SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) 
OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-22683

GABLES REALTY LIMITED PARTNERSHIP
(Exact name of Registrant as specified in its charter)

Registrant's telephone number, including area code: (561) 997-9700

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:
Common Units of Limited Partnership Interest
(Title of Class)

      Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

       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.  [  ]

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).   Yes [X]   No [  ]

      As of June 30, 2003, the aggregate market value of the 4,407,201 common units of limited partnership held by non-affiliates of the Registrant was $139,576,056 based upon the net price of $31.67 on August 20, 2003 at which the common shares of beneficial interest, par value $.01 per share, of Gables Residential Trust (the "Trust"), a Maryland real estate investment trust and the 100% owner of Gables GP, Inc., the sole general partner of the Registrant, into which common units of limited partnership are redeemable under certain circumstances at the election of the Trust, were last sold. (For this computation, the Registrant has excluded the market value of all common units of limited partnership reported as beneficially owned by the Trust and by executive officers and directors of the Registrant; such exclusion shall not be deemed to constitute an admission that any such person is an "affiliate" of the Registrant.) 

DOCUMENTS INCORPORATED BY REFERENCE

      Information contained in Gables Residential Trust’s Proxy Statement relating to its Annual Meeting of Shareholders to be held on May 21, 2004 is incorporated by reference in Part III, Items 10, 11, 12, 13 and 14.

FORM 10-K ANNUAL REPORT
FISCAL YEAR ENDED DECEMBER 31, 2003
TABLE OF CONTENTS

PART I

ITEM 1.  BUSINESS

Introduction

        Gables Realty Limited Partnership (the "Operating Partnership") is the entity through which Gables Residential Trust (the "Trust"), a real estate investment trust (a "REIT"), conducts substantially all of its business and owns, either directly or indirectly through subsidiaries, substantially all of its assets. In 1993, the Trust was formed under Maryland law and the Operating Partnership was organized as a Delaware limited partnership to continue and expand the multifamily apartment community management, development, construction, acquisition and disposition operations of its privately owned predecessor organization. The Trust completed its initial public offering on January 26, 1994 (the "IPO") and its common shares are listed on the NYSE under the symbol GBP.

        At December 31, 2003, the Trust was an 86.9% economic owner of the common equity of the Operating Partnership. The Trust controls the Operating Partnership through Gables GP, Inc. ("Gables GP"), a wholly-owned subsidiary and the sole general partner of the Operating Partnership. This structure is commonly referred to as an umbrella partnership REIT or UPREIT. The board of directors of Gables GP, the members of which are the same as the members of the board of trustees of the Trust, manages the affairs of the Operating Partnership by directing the affairs of Gables GP. The Trust's limited partner and indirect general partner interests in the Operating Partnership entitle it to share in cash distributions from, and in the profits and losses of, the Operating Partnership in proportion to its ownership interest therein and entitles the Trust to vote on all matters requiring a vote of the limited partners.

       Generally, the other limited partners of the Operating Partnership are persons who contributed their direct or indirect interests in certain real estate assets to the Operating Partnership primarily in connection with the IPO and the acquisition of Trammell Crow Residential South Florida.  A unit of limited partnership interest in the Operating Partnership is referred to herein as a “unit.” The Operating Partnership is obligated to redeem each common unit held by a person other than the Trust at the request of the holder for an amount equal to the fair market value of a share of the Trust’s common shares at the time of such redemption, provided that the Trust, at its option, may elect to acquire each common unit presented for redemption for one common share or cash.  The Trust's percentage ownership interest in the Operating Partnership will increase with each redemption. In addition, whenever the Trust issues common shares or preferred shares, it is obligated to contribute any net proceeds to the Operating Partnership and the Operating Partnership is obligated to issue an equivalent number of common or preferred units with substantially identical rights as the common or preferred shares, as applicable, to the Trust.

       The Operating Partnership may issue additional units to acquire land parcels for the development of apartment communities or operating apartment communities in transactions that in certain circumstances defer some or all of the seller's tax consequences. The Operating Partnership believes that many potential sellers of multifamily residential properties have a low tax basis in their properties and would be more willing to sell the properties in transactions that defer federal income taxes. Issuing units instead of paying cash for properties may provide potential sellers partial federal income tax deferral.

       Unless the context otherwise requires, all references to "we," "our" or "us" refer collectively to the Trust and the Operating Partnership.

Business Objectives and Strategies

         Our objective is to increase shareholder value by producing consistent high quality earnings to sustain dividends and annual total returns that exceed the multifamily sector average. We use the National Association of Real Estate Investment Trusts ("NAREIT") Equity Residential REIT Total Return Index (the "NAREIT Apartment Index") as the benchmark for the multifamily sector average.   To achieve our objective, we employ a number of business strategies which are outlined below.

          Investment Strategy. Our investment strategy is research-driven. In order to outperform the sector index, we seek to (1) invest in markets that have growth potential that exceeds the national average and (2) select markets that have complementary economic drivers so that our portfolio has less volatility than the national average. We believe that the success of a real estate investment is predicated on three basic factors: (1) macro-market fundamentals, (2) specific sub-market dynamics and (3) product decisions.

          Our objective is to own a portfolio of high-quality assets in strategically selected markets that are complementary through economic diversity and characterized by high job growth and resiliency to national economic downturns. We believe such a portfolio will provide predictable operating cash flow performance that exceeds the national average on a sustainable basis.

         Real estate is a cyclical business and, as a long-term owner and operator of apartment communities, we believe it is important to evaluate performance potential throughout various economic cycles. We also believe that job creation and household formation are key components of demand for apartment communities. Research has shown that there are markets in the United States that create more jobs and are more resilient to national economic downturns than others. In addition, we believe that the industrial job base of various markets can provide economic diversity through portfolio allocation that, in turn, can reduce volatility in performance. These factors, along with other macro-demographic characteristics, have led us to identify markets in which to make real estate investments.

        We believe that within a macro-market environment, apartment communities located in different sub-markets can have different economic performance, and that specific sub-market locations are the primary factor in determining the potential for investment returns to exceed macro-market results. Factors that differentiate specific sub-markets within a macro-market include, among other items, proximity to employment centers, entertainment and shopping, quality of education systems, availability of land that could be used to introduce new apartment communities and the local entitlement process. We refer to our desired locations as Established Premium Neighborhoods™, or EPNs, as compared to suburban locations that lack many of these differentiating characteristics. It is our belief that apartment communities located in close proximity to these areas and areas with high barriers to entry through lack of available land and/or difficult entitlement processes should produce economic performance that exceeds that of apartment communities in locations without those characteristics.  A key component used to identify EPNs is the average cost per square foot for single family housing. We believe that the single family housing market is very efficient in pricing the quality of housing and the proximity of neighborhoods to employment centers, entertainment, shopping, and quality education systems. By identifying these highly desirable neighborhoods where people are spending the most on a per square foot basis to live, and targeting them for investment, we believe we can achieve economic performance from our apartment communities that exceeds macro-market results.

          The third component of our investment strategy is product specific. Our target resident is the affluent renter-by-choice who desires a high quality apartment community in which to live. We perform and commission extensive market research in an effort to design apartment communities that meet the current and future desires of our target customers. In addition, we invest for the long term by acquiring and developing apartment communities with high quality construction materials and amenities. We believe that long-term maintenance and capital expenditure requirements are reduced by investing additional capital up front in apartment communities built with quality construction materials. This strategy reduces the volatility associated with our cash flow streams relative to our competitors. The timeless design and high quality of the product targeted to the affluent renter-by-choice also gives us a competitive advantage over many other apartment owners through our ability to sell assets to condominium converters at prices in excess of apartment valuations. We have received numerous local and national awards and recognition for the quality of our apartment communities.

          In order to execute our investment strategy, we believe it is important to maintain a strong local presence in each of our markets. Through our local expertise, we stay abreast of current market conditions and can proactively adjust tactics in anticipation of changes in market fundamentals. In addition, we believe we have a competitive advantage over many other apartment community owners through the vertical integration of our organization. We have expertise in all facets of apartment community investment, including the disciplines of development, construction, acquisition and disposition. Since 1982, we have been involved in the development and construction, acquisition and disposition of approximately 35,000, 21,000 and 31,000 apartment homes, respectively.

          Operating Strategy. We adhere to a strategy of owning and operating high quality, class AA/A apartment communities under the Gables brand. We believe that such communities, when located in EPNs and supplemented with high quality service and amenities, attract the affluent renter-by-choice who is willing to pay a premium for location preference, superior service and high quality communities. The resulting portfolio should maintain high occupancy levels and rental rates relative to overall market conditions. This, coupled with more predictable operating expenses and reduced capital expenditure requirements associated with high quality construction materials, should lead to operating margins that exceed national averages for the apartment sector and sustainable growth in operating cash flow.

          We are continuing to pursue a long-standing strategy of brand name development by linking the "Gables" name to our communities. This strategy is intended to reinforce our reputation for excellent service and build recognition of our multifamily communities as a high quality, recognizable brand. We believe that increased consumer recognition of the "Gables" brand name in each of our markets enhances our ability to attract new residents, increases the markets' perception of our communities as high quality residential developments and enhances our relationships with local authorities.

          We operate our communities to maximize sustainable cash flow growth and create long-term real estate value. This strategy is achieved by proactive marketing and leasing of apartment homes, providing the best possible resident service, generating economies of scale to lower expenses and maintaining our communities to the highest standards. We believe that excellent service and branding thereof will distinguish us from our competitors, retain current residents and attract new prospects.

          We employ a number of operating strategies based on market fundamentals and prediction models in order to generate sustainable operating cash flow that exceeds the macro-market and our competitors. Our innovative web-based property management system provides real-time financial and marketing information for all of our communities, and effectively summarizes operating and marketing data critical for making accurate daily decisions. The system also compiles demographic profile information on prospective and current residents, allowing us to effectively target our customer base through our branding efforts. We also utilize the Internet extensively as a marketing tool to attract new customers through our award-winning web site at www.gables.com. All of our communities have high-speed internet access. Capturing and analyzing macro-market and EPN sub-market data through our sophisticated operating systems allows us to perform analyses via our proprietary prediction models. As a result of these analyses, we may choose an operating tactic for a particular market aimed at maximizing rental rate growth while increasing short-term vacancy exposure. In other scenarios, a focus on maximizing occupancy at the expense of rental rate growth may deliver the best operating cash flow results. We may also utilize different operating tactics for assets that are targeted for disposition in order to maximize the sales price based on current market underwriting conditions. These and other operating tactics are employed to maximize sustainable cash flow growth and create long-term real estate value for shareholders relative to our competitors.

          Human Resources Strategy. Our aim is to be the employer of choice within the industry, with a mission of Taking Care of the Way People Live ® . A cornerstone of our strategy involves innovative human resource practices that we believe will attract and retain the highest caliber associates. Because of our long-established presence as a fully integrated multifamily apartment management, development, construction, acquisition and disposition company within our markets, we have the ability to offer multi-faceted career opportunities among the various disciplines within the industry. Approximately 10% of our associates have tenure in excess of 10 years. Average tenure for executive officers, vice presidents and regional managers, and property managers is over 12 years, 9 years and 5 years, respectively. We believe the experience, expertise and depth of our bench strength is a competitive advantage.

          We believe our success with human resource strategies is primarily due to our empowerment of associates and our career development and training. The results of our business operations are ultimately based on a series of local decisions.  We believe the best way to run our business is to equip the most qualified people to make the best possible decisions. By empowering associates to make decisions at a local level, we increase customer and associate satisfaction. We operate each of our apartment communities as a business unit. Property managers and other on-site associates are responsible for achieving economic goals associated with revenues, occupancy and expenses relative to their macro-market, in addition to maintaining assets to a high standard in order to ensure long-term success potential. Empowering associates with responsibility and encouraging decision making requires hiring the highest caliber associates and allocating extensive resources to training and career development.

          We are committed to training at all levels within our organization, from newly hired associates to senior management. This commitment is aimed at ensuring the competitive advantage inherent in the expertise of our associates and deep bench strength, which facilitates succession planning at all levels. Our service-oriented philosophy is branded and reinforced through our college of career development, Gables University. This comprehensive training system established for our associates is overseen by a full-time national training team and offers classes at a variety of different levels.  Bronze, silver and gold certification level classes are offered to our associates.  Bronze certification is required to be completed within 18 months of hire.  Specific curriculums are designed for operations and maintenance personnel while professional development courses apply to all associates.  However, all Gables associates are encouraged to attend any class of their choice.  Customer service is also reinforced with quarterly “Excellence” award ceremonies, where personal achievement by associates is recognized by senior management in each of our markets.  We believe recognition programs reinforce our company culture and branding philosophy.

          A key component to achieving our objectives is the alignment of interests between associates and shareholders. Share ownership is prevalent throughout our organization and includes property and maintenance managers as well as members of the board of trustees. Approximately 41% of our associates have equity ownership in Gables, and therefore have their interests aligned with all other shareholders.

          Capital Strategy. Real estate investments are capital intensive. As a result, capital allocation decisions significantly impact total return to shareholders. Our objective is to produce unleveraged internal rates of return ("IRRs") during our investment hold period that exceed our long-term weighted average cost of capital. An integral part of our capital strategy involves maintaining financial flexibility via a conservative balance sheet that is investment grade. We have investment grade, senior unsecured debt ratings from Moody's Investors Service and Standard and Poor's of Baa2 and BBB, respectively. The Trust’s Series C-1 Preferred Shares and Series D Preferred Shares are also investment grade rated by those firms at Baa3 and BBB-, respectively. We believe our conservative credit profile provides security for shareholders and is a competitive advantage over companies without the financial flexibility associated with investment grade balance sheets.

          Our attention to return on invested capital manifests itself through a very focused approach to managing our capital structure. We judiciously manage our capital and we redeploy capital through the reinvestment of asset disposition proceeds into our business.  In the ordinary course of our business, we evaluate the continued ownership of our assets relative to available opportunities to acquire and develop new assets and relative to available equity and debt capital financing.  We sell assets if we determine that such asset sales are the most attractive sources of capital for redeployment in our business, for repayment of debt, for repurchase of stock and for other uses. We may also capitalize on the arbitrage that exists between the private market valuation of our assets and a discounted public market valuation of our common shares by selling assets and repurchasing stock. We have access to capital through a variety of sources, including debt financing and borrowing, common equity, preferred equity and private equity via direct investment, in addition to internally generated equity through asset dispositions and retained cash flow.

          Ancillary Business Strategy. We are involved in ancillary business lines which include third-party property management, development and construction, corporate rental housing and asset disposition brokerage services. Our expertise in these areas stems from our core competencies. In addition, we are innovative in identifying and capitalizing on new services desired by our residents that provide for increases in earnings and high returns on invested capital. Regular feedback from residents and our clients provides avenues for enhanced service and earnings potential.

          As of December 31, 2003, we managed 102 multifamily communities for third parties and unconsolidated joint ventures, comprising approximately 30,059 apartment homes. These fee management contracts are maintained with a total of approximately 50 owners. In addition to contributing to earnings, engaging in fee management allows us to create economies of scale by leveraging our management operations costs and providing access to development and acquisition opportunities, as well as providing additional market knowledge.

          2003 Significant Events. Apartment fundamentals on a national basis deteriorated during most of 2003 as a result of the economic recession and associated job losses, coupled with low mortgage rates which resulted in an increase in home purchases by apartment residents. Reduced interest rates also contributed to an increase in earnings multiples used by investors to acquire apartments. These increased earnings multiples resulted in very attractive asset disposition prices for apartments. In 2003, we received net proceeds of $112 million from the sale of 1,673 apartment homes that generated gains of $37.7 million or $1.20 per diluted common unit.

          Our research indicated the outlook for operating fundamentals was beginning to improve in several of our markets as job growth began to occur and near term forward supply trends began to taper off.  As a result, in 2003, we selectively acquired 820 apartment homes for $122 million and we commenced construction of 1,323 apartment homes with total budgeted costs of $160 million.  As the national economy recovers, we believe the markets we have selected for investment will lead job growth formation which ultimately produces apartment demand.  We intend to capitalize on these improving fundamentals by increasing our investment activity for both acquisition and development of new communities.   At the same time, we intend to take advantage of attractive valuations for apartment communities by continuing to sell assets that are no longer consistent with our strategy. 

          During 2003, we issued $75 million of 7.5% perpetual preferred shares and redeemed $50 million of 8.625% preferred units.  In addition, we received $79 million of net proceeds from the issuance of 2,500,000 common shares at a price of $31.67 per share, which represented a 3.47% discount from the NYSE closing price of $32.81 on August 20, 2003.  Finally, we expanded our unsecured credit facility from a committed capacity of $225 million to $300 million.

          Apartment Portfolio. As of December 31, 2003, we owned 76 stabilized multifamily apartment communities comprising 20,209 apartment homes, an indirect 25% interest in one stabilized apartment community comprising 345 apartment homes, an indirect 20% interest in four stabilized apartment communities comprising 1,215 apartment homes, and an indirect 8.3% interest in three stabilized apartment communities comprising 1,118 apartment homes. We also owned seven multifamily apartment communities under development or in lease-up at December 31, 2003 that are expected to comprise 2,220 apartment homes upon completion and an indirect 20% interest in two apartment communities under development or in lease-up at December 31, 2003 that are expected to comprise 373 apartment homes upon completion. In addition, as of December 31, 2003, we owned two parcels of land on which we intend to develop two apartment communities that we currently expect will comprise an estimated 453 apartment homes.  We also have rights to acquire additional parcels of land, either through options or long-term conditional contracts, on which we believe we could develop ten communities that we currently expect would comprise an estimated 2,514 apartment homes. Any future development is subject to permits and other governmental approvals, as well as our ongoing business review, and may not be undertaken or completed.

        Our apartment communities generate rental revenue and other income through the leasing of apartment homes to a diverse base of residents. We evaluate the performance of each of our apartment communities on an individual basis. However, because each of our apartment communities has similar economic characteristics, residents, and products and services, they have been aggregated into one reportable segment which comprises 93% of our total revenues for each of the three years in the period ended December 31, 2003.

        Management Structure. We have been responsible for the development or acquisition of approximately 56,000 apartment homes since 1982 and our senior management team has, on average, in excess of 12 years experience in the multifamily industry. We provide a full range of integrated real estate services through a team of approximately 1,500 associates who have expertise in property operations, development, construction, acquisition and disposition. We maintain offices in Atlanta, Austin, Boca Raton, Dallas, Houston and Washington, D.C., each with its own fully integrated organization, including experienced in-house management, development, construction, acquisition and disposition teams with specific knowledge of the particular markets served. We believe that our competitive strength and growth potential lie in our in-depth knowledge of the changing opportunities available in each local market and in our locally focused management structure, which empowers highly experienced development, acquisition, and disposition personnel to pursue opportunities in each market and highly experienced on-site managers to make the day-to-day decisions needed to maximize the performance of our existing properties. Our finance and accounting functions are controlled by a central staff located in Atlanta. 

        Competitive Advantages. We believe that we have several competitive advantages that will assist us in achieving our objective of producing total returns that exceed the NAREIT Apartment Index. These advantages include:

A fully integrated organization: a fully integrated organization with a track record of approximately 21 years in all phases of real estate property management, development, construction, rehabilitation, acquisition, disposition, financing and marketing.

Strategic portfolio diversification: a research-driven strategy that has identified major markets for investment that are geographically independent, rely on diverse economic foundations, have generated and are projected to continue to generate job growth substantially above national averages and have shown resiliency to national economic downturns.

Product focus: a portfolio concentration of class AA/A apartment communities that are located primarily in EPNs and are targeted toward the affluent renter-by-choice, and include garden, townhome and higher density apartment communities.

Local presence in multiple markets: an established local presence in each of our markets, which we serve through an experienced team of associates with superior knowledge of local markets and a culture based on empowerment which provides incentives for outstanding performance.

Technologically savvy: a sophisticated information technology system that is web-based and provides real-time information that leads to better decision making through extensive use of proprietary prediction models.

Brand recognition: a service-oriented philosophy which focuses on offering extensive resident amenities and services in high quality apartment homes to increase occupancy, rental rates and net operating income.

The Management Company

        Our fee management operations are conducted through Gables Residential Services, Inc., a wholly-owned subsidiary of the Operating Partnership. Gables Residential Services also provides other services to third parties, including construction, corporate rental housing and brokerage. A portion of these services are, or may also be, provided by the Operating Partnership directly, to the extent consistent with the gross income requirements for REITs under the Internal Revenue Code (the "Code").

Competition

        All of our communities are located in developed areas that include other apartment communities. The number of competitive multifamily communities in a particular area could have a material effect on our ability to lease apartment homes at our present communities or any newly developed or acquired community, as well as on the rents charged. We may be competing for development and acquisition opportunities with others that have greater resources than we do, including other REITs. In addition, our communities must compete for residents against new and existing homes and condominiums. The home affordability index in all of our markets is above the national average. This competitive environment is partially offset by the propensity to rent for households in our markets which in all cases exceeds the national average. 

        The fee management business is highly competitive, and we face competition from a variety of local, regional and national firms. We compete against these firms by stressing the quality and experience of our employees, the services provided by us, and the market presence and experience we have developed over the past 21 years. We may nevertheless lose some of our third party management business, particularly when such properties are sold.

Environmental and Related Matters

        Under various federal, state and local environmental laws, ordinances and regulations, a current or previous owner or operator of real estate may be required, regardless of knowledge or responsibility, to investigate and remediate the effects of hazardous or toxic substances or petroleum product releases at such property, and may be held liable to a governmental entity or to third parties for property damage and for investigation and remediation costs incurred by such parties as a result of the contamination.  The cost of investigation, remediation or removal of such substances may be substantial, and the presence of such substances, or the failure to properly remediate the contamination on such property, may adversely affect the owner's ability to borrow against, sell or rent such property. In addition, some environmental laws create a lien on the contaminated site in favor of the government for damages and costs it incurs as a result of the contamination. Finally, the owner or operator of a site may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from a site. In connection with the ownership, operation, management and development of our communities and other real estate assets, we may be potentially liable for such damages and costs. 

        There exist federal, state and local laws, ordinances and regulations that govern the removal, encapsulation and disturbance of asbestos-containing materials ("ACMs") when such materials are in poor condition or in the event of reconstruction, remodeling, renovation or demolition of a building. Such laws, ordinances and regulations may impose liability for release of ACMs and may provide for third parties to seek recovery from owners or operators of real estate assets for personal injury associated with exposure to ACMs. In connection with the ownership, operation, management and development of our communities and other real estate assets, we may be potentially liable for such costs.

          We believe that no ACMs were used in connection with the construction of our communities or will be used in connection with future construction. Our environmental assessments have revealed the presence of "potentially friable" ACMs at two of our communities. We have programs in place to maintain and monitor ACMs. We believe our communities are in compliance in all material respects with all federal, state and local laws, ordinances and regulations regarding hazardous or toxic substances or petroleum products. We have not been notified by any governmental authority and are not otherwise aware of any material non-compliance, liability or claim relating to hazardous or toxic substances or petroleum products in connection with any of our present properties that would involve substantial expenditure, and we do not believe that compliance with applicable environmental laws or regulations will have an adverse material effect on us, our financial condition or results of operations. 

          In addition, studies have linked radon, a naturally-occurring substance, to increased risks of lung cancer. While there are currently no state or federal requirements regarding the monitoring for, presence of, or exposure to radon in indoor air, the U.S. Environmental Protection Agency ("EPA") and the Surgeon General recommend testing residences for the presence of radon in indoor air, and the EPA further recommends that concentrations of radon in indoor air be limited to less than four picocuries per liter of air (the "Recommended Action Level").  The presence of radon in concentrations equal to or greater than the Recommended Action Level in a community may adversely affect our ability to rent apartment homes in that community and the market value of the community.

          Federal legislation also requires owners and landlords of residential housing constructed prior to 1978 to disclose to potential residents or purchasers any known lead-paint hazards and will impose treble damages for failure to so notify. In addition, lead-based paint in any of our communities may result in lead poisoning in children residing in that community if chips or particles of such lead-based paint are ingested, and we may be held liable under state laws for any such injuries caused by ingestion of lead-based paint by children living at our communities.

          Finally, mold growth may occur when excessive moisture accumulates in buildings or on building materials, particularly if the moisture issue remains undiscovered or is not addressed over a period of time.  Although the occurrence of mold at multifamily and other structures, and the need to remediate such mold, is not uncommon, there has been increased awareness in recent years that particular molds may, in some instances, lead to adverse health effects, including allergic or other reactions.  To help limit mold growth, we educate residents about the importance of adequate ventilation and request or require that they notify us when they see mold or excessive moisture.  We have established procedures for promptly addressing and remediating mold or excessive moisture from apartment homes when we become aware of their presence regardless of whether we or the resident believe a health risk is presented.  However, no assurances can be made that mold or excessive moisture will be detected and remediated in a timely manner.  If a significant mold problem arises at one of our communities, we could be required to undertake a costly remediation program to contain or remove the mold from the affected community and could be exposed to other liabilities.

          Our assessments of our communities have not revealed, and we are not otherwise aware of, any environmental conditions that we believe would have a material adverse effect on our business, assets, financial condition or results of operations. Nevertheless, it is possible that our assessments do not reveal all environmental liabilities or that there are material environmental liabilities of which we are unaware. Moreover, there can be no assurance that (1) future laws, ordinances or regulations will not impose any material environmental liability, or (2) the current environmental condition of our communities will not be affected by residents, the condition of land or operations in the vicinity of the real estate assets, such as the presence of underground storage tanks, or the actions of third parties unrelated to us.

Costs of Compliance with Americans with Disabilities Act and Similar Laws

          Under the Americans with Disabilities Act of 1990 (the "ADA"), all places of public accommodation are required to meet federal requirements related to access and use by disabled persons. These requirements became effective in 1992. We believe that our communities are substantially in compliance with present requirements of the ADA as they apply to multifamily dwellings. A number of additional federal, state and local laws exist which also may require modifications to our communities or regulate further renovations with respect to access by disabled persons. For example, the Fair Housing Amendments Act of 1988 (the "FHAA") requires apartment communities first occupied after March 13, 1990 to be accessible to the handicapped. Non-compliance with the FHAA could result in the imposition of fines or an award of damages to private litigants. We believe that our communities that are subject to the FHAA are substantially in compliance with this law.

          Additional legislation may impose further burdens or restrictions on owners with respect to access by disabled persons. The ultimate amount of the cost of compliance with the ADA or related legislation is not currently ascertainable, and while these costs are not expected to have a material effect on us, they could be substantial. Limitations or restrictions on the completion of renovations may limit application of our investment strategy in specific instances or reduce overall returns on our investments.

Insurance

          We carry comprehensive liability, fire, extended coverage and rental loss insurance with respect to all of our completed communities, with policy specifications, insured limits and deductibles customarily carried for similar properties. We carry similar insurance with respect to our development properties, but with appropriate exceptions given the undeveloped nature of these properties. There are, however, particular types of losses, such as losses arising from acts of war, catastrophic acts of nature or terrorism that are not insured, in part or in full, because they are either uninsurable or not economically practical to insure in management’s view, given the cost of the insurance after consideration of the resulting coverage levels and related deductibles, limits and exclusions. Should an uninsured loss or a loss in excess of insured limits occur, we could lose our capital invested in a particular property as well as the anticipated future revenues from the property and would continue to be obligated on any mortgage indebtedness or other obligations related to the property. Any uninsured loss or loss in excess of insured limits would adversely affect us.

        No assurances can be made that we will have full coverage under our existing policies for property damage or liabilities to third parties arising as a result of exposure to mold or a claim of exposure to mold at a particular property.  See the discussion under "Environmental and Related Matters" above.

Employees      

        We provide a full range of real estate services through a staff of approximately 1,500 employees, including an experienced management team. There are no collective bargaining agreements with any of our employees. We believe relations with our employees are excellent.

Tax Matters

        The Trust has elected to be taxed as a REIT under the Code. To qualify as a REIT, the Trust must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of the REIT’s ordinary taxable income to its shareholders. It is the current intention of the Trust to adhere to these requirements and maintain its REIT status. As a REIT, the Trust generally will not be subject to federal income tax on distributed taxable income. Even if we qualify as a REIT, we may be subject to state and local taxes on our income and real estate assets, and to federal income and excise taxes on our undistributed taxable income.

         We utilize Gables Residential Services, a taxable REIT subsidiary, to provide management and other services to third parties that a REIT may be prohibited from providing. Taxable REIT subsidiaries are subject to federal, state and local income taxes. 

Policies with Respect to Significant Business Activities

         The following is a discussion of our investment, financing and other significant policies. These policies have been established by our board of trustees and may be amended or revised from time to time by the board of trustees without a vote of our shareholders, except that (1) we cannot change our policy of holding assets and conducting business only through the Operating Partnership, Gables Residential Services and other permitted subsidiaries without the consent of the holders of Units as provided in the partnership agreement of the Operating Partnership, (2) changes in policies with respect to conflicts of interest must be consistent with legal requirements, and (3) we cannot take any action intended to terminate our qualification as a REIT without the approval of the holders of two-thirds of our common shares.

         Investment Policies. We conduct all of our investment activities through the Operating Partnership and its subsidiaries. Our investment activities are aligned with our overall business objective to increase shareholder value by producing consistent high quality earnings to sustain dividends and annual total returns that exceed the NAREIT Apartment Index.  Our long-term investment strategy is research-driven with the objective of creating a portfolio of high-quality assets in strategically selected markets that are complementary through economic diversity and characterized by high job growth and resiliency to national economic downturns. We may purchase income-producing multifamily apartments or other types of properties for long-term investment, expand and improve the communities presently owned or other properties purchased, or sell communities or other properties, in whole or in part, when circumstances warrant. In the ordinary course of our business, we evaluate the continued ownership of our assets relative to available opportunities to acquire and develop new assets and relative to available equity and debt capital financing.  We sell assets if we determine that such sales are the most attractive sources of capital for redeployment in our business, for repayment of debt, for repurchase of stock and for other uses. We may also participate with third parties in apartment community ownership through joint ventures or other types of co-ownership. Equity investments may be subject to existing mortgage financing and other indebtedness or financing or indebtedness incurred in connection with acquiring or refinancing these investments. Debt service on such financing or indebtedness will have a priority over common shares and any distributions thereon.

         While we emphasize equity real estate investments in multifamily apartment communities, we may, at the discretion of the board of trustees, invest in other types of equity real estate investments and mortgages, including participating or convertible mortgages and other real estate interests. We do not have a policy limiting our ability to make loans to third parties or entities, including joint ventures in which we may participate in the future. On three occasions in the past, we have made loans to our vendors and preferred service providers in amounts less than $1 million per transaction to facilitate our business relationship with, and in some cases provide growth capital to, these businesses. We may in the future make similar loans where appropriate to support the needs of our business.  Such loans would require the approval of senior management.     

          We currently intend to invest in apartment communities in specifically identified markets. However, future development or investment activities will not be limited to any geographic area or product type or to a specified percentage of our assets. We will not have any limit on the amount or percent of our assets invested in one property. Subject to customary covenants associated with our unsecured debt financing and the percentage of ownership limitations and gross income and asset tests necessary for REIT qualification, we may also invest in securities of other REITs, other entities engaged in real estate activities or which provide services to the real estate industry, or securities of other issuers, including for the purpose of exercising control over such entities. We may enter into joint ventures or partnerships for the purpose of obtaining an equity interest in a particular property in accordance with our investment policies. These investments may permit us to own interests in larger assets without unduly restricting diversification and, therefore, add flexibility in structuring our portfolio. We will not enter into a joint venture or partnership to make an investment that would not otherwise meet our investment policies. Investment in these securities is also subject to our policy to not be treated as an investment company under the Investment Company Act of 1940. We have not engaged in the trading, underwriting or agency distribution or sale of securities of other issuers, and we do not intend to do so.

          Financing and Equity Capital Policies. Our debt to total market capitalization ratio, defined as our total consolidated debt as a percentage of the December 31, 2003 market value of our outstanding common shares and units plus total consolidated debt and preferred shares at liquidation value, was 44.1% at December 31, 2003. Excluding construction-related indebtedness, this ratio was 40.5% at December 31, 2003. This ratio will fluctuate with changes in the market price of our common shares and the number of outstanding common shares and units or other forms of shares or units of beneficial interest, and differs from the debt-to-book capitalization ratio, which is based upon book values. This percentage will increase as we use financing to continue construction of our development communities and acquire additional multifamily apartment communities. As the debt-to-book capitalization ratio may not reflect the current income potential of a company's assets and operations, we believe that, in most circumstances, the debt to fair market value ratio may provide an alternate indication of leverage for a company whose assets are primarily income-producing real estate and should be evaluated along with the debt service coverage and underlying components of indebtedness. Estimates of the fair market value of our assets are not always readily available through public channels due to the inherent complexity associated with valuing each of our assets. During time periods when the public valuation of equity securities is in-line with the private valuation of real estate assets, the debt to total market capitalization ratio may provide an alternative indication of leverage for a company whose assets are primarily income-producing real estate and could be evaluated along with the debt service coverage and underlying components of indebtedness.

          We currently have a policy of incurring debt only if the ratio of debt to total market capitalization, assuming total market capitalization and fair market value of our assets are in-line, would be 60% or less. Our declaration of trust and bylaws do not, however, limit the amount or the percentage of indebtedness that we may incur. In addition, we may from time to time modify our debt policy in light of current economic conditions, relative costs of debt and equity capital, market values of our communities, general conditions in the market for debt and equity securities, fluctuations in the market price of common shares, growth opportunities and other factors. Accordingly, we may increase our debt to total market capitalization ratio beyond the limits described above. We are, however, subject to certain indebtedness limitations pursuant to the restrictive covenants of our existing debt agreements.  (See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion). To the extent that our board of trustees authorizes us to obtain additional capital, we may raise capital through asset dispositions, additional equity offerings, including the issuance of senior securities, debt financings or retention of cash flow as allowable under the Code in order to maintain REIT tax status, or a combination of these methods. We presently anticipate that any additional borrowings would be made through the Operating Partnership, although we might incur indebtedness, the proceeds of which would be loaned to the Operating Partnership. Borrowings may be unsecured or may be secured by any or all of our assets, the Operating Partnership or any existing or new property owning entity, and may have full or limited recourse to all or any portion of our assets, the Operating Partnership or any existing or new property owning entity. Indebtedness incurred by us may be in the form of bank borrowings, tax-exempt bonds, purchase money obligations to sellers of apartment communities or other properties, publicly or privately placed debt instruments or financing from institutional investors or other lenders. The proceeds from any of our borrowings may be used for working capital, to refinance existing indebtedness and to finance acquisitions, expansions or development of new communities and other properties, and for the payment of distributions. We have not established any limit on the number or amount of mortgages that may be placed on any single property or on our portfolio as a whole. We currently have equivalent senior unsecured debt ratings of BBB from Standard and Poor's and Baa2 from Moody's Investors Service.

          Our board of trustees has the authority, without further shareholder approval, to issue additional authorized common shares and preferred shares or otherwise raise capital, including through the issuance of senior securities, in any manner and on the terms and for the consideration it deems appropriate, including in exchange for property. We have in the past, and may in the future, issue one or more series of additional preferred shares that could have dividend, voting, liquidation and other rights and preferences that are senior to those of our common shares. Existing shareholders will have no preemptive right to additional shares issued in any offering, and any offering might cause a dilution of their investment. We have in the past issued preferred shares in connection with an acquisition, and may in the future, issue common or preferred shares in connection with an acquisition. We have in the past, and may in the future, issue units of partnership interest in the Operating Partnership in connection with acquisitions of property. The Trust’s Series C-1 Preferred Shares and Series D Preferred Shares currently have equivalent ratings of BBB- from Standard and Poor's and Baa3 from Moody's Investors Service.  We intend to adhere to financing policies that will allow us to maintain these investment grade credit ratings.

          Conflict of Interest Policies. As part of their employment agreements, each of Chris Wheeler (Chairman, President and Chief Executive Officer), Marvin Banks (Senior Vice President and Chief Financial Officer), David Fitch (Senior Vice President and Chief Investment Officer) and Mike Hefley (Senior Vice President and Chief Operating Officer) is bound by a non-competition covenant. These non-competition covenants provide that, during the term of employment and for a period of one year following termination of employment, under specified circumstances, each individual is prohibited from directly or indirectly competing with us with respect to any multifamily apartment community management, development, construction, acquisition or disposition activities undertaken or being considered by us. These employment agreements also contain non-solicitation covenants wherein each individual subject to the agreement is prohibited, during the term of employment and for a period of one year following employment, from directly or indirectly (1) soliciting or inducing any of our present or future employees to accept employment with such individual or any person or entity associated with such individual, (2) employing, or causing any person or entity associated with such individual to employ, any of our present or future employees without providing us prior written notice of such proposed employment, or (3) either for himself or for any other person or entity, competing for or soliciting the third party owners with whom we have an existing property management agreement. The employment agreements for Mr. Wheeler, Mr. Banks, Mr. Fitch and Mr. Hefley terminate on January 1, 2005.  These agreements are automatically extended for additional one-year periods unless notice is given by us or the employee three months prior to the agreement's expiration that the agreement will not be renewed.

          In addition, members of our board of trustees as well as officers ("Senior Management") are bound by a conflict of interest policy which narrowly focuses on business activities of Senior Management which may compete directly with our business in the multifamily sector. Under this policy, Senior Management must refrain from engaging in activities such as serving as a director, trustee, officer, employee, partner, consultant, agent, investor, lender, or a significant financial stakeholder in an enterprise that engages, or proposes to engage in the acquisition, development, management, ownership, operation or disposition of multifamily apartment communities in any market in which we are currently present or contemplating entering.

          Senior Management may engage in some permissible competitive activities, although potentially competitive with us. These activities which are similar to the activities described in the preceding paragraph, include any proposed activity that is fully disclosed to and approved by the chairman of the board of trustees, any proposed activity which involves either fewer than 30 residential units or a total value of less than $3.0 million, and relates to a property that is not located within a five mile radius of our existing or proposed properties, and any activity by a trustee, if such activity is an incidental or non-recurring part of the regular duties and responsibilities associated with his or her employment.

          We have adopted a policy that, without the approval of a majority of the disinterested members of the board of trustees, we will not acquire from or sell to any trustee, officer or employee or any entity in which a trustee, officer or employee of our company beneficially owns more than a 1% interest, or acquire from or sell to any affiliate of any of the foregoing, any of our assets or other property.

          Reporting Policies. The Trust’s annual reports, including its audited financial statements, periodic reports and other information, including exhibits to such reports, filed or furnished pursuant to the Securities Exchange Act of 1934, are available free of charge in the "SEC Filings" section of our website located at http://www.gables.com, as soon as reasonably practicable after the reports are filed with or furnished to the Securities and Exchange Commission; and therefore, we do not make the Operating Partnership's reports available here. You can obtain the Operating Partnership's reports by accessing the EDGAR database at the Securities and Exchange Commission's website at www.sec.gov, or we will furnish an electronic or paper copy of these reports free of charge upon request.  Please direct such requests as follows:

Director of Investor Relations
Gables Residential Trust
2859 Paces Ferry Road
Suite 1450
Atlanta, Georgia   30339

Risk Factors

          Before you invest in our securities, you should be aware that there are various risks, including those described below. You should consider carefully these risk factors together with all of the information included or incorporated by reference in this document before you decide to purchase our securities. This section includes forward-looking statements.

          Unfavorable changes in market and economic conditions could hurt occupancy or rental rates. The market and economic conditions in metropolitan areas of our current markets in the United States may significantly affect apartment home occupancy or rental rates. Occupancy and rental rates in those markets, in turn, may significantly affect our profitability and our ability to satisfy our financial obligations. The risks that may affect conditions in those markets include the following:

the economic climate which may be adversely impacted by plant closings, industry slowdowns and other factors;

real estate conditions such as an oversupply of, or a reduced demand for, apartment homes;

decline in household formation that adversely affects occupancy or rental rates;

the inability or unwillingness of residents to pay rent increases;

the potential effect of rent control or rent stabilization laws, or other laws regulating housing, on any of our communities, which could prevent us from raising rents to offset increases in operating costs; and

the rental market which may limit the extent to which rents may be increased to meet increased expenses without decreasing occupancy rates.

          Any of these risks could adversely affect our ability to achieve our desired or anticipated yields on our communities and to make expected distributions to shareholders.

          Increased competition and low mortgage interest rates could limit our ability to lease apartment homes or increase or maintain rents. Our apartment communities in metropolitan areas compete with numerous housing alternatives in attracting residents, including other rental apartments and single-family homes that are available for rent, as well as new and existing single-family homes for sale. Competitive residential housing in a particular area or housing alternatives that are made competitive by a low mortgage interest rate environment could adversely affect our ability to lease apartment homes and to increase or maintain rents.

          Failure to generate sufficient revenue could limit cash flow available for distributions to shareholders. If our communities do not generate revenues sufficient to meet our operating expenses, including debt service and capital expenditures, our cash flow and ability to pay distributions to our shareholders will be adversely affected. The following factors, among others, may adversely affect the revenues generated by our apartment communities:

the national and local economic climates;

local real estate market conditions, such as oversupply of apartment homes;

the perceptions by prospective residents of the safety, convenience and attractiveness of our communities and the neighborhoods in which they are located;

our ability to provide adequate management, maintenance and insurance; and

increased operating costs including real estate taxes and insurance.

          Significant expenditures associated with each investment such as debt service payments, if any, real estate taxes, insurance and maintenance costs are generally not reduced when circumstances cause a reduction in income from a community. For example, if we mortgage a community to secure payment of debt and are unable to meet the mortgage payments, we could sustain a loss as a result of foreclosure on the community or the exercise of other remedies by the mortgagee.

          Development and construction risks could impact our profitability. We intend to continue to develop and construct multifamily apartment communities. Our development activities may be exposed to the following risks:

We may be unable to obtain, or face delays in obtaining, necessary zoning, land-use, building, occupancy, and other required governmental permits and authorizations, which could result in increased costs and could require us to abandon our activities entirely with respect to the project for which we are unable to obtain permits or authorizations;

We may abandon development opportunities that we have already begun to explore and as a result we may fail to recover expenses already incurred in connection with exploring such development opportunities;

We may incur construction costs for a community which exceed our original estimates due to increased materials, labor or other costs, which could make completion of the community uneconomical and we may not be able to increase rents to compensate for the increase in construction costs;

Occupancy rates and rents at a newly completed development community may fluctuate depending on a number of factors, including market and economic conditions, and may result in the community not being profitable;

We may not be able to obtain financing with favorable terms for the development of a community, which may make us unable to proceed with its development; and

We may be unable to complete construction and lease-up of a community on schedule, resulting in increased debt service expense and construction costs.

          Acquisitions may not yield anticipated results. We intend to continue to acquire multifamily apartment communities on a select basis.
Our acquisition activities and their success may be exposed to the following risks:

The acquired community may fail to perform as we expected in analyzing our investment; and

Our estimate of the costs of any necessary repositioning or redeveloping the acquired community may prove inaccurate.

          Insufficient cash flow could affect our debt financing and create refinancing risk. We are subject to the risks normally associated with debt financing, including the risk that our cash flow will be insufficient to meet required payments of principal and interest. We anticipate that only a small portion of the principal of our debt will be repaid prior to maturity. Although we may be able to use cash flow to make future principal payments, we cannot assure you that sufficient cash flow will be available to make all required principal payments. Therefore, we are likely to need to refinance at least a portion of our outstanding debt as it matures. There is a risk that we may not be able to refinance existing debt or that the terms of any refinancing will not be as favorable as the terms of the existing debt.

          Difficulty of selling apartment communities could limit flexibility. Real estate in metropolitan areas of the United States can be hard to sell, especially if market conditions are poor. This may limit our ability to change our portfolio promptly in response to changes in economic or other conditions. In addition, federal tax laws limit our ability to sell communities that we have owned for fewer than four years, and this may affect our ability to sell communities without adversely affecting returns to our shareholders.

          Policy of limiting debt level may be changed and our indebtedness may increase. As of December 31, 2003, we had approximately $1.0 billion in total debt outstanding and our ratio of debt to total market capitalization was 44.1%. While our current policy is not to incur debt that would make our ratio of debt to total market capitalization greater than 60%, assuming total market capitalization and fair market value of our assets are in-line, neither our declaration of trust and bylaws nor the Operating Partnership’s organizational documents contain any such limitations. The governing agreements for our unsecured indebtedness, including our credit facilities and the indenture related to our senior unsecured notes, contain financial covenants that limit, but do not restrict, our total outstanding indebtedness. As a result, we may incur additional debt and thus increase our ratio of debt to total market capitalization. In addition, in the event that the price of our common shares increases, we could incur additional debt without increasing the ratio of debt to total market capitalization and without a concurrent increase in our ability to service such additional debt. Further, the indenture governing our senior unsecured notes does not contain any provisions that would afford holders of such notes protection in the event of a highly leveraged or similar transaction involving us or any of our affiliates or a reorganization, restructuring, merger, sale of all or substantially all of our assets or similar transaction involving the Operating Partnership that may adversely affect the holders of the unsecured senior notes.

          Incurrence of additional debt and related issuance of equity may be dilutive to shareholders. Future issuance of equity may dilute the interest of existing shareholders. To the extent that additional equity securities are issued to finance future developments and acquisitions instead of incurring additional debt, the interests of our existing shareholders could be diluted. Our ability to execute our business strategy depends on our access to an appropriate blend of debt financing, including unsecured lines of credit and other forms of secured and unsecured debt, and equity financing, including common and preferred equity.

          Rising interest rates would increase interest costs and could affect the market price of our securities. We expect to incur variable-rate debt under credit facilities and other interim financing vehicles in connection with the acquisition, construction and renovation of multifamily apartment communities in the future, as well as for other purposes. In addition, we have tax-exempt bonds, as described more fully below, that bear interest at a variable rate.  Accordingly, if interest rates increase, so will our interest costs to the extent the variable rate increase is not hedged effectively. In addition, an increase in market interest rates may lead purchasers of our securities to demand a higher annual yield, which could adversely affect the market price of our outstanding securities.

          Share ownership limit may prevent takeovers beneficial to shareholders.  For us to maintain our qualification as a REIT for federal income tax purposes, not more than 50% in value of our outstanding shares of beneficial interest may be owned, directly or indirectly, by five or fewer individuals. As defined for federal income tax purposes, the term "individuals" includes a number of specified entities. Our declaration of trust includes restrictions regarding transfers of our shares of beneficial interest and ownership limits that are intended to assist us in satisfying such limitations. The ownership limit may have the effect of delaying, deferring or preventing someone from taking control of us, even though such a change of control could involve a premium price for our shareholders or otherwise could be in our shareholders' best interests.

          Limits on changes in control may discourage takeover attempts beneficial to shareholders.  The Trust’s declaration of trust, our bylaws and Maryland law may have the effect of discouraging a third party from attempting to acquire us which makes a change in control more unlikely. The result may be a limitation on the opportunity for shareholders to receive a premium for their common shares over then-prevailing market prices.

          Failure to qualify as a REIT would cause us to be taxed as a corporation which would significantly lower cash available for distributions to shareholders.  If we fail to qualify as a REIT for federal income tax purposes, we will be taxed as a corporation. We believe that we are organized and qualified as a REIT and intend to operate in a manner that will allow us to continue to qualify as a REIT. However, we cannot assure you that we are qualified as such, or that we will remain qualified as such in the future. This is because qualification as a REIT involves the application of highly technical and complex provisions of the Code as to which there are only limited judicial and administrative interpretations, and involves the determination of various factual matters and circumstances not entirely within our control. In addition, future legislation, new regulations, administrative interpretations or court decisions may significantly change the tax laws or the application of the tax laws with respect to qualification as a REIT for federal income tax purposes or the federal income tax consequences of such qualification.

          If, in any taxable year, we fail to qualify as a REIT, we will be subject to federal income tax on our taxable income at regular corporate rates, plus any applicable alternative minimum tax. In addition, unless we are entitled to relief under applicable statutory provisions, we would be disqualified from treatment as a REIT for the four taxable years following the year in which we lose our qualification. The additional tax liability resulting from the failure to qualify as a REIT would significantly reduce or eliminate the amount of cash available for distributions to our shareholders. Furthermore, we would no longer be required to make distributions to our shareholders.

          Compliance or failure to comply with Americans with Disabilities Act (“ADA”) and other similar laws could result in substantial costs.  The ADA generally requires that public accommodations, including office buildings and hotels be made accessible to disabled persons. Noncompliance could result in imposition of fines by the federal government or the award of damages to private litigants. If, pursuant to the ADA, we are required to make substantial alterations and capital expenditures in one or more of our properties, including the removal of access barriers, it could adversely affect our financial condition and results of operations, as well as the amount of cash available for distribution to our shareholders.

          A number of additional federal, state and local laws exist that impact our communities with respect to access thereto by disabled persons. For example, the FHAA requires that apartment communities first occupied after March 13, 1990 be accessible to the handicapped. Noncompliance with the FHAA could result in the imposition of fines or an award of damages to private litigants.

          We cannot predict the ultimate cost of compliance with the ADA or other similar legislation. The costs could be substantial.

          Potential liability for environmental contamination and related matters could result in substantial costs.  We are in the business of acquiring, owning, operating and developing real estate assets. From time to time we will sell to third parties some of our assets. Under various federal, state and local environmental laws, we may be required, often regardless of our knowledge or responsibility but solely because of our current or previous ownership or operation of real estate, to investigate and remediate the effects of hazardous or toxic substances or petroleum product releases at those properties. We may also be held liable to a governmental entity or to third parties for property damage and for investigation and clean-up costs incurred by us in connection with any contamination. These costs could be substantial. The presence of such substances or the failure to properly remediate the contamination may materially and adversely affect our ability to borrow against, sell or rent the affected asset. In addition, applicable environmental laws create liens on contaminated sites in favor of the government for damages and costs it incurs in connection with the contamination.

          Mold growth may occur when excessive moisture accumulates in buildings or on building materials, particularly if the moisture issue remains undiscovered or is not addressed over a period of time.  Although the occurrence of mold at multifamily and other structures, and the need to remediate such mold, is not uncommon, there has been increased awareness in recent years that particular molds may, in some instances, lead to adverse health effects, including allergic or other reactions.  As a result, the presence of mold at a community we own could require us to undertake a costly remediation program to contain or remove the mold from the affected community. Such a remediation program could necessitate the temporary relocation of some or all of the community's residents or the complete rehabilitation of the community.  In addition, the presence of mold at a community could expose us to other liabilities.

          Potential liability for losses not covered by insurance could result in substantial costs.  We may incur casualty losses that are not covered by insurance. We carry insurance coverage on our properties of types and in amounts that we believe are in line with coverage customarily obtained by owners of similar properties in similar locations. We believe all of our properties are adequately insured. There are, however, particular types of losses, such as losses arising from acts of war, catastrophic acts of nature or terrorism that are not insured, in part or in full, because they are either uninsurable or not economically practical to insure in management’s view, given the cost of the insurance after consideration of the resulting coverage levels and related deductibles, limits and exclusions. Should an uninsured loss or a loss in excess of insured limits occur, we could lose our capital invested in a particular property as well as the anticipated future revenues from the property and would continue to be obligated on any mortgage indebtedness or other obligations related to the property. In the event of an uninsured loss or a loss in excess of our insurance limits, we could lose both the revenues generated from the affected community and the capital we have invested in the affected community; depending on the specific circumstances of the affected community it is possible that we could be liable for any mortgage indebtedness or other obligations related to the community. Any such loss could materially and adversely affect our business and financial condition and results of operations.

          Significant new operations and acquired communities under management require integration with the existing business and, if not properly integrated, could create inefficiencies. Our ability to manage growth effectively will require us, among other things, to successfully apply our experience in managing our existing portfolio of multifamily apartment communities to a larger number of assets. In addition, we must be able to successfully manage the integration of new management and operations personnel as our organization grows in size and complexity.

          Failure to succeed in new markets may limit growth. We may make selected acquisitions outside of our current market areas from time to time, if appropriate opportunities arise. Our historical experience in our current markets located in the United States does not ensure that we will be able to operate successfully in other market areas new to us. We may be exposed to a variety of risks if we choose to enter into new markets. These risks include, among others:

a lack of market knowledge and understanding of the local economies;

an inability to obtain land for development or to identify acquisition opportunities;

an inability to obtain construction tradespeople; and

an unfamiliarity with local governmental and permitting procedures.

          Bond compliance requirements could limit income and restrict use of communities and cause favorable financing to become unavailable. Some of our multifamily apartment communities are financed with obligations issued by various local government agencies or instrumentalities, the interest on which is exempt from federal income taxation. These obligations are commonly referred to as "tax-exempt bonds." The bond compliance requirements for our current tax-exempt bonds, and the requirements of any future tax-exempt bond financing, may have the effect of limiting our income from communities subject to such financing. Under the terms of our tax-exempt bonds, we must comply with various restrictions on the use of the communities financed by such bonds, including a requirement that a percentage of apartments be made available to low and middle income households. In addition, some of our tax-exempt bond financing documents require that a financial institution guarantee payment of the principal of, and interest on, the bonds. The guarantee may take the form of a letter of credit, surety bond, guarantee agreement or other additional collateral. If the financial institution defaults in its guarantee obligations, or we are unable to renew the applicable guarantee or otherwise post satisfactory collateral, a default will occur under the applicable tax-exempt bonds and the community could be foreclosed upon.

          Decrease of fee management business would result in decrease in revenues. We manage multifamily apartment communities owned by third parties for a fee. Most of our management contracts are terminable upon 30-days notice. There is a risk that the management contracts will be terminated and/or that the rental revenues upon which management fees are based will decline and management fee income will decrease accordingly.

          Interest rate hedging contracts may involve material charges and may not provide adequate protection. From time to time, when we anticipate offerings of debt securities, we may seek to decrease our exposure to fluctuations in interest rates during the period prior to the pricing of the securities by entering into interest rate hedging contracts in the form of rate locks. We may do so to increase the predictability of our financing costs. Also, from time to time, we rely on interest rate hedging contracts to offset our exposure to moving interest rates with respect to debt financing arrangements at variable interest rates in the form of rate caps and rate swaps. The settlement of interest rate hedging contracts in the form of rate locks has in the past and may in the future involve charges to earnings that may be material in amount. Such charges are typically driven by the extent and timing of fluctuations in interest rates. Despite our efforts to minimize our exposure to interest rate fluctuations, there is no guarantee that we will be able to maintain our hedging contracts at their existing levels of coverage or that the amount of coverage maintained will cover all of our outstanding indebtedness at any such time. If our efforts are unsuccessful, we may not meet our objective of reducing the extent of our exposure to, and sustain losses as a result of, interest rate fluctuations. In addition, while interest rate hedging contracts may mitigate the impact of rising interest rates on us, they also expose us to the risk that other parties to the contracts will not perform or that the agreements may be unenforceable.

ITEM 2.  PROPERTIES

          As of December 31, 2003, we owned or had an interest in 84 stabilized communities consisting of 22,887 apartment homes, and owned or had an interest in nine development/lease-up communities consisting of 2,593 apartment homes. The communities, comprising a total of 25,480 apartment homes, are located in Texas, Georgia, Florida, Tennessee and Washington, D.C.   The following table shows the locations of the communities and the number of apartment homes in each metropolitan area:

          Stabilized Communities. We have developed 39 communities consisting of 10,689 apartment homes and acquired 45 communities consisting of 12,198 apartment homes. We manage and operate all of the stabilized communities, which are typically two and three-story garden apartments, townhomes and higher-density apartments. As of December 31, 2003, the communities had an average monthly market rental rate per apartment home of $993 or $0.96 per square foot and a physical occupancy rate of 94%. The average age of the communities is approximately eleven years.

          Most of our communities offer many attractive features designed to enhance their market appeal, such as vaulted ceilings, fireplaces, dishwashers, disposals, washer/dryer connections, ice-makers, patios and decks. Recreational facilities include swimming pools, fitness facilities, playgrounds, picnic areas and tennis and racquetball courts. In many communities, we make amenities and services such as aerobic classes, resident social events, dry cleaning pickup and delivery, and the use of fax, computer and copy equipment available to residents. All of our communities have high-speed internet access. In-depth market research, including periodic focus groups with residents and feedback from on-site management personnel, is used to refine and enhance management services and community design. Additional information regarding our stabilized communities at December 31, 2003 follows:

						Stabilized Community Features as of December 31, 2003
														Physical
		No. of				Approx.					Year		Average	Occupancy	Market Rent at
		Apt.				Rentable			Total		Constructed/	Year	Unit Size	at	12/31/03 per
Community (a)		Homes				Sq. Ft. (b)			Acreage		Renovated	Acquired	(Sq. Ft.)	12/31/03	Home		Sq. Ft.
Atlanta, GA
Briarcliff Gables			104				128,976	5.2		1995		--	1,240	98%	$1,036		$0.84
Buckhead Gables	(c)		162				122,548	3.5		1994		1994	756	94%	757		1.00
Gables Cityscape	(d)		182				141,550	5.5		1989		1994	778	97%	769		0.93
Gables Metropolitan I	(e)		435				487,472	15.0		2000		--	1,121	91%	1,217		1.09
Gables Metropolitan II	(e)		274				304,239	5.8		2002		--	1,110	94%	1,270		1.14
Gables Mill			438				406,676	36.1		1988		1997	928	91%	768		0.83
Gables Montclair			183				280,701	9.9		2002		--	1,534	96%	1,417		0.92
Gables Northcliff			82				127,990	12.7		1978		1997	1,561	93%	1,160		0.74
Gables Paces			80				131,645	2.6		2002		--	1,646	90%	1,900		1.15
Gables Rock Springs I			188				209,745	28.7		1945-92		1997	1,116	90%	965		0.86
Gables Vinings	(f)		315				336,735	15.2		1997		--	1,069	94%	945		0.88
Gables Walk			310				367,226	19.7		1996-97		1997	1,185	93%	969		0.82
Gables Wood Arbor	(f)		140				127,540	9.9		1987		--	911	95%	632		0.69
Gables Wood Crossing	(f)		268				257,012	22.3		1985-86		--	959	94%	687		0.72
Gables Wood Glen			380				377,340	23.8		1983		--	993	94%	613		0.62
Gables Wood Knoll			312				311,064	19.6		1984		--	997	93%	668		0.67
Lakes at Indian Creek	(f)		603				552,384	49.8		1969-72		1993	916	92%	587		0.64
Roswell Gables I	(f)		384				417,288	28.3		1995		--	1,087	93%	824		0.76
Roswell Gables II	(f)		284				334,268	28.3		1997		--	1,177	93%	824		0.70
Spalding Gables	(f)		252				249,333	11.2		1995		--	989	96%	835		0.84
Wildwood Gables	(c), (f)		546				619,710	37.9		1992-93		1991	1,135	93%	852		0.75
Total/Averages			5,922				6,291,442	391.0					1,062	93%	$    871		$  0.82
South FL
Belmar	(g)		36				54,948	4.4		1982		2003	1,526	----	$    936		$    0.61
Cotton Bay	(f)		444				436,460	37.6		1986		1998	983	96%	787		0.80
Gables Boca Place	(f)		180				175,812	9.4		1984		1998	977	91%	1,071		1.10
Gables Boynton Beach I			252				302,148	18.0		1996		1998	1,199	97%	957		0.80
Gables Boynton Beach II			296				357,653	15.9		1997		1998	1,208	95%	953		0.79
Gables Kings Colony	(f)		480				435,824	18.8		1986		1998	908	96%	905		1.00
Gables Mizner on the Green			246				311,176	8.9		1996		1998	1,265	96%	1,556		1.23
Gables Palma Vista			189				273,606	12.0		2000		--	1,448	93%	1,631		1.13
San Michele I			249				348,358	32.4		1998		1998	1,399	92%	1,517		1.08
San Michele II			343				475,506	32.4		2000		--	1,386	94%	1,508		1.09
Gables San Remo			180				245,014	11.8		1995		1998	1,361	93%	1,297		0.95
Gables Town Colony	(f)		172				147,724	10.0		1985		1998	859	96%	1,006		1.17
Gables Town Place	(f)		312				260,192	13.0		1987		1998	834	96%	873		1.05
Gables Wellington			222				256,472	12.7		1998		1998	1,155	94%	1,078		0.93
Hampton Lakes	(f)		300				317,004	11.0		1986		1998	1,057	92%	853		0.81
Hampton Place			368				352,528	14.1		1985		1998	958	94%	799		0.83
Mahogany Bay	(f)		328				330,459	25.4		1986		1998	1,007	96%	838		0.83
Vinings at Hampton Village	(f)		168				202,752	8.6		1988		1998	1,207	98%	870		0.72
Total/Averages			4,765				5,283,636	296.4					1,109	95%	$ 1,051		$ 0.95
Houston, TX
Gables Austin Colony	(f)		237		231,621			11.0		1984		1998	977	93%	$   925		$  0.95
Gables Cityscape			252		214,824			6.8		1991		--	852	94%	913		1.07
Gables CityWalk/ Waterford Square			317		255,823			8.7		1990/ 1985		--/ 1992	807	94%	874		1.08
Gables Edgewater			292		257,339			12.2		1990		--	881	96%	851		0.97
Gables Lions Head	(f)		277		233,796			10.3		1983		1998	844	95%	769		0.91
Gables Metropolitan Uptown			318		290,141			8.9		1995		--	912	90%	997		1.09
Gables of First Colony			324		321,848			13.3		1996		1997	993	92%	987		0.99
Gables Piney Point	(f)		246		227,880			7.5		1994		--	926	96%	849		0.92
Gables Pin Oak Green			581		592,709			14.4		1990		1996	1,020	93%	1,214		1.19
Gables Pin Oak Park			474		483,740			11.9		1992		1996	1,021	93%	1,214		1.19
Gables Rivercrest I			140		118,020			5.1		1982		1987	843	94%	780		0.93
Gables Rivercrest II	(f)		140		118,020			5.0		1993		1998	843	97%	767		0.91
Gables Windmill Landing	(f)		259		224,689			9.8		1984		1998	868	95%	688		0.79
Gables White Oak	(e)		186		162,552			6.1		2002		--	874	94%	967		1.11
Total/Averages			4,043		3,733,002			131.0					923	94%	$   962		$    1.04

Austin, TX
Gables at the Terrace		308		292,292	18.6	1998	1998	949	96%	$1,009		$1.06
Gables Barton Creek	(f)	160		185,846	11.6	1998	2000	1,162	95%	1,312		1.13
Gables Bluffstone		256		251,909	32.7	1998	--	984	91%	949		0.96
Gables Central Park		273		257,043	6.9	1997	--	942	95%	1,369		1.45
Gables Great Hills		276		228,930	23.7	1993	--	829	93%	779		0.94
Gables Park Mesa		148		161,540	24.3	1992	1997	1,091	93%	1,116		1.02
Gables Town Lake		256		239,264	12.0	1996	--	935	96%	1,296		1.39
Gables West Avenue		239		205,088	2.8	2000	2003	858	94%	1,371		1.60
Total/Averages		1,916		1,821,912	132.6			951	94%	$ 1,136		$ 1.19
Dallas, TX
Gables at Pearl Street		108		117,688	3.6	1995	--	1,090	93%	$ 1,251		$ 1.15
Gables CityPlace		232		244,056	7.1	1995	1997	1,052	96%	1,350		1.28
Gables Ellis Street		245		294,351	6.5	2003	--	1,201	94%	1,581		1.32
Gables Knoxbridge		334		283,426	9.8	1994/1996	2003	849	94%	1,054		1.24
Gables Mirabella		126		114,902	1.4	1996	1997	912	90%	1,119		1.23
Gables Spring Park		188		198,178	12.3	1996	--	1,054	94%	938		0.89
Gables State Thomas     Townhomes		177		264,728	7.1	2002	--	1,496	92%	1,760		1.18
Gables Turtle Creek		150		150,930	3.1	1995	1996	1,006	96%	1,166		1.16
Gables Valley Ranch	(f)	319		325,534	14.8	1994	--	1,020	96%	877		0.86
Total/Averages		1,879		1,993,793	65.7			1,061	94%	$ 1,209		$ 1.14
Memphis, TN
Arbors of Harbortown	(h)	345		341,258	15.0	1991	--	989	97%	$ 901		$ 0.91
Gables Cordova		464		434,461	32.2	1986	--	936	91%	701		0.75
Gables Stonebridge	(i)	500		439,646	34.0	1993/1996	1996	879	93%	704		0.80
Total/Averages		1,309		1,215,365	81.2			928	93%	$ 755		$  0.81
Orlando, FL
Gables Celebration		231		267,417	8.8	1999	--	1,158	92%	$ 1,079		$ 0.93
Gables Chatham Square	(j)	448		503,263	29.6	2001	--	1,123	100%	--		--
Gables North Village		315		418,985	21.3	2002	--	1,330	90%	1,122		0.84
The Commons at Little Lake    Bryan	(j)	280		289,436	16.5	1998	--	1,034	100%	--		--
Total/Averages		1,274		1,479,101	76.2			1,161	96%	$ 1,104		$0.88
Nashville,  TN
Brentwood Gables	(i)	254		287,594	14.5	1996	--	1,132	93%	$ 953		$ 0.84
Gables Hendersonville	(i)	364		342,982	21.0	1991	--	942	92%	688		0.73
Gables Hickory Hollow I	(f)	276		247,322	19.0	1988	--	896	88%	660		0.74
Gables Hickory Hollow II	(f)	272		259,704	18.0	1987	--	955	87%	653		0.68
Total/Averages		1,166		1,137,602	72.5			976	90%	$  731		$ 0.75
Tampa,  FL
Gables West Park Village I	(e)	320		401,314	12.0	2002	--	1,254	85%	$1,182		$  0.94
Total/Averages		320		401,314	12.0			1,254	85%	$1,182		$ 0.94
Washington,  D.C.
Gables Dupont Circle		82		79,895	0.5	1998	2001	974	99%	$ 2,665		$ 2.74
Gables Woodley Park	(k)	211		182,057	0.9	2001	2003	863	--	2,222		2.58
Total/Averages		293		261,952	1.4			894	99%	$ 2,346		$2.62
TOTALS		22,887		23,619,119	1,260.0			1,032	94%	$  993		$ 0.96

          Development and Lease-up Communities. The development communities have been designed to generally resemble the stabilized communities we developed previously and to offer similar amenities. The development communities and recently completed communities reflect our continuing research of consumer preferences for upscale multifamily rental housing and incorporate and emphasize garage parking, increased privacy, high quality interiors, high speed internet access, and private telephone and television systems. Additional information regarding our development and lease-up communities at December 31, 2003 follows:

				Percent at December 31, 2003       .				Actual or Estimated Quarter of
Market	Community	No. of Apt.    Homes	Total Budgeted Cost	Cost to  Complete	Complete	Leased	Occupied	Constr- uction Start	Initial Occu- pancy.	Constr- uction End	Stab- ilized Occupancy
			(millions)	(millions)							(a)

Wholly-Owned Development/Lease-up Communities:

Atlanta, GA	Gables Rock Springs II (b)	233	$ 25	$ 3	94%	68%	61%		2 Q 2002	2 Q 2003	2 Q 2004	3 Q 2004
Austin, TX	Gables Grandview (c)	458	56	13	71%	7%	5%		1 Q 2003	4 Q 2003	4 Q 2004	2 Q 2005
Houston, TX	Gables Augusta (c)	312	33	14	46%	2%	--		1 Q 2003	1 Q 2004	4 Q 2004	2 Q 2005
South FL	Gables Floresta	311	39	13	58%	11%	9%		1 Q 2003	4 Q 2003	4 Q 2004	2 Q 2005
South FL	Gables Montecito (d)	450	56	49	3%	--	--		2 Q 2004	2 Q 2005	2 Q 2006	4 Q 2006
Tampa, FL	Gables Beach Park	166	22	2	89%	5%	1%		1 Q 2003	4 Q 2003	2 Q 2004	4 Q 2004
	Wholly-Owned totals	1,930	$231	$94
Co-Investment Development/Lease-up Community:
Tampa, FL	Gables West Park Village III (e)	76	$ 10	$  8	7%	--	--		4 Q 2003	3 Q 2004	4 Q 2004	1 Q 2005
	Co-Investment totals	76	$10	$  8	(f)
Wholly-Owned Completed Community in Lease-up:
Dallas, TX	Gables State Thomas Ravello	290	$ 48	$    -	100%	90%	88%		4 Q 2001	1 Q 2003	3 Q 2003	2 Q 2004
	Wholly-Owned totals	290	$48	$    -
Co-Investment Completed Community in Lease-up:
Tampa, FL	Gables West Park Village II (e)	297	$ 27	$    -	100%	80%	70%		2 Q 2002	1 Q 2003	4 Q 2003	2 Q 2004
	Co-Investment totals	297	$27	$    -
	Grand Total	2,593

(a)   Stabilized occupancy is defined as the earlier to occur of (i) 93% occupancy or (ii) one year after completion of construction.
(b)   This community represents the reconstruction of 100 apartment homes previously owned and operated by us into 233 apartment homes.
(c)   These communities are secured by construction loans with an aggregate committed capacity of $43.0 million, of which $23.7 million was outstanding at December 31, 2003.
(d)   We are developing single-family lots adjacent to this community and have such lots under contract for sale once development is complete.  Amounts pertaining to the single-family lots have been excluded from the table above. At December 31, 2003,  $8 million in costs have been incurred pertaining to the single-family lots, and the estimated cost to complete is $5 million.
(e)  These communities are owned by the GRAP JV Two, in which we hold an indirect 20% interest.  These communities secure indebtedness totaling $16.4 million as of December 31, 2003.
(f)  Construction loan proceeds are expected to fund $4 million of these costs to complete at December 31, 2003. The remaining costs will be funded by capital contributions to the venture from our venture partner and us in a funding ratio of 80% and 20%, respectively.

          Undeveloped Land.   As of December 31, 2003, we owned the following two parcels of land on which we intend to develop two apartment communities.  We also owned additional parcels of land at December 31, 2003; however, we do not currently intend to develop apartment communities on this land in the foreseeable future. Instead, we intend to sell these land parcels on an as-is basis. There can be no assurance of when or if our undeveloped land will be developed or sold.

          Land Acquisition Rights.  As of December 31, 2003, we had rights to acquire the following ten parcels of land, either through options or long-term conditional contracts, on which we would intend to develop ten apartment communities.  Options and long-term conditional contracts generally enable us to acquire the land shortly before the start of construction, which reduces development-related risks, as well as preserves capital.

          There can be no assurance of when or if our land acquisition rights will be exercised.  In addition, there can be no assurance of when or if any land acquired pursuant to such rights will be developed.

          The projections contained in the tables above under the captions "Development and Lease-up Communities," "Undeveloped Land" and "Land Acquisition Rights" are forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks and uncertainties, and actual results may differ materially from those projected in the forward-looking statements. Risks associated with our development, construction and land acquisition activities, which could impact the forward-looking statements made, include: development and acquisition opportunities may be abandoned; construction costs of a community may exceed original estimates, possibly making the community uneconomical; and construction and lease-up may not be completed on schedule, resulting in increased debt service and construction costs. Development of the undeveloped land and land that we may acquire pursuant to our land acquisition rights is subject to permits and other governmental approvals as well as our ongoing business review of the underlying real estate fundamentals and the impact on our capital structure. There can be no assurance that we will decide or be able to develop or sell the undeveloped land, complete development of all or any of the communities subject to the land acquisition rights, or complete the number of apartment homes shown above.

ITEM 3. LEGAL PROCEEDINGS

          Neither we nor any of our communities are presently subject to any material litigation or, to our knowledge, is any litigation threatened against us or any of our communities other than routine actions for negligence or other claims and administrative proceedings arising in the ordinary course of business, some of which are expected to be covered by liability insurance and all of which collectively are not expected to have a material adverse effect on our business or financial condition.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

       There is no established public trading market for the Operating Partnership's common units. As of March 5, 2004, there were 77 holders of record of common units.

       The following table sets forth the quarterly distributions per common unit to holders of common units for the periods indicated.

        The Operating Partnership currently intends to make monthly distributions to holders of its common units. Distributions are declared at the discretion of the board of directors of Gables GP, Inc., the general partner of the Operating Partnership, and will depend on our financial liquidity from cash provided by recurring real estate activities that include both operating activities and asset disposition activities, our financial condition, capital requirements, annual distribution requirements under the REIT provisions of the Code, and other factors the board of directors may deem relevant. The board of directors may modify the Operating Partnership's distribution policy from time to time.

      Some of our debt agreements contain customary representations, covenants and events of default, including covenants which restrict the ability of the Operating Partnership to make distributions in excess of stated amounts, which in turn restricts the Trust's discretion to declare and pay dividends. In general, during any fiscal year, the Operating Partnership may only distribute up to 100% of its consolidated income available for distribution, as defined in the related agreements. The applicable debt agreements contain exceptions to these limitations to allow the Operating Partnership to make any distributions necessary to (1) allow the Trust to maintain its status as a REIT or (2) distribute 100% of the Trust's taxable income. We do not anticipate that this provision will adversely affect the ability of the Operating Partnership to make distributions or the Trust's ability to declare dividends under its current dividend policy.

       Each time the Trust issues shares of beneficial interest, it contributes the proceeds of such issuance to the Operating Partnership in return for a like number of units with rights and preferences analogous to the shares issued. During the period commencing on October 1, 2003 and ending on December 31, 2003, in connection with issuances of common shares by the Trust during that time period, the Operating Partnership issued an aggregate of 50,251 common units to the Trust. Such common units were issued in reliance on an exemption from registration under Section 4(2) of the Securities Act, and the rules and regulations promulgated thereunder, as these were transactions by an issuer not involving a public offering.  In light of the information obtained by us from the Trust in connection with these transactions, we believe we may rely on this exemption.

ITEM 6. SELECTED FINANCIAL AND OPERATING INFORMATION

          The following table sets forth selected financial and operating information. This information should be read in conjunction with our consolidated financial statements and notes thereto and “Management's Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this report.

GABLES REALTY LIMITED PARTNERSHIP SELECTED FINANCIAL AND OPERATING INFORMATION
(Amounts in Thousands, Except Property and Per Unit Data)
	2003		2002		2001		2000		1999
Operating Information:
Rental revenues	$208,394		$  198,005		$  205,455		$  200,819		$  205,417
Other property revenues	11,809		11,118		11,398		11,274		11,097
Total property revenues	220,203		209,123		216,853		212,093		216,514
Other revenues	17,118		16,704		16,066		16,821		19,377
Total revenues	237,321		225,827		232,919		228,914		235,891
Property operating and maintenance (exclusive of items shown separately below)	79,668		74,279		71,467		69,127		72,338
Depreciation and amortization	52,638		46,279		45,088		41,358		43,066
Property management (owned and third party) and ancillary services	19,424		18,133		16,943		14,923		16,961
Interest expense, credit enhancement fees and amortization of deferred financing costs	46,663		43,685		43,923		44,583		43,440
General and administrative	8,800		7,377		7,209		7,154		5,796
Unusual items (a)	-		1,687		8,847		-		2,800
Total expenses	207,193		191,440		193,477		177,145		184,401
Income from continuing operations before equity in income     of joint ventures and gain on sale	30,128		34,387		39,442		51,769		51,490
Equity in income of joint ventures	265		2,900		242		399		478
Gain on sale of real estate assets	-		20,006		37,330		29,467		8,864
Income from continuing operations	30,393		57,293		77,014		81,635		60,832
Operating income from discontinued operations	2,669		4,756		6,392		6,386		6,200
Gain on disposition of discontinued operations	37,693		9,829		-		-		-
Income from discontinued operations	40,362		14,585		6,392		6,386		6,200
Net income	70,755		71,878		83,406		88,021		67,032
Distributions to preferred unitholders	(10,676	)	(11,131	)	(14,083	)	(14,083	)	(14,083	)
Original issuance costs associated with redemption of preferred units (b)	(1,327	)	(4,009	)	-		-		-
Net income available to common unitholders	$ 58,752		$ 56,738		$ 69,323		$  73,938		$ 52,949
Weighted average common units outstanding – basic	31,346		30,571		30,153		30,365		32,277
Weighted average common units outstanding – diluted	31,452		30,684		30,314		30,439		32,796
Per Common Unit Information:
Income from continuing operations (net of preferred distributions and original     issuance costs associated with the redemption of preferred units) - basic	$       0.59		$        1.38		$     2.09		$    2.22		$    1.45
Income from discontinued operations - basic	1.29		0.48		0.21		0.21		0.19
Income before extraordinary item (net of preferred dividends)	1.99		2.02		2.30		2.43		1.64
Extraordinary loss from early extinguishment of debt, net of minority interest	-		-		-		-		-
Net income available to common unitholders – basic	1.87		1.86		2.30		2.43		1.64
Income from continuing operations (net of preferred distributions and original     issuance costs associated with the redemption of preferred units) - diluted	0.58		1.37		2.08		2.22		1.45
Income from discontinued operations – diluted	1.28		0.48		0.21		0.21		0.19
Income before extraordinary item (net of preferred dividends)	1.98		1.96		2.26		2.40		1.61
Extraordinary loss from early extinguishment of debt	-		-		-		-		-
Net income available to common unitholders – diluted	1.87		1.85		2.29		2.43		1.64
Distributions declared and paid	2.41		2.41		2.34		2.20		2.08
Other Information:
Cash flows provided by operating activities	$ 90,404		$  104,960		$  100,551		$  105,885		$  105,029
Cash flows (used in) provided by investing activities	(155,384	)	(17,361	)	(123,405	)	18,871		80,928
Cash flows provided by (used in) financing activities	64,614		(85,549	)	22,833		(128,467	)	(185,048	)
Funds from operations available to common unitholders (c)	75,048		75,792		84,526		90,605		89,775
Average monthly revenue per apartment home (d)	925		910		880		830		810
Average physical occupancy for stabilized communities	94.0%		93.5%		94.6%		95.3%		94.3%
Gross operating margin (e)	63.8%		64.5%		67.0%		67.4%		66.6%
Completed communities at year-end	86		84		85		84		81
Apartment homes in completed communities at year-end	23,474		23,495		24,374		25,094		23,941
Total return to Gables Residential Trust shareholders (f)	51.2%		(8.3%	)	14.5%		27.1%		13.2%
NAREIT Equity Residential REIT Total Return Index (g)	25.5%		(6.1%	)	8.6%		35.5%		10.7%
Balance Sheet Information:
Real estate assets, before accumulated depreciation	$ 1,964,420		$ 1,794,407		$ 1,760,803		$ 1,598,170		$ 1,601,208
Total assets	1,725,076		1,583,934		1,589,206		1,453,020		1,471,364
Notes payable	1,003,100		958,574		877,231		765,927		755,485
Partners’ capital and limited partners’ common capital interest	653,250		558,359		649,784		634,398		655,761
Funds From Operations Reconciliation:
Net income available to common unitholders	$    58,752		$    56,738		$   69,323		$ 73,938		$    52,949
Real estate asset depreciation and amortization (h), (i)	53,989		49,400		49,313		45,289		45,942
Gain on sale of previously depreciated operating real estate assets (h), (i)	(37,693	)	(30,346	)	(34,110	)	(28,622	)	(9,116	)
Funds from operations available to common unitholders	$    75,048		$    75,792		$    84,526		$    90,605		$    89,775

NOTES TO SELECTED FINANCIAL AND OPERATING INFORMATION
(Amounts in Thousands, Except Property and Per Unit Data)

(a)     Unusual items of $1,687 in 2002 represents the write-off of unamortized deferred financing costs of $236 and a prepayment penalty of $1,451 associated with the early retirement of $48,365 of secured tax-exempt bond indebtedness.  Under accounting rules in effect at that time, these costs were originally classified as an extraordinary item.  In connection with the adoption of SFAS No. 145 on January 1, 2003, these costs were reclassified from extraordinary items to unusual items. In the computation of funds from operations ("FFO") pursuant to the National Association of Real Estate Investment Trusts ("NAREIT") definition outlined below, net income is adjusted for extraordinary items but is not adjusted for unusual items.  As such, previously reported FFO for the year ended December 31, 2002 has been reduced by $1,687.  The adoption of this standard had no impact on previously reported net income. Unusual items of $8,847 in 2001 are comprised of (1) a $5,006 charge associated with the write-off of building components at Gables State Thomas Ravello that were replaced in connection with a remediation program, (2) $2,200 of severance charges, (3) $920 in reserves associated with technology investments and (4) $721 of abandoned real estate pursuit costs as a result of September 2001 events which impacted the U.S. economy. Unusual items of $2,800 in 1999 relate to severance charges.

(b)     In August 2002, all 4,600 of outstanding 8.3% Series A Preferred Shares were redeemed for $115,000 plus accrued and unpaid dividends.  In connection with the issuance of the Series A Preferred Shares in July 1997, $4,009 in issuance costs were incurred and recorded as a reduction of partners’ capital.  The redemption price of the Series A Preferred Shares exceeded the related carrying value by the $4,009 of issuance costs.  The July 2003 clarification of EITF Abstracts, Topic No. D-42 became effective for the third quarter 2003 and is required to be reflected retroactively by restating the financial statements of prior periods.  As a result, previously reported net income available to common unitholders and FFO available to common unitholders for the year ended December 31, 2002 has been reduced by the $4,009 excess.

(c)     FFO is used by industry analysts and investors as a supplemental operating performance measure of an equity REIT.  We calculate FFO in accordance with the definition that was adopted by the Board of Governors of NAREIT.  FFO, as defined by NAREIT, represents net income (loss) determined in accordance with generally accepted accounting principles (“GAAP”), excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated operating real estate assets, plus specified non-cash items, such as real estate asset depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.

Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time.  Since real estate values instead have historically risen or fallen with market conditions, many industry investors and analysts have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves.  Thus, NAREIT created FFO as a supplemental measure of REIT operating performance that excludes historical cost depreciation, among other items, from GAAP net income.  The use of FFO, combined with the required primary GAAP presentations, has improved the understanding of operating results of REITs among the investing public and made comparisons of REIT operating results more meaningful.  We generally consider FFO to be a useful measure for reviewing our comparative operating and financial performance (although FFO should be reviewed in conjunction with net income which remains the primary measure of performance) because by excluding gains or losses related to sales of previously depreciated operating real estate assets and excluding real estate asset depreciation and amortization, FFO can help users compare the operating performance of a company’s real estate between periods or as compared to different companies.   

FFO presented herein is not necessarily comparable to the FFO of other REITs due to the fact that not all REITs use the NAREIT definition.  However, our FFO is comparable to the FFO of REITs that use the NAREIT definition.  FFO should not be considered an alternative to net income as an indicator of our operating performance.  Additionally, FFO does not represent cash flows from operating, investing or financing activities as defined by GAAP.  Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” for a discussion of our cash needs and cash flows. 

(d)     Average monthly revenue per apartment home is equal to the average monthly rental revenue collected during the year presented, divided by the average monthly number of apartment homes occupied during the year presented.

(e)     Gross operating margin represents (1) total property revenues less property operating and maintenance expenses (as reflected in the table and consolidated statements of operations) as a percentage of (2) total property revenues.

(f)     Total return to Gables Residential Trust shareholders is presented on an annual basis for each year presented.  Such computations assume an investment in the Trust’s common shares on the first day of the year presented and the reinvestment of dividends through the end of the year presented.

(g)     The NAREIT Equity Residential REIT Total Return Index (the “NAREIT Apartment Index”) is an industry index of 19 equity residential apartment REITs, including the Trust.  Total return is presented on an annual basis for each year presented.  Such computations assume an investment in the index on the first day of the year presented and the reinvestment of dividends through the end of the year presented.

(h)     Includes results attributable to both continuing and discontinued operations.  On January 1, 2002, we adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets."  The implementation of SFAS No. 144 requires that the gains and losses from the disposition of specified real estate assets and the related historical operating results be included in discontinued operations in the consolidated statements of operations for all periods presented.  We redeploy capital through the reinvestment of asset disposition proceeds into our business in order to enhance total returns to the Trust’s shareholders.

(i)     Includes our share of results of real estate assets owned by unconsolidated joint ventures.

MANAGEMENT'S DISCUSSION AND ANALYSIS
(Amounts in Thousands, Except Property and Per Unit Data)

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

All references to "we," "our" or "us" refer collectively to Gables Realty Limited Partnership and its subsidiaries.

       We are the entity through which Gables Residential Trust (the "Trust"), a real estate investment trust (a "REIT"), conducts substantially all of its business and owns, either directly or indirectly through subsidiaries, substantially all of its assets. We are focused within the multifamily industry in demand-driven markets throughout the United States that have exhibited high job growth and resiliency to economic downturns.  Our operating performance is based predominantly on net operating income (NOI) from our apartment communities. NOI, which represents total property revenues less property operating and maintenance expenses (as reflected in the consolidated statements of operations), is affected by the demand and supply dynamics within our markets. See Note 11, Segment Reporting, to the accompanying consolidated financial statements for further discussion of our use of NOI as the primary financial measure of performance for our apartment communities.  Our performance is also affected by the general availability and cost of capital and our ability to develop and acquire additional apartment communities with returns in excess of our long-term weighted average cost of capital.

Business Objective and Strategies

        The Trust’s objective is to increase shareholder value by producing consistent high quality earnings to sustain dividends and annual total returns that exceed the NAREIT Apartment Index. To achieve that objective, we employ a number of business strategies. First, our long-term investment strategy is research-driven, with the objective of creating a portfolio of high quality assets in strategically selected markets that are complementary through economic diversity and characterized by high job growth and resiliency to national economic downturns. We believe such a portfolio will provide predictable operating cash flow performance that exceeds the national average on a sustainable basis. Second, we adhere to a strategy of owning and operating high quality, class AA/A apartment communities under the Gables brand in Established Premium Neighborhoods,™ or EPNs. EPNs are generally characterized as areas with the highest prices for single-family homes on a per square foot basis. We believe that communities, when located in EPNs and supplemented with high quality service and amenities, attract the affluent renter-by-choice who is willing to pay a premium for location preference, superior service and high quality communities. The resulting portfolio should maintain high levels of occupancy and rental rates relative to overall market conditions. This, coupled with more predictable operating expenses and reduced capital expenditure requirements associated with high quality construction materials, should lead to operating margins that exceed national averages for the apartment sector and sustainable growth in operating cash flow. Third, our aim is to be recognized as the employer of choice within the industry. Our mission of Taking Care of the Way People Live® involves innovative human resource practices that we believe will attract and retain the highest caliber associates. Because of our long-established presence as a fully integrated apartment management, development, construction, acquisition and disposition company within our markets, we have the ability to offer multi-faceted career opportunities among the various disciplines within the industry. Finally, our capital strategy is to generate a return on invested capital that exceeds our long-term weighted average cost of capital while maintaining financial flexibility through a conservative, investment grade credit profile. We judiciously manage our capital and we redeploy capital through the reinvestment of asset disposition proceeds into our business.

        We believe we are well positioned to continue achieving our objectives because (1) the markets we have selected for investment are projected to continue to experience job growth that exceed national averages, (2) our EPN locations are expected to outperform local market results and (3) national demand for apartments is expected to increase during the next five to ten years as the demographic group referred to as the Echo Boomer generation begins to form new households.

        In the ordinary course of our business, we evaluate the continued ownership of our assets relative to available opportunities to acquire and develop new assets and relative to available equity and debt capital financing.  We sell assets if we determine that such sales are the most attractive sources of capital for redeployment in our business, for repayment of debt, for repurchase of stock and for other uses. We maintain staffing levels sufficient to meet our existing development, construction, acquisition and property operating activities. When market conditions warrant, we adjust staffing levels in an attempt to mitigate a negative impact on our results of operations.

        We have experienced slight declines in rental revenues generated from our same-store portfolio in 2003 as compared to prior years.  This is primarily due to national economic weakness, coupled with low mortgage rates that have resulted in an increase in home purchases by apartment residents.  However, the rate of decline has been diminishing and we expect that operating fundamentals for our business will improve as we move through 2004 as job growth, and the balance between supply and demand, improves in our markets.  The job growth prospects for our markets are partially related to national economic conditions.  We expect job growth to continue in our markets, but it is uncertain whether, and to what extent, the national economy and related job growth will improve in 2004.

       On a same-store basis, we expect (1) total property revenues in 2004 to be consistent with, or slightly higher than, 2003 levels and (2) property operating and maintenance expenses for 2004 to increase over 2003 levels generally in line with inflation.  We intend to capitalize on our expectations of improving operating fundamentals by increasing our investment activity for both acquisition and development of new communities.  At the same time, we intend to take advantage of attractive valuations for apartment communities by continuing to sell assets that are no longer consistent with our strategy.