UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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, 1997 OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to__________________
Commission File Number 1-12358
COLONIAL PROPERTIES TRUST
(Exact name of registrant as specified in its charter)
Alabama 59-7007599
(State of organization) (I.R.S. employer
identification no.)
2101 Sixth Avenue North 35203
Suite 750 (Zip Code)
Birmingham, Alabama
(Address of principal executive
offices)
Registrant's telephone number, including area code: (205) 250-8700
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
registered
Common Shares of Beneficial New York Stock Exchange
Interest,
$.01 par value per share
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. YES |X| NO |_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |_|
The aggregate market value of the 20,930,921 Common Shares held by
non-affiliates of the Registrant was approximately $618,770,352 based on the
closing price on the New York Stock Exchange for such Common Shares on March 9,
1998.
Number of the Registrant's Common Shares of Beneficial Interest
outstanding as of March 9, 1998: 21,613,174.
Documents Incorporated by Reference
Portions of the annual report to shareholders for the year ended December
31, 1997, are incorporated by reference into Part II. Portions of the proxy
statement for the annual shareholders meeting to be held in 1998 are
incorporated by reference into Part III.
<PAGE>
PART I
Item 1. Business.
As used herein, the term "Company" includes Colonial Properties Trust, an
Alabama real estate investment trust, and one or more of its subsidiaries and
other affiliates (including Colonial Properties Holding Company, Inc., Colonial
Realty Limited Partnership, Colonial Properties Services Limited Partnership and
Colonial Properties Services, Inc.) or, as the context may require, Colonial
Properties Trust only or Colonial Realty Limited Partnership only.
This annual report on Form 10-K contains certain "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
including but not limited to anticipated timetables for acquisitions,
developments and expansions, expected economic growth in geographic markets
where CRLP owns or expects to own properties, and plans for continuing CRLP's
diversified strategy. These statements involve risks and uncertainties that may
cause actual results to be materially different from those anticipated.
Prospective investors should specifically consider, in connection with these
forward-looking statements, the various factors identified herein and in CRLP's
filings with the SEC which could cause actual results to differ, including
downturns in local or national economies, competitive factors, the availability
of suitable properties for acquisition at favorable prices, and other risks
inherent in the real estate business.
The Company is one of the largest owners, developers and operators of
multifamily, retail and office properties in the Sunbelt region of the United
States. It is a fully-integrated real estate company, whose activities include
ownership of a diversified portfolio of 93 properties as of December 31, 1997,
located in Alabama, Florida, Georgia, Mississippi, North Carolina, South
Carolina, Tennessee and Virginia, development of new properties, acquisition of
existing properties, build-to-suit development, and the provision of management,
leasing, and brokerage services for commercial real estate. The Company is a
self-administered equity real estate investment trust (a "REIT") that, as of
December 31, 1997, owns 43 multifamily apartment communities containing a total
of 13,759 apartment units (the "Multifamily Properties"), 37 retail properties
containing a total of approximately 10.6 million square feet of retail space
(the "Retail Properties"), 13 office properties containing a total of
approximately 1.9 million square feet of office space (the "Office Properties"),
and certain parcels of land adjacent to or near five of these properties (the
"Land"). (The Multifamily Properties, the Retail Properties, the Office
Properties and the Land are referred to collectively as the "Properties"). As of
December 31, 1997, the Multifamily Properties that had achieved stabilized
occupancy, the Retail Properties, and the Office Properties were 93.8%, 93.3%
and 95.5% leased, respectively.
The Company, through Colonial Properties Holding Company, Inc., a wholly
owned subsidiary ("CPHC"), is the sole general partner of, and holds
approximately 68% of the interests in, Colonial Realty Limited Partnership, a
Delaware limited partnership (the "Operating Partnership"). (The Company intends
to dissolve CPHC during the first half of 1998 and thereby become the direct
general partner of the Operating Partnership.) The Operating Partnership owns
all of the Properties (or interests therein). The Company conducts all of its
business through CPHC, the Operating Partnership, and Colonial Properties
Services Limited Partnership (the "Management Partnership"), which provides
management services for the Properties, and Colonial Properties Services, Inc.
(the "Management Corporation"), which provides management services for
properties owned by third parties.
The Company's executive offices are located at 2101 Sixth Avenue North,
Suite 750, Birmingham, Alabama, 35203 and its telephone number is (205)
250-8700. The Company was formed in Maryland on July 9, 1993. On August 21,
1995, the Company reincorporated as an Alabama real estate investment trust
under a new Alabama REIT statute.
Formation of the Company
The Company and the Operating Partnership were formed to succeed to
substantially all of the interests of Colonial Properties, Inc., an Alabama
corporation ("Colonial"), its affiliates and certain others in a diversified
portfolio of multifamily, retail, and office properties located in Alabama,
Florida, and Georgia and to the development, acquisition, management, leasing,
and brokerage businesses of Colonial.
2
<PAGE>
On September 29, 1993, (i) the Company consummated an initial public
offering (the "IPO") of 8,480,000 of its common shares of beneficial interest,
$.01 par value per share ("Common Shares"), (ii) the Operating Partnership
assumed ownership of 36 Properties (or interests therein) held by Thomas H.
Lowder, James K. Lowder, Robert E. Lowder, and their mother, Catherine Lowder
(the "Lowder family"), and third-party partners of the Lowder family, and the
operating businesses of Colonial, (iii) the Company transferred the net proceeds
from the IPO through CPHC to the Operating Partnership, in exchange for
8,480,000 units of limited partnership interest in the Operating Partnership
("OP Units"), (iv) the Operating Partnership repaid approximately $150.2 million
of indebtedness and prepayment penalties associated therewith secured by certain
of the Properties, and (v) the Operating Partnership established a $35.0 million
line of credit with SouthTrust Bank, which has since been increased to $200.0
million, to fund development activities and property acquisitions and for
general corporate purposes (collectively, the "Formation Transactions"). On
October 28, 1993, the underwriters of the IPO exercised an over-allotment option
to purchase an additional 686,200 shares.
The Company owns substantially all of the economic interests in the
Management Corporation, but in order to permit the Company to qualify as a REIT,
voting control of the Management Corporation is held by the Lowder family.
Recent Developments
Since the IPO, the Company has significantly expanded its portfolio of
Properties and its operating businesses. Acquisitions by the Company of new
properties represent a total investment of over $1.0 billion. The Company has
also completed the expansion of six multifamily properties since the IPO, adding
a total of 1,088 units to its multifamily portfolio. The Company currently has
11 active expansion and development projects in progress for Multifamily
Properties (including additional phases of six existing Multifamily Properties).
The Company has also disposed of six Multifamily Properties representing 2,464
apartment units and one Office Property representing 25,000 square feet of
office space.
The following is a summary of the Company's acquisition, disposition, and
development activity in 1997.
Acquisition and Disposition Activity
The Company acquired nine retail shopping centers, including one in
Alabama, two in Georgia, one in Florida, three in North Carolina, one in
Virginia and one in Tennessee containing approximately 1.1 million leasable
square feet for a total purchase price of $70.0 million. The Company also
acquired seven regional malls, including one in Alabama, three in Georgia, two
in North Carolina and one in Virginia containing approximately 3.2 million
leasable square feet for a total purchase price of $180.6 million.
The Company acquired five Multifamily Properties, including one in Alabama,
one in Florida, one in Georgia, one in Mississippi and one in South Carolina
containing 1,434 units for a total purchase price of $82.7 million. In
connection with a regional mall acquisition in Alabama, the Company disposed of,
in an exchange transaction, two multifamily properties located in Florida
containing 368 apartment units and having a net book value of $14.0 million. In
connection with the acquisitions of three malls in Georgia, the Company sold to
a third party four multifamily properties in Alabama containing a total of 2,096
apartment units for a total sale price of $54.8 million, which resulted in a net
gain of $2.6 million. The purchaser of the multifamily properties paid the sale
price by assuming an existing mortgage of $10 million and paying the remainder
in cash.
The Company also acquired four Office Properties, including three in
Alabama and one in Georgia containing 1.0 million square feet of office space
for a total purchase price of $97.1 million. In connection with an office
acquisition in Alabama, the Company disposed of, in an exchange transaction, a
25,000 square foot office building located in Alabama having a net book value of
$2.0 million.
The acquisition agreements for three of the properties acquired in 1997
provide for the Company to make additional payments to the sellers if certain
lease-up conditions are satisfied. The Company expects to make additional
payments to the sellers of approximately $8.3 million in 1998 pursuant to these
provisions.
Also in 1997, the Company purchased a 62.5% interest that it did already
own in two multi-tenant office buildings at an office park in Birmingham. The
purchase of these outside interests made the Company the sole owner of the two
buildings, which total 93,000 square feet. At the same time, the Company sold
its 25 percent interest in a 129,000 square foot building in the same office
complex. The Company also purchased a 50% interest in a 168,000 square foot
office building in Birmingham, increasing the Company's ownership to 100%.
3
<PAGE>
Development Activity
During 1997 the Company constructed 1,172 new apartment units in seven
multifamily communities (two of which were completed during the year) and
acquired land on which it intends to develop additional multifamily communities
during 1998. The aggregate cost of this multifamily development activity was
$50.5 million. As of December 31, 1997, the Company had 1,170 apartment units in
eleven multifamily communities under development and expansion. Management
anticipates that four of the multifamily projects will be completed during the
first half of 1998 and four others will be completed during the second half of
the year. The remaining multifamily projects are expected to be completed during
the first half of 1999. Management expects to invest approximately $64.2 million
over these periods to complete these projects.
During 1997 the Company also completed its 422,000 square foot expansion
of its regional mall in Macon, Georgia and completed a 239,000 square foot
expansion of a community shopping center in Montgomery, Alabama. The aggregate
cost of this retail development activity was $28.6 million.
The table below provides an overview of the Company's acquisition and
development activity during 1997:
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<PAGE>
<TABLE>
Summary of 1997
Acquisition and Development
Activity
<CAPTION>
Cost or
Completion or Type of Units (M) Anticipated
Anticipated Name of Property GLA (R/O) Cost (in
Completion Date Property (1) Location (2) (3) Thousands) (4)
- ----------------- --------------------------------- --------------------- ----------- --------- ----------------
Acquisitions:
<S> <C> <C> <C> <C> <C>
1st Qtr 97 .. Riverchase Center Birmingham, AL O 306,000 $ 24,200
1st Qtr 97 .. Heatherbrooke Center Birmingham, AL R 28,000 3,000
1st Qtr 97 .. Beechwood Shopping Center Athens, GA R 336,000 22,200
2nd Qtr 97 .. CV at Trussville Birmingham, AL M 376 20,500
2nd Qtr 97 .. Brookwood Village Birmingham, AL R 694,000 32,500
2nd Qtr 97 .. Lakeside Office Park Huntsville, AL O 121,000 8,800
2nd Qtr 97 .. Progress Center Huntsville, AL O 225,000 15,600
3rd Qtr 97 .. CV at Timothy Woods Athens, GA M 204 12,800
3rd Qtr 97 .. CV at Oakleigh Pensacola, FL M 176 10,500
3rd Qtr 97 .. Mansell Office Park Atlanta, GA O 352,000 48,500
3rd Qtr 97 .. CG at Natchez Trace Jackson, MS M 328 17,600
4th Qtr 97 .. Lakewood Plaza Jacksonville, FL R 195,000 14,400
4th Qtr 97 .. CV at Caledon Wood Greenville, SC M 350 21,300
4th Qtr 97 .. Georgia Malls Portfolio (3 Properties) Brunswick, Gainesville, R 1,428,200 97,000
and Valdosta, GA
4th Qtr 97 .. Retail Portfolio (8 Properties) NC/VA/TN R 1,490,500 78,500
4th Qtr 97 .. Village at Roswell Summit Atlanta, GA R 25,000 3,000
Developments:
1st Qtr 97 .. CG at Heathrow Orlando, FL M 312 20,500
1st Qtr 97 .. CG at Bayshore Bradenton, FL M 212 11,600
4th Qtr 97 .. CV at River Hills (expansion) Tampa, FL M 276 14,900
4th Qtr 97 .. CV at Inverness (expansion) Birmingham, AL M 84 6,700
4th Qtr 97 .. CG at Bayshore II (expansion) Bradenton, FL M 164 9,300
4th Qtr 97 .. CG at Wesleyan Macon, GA M 240 13,500
2nd Qtr 98 .. CG at Hunter's Creek Orlando, FL M 496 33,300
3rd Qtr 98 .. CG at Inverness Lakes (expansion) Mobile, AL M 132 8,000
4th Qtr 98 .. CG at Wesleyan II (expansion) Macon, GA M 88 6,200
4th Qtr 98 .. CG at Edgewater (expansion) Huntsville, AL M 192 11,500
1st Qtr 99 .. CV at Citrus Park Tampa, FL M 176 12,300
1st Qtr 99 .. CG at Cypress Crossing Orlando, FL M 250 20,000
2nd Qtr 99 .. CG at Lakewood Ranch Sarasota, FL M 288 20,300
1st Qtr 97 .. Macon Mall (expansion) Macon, GA R 422,000 52,000
4th Qtr 97 .. Montgomery Promenade (expansion) Montgomery, AL R 239,000 7,000
---------
Total $ 677,500
=========
<FN>
(1)In the listing of Multifamily Property names, CG has been used as an
abbreviation for Colonial Grand and CV has been used as an abbreviation for
Colonial Village.
(2)M refers to Multifamily Properties, R refers to Retail Properties, and O
refers to Office Properties.
(3)Units (in this table only) refers to multifamily apartment units and GLA
refers to gross leasable area of retail and office space.
(4) Amounts in thousands.
(5)Includes 249,000 square feet of GLA and 173,000 square feet of space owned by
an anchor.
(6)Includes 109,000 square feet of GLA and 130,000 square feet of space owned by
an anchor.
</FN>
</TABLE>
5
<PAGE>
Multifamily Property Acquisitions
Colonial Village at Trussville--On April 1, 1997, the Company acquired
Colonial Village at Trussville, a 376-unit multifamily community in Birmingham,
Alabama. The $20.5 million purchase price was financed through the issuance of
57,072 OP Units, valued at $1.6 million, and an advance on the Company's
unsecured line of credit. Colonial Village at Trussville was constructed in
1996 and 1997. The development consists of 20 two- and three-story buildings
and a separate clubhouse on approximately 28 acres of land. Amenities include
two swimming pools and a wading pool, a car care center, a fitness center,
tennis courts, a playground, and leasable garages. The community was in
lease-up at December 31, 1997. Colonial Village at Trussville was purchased
from a partnership whose partners included a trustee of the Company.
Colonial Village at Timothy Woods--On July 11, 1997, the Company acquired
Colonial Village at Timothy Woods, a 204-unit multifamily community in Athens,
Georgia. The purchase price of $12.8 million was financed through the issuance
of 27,275 OP Units, valued at $800,000, and an advance on the Company's
unsecured line of credit. The community was developed in 1996 and was 89% leased
at December 31, 1997. Amenities include a swimming pool, a fitness center, car
wash, garages, and two tennis courts. Colonial Village at Timothy Woods was
purchased from a corporation whose shareholders included two trustees of the
Company.
Colonial Village at Oakleigh--On July 14, 1997, the Company acquired
Colonial Village at Oakleigh, a 176-unit multifamily community in Pensacola,
Florida. The purchase price of $10.5 million was financed through the issuance
of 35,522 OP Units, valued at $1.0 million, and an advance on the Company's
unsecured line of credit. The community was developed in 1997 and was 95% leased
at December 31, 1997. Amenities include a swimming pool, a fitness center, car
wash, garages and covered parking, and alarm systems.
Colonial Grand at Natchez Trace--On August 29, 1997, the Company acquired
Colonial Grand at Natchez Trace, a 328-unit multifamily community in Jackson,
Mississippi. The community was constructed in three phases between 1995 and
1997, and was 99% leased at December 31, 1997. The purchase price of $17.6
million was financed through the assumption of two mortgages totaling $11.0
million with a weighted average interest rate of 8.09%, and an advance on the
Company's unsecured line of credit. Amenities include a swimming pool, a
clubhouse with an exercise room, and three lighted tennis courts.
Colonial Village at Caledon Wood--On October 31, 1997, the Company
acquired Colonial Village at Caledon Wood, a 350-unit multifamily community in
Greenville, South Carolina. The 25-acre community was developed in 1995 and
1996, and was 86% leased at December 31, 1997. The purchase price of $21.3
million was financed through an advance on the Company's unsecured line of
credit. Amenities include two swimming pools, two clubhouses with recreation
rooms, a fitness center, and lighted tennis courts.
The Company intends to continue to pursue acquisitions in the Sunbelt
region of the United States that meet the Company's acquisition criteria for
property quality, market strength, and investment return.
Completed Multifamily Expansion and Development Activity
Colonial Grand at Heathrow--The Company completed construction on a
312-unit development located in Heathrow (Orlando), Florida. The Company
acquired the land (30 acres) in December 1994 at a cost of $2.2 million. The
development is located adjacent to Heathrow International Business Center and
Heathrow Country Club. The apartment community offers a variety of amenities,
including a clubhouse with conference and computer rooms, an exercise center,
tennis and basketball courts, a swimming pool, and laundry facilities. Project
development costs, including land acquisition costs, totaled $20.5 million and
were funded through advances on the Company's line of credit. The Company
completed construction in the first quarter of 1997 and completed lease-up
during the third quarter of 1997.
6
<PAGE>
Colonial Grand at Bayshore--The Company completed construction on a
212-unit development located in Bradenton, Florida. The community offers a
variety of amenities, including a clubhouse, an exercise center, a swimming pool
overlooking a five-acre lake, tennis and basketball courts, a children's
playground, tenant garages, and storage units. Project costs, including land
acquisition costs, totaled $11.6 million and were funded through advances on the
Company's line of credit. The Company completed construction in the second
quarter of 1997 and completed lease-up during the third quarter of 1997.
Continuing Multifamily Expansion and Development Activity
Colonial Village at River Hills--The Company completed construction on a
276-unit expansion of Colonial Village at River Hills located in Tampa, Florida.
The community amenities include a clubhouse, a swimming pool, an exercise
center, an air-conditioned racquetball court, tennis courts, and laundry
facilities. Project development costs, including land acquisition costs, totaled
$14.9 million and were funded through advances on the Company's line of credit.
The Company completed construction in the fourth quarter of 1997 and expects to
complete lease-up during the second quarter of 1998.
Colonial Village at Inverness--The Company completed construction on an
84-unit expansion of Colonial Village at Inverness located in Birmingham,
Alabama. Project development costs, including land acquisition costs, totaled
$6.7 million and were funded through advances on the Company's line of credit.
The Company completed construction in the fourth quarter of 1997 and expects to
complete lease-up in the first quarter of 1998.
Colonial Grand at Bayshore II--The Company completed construction on a
164-unit expansion to this development located in Bradenton, Florida. The
Company acquired the land (12.5 acres) at a cost of $1.0 million pursuant to an
option acquired at the time the Company purchased the land for the existing
Colonial Grand at Bayshore development in November 1995. This expansion phase
offers the same amenities as the existing community. Project development costs,
including land acquisition costs, totaled $9.3 million and were funded through
advances on the Company's line of credit. The Company completed construction in
the fourth quarter of 1997 and expects to complete lease-up during the second
quarter of 1998.
Colonial Grand at Wesleyan--The Company completed construction on a
240-unit development located in Macon, Georgia. The Company acquired the land
(49.8 acres) at a cost of $1.4 million, which was determined pursuant to an
option acquired at the time of the Company's IPO in September 1993. The new
community offers a variety of amenities, including a clubhouse, an exercise
center, a swimming pool, tennis courts, and storage units for rent. Project
development costs, including land acquisition costs, totaled $13.5 million and
were funded through advances on the Company's line of credit. The Company
completed construction in the fourth quarter of 1997 and expects to complete
lease-up during the second quarter of 1998.
Colonial Grand at Hunter's Creek--The Company continued construction on a
496-unit development located in Orlando, Florida. The Company acquired the land
(36 acres) at a cost of $4.0 million. The new apartment community will offer a
variety of amenities, including a swimming pool and spa, an exercise room,
enclosed garages, tennis courts, and a car wash. Project development costs,
including land acquisition costs, are expected to total $33.3 million and will
be funded through advances on the Company's line of credit. The Company expects
to complete construction in the second quarter of 1998 and to complete lease-up
during the first quarter of 1999.
New Multifamily Expansion and Development Activity
Colonial Grand at Inverness Lakes II--The Company began construction on a
132-unit expansion of Colonial Grand at Inverness Lakes located in Mobile,
Alabama during the third quarter of 1997. Project development costs, including
land acquisition costs, are expected to total $8.0 million and will be funded
through advances on the Company's line of credit. The Company expects to
complete construction in the third quarter of 1998 and to complete lease-up
during the third quarter of 1999.
7
<PAGE>
Colonial Grand at Edgewater II--The Company began construction on a
192-unit expansion of Colonial Grand at Edgewater in Huntsville, Alabama during
the third quarter of 1997. Project development costs, including land acquisition
costs, are expected to total $11.5 million and will be funded through advances
on the Company's line of credit. The Company expects to complete construction in
the fourth quarter of 1998 and to complete lease-up during the third quarter of
1999.
Colonial Grand at Wesleyan II--The Company began construction on an
88-unit expansion of Colonial Grand at Wesleyan located in Macon, Georgia during
the third quarter of 1997. Project development costs, including land acquisition
costs, are expected to total $6.2 million and will be funded through advances on
the Company's line of credit. The Company expects to complete construction in
the fourth quarter of 1998 and to complete lease-up during the fourth quarter of
1998.
Colonial Village at Citrus Park--The Company began construction on a
176-unit development located in Tampa, Florida during the fourth quarter of
1997. The new apartment community will offer a variety of amenities, including a
swimming pool, fitness center, resident business center, garages, covered
parking and a gated entry. Project development costs, including land acquisition
costs, are expected to total $12.3 million and will be funded through advances
on the Company's line of credit. The Company expects to complete construction in
the first quarter of 1999 and to complete lease-up during the second quarter of
1999.
Colonial Grand at Lakewood Ranch--The Company began construction on a
288-unit development located in Sarasota, Florida during the fourth quarter of
1997. The new apartments will feature numerous luxuries that include crown
molding, tiled floors, chair railings, intrusion alarms, fireplaces and screened
patios on all first floor units. Amenities will include a swimming pool, fitness
center, tennis courts and a gated entry. Project development costs, including
land acquisition costs, are expected to total $20.3 million and will be funded
through advances on the Company's line of credit. The Company expects to
complete construction in the second quarter of 1999 and to complete lease-up
during the second quarter of 2000.
Colonial Grand at Cypress Crossing-- The Company began construction on a
250-unit development located in Orlando, Florida during the fourth quarter of
1997. The new apartment community will offer a variety of amenities, including a
swimming pool, fitness center, resident business center, garages, covered
parking and a gated entry. Project development costs, including land acquisition
costs, are expected to total $20.0 million and will be funded through advances
on the Company's line of credit. The Company expects to complete construction in
the first quarter of 1999 and to complete lease-up during the fourth quarter of
1999.
Retail Property Acquisitions
Beechwood Shopping Center--On March 24, 1997, the Company acquired
Beechwood Shopping Center, a 336,000 square foot community shopping center in
Athens, Georgia. The purchase price of $22.2 million was financed through the
assumption of debt totaling $11.9 million and an advance on the Company's
unsecured line of credit. The center includes a 34,000 square foot
Harris-Teeter, a 29,000 square foot Rhodes Furniture, a 10,000 square foot
CVS/Pharmacy, and 39,000 square feet occupied by the U.S. Post Office. The
center, which was built in 1963 and renovated in 1992, was 98% leased at
December 31, 1997.
Heatherbrooke Center--Also on March 24, 1997, the Company acquired
Heatherbrooke Center, a 28,000 square foot community shopping center in
Birmingham, Alabama. The $3.0 million purchase price of the center was financed
through the issuance of 16,303 OP Units, valued at $0.5 million, and an advance
on the Company's unsecured line of credit. AMI-Brookwood Medical Center
occupies 18,000 square feet in the center. Heatherbrooke Center was built in
1984 and was 100% leased at December 31, 1997.
Brookwood Village--On May 13, 1997, the Company acquired Brookwood
Village, a 694,000 square foot regional mall and convenience center in
Birmingham, Alabama, for a purchase price of $32.5 million. The mall includes a
232,000 square foot Rich's and a 106,000 square foot McRae's. The mall was
constructed in 1973, renovated in 1991 and was 86% leased at December 31, 1997.
The Company funded the acquisition through the exchange of two multifamily
properties in Florida and an advance on the Company's unsecured line of credit.
8
<PAGE>
Lakewood Plaza--On October 14, 1997, the Company acquired Lakewood Plaza,
a 195,000 square foot community shopping center located in southwest
Jacksonville, Florida, for a purchase price of $14.4 million. The center
includes a 48,000 square foot Winn Dixie and a 10,000 square foot Beall's
Department Store. The center was refurbished in 1995 and was 89% leased at
December 31, 1997. The purchase price was funded through the issuance of 74,709
OP Units, valued at $2.1 million, and an advance on the Company's unsecured line
of credit. The acquisition agreement provides for the Company to make an
additional payment to the seller if certain lease-up conditions are satisfied.
The Company expects to make an additional payment of approximately $400,000
during 1998 pursuant to this provision.
Georgia Malls Portfolio--On November 4, 1997, the Company acquired three
enclosed shopping malls in Georgia (including Glynn Place Mall in Brunswick,
Georgia, Lakeshore Mall in Gainesville, Georgia, and Valdosta Mall in Valdosta,
Georgia) for an aggregate purchase price of $97.0 million. The portfolio
contains a total of 1.4 million square feet of gross leasable area. In
connection with the acquisition, which was structured as a tax-deferred,
like-kind exchange, the Company agreed to sell to a third party four multifamily
properties for an aggregate sales price of $54.8 million, which the third-party
purchaser paid by assuming an existing mortgage of $10.0 million and paying
$44.8 million in cash. The Company used the cash portion of the sales price,
together with an advance on the Company's line of credit in the approximate
amount of $52.2 million, to pay the purchase price of the three malls. The three
properties have anchor tenants including Sears, Belk, JC Penney, and Kmart, and
collectively were 91% leased at December 31, 1997.
Retail Portfolio--On December 5, 1997, and January 20, 1998, the Company
completed the acquisition of eight retail properties consisting of three
enclosed malls located in Staunton, Virginia and Burlington and Mount Airy,
North Carolina and five community shopping centers located in Abingdon,
Virginia, Greensboro, Locust, and Yadkinville, North Carolina and Chattanooga,
Tennessee. The portfolio contains a total of 1.5 million square feet of gross
leasable area and was acquired for a total purchase price of $78.5 million. The
purchase price was funded through the issuance of 661,517 OP Units, valued at
$19.5 million, the assumption of $5.7 million of debt , and an advance on the
Company's unsecured line of credit. The eight properties collectively were 97%
leased at December 31, 1997. The acquisition agreement for the mall in Staunton,
Virginia provides for the Company to make an additional payment to the seller if
certain lease-up conditions are satisfied. The Company expects to make an
additional payment of $1.8 million pursuant to this provision.
Village at Roswell Summit--On December 31, 1997, the Company acquired
through merger the Village at Roswell Summit, a 25,000 square foot community
shopping center in Atlanta, Georgia, for a purchase price of $3.0 million. The
purchase price was funded through the assumption of $1.7 million of debt with an
interest rate of 8.93%, and an advance on the Company's unsecured line of
credit. The center was 90% leased at December 31, 1997. Village at Roswell
Summit was purchased from a partnership whose partners included a trustee of the
Company.
Retail Expansion Activity
Macon Mall--During the first quarter of 1997, the Company completed its
422,000 square foot expansion of Macon Mall, a super regional mall located in
Macon, Georgia. The mall expansion includes new anchor tenants Parisian, Inc.
and Dillard Department Stores, Inc. together with 50 specialty shops, which have
joined existing department stores including Macy's Primary Real Estate, Inc.,
Belk-Matthews Company of Macon, Georgia, a Georgia Corporation, Sears, Roebuck
and Company and J.C. Penney Company, Inc. Macon Mall now contains approximately
1,439,000 square feet of retail shopping space. The project expansion costs
totaled $52 million and were funded through advances on the Company's line of
credit. The Company expects to complete lease-up of this expansion during the
first quarter of 1998.
9
<PAGE>
Montgomery Promenade--During the fourth quarter of 1997, the Company
completed the 239,000 square foot expansion of Montgomery Promenade, a power
center containing approximately 209,000 square feet located in Montgomery,
Alabama. The expansion, which is known as Montgomery Promenade North, increases
the shopping center to 448,000 square feet of leasable area and includes a
130,000 square foot tenant-owned Home Depot. Montgomery Promenade is anchored by
Winn Dixie Market Place, Stein Mart, Michael's Arts & Crafts, Goody's,
Books-A-Million, and K & B Drugs. Project expansion costs totaled $8.1 million
and were funded through advances on the Company's line of credit. The Company
expects to complete lease-up during the first quarter of 1998.
Office Property Acquisitions
Riverchase Center--In two transactions on January 1 and January 8, 1997,
the Company acquired Riverchase Center 2100 and a 73.05% interest in Riverchase
Center 2200/2300. Riverchase Center is an office park comprised of eight
one-level buildings in Birmingham, Alabama. Major tenants include AT & T,
BellSouth, and Hewlett Packard. The purchase price of $20.8 million was funded
by the assumption of $8.7 million in mortgage debt, the issuance of 25,163 OP
Units, valued at $700,000, and an advance on the Company's unsecured line of
credit. Effective November 1, 1997, the Company purchased the remaining 26.95%
interest in the property by issuing 114,798 OP Units. Riverchase Center was
built between 1984 and 1988 and was 87% leased at December 31, 1997.
Lakeside Office Park--On May 22, 1997, the Company acquired Lakeside
Office Park, an office park comprised of two three-story brick and glass
multi-tenant buildings in Huntsville, Alabama totaling 121,000 square feet of
leasable area. Major tenants include Lockheed Martin, Accugraph, and IBM. The
purchase price of $8.8 million was funded by an advance on the Company's
unsecured line of credit. Lakeside Office Park was built during 1989 and 1990
and was 96% leased at December 31, 1997.
Progress Center--On June 26, 1997, the Company acquired Progress Center,
an office park comprised of five one-story multi-tenant buildings in
Huntsville, Alabama totaling 225,000 square feet of leasable area. Major
tenants include McDonnell Douglas, ADTRAN, Nichols Research Corporation, IKON,
and Telos Engineering. The purchase price of $15.6 million was funded through
the exchange of the Company's 25,000 square foot Whitesburg office building,
which was also in Huntsville, and by an advance on the Company's unsecured line
of credit. Progress Center was built in phases from 1983 to 1991 and was 96%
leased at December 31, 1997.
Mansell Office Park--On July 31, 1997, the Company acquired through merger
Mansell Office Park in Atlanta, Georgia, comprised of six buildings totaling
352,000 square feet, for a purchase price of $48.5 million. Major tenants
include Compdent, Electronic Data Services (EDS), Motorola, NationsBank, and
Xerox. The purchase price was funded by the assumption of $31.7 million in
mortgage debt, the issuance of 540,235 OP Units, valued at $15.7 million, and an
advance on the Company's unsecured line of credit. Mansell Office Park was built
between 1987 and 1996 and was 100% leased at December 31, 1997. As a result of
this transaction, the seller, William M. Johnson, was elected as a trustee of
the Company. In connection with its acquisition of this property, the Company
also agreed to acquire an additional office property consisting of 163,000
square feet of net rentable area and an additional retail property containing
21,000 square feet of gross leasable area. The purchase price of the additional
properties, which are located in or near the Mansell Office Park, is expected to
be approximately $24.3 million (subject to increase if certain lease-up
conditions are satisfied), which will be paid through the issuance of OP Units,
the assumption of debt and an advance on the Company's unsecured line of credit.
The Company expects to acquire the additional properties by the end of the
second quarter of 1998.
10
<PAGE>
Financing Activity
The Company funded a large portion of its acquisitions and developments
through the issuance of common shares, preferred shares, and debt securities.
During 1997, the Company completed the following equity and debt transactions:
Common Share Offerings
(in thousands)
-------------------------
Number of Price Gross Offering Net
Date Common Per Costs Proceeds
Shares Share Proceeds
- ----------------------- -------- -------- ------- -------
January 1,500,000 $ 29.8750 $ 44,812 $ 1,457 $ 43,355
July 1,700,000 $ 30.9375 $ 52,594 $ 2,945 $ 49,649
December 165,632 $ 30.1875 $ 5,000 $ 330 $ 4,670
Preferred Share Offering
(in thousands)
-------------------------
Number of Price
Date Preferred Per Gross Offering Net
Shares Share Proceeds Costs Proceeds
- ----------------------- -------- -------- ------- -------
November 5,000,000 $ 25.0000 $ 125,000 $ 4,451 $ 120,549
Debt Offerings
Gross
Type of Proceeds
Date Note Maturity Rate (in thousands)
- ----------------- --------------- -------------------------- ----------------
January Medium-term January, 2003 7.16% $ 50,000
July Medium-term July, 2004 6.96% $ 75,000
August Medium-term August, 2005 6.96% $ 25,000
September Medium-term September, 2005 6.98% $ 25,000
On July 10, 1997, the Company increased the borrowing capacity under its
unsecured line of credit from $125 million to $200 million. The credit facility,
which is used by the Company primarily to finance additional property
investments, bears interest at a rate ranging between 100 and 150 basis points
above LIBOR and is renewable annually. As of December 31, 1997, the balance
outstanding on the Company's line of credit was $117.1 million, bearing interest
at a rate of 110 basis points above LIBOR.
Business Strategy
The general business strategy of the Company is to generate stable and
increasing cash flow and portfolio value for its shareholders. The Company (and
its predecessor) has implemented this strategy principally by (i) realizing
growth in income from its existing portfolio of properties, (ii) developing,
expanding, and selectively acquiring additional multifamily, retail, and office
properties in growth markets located in the Sunbelt region of the United States,
where the Company has first-hand knowledge of growth patterns and local economic
conditions, (iii) managing its own properties, which has enabled it to better
control operating expenses and establish long-term relationships with its retail
and office tenants, (iv) maintaining its third-party property management
business, which has increased cash flow and established additional relationships
with tenants, and (v) employing a comprehensive capital maintenance program to
maintain properties in first-class condition. The Company's business strategy
and the implementation of that strategy are determined by the Company's board of
trustees and may be changed from time to time.
11
<PAGE>
Financing Strategy
The Company intends to maintain a ratio of long-term debt to total market
capitalization (i.e., the total debt divided by the market value of issued and
outstanding Common Shares and Units plus total debt) in the range of 30% to 45%.
The Company's total market capitalization as of December 31, 1997, was $1.8
billion, and its ratio of debt to total market capitalization was 39.8%. At
December 31, 1997, the Company's total debt included fixed-rate debt of $531.3
million, or 75.7% of total debt, and floating-rate debt of $170.7 million, or
24.3% of total debt. The Company has obtained interest rate protection for $67.8
million of the floating-rate debt.
The Company may from time to time reevaluate its borrowing policies in
light of then current economic conditions, relative costs of debt and equity
capital, market values of properties, growth and acquisition opportunities, and
other factors. The Company may modify its borrowing policy and may increase or
decrease its ratio of debt to total market capitalization. To the extent that
the board of trustees of the Company determines to seek additional capital, the
Company may raise such capital through additional equity offerings, debt
financings, or retention of cash flow (subject to provisions in the Code
requiring the distribution by a REIT of a certain percentage of taxable income
and taking into account taxes that would be imposed on undistributed taxable
income) or a combination of these methods.
Property Management
The Company is experienced in the management and leasing of multifamily,
retail, and office properties and believes that the management and leasing of
its own portfolio has helped the Properties maintain consistent income growth
and has resulted in reduced operating expenses from the Properties. The
third-party management, leasing, and brokerage businesses conducted through the
Management Corporation have provided the Company both with a source of cash flow
that is relatively stable and with the benefits of economies of scale in
conjunction with the management and leasing of its own properties. These
businesses also allow the Company to establish additional relationships with
tenants who may require additional retail or office space and to identify
potential acquisitions.
Operational Structure
Multifamily Division--The multifamily division of the Company is
responsible for all aspects of the Company's multifamily operations, including
day-to-day management and leasing of the 43 Multifamily Properties, as well as
development and acquisition of additional multifamily properties. The
multifamily division also is responsible for the provision of third-party
management services for apartment communities in which the Company does not have
an ownership interest. The multifamily division has regional offices in
Birmingham, Mobile and Montgomery, Alabama, Orlando and Tampa, Florida, and
Stockbridge, Georgia.
Retail Division--The Company's retail division is responsible for all
aspects of the Company's retail operations, including the provision of
management and leasing services for the 37 Retail Properties, as well as the
development and acquisition of additional retail properties. The retail division
also is responsible for the provision of third-party management services for
retail properties in which the Company does not have an ownership interest and
for brokerage services in other retail property transactions. The retail
division has regional offices in Birmingham, Alabama, Orlando, Florida, Macon,
Georgia and Burlington, North Carolina.
Office Division--The Company's office division is responsible for all
aspects of the Company's commercial office operations, including the provision
of management and leasing services for the 13 Office Properties, as well as the
development and acquisition of additional office properties. The office division
also is responsible for the provision of third-party management services for
office properties in which the Company does not have an ownership interest and
for brokerage services in other office property transactions. The office
division has a regional office in Atlanta, Georgia.
12
<PAGE>
Employees
The Company employs approximately 800 persons, including on-site property
employees who provide services for the Properties that the Company owns and/or
manages.
Tax Status
The Company has made an election to be taxed as a REIT under Sections 856
through 860 of the Internal Revenue Code of 1986, as amended (the "Code"),
commencing with its taxable year ending December 31, 1993. If the Company
qualifies for taxation as a REIT, the Company generally will not be subject to
Federal income tax to the extent it distributes at least 95% of its REIT taxable
income to its shareholders. Even if the Company qualifies for taxation as a
REIT, the Company may be subject to certain state and local taxes on its income
and property and to federal income and excise taxes on its undistributed income.
13
<PAGE>
Executive Officers of the Company
The following is a biographical summary of the executive officers of the
Company:
Thomas H. Lowder, 48, has been President and Chief Executive Officer of
the Company and CPHC, a trustee of the Company, and a director of CPHC since
1993. Mr. Lowder became President of Colonial Properties Inc., the Company's
predecessor, in 1976 and since that time has been actively engaged in the
acquisition, development, management, leasing, and sale of multifamily, retail,
and office properties for Colonial. Mr. Lowder is a member and past president of
the Alabama Chapter of the Commercial Investment Real Estate Institute. Mr.
Lowder is a former state Chairman of the Young Presidents' Organization and a
member of the Birmingham Area Board of Realtors, the National Association of
Industrial Office Parks, the International Council of Shopping Centers, and the
National Association of Real Estate Investment Trusts. He serves on the board of
directors for, among other companies, the Children's Hospital of Alabama,
American Red Cross-Birmingham Area Chapter, and the United Way of Central
Alabama. He graduated with honors from Auburn University with a Bachelor of
Science Degree.
Howard B. Nelson, Jr., 50, has been Chief Financial Officer of the Company
and CPHC, with general responsibility for financing matters since May 1997. Mr.
Nelson was Senior Vice President and Chief Operating Officer of the Company and
CPHC, with responsibility for the day-to-day management of the Company, from
September 1993 to May 1997. He joined Colonial in 1984 as a vice president and
became Senior Vice President-Finance in 1987. Mr. Nelson has served as
treasurer, vice president, president, and board member of the Birmingham Chapter
of the National Association of Industrial and Office Parks as well as vice
president and board member of the Building Owners and Managers Association of
Metropolitan Birmingham. He also serves on the Board of Directors of the
Children's Harbor Family Center and the College of Business Advisory Council of
Auburn University. He holds a Bachelor of Science Degree from Auburn University.
Paul F. Earle, 40, has been Executive Vice-President-Multifamily Division
of CPHC, with responsibility for management of all multifamily properties owned
and/or managed by the Company, since May 1997. He joined Colonial in 1991 and
has served as Vice President-Acquisitions, as well as Senior Vice
President--Multifamily Division. Mr. Earle serves as Chairman of the Alabama
Multifamily Council and is an active member of the National Apartment
Association. He also serves on the Board of Directors of Big Brother/Big
Sisters. Before joining Colonial, Mr. Earle was the President and Chief
Operating Officer of American Residential Management, Inc., Executive Vice
President of Great Atlantic Management, Inc., and Senior Vice President of
Balcor Property Management, Inc.
John N. Hughey, 38, has been Executive Vice President-Retail Division of
CPHC, with responsibility for all retail properties owned and/or managed by the
Company, since May 1997. He joined Colonial in 1982 and assumed responsibility
for an increasing number of shopping centers until being named to Senior Vice
President-Retail Division of Colonial in 1991. Mr. Hughey served as the
Alabama/Mississippi State Operations Chairman for the International Council of
Shopping Centers from 1993-1995. He holds a Bachelor of Science Degree from
Auburn University.
Charles A. McGehee, 52, has been Executive Vice President-Land
Acquisitions, Brokerage and Dispositions of CPHC, with responsibility for the
Company's acquisitions and dispositions and the sales brokerage departments,
since May 1997. Mr. McGehee was Senior Vice President--Multifamily
Acquisitions/Development from September 1993 to May 1997 and Senior Vice
President--Office Division from January 1990 to September 1993. He joined
Colonial in 1976 as vice president of retail leasing and was responsible for
leasing all retail space owned and/or managed by Colonial. Mr. McGehee has
served as president and a board member of the National Association of Industrial
and Office Parks as well as a member of the board of directors of the Birmingham
Area Board of Realtors. He holds a Bachelor of Science Degree from Auburn
University.
14
<PAGE>
C. Reynolds Thompson, III, 35, has been Executive Vice President--Office
Division of CPHC, with responsibility for management of all office properties
owned and/or managed by the Company, since May 1997. Mr. Thompson joined
Colonial in February 1997 as Senior Vice President--Office Acquisitions, with
responsibility for all acquisitions of office properties. Prior to joining
Colonial, Mr. Thompson worked for CarrAmerica Realty Corporation in office
building acquisitions and due diligence. Mr. Thompson's ten year real estate
background includes acquisitions, development, leasing, and management of office
properties in the south. He is an active member of the National Association of
Industrial and Office Parks and holds a Bachelor of Science degree from
Washington and Lee University.
Douglas B. Nunnelley, 55, has been Senior Vice President and Secretary of
the Company and CPHC, with general responsibility for regulatory, accounting,
management information systems, and insurance matters, since May 1997. He joined
Colonial in 1993 as Senior Vice President and Chief Financial Officer. From 1979
until 1993, Mr. Nunnelley served as Executive Vice President, Comptroller, and
Chief Accounting Officer of the AmSouth Bancorporation, and as Senior Vice
President and Comptroller of the First National Bank of Birmingham. He serves on
the Board of Directors of Eastern Health Systems, Inc. Mr. Nunnelley holds a
Bachelor of Science Degree in accounting from the University of Alabama and is a
graduate of the Stonier Graduate School of Banking at Rutgers University and is
a Certified Public Accountant.
Kenneth E. Howell, 48, has been Vice President, Controller and Chief
Accounting Officer of the Company and CPHC, with general responsibility for the
supervision of accounting, management information systems, and payroll and
benefits for all of the properties owned and/or managed by the Company, since
1981. He joined Colonial in 1981 and holds a Bachelor of Science Degree in
business administration from Auburn University.
15
<PAGE>
Item 2. Properties.
General
The Company acquired 36 properties in connection with the Formation
Transactions, and acquired or developed 19 additional properties and an
additional phase of an existing property in 1994, six additional properties in
1995, 11 additional properties in 1996, and 25 additional properties in 1997.
Since the Company's initial public offering ("IPO"), the Company has developed
four additional Multifamily Properties and has disposed of eight properties, all
through tax-deferred, like-kind exchanges. The 93 Properties owned by the
Company at December 31, 1997, consisted of 43 Multifamily Properties, 37 Retail
Properties, and 13 Office Properties, as described in more detail below.
Summary of Properties
Total 1997 Percent of Percentage
Units/ Property Total 1997 Occupancy at
Type of Number of GLA/ Revenue (2) Property Dec. 31, 1997
Property Properties NRA (1) (in thousands) Revenue (2) (3)
- ------------ ----------- -------- -------------- ------------ ------------
Multifamily 43 13,759 $ 95,503 51.8% 93.8%
Retail .... 37 10,558,000 71,179 38.6% 93.3%
Office .... 13 1,859,000 17,761 9.6% 95.5%
----------- -----
Total . 93 $ 184,443 100.0%
=========== =====
(1) Units (in this table only) refers to multifamily apartment units, GLA
refers to gross leasable area of retail space and NRA refers to net
rentable area of office space. Information is presented as of December 31,
1997.
(2) Includes the Company's proportionate share of revenue from those Office
Properties accounted for under the equity method, and the Company's share
of the properties disposed of in 1997.
(3) Excludes 1,972 units of expansion phases of five Multifamily Properties
that had not achieved stabilized occupancy as of December 31, 1997.
Multifamily Properties
The 43 Multifamily Properties owned by the Company at December 31, 1997,
contain a total of 13,759 garden-style apartments and range in size from 104 to
1,080 apartment units. Fourteen of the Multifamily Properties were acquired by
the Company in connection with the Formation Transactions, 13 Properties and one
additional phase of an existing Property were acquired during 1994, seven
Properties were acquired during 1996 and five Properties were acquired during
1997. Also, since its IPO the Company has developed four additional Multifamily
Properties. Twenty Multifamily Properties (containing a total of 6,985 apartment
units) are located in Alabama, 13 Multifamily Properties (containing a total of
4,502 apartment units) are located in Florida, eight Multifamily Properties
(containing a total of 1,594 apartments units) are located in Georgia, one
Multifamily Property (containing a total of 328 apartment units) is located in
Mississippi, and one Multifamily Property (containing a total of 350 apartment
units) is located in South Carolina. Each of the Multifamily Properties is
established in its local market and provides residents with numerous amenities,
which may include a swimming pool, exercise room, jacuzzi, clubhouse, laundry
room, tennis court(s), and/or a playground. All of the Multifamily Properties
are managed by the Company.
16
<PAGE>
The following table sets forth certain additional information relating to
the Multifamily Properties as of and for the year ended December 31, 1997.
<TABLE>
Multifamily Properties
<CAPTION>
Average Total Multifamily Percent of
Year Number Approximate Rental Property Total 1997
Multifamily Completed of Rentable Area Percent Rate Revenue for Property
Property (1) Location (2) Units (3) (Square Feet) Occupied Per Unit 1997 Revenue (4)
- ----------------------- --------------- ----------- ---------- ------------ -------- -------- --------- -------------
Alabama:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CV at Ashford Place ...... Mobile 1983 168 139,000 95.8% $ 488 $ 1,007,257 0.5%
CV at Rocky Ridge ........ Birmingham 1984 226 259,000 92.0% 598 1,491,752 0.8%
Colony Park .............. Mobile 1975 201 130,000 92.5% 387 879,268 0.5%
CG at Galleria Woods ..... Birmingham 1994 244 261,000 92.6% 656 1,710,598 0.9%
CG at Mountain Brook ..... Birmingham 1987/91 392 393,000 89.5% 679 2,679,375 1.5%
CV at Trussville ......... Birmingham 1996/97 376 410,000 (7) 674 1,424,920 0.8%
CV at Cahaba Heights ..... Birmingham 1992 125 131,000 92.0% 701 923,694 0.5%
CG at Edgewater .......... Huntsville 1990 308 323,000 98.4% 571 2,153,980 1.2%
CV at Inverness .......... Birmingham 1986/87/90 586 395,000 90.8% 540 2,955,040 1.6%
CV at Huntleigh Woods .... Mobile 1978 233 199,000 99.6% 433 1,250,658 0.7%
CG/CV at Inverness
Lakes Mobile ...... 1983/96 366 362,000 96.8% 572 2,837,271 1.5%
CV at McGehee Place ...... Montgomery 1986/95 468 404,000 92.5% 539 2,526,700 1.4%
CV at Monte D'Oro ........ Birmingham 1977 200 296,000 97.5% 650 1,531,823 0.8%
Patio .................... Auburn 1966/83/84 240 179,000 95.8% 411 1,118,992 0.6%
CV at Hillcrest .......... Mobile 1981 104 114,000 100.0% 590 740,351 0.4%
CG at Galleria ........... Birmingham 1986/96 1,080 1,195,000 92.3% 614 6,095,519 3.3%
CG at Research Park ...... Huntsville 1987/94 736 809,000 97.0% 555 5,282,727 2.9%
CG at Riverchase ......... Birmingham 1984/91 468 746,000 94.2% 746 3,888,784 2.1%
Ski Lodge Tuscaloosa ..... Tuscaloosa 1976/92 304 273,000 94.1% 406 1,402,641 0.8%
CV at Hillwood ........... Montgomery 1984 160 151,000 95.6% 550 959,472 0.5%
Other ................ 9,773,474 5.3%
-------- ----------- ----- ------- ----------- ----
Subtotal - Alabama (20 Properties) ... 6,985 7,169,000 94.1% 582 52,634,296 28.6%
-------- ----------- ----- ------- ----------- ----
Florida:
CG at Kirkman ...............Orlando 1991 370 337,000 92.2% 759 3,361,931 1.8%
CG at Carrollwood ...........Tampa 1966 244 286,000 96.3% 803 2,224,130 1.2%
CG at Bayshore ..............Bradenton 1997 332 369,000 (7) 722 1,364,051 0.7%
CG at Heathrow ..............Orlando 1997 312 370,000 95.5% 817 2,984,876 1.6%
CG at Hunter's Creek ........Orlando 1997 496 624,000 (7) 833 1,968,151 1.1%
CG at Palma Sola ............Bradenton 1992 340 292,000 91.2% 689 2,341,892 1.3%
CG at Palm Aire .............Sarasota 1991 248 252,000 99.2% 785 2,219,046 1.2%
CG at Gainesville ...........Gainesville 1989/93/94 560 489,000 93.6% 720 4,551,652 2.5%
CG at Ponte Vedra ...........Jacksonville 1988 240 212,000 95.4% 666 1,723,195 0.9%
CV at Oakleigh ..............Pensacola 1997 176 186,000 94.7% 683 751,218 0.4%
CV at River Hills ...........Tampa 1991/97 528 465,000 (7) 614 2,519,441 1.4%
CV at Lake Mary .............Orlando 1991/95 504 431,000 98.0% 628 3,764,405 2.0%
CV at Cordova ...............Pensacola 1983 152 116,000 98.7% 497 896,927 0.5%
Other ................... 972,311 0.5%
-------- ----------- ----- ------ ----------- ----
Subtotal - Florida (13 Properties) ... 4,502 4,429,000 95.2% 714 31,643,226 17.1%
-------- ----------- ----- ------ ----------- ----
Georgia:
CG at Barrington ............Macon 1996 176 201,000 80.1% 658 1,249,780 0.7%
CG at Wesleyan ..............Macon 1997 240 240,000 (7) 621 600,453 0.3%
North Ingle Villas ..........Macon 1983 140 133,000 82.1% 550 732,141 0.4%
CV at White Bluff ...........Savannah 1986 120 108,000 91.7% 631 871,295 0.5%
CV at Vernon Marsh ..........Savannah 1986/87 178 151,000 95.5% 610 1,264,803 0.7%
CG at Spring Creek ..........Macon 1992/94 296 328,000 91.6% 618 2,104,184 1.1%
CV at Stockbridge ...........Stockbridge 1993/94 240 253,000 96.3% 672 1,790,655 1.0%
CV at Timothy Woods .........Athens 1996 204 211,000 89.2% 740 825,338 0.4%
------- ----------- ----- ------ ----------- ----
Subtotal - Georgia (8 Properties) .... 1,594 1,625,000 90.1% 641 9,438,649 5.1%
------- ----------- ----- ------ ----------- ----
Mississippi:
CG at Natchez Trace .........Jackson 1995/97 328 343,000 99.0% 637 1,025,654 0.6%
------- ----------- ----- ------ ----------- ----
Subtotal - Mississippi (1 Property) .. 328 343,000 99.0% 637 1,025,654 0.6%
------- ----------- ----- ------ ----------- ----
South Carolina:
CV at Caledon Wood ..........Greenville 1995/96 350 367,000 86.0% 727 761,142 0.4%
------- ----------- ----- ------ ----------- ----
Subtotal - South Carolina (1 Property) 350 367,000 86.0% 727 761,142 0.4%
------- ----------- ----- ------ ----------- ----
TOTAL (43 Properties) ................ 13,759 13,933,000 93.8% $ 631 (5) $95,502,967 51.8%
======= =========== ===== ======== =========== ====
(footnotes on next page)
17
<PAGE>
<FN>
(1)All Multifamily Properties are 100% owned by the Company. In the listing of
Multifamily Property names, CG has been used as an abbreviation for Colonial
Grand and CV as an abbreviation for Colonial Village.
(2)Year initially completed and, where applicable, year(s) in which additional
phases were completed at the Property.
(3)Units (in this table only) refers to multifamily apartment units. Number of
Units includes all apartment units occupied or available for occupancy at
December 31, 1997.
(4)Percent of Total 1997 Property Revenue represents the Multifamily Property's
proportionate share of all revenue from the 93 Properties and the Properties
disposed of in 1997.
(5)Represents weighted average rental rate per unit of the 43 Multifamily
Properties at December 31, 1997.
(6)Represents revenues from the date of the Company's acquisition of this
Property in 1997 through December 31, 1997.
(7) Expanded or newly developed property currently undergoing lease-up.
(8) Represents revenues from the Properties disposed of in 1997.
</FN>
</TABLE>
The following table sets forth the total number of apartment units,
percent leased and average base rental rate per apartment unit as of the end of
each of the last five years for the Multifamily Properties:
<TABLE>
Average Base
Number Percent Rental Rate
Year-End of Units (1) Leased (2) Per Unit
<S> <C> <C> <C>
December 31, 1997 13,759 93.8% $631
December 31, 1996 13,617 94.8% $579
December 31, 1995 11,239 95.7% $552
December 31, 1994 10,972 96.0% $531
December 31, 1993 3,618 96.7% $510
<FN>
(1)Units (in this table only) refers to multifamily apartment units owned at
year end.
(2)Represents weighted average occupancy of the Multifamily Properties that had
achieved stabilized occupancy at the end of the respective period.
</FN>
</TABLE>
Retail Properties
The 37 Retail Properties owned by the Company at December 31, 1997,
contain a total of approximately 10.6 million square feet (including space owned
by anchor tenants). Ten of the Retail Properties are located in Alabama, 11 are
located in Florida, seven are located in Georgia, five are located in North
Carolina, one is located in South Carolina, one is located in Tennessee, and two
Retail Properties are located in Virginia. The Retail Properties consist of 12
enclosed regional malls (Briarcliffe Mall, Brookwood Village, Gadsden Mall,
Glynn Place Mall, Holly Hill Mall, Lakeshore Mall, Macon Mall, Mayberry Mall,
River Oaks Center, Staunton Mall, Valdosta Mall, and Village Mall), two power
centers, and 23 neighborhood shopping centers. Nine of the 37 Retail Properties
were originally developed by the Company, two were acquired in 1994, six were
acquired in 1995, four were acquired in 1996, and 16 were acquired in 1997. All
of the Retail Properties are managed by the Company.
18
<PAGE>
The following table sets forth certain information relating to the Retail
Properties as of and for the year ended December 31, 1997.
<TABLE>
Retail Properties
<CAPTION>
Average
Base
Gross Rent
Leasable Per Total Retail Percent of
Year Area Number Total Leased Property Total 1997
Retail Completed (Square Of Percent Annualized Square Revenue for Property
Property (1) Location (2) Feet) (3) Stores Leased (3) Base Rent Foot (4) 1997 Revenue (5)
- ---------------------------------------------------------------------------------------------------------------------------------
Alabama:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
River Oaks ...........Decatur 1979/89 494,000 58 88.3% $3,293,000 $ 14.90 $ 4,828,318 2.6%
81,000(6)
Brookwood Village ....Birmingham 1973/91 463,000 69 86.3% 3,836,000 12.74 3,631,284 (7) 2.0%
231,000(6)
Gadsden Mall .........Gadsden 1974/91 492,000 61 96.9% 2,705,000 14.14 4,500,473 2.4%
Village Mall .........Auburn 1973/84/89 399,000 63 93.5% 2,606,000 14.44 4,026,642 2.2%
Montgomery Promenade .Montgomery 1990/97 274,000 31 98.3% 1,679,000 14.80 2,214,901 1.2%
174,000(6)
McGehee Place ........Montgomery 1986 55,000 13 86.3% 526,000 11.51 691,375 0.4%
50,000(6)
Bellwood .............Montgomery 1988 37,000 15 86.1% 401,000 10.91 500,703 0.3%
50,000(6)
Old Springville ......Birmingham 1982 64,000 14 100.0% 405,000 8.39 500,277 0.3%
Heatherbrooke Center .Birmingham 1984 28,000 5 100.0% 393,000 11.85 370,728 (7) 0.2%
Olde Town ............Montgomery 1978/90 39,000 15 95.3% 336,000 9.66 427,795 0.2%
---------- ------- ----- ---------- ----- ----------- -----
Subtotal-Alabama (10 Properties) ..... 2,931,000 344 92.0% 16,180,000 13.36 21,692,496 11.8%
---------- ------- ----- ---------- ----- ----------- -----
Florida:
University Park ......Orlando 1986/89 399,000 41 94.6% 2,763,000 13.65 3,668,053 2.0%
Country Lake .........Orlando 1990 217,000 28 97.3% 1,063,000 10.57 1,716,094 0.9%
Burnt Store Square ...Punta Gorda 1990 199,000 21 90.2% 1,241,000 11.64 1,549,115 0.8%
Winter Haven .........Orlando 1986 197,000 24 89.4% 1,292,000 11.50 1,440,257 0.8%
Northdale Court ......Tampa 1988 193,000 27 81.5% 1,322,000 9.50 1,949,345 1.1%
55,000(6)
Bear Lake ............Orlando 1990 125,000 20 85.8% 839,000 12.97 1,117,744 0.6%
Paddock Park .........Ocala 1988 87,000 20 97.6% 663,000 11.89 859,833 0.5%
Bardmoor Village .....St. Petersburg 1981 158,000 27 98.1% 1,355,000 15.45 1,772,679 1.0%
Island Walk ..........Orlando 1993/95 222,000 24 98.2% 1,914,000 15.00 2,262,172 1.2%
Wekiva Riverwalk .....Orlando 1990 209,000 26 82.7% 1,950,000 18.61 2,457,767 1.3%
Lakewood Plaza .......Jacksonville 1995 195,000 39 88.9% 1,366,000 9.30 470,071 (7) 0.3%
---------- ------- ----- ---------- ----- ----------- -----
Subtotal-Florida (11 Properties) ..... 2,256,000 297 91.5% 15,768,000 12.40 19,263,130 10.4%
---------- ------- ----- ---------- ----- ----------- -----
Georgia:
Macon Mall ...........Macon 1975/88/97 757,000 158 (8) 9,778,000 22.59 15,903,335 8.6%
682,000(6)
Beechwood Center .....Athens 1963/92 336,000 51 98.1% 2,404,000 10.29 2,329,786 (7) 1.3%
Britt David ..........Columbus 1990 110,000 10 100.0% 746,000 12.48 936,002 0.5%
Lakeshore Mall .......Gainesville 1984-97 518,000 64 93.6% 3,358,000 16.45 850,449 (7) 0.5%
Valdosta Mall ........Valdosta 1982-85 325,000 53 93.7% 2,831,000 15.93 844,207 (7) 0.5%
74,000(6)
Glynn Place Mall .....Brunswick 1986 285,000 54 84.7% 2,581,000 15.22 620,856 (7) 0.3%
226,000(6)
Village at Roswell Summit..Atlanta 1988 25,000 11 90.0% 320,000 14.77 - (7) 0.0%
---------- ------- ----- ---------- ----- ----------- -----
Subtotal-Georgia (7 Properties) ...... 3,338,000 401 93.4% 22,018,000 17.93 21,484,635 11.7%
---------- ------- ----- ---------- ----- ----------- -----
North Carolina:
Holly Hill Mall ...... Burlington 1969/86/94 422,000 57 98.8% 2,591,000 13.94 820,231 (7) 0.4%
Mayberry Mall ........ Mount Airy 1968/86 150,000 19 95.4% 712,000 10.37 163,627 (7) 0.1%
55,000(6)
Quaker Village ....... Greensboro 1968/88/97 114,000 32 100.0% 1,028,000 10.02 202,015 (7) 0.1%
Yadkin Plaza ......... Yadkinville 1971/97 94,000 13 100.0% 651,000 6.20 59,046 (7) 0.0%
Stanly Plaza ......... Locust 1987/96 47,000 7 100.0% 249,000 7.27 44,373 (7) 0.0%
---------- ------- ----- ---------- ----- ----------- -----
Subtotal-North Carolina (5 Properties) 882,000 128 98.6% 5,231,000 10.71 1,289,292 0.7%
---------- ------- ----- ---------- ----- ----------- -----
South Carolina:
Briarcliffe Mall .....Myrtle Beach 1986 488,000 78 96.7% 4,066,000 15.55 6,725,317 3.6%
---------- ------- ----- ---------- ----- ----------- -----
Subtotal-South Carolina (1 Property) . 488,000 78 96.7% 4,066,000 15.55 6,725,317 3.6%
---------- ------- ----- ---------- ----- ----------- -----
Tennessee:
Rivermont Shopping Center..Chattanooga 1986/97 75,000 8 95.4% 366,000 6.57 75,381 0.0%
---------- ------- ----- ---------- ----- ----------- -----
Subtotal-Tennessee (1 Property) ...... 75,000 8 95.4% 366,000 6.57 75,381 0.0%
---------- ------- ----- ---------- ----- ----------- -----
Virginia:
Staunton Mall ........Staunton 1969/86/97 422,000 46 93.2% 1,841,000 9.92 467,986 0.3%
Abingdon Towne Centre ..Abingdon 1987/96 166,000 19 100.0% 1,001,000 9.81 180,352 0.1%
---------- ------- ----- ---------- ----- ----------- -----
Subtotal-Virginia (2 Properties) ..... 588,000 65 95.1% 2,842,000 9.81 648,338 0.4%
---------- ------- ----- ---------- ----- ----------- -----
Total (37 Properties) ................ 10,558,000 1,321 93.3% $66,471,000 $ 14.38 $ 71,178,589 38.6%
========== ======= ===== ========== ===== =========== =====
(footnotes on next page)
19
<PAGE>
<FN>
(1) All Retail Properties are 100% owned by the Company.
(2) Year initially completed and, where applicable, year(s) in which
the Property was substantially renovated or an additional phase of the
Property was completed.
(3)Total GLA includes space owned by anchor tenants, but Percent Leased excludes
such space.
(4) Includes specialty store space only.
(5)Percent of Total 1997 Property Revenue represents the Retail Property's
proportionate share of all revenue from the 93 Properties.
(6) Represents space owned by anchor tenants.
(7)Represents revenues from the date of the Company's acquisitions of the
Property in 1997 through December 31, 1997.
(8) Expanded or newly developed property currently undergoing lease-up.
</FN>
</TABLE>
The following table sets forth the total gross leasable area, percent
leased and average base rent per leased square foot as of the end of each of the
last five years for the Retail Properties:
<TABLE>
Gross Average
Leasable Area Percent Base Rent Per
Year-End (Square Feet) (1) Leased Leased Square Foot(2)
<S> <C> <C> <C>
December 31, 1997 8,880,000 93.3% $14.38
December 31, 1996 4,856,000 93.8% $14.66
December 31, 1995 3,758,000 93.1% $13.23
December 31, 1994 2,467,000 95.8% $12.61
December 31, 1993 2,158,000 95.0% $12.27
<FN>
(1) Excludes 1,678,000 square feet of space owned by anchor tenants.
(2) Average base rent per leased square foot is calculated using
specialty store year-end base rent figures.
</FN>
</TABLE>
The following table sets out a schedule of the lease expirations for
leases in place as of December 31, 1997, for the Retail Properties:
<TABLE>
Net Rentable Annualized Percent of Total
Year of Number of Area Of Base Rent of Annual Base Rent
Lease Tenants with Expiring Leases Expiring Represented by
Expiration Expiring Leases (Square Feet)(1) Leases (1)(2) Expiring Leases (1)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1998 280 872,122 $ 8,928,000 13.5%
1999 220 702,133 6,984,000 10.1%
2000 205 938,119 8,148,000 12.3%
2001 119 530,314 4,577,000 6.9%
2002 130 513,252 5,230,000 7.9%
2003 56 272,291 2,944,000 4.4%
2004 52 530,403 3,541,000 5.4%
2005 60 220,151 3,380,000 5.1%
2006 57 614,853 4,825,000 7.3%
2007 82 544,787 5,427,000 8.2%
2008-2015 60 2,353,575 12,488,000 18.9%
---------- ------------ -------------- -----------
1,321 8,092,000 $ 66,472,000 100.0%
========== ============ ============== ===========
<FN>
(1)Excludes 1,678,000 square feet of space owned by anchor tenants and 788,000
square feet of space not leased as of December 31, 1997.
(2) Annualized base rent is calculated using base rents as of December 31, 1997.
</FN>
</TABLE>
20
<PAGE>
Office Properties
The 13 Office Properties owned by the Company at December 31, 1997,
contain a total of approximately 1.9 million rentable square feet. Eleven of the
Office Properties are located in Alabama (representing 77% of the office
portfolio's net rentable square feet) , one is located in Atlanta, Georgia and
one is located in Orlando, Florida. The Office Properties range in size from
approximately 30,000 square feet to 352,000 square feet. Four of the Office
Properties were developed by Colonial, five of the Properties were acquired at
various times between 1980 and 1990, and four of the Properties were acquired in
1997. All of the Office Properties are managed by the Company.
The following table sets forth certain additional information relating to
the Office Properties as of and for the year ended December 31, 1997.
<TABLE>
Office Properties
<CAPTION>
Average
Base
Net Rent
Rentable Per Total Office Percent of
Year Area Total Leased Property Total 1997
Office Completed Square Percent Annualized Square Revenue for Property
Property (1) Location (2) Feet Leased Base Rent Foot 1997 (3) Revenue (4)
- -------------------- ------------ ----------- ------------ --------- ------------ --------- ------------ ----------
Alabama:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interstate Park ......Montgomery 1982-85/89 227,000 95.0% $ 2,717,000 $ 12.76 $ 2,987,935 1.5%
Riverchase Center ....Birmingham 1984-88 306,000 87.2% 2,779,000 9.95 2,673,025 (7) 1.3%
International Park ...Birmingham 1987/89 93,000 100.0% 1,119,000 14.23 1,283,943 (8) 0.7%
Colonial Plaza .......Birmingham 1982 168,000 100.0% 2,410,000 14.66 1,784,666 (8) 1.0%
Progress Center ......Huntsville 1983-91 225,000 96.1% 1,732,000 8.26 1,031,030 (7) 0.6%
Lakeside Office Park .Huntsville 1989/90 121,000 96.0% 1,330,000 11.40 858,403 (7) 0.5%
AmSouth Center .......Huntsville 1990 157,000 92.6% 2,489,000 17.64 2,878,541 1.6%
P&S Building .........Gadsden 1946/76/91 40,000 100.0% 178,000 4.50 178,020 0.1%
250 Commerce St ......Montgomery 1904/81 35,000 100.0% 297,000 8.44 373,764 0.2%
Anderson Block (5) ...Montgomery 1981/83 34,000 96.1% 188,000 5.83 116,484 0.1%
Land Title Bldg ......Birmingham 1975 30,000 100.0% 383,000 12.85 142,583 0.1%
Other ................ 110,266 (6) 0.1%
------------ ------ ------------ ------- ------------ ---
Subtotal-Alabama (11 Properties) 1,436,000 94.6% 15,622,000 11.66 14,418,660 7.8%
------------ ------ ------------ ------- ------------ ---
Florida:
University Park Plaza ..Orlando 1985 71,000 92.0% 813,000 14.37 871,548 0.5%
------------ ------ ------------ ------- ------------ ---
Subtotal-Florida (1 Property) .. 71,000 92.0% 813,000 14.37 871,548 0.5%
------------ ------ ------------ ------- ------------ ---
Georgia:
Mansell Office Park ..Atlanta 1987/96/97 352,000 100.0% 4,200,000 12.45 2,471,239 (7) 1.3%
------------ ------ ------------ ------- ------------ ---
Subtotal-Georgia (1 Property) .. 352,000 100.0% 4,200,000 12.45 2,471,239 1.3%
------------ ------ ------------ ------- ------------ ---
TOTAL (13 Properties) .......... 1,859,000 95.5% $ 20,635,000 $ 12.18 $ 17,761,447 9.6%
============ ====== ============ ======= ============ ===
<FN>
(1)All Office Properties are 100% owned by the Company with the exceptions of
Anderson Block and Land Title Building, which are each 33.33% owned by the
Company.
(2)Year initially completed and, where applicable, most recent year in which the
Property was substantially renovated or in which an additional phase of the
Property was completed.
(3)Total 1997 Office Property revenue is the Company's share (based on its
percentage ownership of the property) of total Office Property revenue,
unless otherwise noted.
(4)Percent of Total 1997 Property Revenue represents the Office Property's
proportionate share of all revenue from the 93 Properties and the Properties
disposed of in 1997.
(5) The Company has a leasehold interest in this Property.
(6) Represents revenues from the Property disposed of in 1997.
(7)Represents revenues from the date of the Company's acquisition of this
Property in 1997 through December 31, 1997.
(8)Represents the Company's percentage of 1997 revenues prior to the Company's
purchase of the remaining interests in this Property, and the Company's 100%
interest in 1997 revenues subsequent to the purchase of the remaining
interest in this Property.
</FN>
</TABLE>
21
<PAGE>
The following table sets out a schedule of the lease expirations for leases
in place as of December 31, 1997, for the Office Properties (including all lease
expirations for partially-owned Properties): <TABLE>
Net Rentable Annualized Percent of Total
Year of Number of Area Of Base Rent of Annual Base Rent
Lease Tenants with Expiring Leases Expiring Represented by
Expiration Expiring Leases (Square Feet)(1) Leases (1)(2) Expiring Leases (1)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1998 101 599,000 $ 6,497,000 31.5%
1999 69 296,000 3,467,000 16.8%
2000 57 283,000 3,426,000 16.6%
2001 26 204,000 2,371,000 11.5%
2002 16 68,000 820,000 4.0%
2003 4 87,000 1,314,000 6.4%
2004 2 23,000 254,000 1.2%
2005 3 66,000 1,170,000 5.7%
2006 4 108,000 1,204,000 5.8%
2007 1 6,000 112,000 0.5%
---------- ------------ -------------- -----------
283 1,740,000 $ 20,635,000 100.0%
========== ============ ============== ===========
<FN>
(1) Excludes 119,000 square feet of space not leased as of December 31, 1997.
(2) Annualized base rent is calculated using base rents as of December 31, 1997.
</FN>
</TABLE>
The following sets forth the net rentable area, total percent leased and
average base rent per leased square foot for each of the last five years for the
Office Properties: <TABLE>
Net Average Base
Rentable Area Total Rent Per Leased
Year-end (Square Feet) Percent Leased Square Foot (1)
<S> <C> <C> <C>
December 31, 1997 1,859,000 95.5% $12.18
December 31, 1996 1,009,000 97.4% $13.80
December 31, 1995 1,009,000 94.0% $13.52
December 31, 1994 1,009,000 95.0% $12.99
December 31, 1993 1,007,000 93.7% $13.05
<FN>
- -----------------
(1)Average base rent per leased square foot is calculated using base rents as of
December 31 for each respective year.
</FN>
</TABLE>
Undeveloped Land
The Company owns eight undeveloped land parcels consisting of
approximately 103.2 acres (collectively, the "Land"). These parcels are adjacent
to five of the Properties and are suitable for potential expansion at those
Properties. The Land suitable for expansion is located adjacent to a Multifamily
Property and four Retail Properties. Land adjacent to Multifamily Properties
typically will be considered for potential development of another phase of an
existing Multifamily Property if the Company determines that the particular
market can absorb additional apartment units. The Company currently owns one
such parcel. For expansions at Retail Properties, the Company owns parcels both
contiguous to the boundaries of Retail Properties, which would accommodate
expansion of the mall or shopping center, and outparcels which are suitable for
restaurants, financial institutions or free standing retailers. The Company owns
seven such parcels.
22
<PAGE>
Options to Acquire Additional Land--In addition to the Land, the Company
has options to acquire certain additional land parcels owned by the Lowder
family (collectively, the "Option Parcels"). The name, location, proposed use
and acreage of each Option Parcel is as follows:
<TABLE>
Site Name Location Proposed Use Acres
<S> <C> <C> <C>
North Macon (Wimbleton Forest).Macon, GA Retail/Multifamily 38.1
Osprey (Sarasota) ............Sarasota, FL Mixed Use 73.9
Interstate Park................Montgomery, AL Office 11.3
Huntsville Research Park.......Huntsville, AL Office 9.8
</TABLE>
Each option has a term of five years from the date of the closing of the
IPO, subject to earlier termination if the Company elects not to exercise a
right of first opportunity on a proposed sale of such Option Parcel by the
Lowder family. The Company also has a five-year right of first opportunity with
respect to each Option Parcel beginning on the expiration date of the option
term (if the option is not exercised).
Property Markets
The table below sets forth certain information with respect to the
geographic concentration of the Properties as of December 31, 1997.
<TABLE>
Geographic Concentration of Properties
<CAPTION>
Percent
Of Total
Units Total 1997
(Multifamily) GLA NRA 1997 Property Property
State (1) (Retail) (2) (Office)(3) Revenue Revenue
- ------------- --------- ------------ ----------- ------------- --------
<S> <C> <C> <C> <C> <C>
Alabama 6,985 2,931,000 1,436,000 $ 88,745,452 48.2%
Florida 4,502 2,256,000 71,000 51,777,904 28.0%
Georgia 1,594 3,338,000 352,000 33,394,523 18.1%
Mississippi 328 -0- -0- 1,025,654 0.6%
North Carolina -0- 882,000 -0- 1,289,292 0.7%
South Carolina 350 488,000 -0- 7,486,459 4.0%
Tennessee -0- 75,000 -0- 75,381 0.0%
Virginia -0- 588,000 -0- 648,338 0.4%
--------- ------------ ----------- ------------- -------
Total 13,759 10,558,000 1,859,000 $ 184,443,003 100.0%
========= ============ =========== ============= =======
<FN>
(1) Units (in this table only) refer to multifamily apartment units.
(2) GLA refers to gross leaseable area of retail space.
(3) NRA refers to net rentable area of office space.
</FN>
</TABLE>
The Company believes that the demographic and economic trends and
conditions in the markets where the Properties are located indicate a potential
for continued growth in property net operating income. The Properties are
located in a variety of distinct submarkets within Alabama, Florida, Georgia,
Mississippi, North Carolina, South Carolina, Tennessee and Virginia; however,
Birmingham, Huntsville and Montgomery, Alabama, Orlando, Tampa and
Sarasota/Bradenton, Florida, and Macon and Atlanta, Georgia, are the Company's
primary markets. The Company believes that its markets in these eight states,
which are characterized by stable and increasing population and employment
growth, should continue to provide a steady demand for multifamily, retail, and
office properties.
23
<PAGE>
Mortgage Financing
Certain of the Properties are subject to mortgage indebtedness. The
Properties whose financial results are consolidated in the financial statements
of the Company are subject to existing mortgage indebtedness and other notes
payable in an aggregate amount as of December 31, 1997, of approximately $702.0
million carrying a weighted average interest rate of 7.23% and a weighted
average maturity of 7.3 years. The mortgage indebtedness on the Properties as of
December 31, 1997, is set forth in the table below:
<TABLE>
Mortgage Debt and Notes Payable
<CAPTION>
Anticipated
Annual Debt
Principal Service Estimated
Interest Balance (as of (1/1/98- Maturity Balance Due
Property (1) Rate 12/31/97) 12/31/98) Date (2) on Maturity
- ------------------------------- ---------- ------------- ------------- ---------- --------------
Multifamily Properties:
<S> <C> <C> <C> <C> <C>
CG at Carrollwood 8.870% $ 6,230,000 $ 552,601 03/05/05 $ 6,230,000
CG at Natchez Trace 7.950% 6,859,693 577,803 09/01/35 47,813
8.000% 4,081,678 351,254 02/01/37 29,071
CV at Rocky Ridge 5.900% 6,000,000 354,000 08/01/02(3) 6,000,000
7.625% 1,335,000 188,648 08/01/02(3) 841,667
CG at Galleria Woods 6.875% 7,253,376 645,715 07/15/99 7,035,235
CG at Mountain Brook 8.000% 12,101,956 1,134,426 01/10/00 11,742,632
CV at Cahaba Heights 8.060% 3,696,965 376,726 05/10/00 3,502,055
CG at Edgewater 7.500% 9,811,501 10,481,759 11/15/98 9,685,749
CV at Inverness 5.96%(4) 9,900,000 347,490 06/15/26(5) 9,900,000
CV at Huntleigh Woods 9.500% 2,992,056 (8) 21,280 (8) 05/01/02 2,992,056 (8)
CV at Inverness Lakes 5.900% 4,000,000 236,000 07/31/02(6) 4,000,000
7.625% 1,663,333 204,037 07/31/02(7) 1,234,167
CG at Galleria 4.540% 22,400,000 786,240 06/15/26(5) 22,400,000
CG at Research Park 4.800% 12,775,000 448,403 06/15/26(5) 12,775,000
CG at Riverchase 7.150% 9,081,348 9,134,047 12/31/98 8,967,396
Ski Lodge-Tuscaloosa 9.500% 4,779,642 (8) 33,994 (8) 05/01/02 4,779,642 (8)
CV at Vernon Marsh 5.96%(4) 4,500,000 157,950 06/15/26(5) 4,500,000
CV at White Bluff 5.96%(4) 3,400,000 119,340 06/15/26(5) 3,400,000
CV at Hillwood 5.900% 3,330,000 196,470 07/31/02(6) 3,330,000
7.625% 1,593,333 197,203 07/31/02(7) 1,179,167
Retail Properties:
Bellwood 10.125% 2,973,419 324,825 01/01/99 2,948,518
Island Walk 8.800% 10,253,337 1,059,766 10/01/01 9,578,044
Mayberry Mall 9.220% 3,401,032 362,787 10/01/01 3,237,064
Montgomery Promenade 9.250% 10,810,000 999,925 07/01/00 10,810,000
Rivermont Shopping Center 10.125% 1,789,378 270,656 09/01/08 52,091
University Park Plaza 8.870% 14,445,000 1,281,272 03/05/05 14,445,000
Village at Roswell Summit 8.930% 1,652,438 168,057 09/01/05 1,401,860
Office Properties:
International Park 8.650% 2,011,911 216,795 10/01/99 1,931,425
Interstate Park 8.500% 4,481,137 643,443 08/01/03 2,648,144
Riverchase Center 7.880% 8,479,599 897,960 12/01/00 7,766,043
Mansell Office Park 8.250% 17,571,480 1,595,700 01/10/08 15,285,811
8.625% 14,007,994 1,333,754 06/01/00 13,682,324
Other debt:
Land Loan 7.010% 668,364 712,178 09/30/98 649,897
Line of Credit,
incl. Comp. Bid 6.756%(9) 117,086,000 7,910,330 07/(10)8 117,086,000
Unsecured Senior Notes 7.500% 64,886,337 4,875,000 07/15/01 65,000,000
Unsecured Senior Notes 8.050% 64,741,683 5,232,500 07/15/06 65,000,000
Medium Term Notes 7.050% 50,000,000 3,525,000 12/15/03 50,000,000
Medium Term Notes 7.160% 50,000,000 3,580,000 01/17/03 50,000,000
Medium Term Notes 6.690% 75,000,000 5,017,500 07/26/04 75,000,000
Medium Term Notes 6.960% 25,000,000 1,740,000 08/01/05 25,000,000
Medium Term Notes 6.980% 25,000,000 1,745,000 09/26/05 25,000,000
------------- ------------- --------------
TOTAL $ 702,043,990 $ 70,037,834 $ 681,093,871
============= ============= ==============
(footnotes presented on the next page)
24
<PAGE>
<FN>
(1)As noted in the table, certain Properties were developed in phases and
separate mortgage indebtedness may encumber each of the various phases. In
the listing of property names, CG has been used as an abbreviation for
Colonial Grand and CV as an abbreviation for Colonial Village.
(2)All of the mortgages can be prepaid at any time, subject to prepayment
penalties calculated typically on a yield maintenance basis, except for the
mortgages encumbering CV at Rocky Ridge, CV at Inverness Lakes, CV at
Hillwood, and CG at Natchez Trace, which are closed to prepayment for varying
lengths of time.
(3)The maturity date noted represents the date on which credit enhancement
expires for the tax-exempt municipal bonds put in place as part of the
original financing for the Property. The stated maturity date for the loans
is August 1, 2007.
(4)Represents the maximum interest rate payable by the Company for the next nine
months on these loans as the result of an interest rate protection agreement
entered into by the Company. The loans (which are financed through tax-exempt
bonds) secured by these Properties (or phases thereof) bear interest at a
variable rate, determined weekly at the rate necessary to produce a bid in
the process of remarketing the bonds equal to par plus accrued interest,
based on comparable issues in the market. The interest rate for these debt
obligations as of December 31, 1997, was 3.80% for these Properties.
(5)These loans are financed through tax-exempt bonds which are credit enhanced
by Fannie Mae. The loans, which bear interest at a weekly variable interest
rate, require monthly interest payments through June 2006 and principal and
interest payments from July 2006 through June 2026. The weighted average
interest rate of these five loans was 3.87% at December 31, 1997.
(6)The maturity date noted represents the date on which credit enhancement
expires for the tax-exempt municipal bonds put in place as part of the
original financing for the Property. The stated maturity date for the loans
is August 1, 2022.
(7)The maturity date noted represents the date on which credit enhancement
expires for the tax-exempt municipal bonds put in place as part of the
original financing for the Property. The stated maturity date for the loans
is August 1, 2010.
(8)The principal balances outstanding on these loans were repaid in February
1998 through advances on the Company's unsecured line of credit. The amounts
presented for anticipated annual debt service for these loans represent the
principal and interest paid during 1997 (excluding the final principal
balance paid). The amounts presented for estimated balance due on maturity
for these loans represent the outstanding balances that were repaid in
February 1998.
(9)This line of credit facility bears interest at a variable rate, based on
LIBOR plus a spread that ranges from 100 to 150 basis points. At December 31,
1997, line of credit facility bore interest at a rate of 110 basis points
above LIBOR. The facility also includes a competitive bid feature that allows
the Company to convert up to $100 million under the line of credit to a fixed
rate, for a fixed term not to exceed 90 days. At December 31, 1997, $45
million was outstanding under a competitive bid loan which bore interest at a
weighted average rate of 6.60%.
(10) This credit facility has a term of one year beginning in July 1997 and
provides for a two-year amortization in the event of non-renewal.
</FN>
</TABLE>
In addition to the foregoing mortgage debt, the two Office Properties in
which the Company owns partial interests (and which therefore are not
consolidated in the financial statements of the Company) also are subject to
existing mortgage indebtedness. The Company's pro-rata share of such
indebtedness as of December 31, 1997, was $1,057,000 which carried a weighted
average interest rate of 9.3%. The maturity dates of these loans range from May
31, 1998 to July 17, 2000, and as of December 31, 1997, the loans had a weighted
average maturity of 1.8 years.
Item 3. Legal Proceedings.
Neither the Company nor the Properties are presently subject to any
material litigation nor, to the Company's knowledge, is any material litigation
threatened against the Company or the Properties, other than routine litigation
arising in the ordinary course of business which is expected to be covered by
liability insurance.
Item 4. Submission of Matters to a Vote of Security Holders.
A Special Meeting of Shareholders of Colonial Properties Trust was held on
October 23, 1997. The following is a tabulation of the voting on each proposal
presented at the Special Meeting:
PROPOSAL 1 - TO AMEND THE DECLARATION OF TRUST TO INCREASE THE
NUMBER OF AUTHORIZED SHARES
Votes For 11,953,101
Votes Against 3,067,835
Votes Withheld 103,089
Broker -0-
Non-Votes
25
<PAGE>
PROPOSAL 2 - TO AUTHORIZE THE BOARD OF TRUSTEES TO AUTHORIZE
ISSUANCES OF PREFERRED SHARES
Votes For 14,121,859
Votes Against 885,237
Votes Withheld 116,928
Broker -0-
Non-Votes
PROPOSAL 3 - TO AUTHORIZE THE BOARD OF TRUSTEES TO AUTHORIZE
ISSUANCES OF BONDED INDEBTEDNESS
Votes For 14,362,614
Votes Against 466,136
Votes Withheld 295,274
Broker -0-
Non-Votes
26
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related
Shareholder Matters.
The following sets forth the high and low sale prices for the Common
Shares for each quarter in the two-year period ended December 31, 1997, as
reported by the New York Stock Exchange Composite Tape, and the dividends paid
by the Company with respect to each such period. <TABLE>
Calendar Period High Low Distribution
<CAPTION>
1997:
<S> <C> <C> <C>
First Quarter..........$ 31.875.....$ 28.125.......$ .52
Second Quarter.........$ 30.125.....$ 26.625.......$ .52
Third Quarter..........$ 31.375.....$ 27.500.......$ .52
Fourth Quarter.........$ 30.750.....$ 27.750.......$ .52
1996:
First Quarter..........$ 26.00......$ 23.000.......$ .50
Second Quarter.........$ 24.75......$ 22.000.......$ .50
Third Quarter..........$ 26.375.....$ 23.750.......$ .50
Fourth Quarter.........$ 30.375.....$ 25.875.......$ .50
</TABLE>
On March 9, 1998, the last reported sale price of the Common Shares on the
NYSE was $29.5625. On March 9, 1998, the Company had 460 shareholders of record.
Item 6. Selected Financial Data.
The information required by this item is hereby incorporated by reference
to the material appearing in the 1997 annual report to shareholders (the "Annual
Report to Shareholders"), filed as Exhibit 13.1 hereto, under the caption
"Selected Financial Information."
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The information required by this item is hereby incorporated by reference
to the material appearing in the Annual Report to Shareholders under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Item 8. Financial Statements and Supplementary Data.
The financial statements of the Company are hereby incorporated by
reference to the Consolidated Financial Statements of Colonial Properties Trust
appearing in the Annual Report to Shareholders.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
27
<PAGE>
PART III
Item 10. Trustees and Executive Officers of the Registrant.
The information required by this item with respect to trustees and
compliance with the Section 16(a) reporting requirements is hereby incorporated
by reference to the material appearing in the Company's definitive proxy
statement for the annual meeting of shareholders to be held in 1998 (the "Proxy
Statement") under the captions "Election of Trustees" and "Section 16(a)
Beneficial Ownership Reporting Compliance." Information required by this item
with respect to executive officers is provided in Item 1 of this report. See
"Executive Officers of the Company."
Item 11. Executive Compensation.
The information required by this item is hereby incorporated by reference
to the material appearing in the Proxy Statement under the caption "Executive
Compensation."
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information required by this item is hereby incorporated by reference
to the material appearing in the Proxy Statement under the caption "Voting
Securities and Principal Holders Thereof."
Item 13. Certain Relationships and Related Transactions.
The information required by this item is hereby incorporated by reference
to the material appearing in the Proxy Statement under the captions "Executive
Compensation Committee Interlocks and Insider Participation" and "Certain
Transactions."
28
<PAGE>
Part IV
Item 14. Exhibits, Financial Schedules, and Reports on Form 8-K.
14(a)(1) and (2) Financial Statements and Schedules
Index to Financial Statements and Financial Statement Schedules
Financial Statements:
The following financial statements of the Company are hereby incorporated
by reference to the Consolidated Financial Statements of Colonial Properties
Trust appearing in the Annual Report to Shareholders:
Consolidated Balance Sheets as of December 31, 1997 and 1996
Consolidated Statements of Income for the years ended
December 31, 1997, 1996, and 1995
Consolidated Statements of Shareholders' Equity for the
years ended December 31, 1997, 1996, and 1995
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996, and 1995
Notes to Consolidated Financial Statements
Report of Independent Accountants
Financial Statement Schedules:
Schedule IIIReal Estate and Accumulated Depreciation
Report of Independent Accountants
All other schedules have been omitted because the required information of
such other schedules is not present in amounts sufficient to require submission
of the schedule or because the required information is included in the
consolidated financial statements.
14(a)(3) Exhibits
*3.1 Declaration of Trust of Company.
*3.2 Bylaws of the Company.
**10.1 Second Amended and Restated Agreement of
Limited Partnership of the Operating
Partnership, as amended.
+10.2.1 Registration Rights and Lock-Up Agreement dated September 29,
1993,among the Company and the persons named therein.
10.2.2 Registration Rights and Lock-Up Agreement
dated March 25, 1997, among the Company and
the persons named therein. (EDGAR Version Only)
10.2.3 Registration Rights and Lock-Up Agreement
dated November 4, 1994, among the Company and
the persons named therein. (EDGAR Version Only)
10.2.4 Registration Rights and Lock-Up Agreement
dated August 20, 1997, among the Company and
the persons named therein. (EDGAR Version Only)
10.2.5 Registration Rights and Lock-Up Agreement
dated November 1, 1997, among the Company and
the persons named therein. (EDGAR Version Only)
10.2.6 Registration Rights and Lock-Up Agreement
dated July 1, 1997, among the Company and the
persons named therein. (EDGAR Version Only)
10.2.7 Registration Rights and Lock-Up Agreement
dated July 1, 1996, among the Company and the
persons named therein. (EDGAR Version Only)
29
<PAGE>
(PI)10.3.1 First Amended and Restated Employee Share
++ Option and Restricted Share Plan.
+/-10.3.2 Non-employee Trustee Share Option Plan.
++
+/-+/-10.3.3 Non-employee Trustee Share Plan.
++
(OMEGA)10.3.4 Employee Share Purchase Plan.
++
+10.5 Non-employee Trustee Option Agreement.
+10.6 ++ Employment Agreement between the Company and
Thomas H. Lowder.
+10.7 Officers and Trustees Indemnification
Agreement.
+10.8 Partnership Agreement of the Management
Partnership.
**10.9 Articles of Incorporation of the Management
Corporation, as amended.
+10.10 Bylaws of the Management Corporation.
**10.11 Articles of Incorporation of CPHC, as amended.
+10.12 Bylaws of CPHC.
+10.13 Land Option Agreement.
++10.14 Credit agreement between the Colonial Realty
Limited Partnership and SouthTrust Bank,
National Association, AmSouth Bank, N.A.,
Wells Fargo Bank, National Association,
Wachovia Bank, N.A., First National Bank of
Commerce, N.A., and PNC Bank, Ohio, National
Association dated July 10, 1997 and related
promissory notes.
+10.16 ++ Annual Incentive Plan.
++++10.17 Indenture dated as of July 22, 1996, by and between Colonial
Realty Limited Partnership and Bankers Trust Company, as
amended
13.1 Portions of the Annual Report to Shareholders incorporated by
reference in Part II of this Form 10-K. (EDGAR Version Only)
21.1 List of Subsidiaries. (EDGAR Version Only)
23.1 Consent of Coopers & Lybrand L.L.P. (EDGAR Version Only)
27 Financial Data Schedules (EDGAR Version Only)
- --------------------
* Incorporated by reference to the Annexes to the Company's Proxy Statement
dated September 1, 1995.
**Incorporated by reference to the same titled and number exhibit in the
Company's Annual Report on Form 10-K dated December 31, 1994.
+ Incorporated by reference to the same titled and numbered exhibit in the
Company's Registration Statement on Form S-11, No. 33-65954.
++Management contract or compensatory plan required to be filed pursuant to Item
14(c) of Form 10-K.
++Incorporated by reference to the same titled and number exhibit in the
Company's Quarterly Report on Form 10-Q dated June 30, 1997.
++++ Incorporated by reference to (i) Exhibit D to the Form 8-K dated July 19,
1996, filed by Colonial Realty Limited Partnership, and (ii) Exhibit B to the
Form 8-K dated December 6, 1996, filed by Colonial Realty Limited Partnership.
(PI) Incorporated by reference to the Company's Registration
Statement on Form S-8, No. 333-27203.
+/- Incorporated by reference to the Company's Registration
Statement on Form S-8, No. 333-27203.
+/-+/- Incorporated by reference to the Company's Registration
Statement on Form S-8, No. 333-27205.
(OMEGA) Incorporated by reference to the Company's Registration
Statement on Form S-8, No. 333-27201.
30
<PAGE>
14(b) Reports on Form 8-K
Reports on Form 8-K filed during the last quarter of 1997: Form 8-K
dated October 30, 1997, reported certain property acquisitions during
1997 under Item 5, "Other Events." Form 8-K dated November 5, 1997,
filed certain documents related to the Company's offering of
preferred shares under Item 5, "Other Events." Form 8-K dated
December 11, 1997, reported certain property acquisitions during 1997
under Item 5, "Other Events." Form 8-K dated December 19, 1997, filed
certain documents related to the Company's offering of common shares
under Item 5, "Other Events."
14(c) Exhibits
The list of Exhibits filed with this report is set forth in response
to Item 14(a)(3).
14(d) Financial Statements
None.
31
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, on March
20, 1998.
Colonial Properties Trust
By:/s/ Thomas H. Lowder
-----------------------
Thomas H. Lowder
Chairman of the Board,
President, and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and the capacities indicated on March 20, 1998.
Signature
/s/ Thomas H. Lowder Chairman of the Board, President,
- ------------------------------ and Chief Executive Officer
Thomas H. Lowder
/s/ Howard B. Nelson, Jr. Chief Financial Officer
- ------------------------------
Howard B. Nelson, Jr.
Vice President, Controller, and
/s/ Kenneth E. Howell Assistant Secretary
- ------------------------------ (Chief Accounting Officer)
Kenneth E. Howell
/s/ Carl F. Bailey Trustee
- ------------------------------
Carl F. Bailey
/s/ M. Miller Gorrie Trustee
- ------------------------------
M. Miller Gorrie
/s/ William M. Johnson Trustee
- ------------------------------
William M. Johnson
/s/ James K. Lowder Trustee
- ------------------------------
James K. Lowder
/s/ Herbert A. Meisler Trustee
- ------------------------------
Herbert A. Meisler
/s/ Claude B. Nielsen Trustee
- ------------------------------
Claude B. Nielsen
/s/ Harold W. Ripps Trustee
- ------------------------------
Harold W. Ripps
/s/ Donald T. Senterfitt Trustee
- ------------------------------
Donald T. Senterfitt
32
<PAGE>
<TABLE>
SCHEDULE III
COLONIAL PROPERTIES TRUST
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1997
<CAPTION>
Initial Cost to Cost Gross Amount at Which
Company Capitalized Carried at Close of Period
Buildings and Subsequent to Buildings and
Description Encumbrances Land Improvements Acquisition Land Improvements Total
- ------------------------------------------------------------------------------------------------------------------------------------
Multifamily:
<S> <C> <C> <C> <C> <C> <C> <C>
CG at Barrington $ -0- $ 880,000 $ 8,605,143 $ 63,036 $ 880,000 $ 8,668,179 $ 9,548,179
CG at Bayshore -0- 1,265,561 10,196,833 132,179 1,265,561 10,329,012 11,594,573
CG at Carrollwood 6,230,000 1,464,000 10,657,840 748,737 1,464,000 11,406,577 12,870,577
CG at Edgewater 9,811,501 1,540,000 12,671,606 126,285 1,540,000 12,797,891 14,337,891
CG at Gainesville -0- 3,360,000 24,173,649 2,614,403 3,361,850 26,786,202 30,148,052
CG at Galleria 22,400,000 4,600,000 39,078,925 1,070,959 4,600,000 40,149,884 44,749,884
CG at Galleria II -0- 758,439 7,902,382 16,387 758,439 7,918,769 8,677,208
CG at Galleria Woods 7,253,376 1,220,000 12,480,949 103,462 1,220,000 12,584,411 13,804,411
CG at Heathrow -0- 2,560,661 17,612,990 339,580 2,560,661 17,952,570 20,513,231
CG at Inverness Lakes -0- 641,334 8,873,906 197,150 641,334 9,071,056 9,712,390
CG at Kirkman -0- 2,220,000 21,747,240 591,752 2,220,000 22,338,992 24,558,992
CG at Mountain Brook 12,101,956 1,960,000 21,181,118 188,669 1,960,000 21,369,787 23,329,787
CG at Natchez Trace 10,941,371 1,312,000 16,568,050 23,741 1,312,000 16,591,791 17,903,791
CG at Palm Aire -0- 1,488,000 13,515,075 192,548 1,489,500 13,706,123 15,195,623
CG at Palma Sola -0- 1,479,352 -0- 12,352,103 1,479,352 12,352,103 13,831,455
CG at Ponte Vedra -0- 1,440,000 10,038,593 413,749 1,440,000 10,452,342 11,892,342
CG at Research Park 12,775,000 3,680,000 31,686,621 (1,814,626) 3,680,000 29,871,995 33,551,995
CG at Riverchase 9,081,348 2,340,000 25,248,548 536,523 2,340,000 25,785,071 28,125,071
CG at Spring Creek -0- 1,184,000 13,243,975 164,251 1,184,000 13,408,226 14,592,226
CG at Wesleyan -0- 720,000 12,760,587 5,448 720,000 12,766,035 13,486,035
Colony Park -0- 409,401 4,345,599 301,264 409,406 4,646,859 5,056,264
CV at Ashford Place -0- 537,600 5,839,838 59,784 537,600 5,899,622 6,437,222
CV at Cahaba Heights 3,696,965 625,000 6,548,683 142,591 625,000 6,691,274 7,316,274
CV at Caledon Wood -0- 2,100,000 19,482,210 -0- 2,100,000 19,482,210 21,582,210
CV at Cordova -0- 134,000 3,986,304 295,277 134,000 4,281,581 4,415,581
CV at Hillcrest -0- 332,800 4,310,671 53,392 332,800 4,364,063 4,696,863
CV at Hillwood 4,923,333 511,700 5,508,300 174,256 511,700 5,682,556 6,194,256
CV at Huntleigh Woods 2,992,056 745,600 4,908,990 555,874 745,600 5,464,864 6,210,464
CV at Inverness 9,900,000 1,713,668 10,352,151 7,941,736 1,713,668 18,293,887 20,007,555
CV at Inverness Lakes 5,663,333 735,080 7,254,920 278,424 735,080 7,533,344 8,268,424
CV at Lake Mary -0- 2,145,480 -0- 19,068,913 3,634,094 17,580,299 21,214,393
CV at McGehee Place -0- 795,627 -0- 16,657,470 842,321 16,610,776 17,453,097
CV at Monte D'Oro -0- 1,000,000 6,994,227 881,623 1,000,000 7,875,850 8,875,850
CV at Oakleigh -0- 880,000 9,685,518 151,072 1,024,334 9,692,256 10,716,590
CV at River Hills II -0- 857,080 -0- 8,976,348 857,079 8,976,349 9,833,428
CV at Rocky Ridge 7,335,000 644,943 8,325,057 154,091 644,943 8,479,148 9,124,091
CV at Stockbridge -0- 960,000 11,975,947 185,421 960,000 12,161,368 13,121,368
CV at Timothy Woods -0- 1,020,000 11,910,546 27,892 1,020,000 11,938,438 12,958,438
CV at Trussville -0- 1,504,000 18,800,253 589,448 1,504,000 19,389,701 20,893,701
CV at Vernon Marsh 3,400,000 960,984 3,511,596 3,067,840 960,984 6,579,436 7,540,420
CV at White Bluff 4,500,000 699,128 4,920,872 251,830 699,128 5,172,702 5,871,830
North Ingle Villas -0- 497,574 4,122,426 334,401 497,574 4,456,827 4,954,401
Patio I, II & III -0- 249,876 3,305,124 1,918,124 366,717 5,106,407 5,473,124
Ski Lodge - Tuscaloosa 4,779,642 1,064,000 6,636,685 385,614 1,064,000 7,022,299 8,086,299
S-1
<PAGE>
Retail:
Abingdon Town Centre -0- 2,051,250 6,687,616 -0- 2,051,250 6,687,616 8,738,866
Bardmoor Village -0- 2,143,152 9,746,573 14,481 2,143,152 9,761,054 11,904,206
Bear Lake Village -0- 2,134,440 6,551,683 61,109 2,134,440 6,612,792 8,747,232
Beechwood Shopping Center -0- 2,565,550 19,647,875 214,717 2,565,550 19,862,592 22,428,142
Bellwood 2,973,419 330,000 -0- 3,138,776 330,000 3,138,776 3,468,776
Briarcliffe Mall -0- 9,099,972 33,663,654 733,323 9,099,972 34,396,977 43,496,949
Britt David -0- 1,755,000 4,951,852 -0- 1,755,000 4,951,852 6,706,852
Brookwood Village -0- 8,136,700 24,435,002 815,382 8,136,700 25,250,384 33,387,084
Burnt Store Square -0- 3,750,000 8,198,677 39,806 3,750,000 8,238,483 11,988,483
Country Lake Village -0- 3,659,040 6,783,697 46,259 3,659,040 6,829,956 10,488,996
Gadsden Mall -0- 639,577 -0- 18,815,847 639,577 18,815,847 19,455,424
Glynn Place Mall -0- 3,588,178 22,514,121 20,711 3,588,178 22,534,832 26,123,010
Heatherbrooke Center -0- 1,680,000 1,387,055 79,264 1,680,000 1,466,319 3,146,319
Holly Hill Mall -0- 4,120,000 25,632,587 30,396 4,120,000 25,662,983 29,782,983
Island Walk 10,253,337 4,181,760 13,023,401 51,966 4,181,760 13,075,367 17,257,127
Lakeshore Mall -0- 4,646,300 30,973,239 21,226 4,646,300 30,994,465 35,640,765
Lakewood Plaza -0- 2,984,522 11,482,512 11,138 2,984,522 11,493,650 14,478,172
Macon Mall -0- 1,021,733 -0- 89,406,602 4,928,601 85,499,734 90,428,335
Mayberry Mall 3,401,032 862,500 3,778,590 8,290 862,500 3,786,880 4,649,380
McGehee Place -0- 197,152 -0- 3,799,891 197,152 3,799,891 3,997,043
Montgomery Promenade 10,810,000 3,788,913 11,346,754 990,022 4,332,432 11,793,257 16,125,689
Montgomery Promenade North -0- 2,400,000 5,664,858 -0- 2,400,000 5,664,858 8,064,858
Northdale Court -0- 3,059,760 8,054,090 22,871 3,059,760 8,076,961 11,136,721
Old Springville -0- 272,594 -0- 3,340,930 277,975 3,335,549 3,613,524
Olde Town -0- 343,325 -0- 2,445,304 343,325 2,445,304 2,788,629
Paddock Park -0- 1,532,520 3,754,879 66,765 1,532,520 3,821,644 5,354,164
Quaker Village -0- 931,000 7,901,874 -0- 931,000 7,901,874 8,832,874
River Oaks -0- 3,262,800 23,636,229 576,083 3,262,800 24,212,312 27,475,112
Rivermont Shopping Center 1,789,378 515,250 2,332,486 7,240 515,250 2,339,726 2,854,976
Stanly Plaza -0- 450,000 1,657,870 -0- 450,000 1,657,870 2,107,870
Staunton Mall -0- 2,895,000 15,083,542 -0- 2,895,000 15,083,542 17,978,542
University Park Plaza 14,445,000 6,946,785 20,104,517 269,075 6,946,785 20,373,592 27,320,377
Valdosta Mall -0- 5,377,000 30,239,796 20,832 5,377,000 30,260,628 35,637,628
Village at Roswell Summit 1,652,438 450,000 2,563,642 -0- 450,000 2,563,642 3,013,642
Village Mall -0- 103,480 -0- 14,381,208 319,528 14,165,160 14,484,688
Wekiva Riverwalk -0- 2,817,788 15,302,375 43,924 2,817,788 15,346,299 18,164,087
Winter Haven Village -0- 1,768,586 3,928,903 4,338,922 4,045,045 5,991,366 10,036,411
Yadkin Plaza -0- 1,080,000 1,224,136 -0- 1,080,000 1,224,136 2,304,136
S-2
<PAGE>
Office:
250 Commerce Street -0- 25,000 200,200 2,252,870 25,000 2,453,070 2,478,070
AmSouth Center -0- 764,961 -0- 16,594,852 764,961 16,594,852 17,359,813
Colonial Plaza -0- 1,001,375 12,381,023 13,638 1,001,375 12,394,661 13,396,036
International Park 2,011,911 1,279,355 5,668,186 99,830 1,279,355 5,768,016 7,047,371
Interstate Park 4,481,137 1,125,990 7,113,558 8,663,186 1,125,988 15,776,746 16,902,734
Lakeside Office Park -0- 423,451 8,313,291 121,822 423,451 8,435,113 8,858,564
Mansell Office Park 31,579,474 4,540,000 44,012,971 337,397 4,540,000 44,350,368 48,890,368
P&S Building -0- 104,089 -0- 773,576 104,089 773,576 877,665
Progress Center -0- 521,037 14,710,851 356,689 521,037 15,067,540 15,588,577
Riverchase Center 8,479,597 1,916,727 22,091,651 151,889 1,916,727 22,243,540 24,160,267
University Park -0- 396,960 -0- 4,305,866 396,960 4,305,866 4,702,826
Active Development Projects:
CG at Bayshore II -0- 9,213,320 -0- -0- 984,000 8,229,320 9,213,320
CG at Cypress Crossing -0- 4,332,601 -0- -0- 1,909,932 2,422,669 4,332,601
CG at Edgewater II -0- 3,871,062 -0- -0- 999,221 2,871,841 3,871,062
CG at Hunter's Creek -0- 33,264,022 -0- -0- 4,725,936 28,538,086 33,264,022
CG at Inverness Lakes II -0- 2,956,482 -0- -0- 477,259 2,479,223 2,956,482
CG at Lakewood Ranch -0- 2,320,442 -0- -0- 1,816,934 503,508 2,320,442
CG at Research Park II -0- 3,538 -0- -0- 3,538 -0- 3,538
CG at Wesleyan II -0- 788,868 -0- -0- 720,000 68,868 788,868
CV at Citrus Park -0- 1,323,593 -0- -0- 1,199,760 123,833 1,323,593
CV at Inverness IV -0- 6,710,610 -0- -0- 630,858 6,079,752 6,710,610
CV at McGehee Place -0- 90,733 -0- -0- 58,549 32,184 90,733
CV at River Hills III -0- 14,462,674 -0- -0- 1,694,075 12,768,599 14,462,674
Other Miscellaneous Projects -0- 185,914 -0- -0- -0- 185,914 185,914
Unimproved Land:
Macon Mall Outparcels -0- 663,142 -0- -0- 663,142 -0- 663,142
McGehee Place Land 668,364 439,471 -0- -0- 439,471 -0- 439,471
North Heathrow Land -0- 5,487,137 -0- -0- 5,487,137 -0- 5,487,137
Village Mall -0- 404,187 -0- -0- 404,187 -0- 404,187
-----------------------------------------------------------------------------------------------------------------------------
$ 230,329,968 $ 253,395,256 $ 977,715,763 $ 258,002,996 $197,839,569 $1,291,274,447 $1,489,114,015
===================================================================================================
</TABLE>
S-3
<PAGE>
<TABLE>
(INFORMATION CONTINUED FROM PREVIOUS TABLE)
SCHEDULE III, CONTINUED
COLONIAL PROPERTIES TRUST
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1997
<CAPTION>
Date
Acquired/
Accumulated Date Placed in Depreciable
Description Depreciation Completed Service Lives-Year
- -----------------------------------------------------------------------------------------
Multifamily:
<S> <C> <C> <C> <C>
CG at Barrington $ 431,389 1996 1996 7-40 Years
CG at Bayshore 443,040 1997 1985/97 7-40 Years
CG at Carrollwood 1,594,539 1966 1994 7-40 Years
CG at Edgewater 1,807,397 1990 1994 7-40 Years
CG at Gainesville 3,284,411 1989/93/94 1994 7-40 Years
CG at Galleria 3,102,045 1986 1994 7-40 Years
CG at Galleria II 395,443 1996 1996 7-40 Years
CG at Galleria Woods 757,786 1994 1996 7-40 Years
CG at Heathrow 905,027 1997 1994/97 7-40 Years
CG at Inverness Lakes 603,138 1996 1996 7-40 Years
CG at Kirkman 2,504,039 1991 1994 7-40 Years
CG at Mountain Brook 954,956 1987/91 1996 7-40 Years
CG at Natchez Trace 248,598 1995/97 1997 7-40 Years
CG at Palm Aire 1,741,412 1991 1994 7-40 Years
CG at Palma Sola 3,347,872 1992 1992 7-40 Years
CG at Ponte Vedra 1,027,570 1988 1994 7-40 Years
CG at Research Park 2,813,761 1987/94 1994 7-40 Years
CG at Riverchase 2,249,290 1984/91 1994 7-40 Years
CG at Spring Creek 790,076 1992/94 1996 7-40 Years
CG at Wesleyan 150,044 1997 1996/97 7-40 Years
Colony Park 504,066 1975 1993 7-40 Years
CV at Ashford Place 258,255 1983 1996 7-40 Years
CV at Cahaba Heights 342,207 1992 1996 7-40 Years
CV at Caledon Wood 166,624 1995/96 1997 7-40 Years
CV at Cordova 2,181,133 1983 1983 7-40 Years
CV at Hillcrest 191,353 1981 1996 7-40 Years
CV at Hillwood 634,492 1984 1993 7-40 Years
CV at Huntleigh Woods 447,971 1978 1994 7-40 Years
CV at Inverness 3,695,685 1986/87/90 1986/87/90 7-40 Years
CV at Inverness Lakes 815,481 1983/96 1993 7-40 Years
CV at Lake Mary 3,580,282 1991/95 1991/95 7-40 Years
CV at McGehee Place 3,677,362 1986/95 1986/95 7-40 Years
CV at Monte D'Oro 615,354 1977 1994 7-40 Years
CV at Oakleigh 176,590 1997 1997 7-40 Years
CV at River Hills II 2,404,003 1991 1991 7-40 Years
CV at Rocky Ridge 905,670 1984 1993 7-40 Years
CV at Stockbridge 1,348,362 1993/94 1994 7-40 Years
CV at Timothy Woods 211,292 1996 1997 7-40 Years
CV at Trussville 528,574 1996/97 1997 7-40 Years
CV at Vernon Marsh 1,504,331 1986/87 1986/93 7-40 Years
CV at White Bluff 556,169 1986 1993 7-40 Years
North Ingle Villas 496,783 1983 1983 7-40 Years
Patio I, II & III 553,002 1966/83/84 1994/93/93 7-40 Years
Ski Lodge - Tuscaloosa 601,280 1976/92 1994 7-40 Years
S-1
<PAGE>
Retail:
Abingdon Town Centre 27,865 1987/96 1997 7-40 Years
Bardmoor Village 332,165 1981 1996 7-40 Years
Bear Lake Village 425,571 1990 1995 7-40 Years
Beechwood Shopping Center 371,483 1963/92 1997 7-40 Years
Bellwood 898,419 1988 1988 7-40 Years
Briarcliffe Mall 1,006,829 1986 1996 7-40 Years
Britt David 392,021 1990 1994 7-40 Years
Brookwood Village 380,641 1973/91 1997 7-40 Years
Burnt Store Square 721,350 1990 1994 7-40 Years
Country Lake Village 432,573 1990 1995 7-40 Years
Gadsden Mall 8,036,149 1974/91 1974 7-40 Years
Glynn Place Mall 93,750 1986 1997 7-40 Years
Heatherbrooke Center 27,698 1984 1997 7-40 Years
Holly Hill Mall 106,782 1969/86/94 1997 7-40 Years
Island Walk 459,924 1993/95 1996 7-40 Years
Lakeshore Mall 129,174 1984-87 1997 7-40 Years
Lakewood Plaza 47,840 1995 1997 7-40 Years
Macon Mall 15,677,827 1975/88/97 1975/88 7-40 Years
Mayberry Mall 15,742 1968/86 1997 7-40 Years
McGehee Place 1,134,760 1986 1986 7-40 Years
Montgomery Promenade 2,088,214 1990 1993 7-40 Years
Montgomery Promenade North -0- 1997 1995 7-40 Years
Northdale Court 438,674 1988 1995 7-40 Years
Old Springville 2,558,418 1982 1982 7-40 Years
Olde Town 620,383 1978/90 1978/90 7-40 Years
Paddock Park 202,862 1988 1995 7-40 Years
Quaker Village 32,924 1968/88/97 1997 7-40 Years
River Oaks 1,463,231 1979/89 1993 7-40 Years
Rivermont Shopping Center 9,682 1986/97 1997 7-40 Years
Stanly Plaza 6,908 1987/96 1997 7-40 Years
Staunton Mall 62,834 1969/86/97 1997 7-40 Years
University Park Plaza 5,709,782 1986/89 1993 7-40 Years
Valdosta Mall 125,950 1982-85 1997 7-40 Years
Village at Roswell Summit -0- 1988 1997 7-40 Years
Village Mall 7,742,483 1973/84/89 1973/84/89 7-40 Years
Wekiva Riverwalk 520,755 1990 1996 7-40 Years
Winter Haven Village 319,706 1986 1995 7-40 Years
Yadkin Plaza 5,101 1971/97 1997 7-40 Years
S-2
<PAGE>
Office:
250 Commerce Street 2,286,805 1904/81 1980 7-40 Years
AmSouth Center 5,384,009 1990 1990 7-40 Years
Colonial Plaza 25,980 1982 1997 7-40 Years
International Park 95,529 1987/89 1997 7-40 Years
Interstate Park 4,228,248 1982-85/89 1982-85/89 7-40 Years
Lakeside Office Park 122,464 1989/90 1997 7-40 Years
Mansell Office Park 457,529 1987/96/97 1997 7-40 Years
P&S Building 393,176 1946/76/91 1974 7-40 Years
Progress Center 185,392 1983-91 1997 7-40 Years
Riverchase Center 510,103 1984-88 1997 7-40 Years
University Park 1,600,448 1985 1985 7-40 Years
Active Development Projects:
CG at Bayshore II 54,217 N/A 1985 N/A
CG at Cypress Crossing -0- N/A 1997 N/A
CG at Edgewater II -0- N/A 1997 N/A
CG at Hunter's Creek 320,071 N/A 1996 N/A
CG at Inverness Lakes II -0- N/A 1994 N/A
CG at Lakewood Ranch -0- N/A 1997 N/A
CG at Research Park II -0- N/A 1985 N/A
CG at Wesleyan II -0- N/A 1996 N/A
CV at Citrus Park -0- N/A 1997 N/A
CV at Inverness IV 35,227 N/A 1985 N/A
CV at McGehee Place -0- N/A 1987 N/A
CV at River Hills III 362,235 N/A 1985 N/A
Other Miscellaneous Projects -0- N/A 1993 N/A
Unimproved Land:
Macon Mall Outparcels -0- N/A 1987 N/A
McGehee Place Land -0- N/A 1981 N/A
North Heathrow Land -0- N/A 1997 N/A
Village Mall -0- N/A 1981 N/A
-----------------------------------------------------------------------------
$ 124,236,057
===================================================
</TABLE>
S-3
<PAGE>
NOTES TO SCHEDULE III
COLONIAL PROPERTIES TRUST
December 31, 1997
(1) The aggregate cost for Federal Income Tax purposes was approximately
$1,151,629,000 at December 31, 1997.
(2) See description of mortgage notes payable in Note 7 of Notes to
Consolidated Financial Statements.
(3) The following is a reconciliation of real estate to balances reported at
the beginning of the year:
<TABLE>
Reconciliation of Real Estate
<CAPTION>
1997 1996 1995
--------------- --------------- -------------
Real estate investments:
<S> <C> <C> <C>
Balance at beginning of year $ 1,017,009,315 $ 736,937,703 $ 640,680,718
Acquisitions of new property 451,256,964 173,276,789 67,326,328
Improvements and development 97,564,705 107,834,251 29,121,438
Dispositions of property (76,716,969) (1,039,428) (190,781)
--------------- --------------- -------------
Balance at end of year $ 1,489,114,015 $ 1,017,009,315 $ 736,937,703
=============== =============== =============
</TABLE>
<TABLE>
Reconciliation of Accumulated Depreciation
<CAPTION>
1997 1996 1995
--------------- --------------- -------------
Accumulated depreciation:
<S> <C> <C> <C>
Balance at beginning of year $101,541,658 $79,780,292 $61,773,344
Depreciation 31,945,960 22,015,054 18,044,446
Depreciation of disposition of property (9,251,561) (253,688) (37,498)
--------------- --------------- -------------
Balance at end of year $124,236,057 $101,541,658 $79,780,292
=============== =============== =============
</TABLE>
S-4
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of Colonial Properties Trust:
Our report on the consolidated financial statements of Colonial Properties Trust
has been incorporated by reference in this Form 10-K from the 1997 Annual Report
to Shareholders of Colonial Properties Trust. In connection with our audits of
such financial statements, we have also audited the related financial statement
schedules listed in the index in Item 14 of this Form 10-K.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
January 19, 1998
S-5
Exhibit 10.2.2
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
THIS REGISTRATION RIGHTS AND LOCK-UP AGREEMENT (this "Agreement") is
made and entered into as of March 25, 1997 by and among Colonial Properties
Trust, an Alabama real estate investment trust (the "Company"), Colonial Realty
Limited Partnership, a Delaware limited partnership (the "Operating
Partnership"), and the Holders (as defined in Section 1 hereof).
WHEREAS, on the date hereof the Operating Partnership is acquiring
the Heatherbrooke Medical and Retail Center located in Birmingham, Alabama
pursuant to an Agreement for Contribution of Interests dated as of March 25,
1997 (the "Contribution Agreement") by and between the Operating Partnership and
the partners of Inverness Family Medical Center Partners, Ltd. ("Inverness"),
and in connection therewith, the Holders, as limited partners of Inverness, will
have their portion of the purchase price paid in Class B units of limited
partnership interest in the Operating Partnership (the "Class B Units") (such
Class B Units and the Class A units of limited partnership interest into which
such Class B Units will be converted being referred to hereinafter as the
"Units");
WHEREAS, in order to induce the Holders to approve the consummation
of the closing contemplated under the Contribution Agreement, the Company has
agreed to grant each of the Holders the registration rights set forth in Section
3 hereof; and
WHEREAS, in order to induce the Operating Partnership to consummate
the closing contemplated under the Contribution Agreement, each of the Holders
has agreed to the Lock-up (as defined in Section 2(a) hereof).
NOW, THEREFORE, the parties hereto, in consideration of the
foregoing, the mutual covenants and agreements hereinafter set forth, and other
good and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, hereby agree as follows:
1. Definitions.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"Common Shares" shall mean common shares of beneficial interest, par
value $ .01 per share, in the Company.
"Company" shall have the meaning set forth in the Preamble and also
shall include the Company's successors.
"Contribution Agreement" shall have the meaning set
forth in the Preamble.
"Dispose of" shall have the meaning set forth in
Section 2(a) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Holders" shall mean the parties hereto who hold Class B Units and
such parties' successors and permitted assigns.
"Lock-up" shall have the meaning set forth in Section
2(a) hereof.
"Lock-up Period" shall have the meaning set forth in
Section 2(a) hereof.
"NASD" shall mean the National Association of
Securities Dealers, Inc.
"Operating Partnership" shall have the meaning set forth in the
Preamble and also shall include the Operating Partnership's successors.
"Person" shall mean an individual, partnership, corporation, trust,
estate, or unincorporated organization, or a government or agency or political
subdivision thereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by a Shelf
Registration Statement, and by all other amendments and supplements to such
prospectus, including post-effective amendments, and in each case including all
material incorporated by reference therein.
"Registrable Securities" shall mean the Shares, excluding (i) Shares
for which a Registration Statement relating to the sale thereof shall have
become effective under the Securities Act and which have been disposed of under
such Registration Statement and (ii) Shares sold pursuant to Rule 144 under the
Securities Act or Shares which, when combined with all other Shares then owned
by the Holder, are eligible for sale pursuant to Rule 144 during a single 90-day
period.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance with this Agreement, including, without limitation:
(i) all SEC, stock exchange or NASD registration and filing fees; (ii) all fees
and expenses incurred in connection with compliance with state securities or
"blue sky" laws (including reasonable fees and disbursements of counsel in
connection with "blue sky" qualification of any of the Registrable Securities
and the preparation of a Blue Sky Memorandum) and compliance with the rules of
the NASD; (iii) all expenses of any Persons in preparing or assisting in
preparing, word processing, printing and distributing any Registration
Statement, any Prospectus, certificates and other documents relating to the
performance of and compliance with this Agreement; (iv) all fees and expenses
incurred in connection with the listing, if any, of any of the Registrable
Securities on any securities exchange or exchanges pursuant to Section 4(1)
hereof; and (v) the fees and disbursements of counsel for the Company and of the
independent public accountants of the Company, including the expenses of any
special audits or "cold comfort" letters required by or incident to such
performance and compliance. Registration Expenses shall specifically exclude
underwriting discounts and commissions, the fees and disbursements of counsel
representing the Holder, and transfer taxes, if any, relating to the sale or
disposition of Registrable Securities by the Holder, all of which shall be borne
by the Holder in all cases.
"Registration Notice" shall have the meaning set forth
in Section 3(a) hereof.
"Registration Statement" or "Shelf Registration Statement" shall mean
a "shelf" registration statement of the Company and any other Person required to
be a registrant with respect to such shelf registration statement pursuant to
the requirements of the Securities Act which covers the issuance or resale of
the Registrable Securities on an appropriate form under Rule 415 under the
Securities Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all materials incorporated by reference
therein.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
"Shares" shall mean any Common Shares issued or to be issued to a
Holder upon redemption of their Units.
"Shelf Registration" shall mean a registration required to be
effected pursuant to Section 3 hereof.
"Units" shall have the meaning set forth in the
Preamble.
2. Lock-up Agreement.
2(a) Each Holder hereby agrees that, except as set forth in
Section 2(b) below, for one year following the date hereof (the "Lock-up
Period"), it will not, without the prior written consent of the Company, offer,
pledge, sell, contract to sell, grant any options for the sale of or otherwise
dispose of, directly or indirectly (collectively, "Dispose of"), any Units (the
"Lock-up").
2(b) The following transfers of Units shall not be subject to
the Lock-up set forth in Section 2(a):
(i) a Holder may Dispose of Units as a gift
or other transfer without consideration; and
(ii) a Holder may Dispose of Units pursuant to a pledge,
grant of security interest or other encumbrance effected in a
bona fide transaction with an unrelated and unaffiliated
pledgee.
In the event that a Holder Disposes of Units as permitted by this Section 2(b),
such Units shall remain subject to this Agreement and, as a condition of the
validity of such disposition, the transferee shall be required to execute and
deliver a counterpart of this Agreement (except that a pledgee shall not be
required to execute and deliver a counterpart of this Agreement until it
forecloses upon such Units). Thereafter, such transferee shall be deemed to be a
Holder for purposes of this Agreement.
3. Shelf Registration Under the Securities Act.
3(a) Filing of Shelf Registration Statement. Beginning after the
expiration of the Lock-up Period, a Holder shall be entitled to offer for sale
pursuant to a Registration Statement any Registrable Securities held by the
Holder, subject to the terms and conditions hereof. Upon receipt by the Company
of a written notice (a "Registration Notice") from one or more of the Holders
that such Holder(s) propose to make a registered offer of a specified number of
Registrable Securities (which number shall not be less than 25,000), the Company
shall cause to be filed within 60 days of receipt by the Company of the
Registration Notice a Shelf Registration Statement providing for the sale by the
Holder(s) of the Registrable Securities specified in such Registration Notice
(and, if the Company so elects, any Registrable Securities held by any other
Holder or Holders) in accordance with the terms hereof and will use its
reasonable efforts to cause such Shelf Registration Statement to be declared
effective by the SEC as soon as practicable. The Company agrees to use its
reasonable efforts to keep the Shelf Registration Statement continuously
effective for a period expiring on the date on which all of the Registrable
Securities covered by the Shelf Registration Statement have been sold pursuant
to the Shelf Registration Statement or have become eligible for sale pursuant to
Rule 144 under the Securities Act during a single 90-day period and, subject to
Section 4(b) and Section 4(i), further agrees to supplement or amend the Shelf
Registration Statement, if and as required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by the Securities Act or by any other rules and
regulations thereunder for shelf registration; provided, however, that the
Company shall not be deemed to have used its reasonable efforts to keep a
Registration Statement effective during the applicable period if it voluntarily
takes any action that would result in a Holder's not being able to sell such
Registrable Securities during that period, unless such action is required under
applicable law or the Company has filed a post-effective amendment to the
Registration Statement and the SEC has not declared it effective.
Notwithstanding the foregoing, the Company shall not be required to file a
Registration Statement or to keep a Registration Statement effective if the
negotiation or consummation of a transaction is pending or an event has
occurred, which negotiation, consummation or event would require additional
disclosure by the Company in the Registration Statement of material information
which the Company has a bona fide business purpose for keeping confidential and
the nondisclosure of which in the Registration Statement might cause the
Registration Statement to fail to comply with applicable disclosure
requirements, and the Company so advises the Holder(s) in a writing signed by an
executive officer of the Company; provided, however, that the Company may not
delay, suspend or withdraw a Registration Statement for such reason for more
than 60 days or more often than twice during any period of 12 consecutive
months.
3(b) Expenses. The Company shall pay all Registration Expenses
in connection with any registration pursuant to Section 3(a). The Holder(s)
shall pay all underwriting discounts, if any, sales commissions, fees and
disbursements of counsel representing the Holder(s), and transfer taxes, if any,
relating to the sale or disposition of each Holder's Registrable Securities
pursuant to the Shelf Registration Statement or Rule 144 under the Securities
Act.
3(c) Inclusion in Shelf Registration Statement. If a Holder does
not timely provide the information reasonably requested by the Company in
connection with the Shelf Registration Statement, the Holder shall not be
entitled to have its Registrable Securities included in the Shelf Registration
Statement.
3(d) Repurchase Option. In lieu of registering Registrable
Securities that a Holder seeks to register pursuant to Section 3(a) hereof, the
Company may, by delivery of written notice to the Holder within 30 days after
receipt of a Registration Notice from the Holder, elect to repurchase such
Registrable Securities for cash, in an amount per Share equal to the average of
the closing prices of the Common Shares on the New York Stock Exchange (or on
such other exchange or in such other market as the Common Shares are then listed
or traded) on the ten trading days preceding the Company's receipt of such
Registration Notice (or, if the Common Shares have not traded on all ten of such
trading days, in an amount equal to the fair value of such Registrable
Securities as determined in good faith by the Board of Trustees of the Company).
4. Registration Procedures.
In connection with the obligations of the Company with respect to the
Registration Statement pursuant to Section 3 hereof, the Company shall:
4(a) prepare and file with the SEC, within the time period set
forth in Section 3 hereof, a Shelf Registration Statement, which Shelf
Registration Statement (i) shall be available for the sale of the Registrable
Securities in accordance with the intended method or methods of distribution by
the Holder(s) and (ii) shall comply as to form in all material respects with the
requirements of the applicable form and include all financial statements
required by the SEC to be filed therewith;
4(b) subject to the last three sentences of this Section 4(b)
and Section 4(i) hereof, (i) prepare and file with the SEC such amendments and
post-effective amendments to each such Registration Statement as may be
necessary to keep such Registration Statement effective for the applicable
period; (ii) cause each such Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
or any similar rule that may be adopted under the Securities Act; (iii) respond
as promptly as practicable to any comments received from the SEC with respect to
the Shelf Registration Statement, or any amendment, post-effective amendment or
supplement relating thereto; and (iv) comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by each
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the Holder(s). Notwithstanding
anything to the contrary contained herein, the Company shall not be required to
take any of the actions described in subsections (i), (ii) or (iii) above unless
and until the Company has received a notice from a Holder that the Holder
intends to make offers or sales under the Registration Statement as specified in
such Registration Notice; provided, however, that the Company shall have 10
business days to prepare and file any such amendment or supplement after receipt
of such notice. Once a Holder has delivered a Registration Notice to the
Company, the Holder shall promptly provide to the Company such information as
the Company reasonably requests in order to identify the Holder and the method
of distribution in a Registration Statement or post-effective amendment to the
Registration Statement or a supplement to the Prospectus. A Holder also shall
notify the Company in writing upon completion of such offer or sale or at such
time as the Holder no longer intends to make offers or sales under the
Registration Statement;
4(c) furnish to the Holder(s), without charge, as many copies of
each Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as the Holder(s) may reasonably
request, in order to facilitate the public sale or other disposition of the
Registrable Securities; the Company consents to the use of the Prospectus,
including each preliminary Prospectus, by the Holder(s) in connection with the
offering and sale of the Registrable Securities covered by the Prospectus or the
preliminary Prospectus;
4(d) use its reasonable efforts to register or qualify the
Registrable Securities by the time the applicable Registration Statement is
declared effective by the SEC under all applicable state securities or "blue
sky" laws of such jurisdictions as the Holder(s) shall reasonably request in
writing, keep each such registration or qualification effective during the
period such Registration Statement is required to be kept effective or during
the period offers or sales are being made by the Holder(s), whichever is
shorter, and do any and all other acts and things which may be reasonably
necessary or advisable to enable the Holder(s) to consummate the disposition in
each such jurisdiction of such Registrable Securities owned by the Holder;
provided, however, that the Company shall not be required to (i) qualify
generally to do business in any jurisdiction or to register as a broker or
dealer in such jurisdiction where it would not otherwise be required to qualify
but for this Section 4(d), (ii) subject itself to taxation in any such
jurisdiction, or (iii) submit to the general service of process in any such
jurisdiction;
4(e) notify the Holder(s) promptly and, if requested by a
Holder, confirm such advice in writing (i) when a Registration Statement has
become effective and when any post-effective amendments and supplements thereto
become effective, (ii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a Registration
Statement or the initiation of any proceedings for that purpose, (iii) if the
Company receives any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation of any proceeding for such purpose, and (iv) of the happening of any
event during the period a Registration Statement is effective which is of a type
specified in the last sentence of Section 3(a) hereof or as a result of which
such Registration Statement or the related Prospectus contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made (in the case of the Prospectus), not
misleading;
4(f) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement at the
earliest possible moment;
4(g) furnish to a Holder, without charge, at least one conformed
copy of each Registration Statement and any post-effective amendment thereto
(without documents incorporated therein by reference or exhibits thereto, unless
requested);
4(h) cooperate with the Holder(s) to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold and not bearing any Securities Act legend; and enable certificates for
such Registrable Securities to be issued for such numbers of Shares and
registered in such names as the Holder(s) may reasonably request at least two
business days prior to any sale of Registrable Securities;
4(i) subject to the last sentence of Section 3(a) hereof and the
last three sentences of Section 4(b) hereof, upon the occurrence of any event
contemplated by Section 4(e)(iv) hereof, use its reasonable efforts promptly to
prepare and file a supplement or prepare, file and obtain effectiveness of a
post-effective amendment to a Registration Statement or the related Prospectus
or any document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading;
4(j) make available for inspection by representatives of the
Holder(s) and any counsel or accountant retained by the Holder(s), all financial
and other records, pertinent corporate documents and properties of the Company,
and cause the respective officers, directors and employees of the Company to
supply all information reasonably requested by any such representative, counsel
or accountant in connection with a Registration Statement; provided, however,
that such records, documents or information which the Company determines, in
good faith, to be confidential and notifies such representatives, counsel or
accountants in writing that such records, documents or information are
confidential shall not be disclosed by the representatives, counsel or
accountants unless (i) the disclosure of such records, documents or information
is necessary to avoid or correct a material misstatement or omission in a
Registration Statement, (ii) the release of such records, documents or
information is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, or (iii) such records, documents or information have
been generally made available to the public;
4(k) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus, provide copies of such document (not
including any documents incorporated by reference therein unless requested) to
the Holder(s) in order to permit the Holder(s) to review and comment on such
document;
4(l) use its reasonable efforts to cause all Registrable
Securities to be listed on any securities exchange on which similar securities
issued by the Company are then listed;
4(m) provide a CUSIP number for all Registrable Securities, not
later than the effective date of a Registration Statement;
4(n) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the SEC and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering at
least 12 months which shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder; and
4(o) use its reasonable efforts to cause the Registrable
Securities covered by a Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary by virtue
of the business and operations of the Company to enable the Holder(s) to
consummate the disposition of such Registrable Securities.
The Company may require the Holder(s) to furnish to the Company in
writing such information regarding the proposed distribution by the Holder(s) of
such Registrable Securities as the Company may from time to time reasonably
request in writing.
In connection with and as a condition to the Company's obligations
with respect to the Registration Statement pursuant to Section 3 hereof and this
Section 4, each Holder agrees that (i) it will not offer or sell its Registrable
Securities under the Registration Statement until it has provided a Registration
Notice pursuant to Section 4(b) hereof and has received copies of the
supplemental or amended Prospectus contemplated by Section 4(b) hereof and
receives notice that any post-effective amendment has become effective, (ii)
upon receipt of any notice from the Company of the happening of any event of the
kind described in Section 4(e)(iv) hereof, the Holder will forthwith discontinue
disposition of Registrable Securities pursuant to a Registration Statement until
the Holder receives copies of the supplemented or amended Prospectus
contemplated by Section 4(i) hereof and receives notice that any post-effective
amendment has become effective, and, if so directed by the Company, the Holder
will deliver to the Company (at the expense of the Company) all copies in its
possession, other than permanent file copies then in the Holder's possession, of
the Prospectus covering such Registrable Securities current at the time of
receipt of such notice, and (iii) all offers and sales under the Registration
Statement shall be completed within sixty (60) days after the first date on
which offers or sales can be made pursuant to clause (i) above, and upon
expiration of such sixty (60) day period the Holder will not offer or sell its
Registrable Securities under the Registration Statement until it has again
complied with the provisions of clause (i) above.
5. Indemnification; Contribution.
5(a) Indemnification by the Company. The Company agrees to
indemnify and hold harmless each Holder and its partners and each Person, if
any, who controls the Holder within the meaning of Section 15 of the Securities
Act and the respective officers, directors, partners, employees, representatives
and agents of the Holder, its partners and each controlling Person as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact
contained in any Registration Statement (or any amendment
thereto) pursuant to which Registrable Securities were
registered under the Securities Act, including all documents
incorporated therein by reference, or the omission or alleged
omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Prospectus
(or any amendment or supplement thereto), including all
documents incorporated therein by reference, or the omission or
alleged omission therefrom of a material fact necessary in order
to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue
statement or omission, if such settlement is effected with the
written consent of the Company; and
(iii)against any and all expense whatsoever, as incurred
(including reasonable fees and disbursements of counsel),
reasonably incurred in investigating, preparing or defending
against any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, in each
case whether or not a party, or any claim whatsoever based upon
any such untrue statement or omission, or any such alleged
untrue statement or omission, to the extent that any such
expense is not paid under subparagraph (i) or (ii) above;
provided, however, that the indemnity provided pursuant to this Section 5(a)
does not apply with respect to any loss, liability, claim, damage or expense to
the extent arising out of (x) any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with written
information furnished to the Company by the Holder expressly for use in a
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto) or (y) the Holder's failure to deliver an
amended or supplemental Prospectus if such loss, liability, claim, damage or
expense would not have arisen had such delivery occurred.
5(b) Indemnification by Holder. Each of the Holders agrees to
indemnify and hold harmless the Company and its trustees and officers (including
each trustee and officer of the Company who signed the Registration Statement),
and each Person, if any, who controls the Company within the meaning of Section
15 of the Securities Act, to the same extent as the indemnity contained in
Section 5(a) hereof (except that any settlement described in Section 5(a)(ii)
shall be effected with the written consent of the Holder), but only insofar as
such loss, liability, claim, damage or expense arises out of or is based upon
any untrue statement or omission, or alleged untrue statements or omissions,
made in a Registration Statement (or any amendment thereto) or any Prospectus
(or any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by the Holder expressly for use in
such Registration Statement (or any amendment thereto) or such Prospectus (or
any amendment or supplement thereto).
5(c) Conduct of Indemnification Proceedings. Each indemnified
party shall give reasonably prompt notice to each indemnifying party of any
action or proceeding commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party (i) shall not
relieve it from any liability which it may have under the indemnity agreement
provided in Section 5(a) or 5(b) above, unless and to the extent it did not
otherwise learn of such action and the lack of notice by the indemnified party
results in the forfeiture by the indemnifying party of substantial rights and
defenses and (ii) shall not, in any event, relieve the indemnifying party from
any obligations to any indemnified party other than the indemnification
obligation provided under Section 5(a) or 5(b) above. If the indemnifying party
so elects within a reasonable time after receipt of such notice, the
indemnifying party may assume the defense of such action or proceeding at such
indemnifying party's own expense with counsel chosen by the indemnifying party
and approved by the indemnified parties defendant in such action or proceeding,
which approval shall not be unreasonably withheld; provided, however, that, if
such indemnified party or parties reasonably determine that a conflict of
interest exists where it is advisable for such indemnified party or parties to
be represented by separate counsel or that, upon advice of counsel, there may be
legal defenses available to them which are different from or in addition to
those available to the indemnifying party, then the indemnifying party shall not
be entitled to assume such defense and the indemnified party or parties shall be
entitled to one separate counsel at the indemnifying party's or parties'
expense. If an indemnifying party is not entitled to assume the defense of such
action or proceeding as a result of the proviso to the preceding sentence, such
indemnifying party's counsel shall be entitled to conduct such indemnifying
party's defense and counsel for the indemnified party or parties shall be
entitled to conduct the defense of such indemnified party or parties, it being
understood that both such counsel will cooperate with each other to conduct the
defense of such action or proceeding as efficiently as possible. If an
indemnifying party is not so entitled to assume the defense of such action or
does not assume such defense, after having received the notice referred to in
the first sentence of this paragraph, the indemnifying party or parties will pay
the reasonable fees and expenses of counsel for the indemnified party or
parties. In such event, however, no indemnifying party will be liable for any
settlement effected without the written consent of such indemnifying party. If
an indemnifying party is entitled to assume, and assumes, the defense of such
action or proceeding in accordance with this paragraph, such indemnifying party
shall not be liable for any fees and expenses of counsel for the indemnified
parties incurred thereafter in connection with such action or proceeding.
5(d) Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
this Section 5 is for any reason held to be unenforceable although applicable in
accordance with its terms, the Company and the Holders shall contribute to the
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnity agreement incurred by the Company and the Holder,
in such proportion as is appropriate to reflect the relative fault of and
benefits to the Company on the one hand and the Holders on the other (in such
proportions that the Holders are severally, not jointly, responsible for the
balance), in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits to the indemnifying party and
indemnified parties shall be determined by reference to, among other things, the
total proceeds received by the indemnifying party and indemnified parties in
connection with the offering to which such losses, claims, damages, liabilities
or expenses relate. The relative fault of the indemnifying party and indemnified
parties shall be determined by reference to, among other things, whether the
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has been
made by, or relates to information supplied by, such indemnifying party or the
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action.
The parties hereto agree that it would not be just or equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), the Holders shall not be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities of the Holders were offered to the
public exceeds the amount of any damages which the Holders would otherwise have
been required to pay by reason of such untrue statement or omission.
Notwithstanding the foregoing, no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 5(d), each Person,
entitled to indemnification pursuant to Section 5(a) shall have the same rights
to contribution as the Holders, and each trustee of the Company, each officer of
the Company who signed the Registration Statement and each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act
shall have the same rights to contribution as the Company.
6. Rule 144 Sales.
6(a) The Company covenants that it will file the reports
required to be filed by the Company under the Securities Act and the Exchange
Act so as to enable the Holders to sell Shares pursuant to Rule 144 under the
Securities Act.
6(b) In connection with any sale, transfer or other disposition
by a Holder of any Shares pursuant to Rule 144 under the Securities Act, the
Company shall cooperate with such Holders to facilitate the timely preparation
and delivery of certificates representing Shares to be sold and not bearing any
Securities Act legend, and enable certificates for such Shares to be for such
number of shares and registered in such names as the Holder may reasonably
request at least two business days prior to any sale of Shares.
7. Miscellaneous.
7(a) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given without the written consent of the Company and the Holders.
Notice of any amendment, modification or supplement to this Agreement adopted in
accordance with this Section 7(a) shall be provided by the Company to the
Holders at least thirty (30) days prior to the effective date of such amendment,
modification or supplement.
7(b) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery, to the parties at their respective addresses set forth opposite their
signatures below or at such other address as a party may indicate by written
notice to the other party or parties.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three (3)
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; or
at the time delivered, if delivered by an air courier guaranteeing overnight
delivery.
7(c) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders. If any successor, assignee or transferee
of a Holder shall acquire Registrable Securities, in any manner, whether by
operation of law or otherwise, such Registrable Securities shall be held subject
to all of the terms of this Agreement, and by taking and holding such
Registrable Securities such Person shall be entitled to receive the benefits
hereof and shall be conclusively deemed to have agreed to be bound by all of the
terms and provisions hereof.
7(d) [Intentionally Omitted]
7(e) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
7(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
7(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICTS OF LAW PROVISIONS THEREOF.
7(h) Specific Performance. The parties hereto acknowledge that
there would be no adequate remedy at law if any party fails to perform any of
its obligations hereunder, and accordingly agree that each party, in addition to
any other remedy to which it may be entitled at law or in equity, shall be
entitled to compel specific performance of the obligations of any other party
under this Agreement in accordance with the terms and conditions of this
Agreement in any court of the United States or any State thereof having
jurisdiction.
7(i) Entire Agreement. This Agreement is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, or caused this Agreement to be duly executed on its behalf, as of the
date first written above.
Address:
Colonial Plaza COLONIAL PROPERTIES TRUST
2101 6th Avenue North,
Suite 750
Birmingham, Alabama 35202
By:__/s/ Douglas B. Nunnelley____
Douglas B. Nunnelley
Senior Vice President and
Secretary
Colonial Plaza COLONIAL REALTY LIMITED
2101 6th Avenue North, PARTNERSHIP
Suite 750
Birmingham, Alabama 35202
By: COLONIAL PROPERTIES
HOLDING COMPANY, INC.,
General Partner
By: _/s/ Douglas B. Nunnelley__
Douglas B. Nunnelley
Senior Vice President
and
Secretary
<PAGE>
Holders of Class B Units
By: _/s/ Thomas H. Lowder____
Thomas H. Lowder,
Attorney-in-fact*
*Serving as attorney-in-fact
for:
B&G Properties Co. LLC
729 South 30th Street
Birmingham, AL 35233
Frank Chrencik
P.O. Box 530187
Birmingham, AL 35253
Howard B. Nelson, Jr.
1224 Cedardell Lane
Birmingham, AL 35216
Lonnie B. Welch
239 Big Springs Drive
Birmingham, AL 35216
William L. Welch
2209 Hunters Cove
Birmingham, AL 35216
Equity Partners Joint Venture
Energen Plaza, Suite 750
2101 Sixth Avenue North
Birminghan, AL 35202
<PAGE>
===================================================================
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
Dated as of March 25, 1997
by and among
COLONIAL PROPERTIES TRUST,
COLONIAL REALTY LIMITED PARTNERSHIP
and
Certain Holders of Class B Units of
Limited Partnership Interests of
Colonial Realty Limited Partnership
===================================================================
Exhibit 10.2.3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement")
is made and entered into as of November 4, 1994, by and between
Colonial Properties Trust (the "Company") and Thomas H. Lowder,
James K. Lowder, and Robert E. Lowder (the "Sellers").
WHEREAS, each of the Sellers is a party to a Registration Rights and
Lock-Up Agreement made and entered into as of September 29, 1993, by and among
the Company, the Sellers, and certain other parties who are signatories thereto
(the "1993 Agreement").
WHEREAS, this Agreement is made and entered into in connection with
and on the date of the sale to Colonial Realty Limited Partnership (the
"Operating Partnership") by the Sellers of their one-half interest in certain
land located in Mobile, Alabama to be used in development of Phase II of the
Operating Partnership's existing Inverness Apartments (the "Inverness Land").
WHEREAS, in connection with the sale of their one-half interest in
the Inverness Land to the Operating Partnership, the Operating Partnership is
issuing to the Sellers on the date hereof Class B units of limited partnership
interests in the Operating Partnership (such units, together with the Class A
units into which they will convert in the future, the "New Units").
WHEREAS, in order to induce the Sellers to sell to the Operating
Partnership their one-half interest in the Inverness Land in exchange for the
New Units, the Company desires to enter into this Agreement with the Sellers.
NOW, THEREFORE, the parties hereto, in consideration of the
foregoing, and the agreements, terms and conditions hereinafter set forth, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, agree as follows:
1. Definitions. All capitalized terms set forth herein shall have the
meanings assigned to them in Section 1 of the 1993 Agreement, unless such terms
are otherwise specifically defined herein.
2. Registration Rights.
2(a) The parties hereto agree that the New Units shall be deemed
to be "Units" for purposes of the 1993 Agreement, and that, as such, the New
Units shall be deemed entitled to all the rights and benefits and to be subject
to all of the terms and conditions of the 1993 Agreement, which are hereby
incorporated by reference except as otherwise provided herein; provided,
however, that Sections 2 and 7(d) of the 1993 Agreement shall not apply to the
New Units or any Common Shares issued upon the redemption thereof, and all
references to the Lock-Up or to the Lock-Up Period shall be inapplicable to the
New Units and to any Common Shares issued upon the redemption thereof.
2(b) The parties hereto agree that each of the Sellers shall be
deemed to be an "Affiliated Holder" for purposes of the 1993 Agreement. For
purposes of the first sentence of Section 3(a) of the 1993 Agreement, the rights
of each Affiliated Holder shall begin on the first anniversary of the date
hereof with respect to the New Units.
3. Amendments and Waivers. Notwithstanding Section 7(a) of the
1993 Agreement, this Agreement may be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof and of the 1993
Agreement may be given, upon the written consent of the Company and the holders
of a majority in amount of the New Units (including any Common Shares issued
upon the redemption thereof).
4. Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, or caused this Agreement to be duly executed on its behalf, as of the
date first written above.
COLONIAL PROPERTIES TRUST
By:___/s/ Douglas B. Nunnelley
Douglas B. Nunnelley
Senior Vice President
and Chief Financial
Officer
By:___/s/ Thomas H. Lowder
Thomas H. Lowder
By:___/s/ James K. Lowder
James K. Lowder
By:___/s/ Robert E. Lowder
Robert E. Lowder
Exhibit 10.2.4
SUPPLEMENTAL REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
THIS SUPPLEMENTAL REGISTRATION RIGHTS AND LOCK-UP AGREEMENT (this
"Agreement") is made and entered into as of August 20, 1997, by and among
COLONIAL PROPERTIES TRUST, an Alabama real estate investment trust (the
"Company"), Colonial Realty Limited Partnership, a Delaware limited partnership
(the "Operating Partnership"), and James K. Lowder and Thomas H. Lowder
(collectively, the "Lowders").
WHEREAS, on September 29, 1993, the Company, the Lowders and certain
other parties entered into a Registration Rights and Lock-up Agreement (the
"Initial Agreement") pursuant to which the Company granted to certain holders of
Units (as defined in the Initial Agreement) of the Operating Partnership certain
registration rights, and such holders agreed to certain lock-up arrangements;
WHEREAS, on the date hereof, each of the Lowders will acquire 10,822
Units (the "Additional Units") in connection with the purchase by the Operating
Partnership of certain real estate known as Inverness Phase III; and
WHEREAS, the parties hereto have agreed that, except as stated
herein, they and the Additional Units shall be governed by and subject to the
Initial Agreement.
NOW, THEREFORE, the parties hereto, in consideration of the
foregoing, the mutual covenants and agreements set forth herein and other good
and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, agree as follows:
1. General.
1(a) Except as otherwise defined herein, all capitalized terms
used herein shall have the meanings ascribed to them in the Initial Agreement.
1(b) Except as otherwise provided herein, the Lowders and the
Company shall have all of the rights and obligations with respect to the
Additional Units as are provided for in the Initial Agreement with respect to
the Common Shares and Units expressly referred to therein. Nothing in this
Agreement shall be deemed to amend, waive, supplement, or otherwise affect the
terms of the Initial Agreement.
2. Definitions.
Except as otherwise provided herein,
2(a) The Additional Units shall be deemed "Units" as that term
is defined in the Initial Agreement, and any Common Shares issued upon
redemption of Additional Units shall be deemed "Shares" as that term is defined
in the Initial Agreement. The Additional Units and any Common Shares issuable
upon redemption of Additional Units are referred to herein collectively as "New
Securities."
2(b) Any Common Shares issued or issuable upon the redemption of
Additional Units shall be deemed "Registrable Securities" as that term is
defined in the Initial Agreement.
2(c) Each of the Lowders and their permitted successors and
assigns shall be deemed a "Holder" as that term is defined in the Initial
Agreement and shall be referred to as a Holder herein.
3. Lock-up Agreement.
3(a) Notwithstanding any other provision of this Agreement or
the Initial Agreement, each Holder hereby agrees that, except as set forth in
Section 3(b) below, for a period of one year from the date hereof (the "Lock-up
Period"), without the prior written consent of the Company, it will not offer,
pledge, sell, contract to sell, grant any options for the sale of or otherwise
dispose of, directly or indirectly (collectively, "Dispose of"), any New
Securities (the "Lock-up").
3(b) The following transfers of New Securities shall not be
subject to the Lock-up set forth in Section 2(a):
(i) a Holder may Dispose of New Securities as a
gift or other transfer without consideration;
(ii) a Holder who is a natural person may Dispose of New
Securities to his or her spouse, siblings, parents or any
natural or adopted children or other descendants or to any
personal trust in which such family members or such Holder
retain the entire beneficial interest;
(iii)a Holder may Dispose of New Securities to any entity
that controls, is controlled by, or is under common control with
such Holder; and
(iv) a Holder may Dispose of New Securities pursuant to a
pledge, grant of security interest or other encumbrance effected
in a bona fide transaction with an unrelated and unaffiliated
pledgee.
In the event a Holder Disposes of New Securities described in this
Section 3(b) (except pursuant to clause (iv) hereof), such New Securities shall
remain subject to this Agreement and, as a condition of the validity of such
disposition, the transferee shall be required to execute and deliver a
counterpart of this Agreement (except that a pledgee shall not be required to
execute and deliver a counterpart of this Agreement until it forecloses upon
such New Securities). Thereafter, such transferee shall be deemed to be a Holder
for purposes of this Agreement.
4. Shelf Registration Under the Securities Act.
Beginning after the expiration of the Lock-up Period, each
Holder shall be entitled to offer for sale pursuant to a Registration Statement
any Registrable Securities held by the Holder, subject to the terms and
conditions, and pursuant to the procedures, specified in Sections 3 and 4 of the
Initial Agreement.
5. Indemnification; Contribution.
The parties agree to indemnify and hold harmless, with respect
to any registration of Registrable Securities hereunder, to the same extent as
specified in Section 5 of the Initial Agreement.
6. Rule 144 Sales.
The Company covenants to undertake all such steps as are
specified in Section 6 of the Initial Agreement in order to enable any Holder to
sell Common Shares issued or issuable upon redemption of Additional Units
pursuant to Rule 144 under the Securities Act.
7. Miscellaneous.
7(a) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given without the written consent of the Company and the Holders of a
majority in amount of the outstanding New Securities; provided, however, that no
amendment, modification or supplement or waiver or consent to the departure with
respect to the provisions of Sections 3, 4, 5 or 6 hereof shall be effective as
against any Holder of New Securities unless consented to in writing by such
Holder of New Securities. Notice of any amendment, modification or supplement to
this Agreement shall be provided by the Company to each Holder of New Securities
at least thirty (30) days prior to the effective date of such amendment,
modification or supplement.
7(b) Notices; Counterparts; Headings; Successors and Assigns;
Specific Performance; Governing Law. The parties agree to be governed with
respect to the subject matter hereof by the provisions set forth in Sections
7(b), 7(c), 7(e), 7(f), 7(g) and 7(h) of the Initial Agreement.
7(c) Entire Agreement. This Agreement is intended by the parties
as a final expression of their agreement with respect to the New Securities and
is intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, or caused this Agreement to be duly executed on its behalf, as of the
date first written above.
Address:
Energen Plaza
2101 6th Avenue North, COLONIAL PROPERTIES TRUST
Suite 750
Birmingham, Alabama 35202
By:__/s/ Douglas B.
Nunnelley______
Name: Douglas B. Nunnelley
Title: Senior Vice President
and Secretary
Energen Plaza
2101 6th Avenue North, COLONIAL REALTY LIMITED
Suite 750 PARTNERSHIP
Birmingham, Alabama 35202
By: COLONIAL PROPERTIES
HOLDING COMPANY, INC.,
General Partner
By: _/s/ Douglas B.
Nunnelley___
Name: Douglas B. Nunnelley
Title: Senior Vice
President and Secretary
Address:
Energen Plaza
2101 6th Avenue North
Suite 750
Birmingham, Alabama 35202
/s/ James K. Lowder
James K. Lowder
Energen Plaza
2101 6th Avenue North
Suite 750
Birmingham, Alabama 35202
/s/ Thomas H. Lowder
Thomas H. Lowder
===================================================================
SUPPLEMENTAL REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
Dated as of August 20, 1997
by and among
COLONIAL PROPERTIES TRUST,
COLONIAL REALTY LIMITED PARTNERSHIP
and
JAMES K. LOWDER,
and
THOMAS H. LOWDER
===================================================================
Exhibit 10.2.5
SUPPLEMENTAL REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
THIS SUPPLEMENTAL REGISTRATION RIGHTS AND LOCK-UP AGREEMENT (this
"Agreement") is made and entered into as of November 1, 1997, by and among
COLONIAL PROPERTIES TRUST, an Alabama real estate investment trust (the
"Company"), Colonial Realty Limited Partnership, a Delaware limited partnership
(the "Operating Partnership"), and B & G Properties Company LLP ("B & G").
WHEREAS, on March 25, 1997, the Company, the Operating Partnership,
and B & G and certain other parties entered into a Registration Rights and
Lock-up Agreement (the "Initial Agreement") pursuant to which the Company
granted to certain holders of Units (as defined in the Initial Agreement) of the
Operating Partnership certain registration rights, and such holders agreed to
certain lock-up arrangements;
WHEREAS, on the date hereof, B & G will acquire 114,798 Units (the
"Additional Units") in connection with the Operating Partnership's acquisition
of B & G's 26.95% interest in 2200/2300 Riverchase Center pursuant to a
Contribution Agreement effective as of November 1, 1997 by and between the
Operating Partnership and B & G; and
WHEREAS, the parties hereto have agreed that, except as stated
herein, they and the Additional Units shall be governed by and subject to the
Initial Agreement.
NOW, THEREFORE, the parties hereto, in consideration of the
foregoing, the mutual covenants and agreements set forth herein and other good
and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, agree as follows:
1. General.
1(a) Except as otherwise defined herein, all capitalized terms
used herein shall have the meanings ascribed to them in the Initial Agreement.
1(b) Except as otherwise provided herein, B & G and the Company
shall have all of the rights and obligations with respect to the Additional
Units as are provided for in the Initial Agreement with respect to the Common
Shares and Units expressly referred to therein. Nothing in this Agreement shall
be deemed to amend, waive, supplement, or otherwise affect the terms of the
Initial Agreement.
2. Definitions.
Except as otherwise provided herein,
2(a) The Additional Units shall be deemed "Units" as that term
is defined in the Initial Agreement, and any Common Shares issued upon
redemption of Additional Units shall be deemed "Shares" as that term is defined
in the Initial Agreement. The Additional Units and any Common Shares issuable
upon redemption of Additional Units are referred to herein collectively as "New
Securities."
2(b) Any Common Shares issued or issuable upon the redemption of
Additional Units shall be deemed "Registrable Securities" as that term is
defined in the Initial Agreement.
2(c) B & G and its permitted successors and assigns shall be
deemed a "Holder" as that term is defined in the Initial Agreement and shall be
referred to as a Holder herein.
3. Lock-up Agreement.
3(a) Notwithstanding any other provision of this Agreement or
the Initial Agreement, each Holder hereby agrees that, except as set forth in
Section 3(b) below, for a period of one year from the date hereof (the "Lock-up
Period"), without the prior written consent of the Company, it will not offer,
pledge, sell, contract to sell, grant any options for the sale of or otherwise
dispose of, directly or indirectly (collectively, "Dispose of"), any New
Securities (the "Lock-up").
3(b) The following transfers of New Securities shall not be
subject to the Lock-up set forth in Section 2(a):
(i) a Holder may Dispose of New Securities as a
gift or other transfer without consideration;
(ii) a Holder who is a natural person may Dispose of New
Securities to his or her spouse, siblings, parents or any
natural or adopted children or other descendants or to any
personal trust in which such family members or such Holder
retain the entire beneficial interest;
(iii)a Holder may Dispose of New Securities to any entity
that controls, is controlled by, or is under common control with
such Holder; and
(iv) a Holder may Dispose of New Securities pursuant to a
pledge, grant of security interest or other encumbrance effected
in a bona fide transaction with an unrelated and unaffiliated
pledgee.
In the event a Holder Disposes of New Securities described in this
Section 3(b) (except pursuant to clause (iv) hereof), such New Securities shall
remain subject to this Agreement and, as a condition of the validity of such
disposition, the transferee shall be required to execute and deliver a
counterpart of this Agreement (except that a pledgee shall not be required to
execute and deliver a counterpart of this Agreement until it forecloses upon
such New Securities). Thereafter, such transferee shall be deemed to be a Holder
for purposes of this Agreement.
4. Shelf Registration Under the Securities Act.
Beginning after the expiration of the Lock-up Period, each
Holder shall be entitled to offer for sale pursuant to a Registration Statement
any Registrable Securities held by the Holder, subject to the terms and
conditions, and pursuant to the procedures, specified in Sections 3 and 4 of the
Initial Agreement.
5. Indemnification; Contribution.
The parties agree to indemnify and hold harmless, with respect
to any registration of Registrable Securities hereunder, to the same extent as
specified in Section 5 of the Initial Agreement.
6. Rule 144 Sales.
The Company covenants to undertake all such steps as are
specified in Section 6 of the Initial Agreement in order to enable any Holder to
sell Common Shares issued or issuable upon redemption of Additional Units
pursuant to Rule 144 under the Securities Act.
7. Miscellaneous.
7(a) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given without the written consent of the Company and the Holder(s) of
a majority in amount of the outstanding New Securities; provided, however, that
no amendment, modification or supplement or waiver or consent to the departure
with respect to the provisions of Sections 3, 4, 5 or 6 hereof shall be
effective as against any Holder of New Securities unless consented to in writing
by such Holder of New Securities. Notice of any amendment, modification or
supplement to this Agreement shall be provided by the Company to each Holder of
New Securities at least thirty (30) days prior to the effective date of such
amendment, modification or supplement.
7(b) Notices; Successors and Assigns; Counterparts; Headings;
Governing Law; Specific Performance. The parties agree to be governed with
respect to the subject matter hereof by the provisions set forth in Sections
7(b), 7(c), 7(e), 7(f), 7(g) and 7(h) of the Initial Agreement.
7(c) Entire Agreement. This Agreement is intended by the parties
as a final expression of their agreement with respect to the New Securities and
is intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, or caused this Agreement to be duly executed on its behalf, as of the
date first written above.
Address:
Colonial Plaza COLONIAL PROPERTIES TRUST
2101 6th Avenue North,
Suite 750
Birmingham, Alabama 35203
By:_/s/ Douglas B.
Nunnelley________
Douglas B. Nunnelley
Senior Vice President and
Secretary
Colonial Plaza COLONIAL REALTY LIMITED
2101 6th Avenue North, PARTNERSHIP
Suite 750
Birmingham, Alabama 35203
By: COLONIAL PROPERTIES
HOLDING COMPANY, INC.,
General Partner
By: _/s/ Douglas B.
Nunnelley__Douglas B. Nunnelley
Senior Vice President and
Secretary
Address:
B & G PROPERTIES COMPANY LLP
729 South 30th Street
Birmingham, Alabama 35233
/s/ M. Miller Gorrie
M. Miller Gorrie
Title: General Partner
===================================================================
SUPPLEMENTAL REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
Dated as of November 1 , 1997
by and among
COLONIAL PROPERTIES TRUST,
COLONIAL REALTY LIMITED PARTNERSHIP
and
B & G PROPERTIES COMPANY LLP
===================================================================
Exhibit 10.2.6
SUPPLEMENTAL REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
THIS SUPPLEMENTAL REGISTRATION RIGHTS AND LOCK-UP AGREEMENT (this
"Agreement") is made and entered into as of July 1, 1997, by and among COLONIAL
PROPERTIES TRUST, an Alabama real estate investment trust (the "Company"),
Colonial Realty Limited Partnership, a Delaware limited partnership (the
"Operating Partnership"), and COLONIAL COMMERCIAL INVESTMENTS, INC. ("CCI").
WHEREAS, on September 29, 1993 the Company, Colonial Properties, Inc.
(of which CCI is the successor) and certain other parties entered into a
Registration Rights and Lock-up Agreement (the "Initial Agreement") pursuant to
which the Company granted to certain holders of Units (as defined in the Initial
Agreement) of the Operating Partnership certain registration rights, and such
holders agreed to certain lock-up arrangements;
WHEREAS, on July 1, 1996, CCI and certain other parties entered into
a Supplemental Registration Rights and Lock-Up Agreement pursuant to which
certain additional Units became subject to the terms and conditions of the
Initial Agreement;
WHEREAS, on the date hereof, CCI is or will become the owner of
27,275 Units (the "Additional Units") in connection with the transfer to the
Operating Partnership of the Timothy Woods Apartments; and
WHEREAS, the parties hereto have agreed that, except as stated
herein, the Additional Units shall be subject to, and the parties hereto shall
be governed by, the terms and conditions of the Initial Agreement.
NOW, THEREFORE, the parties hereto, in consideration of the
foregoing, the mutual covenants and agreements hereinafter set forth, and other
good and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, agree as follows:
1. General.
1(a) Except as otherwise defined herein, all capitalized terms
used herein shall have the meanings ascribed to them in the Initial Agreement.
1(b) Except as otherwise provided herein, CCI and the Company
shall have all of the rights and obligations with respect to the Additional
Units as are provided for in the Initial Agreement with respect to the Common
Shares and Units expressly referred to therein. Nothing in this Agreement shall
be deemed to amend, waive, supplement, or otherwise affect the terms of the
Initial Agreement.
2. Definitions.
Except as otherwise provided herein,
2(a) The Additional Units shall be deemed "Units" as that term
is defined in the Initial Agreement, and any Common Shares issued upon
redemption of Additional Units shall be deemed "Shares" as that term is defined
in the Initial Agreement. The Additional Units and any Common Shares issuable
upon redemption of Additional Units are referred to herein collectively as "New
Securities."
2(b) Any Common Shares issued upon the redemption of Additional
Units shall be deemed "Registrable Securities" as that term is defined in the
Initial Agreement.
2(c) CCI and its permitted successors and assigns shall be
deemed "Holders" as that term is defined in the Initial Agreement and shall be
referred to as Holders herein.
3. Lock-up Agreement.
3(a) Notwithstanding any other provision of this Agreement or
the Initial Agreement, the Holder hereby agrees that, except as set forth in
Section 3(b) below, for a period of one year from the date hereof (the "Lock-up
Period"), without the prior written consent of the Company, it will not offer,
pledge, sell, contract to sell, grant any options for the sale of or otherwise
dispose of, directly or indirectly (collectively, "Dispose of"), any New
Securities (the "Lock-up").
3(b) The following transfers of New Securities shall not be
subject to the Lock-up set forth in Section 2(a):
(i) a Holder may Dispose of New Securities
as a gift or other transfer without consideration;
(ii) a Holder who is a natural person may Dispose of New
Securities to his or her spouse, siblings, parents or any
natural or adopted children or other descendants or to any
personal trust in which such family members or such Holder
retain the entire beneficial interest;
(iii)a Holder may Dispose of New Securities to any entity
that controls, is controlled by, or is under common control with
such Holder;
(iv) a Holder may Dispose of New Securities pursuant to a
pledge, grant of security interest or other encumbrance effected
in a bona fide transaction with an unrelated and unaffiliated
pledgee; and
(v) at the election of the Company, a Holder may Dispose of
New Securities in an underwritten public offering.
In the event a Holder Disposes of New Securities described in this
Section 3(b) (except pursuant to clause (iv) hereof), such New Securities shall
remain subject to this Agreement and, as a condition of the validity of such
disposition, the transferee shall be required to execute and deliver a
counterpart of this Agreement (except that a pledgee shall not be required to
execute and deliver a counterpart of this Agreement until it forecloses upon
such New Securities). Thereafter, such transferee shall be deemed to be a Holder
for purposes of this Agreement.
4. Shelf Registration Under the Securities Act.
Beginning after the expiration of the Lock-up Period, the
Holder(s) shall be entitled to offer for sale pursuant to a Registration
Statement any Registrable Securities held by the Holder(s), subject to the terms
and conditions, and pursuant to the procedures, specified in Sections 3 and 4 of
the Initial Agreement.
5. Indemnification; Contribution.
The parties agree to indemnify and hold harmless, with respect
to any registration of Registrable Securities hereunder, to the same extent as
specified in Section 5 of the Initial Agreement.
6. Rule 144 Sales.
The Company covenants to undertake all such steps as are
specified in Section 6 of the Initial Agreement in order to enable any Holder to
sell Common Shares issued or issuable upon redemption of Additional Units
pursuant to Rule 144 under the Securities Act.
7. Miscellaneous.
7(a) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given without the written consent of the Company and the Holders of a
majority in amount of the outstanding New Securities; provided, however, that no
amendment, modification or supplement or waiver or consent to the departure with
respect to the provisions of Sections 3, 4, 5 or 6 hereof shall be effective as
against any Holder of New Securities unless consented to in writing by such
Holder of New Securities. Notice of any amendment, modification or supplement to
this Agreement shall be provided by the Company to each Holder of New Securities
at least thirty (30) days prior to the effective date of such amendment,
modification or supplement.
7(b) Notices; Counterparts; Headings; Successors and Assigns;
Specific Performance; Governing Law. The parties agree to be governed with
respect to the subject matter hereof by the provisions set forth in Sections
7(b), 7(c), 7(e), 7(f), 7(g) and 7(h) of the Initial Agreement.
7(c) Entire Agreement. This Agreement is intended by the parties
as a final expression of their agreement with respect to the New Securities and
is intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, or caused this Agreement to be duly executed on its behalf, as of the
date first written above.
Address:
2101 6th Avenue North, COLONIAL PROPERTIES TRUST
Suite 750
Birmingham, Alabama 35202
By:_/s/ Paul F.
Earle___________
Name: Paul F. Earle
Title: Executive Vice
President
2101 6th Avenue North, COLONIAL REALTY LIMITED
Suite 750 PARTNERSHIP
Birmingham, Alabama 35202
By: COLONIAL PROPERTIES
HOLDING COMPANY, INC.,
General Partner
By: _/s/ Paul F.
Earle____
Name: Paul F. Earle
Title: Executive Vice
President
Address: COLONIAL COMMERCIAL
INVESTMENTS, INC.
2000 Interstate Park Drive
Suite 400
Montgomery, AL 36109
By: /s/ James K. Lowder
James K. Lowder
President
===================================================================
SUPPLEMENTAL REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
Dated as of July 1, 1997
by and among
COLONIAL PROPERTIES TRUST,
COLONIAL REALTY LIMITED PARTNERSHIP
and
COLONIAL COMMERCIAL INVESTMENTS, INC.
===================================================================
Exhibit 10.2.7
SUPPLEMENTAL REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
THIS SUPPLEMENTAL REGISTRATION RIGHTS AND LOCK-UP AGREEMENT (this
"Agreement") is made and entered into as of July 1, 1996, by and among COLONIAL
PROPERTIES TRUST (the "Company") and COLONIAL COMMERCIAL INVESTMENTS, INC.
("CCII"), THOMAS H. LOWDER, JAMES K. LOWDER, and the other parties who are
signatories hereto. Thomas H. Lowder and James K. Lowder are referred to herein
collectively as the "Lowder brothers."
WHEREAS, on September 29, 1993 the Company, Colonial Properties, Inc.
(of which CCII is the successor), the Lowder brothers and certain other parties
entered into a Registration Rights and Lock-up Agreement (the "Initial
Agreement") pursuant to which the Company granted to certain holders of Units
(as defined in the Initial Agreement) of Colonial Realty Limited Partnership
(the "Operating Partnership") certain registration rights, and such holders
agreed to certain lock-up arrangements;
WHEREAS, on the date hereof, CCII is or will become the owner of
58,466 Units (the "Additional Units") in connection with the transfer to the
Operating Partnership of certain land located in North Macon, Georgia;
WHEREAS, the parties hereto have agreed that, except as stated
herein, the Additional Units shall be subject to, and the parties hereto shall
be governed by, the terms and conditions of the Initial Agreement.
NOW, THEREFORE, the parties hereto, in consideration of the
foregoing, the mutual covenants and agreements hereinafter set forth, and other
good and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, agree as follows:
1. General.
1(a) Except as otherwise defined herein, all capitalized terms
used herein shall have the meanings ascribed to them in the Initial Agreement.
1(b) Except as otherwise provided herein, CCII and the Company
shall have all of the rights and obligations with respect to the Additional
Units as are provided for in the Initial Agreement with respect to the Common
Shares and Units expressly referred to therein. Nothing in this Agreement shall
be deemed to amend, waive, supplement, or otherwise affect the terms of the
Initial Agreement.
2. Definitions.
Except as otherwise provided herein,
2(a) The Additional Units shall be deemed "Units" as that terms
is defined in the Initial Agreement, and any Common Shares issued upon
redemption of Additional Units shall be deemed "Shares" as that term is defined
in the Initial Agreement. The Additional Units and any Common Shares issuable
upon redemption of Additional Units are referred to herein collectively as "New
Securities."
2(b) Any Common Shares issued upon the redemption of Additional
Units shall be deemed "Registrable Securities" as that term is defined in the
Initial Agreement.
2(c) CCII and its permitted successors and assigns shall be
deemed "Holders" as that term is defined in the Initial Agreement and shall be
referred to as Holders herein.
3. Lock-up Agreement.
3(a) Notwithstanding any other provision of this Agreement or
the Initial Agreement, the Holder hereby agrees that, except as set forth in
Section 3(b) below, for a period of one year from the date hereof (the "Lock-up
Period"), without the prior written consent of the Company, it will not offer,
pledge, sell, contract to sell, grant any options for the sale of or otherwise
dispose of, directly or indirectly (collectively, "Dispose of"), any New
Securities (the "Lock-up").
3(b) The following transfers of New Securities shall not be
subject to the Lock-up set forth in Section 2(a):
(i) a Holder who is a natural person may Dispose of New
Securities to his or her spouse, siblings, parents or any
natural or adopted children or other descendants or to any
personal trust in which such family members or such Holder
retain the entire beneficial interest;
(ii) a Holder that is a corporation, partnership, joint
venture or other business entity may Dispose of New Securities
to one or more other entities that are wholly owned and
controlled, legally and beneficially, by such Holder or by a
Person that directly or indirectly wholly owns and controls such
Holder;
(iii)a Holder may Dispose of New Securities on his or her
death to such Holder's estate, executor, administrator or
personal representative or to such Holder's beneficiaries
pursuant to a devise or bequest or by the laws of descent and
distribution;
(iv) at the election of the Company, a Holder may Dispose
of New Securities in an underwritten public offering;
(v) a Holder may Dispose of New Securities
as a gift or other transfer without consideration;
and
(vi) a Holder may Dispose of New Securities pursuant to a
pledge, grant of security interest or other encumbrance effected
in a bona fide transaction with an unrelated and unaffiliated
pledgee.
In the event a Holder Disposes of New Securities described in this
Section 3(b) (except pursuant to clause (iv) hereof), such New Securities shall
remain subject to this Agreement and, as a condition of the validity of such
disposition, the transferee shall be required to execute and deliver a
counterpart of this Agreement (except that a pledgee shall not be required to
execute and deliver a counterpart of this Agreement until it forecloses upon
such New Securities). Thereafter, such transferee shall be deemed to be a Holder
for purposes of this Agreement.
3(c) Each of the Lowder brothers hereby agrees that, during the
Lock-Up Period, he will not, without the prior consent of the Company, Dispose
of his indirect interest in any New Securities held by CCII by Disposing of his
interest in (or permitting the sale of equity interests in) CCII, except that
the Lowder brothers may Dispose of their interests in such entities to the same
extent that the Holder(s) may transfer New Securities as set forth in Section
3(b) hereof.
4. Shelf Registration Under the Securities Act.
Beginning after the expiration of the Lock-up Period, the Holder
shall be entitled to offer for sale pursuant to a Registration Statement any
Registrable Securities held by the Holder, subject to the terms and conditions,
and pursuant to the procedures, specified in Sections 3 and 4 of the Initial
Agreement.
5. Indemnification; Contribution.
The parties agree to indemnify and hold harmless, with respect
to any registration of Registrable Securities hereunder, to the same extent as
specified in Section 5 of the Initial Agreement.
6. Rule 144 Sales.
The Company covenants to undertake all such steps as are
specified in Section 6 of the Initial Agreement in order to enable any Holder to
sell Common Shares issued or issuable upon redemption of Additional Units
pursuant to Rule 144 under the Securities Act.
7. Miscellaneous.
7(a) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given without the written consent of the Company and the Holders of a
majority in amount of the outstanding New Securities; provided, however, that no
amendment, modification or supplement or waiver or consent to the departure with
respect to the provisions of Sections 3, 4, 5 or 6 hereof shall be effective as
against any Holder of New Securities unless consented to in writing by such
Holder of New Securities. Notice of any amendment, modification or supplement to
this Agreement shall be provided by the Company to each Holder of New Securities
at least thirty (30) days prior to the effective date of such amendment,
modification or supplement.
7(b) Notices; Counterparts; Headings; Successors and Assigns;
Specific Performance; Governing Law. The parties agree to be governed with
respect to the subject matter hereof by the provisions set forth in Sections
7(b), 7(c), 7(e), 7(f), 7(g) and 7(h) of the Initial Agreement.
7(c) Entire Agreement. This Agreement is intended by the parties
as a final expression of their agreement with respect to the New Securities and
is intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, or caused this Agreement to be duly executed on its behalf, as of the
date first written above.
Address:
120 University Park Drive COLONIAL PROPERTIES TRUST
Suite 150
Orlando, Florida 32792
By:___/s/ Douglas B. Nunnelley
Douglas B. Nunnelley
Senior Vice President and
Chief Financial
Officer
HOLDERS:
Address:
Energen Plaza COLONIAL COMMERCIAL 2101 Sixth Avenue North INVESTMENTS, INC.
Suite 750
Birmingham, Alabama 35202
By:___/s/ James K. Lowder
Name: James K. Lowder
Title: President
Address: ______/s/ Thomas H. Lowder
Energen Plaza Thomas H. Lowder
2101 Sixth Avenue North
Suite 750
Birmingham, Alabama 35203
Address: ______/s/ James K. Lowder
200 Interstate Parkway James K. Lowder
Suite 400
Montgomery, Alabama 36104
===================================================================
SUPPLEMENTAL REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
Dated as of July 1, 1996
by and among
COLONIAL PROPERTIES TRUST
and
Certain Direct and Indirect Holders of Common Shares of
Beneficial Interest Therein
and/or Limited Partnership Interests
of Colonial Realty Limited Partnership
===================================================================
<TABLE>
selected financial information
<CAPTION>
(Dollar amounts in thousands,
except share data) 1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------------
OPERATING DATA
<S> <C> <C> <C> <C> <C>
Total revenue $ 184,126 $ 134,881 $110,890 $ 64,031 $ 42,610
Expenses:
Depreciation and amortization 33,278 23,533 20,490 13,061 7,874
Other operating 63,581 46,819 41,772 24,026 16,737
Income from operations 87,267 64,529 48,628 26,944 17,999
Interest expense 40,496 24,584 24,060 10,877 12,772
Other income (expense), net 3,187 1,303 736 578 (1,007)
Income before extraordinary items
and minority interest 49,958 41,248 25,479 16,767 4,220
Dividends to preferred shareholders 1,671 0 0 0 0
Net income (loss) available to
common shareholders 30,277 27,506 14,936 11,317 (2,991)
Per share - basic and diluted:
Income before extraordinary items $1.66 $1.60 $1.29 $1.18 $0.19
Extraordinary loss from early
extinguishment of debt (0.13) (0.02) 0 0 (0.51)
Net income (loss) 1.53 1.58 1.29 1.18 (0.32)
Dividends declared 2.08 2.00 1.90 1.73 0
=========================================================================================================
BALANCE SHEET DATA
Land, buildings, and equipment, net $1,268,432 $ 801,800 $624,517 $555,581 $236,062
Total assets 1,397,078 948,105 681,122 620,413 289,846
Total debt 702,044 506,435 354,100 362,134 110,432
=========================================================================================================
OTHER DATA
Funds from operations(1) $ 77,493 $ 62,999 $ 44,015 $ 28,123 $ 11,176
Total market capitalization(2) 1,764,810 1,298,946 894,342 759,313 417,207
Ratio of debt to total market
capitalization 39.8% 39.0% 39.6% 47.7% 26.5%
Cash flow provided by (used in):
Operating activities $ 72,065 $ 62,873 $ 47,004 $ 27,970 $ 7,518
Investing activities (346,379) (224,076) (95,592) (119,162) (22,417)
Financing activities 275,503 162,957 29,443 84,689 41,880
Total properties (at end of period) 93 73 62 55 36
<FN>
(1) The Company generally considers Funds From Operations ("FFO") a widely used
and appropriate measure of performance for an equity REIT that provides a
relevant basis for comparison among REITs. FFO, as defined by the National
Association of Real Estate Investment Trusts (NAREIT), means income (loss)
before minority interest (determined in accordance with GAAP), excluding gains
(losses) from debt restructuring and sales of property, plus real estate related
depreciation and after adjustments for unconsolidated partnerships and joint
ventures. FFO is presented to assist investors in analyzing the performance of
the Company. The Company's method of calculating FFO may be different from
methods used by other REITs and, accordingly, may not be comparable to such
other REITs. FFO (i) does not represent cash flows from operations as defined by
GAAP, (ii) is not indicative of cash available to fund all cash flow needs and
liquidity, including its ability to make distributions, and (iii) should not be
considered as an alternative to net income (as determined in accordance with
GAAP) for purposes of evaluating the Company's operating performance.
(2) Total market capitalization is the market value of all outstanding Common
Shares of the Company plus total debt. This amount was calculated assuming the
conversion of 9,976,419, 8,431,198, 8,141,023, and 8,070,159 units of minority
interest in Colonial Realty Limited Partnership into the Company's Common Shares
for 1997, 1996, 1995, and 1994, respectively. </FN> </TABLE>
<PAGE>
management's discussion and analysis
of financial condition and results of operations
general
Colonial Properties Trust (Colonial or the Company) is engaged in the ownership,
development, management, and leasing of multifamily communities, retail malls
and shopping centers, and office buildings. Colonial is organized as a real
estate investment trust (REIT) and owns and operates properties in eight states
in the Sunbelt region of the United States. As of December 31, 1997, Colonial's
real estate portfolio consisted of 43 multifamily communities, 37 retail
properties, and 13 office properties. As of December 31, 1997 Colonial was one
of the largest diversified REITs in the United States. Consistent with its
diversified strategy, Colonial manages its business with three separate and
distinct operating divisions: Multifamily, Retail, and Office. Each division has
an Executive Vice President that oversees growth and operations and has a
separate management team that is responsible for acquiring, developing, and
leasing properties within each division. This structure allows Colonial to
utilize specialized management personnel for each operating division. Although
these divisions operate independently from one another, constant communication
among the Executive Vice Presidents provides the Company with synergy allowing
the Company to take advantage of a variety of investment opportunities. The
following discussion should be read in conjunction with the Consolidated
Financial Statements and Notes to Consolidated Financial Statements appearing
elsewhere in this report. As used herein, the terms "Colonial" or "the Company"
includes Colonial Properties Trust, and one or more of its subsidiaries
including, among others, Colonial Realty Limited Partnership (CRLP). Any
statement contained in this report which is not a historical fact, or which
might be otherwise considered an opinion or projection concerning the Company or
its business, whether express or implied, is meant as, and should be considered,
a forward-looking statement as that term is defined in the Private Securities
Litigation Reform Act of 1996. Forward-looking statements are based upon
assumptions and opinions concerning a variety of known and unknown risks,
including but not limited to changes in market conditions, the supply and demand
for leasable real estate, interest rates, increased competition, changes in
governmental regulations, and national and local economic conditions generally,
as well as other risks more completely described in the Company's filings with
the Securities and Exchange Commission. If any of these assumptions or opinions
prove incorrect, any forward-looking statements made on the basis of such
assumptions or opinions may also prove materially incorrect in one or more
respects.
Results of Operations - 1997 vs. 1996
In 1997, the Company experienced growth in revenues, operating expenses, and net
income which resulted from the acquisition and development of 43 properties
during 1997 and 1996. As a result of the acquisitions and developments, the
Company's net income before dividends to preferred shareholders increased by
$5.0 million, or 18.0%, for 1997 when compared to 1996. On a per share basis,
net income available to common shareholders was $1.53 for 1997, a 3.2% decrease,
compared to $1.58 for 1996. The decrease in net income available to common
shareholders, on a per share basis, is directly attributable to the
extraordinary loss from early extinguishment of debt and the dividends paid to
the preferred shareholders.
Revenues - Total revenues increased by $49.2 million, or 36.5%, during 1997 when
compared to 1996. Of this increase, $43.4 million relates to revenues generated
by properties that were acquired or developed during 1997 and 1996. The
remaining increase primarily relates to increases in rental rates at existing
properties.
Operating Expenses - Total operating expenses increased by $26.5 million, or
37.7%, during 1997 when compared to 1996. The majority of this increase, $21.5
million, relates to additional operating expenses associated with properties
that were acquired or developed during 1997 and 1996. Depreciation expense at
existing properties increased by $1.8 million during 1997 when compared to 1996.
The remaining increase primarily relates to the resolution of prior year
reserves for certain tax contingencies, increases in operating expenses at
existing properties, and overall increases in corporate overhead and personnel
costs associated with the Company's continued growth.
Other Income and Expenses - Interest expense increased by $15.9 million, or
64.7%, during 1997 when compared to 1996. The increase in interest expense is
primarily attributable to the assumption of $75 million of debt, the issuance of
$175 million in Medium Term Notes, and the increase usage of the Company's line
of credit in conjunction with the financing of acquisitions and developments.
Results of Operations - 1996 vs. 1995
In 1996, the Company experienced growth in revenues and operating expenses which
resulted from the acquisition and development of 22 properties during 1996 and
1995. As a result of the acquisitions and developments, the Company's net income
before dividends to preferred shareholders increased by $12.6 million, or 84.2%,
for 1996 when compared to 1995. On a per share basis, net income was $1.58 for
1996, a 22.5% increase, compared to $1.29 for 1995.
Revenues - Total revenues increased by $24.0 million, or 21.6%, during 1996 when
compared to 1995. Of this increase, $21.7 million relates to revenues generated
by properties that were acquired or developed during 1996 and 1995. The
remaining increase primarily relates to increases in rental rates at existing
properties.
Operating Expenses - Total operating expenses increased by $8.1 million, or
13.0%, during 1996 when compared to 1995. The change is due to an increase of
$9.4 million related to additional operating expenses associated with properties
that were acquired or developed during 1997 and 1996 and a decrease of $1.9
million due to the resolution of certain state tax contingencies.
Other Income and Expenses - Interest expense increased by $0.5 million, or 2.2%,
during 1996 when compared to 1995. The change in interest expense is primarily
attributable to an increase in indebtedness incurred to finance acquisitions and
developments, which was offset by the repayment of two mortgages and one
revolving credit agreement and an increase in capitalized interest during the
year.
LIQUIDITY AND CAPITAL RESOURCES
During 1997, the Company invested $523 million in the acquisition and
development of properties. This acquisition and development activity increased
the Company's multifamily, retail, and office property holdings. The Company
financed this growth through proceeds from public offerings of equity and debt
totaling $403 million during 1997, advances on its bank line of credit, the
issuance of limited partnership units in CRLP, and cash from operations. In
connection with the acquisition activity, the Company sold or exchanged six
multifamily properties and one office property through tax-deferred
transactions. The Company also used these sources of funds, along with
exchanging or selling properties, to repay or transfer $120 million on 17
mortgage loans.
Acquisition and Development Activities
Multifamily Properties - During 1997, the Company added 1,434 apartment units
through the acquisition of five multifamily communities at an aggregate cost of
$84 million. In a continuing effort to diversify its portfolio, the Company sold
or exchanged six multifamily communities, which had a net book value of $68
million and consisted of 2,464 apartment units. The Company also completed
development of 1,172 apartment units in seven multifamily communities during
1997 and acquired land on which it intends to develop additional multifamily
communities during 1998. The aggregate investment in the multifamily
developments during 1997 was $50.5 million. As of December 31, 1997, the Company
has 1,170 apartment units in seven multifamily communities under development or
expansion. Management anticipates that the seven multifamily projects will be
completed during 1998 and the first half of 1999. Management estimates that it
will invest an additional $63 million to complete these multifamily communities.
Retail Properties - During 1997, the Company added 4.9 million square feet of
retail shopping space through the acquisition of nine community shopping centers
and seven enclosed malls at an aggregate cost of $250.6 million. The Company
also completed a 422,000 square foot expansion of a regional mall in Macon,
Georgia and a 239,000 square foot expansion of a community shopping center in
Montgomery, Alabama at an aggregate cost during 1997 of $28.6 million.
Office Properties - During 1997, the Company increased its office portfolio by
one million square feet with the acquisition of four office properties and the
purchase of additional interests in two joint ventures. The office properties
are located in Alabama and Georgia and were purchased at an aggregate cost of
$104.5 million. In connection with one of the acquisitions, the Company
exchanged an office property which had a net book value of $2.0 million and
consisted of 25,000 square feet.
Financing Activities
The Company funded a large portion of its acquisitions and developments through
the issuance of common shares, preferred shares, and debt securities. During
1997, the Company completed the following equity and debt transactions:
<TABLE>
Common Share Offerings
<CAPTION>
(in thousands)
Number of Price Per Gross Offering Net
Date Common Shares Share Proceeds Costs Proceeds
- -------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
January 1,500,000 $29.8750 $44,812 $1,457 $43,355
July 1,700,000 $30.9375 $52,594 $2,945 $49,649
December 165,632 $30.1875 $ 5,000 $ 330(1) $ 4,670
(1) Includes $90,000 in shelf registration fees paid to the Securities and
Exchange Commission.
</TABLE>
<TABLE>
Preferred Share Offering
<CAPTION>
(in thousands)
Number of Price Per Gross Offering Net
Date Preferred Shares Share Proceeds Costs Proceeds
- -------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
November 5,000,000 $25.0000 $125,000 $4,451 $120,549
</TABLE>
<TABLE>
Debt Offerings
<CAPTION>
Gross
Type of Proceeds
Date Note Maturity Rate (in thousands)
- -------------------------------------------------------------------
<S> <C> <C> <C> <C>
January Medium-term January, 2003 7.16% $50,000
July Medium-term July, 2004 6.96% $75,000
August Medium-term August, 2005 6.96% $25,000
September Medium-term September, 2005 6.98% $25,000
</TABLE>
On July 10, 1997, the Company increased the borrowing capacity under its
unsecured line of credit from $125 million to $200 million. The credit facility,
which is used by the Company primarily to finance additional property
investments, bears interest at a rate ranging between 100 and 150 basis points
above LIBOR and is renewable annually. As of December 31, 1997, the balance
outstanding on the Company's line of credit was $117.1 million, bearing interest
at a rate of 110 basis points above LIBOR. At December 31, 1997, the Company's
total outstanding debt balance was $702.0 million. The outstanding balance
includes fixed rate debt of $531.3 million, or 75.7%, and floating-rate debt of
$170.7 million, or 24.3%. The Company has obtained interest rate protection for
$67.8 million of the floating-rate debt under two agreements. One agreement,
protecting $17.8 million, limits the debt to an interest rate of 5.96% through
September 30, 1998, and the other agreement, protecting $50.0 million, limits
the debt to an interest rate of 8.00% through May 2, 2000. The Company's total
market capitalization as of December 31, 1997 was $1.76 billion and its ratio of
debt to total market capitali-zation was 39.8%. Certain loan agreements of the
Company contain restrictive covenants which, among other things, require
maintenance of various financial ratios. At December 31, 1997, the Company was
in compliance with these covenants.
Outlook
Management intends to maintain the Company's strength through continued
diversification, while pursuing acquisitions that meet Colonial's criteria for
property quality, market strength, and investment return. Management will
continue to use its line of credit to provide short-term financing for
acquisition and development activities and plans to continue to replace
significant borrowings under the bank line of credit with funds generated from
the sale of additional equity securities and permanent financing, as market
conditions permit. Management believes that these potential sources of funds,
along with the possibility of issuing limited partnership units of CRLP in
exchange for properties, will provide the Company with the means to finance
additional acquisitions and development. Colonial continues to work diligently
to improve its credit rating, in order to reduce its cost of raising future
capital. Management anticipates that its net cash provided by operations and its
existing cash balances will provide the necessary funds on a short- and
long-term basis to cover its operating expenses, interest expense on outstanding
indebtedness, recurring capital expenditures, and dividends to shareholders in
accordance with Internal Revenue Code requirements applicable to real estate
investment trusts. The Company is aware of the potential issues associated with
the data conversion and system upgrades necessary for its computer systems to be
year 2000 compliant. Management is also currently in the process of addressing
the operational impact the year 2000 issue will have on the properties owned by
the Company. The Company expects to incur internal staff costs as well as other
expenses related to facilities enhancements necessary to prepare its systems for
the year 2000. The Company currently believes that, with modifications to
existing software at the corporate level and upgrading operational systems at
the property level, the year 2000 issue will not have a material impact on the
operations of the Company. However, if such modifications or upgrades are not
completed timely or if software vendors, suppliers, or other companies upon
whose systems Colonial relies in the ordinary course of business have failed to
appropriately address the conversion issue, then the year 2000 issue may have a
material impact on the operations of the Company. At the current time, the
Company has not determined the cost that will ultimately be incurred to be year
2000 compliant.
Recently Issued Accounting Standard
Statement of Financial Accounting Standard No. 131 (SFAS 131), Disclosures about
Segments of an Enterprise and Related Information, establishes new disclosure
guidelines for reporting financial information related to operating segments.
Under SFAS 131, the Company will be required to disclose operating results and
other financial information related to its multifamily, retail, and office
divisions. The Company is required to adopt SFAS 131 for fiscal year ending
December 31, 1998.
Inflation
Substantially all of the leases at the retail properties provide for the
pass-through to tenants of certain operating costs, including real estate taxes,
common area maintenance expenses, and insurance. Leases at the multifamily
properties generally provide for an initial term of six months to one year and
allow for rent adjustments at the time of renewal. Leases at the office
properties typically provide for rent adjustments and the pass-through of
certain operating expenses during the term of the lease. All of these provisions
permit the Company to increase rental rates or other charges to tenants in
response to rising prices and, therefore, serve to minimize the Company's
exposure to the adverse effects of inflation.
FUNDS FROM OPERATIONS
The Company considers Funds From Operations ("FFO") a widely accepted and
appropriate measure of performance for an equity REIT that provides a relevant
basis for comparison among REITs. FFO, as defined by the National Association of
Real Estate Investment Trusts (NAREIT), means income (loss) before minority
interest (determined in accordance with GAAP), excluding gains (losses) from
debt restructuring and sales of property, plus real estate depreciation and
after adjustments for unconsolidated partnerships and joint ventures. FFO is
presented to assist investors in analyzing the performance of the Company. The
Company's method of calculating FFO may be different from methods used by other
REITs and, accordingly, may not be comparable to such other REITs. FFO (i) does
not represent cash flows from operations as defined by GAAP, (ii) is not
indicative of cash available to fund all cash flow needs and liquidity,
including its ability to make distributions, and (iii) should not be considered
as an alternative to net income (as determined in accordance with GAAP) for
purposes of evaluating the Company's operating performance. The Company's FFO
for the years ended December 31, 1997 and 1996 was computed as follows:
<TABLE>
(in thousands) 1997 1996
- ----------------------------------------------------------------------
<S> <C> <C>
Net income $30,277 $27,506
Adjustments:
Minority interest in CRLP 14,360 13,231
Depreciation(1) 32,288 22,621
Gains from sales of property(1) (3,082) (870)
Debt prepayment penalties 3,650 511
- ----------------------------------------------------------------------
Funds from operations $77,493 $62,999
======================================================================
(1)Includes pro-rata share of adjustments for subsidiaries.
</TABLE>
<PAGE>
<TABLE>
consolidated balance sheets
december 31, 1997 and 1996
<CAPTION>
(Amounts in thousands) 1997 1996
- ---------------------------------------------------------------------------
assets:
<S> <C> <C>
Land, buildings, and equipment, net $1,268,432 $801,800
Undeveloped land and construction in progress 98,555 113,689
Cash and equivalents 4,531 3,342
Restricted cash 2,665 2,450
Accounts receivable, net 7,301 4,792
Prepaid expenses 3,164 4,582
Deferred debt and lease costs 6,901 6,028
Investment in subsidiaries 685 5,692
Other assets 4,844 5,730
- ---------------------------------------------------------------------------
Total assets $1,397,078 $948,105
===========================================================================
liabilities and shareholders' equity:
Notes and mortgages payable $ 702,044 $506,435
Accounts payable 12,706 7,699
Accounts payable to affiliates 2,320 9,973
Accrued interest 6,526 5,465
Accrued expenses 2,814 1,705
Tenant deposits 3,715 2,926
Unearned rent 2,253 924
- ---------------------------------------------------------------------------
Total liabilities 732,378 535,127
- ---------------------------------------------------------------------------
Minority interest 174,281 133,474
- ---------------------------------------------------------------------------
Preferred shares of beneficial interest, $.01 par value, 10,000,000 shares
authorized; 5,000,000 and -0- shares issued and outstanding
at December 31, 1997 and 1996, respectively 50 0
Common shares of beneficial interest, $.01 par value,
65,000,000 shares authorized; 21,152,754 and
17,659,696 shares issued and outstanding at
December 31, 1997 and 1996, respectively 212 177
Additional paid-in capital 524,605 302,304
Cumulative earnings 82,716 50,768
Cumulative distributions (116,768) (73,387)
Deferred compensation on restricted shares (396) (358)
- ---------------------------------------------------------------------------
Total shareholders' equity 490,419 279,504
- ---------------------------------------------------------------------------
Total liabilities and shareholders' equity $1,397,078 $948,105
===========================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
consolidated statements of income
for the years ended december 31, 1997, 1996, 1995
<CAPTION>
(Amounts in thousands, except per share data) 1997 1996 1995
- -------------------------------------------------------------------------------------------------
Revenue:
<S> <C> <C> <C>
Base rent $154,063 $115,174 $ 94,835
Base rent from affiliates 879 758 836
Percentage rent 2,161 1,841 1,782
Tenant recoveries 17,349 10,717 7,621
Other 9,674 6,391 5,816
- -------------------------------------------------------------------------------------------------
Total revenue 184,126 134,881 110,890
- -------------------------------------------------------------------------------------------------
Property operating expenses:
General operating expenses 12,603 9,530 8,355
Salaries and benefits 10,283 8,606 7,363
Repairs and maintenance 18,669 13,073 10,890
Taxes, licenses, and insurance 15,578 11,538 9,617
General and administrative 6,448 4,071 5,547
Depreciation 31,956 22,025 18,044
Amortization 1,322 1,509 2,446
- -------------------------------------------------------------------------------------------------
Total operating expenses 96,859 70,352 62,262
- -------------------------------------------------------------------------------------------------
Income from operations 87,267 64,529 48,628
- -------------------------------------------------------------------------------------------------
Other income (expense):
Interest expense (40,496) (24,584) (24,060)
Income from subsidiaries 620 835 736
Gains from sales of property 2,567 468 175
- -------------------------------------------------------------------------------------------------
Total other expense (37,309) (23,281) (23,149)
- -------------------------------------------------------------------------------------------------
Income before extraordinary items and
minority interest 49,958 41,248 25,479
Extraordinary loss from early extinguishment of debt (3,650) (511) -0-
- -------------------------------------------------------------------------------------------------
Income before minority interest 46,308 40,737 25,479
Minority interest in income of CRLP 14,360 13,231 10,543
- -------------------------------------------------------------------------------------------------
Net income 31,948 27,506 14,936
Dividends to preferred shareholders (1,671) -0- -0-
- -------------------------------------------------------------------------------------------------
Net income available to common shareholders $ 30,277 $ 27,506 $ 14,936
=================================================================================================
Basic and Diluted net income per share after consideration of minority interest:
Income before extraordinary items $ 1.66 $ 1.60 $ 1.29
Extraordinary loss from early extinguishment of debt (0.13) (0.02) -0-
- -------------------------------------------------------------------------------------------------
Net income per common share $ 1.53 $ 1.58 $ 1.29
=================================================================================================
Weighted average common shares outstanding 19,808 17,378 11,613
=================================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
consolidated statements of shareholders' equity
for the years ended december 31, 1997, 1996, 1995
<CAPTION>
Preferred Shares of Common Shares of Additional Deferred Total
Beneficial Interest Beneficial Interest Paid-In Cumulative Cumulative Compensation on Shareholders'
(Amounts in thousands)Shares Par Value Shares Par Value Capital Earnings Distributions Restricted Shares Equity
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 9,582 $ 96 $140,928 $ 8,326 $(16,577) $(143) $132,630
Distributions ($1.90 per share) (21,503) (21,503)
Net income 14,936 14,936
Issuance of Restricted Common Shares of
Beneficial Interest 9 -0- 204 (204) -0-
Amortization of deferred compensation 44 44
Public offering of common shares of
beneficial interest, net of offering
costs of $4,832 3,450 35 73,621 73,656
Issuance of common shares of beneficial
interest through the Company's dividend
reinvestment plan 4 -0- 88 88
Adjustments to minority interest in Colonial
Realty Limited Partnership due to issuance
of common shares of beneficial interest
and limited partnership units (8,956) (8,956)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995 -0- $ -0- 13,045 131 205,885 23,262 (38,080) (303) 190,895
Distributions ($2.00 per share) (35,307) (35,307)
Net income 27,506 27,506
Issuance of Restricted Common Shares of
Beneficial Interest 7 -0- 158 (158) -0-
Amortization of deferred compensation 103 103
Public offering of common shares of
beneficial interest, net of offering
costs of $6,632 4,600 46 106,597 106,643
Issuance of common shares of beneficial
interest through the Company's dividend
reinvestment plan 8 -0- 204 204
Adjustments to minority interest in Colonial
Realty Limited Partnership due to issuance
of common shares of beneficial interest
and limited partnership units (10,540) (10,540)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 -0- -0- 17,660 177 302,304 50,768 (73,387) (358) 279,504
Distributions on common shares ($2.08 per share) (41,710) (41,710)
Distributions on preferred
shares ($0.3342 per share) (1,671) (1,671)
Net income 31,948 31,948
Issuance of Restricted Common Shares of
Beneficial Interest 8 -0- 261 (261) -0-
Amortization of deferred compensation 223 223
Public offering of preferred shares of
beneficial interest, net of offering
costs of $4,451 5,000 50 120,499 120,549
Public offerings of common shares of
beneficial interest, net of offering
costs of $4,732 3,366 34 97,640 97,674
Issuance of common shares of beneficial
interest through the Company's dividend
reinvestment plan 95 1 2,475 2,476
Issuance of common shares of beneficial
interest through options exercised 24 -0- 570 570
Adjustments to minority interest in Colonial
Realty Limited Partnership due to issuance
of common shares of beneficial interest
and limited partnership units 856 856
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 5,000 $50 21,153 $212 $524,605 $82,716 $(116,768) $(396) $490,419
====================================================================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
consolidated statements of cash flows
for the years ended december 31, 1997, 1996, 1995
<CAPTION>
(Amounts in thousands) 1997 1996 1995
- -------------------------------------------------------------------------------------------------
Cash flows from operating activities:
<S> <C> <C> <C>
Net income $ 31,948 $ 27,506 $ 14,936
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 33,278 23,534 20,490
Income from subsidiaries (620) (835) (736)
Minority interest in CRLP 14,360 13,231 10,543
Gains from sales of property 2,567 468 175
Other, net (930) 90 (170)
Decrease (increase) in:
Restricted cash (215) (371) (933)
Accounts receivable (2,743) (3,253) (145)
Prepaid expenses 867 (224) (108)
Other assets 565 (1,298) (1,974)
Increase (decrease) in:
Accounts payable (2,646) 81 4,456
Accrued interest 1,061 4,508 451
Accrued expenses and other (5,427) (564) 19
- -------------------------------------------------------------------------------------------------
Net cash provided by operating activities 72,065 62,873 47,004
Cash flows from investing
activities:
Acquisition of properties (301,931) (125,927) (67,581)
Development expenditures (37,589) (22,168) (3,741)
Development expenditures paid to an affiliate (46,481) (70,415) (21,646)
Tenant improvements (2,792) (1,029) (1,061)
Capital expenditures (12,325) (6,824) (2,673)
Proceeds from sales of property, net of selling costs 54,092 1,254 328
Distributions from subsidiaries 788 1,047 1,012
Capital contributions to subsidiaries (141) (14) (230)
- -------------------------------------------------------------------------------------------------
Net cash used in investing activities (346,379) (224,076) (95,592)
Cash flows from financing activities:
Proceeds from common stock issuances, net of
expenses paid 97,674 106,643 73,656
Proceeds from preferred stock issuance, net of
expenses paid 120,549 -0- -0-
Principal reductions of debt (122,880) (45,798) (37,132)
Proceeds from additional borrowings 175,246 179,540 62,220
Net change in revolving credit balances 68,271 (21,877) (33,206)
Dividends paid to common and preferred shareholders (43,381) (35,306) (21,503)
Distributions to minority partners (17,956) (16,523) (13,733)
Payment of mortgage financing cost (1,417) (3,416) (946)
Other, net (603) (306) 87
- -------------------------------------------------------------------------------------------------
Net cash provided by financing activities 275,503 162,957 29,443
Increase (decrease) in cash and equivalents 1,189 1,754 (19,145)
Cash and equivalents, beginning of period 3,342 1,588 20,733
- -------------------------------------------------------------------------------------------------
Cash and equivalents, end of period $ 4,531 $ 3,342 $ 1,588
=================================================================================================
Supplemental disclosures of cash flow information:
Cash paid during the year for interest $ 39,435 $ 20,077 $ 23,609
=================================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
notes to consolidated financial statements
1. Organization and Basis of Presentation
Organization - Colonial Properties Trust (Colonial or the Company), an
Alabama real estate investment trust (REIT), was formed as a Maryland real
estate investment trust on July 9, 1993, to succeed to certain real estate
interests of Colonial Properties, Inc. (CPI), and certain persons and companies
affiliated with CPI. On September 29, 1993, the Company completed its initial
public offering, and on August 21, 1995, the Company reincorporated as an
Alabama real estate investment trust under a new Alabama REIT statute. The
Company is engaged in the ownership, development, management, and leasing of
multifamily housing communities, retail malls and centers, and office buildings.
The Company also owns certain parcels of land.
Federal Income Tax Status - The Company, which is considered a corporation
for federal income tax purposes, qualifies as a REIT for federal income tax
purposes and generally will not be subject to federal income tax to the extent
it distributes its REIT taxable income to its shareholders. REITs are subject to
a number of organizational and operational requirements. If the Company fails to
qualify as a REIT in any taxable year, the Company will be subject to federal
income tax on its taxable income at regular corporate rates. The Company may be
subject to certain state and local taxes on its income and property. No
provision for income taxes is included in the financial statements.
Distributions to shareholders are partially taxable to shareholders as ordinary
income and partially non-taxable to shareholders as return of capital. During
1995, 1996, and 1997 the Company's distributions had the following
characteristics: <TABLE>
Distribution Ordinary Return of
Per Share Income Capital
------------------------------------------------------
<S> <C> <C> <C>
1995 $1.90 71.44% 28.56%
1996 $2.00 75.32% 24.68%
1997 $2.08 74.02% 25.98%
</TABLE>
Principles Of Consolidation - The Company's consolidated financial
statements include the Company; its wholly-owned subsidiary, Colonial Properties
Holding Company, Inc.; Colonial Realty Limited Partnership (CRLP) (in which
Colonial Properties Holding Company, Inc. held 67.94%, 67.68%, and 61.56%
general and limited partner interests at December 31, 1997, 1996, and 1995,
respectively) and Colonial Properties Services Limited Partnership (in which
CRLP holds 99% general and limited partner interests). The minority limited
partner interests in CRLP and Colonial Properties Services Limited Partnership
are included as minority interest in the Company's consolidated financial
statements.
Investments In Subsidiaries - Partnerships and corporations in which the
Company owns a fifty percent or less interest and does not control are reflected
in the consolidated financial statements as investments accounted for under the
equity method. Under this method the investment is carried at cost plus or minus
equity in undistributed earnings or losses since the date of acquisition.
Also included in investments in partnerships and partially-owned
corporations is the Company's 99% nonvoting, equity interest in Colonial
Properties Services, Inc. (CPSI). Colonial holds a one percent voting interest
in CPSI. The Company accounts for its 99% equity interest on the equity method.
CPSI provides property management services for third-party owned properties and
adminis- trative services to the Company. Colonial generally reimburses CPSI for
payroll and other costs incurred in providing services to the Company.
2. Summary of Significant Accounting Policies
Land, Buildings, and Equipment - Land, buildings, and equipment is stated
at the lower of cost, less accumulated depreciation, or net realizable value.
Where an impairment of a property's value is determined to be other than
temporary, an allowance for the estimated potential loss is established to
record the property at its net realizable value. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets, which
range from 7 to 40 years. Repairs and maintenance are charged to expense as
incurred. Replacements and improvements are capitalized and depreciated over the
estimated remaining useful lives of the assets. When items of land, buildings,
or equipment are sold or retired, the related cost and accumulated depreciation
are removed from the accounts and any gain or loss is included in the results of
operations.
Undeveloped Land and Construction in Progress - Undeveloped land and
construction in progress is stated at the lower of cost or net realizable value.
The Company capitalizes all costs associated with land development including
construction period interest and property taxes.
Capitalization of Interest - The Company capitalizes interest during
periods in which property is undergoing development activities necessary to
prepare the asset for its intended use.
Cash and Equivalents - The Company includes highly liquid marketable
securities and debt instruments purchased with a maturity of three months or
less in cash equivalents.
Restricted Cash - Cash which is legally restricted as to use consists
primarily of tenant deposits.
Deferred Debt and Lease Costs - Amortization of mortgage costs is recorded
using the straight-line method, which approximates the effective interest
method, over the terms of the related mortgages. Leasing commissions and fees
are amortized using the straight-line method over the terms of the related
leases.
Derivatives - The Company has only limited involvement with derivative
financial instruments and does not use them for trading purposes. Interest rate
cap agreements are used to reduce the potential impact of increases in interest
rates on variable-rate debt. Premiums paid for purchased interest rate cap
agreements are amortized to expense over the terms of the caps. Unamortized
premiums are included in other assets in the balance sheets. Amounts receivable
under cap agreements are accrued as a reduction of interest expense.
Deferred Compensation on Restricted Shares - Deferred compensation on
restricted shares relates to the issuance of restricted shares to employees of
the Company which are being amortized to compensation expense over the vesting
period of the respective shares issued.
Revenue Recognition - Rental income attributable to leases is recognized on
a straight-line basis over the terms of the leases.
Net Income Per Share - Basic net income per share is calculated by dividing
the net income available to common shareholders by the weighted average numbers
of common shares outstanding during the periods. Diluted net income per share is
calculated by dividing the net income available to common shareholders by the
weighted average numbers of common shares outstanding during the periods,
adjusted for the assumed conversion of all potentially dilutive securities.
Use of Estimates - 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 the reported amounts of revenues and expenses. Actual results
could differ from those estimates.
Recently Issued Accounting Standard - Statement of Financial Accounting
Standards No. 131 (SFAS 131), Disclosures about Segments of an Enterprise and
Related Information, establishes new disclosure guidelines for reporting
financial information related to operating segments. Under SFAS 131, the Company
will be required to disclose operating results and other financial information
related to its multifamily, retail and office divisions. The Company is required
to adopt SFAS 131 for fiscal year ending December 31, 1998.
Reclassifications - Certain immaterial reclassifications have been made to
the 1995 and 1996 financial statements in order to conform them to the 1997
financial statement presentation.
3. Property Acquisitions and Dispositions
The Company acquired 25 properties during 1997, 11 properties during 1996,
and six properties during 1995 at aggregate costs of $430.6 million, $173.7
million, and $68.4 million, respectively. The Company funded these acquisitions
with cash proceeds from its public offerings of equity (see Note 8) and debt
(see Note 7), advances on bank lines of credit, the issuance of limited
partnership units in CRLP, the exchange of certain properties, proceeds from the
sale of certain properties, and cash from operations. The acquisition agreements
for three of the properties acquired in 1997 provide for the Company to make
additional payments if certain lease-up conditions are satisfied. The Company
expects to make additional payments to the sellers of $8.3 million in 1998
pursuant to these provisions.
In connection with the Brookwood Village acquisition, which was structured
as a like-kind, tax-deferred exchange, the Company exchanged two multifamily
properties in Florida containing 368 apartment units with a net book value of
$14.0 million. In connection with the Progress Center acquisition, which was
also structured as a like-kind, tax-deferred exchange, the Company exchanged a
25,000 square foot office building in Alabama with a net book value of $2.0
million. In connection with the acquisitions of Glynn Place Mall, Lakeshore Mall
and Valdosta Mall, the Company sold to a third party four multifamily properties
in Alabama containing a total of 2,096 apartment units for a total sale price of
$54.8 million, which resulted in a net gain of $2.6 million. In connection with
this sale, the purchaser of these multifamily properties assumed an existing
mortgage of $10 million and paid the remainder in cash.
The properties acquired during 1997, 1996, and 1995 are listed below:
Effective
Acquisition
Location Date
- --------------------------------------------------------------------
Retail Properties:
Bear Lake Village Orlando, FL July 1, 1995
Country Lake Village Orlando, FL July 1, 1995
Winter Haven Village Orlando, FL July 1, 1995
River Oaks Center Decatur, AL July 14, 1995
Northdale Court Tampa, FL October 1, 1995
Paddock Park Ocala, FL November 16, 1995
Briarcliffe Mall Myrtle Beach, SC July 1, 1996
Wekiva Riverwalk Orlando, FL October 1, 1996
Bardmoor Village St. Petersburg, FL October 1, 1996
Island Walk Orlando, FL October 1, 1996
Heatherbrooke Center Birmingham, AL March 24, 1997
Beechwood Shopping Center Athens, GA March 27, 1997
Brookwood Village Birmingham, AL May 13, 1997
Lakewood Plaza Jacksonville, FL October 1, 1997
Glynn Place Mall Brunswick, GA November 1, 1997
Lakeshore Mall Gainesville, GA November 1, 1997
Valdosta Mall Valdosta, GA November 1, 1997
Holly Hill Mall Burlington, NC November 1, 1997
Mayberry Mall Mount Airy, NC November 1, 1997
Quaker Village Greensboro, NC November 1, 1997
Yadkin Plaza Yadkinville, NC November 1, 1997
Stanly Plaza Locust, NC November 1, 1997
Rivermont Shopping Center Chattanooga, TN November 1, 1997
Staunton Mall Staunton, VA November 1, 1997
Abingdon Town Centre Abingdon, VA November 1, 1997
Village at Roswell Summit Atlanta, GA December 31, 1997
Effective
Acquisition
Location Date
- -----------------------------------------------------------------------------
Multifamily Properties:
Colonial Village at Ashford Place Mobile, AL April 1, 1996
Colonial Village at Hillcrest Mobile, AL April 1, 1996
Colonial Grand at Spring Creek Macon, GA April 1, 1996
Colonial Grand at Galleria Woods Birmingham, AL April 15, 1996
Colonial Grand at Mountain Brook Birmingham, AL May 10, 1996
Colonial Village at Cahaba Heights Birmingham, AL May 10, 1996
Colonial Grand at Barrington Macon, GA September 13, 1996
Colonial Village at Trussville Birmingham, AL April 1, 1997
Colonial Village at Timothy Woods Athens, GA July 1, 1997
Colonial Grand at Oakleigh Pensacola, FL July 1, 1997
Colonial Grand at Natchez Trace Jackson, MS August 1, 1997
Colonial Village at Caledon Wood Greenville, SC October 1, 1997
Office Properties:
Riverchase Center Birmingham, AL January 1, 1997
Lakeside Office Park Huntsville, AL May 23, 1997
Progress Center Huntsville, AL June 24, 1997
Mansell Business Park Atlanta, GA July 31, 1997
Also in 1997, the Company purchased the 62.5% interests in two multi-tenant
office buildings at International Park in Birmingham. The purchase of these
outside interests increased the CompanyOs ownership from a 37.5% interest to
full ownership in the two buildings containing 93,000 square feet. At the same
time, the Company sold its 25% interest in a 129,000 square foot building in the
same office complex. The Company also purchased the remaining 50% interest in a
168,000 square foot office building in Birmingham. This purchase increased the
CompanyOs ownership from 50% to 100%. Results of operations of these properties,
subsequent to their respective acquisition dates, are included in the
consolidated financial statements of the Company. The cash paid to acquire these
properties is included in the statements of cash flows. The acquisitions during
1997, 1996, and 1995 are comprised of the following: <TABLE>
(in thousands) 1997 1996 1995
- --------------------------------------------------------------------------------
Assets purchased:
<S> <C> <C> <C>
Land, buildings, and equipment $430,614 $173,277 $68,322
Other assets 4 455 43
- --------------------------------------------------------------------------------
430,618 173,732 68,365
Notes and mortgages assumed (74,910) (40,444) -0-
Other liabilities assumed or recorded (8,716) (1,774) (784)
Issuance of limited partnership units of
Colonial Realty Limited Partnership (45,061) (5,587) -0-
- --------------------------------------------------------------------------------
Cash paid $301,931 $125,927 $67,581
================================================================================
</TABLE>
The properties disposed during 1997 are listed below:
Effective
Disposition
Location Date
- --------------------------------------------------------------------------------
Multifamily Properties:
Sunchase Bradenton, FL May 13, 1997
Polos West Orlando, FL May 13, 1997
Ski Lodge I Birmingham, AL November 1, 1997
Ski Lodge II Birmingham, AL November 1, 1997
Ski Lodge III Birmingham, AL November 1, 1997
Vieux Carre Montgomery, AL November 1, 1997
Office Property:
Whitesburg Building Huntsville, AL June 24, 1997
The Company's unaudited pro forma results of operations, assuming these
acquisitions and dispositions had been effected by the Company prior to January
1, 1995, are as follows: <TABLE>
For the Year Ended For the Year Ended For the Year Ended
December 31, 1997 December 31, 1996 December 31, 1995
(in thousands) (unaudited) (unaudited) (unaudited)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $214,712 $184,712 $160,721
================================================================================
Income before minority
interest $ 65,980 $ 66,234 $ 59,310
================================================================================
Net income available to
common shareholders $ 33,913 $ 34,070 $ 29,365
================================================================================
Net income per share -
basic and diluted $ 1.60 $ 1.61 $ 1.39
================================================================================
</TABLE>
On January 9, 1998, the Company acquired Perimeter Corporate Park, an
office park comprised of two multi-tenant buildings in Huntsville, Alabama
totaling 233,000 square feet of leasable area. The total purchase price of $19.5
million was funded by the assumption of $5.5 million in mortgage debt and an
advance on the Company's bank line of credit agreement. On January 15, 1998, the
Company also acquired Independence Plaza, a 106,000 square foot multi-level
office building in Birmingham, Alabama. The total purchase price of $7.5 million
was funded through an advance on the Company's bank line of credit agreement.
The effects of these acquisitions are not included in the Company's accompanying
consolidated financial statements or in the pro forma information above.
4. Land, Buildings, and Equipment
Land, buildings, and equipment consists of the following at December 31, 1997
and 1996:
<TABLE>
(in thousands) 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Buildings $1,140,504 $ 736,621
Furniture and fixtures 30,147 23,445
Equipment 3,087 2,569
Land improvements 27,343 18,328
Tenant improvements 15,273 11,969
- --------------------------------------------------------------------------------
1,216,354 792,932
Accumulated depreciation (124,254) (101,549)
- --------------------------------------------------------------------------------
1,092,100 691,383
Land 176,332 110,417
- --------------------------------------------------------------------------------
$1,268,432 $ 801,800
================================================================================
</TABLE>
5. Undeveloped Land and Construction in Progress
During 1997 the Company completed the construction of two multifamily expansion
projects at a combined total cost of $32.1 million and two retail expansion
projects at a combined total cost of $67.6 million. The multifamily expansion
projects produced 524 new apartment units (428 units completed during 1996 and
96 units completed during 1997), 312 units at Colonial Grand at Heathrow in
Orlando, Florida, and 212 units at Colonial Grand at Bayshore in Bradenton,
Florida. The retail expansion projects produced 661,000 square feet of leasable
space. The Company currently has 11 active expansion and development projects in
progress and various parcels of land available for expansion, construction, or
sale. During 1997 the Company completed construction on 1,172 apartment units
(including the 96 units in completed projects mentioned above), and the Company
has an additional 1,170 apartment units in progress at December 31, 1997.
Undeveloped land and construction in progress is comprised of the following at
December 31, 1997: <TABLE>
Total Costs
Units/ Estimated Capitalized
Square Estimated Total Costs To Date
Feet Completion (in thousands) (in thousands)
- --------------------------------------------------------------------------------------------------------
Multifamily Projects:
<S> <C> <C> <C> <C>
Colonial Village at Inverness (expansion) 84 1998 $ 6,700 $ 6,624
Colonial Village at Riverchase (expansion) 276 1998 14,900 14,181
Colonial Grand at Inverness Lakes (expansion) 132 1998 8,000 2,956
Colonial Grand at Edgewater (expansion) 192 1998 11,500 3,871
Colonial Grand at Bayshore II (expansion) 164 1998 9,300 9,213
Colonial Grand at Wesleyan II (expansion) 88 1998 6,200 789
Colonial Grand at Wesleyan 240 1998 13,500 13,480
Colonial Grand at HunterOs Creek 496 1998 33,300 33,257
Colonial Village at Citrus Park 176 1999 12,300 1,324
Colonial Grand at Lakewood Ranch 288 1999 20,300 2,320
Colonial Grand at Cypress Crossing 250 1999 20,000 4,333
- --------------------------------------------------------------------------------------------------------
2,386 156,000 92,348
Other Projects and Undeveloped Land 6,207
- --------------------------------------------------------------------------------------------------------
$156,000 $98,555
========================================================================================================
</TABLE>
Interest capitalized on construction in progress during 1997, 1996, and 1995 was
$4.1 million, $3.7 million and $868,000, respectively.
6. Investment in Subsidiaries
Investment in subsidiaries at December 31, 1997 and 1996 consists of the
following:
<TABLE>
(in thousands)
Percent
Owned 1997 1996
- --------------------------------------------------------------------------------
Office:
<S> <C> <C> <C>
600 Building Partnership, Birmingham, AL 33.34% $ (8) 5
Anderson Block Properties, Montgomery, AL 33.33% (38) (53)
Hoar/Colonial/Polar-BEK Partnership I,
Birmingham, AL 37.50% -0- (430)
Hoar/Colonial/Polar-BEK Partnership II,
Birmingham, AL 37.50% -0- (35)
Polar-Bek/Colonial Partnership I,
Birmingham, AL 50.00% -0- 5,000
Polar-BEK/Rubaiyat/Colonial Partnership,
Birmingham, AL 25.00% -0- 506
- --------------------------------------------------------------------------------
(46) 4,993
- --------------------------------------------------------------------------------
Other:
Colonial/Polar-BEK Management Company,
Birmingham, AL 50.00% 35 35
Colonial Properties Services, Inc.,
Birmingham, AL 99.00% 696 664
- --------------------------------------------------------------------------------
731 699
- --------------------------------------------------------------------------------
$685 5,692
================================================================================
</TABLE>
7. Notes and Mortgages Payable
Notes and mortgages payable at December 31, 1997 and 1996 consist of the
following:
<TABLE>
(in thousands)
1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Revolving credit agreement $117,086 $ 48,815
Mortgages and other notes:
4.50% to 6.00% 66,305 76,605
6.01% to 7.50% 316,701 154,179
7.51% to 9.00% 175,207 180,081
9.01% to 10.25% 26,745 46,755
- --------------------------------------------------------------------------------
$702,044 $506,435
================================================================================
</TABLE>
As of December 31, 1997, the Company has one unsecured bank line of credit
providing for total borrowings of up to $200 million. This line of credit
agreement bears interest at LIBOR plus 100 to 150 basis points, is renewable
annually and provides for a two-year amortization in the case of non-renewal.
The agreement evidencing the line of credit includes a competitive bid feature
that will allow the Company to convert up to $100 million under the line of
credit to a fixed rate, for a fixed term not to exceed 90 days. The credit
facility is primarily used by the Company to finance property acquisitions and
development and had an outstanding balance at December 31, 1997, of $117.1
million. The weighted average interest rate of this short-term borrowing
facility was 6.70% and 6.81% at December 31, 1997 and 1996, respectively.
During 1997 and 1996, the Company completed five public offerings of
unsecured medium term debt securities totaling $225 million through its
subsidiary CRLP. In July 1996 the Company completed a public offering of senior,
unsecured debt securities totaling $130 million through its subsidiary CRLP. The
securities were issued in two series of $65 million each requiring semi-annual
payments of interest only. The proceeds of the offerings were used to fund
acquisitions and development expenditures, repay balances outstanding on the
CompanyOs revolving credit agreement, repay certain notes and mortgages payable,
and for general corporate purposes. Details relating to these debt offerings are
as follows: <TABLE>
Gross
Type of Proceeds
Date Note Maturity Rate (in thousands)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
July, 1996 Senior July, 2001 7.50% $65,000
July, 1996 Senior July, 2006 8.05% $65,000
December, 1996 Medium-term December, 2003 7.05% $50,000
January, 1997 Medium-term January, 2003 7.16% $50,000
July, 1997 Medium-term July, 2004 6.96% $75,000
August, 1997 Medium-term August, 2005 6.96% $25,000
September, 1997 Medium-term September, 2005 6.98% $25,000
</TABLE>
Colonial has entered into interest rate cap agreements which limit debt of
$17.8 million to an interest rate of 5.96% through September 30, 1998 and limit
debt of $50 million to an interest rate of 8.00% through May 2, 2000. The
Company paid $602,000 for the interest rate caps, which are being amortized over
the lives of the agreements. In December 1997 and January 1998 the Company
entered into two 90-day treasury lock agreements through its subsidiary CRLP.
The agreements are for notional amounts of $25 million each with interest rates
of 5.859% and 5.567%, respectively. Colonial is exposed to credit losses in the
event of nonperformance by the counterparties to its interest rate cap and
nonderivative financial assets but has minimal off-balance-sheet credit risk of
accounting loss. The Company anticipates, however, that counterparties will be
able to fully satisfy their obligations under the contracts. Colonial does not
obtain collateral or other security to support financial instruments subject to
credit risk but monitors the credit standing of counterparties. The interest
rate risk related to commitments to enter treasury lock agreements at December
31, 1997 is immaterial to the Company.
At December 31, 1997, the Company had $472.1 million in unsecured
indebtedness including balances outstanding on its bank line of credit and
certain other notes payable. The remainder of the CompanyOs notes and mortgages
payable are collateralized by the assignment of rents and leases of certain
properties and assets with an aggregate net book value of $370.5 million at
December 31, 1997. The aggregate maturities of notes and mortgages payable at
December 31, 1997, are as follows: <TABLE>
(in thousands)
- --------------------------------------------------------------------------------
<S> <C>
1998 $138,622
1999 13,927
2000 49,150
2001 79,031
2002 8,557
Thereafter 412,757
- --------------------------------------------------------------------------------
$702,044
================================================================================
</TABLE>
A substantial majority of the Company's notes and mortgages payable have
been recently financed or are covered by interest rate cap agreements, and as
such, the balances outstanding on these notes and mortgages are considered to be
the fair values. The Company's line of credit arrangement bears interest at a
rate that varies with changes in LIBOR; therefore, the balances outstanding are
considered to be the fair value.
Certain loan agreements of the Company contain restrictive covenants which,
among other things, require maintenance of various financial ratios. At December
31, 1997, the Company was in compliance with these covenants.
Certain shareholders and trustees of the Company have guaranteed
indebtedness of the Company totaling $4.5 million at December 31, 1997. The
Company has indemnified these individuals from their guarantees of $1.6 million
of this indebtedness. Certain partners of the CompanyOs subsidiary, CRLP, have
guaranteed indebtedness of the Company totaling $32.8 million at December 31,
1997.
8. Equity Offerings
During 1997, 1996 and 1995, the Company completed six public offerings of common
stock totaling 11,415,632 common shares of beneficial interest (Common Shares).
In November 1997 the Company completed its first public offering of preferred
stock totaling 5,000,000 preferred shares of beneficial interest (Preferred
Shares). The Series A Preferred Shares pay a quarterly dividend at 8.75% per
annum and may be called by the Company on or after November 6, 2002. The
Preferred Shares have no stated maturity, sinking fund or mandatory redemption
and are not convertible into any other securities of the Company. The Preferred
Shares have a liquidation preference of $25.00 per share. The proceeds of the
offerings were used to fund acquisition and development expenditures, repay
balances outstanding on the CompanyOs revolving credit agreement, repay certain
notes and mortgages payable, and for general corporate purposes. Details
relating to these equity offerings are as follows: <TABLE>
(in thousands)
Type of Number of Price Per Gross Offering Net
Date Offering Shares Share Proceeds Costs Proceeds
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
May, 1995 Common 3,450,000 $22.7500 $ 78,488 $4,832 $ 73,656
January, 1996 Common 4,600,000 $24.6250 $ 113,275 $6,632 $106,643
January, 1997 Common 1,500,000 $29.8750 $ 44,812 $1,457 $ 43,355
July, 1997 Common 1,700,000 $30.9375 $ 52,594 $2,945 $ 49,649
November, 1997 Preferred 5,000,000 $25.0000 $ 125,000 $4,451 $120,549
December, 1997 Common 165,632 $30.1875 $ 5,000 $ 330(1) $ 4,670
<FN>
(1) Includes $90,000 in shelf registration fees paid to the Securities and
Exchange Commission.
</FN>
</TABLE>
9. Share Option and Restricted Share Plans
In September 1993 the Company adopted an Employee Share Option and Restricted
Share Plan (the Employee Plan) designed to attract, retain, and motivate
executive officers of the Company and other key employees. The Employee Plan
authorizes the issuance of up to 675,000 common shares of beneficial interest
pursuant to options or restricted shares granted or issued under this plan,
provided that no more than 300,000 restricted shares may be issued. In
connection with the grant of options under the Employee Plan, the Executive
Compensation Committee of the Board of Trustees determines the option exercise
period and any vesting requirements. In September 1993 the Company also adopted
a Trustee Share Option Plan (the Trustee Plan). The Trustee Plan authorizes the
issuance of up to 125,000 options to purchase common shares of beneficial
interest. In April 1997 the Company increased the number of options to purchase
common shares authorized under the Trustee Plan from 125,000 common shares to
500,000 common shares. In April 1997 the Company also adopted a Non-Employee
Trustee Share Plan (Share Plan). The Share Plan permits non-employee trustees of
the Company to elect to receive common shares in lieu of all or a portion of
their annual trustee fees, board fees and committee fees. The Share Plan
authorizes the issuance of 50,000 common shares under the Plan. The Company
issued 126 common shares pursuant to the Share Plan during 1997. In April 1997
the Company adopted an Employee Share Purchase Plan (Purchase Plan). The
Purchase Plan permits eligible employees of the Company, through payroll
deductions, to purchase common shares at a 5% discount to the market price. The
Purchase Plan has no limit on the number of common shares that may be issued
under the plan. The Company issued 185 common shares pursuant to the Purchase
Plan during 1997.
The Company applies Accounting Principles Board Opinion 25 and related
Interpretations in accounting for its plans. Accordingly, no compensation
expense has been recognized for its stock option plans. Had compensation expense
for the CompanyOs stock option plans been determined based on the fair value at
the grant dates for awards under those plans consistent with the methods
prescribed in Statement of Financial Accounting Standards No. 123, Accounting
for Stock-Based Compensation, the CompanyOs net income and earnings per share
would have been reduced to the pro forma amounts indicated below:
<TABLE>
For the Year Ending December 31,
(in thousands, except per share data)
1997 1996 1995
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Income available to common shareholders:
As reported $30,277 $27,506 $14,936
Pro forma $30,020 $27,412 $14,892
====================================================================================
Net income per share - basic and diluted:
As reported $1.53 $1.58 $1.29
Pro forma $1.52 $1.57 $1.29
====================================================================================
</TABLE>
The Company elected to use the Black-Scholes pricing model to calculate the
fair values of the options awarded, which are included in the pro forma results
above. The following assumptions were used to derive the fair values: a 10-year
option term; an annualized volatility rate of 15.24%, 13.16% and 12.13% for
1997, 1996 and 1995, respectively; a risk-free rate of return of 5.86%, 5.83%
and 5.80% for 1997, 1996 and 1995, respectively; and a dividend yield of 7.11%,
7.92% and 7.99% for 1997, 1996 and 1995, respectively.
The Company issued 8,450, 7,800, and 9,050 restricted shares under the
Employee Plan during 1997, 1996, and 1995, respectively. The value of
outstanding restricted shares is being charged to compensation expense based
upon the earlier of satisfying the vesting period (eight years) or satisfying
certain performance targets.
Option activity under both the Employee Plan and the Trustee Plan combined
is presented in the table below:
<TABLE>
Options Outstanding
Shares Weighted-
Available average
for future Price per
Option Grant Shares Share
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, December 31, 1994 728,310 71,690 $23.000
Options granted (85,205) 85,205 23.000
- ----------------------------------------------------------------------------------
Balance, December 31, 1995 643,105 156,895 23.000
Options granted (103,450) 103,450 24.371
- ----------------------------------------------------------------------------------
Balance, December 31, 1996 539,655 260,345 23.540
Addition to shares authorized 375,000
Options granted (119,000) 119,000 31.113
Options terminated 12,237 (12,237) 24.975
Options exercised (24,130) 23.263
- ----------------------------------------------------------------------------------
Balance, December 31, 1997 807,892 342,978 $26.136
==================================================================================
</TABLE>
All options granted to date have a term of ten years and may be exercised
in installments of one-third of the total number of options issued to any
individual on each of the first three anniversary dates of the grant of the
option; the first of such anniversary dates was September 29, 1994. The balance
of options that were exercisable totaled 132,345, 78,425 and 33,897 at December
31, 1997, 1996, and 1995, respectively.
10. Employee Benefits
Employees of the Company and CPSI participate in a noncontributory defined
benefit pension plan designed to cover substantially all employees. Pension
expense includes service and interest costs adjusted by actual earnings on plan
assets and amortization of prior service cost and the transition amount. The
benefits provided by this plan are based on years of service and the employee's
final average compensation. The Company's policy is to fund the minimum required
contribution under ERISA and the Internal Revenue Code.
The table below presents a summary of pension plan status as of December
31, 1997 and 1996, as it relates to the employees of the Company and CPSI.
<TABLE>
(Amounts in thousands) 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of accumulated benefit
obligation including vested benefits
of $828 and $528 at December 31, 1997 and 1996,
respectively $ 961 $ 587
Actuarial present value of projected benefit obligations
at year end $1,957 $1,439
Fair value of assets at year end $ 861 $ 644
Accrued pension cost $ 536 $ 274
Net pension cost for the year $ 310 $ 337
</TABLE>
Actuarial assumptions used in determining the actuarial present value of
projected benefit obligations at January 1, 1997 and 1996 are as follows:
<TABLE>
1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Weighted-average interest rate 7.25% 7.75%
- --------------------------------------------------------------------------------
Increase in future compensation levels 4.25% 4.50%
</TABLE>
The Company and CPSI participate in a salary reduction profit sharing plan
covering substantially all employees. This plan provides, with certain
restrictions, that employees may contribute a portion of their earnings with the
Company and CPSI matching one-half of such contributions, solely at the Company
and CPSIOs discretion. Contributions by the Company and CPSI were $159,000,
$164,000 and $155,000 for the years ended December 31, 1997, 1996 and 1995,
respectively.
11. Leasing Operations
The Company is in the business of leasing and managing commercial, retail, and
residential property. For properties owned by the Company, minimum rentals due
in future periods under noncancelable operating leases extending beyond one year
at December 31, 1997, are as follows: <TABLE>
(in thousands)
-------------------------------------------------------------------------
<S> <C>
1998 $ 76,458
1999 64,230
2000 54,693
2001 47,253
2002 40,626
Thereafter 177,486
-------------------------------------------------------------------------
$ 460,746
=========================================================================
</TABLE>
The noncancelable leases are with tenants engaged in retail and commercial
operations in Alabama, Georgia, Florida, North Carolina, South Carolina,
Tennessee, and Virginia. Performance in accordance with the lease terms is in
part dependent upon the economic conditions of the respective areas. No
additional credit risk exposure relating to the leasing arrangements exists
beyond the accounts receivable amounts shown in the December 31, 1997 balance
sheet. Leases with tenants in multifamily properties are generally for one year
or less and are thus excluded from the above table. Substantially all of the
CompanyOs land, buildings, and equipment represent property leased under the
above and other short-term leasing arrangements.
Rental income for 1997, 1996, and 1995 includes contingent rent of $2.2
million, $1.8 million, and $1.8 million, respectively. This rental income was
earned when certain retail tenants attained sales volumes specified in their
respective lease agreements.
12. Related Party Transactions
Colonial has generally used affiliated construction companies to manage and
oversee its development projects. The Company paid $41.3 million, $42.6 million,
and $16.1 million for property development costs to Lowder Construction Company,
Inc., a construction company owned by The Colonial Company ("TCC") (an affiliate
of certain shareholders and minority interest holders), during the years ended
December 31, 1997, 1996, and 1995, respectively. The Company had outstanding
construction invoices and retainage payable to Lowder Construction Company, Inc.
totaling $2.3 million and $6.7 million at December 31, 1997 and 1996,
respectively. The Company also paid $5.2 million, $27.9 million, and $5.5
million for property development costs to two construction companies owned by
three trustees during the years ended December 31, 1997, 1996, and 1995,
respectively. The Company had outstanding construction invoices and retainage
payable to these construction companies totaling $3.2 million at December 31,
1996. There were no outstanding construction invoices and retainage payable to
these construction companies at December 31, 1997.
Colonial Commercial Investments, Inc. ("CCI"), which is owned by trustees
James K. Lowder and Thomas H. Lowder has guaranteed indebtedness totaling $1.4
million at December 31, 1997 for Anderson Block Properties, which is a
partnership accounted for by the Company under the equity method (listed in Note
6). The Company has indemnified CCI from its guarantees of this indebtedness.
In connection with the Riverchase Center acquisition, the Company initially
acquired a 73% interest in a portion of the office complex. Effective November
1, 1997, the Company purchased the remaining 27% interest in the property by
issuing 114,798 limited partnership units in Colonial Realty Limited Partnership
("CRLP Units") to the seller. The seller is also a trustee of the Company.
In November 1997, the Company purchased Polar Bek's 50% interest in Polar
BEK/Colonial Partnership I (a partnership previously accounted for under the
equity method of accounting), a partnership which owned a 168,000 square foot
office building in Birmingham for $7.4 million. This purchase increased the
Company's ownership from 50% to 100%.
Following is a summary of property acquisitions from entities for which
trustees of the Company are involved as a partner or shareholder:
<TABLE>
Date Property and Land Acquired Purchase Price
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
March 1997 Heatherbrooke Center $3.0 million including 16,303 CRLP Units and debt
April 1997 Colonial Village at Trussville $20.5 million including 57,072 CRLP Units and debt
July 1997 Colonial Village at Timothy Woods $12.8 million including 27,275 CRLP Units and debt
August 1997 Mobile, Alabama Land $475,000 including 10,822 CRLP Units and debt
December 1997 Village at Roswell Summit $3.0 million including 34,777 CRLP Units and debt
July 1996 Macon, Georgia Land $1.4 million including 58,466 CRLP Units and debt
</TABLE>
At December 31, 1997, the Company had options outstanding in the amount of $10.5
million to acquire land from a related party. These options will expire on
September 29, 1998, the fifth anniversary of the Company's initial public
offering. During 1997 and 1996 the Company, through CPSI, exercised options in
the amount of $366,000 and $2.4 million, respectively. In December 1997, CPSI
acquired a parcel of land from CCI and sold the land, along with an adjoining
parcel of land, to an unaffiliated third party for a net gain of $60,000. Also
in December 1997, CPSI sold a separate parcel of land to CCI, which resulted in
a net gain of $120,000. The Company and its subsidiaries provided certain
services to and received certain services from related entities which resulted
in the following income (expense) included in the accompanying statements of
income: <TABLE>
(Amounts in thousands)
1997 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Rental income $ 879 $ 758 $ 836
Management/leasing fee income 368 356 321
Insurance brokerage expense (182) (187) (168)
Rental expense (156) (211) (209)
</TABLE>
13. Net Income Per Share
The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
(Amounts in thousands, except per share data)
1997 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Numerator:
Numerator for basic and diluted net
income per share - net income available
to common shareholders $30,277 $27,506 $14,936
================================================================================
Denominator:
Denominator for basic net income per
share - weighted average common shares 19,808 17,378 11,613
Effect of dilutive securities:
Trustee and employee stock options 46 17 5
- --------------------------------------------------------------------------------
Denominator for diluted net income per share -
adjusted weighted average common shares 19,854 17,395 11,618
================================================================================
Basic and Diluted net income per share $ 1.53 $ 1.58 $ 1.29
================================================================================
</TABLE>
Options to purchase 108,745 Common Shares at a weighted average exercise
price of $30.91 per share were outstanding during 1997 but were not included in
the computation of diluted net income per share because the optionsO exercise
price was greater than the average market price of the common shares, making
these options antidilutive.
14. Subsequent Events
On January 24, 1998, the Board of Trustees declared a cash distribution to
shareholders of the Company and partners of Colonial Realty Limited Partnership
in the amount of $.55 per share and per partnership unit, totaling $16.4
million. The distribution was made to shareholders and partners of record as of
February 4, 1998, and was paid on February 11, 1998.
On February 17, 1998, the Company issued 375,540 Common Shares through
participation with 10 other REITs in a registered unit investment trust. The net
proceeds of $10.7 million were used to repay a portion of the outstanding
balance on the CompanyOs unsecured line of credit.
15. Quarterly Financial Information (Unaudited)
The following is a summary of the unaudited quarterly financial information for
the years ended December 31, 1997 and 1996:
<TABLE>
1997
(Amounts in thousands, except per share data)
- ------------------------------------------------------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $39,170 $42,823 $47,479 $54,654 $184,126
Income before minority interest 9,905 10,349 8,207 17,847 46,308
Minority interest 3,092 3,209 2,531 5,528 14,360
Net income 6,813 7,140 5,676 12,319 31,948
Preferred Dividends -0- -0- -0- 1,671 1,671
Net income available to common shareholders $ 6,813 $ 7,140 $ 5,676 $10,648 $ 30,277
Net income per share:
Basic $0.37 $0.37 $0.28 $0.51 $1.53
Diluted $0.36 $0.37 $0.28 $0.51 $1.53
Weighted average common shares outstanding 18,657 19,195 20,372 20,977 19,808
1996
(Amounts in thousands, except per share data)
- ------------------------------------------------------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
- ------------------------------------------------------------------------------------------------
Revenues $29,607 $31,824 $34,832 $38,618 $134,881
Income before minority interest 8,361 9,424 10,216 12,736 40,737
Minority interest 2,773 3,478 3,302 3,678 13,231
Net income 5,588 5,946 6,914 9,058 27,506
Preferred Dividends -0- -0- -0- -0- -0-
Net income available to common shareholders $ 5,588 $ 5,946 $ 6,914 $ 9,058 $ 27,506
Net income per share:
Basic $0.34 $0.34 $0.39 $0.51 $1.58
Diluted $0.34 $0.34 $0.39 $0.51 $1.58
Weighted average common shares outstanding 16,536 17,655 17,656 17,658 17,378
</TABLE>
<PAGE>
report of independent accountants
To the Board of Trustees and Shareholders of
Colonial Properties Trust:
We have audited the accompanying consolidated balance sheets of Colonial
Properties Trust as of December 31, 1997 and 1996 and the consolidated
statements of income, shareholders' equity and cash flows for each of the three
years in the period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Colonial
Properties Trust as of December 31, 1997 and 1996 and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1997 in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
January 19, 1998, except for Note 14, as to which the date is February 17,
1998
Exhibit 21.1
Colonial Properties Trust
List of Subsidiaries
Ownership
Colonial Properties Holding Company, Inc. 100.0% Common Stock
Colonial Realty Limited Partnership 67.9% GP and LP
Colonial Properties Services
Limited Partnership 99.0% GP and LP
Colonial VRS, L.L.C. 100.0%
Colonial Properties Services, Inc. 100.0% Common Stock
(non-voting)
1.0% Common Stock
(voting)
99.0% of Equity
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Colonial Properties Trust on Form S-8 related to certain restricted shares and
stock options filed on September 29, 1994; Form S-3 related to the Shelf
Registration filed on January 8, 1997; Form S-3 related to the Shelf
Registration filed on November 21, 1997; Form S-3 related to the Dividend
Reinvestment Plan filed on April 11, 1995, as amended; Form S-8 related to the
registration of common stock issuable under the Colonial Properties Trust
401(K)/Profit-Sharing Plan filed on October 15, 1996; Form S-8 related to the
Employee Share Purchase Plan filed on May 15, 1997; Form S-8 related to the
Non-employee Trustee Share Plan filed on May 15, 1997; and Form S-8 related to
changes to the First Amended and Restated Employee Share Option and Restricted
Share Plan and the Non-employee Trustee Share Option Plan, of our report dated
January 19, 1998, except for Note 14, as to which the date is February 17, 1998,
on our audits of the Consolidated Financial Statements and Financial Statement
Schedules of Colonial Properties Trust as of December 31, 1997 and 1996, and for
the years ended December 31, 1997, 1996, and 1995, which report is incorporated
by reference in this Form 10-K.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
March 20, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 4,531
<SECURITIES> 0
<RECEIVABLES> 7,301
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,392,686
<DEPRECIATION> (124,254)
<TOTAL-ASSETS> 1,397,078
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
50
<COMMON> 212
<OTHER-SE> 490,157
<TOTAL-LIABILITY-AND-EQUITY> 1,397,078
<SALES> 184,126
<TOTAL-REVENUES> 184,126
<CGS> 96,859
<TOTAL-COSTS> 96,859
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 40,496
<INCOME-PRETAX> 49,958
<INCOME-TAX> 0
<INCOME-CONTINUING> 49,958
<DISCONTINUED> 0
<EXTRAORDINARY> (3,650)
<CHANGES> 0
<NET-INCOME> 30,277
<EPS-PRIMARY> 1.53
<EPS-DILUTED> 1.53
</TABLE>
