTH CAROLINA
Post Park at Phillips Place 11/95 5 - 40 Years
TENNESSEE
Post Green Hills 07/94 5 - 40 Years
Post Hillsboro Village 08/96 5 - 40 Years
The Lee Apartments 08/96 5 - 40 Years
COLORADO
Denver St. Lukes 10/97 -
MISCELLANEOUS INVESTMENTS 5 - 40 Years
TOTAL
(1) The aggregate cost for Federal Income Tax purposes to the Company was
approximately $1,963,647 at December 31, 1998, taking into account the
special allocation of gain to the partners contributing property to the
Operating Partnership.
(2) These properties serve as collateral for the Federal National Mortgage
Association credit enhancement.
(3) Balance includes an allowance for possible loss of $3,700 which was taken in
prior years.
(4) Construction still in process as of December 31, 1998.
(5) The Company acquired this community during 1996. The Company is operating
the community while evaluating whether whether to hold, renovate or sell the
community.
(6) Additional land was acquired for construction of a second phase.
=====================================================
A summary of activity for real estate investments and accumulated depreciation ============================ ==========
is as follows: 1998 1997 1996
========== ========== ==========
Real estate investments:
Balance at beginning of year $1,936,011 $1,109,342 $ 937,924
Purchase of minority interests in certain property partnerships - -
Purchase of assets in connection with the Merger 635,732
Improvements 319,408 216,020 183,910
Disposition of property (345) (25,083) (12,492)
---------- ---------- ----------
Balance at end of year $2,255,074 $1,936,011 $1,109,342
========== ========== ==========
Accumulated depreciation:
Balance at beginning of year $ 201,095 $177,672 $ 156,824
Depreciation 46,288 [A] 29,023 [A] 23,372 [A]
Depreciation on disposed property (235) (5,600) (2,524)
---------- ---------- ----------
Balance at end of year $ 247,148 $ 201,095 $ 177,672
========== ========== ==========
[a] Depreciation expense in the Consolidated Statements for the years ended
December 31, 1998, 1997 and 1996, include $335, $25 and $231, respectively,
of depreciation expense on other assets.
</TABLE>
<PAGE> 81
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of the
Post Properties, Inc. 1995 Non-Qualified Employee Stock Purchase Plan
In our opinion, the accompanying statements of net assets available for plan
benefits and of changes in net assets available for plan benefits present
fairly, in all material respects, the net assets of the Post Properties, Inc.
1995 Non-Qualified Employee Stock Purchase Plan at December 31, 1998 and 1997
and the changes in net assets available for plan benefits for the years then
ended, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Plan's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Atlanta, Georgia
February 26, 1999
79
<PAGE> 82
POST PROPERTIES, INC.
1995 NON-QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1998 1997
------------ ----------
<S> <C> <C>
ASSETS
Receivable from Post Apartment Homes, L.P...... $ 563,764 $ 440,170
============= =============
NET ASSETS AVAILABLE FOR PLAN BENEFITS
Net Assets available for Plan Benefits......... $ 563,764 $ 440,170
============= =============
</TABLE>
80
<PAGE> 83
POST PROPERTIES, INC.
1995 NON-QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1998 1997
----------- -----------
<S> <C> <C>
NET ASSETS AVAILABLE FOR PLAN BENEFITS, JANUARY 1 .......... $ 440,170 $ 424,015
DEDUCTIONS:
Purchase of participants' shares ......................... (985,593) (961,877)
Payment for payroll taxes on behalf
of participants ........................................ (44,035) (63,869)
ADDITIONS:
Participant contributions ................................ 1,153,222 1,041,901
----------- -----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS, DECEMBER 31 ........ $ 563,764 $ 440,170
=========== ===========
</TABLE>
81
<PAGE> 84
POST PROPERTIES, INC.
1995 NON-QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) Post Properties, Inc. (the "Company") established the 1995 Non-Qualified
Employee Stock Purchase Plan (the "Plan") to encourage stock ownership by
eligible directors and employees.
(B) The financial statements have been prepared on the accrual basis of
accounting.
(C) All expenses incurred in the administration of the Plan are paid by the
Company and are excluded from these financial statements.
NOTE 2 - THE PLAN
The Plan became effective as of January 1, 1995. Under the Plan, eligible
participating employees and directors of the Company can purchase Common Stock
at a discount (up to 15% as set by the Compensation Committee of the Company's
Board of Directors) from the Company through salary withholding or cash
contributions. The Plan is not subject to the provisions of the Employee
Retirement Income Security Act of 1974, nor is it intended to qualify for
special tax treatment under Section 401(a) of the Internal Revenue Code.
Directors who have been a member of the Board of Directors for at least one full
calendar month and full-time employees who have been employed a full calendar
month are eligible to participate in the Plan. Eligible directors and employees
(the "Participants") may contribute in cash or as a specified dollar amount or
percentage of their compensation to the Plan. The minimum payroll deduction for
a Participant for each payroll period for purchases under the Plan is $10.00.
The maximum contribution which a Participant can make for purchases under the
Plan for any calendar year is $100,000. All contributions to the Plan are held
in the general assets of Post Apartment Homes, L.P., the Company's operating
partnership.
Shares of the Company's Common Stock are purchased by an investment firm
semi-annually after the end of each six-month period, as defined, and credited
to each Participant's individual account. The purchase price of the Common Stock
purchased pursuant to the Plan is currently equal to 85% of the closing price on
either the first or last trading day of each purchase period, whichever is
lower.
All Common Stock of the Company purchased by Participants pursuant to the Plan
may be voted by the Participants or as directed by the Participants.
The Plan does not discriminate, in scope, terms, or operation, in favor of
officers or directors of the Company and is available, subject to the
eligibility rules of the Plan, to all employees of the Company on the same
basis.
NOTE 3 - FEDERAL INCOME TAXES
The Plan is not subject to Federal income taxes. The difference between the fair
market value of the shares acquired under the Plan, and the amount contributed
by the Participants is treated as ordinary income to the Participants' for
Federal income tax purposes. Accordingly, the Company withholds all applicable
taxes from the employee contributions. The fair market value of the shares is
determined as of the stock purchase date.
82
<PAGE> 85
3. EXHIBITS
Certain of the exhibits required by Item 601 of Regulation S-K have been filed
with previous reports by the registrant and are herein incorporated by reference
thereto.
The Registrant agrees to furnish a copy of all agreements relating to long-term
debt upon request of the Commission.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
<S> <C>
2.1 (a) -- Agreement and Plan of Merger dated as of August 1, 1997 among Post Properties, Inc. (the "Company"),
Columbus Realty Trust ("Columbus") and Post LP Holdings, Inc. (subsequently renamed Post Interim
Holdings, Inc.), a wholly owned subsidiary of the Company.
3.1 (b) -- Articles of Incorporation of the Company
3.2 (b) -- Bylaws of the Company
4.1 (c) -- Indenture between the Company and Sun Trust Bank, Atlanta, as Trustee
10.1 (d) -- Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership
10.2 (d) -- First Amendment to Second Amended and Restated Partnership Agreement
10.3 (d) -- Second Amendment to Second Amended and Restated Partnership Agreement
10.4 -- Third Amendment to Second Amended and Restated Partnership Agreement
10.5 -- Fourth Amendment to Second Amended and Restated Partnership Agreement
10.6 (e) -- Employee Stock Plan
10.7 (d) -- Amendment to Employee Stock Plan
10.8 (d) -- Amendment No. 2 to Employee Stock Plan
10.9 (d) -- Amendment No. 3 to Employee Stock Plan
10.10 (d) -- Amendment No. 4 to Employee Stock Plan
10.11(e) -- Noncompetition Agreement between the Company, the Operating Partnership and John A. Williams
10.12 (e) -- Noncompetition Agreement between the Company, the Operating Partnership and John T. Glover
10.13 -- Amendment of Noncompetition Agreement between the Company, the Operating Partnership and John A. Williams
dated as of June 1, 1998
10.14 -- Amendment of Noncompetition Agreement between the Company, the Operating Partnership and John T.
Glover dated as of June 1, 1998
10.15 -- Master Employment Agreement between the Company, the Operating Partnership, Post Services, Inc. and
John A. Williams dated June 1, 1998
10.16 -- Master Employment Agreement between the Company, the Operating Partnership, Post Services, Inc. and John
T. Glover dated as of June 1, 1998
10.17 (e) -- Option and Transfer Agreement among the Operating Partnership, Post Services, John A. Williams and
John T. Glover
10.18 (e) -- Promissory Note made by Post Services, Inc. in favor of RAM Partners, Inc.
10.19 (d) -- Form of officers and directors Indemnification Agreement
10.20 (b) -- Form of Option Agreement to be entered into between the Operating Partnership and the owners of four
parcels of undeveloped land
10.21 (b) -- Profit Sharing Plan of the Company
10.22 (d) -- Amendment Number One to Profit Sharing Plan
10.23 (d) -- Amendment Number Two to Profit Sharing Plan
10.24 (d) -- Amendment Number Three to Profit Sharing Plan
10.25 (d) -- Amendment Number Four to Profit Sharing Plan
</TABLE>
83
<PAGE> 86
<TABLE>
<S> <C>
10.26 (e) -- Form of General Partner 1% Exchange Agreement
10.27 (f) -- Employee Stock Purchase Plan
10.28 (d) -- Amendment to Employee Stock Purchase Plan
10.29 (g) -- Amended and Restated Dividend Reinvestment and Stock Purchase Plan
10.30 (d) -- Amended and Restated Credit Agreement dated as of April 9, 1997 among Post Apartment Homes, L.P.,
Wachovia Bank of Georgia, N.A., as administrative agent, First Union National Bank of Georgia, as Co-
Agent, and the banks listed on the signature pages thereto (the "Credit Agreement")
10.31 (d) -- First Amendment to Credit Agreement dated December 17, 1997
10.32 -- Second Amended and Restated Credit Agreement dated as of November 20, 1998 among Post Apartment
Homes, L.P., Wachovia Bank of Georgia, N.A., and the banks listed on the signature pages there to (the
"Second Credit Agreement")
10.33 -- First Amendment to Second Credit Agreement
21.1 -- List of Subsidiaries
23.1 -- Consent of PricewaterhouseCoopers LLP for Registration Statement on Form S-8 (No. 333-62243)
23.2 -- Consent of PricewaterhouseCoopers LLP for Registration Statement on Form S-8 (No. 333-70689)
23.3 -- Consent of PricewaterhouseCoopers LLP for Registration Statement on Form S-3 (No. 33-81772)
23.4 -- Consent of PricewaterhouseCoopers LLP for Registration Statement on Form S-3 (No. 333-39461)
23.5 -- Consent of PricewaterhouseCoopers LLP for Registration Statement on Form S-3 (No. 333-36595)
23.6 -- Consent of PricewaterhouseCoopers LLP for Registration Statement on Form S-3 (No. 333-47399)
23.7 -- Consent of PricewaterhouseCoopers LLP for Registration Statement on Form S-8 (No. 33-00020)
24.1 -- Powers of Attorney
27.1 -- Financial Data Schedule for the Company for the year ended December 31, 1998 (for SEC use only)
27.2 -- Financial Data Schedule for the Operating Partnership for the year ended December 31, 1998 (for SEC use
only)
</TABLE>
- ------------------
(a) Filed as an exhibit to the Current Report on Form 8-K, dated as of August 6,
1997, of the Company.
(b) Filed as an exhibit to the Registration Statement on Form S-11 (SEC File No.
33-61936), as amended, of the Company.
(c) Filed as an exhibit to the Registration Statement on Form S-3 (SEC File No.
333-3555) of the Company.
(d) Filed as an exhibit to the Annual Report on Form 10-K of the Company for the
year ended December 31, 1997.
(e) Filed as an exhibit to the Registration Statement on Form S-11 (SEC File No.
33-71650), as amended, of the Company.
(f) Filed as an exhibit to the Registration Statement on Form S-8 (SEC File No.
33-86674) of the Company.
(g) Filed as part of the Registration Statement on Form S-3 (SEC File No.
333-39461) of the Company.
The Company's proxy statement is expected to be filed with the Commission on
or about April 2, 1999.
(b) Reports on Form 8-K
During the fourth quarter of fiscal 1998 the Company and the Operating
Partnership each filed a current report on Form 8-K on November 2, 1998, that
were amended on November 3, 1998.
84
<PAGE> 87
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
POST PROPERTIES, INC.
(Registrant)
March 15, 1999 John T. Glover
-------------------------------------------------
John T. Glover, President
Chief Operating Officer, Treasurer and a Director
(Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
John A. Williams Chairman of the Board, Chief
--------------------- Executive Officer and Director March 15, 1999
John A. Williams
John T. Glover President, Chief Operating Officer, March 15, 1999
--------------------- Treasurer, Principal Financial
John T. Glover Officer, and Director
R. Gregory Fox Executive Vice President, Chief
--------------------- Accounting Officer March 15, 1999
R. Gregory Fox
* Director
---------------------
Arthur M. Blank March 15, 1999
* Director
---------------------
Herschel M. Bloom March 15, 1999
* Director
---------------------
Russell R. French March 15, 1999
* Director
---------------------
Zell Miller March 15, 1999
* Director
---------------------
Charles Rice March 15, 1999
* Director
---------------------
J.C. Shaw March 15, 1999
* By: Sherry W. Cohen
---------------------
Attorney-in-Fact
</TABLE>
85
<PAGE> 88
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
POST APARTMENT HOMES, L.P.
By: Post G.P. Holdings, Inc., as General Partner
March 15, 1999 John T. Glover
--------------------------------------
John T. Glover, President
Chief Operating Officer,
Treasurer and Principal Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
John A. Williams Chief Executive Officer March 15, 1999
- ---------------------
John A. Williams
John T. Glover President, Chief Operating Officer, March 15, 1999
- --------------------- Treasurer and Principal Financial
John T. Glover Officer
R. Gregory Fox Executive Vice President, Chief March 15, 1999
- ---------------------- Accounting Officer
R. Gregory Fox
86
<PAGE> 1
EXHIBIT 10.4
THIRD AMENDMENT TO
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
POST APARTMENT HOMES, L.P.
This Third Amendment to Second Amended and Restated Agreement of
Limited Partnership of Post Apartment Homes, L.P. (this "Amendment") is entered
into as of February 9, 1998, by and among Post GP Holdings, Inc. (the "General
Partner") and the Limited Partners of Post Apartment Homes, L.P. All capitalized
terms used herein shall have the meanings given to them in the Second Amended
and Restated Agreement of Limited Partnership of Post Apartment Homes, L.P.,
dated October 24, 1997 as amended to date (the "Partnership Agreement").
WHEREAS, Post Properties, Inc. ("PPI"), on even date herewith, has
issued 2,000,000 shares of its 7 5/8% Series C Cumulative Redeemable Preferred
Shares, par value $.01 per share, having a liquidation preference equivalent to
$25.00 per share (the "Series C Preferred Shares"), and has sold such Series C
Preferred Shares in a public offering;
WHEREAS, PPI has contributed to Post LP Holdings, Inc. ("Post LP
Holdings") the net proceeds of the sale of the Series C Preferred Shares;
WHEREAS, Post LP Holdings desires to contribute such net proceeds of
the sale of the Series C Preferred Shares to the Partnership in exchange for
partnership interests in the Partnership as set forth herein;
WHEREAS, the General Partner is authorized to cause the Partnership to
issue interests in the Partnership to Post LP Holdings in exchange for such
contribution;
NOW THEREFORE, in consideration of the mutual covenants herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
Section 1. Contribution.
PPI has contributed to Post LP Holdings, and Post LP Holdings in turn
hereby contributes to the Partnership, the entire net proceeds received by PPI
from the issuance of the Series C Preferred Shares. As provided in Section 4.3
of the Partnership Agreement, Post LP Holdings shall be deemed to have made a
Capital Contribution to the Partnership in the amount of the gross proceeds of
such issuance, which is $50,000,000, and the Partnership shall be deemed
simultaneously to have reimbursed Post LP Holdings (and Post LP Holdings shall
be deemed to have reimbursed PPI) pursuant to Section 7.4.C of the Partnership
Agreement for the amount of the underwriters discount and other costs incurred
by PPI in connection with such issuance.
<PAGE> 2
Section 2. Issuance of Series B Preferred Partnership Units.
In consideration of the contribution to the Partnership made by Post LP
Holdings pursuant to Section 1 hereof, the Partnership hereby issues to Post LP
Holdings 2,000,000 Series C Preferred Partnership Units (as defined herein).
Section 3. Definitions.
In addition to those terms defined in the Partnership Agreement, the
following definitions shall be for all purposes, unless otherwise clearly
indicated to the contrary, applied to the terms used in the Partnership
Agreement and in this Amendment:
"Series C Preferred Partnership Unit" means a Partnership Unit
issued by the Partnership to Post LP Holdings in consideration of the
contribution by Post LP Holdings to the Partnership of the entire net
proceeds received by Post LP Holdings from PPI in connection with PPI's
issuance of the Series C Preferred Shares. The Series C Preferred
Partnership Units shall constitute Preferred Partnership Units. The
Series C Preferred Partnership Units shall have the voting powers,
designation, preferences and relative, participating, optional or other
special rights and qualifications, limitations or restrictions as are
set forth in Exhibit G, attached hereto. It is the intention of the
General Partner, in establishing the Series C Preferred Partnership
Units, that each Series C Preferred Partnership Unit shall be
substantially the economic equivalent of a Series C Preferred Share.
"Series C Preferred Shares" means the 7 5/8% Series C
Cumulative Redeemable Preferred Shares, par value $.01 per share,
having a liquidation preference equivalent to $25.00 per share, issued
by PPI.
Section 4. Exhibits to Partnership Agreement.
The Partnership Agreement is hereby amended by attaching thereto as
Exhibit G the Exhibit G attached hereto.
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have executed the Amendment
under seal as of the date first written above.
GENERAL PARTNER:
POST GP HOLDINGS, INC.,
a Georgia corporation
By: John A. Williams
--------------------------------------
John A. Williams
Chairman and Chief Executive Officer
Attest: Sherry W. Cohen
----------------------------------
Sherry W. Cohen
Vice President and Secretary
[CORPORATE SEAL]
LIMITED PARTNERS:
POST LP HOLDINGS, INC.,
a Georgia corporation,
as attorney-in-fact for the
Limited Partners
By: John A. Williams
--------------------------------------
John A. Williams
Chairman and Chief Executive Officer
Attest: Sherry W. Cohen
----------------------------------
Sherry W. Cohen
Vice President and Secretary
[CORPORATE SEAL]
<PAGE> 4
EXHIBIT G
POST APARTMENT HOMES, L.P.
DESIGNATION OF THE VOTING POWERS, DESIGNATION, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS AND
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS
OF THE
SERIES C PREFERRED PARTNERSHIP UNITS
The following are the terms of the Series C Preferred Partnership Units
established pursuant to this Amendment:
(a) NUMBER. The maximum number of authorized Series C Preferred
Partnership Units shall be 2,300,000.
(b) RELATIVE SENIORITY. In respect of rights to receive quarterly
distributions and to participate in distributions of payments in the event of
any liquidation, dissolution or winding up of the Partnership, the Series C
Preferred Partnership Units shall rank senior to the Common Partnership Units
and any other class or series of Partnership Units of the Partnership ranking,
as to quarterly distributions and upon liquidation, junior to the Series C
Preferred Partnership Units (collectively, "Junior Partnership Units").
(c) QUARTERLY DISTRIBUTIONS.
(1) The Post Partners, in their capacity as the holders of the
then outstanding Series C Preferred Partnership Units, shall be entitled to
receive, when and as declared by the General Partner out of any funds legally
available therefor, cumulative quarterly distributions at the rate of $1.90625
per Series C Preferred Partnership Unit per year, payable in equal amounts of
$0.47656 per unit quarterly in cash on the last day of each March, June,
September, and December or, if not a Business Day (as hereinafter defined), the
next succeeding Business Day (each such day being hereafter called a "Quarterly
Distribution Date" and each period ending on a Quarterly Distribution Date being
hereinafter called a "Distribution Period"). Quarterly distributions on each
Series C Preferred Partnership Unit shall accrue and be cumulative from and
including the date of original issue thereof, whether or not (i) quarterly
distributions on such Series C Preferred Partnership Units are earned or
declared or (ii) on any Quarterly Distribution Date there shall be funds legally
available for the payment of quarterly distributions. Quarterly distributions
paid on the Series C Preferred Partnership Units in an amount less than the
total amount of such quarterly distributions at the time accrued and
G-1
<PAGE> 5
payable on such Partnership Units shall be allocated pro rata on a per unit
basis among all such Series C Preferred Partnership Units at the time
outstanding.
"Business Day" shall mean any day, other than a Saturday or Sunday,
that is neither a legal holiday nor a day on which banking institutions in New
York City are authorized or required by law, regulation or executive order to
close.
(2) The amount of any quarterly distributions accrued on any
Series C Preferred Partnership Units at any Quarterly Distribution Date shall be
the amount of any unpaid quarterly distributions accumulated thereon, to and
including such Quarterly Distribution Date, whether or not earned or declared,
and the amount of quarterly distributions accrued on any Series C Preferred
Partnership Units at any date other than a Quarterly Distribution Date shall be
equal to the sum of the amount of any unpaid quarterly distributions accumulated
thereon, to and including the last preceding Quarterly Distribution Date,
whether or not earned or declared, plus an amount calculated on the basis of the
annual distribution rate of $1.90625 per unit for the period after such last
preceding Quarterly Distribution Date to and including the date as of which the
calculation is made based on a 360-day year of twelve 30-day months.
(3) Except as provided herein, the Series C Preferred Partnership
Units shall not be entitled to participate in the earnings or assets of the
Partnership, and no interest, or sum of money in lieu of interest, shall be
payable in respect of any distribution or distributions on the Series C
Preferred Partnership Units which may be in arrears.
(4) Any distribution made on the Series C Preferred Partnership
Units shall be first credited against the earliest accrued but unpaid quarterly
distribution due with respect to such Partnership Units which remains payable.
(5) No quarterly distributions on the Series C Preferred
Partnership Units shall be authorized by the General Partner or be paid or set
apart for payment by the Partnership at such time as the terms and provisions of
any agreement of PPI, any Post Partner or the Partnership, including any
agreement relating to its indebtedness, prohibits such authorization, payment or
setting apart for payment or provides that such authorization, payment or
setting apart for payment would constitute a breach thereof or a default
thereunder, or if such authorization or payment shall be restricted or
prohibited by law. Notwithstanding the foregoing, quarterly distributions on the
Series C Preferred Partnership Units will accrue whether or not the Partnership
has earnings, whether or not there are funds legally available for the payment
of such quarterly distributions and whether or not such quarterly distributions
are authorized.
(d) LIQUIDATION RIGHTS.
(1) Upon the voluntary or involuntary dissolution, liquidation or
winding up of the Partnership, the Post Partners, in their capacity as the
holders of the Series C Preferred Partnership Units then outstanding, shall be
entitled to receive and to be paid out of the assets of the Partnership
G-2
<PAGE> 6
available for distribution to its partners, before any payment or distribution
shall be made on any Junior Partnership Units, the amount of $25.00 per Series C
Preferred Partnership Unit, plus accrued and unpaid quarterly distributions
thereon.
(2) After the payment to the holders of the Series C Preferred
Partnership Units of the full preferential amounts provided for herein, the Post
Partners, in their capacity as the holders of the Series C Preferred Partnership
Units as such, shall have no right or claim to any of the remaining assets of
the Partnership.
(3) If, upon any voluntary or involuntary dissolution,
liquidation, or winding upon of the Partnership, the amounts payable with
respect to the preference value of the Series C Preferred Partnership Units and
any other Preferred Partnership Units of the Partnership ranking as to any such
distribution on a parity with the Series C Preferred Partnership Units are not
paid in full, the holders of the Series C Preferred Partnership Units and of
such other Preferred Partnership Units will share ratably in any such
distribution of assets of the Partnership in proportion to the full respective
preference amounts to which they are entitled.
(4) Neither the sale, lease or conveyance of all or substantially
all of the property or business of the Partnership, nor the merger or
consolidation of the Partnership into or with any other entity or the merger or
consolidation of any other entity into or with the Partnership, shall be deemed
to be a dissolution, liquidation or winding up, voluntary or involuntary, for
the purposes hereof.
(e) REDEMPTION.
(1) OPTIONAL REDEMPTION. On and after February 9, 2003, the
General Partner may, at its option, cause the Partnership to redeem at any time
all or, from time to time, part of the Series C Preferred Partnership Units at a
price per unit (the "Redemption Price"), payable in cash, of $25.00, together
with all accrued and unpaid distributions to the and including the date fixed
for redemption (the "Redemption Date"), without interest, to the full extent the
Partnership has funds legally available therefore. The Series C Preferred
Partnership Units have no stated maturity and will not be subject to any sinking
fund or mandatory redemption provisions.
(2) PROCEDURES OF REDEMPTION.
(i) At any time that PPI exercises its right to redeem
all or any of the Series C Preferred Shares, the General Partner shall
exercise its right to cause the Partnership to redeem an equal number
of Series C Preferred Partnership Units in the manner set forth herein.
(ii) No Series C Preferred Partnership Units may be
redeemed except from proceeds from the sale of other capital stock of
PPI, including but not limited to common stock, preferred stock,
depositary shares, interests, participations or other ownership
interests (however designated) and any rights (other than debt
securities convertible into the
G-3
<PAGE> 7
exchangeable for equity securities) or options to purchase any of the
foregoing. The proceeds of such sale of capital stock of PPI shall be
conveyed by PPI to the Post Partners, by contribution or loan, and
thereupon contributed by the Post Partners to the Partnership pursuant
to the requirements of Section 4.2 of the Partnership Agreement.
(iii) Unless full accumulated distributions on all Series C
Preferred Shares shall have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set apart
for payment for all past Distribution Periods and the then current
Distribution Period, no Series C Preferred Partnership Units shall be
redeemed or purchased or otherwise acquired directly or indirectly
(except by conversion into or exchange for Junior Partnership Units);
provided, however, that the foregoing shall not prevent the redemption
of Series C Preferred Partnership Units to preserve PPI's REIT status
or the purchase or acquisition of Series C Preferred Partnership Units
pursuant to a purchase or exchange offer made on the same terms to
holders of all outstanding Series C Preferred Partnership Units.
(f) VOTING RIGHTS. Except as required by law, the Post Partners,
in their capacity as the holder of the Series C Preferred Partnership Units,
shall not be entitled to vote at any meeting of the Partners or for any other
purpose or otherwise to participate in any action taken by the Partnership or
the Partners, or to receive notice of any meeting of Partners.
(g) CONVERSION. The Series C Preferred Partnership Units are not
convertible into or exchangeable for any other property or securities of the
Partnership.
(h) RESTRICTIONS ON OWNERSHIP. The Series C Preferred Partnership
Units shall be owned and held solely by one or both of the Post Partners. As of
the date hereof, all of the Series C Preferred Partnership Units are owned by
Post LP Holdings.
(i) GENERAL. The rights of the Post Partners, in their capacity as
holders of the Series C Preferred Partnership Units, are in addition to and not
in limitation on any other rights or authority of the Post Partners, in any
other capacity, under the Partnership Agreement. In addition, nothing contained
herein shall be deemed to limit or otherwise restrict any rights or authority of
the Post Partners, under the Partnership Agreement, other than in their capacity
as the holders of the Series C Preferred Partnership Units.
G-4
<PAGE> 1
EXHIBIT 10.5
FOURTH AMENDMENT TO
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
POST APARTMENT HOMES, L.P.
This Fourth Amendment to Second Amended and Restated Agreement of
Limited Partnership of Post Apartment Homes, L.P. (this "Amendment") is entered
into as of December ___, 1998, by and among Post GP Holdings, Inc. (the "General
Partner") and the Limited Partners of Post Apartment Homes, L.P. All capitalized
terms used herein shall have the meanings given to them in the Second Amended
and Restated Agreement of Limited Partnership of Post Apartment Homes, L.P.,
dated October 24, 1997 as amended to date (the "Partnership Agreement").
WHEREAS, it is in the best interests of the Partnership, the Partners,
the General Partner and PPI to modify the Redemption Right set forth in Section
8.6 of the Partnership Agreement to allow the Partnership, in its sole and
absolute discretion, to require PPI to contribute the Redemption Amount to the
General Partner and the General Partner, in turn, to contribute the Redemption
Amount to the Partnership;
WHEREAS, this modification of the Redemption Right is not adverse to
any Limited Partner;
WHEREAS, the General Partner is authorized to amend the Partnership
Agreement for such purpose pursuant to Sections 14.1.B(1), (4) and (5) of the
Partnership Agreement;
NOW THEREFORE, in consideration of the mutual covenants herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
Section 1. Redemption Rights.
The Partnership Agreement is hereby amended by adding the following
Section 8.6.F immediately following the existing Section 8.6.E:
F. Notwithstanding the other provisions of this Section
8.6, the Partnership, in its sole and absolute discretion, shall have
the right to require PPI to contribute to the General Partner the
Redemption Amount to be paid by the Partnership to redeeming Limited
Partners pursuant to Section 8.6.A hereof. Upon any such contribution
by PPI to the General Partner, the General Partner, in turn, shall be
required to contribute the Redemption Amount so contributed to it by
PPI to the Partnership and the Partnership shall use the Redemption
Amount so contributed to it by the General Partner to fulfill its
obligations pursuant to Section 8.6.A. The General Partner shall be
deemed to have made a Capital Contribution to the Partnership, the
Partnership shall be deemed simultaneously to have reimbursed the
<PAGE> 2
General Partner pursuant to Section 7.4.C and the General Partner in
turn shall be deemed to have reimbursed PPI, all in the amount of the
Redemption Amount.
Section 2. Definitions.
a. The definition of "Redemption Amount" in the Partnership
Agreement is hereby deleted and the following new definition of "Redemption
Amount" is inserted in its place and such new definition shall be for all
purposes, unless otherwise clearly indicated to the contrary, applied to the
term "Redemption Amount" as used in the Partnership Agreement and in this
Amendment:
"Redemption Amount" means either the Cash Amount or the REIT
Shares Amount, as determined by the Partnership in its sole and
absolute discretion. A Redeeming Partner shall have no right, without
the Partnership's consent, to receive the Redemption Amount in the form
of the REIT Shares Amount.
b. The definition of "Liquidation Preference Amount" in the
Partnership Agreement is hereby deleted and the following new definition thereof
is inserted in its place and such new definition shall be for all purposes,
unless otherwise indicated to the contrary, applied to the term "Redemption
Amount" as used in the Partnership Agreement.
"Liquidation Preference Amount" means, with respect to any
Preferred Partnership Unit, the amount payable with respect to such
Preferred Partnership Unit (as established by the instrument
designating such Preferred Partnership Units) upon the voluntary or
involuntary dissolution, liquidation or winding up of the Partnership,
or upon the earlier redemption of such Preferred Partnership Unit, as
the case may be, but excluding any accrued and unpaid quarterly
distributions in respect of such Preferred Partnership Unit.
Section 3. Exhibit C -- Special Allocation Rules.
Exhibit C to the Partnership Agreement is hereby deleted and the
attached Exhibit C is hereby substituted in its place.
Section 4. Miscellaneous.
Except as specifically set forth herein, all other terms and conditions
of the Partnership Agreement shall remain unmodified and in full force and
effect, the same being confirmed and republished hereby. This Amendment may be
executed in any number of counterparts all of which taken together shall
constitute one and the same instrument and any of the parties or signatories
hereto may execute this Amendment by signing any such counterpart.
[SIGNATURES COMMENCE ON FOLLOWING PAGE.]
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have executed the Amendment
under seal as of the date first written above.
GENERAL PARTNER:
POST GP HOLDINGS, INC.,
a Georgia corporation
By: /s/
----------------------------
Name:
-----------------------
Title:
----------------------
Attest: /s/
-------------------------
Name:
---------------------
Title:
--------------------
[CORPORATE SEAL]
LIMITED PARTNERS:
POST LP HOLDINGS, INC.,
a Georgia corporation,
as attorney-in-fact for the
Limited Partners
By: /s/
----------------------------
Name:
-----------------------
Title:
----------------------
Attest: /s/
-------------------------
Name:
---------------------
Title:
--------------------
[CORPORATE SEAL]
<PAGE> 1
EXHIBIT 10.13
AMENDMENT OF NONCOMPETITION AGREEMENT
This AMENDMENT OF NONCOMPETITION AGREEMENT is entered into as of June
1, 1998 by and among John A. Williams, Post Properties, Inc., a Georgia
corporation, and Post Apartment Homes, L.P., a Georgia limited partnership.
WHEREAS, the parties entered into a Noncompetition Agreement as of
July 22, 1993 (the "Noncompetition Agreement"); and
WHEREAS, the parties would now like to amend the Noncompetition
Agreement pursuant to Section 8(d) thereof.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto agree to amend the Noncompetition Agreement as
follows:
1.
Section 3.(a) of the Noncompetition Agreement shall be deleted and
replaced in its entirety by the following:
3.(a). Antipirating of Employees. Williams will not, during the
Restricted Period, seek to employ on his own behalf or on behalf of
any other person, firm, or corporation which engages, directly or
indirectly, in the development, operation, management, leasing, or
landscaping of a Multifamily Property, any person who was employed as
an employee by the Company or by any of the Service Companies in an
executive, managerial or supervisory capacity at any time during
Williams' employment by the Company and who has not thereafter ceased
to be employed in such capacity by the Company or any of the Services
Companies for a period of at least one (1) year.
2.
Section 3.(b) of the Noncompetition Agreement shall be deleted and
replaced in its entirety by the following:
3.(b). Nonsolicitation of Customers. Williams will not, during the
Restricted Period, for purposes of competing with the Company or any
of the Service Companies, solicit or seek to solicit on his own behalf
or on behalf of any other person, firm, or corporation which engages,
directly or indirectly, in the development, operation, management,
leasing, or
<PAGE> 2
landscaping of a Multifamily Property, any entity or person who was a
customer of the Company or any of the Services Companies, and with
whom Williams had personal business interaction, at any time (i)
during Williams' employment by the Company for that period of the
Restricted Period or (ii) during the two (2) years immediately prior
to the termination of Williams' employment by the Company for the
post-termination period of the Restricted Period.
3.
Section 8(g) of the Noncompetition Agreement shall be amended by
adding a new second sentence as follows:
All administrative costs of the arbitration, including the filing fee
and the fees and expenses of the arbitrator(s), shall be paid by the
Company regardless of the outcome of the arbitration.
4.
Except as stated above, the Noncompetition Agreement is not amended,
modified, or altered in any way and continues in full force and effect.
IN WITNESS WHEREOF, each of the undersigned has executed, or caused to
be executed on its behalf, this Amendment of Noncompetition Agreement as of the
date first set forth above.
POST PROPERTIES, INC.
By: John T. Glover
-----------------------------------
John T. Glover
President
POST APARTMENT HOMES, L.P.
By: Post Properties, Inc., Its General Partner
By: John T. Glover
-----------------------------------
John T. Glover
President
<PAGE> 3
John A. Williams
-----------------------------------
JOHN A. WILLIAMS
<PAGE> 1
EXHIBIT 10.14
AMENDMENT OF NONCOMPETITION AGREEMENT
This AMENDMENT OF NONCOMPETITION AGREEMENT is entered into as of June
1, 1998 by and among John T. Glover, Post Properties, Inc., a Georgia
corporation, and Post Apartment Homes, L.P., a Georgia limited partnership.
WHEREAS, the parties entered into a Noncompetition Agreement as of
July 22, 1993 (the "Noncompetition Agreement"); and
WHEREAS, the parties would now like to amend the Noncompetition
Agreement pursuant to Section 8(d) thereof.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto agree to amend the Noncompetition Agreement as
follows:
1.
Section 3.(a) of the Noncompetition Agreement shall be deleted and
replaced in its entirety by the following:
3.(a). Antipirating of Employees. Glover will not, during the
Restricted Period, seek to employ on his own behalf or on behalf of
any other person, firm, or corporation which engages, directly or
indirectly, in the development, operation, management, leasing, or
landscaping of a Multifamily Property, any person who was employed as
an employee by the Company or by any of the Service Companies in an
executive, managerial or supervisory capacity at any time during
Glover's employment by the Company and who has not thereafter ceased
to be employed in such capacity by the Company or any of the Services
Companies for a period of at least one (1) year.
2.
Section 3.(b) of the Noncompetition Agreement shall be deleted and
replaced in its entirety by the following:
3.(b). Nonsolicitation of Customers. Glover will not, during the
Restricted Period, for purposes of competing with the Company or any
of the Service Companies, solicit or seek to solicit on his own behalf
or on behalf of any other person, firm, or corporation which engages,
directly or indirectly, in the development, operation, management,
leasing, or landscaping of a
<PAGE> 2
Multifamily Property, any entity or person who was a customer of the
Company or any of the Services Companies, and with whom Glover had
personal business interaction, at any time (i) during Glover's
employment by the Company for that period of the Restricted Period or
(ii) during the two (2) years immediately prior to the termination of
Glover's employment by the Company for the post-termination period of
the Restricted Period.
3.
Section 8(g) of the Noncompetition Agreement shall be amended by
adding a new second sentence as follows:
All administrative costs of the arbitration, including the filing fee
and the fees and expenses of the arbitrator(s), shall be paid by the
Company regardless of the outcome of the arbitration.
4.
Except as stated above, the Noncompetition Agreement is not amended,
modified, or altered in any way and continues in full force and effect.
IN WITNESS WHEREOF, each of the undersigned has executed, or caused to
be executed on its behalf, this Amendment of Noncompetition Agreement as of the
date first set forth above.
POST PROPERTIES, INC.
By: John A. Williams
-----------------------------------
John A. Williams
Chief Executive Officer
POST APARTMENT HOMES, L.P.
By: Post Properties, Inc., Its General Partner
By: John A. Williams
-----------------------------------
John A. Williams
Chief Executive officer
<PAGE> 3
John T. Glover
-----------------------------------
JOHN T. GLOVER
<PAGE> 1
EXHIBIT 10.15
MASTER
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), is made and entered into
on this 1st day of June, 1998, by and between JOHN A. WILLIAMS, an individual
resident of the State of Georgia ("Executive"), POST PROPERTIES, INC., a Georgia
corporation ("Post"), POST APARTMENT HOMES, L.P., a Georgia limited partnership
("Post LP") and Post Services, Inc., a Georgia corporation ("Services");
W I T N E S S E T H:
WHEREAS, Post, Post LP and Services desire to employ Executive, and
Executive desires to be employed by Post, Post LP and Services on the terms and
conditions contained in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Post, Post LP, Services and
Executive, intending to be legally bound, do hereby agree as follows:
ss. 1.
Employment
Subject to the terms of this Agreement, Post, Post LP and Services
hereby employ Executive, and Executive hereby accepts such employment with Post,
Post LP and Services. Executive shall serve as Chief Executive Officer of Post,
Post LP and Services. Executive shall report to the Board of Directors of Post
with respect to his duties and responsibilities as Post's Chief Executive
Officer, to the Board of Directors of Post LP's General Partner, Post GP
Holdings, Inc., with respect to his duties and responsibilities as Post LP's
Chief Executive Officer and to the Board of Directors of Services with respect
to his duties and responsibilities as Services' Chief Executive Officer. Subject
to the other terms and conditions of this Agreement, Executive, Post, Post LP
and Services agree that Executive's compensation, accountabilities, and
requirements shall be determined by Post's Board of Directors or its
Compensation Committee (the "Committee"), in their sole discretion but after
discussion with Executive, Post LP and Services. Executive shall devote his
primary business time, skills, and best efforts to rendering services on behalf
of Post, Post LP and Services and their affiliates and shall exercise such care
as is customarily required by executives undertaking similar duties for entities
similar to Post, Post LP and Services. Unless agreed to by Executive, neither
Post, Post LP nor Services will change Executive's job title during the term of
this
<PAGE> 2
Agreement. Finally, Executive shall have the discretion to decide at any time
whether he is performing his duties or exercising his responsibilities for Post,
for Post LP or for Services.
ss. 2.
Compensation; Expenses
2.1. Base Salary. Commencing on the Effective Date (as defined in
ss. 3.1), Executive shall be paid during the term of Executive's employment
under this Agreement, a minimum base salary equal to $325,000 per annum (the
"Base Salary"), which amount shall be subject to upward adjustment, if any, in
accordance with this ss. 2.1. The Committee shall review Executive's Base Salary
on a regular basis to ensure its continued competitiveness based on the annual
Compensation Performance Matrix adopted by Post, Post LP and Services.
Executive's Base Salary, less all applicable withholding taxes, shall be paid to
Executive in accordance with the payroll procedures in effect with respect to
executive officers of Post but shall be apportioned between and actually be paid
on Post's payroll, Post LP's payroll and Services' payroll as agreed upon from
time to time by Post, Post LP and Services.
2.2. Option in Lieu of Base Salary. Executive before the beginning of
any calendar year may make an irrevocable election to reduce his Base Salary for
such calendar year by up to $75,000 and to receive instead options to purchase
whole shares of Post common stock. Any such election shall be made in writing
and shall be delivered to the Secretary of Post. Such options thereafter shall
be granted by the Committee under Post's stock option plan at the first regular
meeting of such Committee in such calendar year, and the number of whole shares
of stock subject to such options shall be determined by dividing the amount by
which Executive elected to reduce his Base Salary by the fair market value of a
share of common stock on the date of such Committee meeting. Such fair market
value shall be determined by the Committee under the terms of such stock option
plan, and the option price of such option shall be the same as such fair market
value. Each option shall be exercisable in full at grant and shall (subject to
the plan)remain exercisable until the tenth anniversary of the date of grant and
shall be subject to such other terms and conditions as the Committee deems
appropriate under the circumstances. Cash shall be paid to Executive in lieu of
an option to purchase a fractional share, and such payment shall be made as soon
as practicable after the option is granted under this ss. 2.2.
2.3. Incentive Compensation. In addition to the Base Salary payable to
Executive pursuant to ss. 2.1, effective as of the Effective Date, Executive
shall be entitled to participate in the following incentive compensation plans:
(a) Annual Incentive Plan. Executive shall have the opportunity to
participate in the annual incentive plan, if any, maintained by Post, Post
LP and Services, the earnings opportunities and performance requirements
for which will be set out in the annual Compensation Performance Matrix
adopted by each such company. At the sole discretion of Post's Board of
Directors, any such annual incentive payments may be paid to Executive
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<PAGE> 3
in cash, Post stock, or any combination thereof. At the election of
Executive, any such annual incentive payments, in whole or in part, may be
deferred according to the deferred compensation plan, if any, maintained by
Post.
(b) Long Term Incentive Plan. Executive shall have the opportunity to
participate in the long term incentive plan, if any, maintained by Post,
Post LP and Services the earnings opportunities and performance
requirements for which will be set out in the annual Compensation
Performance Matrix adopted by each such company.
2.4. Stock Options. Any options granted on any date to Executive to
purchase Post stock shall be subject to the same terms and conditions as the
stock options granted on the same date to similarly situated executives of Post,
Post LP or Services.
2.5. Expenses. Executive shall be reimbursed for all reasonable
business-related expenses incurred by Executive at the request of or on behalf
of Post, Post LP or Services, including, without limitation, first class travel
expenses incurred in connection with the performance of Executive's duties and
responsibilities, moving expenses and his expenses to maintain a complete, real
time communications link with Post, Post LP and Services while he is away from
his office.
2.6. Participation in Employee Benefit Plans.
(a) General. Executive shall be entitled to participate in such
medical, dental, disability, hospitalization, life insurance, profit
sharing and other employee benefit plans as maintained from time to time
for the benefit of executive officers of Post, Post LP and Services, on the
terms and subject to the conditions set forth in such plans. However, if
Post, Post LP and Services each maintain the same plan, the benefits
available under such plan shall not exceed the benefit which would have
been available if Post, Post LP and Services were one and the same company.
(b) Life Insurance. Post, Post LP and Services collectively will
provide Executive with a split dollar life insurance program up to
$20,000,000 on terms and conditions to be agreed upon by Post and
Executive.
(c) Disability. Post, Post LP and Services collectively will provide
Executive with a supplemental disability program providing a maximum
monthly payment of $25,000.
(d) Annual Physical. Post, Post LP and Services will reimburse
Executive for a comprehensive physical examination on an annual basis.
Post, Post LP and Services require that Executive have such an examination
at least every other year.
2.7. Vacation. Executive shall receive such paid time off each year
during the term of this Agreement as the Committee deems consistent with his
status as a Chief Executive Officer.
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<PAGE> 4
2.8. Miscellaneous Perquisites.
(a) Luncheon/Athletic Club. Post, Post LP and Services collectively
shall reimburse Executive for monthly dues for one luncheon or athletic
club.
(b) Luxury Car. Post, Post LP and Services collectively shall
reimburse Executive for the rental and operation of a luxury automobile,
including lease payments, insurance, maintenance, and operating expenses.
(c) Office. Post, Post LP and Services collectively shall provide a
senior executive business office and all related equipment and services,
including secretarial and other support services, to operate and maintain
such an office during Post's normal work day which is at least comparable
to the office, equipment and services provided similarly situated senior
executives of Post and, further, shall provide and maintain home office
equipment to and for Executive, including a computer, telephone, home
security system, and related ancillary equipment such as a printer, modem,
fax machine, and pager to enable Executive to perform his duties and
responsibilities from his primary residence and each other residence owned
and used as a secondary residence by Executive.
(d) Personal Financial Counseling. Post, Post LP and Services
collectively shall reimburse Executive for all reasonable costs associated
with retaining a personal financial counselor, up to an annual amount of
$75,000, to provide such advice and services to and on behalf of Executive
as customarily provided by personal financial counselors.
2.9. Allocation. Post, Post LP and Services shall allocate the
payments and benefits called for under this Agreement between themselves as
Post, Post LP and Services deem reasonable and appropriate and, further, may (as
between themselves) designate one company to make all such payments (except with
respect to Base Salary under ss. 2.1 and incentive compensation under ss. 2.3)
and provide all such benefits to Executive. However, Executive may (except with
respect to Base Salary under ss. 2.1 and incentive compensation under ss. 2.3)
look to either Post, Post LP or Services for 100% of the payments and benefits
called for under this Agreement if at any time there is any failure by Post,
Post LP or Services to make any payment or provide any benefit called for under
this Agreement.
ss. 3.
Term of Employment
3.1. Term of Employment. Unless earlier terminated in accordance with
ss. 3.4 or ss. 5 of this Agreement, the employment of Executive under this
Agreement shall commence on June 1, 1998 (the "Effective Date"), and shall
continue for a period of three (3) years through May 31, 2001 (the "Initial
Term").
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<PAGE> 5
3.2. Renewal. Unless terminated earlier in accordance with ss. 3.4 or
ss. 5, this Agreement on May 31, 2001 and on each anniversary of such date shall
automatically renew for a one (1) additional year term unless either Post or
Executive notifies the other in writing at least six (6) months prior to May 31,
2001 or any anniversary of such date of its or his desire not to renew this
Agreement.
3.3. Termination of Prior Employment Agreement. Executive's Employment
Agreements with Post, Post LP and Services entered into on July 22, 1993, will
terminate on the Effective Date, but Executive's Noncompetition Agreement with
Post, Post LP and Services, entered into as of July 22, 1993 (the
"Noncompetition Agreement"), shall not be affected by this Agreement and shall
continue in full force and effect.
3.4. Termination. Except as provided in ss. 5 of this Agreement,
Executive's employment under this Agreement may be terminated as follows:
(a) by Post upon the death or total disability of Executive (total
disability meaning the inability of Executive to perform the essential
functions of his jobs (even with reasonable accommodation) under this
Agreement for a period of six (6) consecutive months during the term of
this Agreement by reason of Executive's mental or physical disability)
(which shall be referred to as a "Death or Disability Termination"); or
(b) by Post if (i) Executive is convicted of, pleads guilty to, or
confesses to any felony or any act of fraud, misappropriation or
embezzlement which has an immediate and materially adverse effect on Post,
Post LP or Services or any of their affiliates, as determined by Post's
Board of Directors in good faith; (ii) Executive engages in a fraudulent
act to the material damage or prejudice of Post, Post LP or Services or any
of their affiliates or in conduct or activities materially damaging to the
property, business or reputation of Post, Post LP or Services or any of
their affiliates, all as determined by Post's Board of Directors in good
faith; (iii) there is any material act or omission by Executive involving
malfeasance or negligence in the performance of Executive's duties to Post,
Post LP or Services to the material detriment of Post, Post LP or Services,
as determined by Post's Board of Directors in good faith, which has not
been corrected by Executive within thirty (30) days after written notice
from Post of any such act or omission; (iv) Executive fails to comply in
any material respect with the terms of this Agreement or any other
agreement with Post, Post LP or Services or any of their affiliates or any
written policies or directives of Post's Board of Directors as determined
by Post's Board of Directors in good faith, which has not been corrected by
Executive within thirty (30) days after written notice from Post of such
failure; or (v) Executive breaches any of the covenants set forth in the
Noncompetition Agreement (which shall be referred to individually and
collectively as a "For Cause Termination"); or
(c) by Post for any reason other than a For Cause Termination or a
Death or Disability Termination (which shall be referred to as a "No Cause
Termination"); or
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<PAGE> 6
(d) by Executive for any reason other than an Executive-Initiated
Termination (as defined in ss. 3.4(e)) at any time during or after the
Initial Term and after giving 30 days prior written notice to Post (which
shall be referred to as a "Voluntary Termination"); or
(e) by Executive if (i) there is a material reduction in Executive's
duties, rights, or responsibilities under this Agreement without his
consent and without regard to whether he keeps his title as Chief Executive
Officer; (ii) there is a material decrease in the value of Executive's
compensation and benefits package without his consent; or (iii) Post, Post
LP or Services accelerates the date for repayment of any indebtedness owed
by Executive to Post, Post LP or Services without Executive's consent
(which shall be referred to individually and collectively as an
"Executive-Initiated Termination").
ss. 4.
Result of Termination
4.1. Termination As Result of Voluntary Termination or For Cause
Termination. If Executive's employment under this Agreement is terminated as a
result of a Voluntary Termination or a For Cause Termination, Executive shall
not thereafter be entitled to receive any Base Salary or other incentive
compensation for periods following the effective date of such termination;
provided, however, that Executive shall be entitled to receive any Base Salary
which may be owed to Executive but is unpaid as of the effective date of such
termination. All Executive's perquisites and benefits called for exclusively
under the terms of this Agreement shall terminate as of the effective date of
such termination. All Executive's perquisites and benefits, including stock
options, to which Executive has a right independent of this Agreement shall
remain in effect, if at all, exclusively under the terms and conditions of the
plans and programs under which such perquisites and benefits were granted to
Executive.
4.2. Termination As Result of No Cause Termination or
Executive-Initiated Termination. If Executive's employment under this Agreement
is terminated in any calendar year as a result of a No Cause Termination or an
Executive-Initiated Termination,
(a) Executive shall be entitled to receive (i) any Base Salary which
is payable for periods ending on or before the effective date of
Executive's termination but which has not been paid by the effective date
of such termination, (ii) any stock options to be granted in such calendar
year in lieu of salary or bonus, (iii) an annual incentive payment of a pro
rata portion of Executive's annual incentive payment, if any, for the
preceding calendar year through the effective date of such termination (a
"Pro Rata Bonus"), and (iv) a severance payment equal to two times
Executive's Total Annual Compensation for such calendar year. Executive's
"Total Annual Compensation" for any calendar year shall be equal to his
Base Salary and annual incentive payment, if any, for the preceding
calendar year plus the amount of any
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<PAGE> 7
Base Salary or bonus for such year which he elected to forego in exchange
for the grant of stock options;
(b) Executive's unvested stock options, if any, shall fully vest and
the restrictions on his restricted stock grants, if any, shall lapse on the
effective date of such termination,
(c) Executive shall be entitled to continue to receive all the
perquisites, benefits, services and equipment described in ss. 2.6 and
ss. 2.8 of this Agreement for two (2) years after the effective date of
such termination or the cash equivalent of such perquisites, benefits,
services and equipment (to the extent that Post and Executive agree on such
cash equivalent), and
(d) Executive shall receive all the perquisites and benefits to which
he has a right to receive independent of this Agreement under the terms and
conditions of the plans and programs under which such perquisites and
benefits were granted to Executive.
4.3. Termination as a Result of a Death or Disability Termination. If
Executive's employment under this Agreement is terminated as a result of Death
or Disability Termination,
(a) Executive (or at his death, his designated beneficiary, if any, or
if none, his surviving spouse or, if none, his estate) shall be entitled to
receive (i) any Base Salary which may be owed to Executive but which is
unpaid as of the effective date of such termination, (ii) the Pro Rata
Bonus, and (iii) a severance payment equal to his Total Annual Compensation
for such year, and
(b) Executive's unvested stock options shall fully vest on the
effective date of such termination, and
(c) all Executive's perquisites and benefits called for exclusively
under the terms of this Agreement shall terminate as of the effective date
of such termination, but all of Executive's perquisites and benefits to
which he has a right independent of this Agreement shall remain in effect,
if at all, exclusively under the terms and conditions of the plans and
programs under which such perquisites and benefits were granted to
Executive.
4.4. Employee Benefit Plans and Incentive Compensation and Other
Compensatory Arrangements. Executive shall be eligible for such benefits, if
any, in addition to those described in Section 4.1, 4.2 and 4.3 upon his
termination of employment as payable under any employee benefit plans pursuant
to the terms and conditions set forth in such plans.
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ss. 5.
Change In Control
5.1. Definition. A Change in Control under this Agreement shall mean
(A) a "change in control" of Post of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A for a proxy statement filed
under Section 14(a) of the Securities Exchange Act of 1934, as amended ("1934
Act") as in effect on June 1, 1998, (B) a "person" (as that term is used in
14(d)(2) of the 1934 Act) becomes the beneficial owner (as defined in Rule 13d-3
under the 1934 Act) directly or indirectly of securities representing 45% or
more of the combined voting power for election of directors of the then
outstanding securities of Post, (C) the individuals who at the beginning of any
period of two consecutive years or less (starting on or after June 1, 1998)
constitute Post's Board of Directors cease for any reason during such period to
constitute at least a majority of Post's Board of Directors, unless the election
or nomination for election of each new member of such Board was approved by vote
of at least two-thirds of the members of such Board then still in office who
were members of such Board at the beginning of such period, (D) the shareholders
of Post approve any dissolution or liquidation of Post or any sale or
disposition of 50% or more of the assets or business of Post, or (E) the
shareholders of Post approve a merger or consolidation to which Post is a party
(other than a merger or consolidation with Post LP, Services or a wholly-owned
subsidiary of Post, Post LP or Services) or a share exchange in which Post shall
exchange Post shares for shares of another corporation as a result of which the
persons who were shareholders of Post immediately before the effective date of
such merger, consolidation or share exchange shall have beneficial ownership of
less than 50% of the combined voting power for election of directors of the
surviving corporation following the effective date of such merger, consolidation
or share exchange.
5.2. Effect of a Change in Control. If Executive's employment with
Post is terminated by Post or by Executive for any reason other than a For Cause
Termination or a Death or Disability Termination during the two (2) year period
immediately following a Change in Control, Post (on behalf of Post, Post LP and
Services) shall in lieu of any benefit under ss. 4 (i) promptly pay Executive
any Base Salary which may be owed to Executive but is unpaid as of the effective
date of such termination, (ii) promptly pay Executive the Pro Rata Bonus, (iii)
promptly pay Executive three (3) times the total of (a) Executive's Base Salary
and (b) the average of all his annual incentive payments, if any, for the three
(3) preceding calendar years; (iv) continue to make available to Executive all
the perquisites, benefits, services and equipment described in ss. 2.6 and
ss. 2.8 of this Agreement for three (3) years after the effective date of such
termination or the cash equivalent of such perquisites, benefits, services and
equipment (to the extent that Post and Executive agree on such cash equivalent),
(v) fully vest all of Executive's stock options and make such options
exercisable for the maximum permissible term under the terms of the plan under
which the options were granted or for two years, whichever is less, and (vi)
waive any restrictions on Executive's right to receive any restricted stock
which had been granted to Executive.
5.3. Tax Protection. If Post determines that the payments, option
vesting, forfeiture lapses and other benefits called for under Section 5.2 will
result in Executive being subject
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to an excise tax under Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), or if such an excise tax is properly and timely assessed
against Executive as a result of a Change in Control or if such a determination
is made and such a tax is assessed, Post (on behalf of Post, Post LP and
Services) shall make a Gross-Up Payment to Executive at the time his employment
terminates, if a determination is made that an excise tax is due at that time,
or at the time of such assessment, or at both such times, as appropriate. A
"Gross-Up Payment" means a payment to Executive which shall be sufficient for
Executive to pay (i) any such excise tax in full, (ii) any federal, state and
local income tax on the payment made to pay Executive's excise tax as well as
any additional excise tax on such payment and (iii) any interest or penalties
assessed by the Internal Revenue Service on Executive if Post failed to
determine and report to Executive and to the Internal Revenue Service the full
amount on which an excise tax was due at the time Executive's employment
terminated. Any determination under this Section 5.3 by Post shall be made in
accordance with Section 280(g) of the Code and any related regulations (whether
proposed, temporary or final) and any related Internal Revenue Service rulings
and any related case law.
ss. 6.
Miscellaneous
6.1. Binding Effect. This Agreement shall inure to the benefit of and
shall be binding upon Executive and his executor, administrator, heirs, personal
representative and assigns, and upon Post, Post LP and Services and their
successors and assigns; provided, however, that Executive shall not be entitled
to assign or delegate any of his rights or obligations hereunder without the
prior written consent of Post, Post LP and Services.
6.2. Construction of Agreement. No provision of this Agreement or any
related document shall be construed against or interpreted to the disadvantage
of any party hereto by any court or other governmental or judicial authority by
reason of such party having or being deemed to have structured or drafted such
provision.
6.3. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Georgia.
6.4. Survival of Agreements. All covenants and agreements made herein
shall survive the execution and delivery of this Agreement and the termination
of Executive's employment hereunder for any reason.
6.5. Headings. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
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6.6. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to be given when delivered
personally or mailed first class, registered or certified mail, postage prepaid,
in either case, addressed as follows:
(a) If to Executive:
Mr. John A. Williams
4615 Northside Drive, N.W.
Atlanta, Georgia 30327
(b) If to Post, Post LP or Services:
Post Properties, Inc.
One Riverside
4401 Northside Parkway
Suite 800
Atlanta, Georgia 30327
with a copy to:
Mr. Herschel M. Bloom
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
6.7. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
6.8. Entire Agreement. This Agreement constitutes the entire agreement
of the parties with respect to the subject matter hereof and upon the Effective
Date, will supersede and replace all prior agreements, written and oral, between
the parties hereto or with respect to the subject matter hereof. This Agreement
may be modified only by a written instrument signed by each party hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
POST PROPERTIES, INC.
By: /s/
--------------------------------------------
Title:
-----------------------------------------
POST APARTMENT HOMES, L.P.
By: Post GP Holdings, Inc., its General Partner
By: /s/
--------------------------------------------
Title:
-----------------------------------------
POST SERVICES, INC.
By: /s/
--------------------------------------------
Title:
-----------------------------------------
EXECUTIVE
John A. Williams
-----------------------------------------------
John A. Williams
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<PAGE> 1
EXHIBIT 10.16
MASTER
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), is made and entered into
on this 1st day of June, 1998, by and between JOHN T. GLOVER, an individual
resident of the State of Georgia ("Executive"), POST PROPERTIES, INC., a Georgia
corporation ("Post"), POST APARTMENT HOMES, L.P., a Georgia limited partnership
("Post LP") and Post Services, Inc., a Georgia corporation ("Services");
W I T N E S S E T H:
WHEREAS, Post, Post LP and Services desire to employ Executive, and
Executive desires to be employed by Post, Post LP and Services on the terms and
conditions contained in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Post, Post LP, Services and
Executive, intending to be legally bound, do hereby agree as follows:
ss. 1.
Employment
Subject to the terms of this Agreement, Post, Post LP and Services
hereby employ Executive, and Executive hereby accepts such employment with Post,
Post LP and Services. Executive shall serve as President and Chief Operating
Officer of Post, Post LP and Services. Executive shall report to the Chief
Executive Officer of Post with respect to his duties and responsibilities as
Post's President and Chief Operating Officer, to the Chief Executive Officer of
Post LP's General Partner, Post GP Holdings, Inc., with respect to his duties
and responsibilities as Post LP's President and Chief Operating Officer and to
the Chief Executive Officer of Services with respect to his duties and
responsibilities as Services' President and Chief Operating Officer. Subject to
the other terms and conditions of this Agreement, Executive, Post, Post LP and
Services agree that Executive's compensation, accountabilities, and requirements
shall be determined by Post's Board of Directors or its Compensation Committee
(the "Committee"), in their sole discretion but after discussion with Executive,
Post LP and Services. Executive shall devote his primary business time, skills,
and best efforts to rendering services on behalf of Post, Post LP and Services
and their affiliates and shall exercise such care as is customarily required by
executives undertaking similar duties for entities similar to Post, Post LP and
Services. Unless agreed to by Executive, neither Post,
<PAGE> 2
Post LP nor Services will change Executive's job title during the term of this
Agreement. Finally, Executive shall have the discretion to decide at any time
whether he is performing his duties or exercising his responsibilities for Post,
for Post LP or for Services.
ss. 2.
Compensation; Expenses
2.1. Base Salary. Commencing on the Effective Date (as defined in
ss. 3.1), Executive shall be paid during the term of Executive's employment
under this Agreement, a minimum base salary equal to $325,000 per annum (the
"Base Salary"), which amount shall be subject to upward adjustment, if any, in
accordance with this ss. 2.1. The Committee shall review Executive's Base Salary
on a regular basis to ensure its continued competitiveness based on the annual
Compensation Performance Matrix adopted by Post, Post LP and Services.
Executive's Base Salary, less all applicable withholding taxes, shall be paid to
Executive in accordance with the payroll procedures in effect with respect to
executive officers of Post but shall be apportioned between and actually be paid
on Post's payroll, Post LP's payroll and Services' payroll as agreed upon from
time to time by Post, Post LP and Services.
2.2. Option in Lieu of Base Salary. Executive before the beginning of
any calendar year may make an irrevocable election to reduce his Base Salary for
such calendar year by up to $75,000 and to receive instead options to purchase
whole shares of Post common stock. Any such election shall be made in writing
and shall be delivered to the Secretary of Post. Such options thereafter shall
be granted by the Committee under Post's stock option plan at the first regular
meeting of such Committee in such calendar year, and the number of whole shares
of stock subject to such options shall be determined by dividing the amount by
which Executive elected to reduce his Base Salary by the fair market value of a
share of common stock on the date of such Committee meeting. Such fair market
value shall be determined by the Committee under the terms of such stock option
plan, and the option price of such option shall be the same as such fair market
value. Each option shall be exercisable in full at grant and shall (subject to
the plan) remain exercisable until the tenth anniversary of the date of grant
and shall be subject to such other terms and conditions as the Committee deems
appropriate under the circumstances. Cash shall be paid to Executive in lieu of
an option to purchase a fractional share, and such payment shall be made as soon
as practicable after the option is granted under this ss. 2.2.
2.3. Incentive Compensation. In addition to the Base Salary payable to
Executive pursuant to ss. 2.1, effective as of the Effective Date, Executive
shall be entitled to participate in the following incentive compensation plans:
(a) Annual Incentive Plan. Executive shall have the opportunity to
participate in the annual incentive plan, if any, maintained by Post, Post
LP and Services, the earnings opportunities and performance requirements
for which will be set out in the annual Compensation Performance Matrix
adopted by each such company. At the sole discretion
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of Post's Board of Directors, any such annual incentive payments may be
paid to Executive in cash, Post stock, or any combination thereof. At the
election of Executive, any such annual incentive payments, in whole or in
part, may be deferred according to the deferred compensation plan, if any,
maintained by Post.
(b) Long Term Incentive Plan. Executive shall have the opportunity to
participate in the long term incentive plan, if any, maintained by Post,
Post LP and Services the earnings opportunities and performance
requirements for which will be set out in the annual Compensation
Performance Matrix adopted by each such company.
2.4. Stock Options. Any options granted on any date to Executive to
purchase Post stock shall be subject to the same terms and conditions as the
stock options granted on the same date to similarly situated executives of Post,
Post LP or Services.
2.5. Expenses. Executive shall be reimbursed for all reasonable
business-related expenses incurred by Executive at the request of or on behalf
of Post, Post LP or Services, including, without limitation, first class travel
expenses incurred in connection with the performance of Executive's duties and
responsibilities, moving expenses and his expenses to maintain a complete, real
time communications link with Post, Post LP and Services while he is away from
his office.
2.6. Participation in Employee Benefit Plans.
(a) General. Executive shall be entitled to participate in such
medical, dental, disability, hospitalization, life insurance, profit
sharing and other employee benefit plans as maintained from time to time
for the benefit of executive officers of Post, Post LP and Services, on the
terms and subject to the conditions set forth in such plans. However, if
Post, Post LP and Services each maintain the same plan, the benefits
available under such plan shall not exceed the benefit which would have
been available if Post, Post LP and Services were one and the same company.
(b) Life Insurance. Post, Post LP and Services collectively will
provide Executive with a split dollar life insurance program up to
$15,000,000 on terms and conditions to be agreed upon by Post and
Executive.
(c) Disability. Post, Post LP and Services collectively will provide
Executive with a supplemental disability program providing a maximum
monthly payment of $25,000.
(d) Annual Physical. Post, Post LP and Services will reimburse
Executive for a comprehensive physical examination on an annual basis.
Post, Post LP and Services require that Executive have such an examination
at least every other year.
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2.7. Vacation. Executive shall receive such paid time off each year
during the term of this Agreement as the Committee deems consistent with his
status as a President and Chief Operating Officer.
2.8. Miscellaneous Perquisites.
(a) Luncheon/Athletic Club. Post, Post LP and Services collectively
shall reimburse Executive for monthly dues for one luncheon or athletic
club.
(b) Luxury Car. Post, Post LP and Services collectively shall
reimburse Executive for the rental and operation of a luxury automobile,
including lease payments, insurance, maintenance, and operating expenses.
(c) Office. Post, Post LP and Services collectively shall provide a
senior executive business office and all related equipment and services,
including secretarial and other support services, to operate and maintain
such an office during Post's normal work day which is at least comparable
to the office, equipment and services provided similarly situated senior
executives of Post and, further, shall provide and maintain home office
equipment to and for Executive, including a computer, telephone, home
security system, and related ancillary equipment such as a printer, modem,
fax machine, and pager to enable Executive to perform his duties and
responsibilities from his primary residence and each other residence owned
and used as a secondary residence by Executive.
(d) Personal Financial Counseling. Post, Post LP and Services
collectively shall reimburse Executive for all reasonable costs associated
with retaining a personal financial counselor, up to an annual amount of
$50,000, to provide such advice and services to and on behalf of Executive
as customarily provided by personal financial counselors.
2.9. Allocation. Post, Post LP and Services shall allocate the
payments and benefits called for under this Agreement between themselves as
Post, Post LP and Services deem reasonable and appropriate and, further, may (as
between themselves) designate one company to make all such payments (except with
respect to Base Salary under ss. 2.1 and incentive compensation under ss. 2.3)
and provide all such benefits to Executive. However, Executive may (except with
respect to Base Salary under ss. 2.1 and incentive compensation under ss. 2.3)
look to either Post, Post LP or Services for 100% of the payments and benefits
called for under this Agreement if at any time there is any failure by Post,
Post LP or Services to make any payment or provide any benefit called for under
this Agreement.
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ss. 3.
Term of Employment
3.1. Term of Employment. Unless earlier terminated in accordance with
ss. 3.4 or ss. 5 of this Agreement, the employment of Executive under this
Agreement shall commence on June 1, 1998 (the "Effective Date"), and shall
continue for a period of three (3) years through May 31, 2001 (the "Initial
Term").
3.2. Renewal. Unless terminated earlier in accordance with ss. 3.4 or
ss. 5, this Agreement on May 31, 2001 and on each anniversary of such date shall
automatically renew for a one (1) additional year term unless either Post or
Executive notifies the other in writing at least six (6) months prior to May 31,
2001 or any anniversary of such date of its or his desire not to renew this
Agreement.
3.3. Termination of Prior Employment Agreement. Executive's Employment
Agreements with Post, Post LP and Services entered into on July 22, 1993, will
terminate on the Effective Date, but Executive's Noncompetition Agreement with
Post, Post LP and Services, entered into as of July 22, 1993 (the
"Noncompetition Agreement"), shall not be affected by this Agreement and shall
continue in full force and effect.
3.4. Termination. Except as provided in ss. 5 of this Agreement,
Executive's employment under this Agreement may be terminated as follows:
(a) by Post upon the death or total disability of Executive (total
disability meaning the inability of Executive to perform the essential
functions of his jobs (even with reasonable accommodation) under this
Agreement for a period of six (6) consecutive months during the term of
this Agreement by reason of Executive's mental or physical disability)
(which shall be referred to as a "Death or Disability Termination"); or
(b) by Post if (i) Executive is convicted of, pleads guilty to, or
confesses to any felony or any act of fraud, misappropriation or
embezzlement which has an immediate and materially adverse effect on Post,
Post LP or Services or any of their affiliates, as determined by Post's
Board of Directors in good faith; (ii) Executive engages in a fraudulent
act to the material damage or prejudice of Post, Post LP or Services or any
of their affiliates or in conduct or activities materially damaging to the
property, business or reputation of Post, Post LP or Services or any of
their affiliates, all as determined by Post's Board of Directors in good
faith; (iii) there is any material act or omission by Executive involving
malfeasance or negligence in the performance of Executive's duties to Post,
Post LP or Services to the material detriment of Post, Post LP or Services,
as determined by Post's Board of Directors in good faith, which has not
been corrected by Executive within thirty (30) days after written notice
from Post of any such act or omission; (iv) Executive fails to comply in
any material respect with the terms of this Agreement or any other
agreement with Post, Post LP or
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Services or any of their affiliates or any written policies or directives
of Post's Board of Directors as determined by Post's Board of Directors in
good faith, which has not been corrected by Executive within thirty (30)
days after written notice from Post of such failure; or (v) Executive
breaches any of the covenants set forth in the Noncompetition Agreement
(which shall be referred to individually and collectively as a "For Cause
Termination"); or
(c) by Post for any reason other than a For Cause Termination or a
Death or Disability Termination (which shall be referred to as a "No Cause
Termination"); or
(d) by Executive for any reason other than an Executive-Initiated
Termination (as defined in ss. 3.4(e)) at any time during or after the
Initial Term and after giving 30 days prior written notice to Post (which
shall be referred to as a "Voluntary Termination"); or
(e) by Executive if (i) there is a material reduction in Executive's
duties, rights, or responsibilities under this Agreement without his
consent and without regard to whether he keeps his title as President and
Chief Operating Officer; (ii) there is a material decrease in the value of
Executive's compensation and benefits package without his consent; or (iii)
Post, Post LP or Services accelerates the date for repayment of any
indebtedness owed by Executive to Post, Post LP or Services without
Executive's consent (which shall be referred to individually and
collectively as an "Executive-Initiated Termination").
ss. 4.
Result of Termination
4.1. Termination As Result of Voluntary Termination or For Cause
Termination. If Executive's employment under this Agreement is terminated as a
result of a Voluntary Termination or a For Cause Termination, Executive shall
not thereafter be entitled to receive any Base Salary or other incentive
compensation for periods following the effective date of such termination;
provided, however, that Executive shall be entitled to receive any Base Salary
which may be owed to Executive but is unpaid as of the effective date of such
termination. All Executive's perquisites and benefits called for exclusively
under the terms of this Agreement shall terminate as of the effective date of
such termination. All Executive's perquisites and benefits, including stock
options, to which Executive has a right independent of this Agreement shall
remain in effect, if at all, exclusively under the terms and conditions of the
plans and programs under which such perquisites and benefits were granted to
Executive.
4.2. Termination As Result of No Cause Termination or
Executive-Initiated Termination. If Executive's employment under this Agreement
is terminated in any calendar year as a result of a No Cause Termination or an
Executive-Initiated Termination,
(a) Executive shall be entitled to receive (i) any Base Salary which
is payable for periods ending on or before the effective date of
Executive's termination
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but which has not been paid by the effective date of such termination, (ii)
any stock options to be granted in such calendar year in lieu of salary or
bonus, (iii) an annual incentive payment of a pro rata portion of
Executive's annual incentive payment, if any, for the preceding calendar
year through the effective date of such termination (a "Pro Rata Bonus"),
and (iv) a severance payment equal to two times Executive's Total Annual
Compensation for such calendar year. Executive's "Total Annual
Compensation" for any calendar year shall be equal to his Base Salary and
annual incentive payment, if any, for the preceding calendar year plus the
amount of any Base Salary or bonus for such year which he elected to forego
in exchange for the grant of stock options;
(b) Executive's unvested stock options, if any, shall fully vest and
the restrictions on his restricted stock grants, if any, shall lapse on the
effective date of such termination,
(c) Executive shall be entitled to continue to receive all the
perquisites, benefits, services and equipment described in ss. 2.6 and ss.
2.8 of this Agreement for two (2) years after the effective date of such
termination or the cash equivalent of such perquisites, benefits, services
and equipment (to the extent that Post and Executive agree on such cash
equivalent), and
(d) Executive shall receive all the perquisites and benefits to which
he has a right to receive independent of this Agreement under the terms and
conditions of the plans and programs under which such perquisites and
benefits were granted to Executive.
4.3. Termination as a Result of a Death or Disability Termination. If
Executive's employment under this Agreement is terminated as a result of Death
or Disability Termination,
(a) Executive (or at his death, his designated beneficiary, if any, or
if none, his surviving spouse or, if none, his estate) shall be entitled to
receive (i) any Base Salary which may be owed to Executive but which is
unpaid as of the effective date of such termination, (ii) the Pro Rata
Bonus, and (iii) a severance payment equal to his Total Annual Compensation
for such year, and
(b) Executive's unvested stock options shall fully vest on the
effective date of such termination, and
(c) all Executive's perquisites and benefits called for exclusively
under the terms of this Agreement shall terminate as of the effective date
of such termination, but all of Executive's perquisites and benefits to
which he has a right independent of this Agreement shall remain in effect,
if at all, exclusively under the
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terms and conditions of the plans and programs under which such perquisites
and benefits were granted to Executive.
4.4. Employee Benefit Plans and Incentive Compensation and Other
Compensatory Arrangements. Executive shall be eligible for such benefits, if
any, in addition to those described in Section 4.1, 4.2 and 4.3 upon his
termination of employment as payable under any employee benefit plans pursuant
to the terms and conditions set forth in such plans.
ss. 5.
Change In Control
5.1. Definition. A Change in Control under this Agreement shall mean
(A) a "change in control" of Post of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A for a proxy statement filed
under Section 14(a) of the Securities Exchange Act of 1934, as amended ("1934
Act") as in effect on June 1, 1998, (B) a "person" (as that term is used in
14(d)(2) of the 1934 Act) becomes the beneficial owner (as defined in Rule 13d-3
under the 1934 Act) directly or indirectly of securities representing 45% or
more of the combined voting power for election of directors of the then
outstanding securities of Post, (C) the individuals who at the beginning of any
period of two consecutive years or less (starting on or after June 1, 1998)
constitute Post's Board of Directors cease for any reason during such period to
constitute at least a majority of Post's Board of Directors, unless the election
or nomination for election of each new member of such Board was approved by vote
of at least two-thirds of the members of such Board then still in office who
were members of such Board at the beginning of such period, (D) the shareholders
of Post approve any dissolution or liquidation of Post or any sale or
disposition of 50% or more of the assets or business of Post, or (E) the
shareholders of Post approve a merger or consolidation to which Post is a party
(other than a merger or consolidation with Post LP, Services or a wholly-owned
subsidiary of Post, Post LP or Services) or a share exchange in which Post shall
exchange Post shares for shares of another corporation as a result of which the
persons who were shareholders of Post immediately before the effective date of
such merger, consolidation or share exchange shall have beneficial ownership of
less than 50% of the combined voting power for election of directors of the
surviving corporation following the effective date of such merger, consolidation
or share exchange.
5.2. Effect of a Change in Control. If Executive's employment with
Post is terminated by Post or by Executive for any reason other than a For Cause
Termination or a Death or Disability Termination during the two (2) year period
immediately following a Change in Control, Post (on behalf of Post, Post LP and
Services) shall in lieu of any benefit under ss. 4 (i) promptly pay Executive
any Base Salary which may be owed to Executive but is unpaid as of the effective
date of such termination, (ii) promptly pay Executive the Pro Rata Bonus, (iii)
promptly pay Executive three (3) times the total of (a) Executive's Base Salary
and (b) the average of all his annual incentive payments, if any, for the three
(3) preceding calendar years; (iv) continue to make available to Executive all
the perquisites, benefits, services and equipment described in ss. 2.6 and
ss. 2.8 of this Agreement for three (3) years after the effective date of such
termination or the cash equivalent of
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such perquisites, benefits, services and equipment (to the extent that Post and
Executive agree on such cash equivalent), (v) fully vest all of Executive's
stock options and make such options exercisable for the maximum permissible term
under the terms of the plan under which the options were granted or for two
years, whichever is less, and (vi) waive any restrictions on Executive's right
to receive any restricted stock which had been granted to Executive.
5.3. Tax Protection. If Post determines that the payments, option
vesting, forfeiture lapses and other benefits called for under Section 5.2 will
result in Executive being subject to an excise tax under Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), or if such an excise tax
is properly and timely assessed against Executive as a result of a Change in
Control or if such a determination is made and such a tax is assessed, Post (on
behalf of Post, Post LP and Services) shall make a Gross-Up Payment to Executive
at the time his employment terminates, if a determination is made that an excise
tax is due at that time, or at the time of such assessment, or at both such
times, as appropriate. A "Gross-Up Payment" means a payment to Executive which
shall be sufficient for Executive to pay (i) any such excise tax in full, (ii)
any federal, state and local income tax on the payment made to pay Executive's
excise tax as well as any additional excise tax on such payment and (iii) any
interest or penalties assessed by the Internal Revenue Service on Executive if
Post failed to determine and report to Executive and to the Internal Revenue
Service the full amount on which an excise tax was due at the time Executive's
employment terminated. Any determination under this Section 5.3 by Post shall be
made in accordance with Section 280(g) of the Code and any related regulations
(whether proposed, temporary or final) and any related Internal Revenue Service
rulings and any related case law.
ss. 6.
Miscellaneous
6.1. Binding Effect. This Agreement shall inure to the benefit of and
shall be binding upon Executive and his executor, administrator, heirs, personal
representative and assigns, and upon Post, Post LP and Services and their
successors and assigns; provided, however, that Executive shall not be entitled
to assign or delegate any of his rights or obligations hereunder without the
prior written consent of Post, Post LP and Services.
6.2. Construction of Agreement. No provision of this Agreement or any
related document shall be construed against or interpreted to the disadvantage
of any party hereto by any court or other governmental or judicial authority by
reason of such party having or being deemed to have structured or drafted such
provision.
6.3. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Georgia.
-9-
<PAGE> 10
6.4. Survival of Agreements. All covenants and agreements made herein
shall survive the execution and delivery of this Agreement and the termination
of Executive's employment hereunder for any reason.
6.5. Headings. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
6.6. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to be given when delivered
personally or mailed first class, registered or certified mail, postage prepaid,
in either case, addressed as follows:
(a) If to Executive:
Mr. John T. Glover
1888 Garraux Road, N.W.
Atlanta, Georgia 30327
(b) If to Post, Post LP or Services:
Post Properties, Inc.
One Riverside
4401 Northside Parkway
Suite 800
Atlanta, Georgia 30327
with a copy to:
Mr. Herschel M. Bloom
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
6.7. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
6.8. Entire Agreement. This Agreement constitutes the entire agreement
of the parties with respect to the subject matter hereof and upon the Effective
Date, will supersede and replace all prior agreements, written and oral, between
the parties hereto or with respect to the subject matter hereof. This Agreement
may be modified only by a written instrument signed by each party hereto.
-10-
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
POST PROPERTIES, INC.
By: /s/
--------------------------------------------
Title:
-----------------------------------------
POST APARTMENT HOMES, L.P.
By: Post GP Holdings, Inc., its General Partner
By: /s/
--------------------------------------------
Title:
-----------------------------------------
POST SERVICES, INC.
By: /s/
--------------------------------------------
Title:
-----------------------------------------
EXECUTIVE
John T. Glover
-----------------------------------------------
John T. Glover
-11-
<PAGE> 1
EXHIBIT 10.32
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
POST APARTMENT HOMES, L.P.,
THE BANKS LISTED THEREIN,
FIRST UNION NATIONAL BANK, AS SYNDICATION AGENT,
SUNTRUST BANK, ATLANTA, AS DOCUMENTATION AGENT
AND
WACHOVIA BANK, N.A., AS ADMINISTRATIVE AGENT
NOVEMBER 20, 1998
<PAGE> 2
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this "Amendment and
Restatement") is dated as of the 20th day of November, 1998 among POST APARTMENT
HOMES, L.P. (the "Borrower"), WACHOVIA BANK, N.A., as Administrative Agent (the
"Administrative Agent"), FIRST UNION NATIONAL BANK, as Syndication Agent,
SUNTRUST BANK, ATLANTA, as Documentation Agent and WACHOVIA BANK, N.A., FIRST
UNION NATIONAL BANK, SUNTRUST BANK, ATLANTA, COMMERZBANK AG, ATLANTA AGENCY,
FOUR WINDS FUNDING CORPORATION, BANK ONE, TEXAS, N.A. and CHASE BANK OF TEXAS,
National Association (collectively, the "Banks");
W I T N E S S E T H :
WHEREAS, the Borrower, the Administrative Agent, the Syndication Agent,
the Documentation Agent and Wachovia Bank, N.A. (formerly Wachovia Bank of
Georgia, N.A.), First Union National Bank (formerly First Union National Bank of
Georgia), SunTrust Bank, Atlanta, Corestates Bank and Commerzbank AG, Atlanta
Agency, executed and delivered that certain Amended and Restated Credit
Agreement, dated as of April 9, 1997 (as amended by that certain First Amendment
thereto dated as of December 17, 1997 and that certain Second Amendment dated as
of July 31, 1998, the "Credit Agreement");
WHEREAS, the Borrower has requested and the Administrative Agent, the
Syndication Agent, the Documentation Agent and the Banks have agreed to make
certain amendments to the Credit Agreement and to amend and restate the Credit
Agreement in its entirety, subject to the terms and conditions hereof;
NOW, THEREFORE, for and in consideration of the above premises and
other good and valuable consideration, the receipt and sufficiency of which
hereby is acknowledged by the parties hereto, the Borrower, the Administrative
Agent, the Syndication Agent, the Documentation Agent and the Banks hereby
covenant and agree as follows:
<PAGE> 3
1. Definitions. Unless otherwise specifically defined herein, each term
used herein which is defined in the Credit Agreement shall have the meaning
assigned to such term in the Credit Agreement. Each reference to "hereof",
"hereunder", "herein" and "hereby" and each other similar reference and each
reference to "this Agreement" and each other similar reference contained in the
Credit Agreement shall from and after the date hereof refer to the Credit
Agreement as amended and restated hereby.
2. Restatement. The Credit Agreement as in effect on the date hereof is
hereby incorporated and restated in its entirety with the amendments specified
herein.
3. Changes to Commitments. (a) From and after the date of this
Amendment and Restatement, the Commitment of each Bank shall be the amount set
forth opposite the name of such Bank on the signature page of this Amendment and
Restatement, as such amount may be increased or reduced pursuant to Section 2.08
of the Credit Agreement.
(b) So long as the Borrower has not reduced the Commitments,
the Borrower may request that the Commitments be increased to $250,000,000 (the
"Maximum Commitment"). If the Borrower requests that the total Commitments from
the Banks then parties to this Amendment and Restatement be increased, the
Administrative Agent shall promptly give notice of such request (the "Commitment
Increase Notice") to each Bank. Within five Business Days of its receipt of a
Commitment Increase Notice from the Administrative Agent, each Bank that desires
to increase its Commitment in response to such request (each such Bank, a
"Consenting Bank") shall deliver notice to the Administrative Agent of its
election to increase its Commitment and the maximum amount of such increase to
its Commitment (for each Consenting Bank, its "Additional Commitment"), which
may not be larger than the excess of (a) the Maximum Commitment, over (b) the
Commitments then in effect. The failure of any Bank to so notify the
Administrative Agent of its election and its Additional Commitment, if any,
shall be deemed to be a refusal to increase its Commitment. If the sum of the
Commitments then in effect plus the aggregate Additional Commitments does not
exceed the Maximum Commitment, the Commitment of each Consenting Bank shall be
increased by its Additional Commitment. If the sum of the Commitments then in
effect plus the aggregate Additional Commitments exceeds the Maximum Commitment,
the Commitment of each Consenting Bank shall be increased by an amount equal to
the
2
<PAGE> 4
product of (i) such Consenting Bank's Additional Commitment multiplied by (ii)
the quotient of (a) the excess of (A) the Maximum Commitment, over (B) the
Commitments then in effect, divided by (b) the aggregate Additional Commitments
of all Consenting Banks. Any increase in the Commitments shall be effective as
of the tenth Business Day after the delivery of the Commitment Increase Notice;
provided, that the Commitments may not at any time exceed the Maximum
Commitment.
4. Additional Banks and Commitments. Upon (i) the execution of a
signature page to this Amendment and Restatement by a new bank or financial
institution (a "New Bank") and acceptance thereof by the Administrative
Agent,(ii) execution and delivery by the Borrower of a Syndicated Loan Note and
a Money Market Loan Note in favor of the New Bank, and (iii) delivery of notice
to the Banks by the Administrative Agent setting forth the effective date of the
addition of the New Bank hereunder and the amount of such New Bank's Commitment,
such New Bank shall be for all purposes a Bank party to this Agreement to the
same extent as if it were an original party hereto with a Commitment as set
forth on the signature page executed by the New Bank; provided, however, (i) the
total Commitments of all Banks shall not exceed in the aggregate the Maximum
Commitment, and (ii) the Commitments and obligations of all Banks party hereto
prior to the addition of any New Bank shall not be affected by the addition of
such New Bank.
5. Notes. Each reference in the Credit Agreement to any Note shall
hereafter refer to the Notes executed as of the date hereof and any additional
Notes executed in favor of Banks in respect of Additional Commitments and in
favor of any New Bank in respect of its Commitment.
6. Restatement of Representations and Warranties. The Borrower hereby
restates and renews each and every representation and warranty heretofore made
by it in the Credit Agreement and the other Loan Documents as fully as if made
on the date hereof and with specific reference to this Amendment and Restatement
and all other loan documents executed and/or delivered in connection herewith,
except to the extent otherwise disclosed pursuant to Section 5.01(c) or (d) of
the Credit Agreement.
7. Effect of Amendment. Except as set forth expressly hereinabove, all
terms of the Credit Agreement and the other Loan Documents shall be and remain
in full force and effect, and shall constitute the legal, valid, binding and
enforceable obligations
3
<PAGE> 5
of the Borrower. The amendments contained herein shall be deemed to have
prospective application only, unless otherwise specifically stated herein.
8. Ratification. The Borrower hereby restates, ratifies and reaffirms
each and every term, covenant and condition set forth in the Credit Agreement
and the other Loan Documents effective as of the date hereof.
9. Counterparts. This Amendment and Restatement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts, taken together, shall constitute but one and the
same instrument.
10. Section References. Section titles and references used in this
Amendment and Restatement shall be without substantive meaning or content of any
kind whatsoever and are not a part of the agreements among the parties hereto
evidenced hereby.
11. No Default. The Borrower hereby acknowledges and agrees that, as of
the date hereof, and after giving effect to the terms hereof, there exists (i)
no Default or Event of Default and (ii) no right of offset, defense,
counterclaim, claim or objection in favor of the Borrower arising out of or with
respect to any of the Loans or other obligations of the Borrower owed to the
Banks.
12. Further Assurances. The Borrower agrees to take such further
actions as the Administrative Agent shall reasonably request in connection
herewith to evidence the amendments herein contained to the Borrower.
13. Governing Law. This Amendment and Restatement shall be
governed by and construed and interpreted in accordance with, the
laws of the State of Georgia.
14. Conditions Precedent. This Amendment and Restatement shall become
effective only upon the satisfaction of the conditions set forth in Section 3.02
of the Credit Agreement and receipt by the Administrative Agent of the following
(as to the documents described in paragraphs (a), (c), and (d) below, in
sufficient number of counterparts for each Bank):
4
<PAGE> 6
(a) from each of the parties hereto either (i) a duly executed
counterpart of this Amendment and Restatement signed by such party or
(ii) a facsimile transmission of such executed counterpart (with the
original to be sent to the Administrative Agent by overnight courier);
(b) a duly executed Syndicated Loan Note and a duly executed
Money Market Loan Note for the account of each Bank complying with the
provisions of Section 2.03 (including a Designated Bank Note in favor
of Four Winds Funding Corporation, as the Designated Bank of
Commerzbank AG, Atlanta Agency) and a Consent and Reaffirmation of
Guarantors duly executed by the Guarantors;
(c) an opinion letter of King & Spalding, counsel for the
Borrower and the Guarantors, dated as of the date hereof, covering such
matters relating to the transactions contemplated hereby as the
Administrative Agent or any Bank may reasonably request;
(e) a certificate (the "Closing Certificate"), dated as of the
Closing Date, signed by a principal financial officer of the Borrower,
to the effect that, to the best of his or her knowledge, (i) no Default
has occurred and is continuing and (ii) the representations and
warranties of the Borrower contained in Article IV of the Credit
Agreement are true on and as of the date hereof;
(f) all documents which the Administrative Agent or any Bank
may reasonably request relating to the existence of the Borrower and
the Guarantors, the corporate authority for and the validity of this
Amendment and Restatement, the Notes, and any other matters relevant
hereto, all in form and substance satisfactory to the Administrative
Agent, including, without limitation, a certificate of each of the
Borrower and the Guarantors (the "Officer's Certificate"), signed by
the Secretary or an Assistant Secretary of the Borrower and the
Guarantors, respectively, and as to the names, true signatures and
incumbency of the officer or officers of the Borrower or Guarantors
authorized to execute and deliver the Loan Documents, and certified
copies of the following items for each of the Borrower and Guarantors
(i) a certificate of the Secretary of State of the State of its
incorporation as to its good standing as a corporation incorporated
therein, and (ii) the action taken by its Board
5
<PAGE> 7
of Directors authorizing the execution, delivery and performance of the
Loan Documents to which it is a party.
6
<PAGE> 8
IN WITNESS WHEREOF, the Borrower, the Administrative Agent, the
Syndication Agent, the Documentation Agent, and each of the undersigned Banks
has caused this Amendment and Restatement to be duly executed, under seal, by
its duly authorized officer as of the day and year first above written.
POST APARTMENT HOMES, L.P. (SEAL)
By: Post GP Holdings, Inc., its
sole general partner
By: R. Byron Carlock, Jr.
------------------------------------
R. Byron Carlock, Jr.
Executive Vice President
<TABLE>
<CAPTION>
Commitments
- ------------
<S> <C>
$70,000,000 WACHOVIA BANK, N.A.,
as Administrative Agent and
as a Bank (SEAL)
By: /s/
---------------------------------------------
Title:
$60,000,000 FIRST UNION NATIONAL BANK,
as Syndication Agent and
as a Bank (SEAL)
By: /s/
---------------------------------------------
Title:
$60,000,000 SUNTRUST BANK, ATLANTA,
as Documentation Agent and
a Bank (SEAL)
By: /s/
---------------------------------------------
Title:
</TABLE>
7
<PAGE> 9
<TABLE>
<S> <C>
$20,000,000 COMMERZBANK AG, ATLANTA
AGENCY (SEAL)
By: /s/
----------------------------------------------
Title:
By: /s/
----------------------------------------------
Title:
FOUR WINDS FUNDING
CORPORATION (SEAL)
By: Commerzbank AG, New York
Branch, as Administrator
and Attorney-in-Fact
By: /s/
------------------------------------------
Title:
By: /s/
------------------------------------------
Title:
$20,000,000 BANK ONE, TEXAS, N.A. (SEAL)
By: /s/
----------------------------------------------
Title:
$10,000,000 CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION.
By: /s/
----------------------------------------------
Title: Vice President
</TABLE>
8
<PAGE> 10
CONSENT AND REAFFIRMATION OF GUARANTORS
Each of the undersigned (i) acknowledges receipt of the foregoing Second
Amended and Restated Credit Agreement (the "Amendment and Restatement"), (ii)
consents to the execution and delivery of the Amendment and Restatement by the
parties thereto and (iii) reaffirms all of its obligations and covenants under
their respective Guaranties dated as of April 9, 1997 and December 17, 1997, and
agrees that none of such obligations and covenants shall be affected by the
execution and delivery of the Amendment and Restatement. This Consent and
Reaffirmation may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which counterparts, taken
together, shall constitute but one and the same instrument.
POST PROPERTIES, INC. (SEAL)
By: /s/
------------------------------------------
Title:
POST GP HOLDINGS, INC. (SEAL)
By: /s/
------------------------------------------
Title:
POST LP HOLDINGS, INC. (SEAL)
By: /s/
------------------------------------------
Title:
<PAGE> 1
EXHIBIT 10.33
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
(this "First Amendment") is dated as of the ___th day of February, 1999 among
POST APARTMENT HOMES, L.P. (the "Borrower"), WACHOVIA BANK, N.A., as
Administrative Agent (the "Administrative Agent"), FIRST UNION NATIONAL BANK, as
Syndication Agent, SUNTRUST BANK, ATLANTA, as Documentation Agent and WACHOVIA
BANK, N.A., FIRST UNION NATIONAL BANK, SUNTRUST BANK, ATLANTA, COMMERZBANK AG,
ATLANTA AGENCY, FOUR WINDS FUNDING CORPORATION, BANK ONE, TEXAS, N.A., CHASE
BANK OF TEXAS, NATIONAL ASSOCIATION, and NATIONSBANK, N.A. (collectively, the
"Banks");
W I T N E S S E T H:
WHEREAS, the Borrower, the Administrative Agent, the Syndication Agent,
the Documentation Agent and Wachovia Bank, N.A., First Union National Bank,
Suntrust Bank, Atlanta, Commerzbank AG, Atlanta Agency, Four Winds Funding
Corporation, Bank One, Texas, N.A., and Chase Bank of Texas, National
Association, executed and delivered that certain Second Amended and Restated
Credit Agreement, dated as of November 20, 1998 (the "Credit Agreement");
WHEREAS, the Borrower has requested and the Administrative Agent, the
Syndication Agent, the Documentation Agent and the Banks have agreed to make
certain amendments to the Credit Agreement and to add NationsBank, N.A. as a new
bank, subject to the terms and conditions hereof;
NOW, THEREFORE, for and in consideration of the above premises and
other good and valuable consideration, the receipt and sufficiency of which
hereby is acknowledged by the parties hereto, the Borrower, the Administrative
Agent, the Syndication Agent, the Documentation Agent and the Banks hereby
covenant and agree as follows:
1. Definitions. Unless otherwise specifically defined herein, each term
used herein which is defined in the Credit Agreement shall have the meaning
assigned to such term in the Credit Agreement. Each reference to "hereof",
"hereunder", "herein" and "hereby" and each other similar reference and each
reference to "this Agreement" and each other similar reference contained in the
Credit Agreement
<PAGE> 2
shall from and after the date hereof refer to the Credit Agreement as amended
and restated hereby.
2. Changes to Commitments. From and after the date of this Amendment,
the Commitment of each Bank shall be the amount set forth opposite the name of
such Bank on the signature page of this Amendment, as such amount may be
increased or reduced pursuant to Section 2.08 of the Credit Agreement.
3. Maximum Commitment. The Maximum Commitment (as defined in Section
3(b) of the Second Amended And Restated Credit Agreement)is hereby increased to
and shall hereafter be $300,000,000.
4. Amendment to Section 2.12. Section 2.12 of the Credit Agreement
hereby is amended by deleting paragraph (a) thereof in its entirety, and
substituting the following therefor:
(a) The Borrower shall make each payment of principal of, and interest
on, the Syndicated Loans, Money Market Loans and Swing Loans and of fees
hereunder, not later than noon (Atlanta, Georgia time) on the date when due, in
Federal or other funds immediately available in Atlanta, Georgia, to the
Administrative Agent at its address referred to in Section 9.01. The
Administrative Agent will promptly distribute to each Bank its ratable share of
each such payment received by the Administrative Agent for the account of the
Banks, and to Wachovia such payment received by the Administrative Agent on
account of the Swing Loans. If the Administrative Agent fails to distribute to
any Bank its ratable share of any such payment on the day received, if received
not later than 1:00 p.m. (Atlanta, Georgia time) on such day, or on the next
Domestic Business Day, if received after 1:00 p.m. (Atlanta, Georgia time) on
such day, such Bank shall be entitled to recover such Bank's ratable share of
such payment from the Administrative Agent, together with interest thereon for
each day during the period from the date of distribution of such Banks ratable
share of such payment shall have become due until such distribution shall be
made, at a rate per annum equal to the rate at which the Administrative Agent
determines that it obtained (or could have obtained) overnight federal funds in
such amount for each such day during such period.
5. Additional Bank. Upon execution of this Amendment by NationsBank,
N.A., NationsBank, N.A. shall be a Bank for all purposes under the Credit
Agreement with the Commitment set forth on the signature page hereof.
2
<PAGE> 3
6. Restatement of Representations and Warranties. The Borrower hereby
restates and renews each and every representation and warranty heretofore made
by it in the Credit Agreement and the other Loan Documents as fully as if made
on the date hereof and with specific reference to this Amendment and all other
loan documents executed and/or delivered in connection herewith, except to the
extent otherwise disclosed pursuant to Section 5.01(c) or (d) of the Credit
Agreement.
7. Effect of Amendment. Except as set forth expressly hereinabove, all
terms of the Credit Agreement and the other Loan Documents shall be and remain
in full force and effect, and shall constitute the legal, valid, binding and
enforceable obligations of the Borrower. The amendments contained herein shall
be deemed to have prospective application only, unless otherwise specifically
stated herein.
8. Ratification. The Borrower hereby restates, ratifies and reaffirms
each and every term, covenant and condition set forth in the Credit Agreement
and the other Loan Documents effective as of the date hereof.
9. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which counterparts, taken together, shall constitute but one and the same
instrument.
10. Section References. Section titles and references used in this
Amendment shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreements among the parties hereto evidenced hereby.
11. No Default. The Borrower hereby acknowledges and agrees that, as of
the date hereof, and after giving effect to the terms hereof, there exists (i)
no Default or Event of Default and (ii) no right of offset, defense,
counterclaim, claim or objection in favor of the Borrower arising out of or with
respect to any of the Loans or other obligations of the Borrower owed to the
Banks.
12. Further Assurances. The Borrower agrees to take such further
actions as the Administrative Agent shall reasonably request in connection
herewith to evidence the amendments herein contained to the Borrower.
3
<PAGE> 4
13. Governing Law. This Amendment shall be governed by and
construed and interpreted in accordance with, the laws of the State of Georgia.
14. Conditions Precedent. This Amendment shall become effective only
upon receipt by the Administrative Agent of the following (as to the documents
described in paragraphs (a), (c), and (d) below, in sufficient number of
counterparts for each Bank):
(a) from each of the parties hereto either (i) a duly executed
counterpart of this Amendment signed by such party or (ii) a facsimile
transmission of such executed counterpart (with the original to be sent
to the Administrative Agent by overnight courier);
(b) a duly executed Syndicated Loan Note for each New Bank and
any Bank with an increased Commitment and a duly executed Money Market
Loan Note for the account of each Bank complying with the provisions of
Section 2.03 (including a Designated Bank Note in favor of Four Winds
Funding Corporation, as the Designated Bank of Commerzbank AG, Atlanta
Agency) and a Consent and Reaffirmation of Guarantors duly executed by
the Guarantors;
(c) an opinion letter of King & Spalding, counsel for the
Borrower and the Guarantors, dated as of the date hereof, covering such
matters relating to the transactions contemplated hereby as the
Administrative Agent or any Bank may reasonably request;
(d) a certificate (the "Closing Certificate"), dated as of the
Closing Date, signed by a principal financial officer of the Borrower,
to the effect that, to the best of his or her knowledge, (i) no Default
has occurred and is continuing and (ii) the representations and
warranties of the Borrower contained in Article IV of the Credit
Agreement are true on and as of the date hereof;
(e) all documents which the Administrative Agent or any Bank
may reasonably request relating to the existence of the Borrower and
the Guarantors, the corporate authority for and the validity of this
Amendment, the Notes, and any other matters relevant hereto, all in
form and substance satisfactory to the Administrative Agent, including,
without
4
<PAGE> 5
limitation, a certificate of each of the Borrower and the Guarantors
(the "Officer's Certificate"), signed by the Secretary or an Assistant
Secretary of the Borrower and the Guarantors, respectively, and as to
the names, true signatures and incumbency of the officer or officers of
the Borrower or Guarantors authorized to execute and deliver the Loan
Documents, and certified copies of the following items for each of the
Borrower and Guarantors (i) a certificate of the Secretary of State of
the State of its incorporation as to its good standing as a corporation
incorporated therein, and (ii) the action taken by its Board of
Directors authorizing the execution, delivery and performance of the
Loan Documents to which it is a party.
5
<PAGE> 6
IN WITNESS WHEREOF, the Borrower, the Administrative Agent, the
Syndication Agent, the Documentation Agent, and each of the undersigned Banks
has caused this Amendment to be duly executed, under seal, by its duly
authorized officer as of the day and year first above written.
POST APARTMENT HOMES, L.P. (SEAL)
By: Post GP Holdings, Inc., its
sole general partner
By: /s/ R. Byron Carlock, Jr.
----------------------------------------
R. Byron Carlock, Jr.
Executive Vice President
<TABLE>
<CAPTION>
Commitments
- ------------
<S> <C>
$70,000,000 WACHOVIA BANK, N.A.,
as Administrative Agent and
as a Bank (SEAL)
By: /s/
--------------------------------------------
Title:
$60,000,000 FIRST UNION NATIONAL BANK,
as Syndication Agent and
as a Bank (SEAL)
By: /s/
--------------------------------------------
Title:
$70,000,000 SUNTRUST BANK, ATLANTA,
as Documentation Agent and
a Bank (SEAL)
By: /s/
--------------------------------------------
Title:
</TABLE>
6
<PAGE> 7
<TABLE>
<S> <C>
$20,000,000 COMMERZBANK AG, ATLANTA
AGENCY (SEAL)
By: /s/
---------------------------------------------
Title:
By: /s/
---------------------------------------------
Title:
FOUR WINDS FUNDING
CORPORATION (SEAL)
By: Commerzbank AG, New York
Branch, as Administrator
and Attorney-in-Fact
By: /s/
-----------------------------------------
Title:
By: /s/
-----------------------------------------
Title:
$20,000,000 BANK ONE, TEXAS, N.A.(SEAL)
By: /s/
---------------------------------------------
Title:
$10,000,000 CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION
By: /s/
---------------------------------------------
Title: Vice President
</TABLE>
7
<PAGE> 8
<TABLE>
<S> <C>
$25,000,000 NATIONSBANK, N.A.
By: /s/
---------------------------------------------
Title:
LENDING OFFICE
NationsBank, N.A.
600 Peachtree Street, N.E.
6th Floor
Atlanta, Georgia 30308-3318
Attention: Mr. Frank Chiu
Telecopier No.: (404) 607-4145
Confirmation No.: (404) 607-4128
</TABLE>
8
<PAGE> 9
CONSENT AND REAFFIRMATION OF GUARANTORS
Each of the undersigned (i) acknowledges receipt of the foregoing First
Amendment to Second Amended and Restated Credit Agreement (the "Amendment"),
(ii) consents to the execution and delivery of the Amendment by the parties
thereto and (iii) reaffirms all of its obligations and covenants under their
respective Guaranties dated as of April 9, 1997 and December 17, 1997, and
agrees that none of such obligations and covenants shall be affected by the
execution and delivery of the Amendment. This Consent and Reaffirmation may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which counterparts, taken together, shall
constitute but one and the same instrument.
POST PROPERTIES, INC. (SEAL)
By: /s/
-----------------------------------------
Title:
POST GP HOLDINGS, INC. (SEAL)
By: /s/
-----------------------------------------
Title:
POST LP HOLDINGS, INC. (SEAL)
By: /s/
-----------------------------------------
Title:
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF POST PROPERTIES, INC.
<TABLE>
<CAPTION>
Name Incorporation
---- -------------
<S> <C> <C>
1. Post Apartment Homes, L.P. Georgia
2. Post Services, Inc. Georgia
3. Post LP Holdings, Inc. Georgia
4. Post GP Holdings, Inc. Georgia
5. Post Travel, Inc. Georgia
6. Post Landscape Group Georgia
7. RAM Partners, Inc. Georgia
8. Post Asset Management, Inc. Georgia
9. Rocky Point Management, Inc. Georgia
10. Cumberland Lake, Inc. Georgia
11. Briarcliff Commercial Property, LLC Georgia
12. Armada Homes, Inc. Delaware
13. Post Development Services
Limited Partnership Georgia
14. Addison Circle Access, Inc. Delaware
15. Akard-McKinney Investment
Company, LLC Texas
16. Post Uptown, LLC Texas
17. Greenwood Residential, LLC Texas
18. Columbus Management Services, LLC Texas
19. Uptown Denver, LLC Columbus
20. Addison Circle One, Ltd. Texas
21. Addison Circle Two, Ltd. Texas
22. Post Rice Lofts, LLC Texas
23. Rice Lofts, L.P. Texas
24. Post-AmerUs Rice Lofts, L.P. Georgia
25. Post-AmerUs American Beauty Mill, L.P. Georgia
26. Post Aviation, LLC Georgia
27. Villas at Parkway Village, L.P. Georgia
28. Villas GP, LLC Georgia
29. Post-AmerUs Bennie Dillon, L.P. Georgia
30. Miller-Post Development Group, LLC Georgia
31. Post-AmerUs Wilson Building, L.P. Georgia
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-62243) of our report dated February 26, 1999
appearing on page 35 of Post Properties, Inc.'s Annual Report on Form 10-K for
the year ended December 31, 1998.
PricewaterhouseCoopers LLP
Atlanta, Georgia
March 12, 1999
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-70689) of our report dated February 26, 1999
appearing on page 35 of Post Properties, Inc.'s Annual Report on Form 10-K for
the year ended December 31, 1998.
PricewaterhouseCoopers LLP
Atlanta, Georgia
March 12, 1999
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 33-81772) of
our report dated February 26, 1999 appearing on page 35 of Post Properties,
Inc.'s Annual Report on Form 10-K for the year ended December 31, 1998.
PricewaterhouseCoopers LLP
Atlanta, Georgia
March 12, 1999
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 333-39461) of
our report dated February 26, 1999 appearing on page 35 of Post Properties,
Inc.'s Annual Report on Form 10-K for the year ended December 31, 1998.
PricewaterhouseCoopers LLP
Atlanta, Georgia
March 12, 1999
<PAGE> 1
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 333-36595) of
our reports dated February 26, 1999 appearing on pages 35 and 56 of Post
Properties, Inc.'s and Post Apartment Homes, L.P.'s Annual Report on Form 10-K
for the year ended December 31, 1998, respectively.
PricewaterhouseCoopers LLP
Atlanta, Georgia
March 12, 1999
<PAGE> 1
EXHIBIT 23.6
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 333-47399) of
our report dated February 26, 1999 appearing on page 35 of Post Properties,
Inc.'s Annual Report on Form 10-K for the year ended December 31, 1998.
PricewaterhouseCoopers LLP
Atlanta, Georgia
March 12, 1999
<PAGE> 1
EXHIBIT 23.7
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-00020) of our report dated February 26, 1999
appearing on page 35 Post Properties, Inc.'s Annual Report on Form 10-K for the
ended December 31, 1998.
PricewaterhouseCoopers LLP
Atlanta, Georgia
March 12, 1999
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned hereby constitutes and
appoints Sherry W. Cohen, the Secretary of Post Properties, Inc. (the
"Company"), as the true and lawful agent and attorney-in-fact of the
undersigned with full power to appoint a substitute or substitutes to act
hereunder for the undersigned, and in his name to execute and file with the
Securities and Exchange Commission on behalf of the undersigned, or on behalf
of any trust with respect to which the undersigned serves as a trustee, any
Form 3s, Form 4s or Form 5s (or any amendments thereto) required to be so
executed and filed by the undersigned or any such trust with respect to which
the undersigned serves as trustee under Section 16(a) of the Securities
Exchange Act of 1934, as amended (the "Act"), and the rules and regulations
promulgated thereunder. The undersigned hereby gives to said agent and
attorney-in-fact full power and authority to act in the premises, including,
but not limited to, full power and authority to determine in her sole discretion
the time when, purpose for, and manner in which any powers herein conferred
shall be exercised. The undersigned hereby ratifies and confirms all that said
agent and attorney-in-fact, or any substitute or substitutes, may do by virtue
hereof. This Power of Attorney shall remain valid and in full force and effect
until the earlier or (i) the date on which the undersigned is no longer subject
to the reporting requirements under Section 16(a) of the Act and the rules and
regulations promulgated thereunder; and (ii) the date on which this Power of
Attorney is revoked in writing by the undersigned.
IN WITNESS WHEREOF, the undersigned has duly executed this Power of
Attorney this 19th day of February, 1998.
/s/ Arthur M. Blank
--------------------------
Arthur M. Blank
Sworn to and subscribed
before me this 19th day
of February 1998
/s/ Marcellene Lea
- -------------------------
Notary Public
My Commission Expires:
12-8-98
- ------------------------- (SEAL)
[Notary Seal]
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned hereby constitutes and
appoints Sherry W. Cohen, the Secretary of Post Properties, Inc. (the
"Company"), as the true and lawful agent and attorney-in-fact of the undersigned
with full power to appoint a substitute or substitutes to act hereunder for the
undersigned, and in his name to execute and file with the Securities and
Exchange Commission on behalf of the undersigned, or on behalf of any trust with
respect to which the undersigned serves as a trustee, any Form 3s, Form 4s or
Form 5s (or any amendments thereto) required to be so executed and filed by the
undersigned or any such trust with respect to which the undersigned serves as
trustee under Section 16(a) of the Securities Exchange Act of 1934, as amended
(the "Act"), and the rules and regulations promulgated thereunder. The
undersigned hereby gives to said agent and attorney-in-fact full power and
authority to act in the premises, including, but not limited to, full power and
authority to determine in her sole discretion the time when, purpose for, and
manner in which any powers herein conferred shall be exercised. The undersigned
hereby ratifies and confirms all that said agent and attorney-in-fact, or any
substitute or substitutes, may do by virtue hereof. This Power of Attorney shall
remain valid and in full force and effect until the earlier of (i) the date on
which the undersigned is no longer subject to the reporting requirements under
Section 16(a) of the Act and the rules and regulations promulgated thereunder;
and (ii) the date on which this Power of Attorney is revoked in writing by the
undersigned.
IN WITNESS WHEREOF, the undersigned has duly executed this Power of
Attorney this 19th day of February, 1998.
/s/ Herschel M. Bloom
-----------------------------
Herschel M. Bloom
Sworn to and subscribed
before me this 19th day
of February, 1998
/s/ Marcellene Lea
- --------------------------
Notary Public
My Commission Expires:
12-8-98
- -------------------------- (SEAL)
[Notarial Seal]
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned hereby constitutes and
appoints Sherry W. Cohen, the Secretary of Post Properties, Inc. (the
"Company"), as the true and lawful agent and attorney-in-fact of the undersigned
with full power to appoint a substitute or substitutes to act hereunder for the
undersigned, and in his name to execute and file with the Securities and
Exchange Commission on behalf of the undersigned, or on behalf of any trust with
respect to which the undersigned serves as a trustee, any Form 3s, Form 4s or
Form 5s (or any amendments thereto) required to be so executed and filed by the
undersigned or any such trust with respect to which the undersigned serves as
trustee under Section 16(a) of the Securities Exchange Act of 1934, as amended
(the "Act"), and the rules and regulations promulgated thereunder. The
undersigned hereby gives to said agent and attorney-in-fact full power and
authority to act in the premises, including, but not limited to, full power and
authority to determine in her sole discretion the time when, purpose for, and
manner in which any powers herein conferred shall be exercised. The undersigned
hereby ratifies and confirms all that said agent and attorney-in-fact, or any
substitute or substitutes, may do by virtue hereof. This Power of Attorney shall
remain valid and in full force and effect until the earlier of (i) the date on
which the undersigned is no longer subject to the reporting requirements under
Section 16(a) of the Act and the rules and regulations promulgated thereunder;
and (ii) the date on which this Power of Attorney is revoked in writing by the
undersigned.
IN WITNESS WHEREOF, the undersigned has duly executed this Power of
Attorney this 19th day of February, 1998.
/s/ Russell R. French
-----------------------------
Russell R. French
Sworn to and subscribed
before me this 19th day
of February, 1998
/s/ Marcellene Lea
- -----------------------
Notary Public
My Commission Expires:
12-8-98
- ----------------------- (SEAL)
[Notarial Seal]
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned hereby constitutes and
appoints Sherry W. Cohen, the Secretary of Post Properties, Inc. (the
"Company"), as the true and lawful agent and attorney-in-fact of the
undersigned with full power to appoint a substitute or substitutes to act
hereunder for the undersigned, and in her name to execute and file with the
Securities Exchange Commission on behalf of the undersigned, or on behalf of any
trust with respect to which the undersigned serves as trustee, any Form 3s, Form
4s or Form 5s (or any amendments thereto) required to be so executed and filed
by the undersigned or any such trust with respect to which the undersigned
serves as trustee under Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Act"), and the rules and regulations promulgated thereunder. The
undersigned hereby gives to said agent and attorney-in-fact full power and
authority to act in the premises, including, but not limited to, full power and
authority to determine in her sole discretion the time when, purpose for, and
manner in which any powers herein conferred shall be exercised. The undersigned
hereby ratifies and confirms all that said agent and attorney-in-fact, or any
substitute or substitutes, may do by virtue hereof. This Power of Attorney shall
remain valid and in full force and effect until the earlier of (i) the date on
which the undersigned is no longer subject to the reporting requirements under
Section 16(a) of the Act and the rules and regulations promulgated thereunder,
and (ii) the date on which this Power of Attorney is revoked in writing by the
undersigned.
IN WITNESS WHEREOF, the undersigned has duly executed this Power of
Attorney is this 29th day of January 1999.
/s/ Zell Miller
---------------------------------------
Sworn to and subscribed
Before me this 29th day
of January, 1999
/s/ Sharyn E. Collier
- -----------------------
Notary Public
My Commission expires:
March 19, 2002
- ----------------------- (SEAL)
[Notarial Seal]
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned hereby constitutes and
appoints Sherry W. Cohen, the Secretary of Post Properties, Inc. (the
"Company"), as the true and lawful agent and attorney-in-fact of the undersigned
with full power to appoint a substitute or substitutes to act hereunder for the
undersigned, and in his name to execute and file with the Securities and
Exchange Commission on behalf of the undersigned, or on behalf of any trust with
respect to which the undersigned serves as a trustee, any Form 3s, Form 4s or
Form 5s (or any amendments thereto) required to be so executed and filed by the
undersigned or any such trust with respect to which the undersigned serves as
trustee under Section 16(a) of the Securities Exchange Act of 1934, as amended
(the "Act"), and the rules and regulations promulgated thereunder. The
undersigned hereby gives to said agent and attorney-in-fact full power and
authority to act in the premises, including, but not limited to, full power and
authority to determine in her sole discretion the time when, purpose for, and
manner in which any powers herein conferred shall be exercised. The undersigned
hereby ratifies and confirms all that said agent and attorney-in-fact, or any
substitute or substitutes, may do by virtue hereof. This Power of Attorney shall
remain valid and in full force and effect until the earlier of (i) the date on
which the undersigned is no longer subject to the reporting requirements under
Section 16(a) of the Act and the rules and regulations promulgated thereunder;
and (ii) the date on which this Power of Attorney is revoked in writing by the
undersigned.
IN WITNESS WHEREOF, the undersigned has duly executed this Power of
Attorney this 19th day of February, 1998.
/s/ Charles E. Rice
-----------------------------------
Charles E. Rice
Sworn to and subscribed
before me this 19th day
of February 1998
/s/ Marcellene Lea
- ---------------------------
Notary Public
My Commission Expires:
12-8-98
- ---------------------------- (SEAL)
[Notarial Seal]
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned hereby constitutes and
appoints Sherry W. Cohen, the Secretary of Post Properties, Inc. (the
"Company"), as the true and lawful agent and attorney-in-fact of the
undersigned with full power to appoint a substitute or substitutes to act
hereunder for the undersigned, and in his name to execute and file with the
Securities and Exchange Commission on behalf of the undersigned, or on behalf
of any trust with respect to which the undersigned serves as a trustee, any
Form 3s, Form 4s or Form 5s (or any amendments thereto) required to be so
executed and filed by the undersigned or any such trust with respect to which
the undersigned serves as trustee under Section 16(a) of the Securities
Exchange Act of 1934, as amended (the "Act"), and the rules and regulations
promulgated thereunder. The undersigned hereby gives to said agent and
attorney-in-fact full power and authority to act in the premises, including,
but not limited to, full power and authority to determine in her sole
discretion the time when, purpose for, and manner in which any powers herein
conferred shall be exercised. The undersigned hereby ratifies and confirms all
that said agent and attorney-in-fact, or any substitute or substitutes, may do
by virtue hereof. This Power of Attorney shall remain valid and in full force
and effect until the earlier of (i) the date on which the undersigned is no
longer subject to the reporting requirements under Section 16(a) of the Act and
the rules and regulations promulgated thereunder; and (ii) the date on which
this Power of Attorney is revoked in writing by the undersigned.
IN WITNESS WHEREOF, the undersigned has duly executed this Power of
Attorney this 19th day of February, 1998.
/s/ J.C. Shaw
------------------------------
J.C. Shaw
Sworn to and subscribed
before me this 19th day
of February 1998
/s/ Marcellene Lea
- -----------------------------
Notary Public
My Commission Expires
12-8-98
- ----------------------------- (SEAL)
[Notarial Seal]
<PAGE> 7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned hereby constitutes and
appoints Sherry W. Cohen, the Secretary of Post Properties, Inc. (the
"Company"), as the true and lawful agent and attorney-in-fact of the undersigned
with full power to appoint a substitute or substitutes to act hereunder for the
undersigned, and in his name to execute and file with the Securities and
Exchange Commission on behalf of the undersigned, or on behalf of any trust with
respect to which the undersigned serves as a trustee, any Form 3s, Form 4s or
Form 5s (or any amendments thereto) required to be so executed and filed by the
undersigned or any such trust with respect to which the undersigned serves as
trustee under Section 16(a) of the Securities Exchange Act of 1934, as amended
(the "Act"), and the rules and regulations promulgated thereunder. The
undersigned hereby gives to said agent and attorney-in-fact full power and
authority to act in the premises, including, but not limited to, full power and
authority to determine in her sole discretion the time when, purpose for, and
manner in which any powers herein conferred shall be exercised. The undersigned
hereby ratifies and confirms all that said agent and attorney-in-fact, or any
substitute or substitutes, may do by virtue hereof. This Power of Attorney shall
remain valid and in full force and effect until the earlier of (i) the date on
which the undersigned is no longer subject to the reporting requirements under
Section 16(a) of the Act and the rules and regulations promulgated thereunder;
and (ii) the date on which this Power of Attorney is revoked in writing by the
undersigned.
IN WITNESS WHEREOF, the undersigned has duly executed this Power of
Attorney this 19th day of February, 1998.
/s/ John A. Williams
----------------------------
John A. Williams
Sworn to and subscribed
before me this 19th day
of February 1998
/s/ Marcellene Lea
- -----------------------
Notary Public
My Commission Expires:
12-8-98
- ----------------------- (SEAL)
[Notarial Seal]
<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 DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000903127
<NAME> POST PROPERTIES INC
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 22,502,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,255,074,000
<DEPRECIATION> 247,148,000
<TOTAL-ASSETS> 2,066,713,000
<CURRENT-LIABILITIES> 0
<BONDS> 800,008,000
0
50,000
<COMMON> 380,000
<OTHER-SE> 1,051,256,000
<TOTAL-LIABILITY-AND-EQUITY> 2,066,713,000
<SALES> 0
<TOTAL-REVENUES> 298,866,000
<CGS> 0
<TOTAL-COSTS> 153,745,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,297,000
<INCOME-PRETAX> 102,405,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 77,477,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 77,477,000
<EPS-PRIMARY> 2.21
<EPS-DILUTED> 2.18
</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 DECEMBER
31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0001012271
<NAME> POST APARTMENT HOMES LP
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 22,502,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,255,074,000
<DEPRECIATION> 247,148,000
<TOTAL-ASSETS> 2,066,713,000
<CURRENT-LIABILITIES> 0
<BONDS> 800,008,000
0
0
<COMMON> 0
<OTHER-SE> 1,177,051,000
<TOTAL-LIABILITY-AND-EQUITY> 2,066,713,000
<SALES> 0
<TOTAL-REVENUES> 298,866,000
<CGS> 0
<TOTAL-COSTS> 153,745,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,297,000
<INCOME-PRETAX> 102,405,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 88,988,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 88,988,000
<EPS-PRIMARY> 2.21
<EPS-DILUTED> 2.18
</TABLE>
