GABLES REALTY LIMITED PARTNERSHIP - 10-Q Quarterly Report

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

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

777 Yamato Road, Suite 510
Boca Raton, Florida 33431
(Address of principal executive offices, including zip code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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 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.

(X) YES ( ) NO

Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act)
(X) YES ( ) NO

GABLES REALTY LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited and Amounts in Thousands, Except Per Unit Data)
	Three Months . Ended September 30,						Nine Months Ended September 30,
		2004		2003		2004			2003
Revenues:
Rental revenues		$ 53,106		$ 49,501		$155,773			$144,281
Other property revenues		4,449		4,031		12,922			11,482
Total property revenues		57,555		53,532		168,695			155,763

Property management revenues		2,261		2,345		6,493			6,145
Ancillary services revenues		1,487		2,139		4,038			5,465
Interest income		69		3		109			164
Other revenues		144		424		1,003			544
Total other revenues		3,961		4,911		11,643			12,318

Total revenues		61,516		58,443		180,338			168,081

Expenses:
Property operating and maintenance (exclusive of items shown separately below)		22,633		20,524		64,589			57,635
Real estate asset depreciation and amortization		13,763		12,080		40,407			34,811
Property management (owned and third party)		4,593		3,768		12,992			10,898
Ancillary services		1,056		992		3,130			3,302
Interest expense and credit enhancement fees		11,354		10,687		32,901			31,419
Amortization of deferred financing costs		480		494		1,501			1,400
General and administrative		2,571		2,052		8,296			6,657
Corporate asset depreciation and amortization		844		576		2,056			1,400
Hurricane damage costs		1,500		-		1,500			-
Total expenses		58,794		51,173		167,372			147,522

Income from continuing operations before equity in income of joint ventures and gain on sale		2,722		7,270		12,966			20,559

Equity in income of joint ventures		196		55		740			250
Gain on sale of joint venture interest		1,726		-		1,726			-
Gain on sale of land, net of applicable income tax provision		11,899		-		11,899			-

Income from continuing operations		16,543		7,325		27,331			20,809

Operating income from discontinued operations		85		1,248		1,383			4,239
Gain on sale of discontinued operations		23,084		12,368		39,664			17,410
Debt extinguishment costs associated with the sale of real estate assets		( 395	)	-		( 1,381		)	-
Income from discontinued operations		22,774		13,616		39,666			21,649

Net income		39,317		20,941		66,997			42,458

Distributions to preferred unitholders		( 2,194	)	( 3,272	)	( 6,581		)	( 7,944	)

Net income available to common unitholders		$37,123		$ 17,669		$60,416			$34,514

Weighted average number of common units outstanding – basic		33,525		31,525		33,421			30,752
Weighted average number of common units outstanding – diluted		33,613		31,664		33,529			30,845

Per Common Unit Information – Basic:
Income from continuing operations (net of preferred distributions)		$0.43		$0.13		$0.62			$0.42
Income from discontinued operations		$0.68		$0.43		$1.19			$0.70
Net income available to common unitholders		$1.11		$0.56		$1.81			$1.12

Per Common Unit Information – Diluted:
Income from continuing operations (net of preferred distributions)		$0.43		$0.13		$0.62			$0.42
Income from discontinued operations		$0.68		$0.43		$1.18			$0.70
Net income available to common unitholders		$1.10		$0.56		$1.80			$1.12

See notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited and Amounts in Thousands, Except Property and Per Unit Data)                                                                               ..

        Unless the context otherwise requires, all references to "we," "our" or "us" in this report refer collectively to Gables Realty Limited Partnership and its subsidiaries.

1.   ORGANIZATION AND FORMATION

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. The Trust was formed in 1993 under Maryland law to continue and expand the operations of its privately owned predecessor organization. The Trust completed its initial public offering on January 26, 1994.

       We are a fully integrated real estate company engaged in the multifamily apartment community management, development, construction, acquisition and disposition businesses. We also provide management, development and construction, corporate rental housing and brokerage services to third parties and unconsolidated joint ventures. Substantially all of our third-party management businesses are conducted through a wholly-owned subsidiary, Gables Residential Services.

       As of September 30, 2004, the Trust was an 87.3% economic owner of our common equity. The Trust controls us through Gables GP, Inc. ("Gables GP"), a wholly-owned subsidiary of the Trust and our sole general partner. This organizational 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 Trust's board of trustees, manages our affairs by directing the affairs of Gables GP. The Trust's limited partnership and indirect general partnership interests in us entitle it to share in our cash distributions, and in our profits and losses in proportion to its ownership interest therein and entitles the Trust to vote on all matters requiring a vote of the limited partners. Generally, our other limited partners are persons who contributed their direct or indirect interests in certain of our real estate assets primarily in connection with the IPO and the 1998 acquisition of the real estate assets and operations of Trammell Crow Residential South Florida. A unit of limited partnership interest in the Operating Partnership is referred to herein as a “unit.” We are 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. Such limited partners' redemption rights are reflected in "limited partners' capital interest" in our accompanying consolidated balance sheets at the cash redemption amount at the balance sheet date. The Trust's percentage ownership interest in us 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 us and we are 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.

        As of September 30, 2004, we managed a total of 172 multifamily apartment communities owned by us and our third-party clients comprising 44,814 apartment homes. As of September 30, 2004, we owned 76 stabilized multifamily apartment communities comprising 19,496 apartment homes, an indirect 50% interest in two stabilized apartment communities comprising 411 apartment homes, an indirect 49% interest in two stabilized apartment communities comprising 532 apartment homes, an indirect 25% interest in one stabilized apartment community comprising 345 apartment homes, and an indirect 20% interest in four stabilized apartment communities comprising 1,326 apartment homes. We also owned eight multifamily apartment communities under development or in lease-up at September 30, 2004 that are expected to comprise 2,382 apartment homes upon completion and an indirect 20% interest in one apartment community under development at September 30, 2004 that is expected to comprise 76 apartment homes upon completion. In addition, as of September 30, 2004, we owned four parcels of land on which we intend to develop four apartment communities that we currently expect will comprise 779 apartment homes upon completion. 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 11 communities that we currently expect would comprise an estimated 2,449 apartment homes upon completion. Any future development is subject to obtaining permits and other governmental approvals, as well as our ongoing business review, and may not be undertaken or completed.

2. COMMON AND PREFERRED EQUITY ACTIVITY

Secondary Common Share Offerings

        Since its IPO, the Trust has issued a total of 17,331 common shares in nine offerings, generating $426.8 million in net proceeds which were generally used (1) to reduce outstanding indebtedness under our interim financing vehicles utilized to fund our development and acquisition activities and (2) for general working capital purposes, including funding of future development and acquisition activities. The most recent offering, involving the issuance of 2,500 common shares that generated $79.0 million in net proceeds, closed on August 26, 2003.

Preferred Share Offerings

On May 8, 2003, the Trust issued 3,000 shares of 7.5% Series D Cumulative Redeemable Preferred Shares with a liquidation preference of $25.00 per share. The net proceeds from this issuance of approximately $72.4 million were used to reduce outstanding indebtedness under our interim financing vehicles. The Series D Preferred Shares may be redeemed at the Trust’s option at $25.00 per share plus accrued and unpaid dividends on or after May 8, 2008. The Series D Preferred Shares are not subject to any sinking fund or convertible into any other securities of the Trust.

On September 27, 2002, the Trust issued 1,600 shares of 7.875% Series C Cumulative Redeemable Preferred Shares with a liquidation preference of $25.00 per share in a private placement to an institutional investor. The net proceeds from this issuance of $39.7 million, together with the net proceeds of $39.7 million from the concurrent issuance of $40 million of senior unsecured notes, were used to retire approximately $82.5 million of unsecured indebtedness at an interest rate of 8.3% that was scheduled to mature in December 2002. Pursuant to a registration rights agreement with the purchaser of the Series C Preferred Shares, the Trust registered a new series of preferred shares with the Securities and Exchange Commission and offered to exchange those shares on a one-for-one basis for the outstanding Series C Preferred Shares. The dividend rate, preferences and other terms for the new preferred shares, or 7.875% Series C-1 Cumulative Redeemable Preferred Shares, are identical in all material respects to the Series C Preferred Shares, except that the Series C-1 Preferred Shares are freely tradable by a holder. The exchange offer was consummated on September 5, 2003 and did not generate any cash proceeds for the Trust. The Series C-1 Preferred Shares may be redeemed at the Trust’s option at $25.00 per share plus accrued and unpaid dividends on or after September 27, 2006. The Series C-1 Preferred Shares are not subject to any sinking fund or convertible into any other securities of the Trust.

        On June 18, 1998, the Trust issued 180 shares of 5.0% Series Z Cumulative Redeemable Preferred Shares with a liquidation preference of $25.00 per share in connection with the acquisition of a parcel of land for future development. The Series Z Preferred Shares, which are subject to mandatory redemption on June 18, 2018, may be redeemed at the Trust’s option at any time for $25.00 per share plus accrued and unpaid dividends. Dividends on the Series Z Preferred Shares are cumulative from the issuance date and the first dividend payment date is June 18, 2008. Thereafter, dividends will be paid annually in arrears. The Series Z Preferred Shares are not subject to any sinking fund or convertible into any other securities of the Trust.

Isssuances of Common Operating Partnership Units

       Since the IPO, we have issued a total of 4,487 common units in connection with the 1998 acquisition of the real estate assets and operations of Trammell Crow Residential South Florida, the acquisition of other operating apartment communities and the acquisition of parcels of land for future development. The most recent issuance of common units on June 17, 2004 was related to the acquisition of a parcel of land for the future development of an apartment community expected to comprise 416 apartment homes upon completion. The purchase price of $12.3 million was financed in part through the issuance of 66 common units.

Issuance of Preferred Operating Partnership Units

      On November 12, 1998, we issued 2,000 of our 8.625% Series B Preferred Units to an institutional investor. The net proceeds from this issuance of $48.7 million were used to reduce outstanding indebtedness under our interim financing vehicles. On November 17, 2003, we redeemed each of the 2,000 outstanding Series B Preferred Units at $25.00 per unit plus accrued and unpaid distributions. The redemption price of the Series B Preferred Units exceeded the related carrying value by the $1.3 million of issuance costs that were originally incurred and classified as a reduction to partners’ capital. In the fourth quarter of 2003, the $1.3 million excess was reflected as a reduction to earnings in arriving at net income available to common unitholders in accordance with the July 2003 clarification of EITF Abstracts, Topic No. D-42, "The Effect on the Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred Stock" (Note 5).

Common Equity Repurchase Program

       The Trust’s board of trustees implemented a common equity repurchase program pursuant to which the Trust is authorized to purchase up to $200 million of its outstanding common shares or units. The Trust views the repurchase of common equity with consideration of other investment alternatives when capital is available to be deployed. The Trust has repurchased shares from time to time in open market and privately negotiated transactions, depending on market prices and other prevailing conditions, using proceeds from sales of selected assets. Whenever the Trust repurchases common shares from shareholders, we are required to redeem from the Trust an equivalent number of common units on the same terms and for the same aggregate price. After redemption, the common units redeemed by us are no longer deemed outstanding. Common units have also been repurchased for cash from time to time upon their presentation for redemption by unitholders. As of September 30, 2004, we had redeemed 4,806 common units, including 4,506 common units redeemed by the Trust, for a total of $116.0 million, including $0.2 million in related commissions.

Shelf Registration Statement

       We have an effective shelf registration statement on file with the Securities and Exchange Commission under which the Trust has $500 million of equity capacity and we have $500 million of debt capacity. We believe it is prudent to maintain shelf registration capacity in order to facilitate future capital raising activities. To date, there have been no issuances of securities under this registration statement.

3. BASIS OF PRESENTATION

       The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the consolidated accounts of the Operating Partnership and its subsidiaries, including Gables Residential Services. We consolidate the financial statements of all entities in which we have a controlling financial interest, as that term is defined under GAAP, through either majority voting interest or contractual agreements. Our investments in non-controlled joint ventures are accounted for using the equity method. All significant intercompany accounts and transactions have been eliminated in consolidation.

       The accompanying interim unaudited financial statements have been prepared in accordance with GAAP for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, all adjustments (consisting only of normally recurring adjustments) considered necessary for a fair presentation for these interim periods have been included. The results of operations for the interim period ended September 30, 2004 are not necessarily indicative of the results that may be expected for the full year. These financial statements should be read in conjunction with the financial statements included in our Form 10-K for the year ended December 31, 2003.

      Certain amounts in the 2003 financial statements have been reclassified to conform to the 2004 presentation.

4. PORTFOLIO AND OTHER FINANCING ACTIVITY

Community Dispositions Subject to Discontinued Operations Reporting

In July 2004, we sold three apartment communities located in South Florida comprising 836 apartment homes. Two of such communities were encumbered by $28.0 million of tax-exempt variable-rate bonds that were enhanced by letters of credit with an expiration date of April 2008. The net proceeds from such sale were $69.5 million and were used to repay the $28.0 million bond indebtedness and to pay down outstanding borrowings under our interim financing vehicles. In connection with the sale transaction, we incurred approximately $0.4 million of debt extinguishment costs, including $0.2 million of credit enhancement prepayment costs and $0.2 million relating to the write-off of unamortized deferred financing costs. This amount is reflected in the accompanying consolidated statements of operations as “debt extinguishment costs associated with the sale of real estate assets.” Such costs are excluded from the gain on sale of real estate assets because the debt was not part of the disposal group. The gain from the sale of these communities, exclusive of the debt extinguishment costs, was $23.1 million and was recognized in the third quarter of 2004.

       In May 2004, we sold an apartment community located in Atlanta comprising 603 apartment homes. The community was encumbered by $10.5 million of tax-exempt fixed-rate bonds that had a scheduled maturity date of January 2025. The net proceeds from the sale of $25.6 million were used to defease the $10.5 million bond indebtedness and to pay down outstanding borrowings under our interim financing vehicles. In connection with the sale transaction, we incurred $1.0 million of debt extinguishment costs, including $0.6 million of defeasance costs and $0.4 million relating to the write-off of unamortized deferred financing costs. This amount is reflected in the accompanying consolidated statements of operations as “debt extinguishment costs associated with the sale of real estate assets.” Such costs are excluded from the gain on sale of real estate assets because the debt was not part of the disposal group. The gain from the sale of this community, exclusive of the debt extinguishment costs, was $14.2 million and was recognized in the second quarter of 2004.

       In March 2004, we sold an apartment community located in Orlando comprising 231 apartment homes. The net proceeds from this sale were $27.0 million and were used to pay down outstanding borrowings under our interim financing vehicles. In connection with the sale transaction, we were relieved of a $2.0 million note payable obligation. The gain from the sale of this community was $2.4 million and was recognized in the first quarter of 2004.

      During 2003, we sold four apartment communities located in Houston comprising 1,373 apartment homes and an apartment community located in Dallas comprising 300 apartment homes. The net proceeds from these sales were $112.1 million and were used to pay down outstanding borrowings under our interim financing vehicles. The aggregate gain from the sale of these five communities was $37.7 million. One of these sales occurred during the first quarter of 2003, resulting in a $5.0 million gain which was recognized in the first quarter of 2003. Two of these sales occurred during the third quarter of 2003, resulting in a $12.4 million gain which was recognized in the third quarter of 2003. The other sales occurred during the fourth quarter of 2003.

       Historical operating results, gains and debt extinguishment costs associated with the sale of real estate assets are reflected as discontinued operations in the accompanying consolidated statements of operations (Note 6).

Community and Land Dispositions Not Subject to Discontinued Operations Reporting

        In September 2004, we acquired and sold a 1.5 acre parcel of land in Arlington, Virginia. The net proceeds from the sale were $26.7 million and resulted in a $11.9 million gain, net of an applicable income tax provision of $0.9 million, which was recognized in the third quarter of 2004.

       In August 2004, we sold our 8.3% ownership interest in the CMS Tennessee Multifamily JV, which owns three apartment communities located in Tennessee comprising 1,118 apartment homes. The net proceeds from this sale were $1.1 million, resulting in a gain of $1.7 million which was recognized in the third quarter of 2004.

       In June 2004, we sold a 50% interest in two apartment communities located in South Florida comprising 411 apartment homes in connection with the formation of a new joint venture, GN Apartment Fund LLC. This transaction did not meet the criteria for gain recognition. See “NYSTRS Joint Venture Arrangements” below for further discussion.

       In March 2004, we sold our 20% ownership interest in an apartment community located in Houston comprising 186 apartment homes to our partner in the Gables Residential Apartment Portfolio JV (the "GRAP JV"). The net proceeds from this sale were $1.6 million, resulting in a gain of $0.4 million which was recognized in the first quarter of 2004.

In February 2004, we sold a parcel of land in San Antonio. The net proceeds from this sale were $1.7 million and resulted in no gain or loss.

Historical operating results and gains are included in continuing operations in the accompanying consolidated statements of operations (Note 6).

Community Acquisitions

In September 2004, we acquired an apartment community located in Atlanta comprising 324 units for approximately $42.5 million in cash.

In August 2004, we acquired an apartment community located in Dallas comprising 54 units for approximately $7.0 million in cash.

In July 2004, we acquired an apartment community located in Dallas comprising 55 apartment homes for approximately $16.9 million in cash.

In June 2004, we acquired an apartment community located in Dallas comprising 30 apartment homes for approximately $2.0 million in cash.

In June 2004, we acquired an apartment community located in Atlanta comprising 272 apartment homes for approximately $32.9 million in cash.

In December 2003, we acquired an apartment community for renovation located in South Florida comprising 36 apartment homes for approximately $4.1 million in cash. This community is adjacent to a land parcel that we acquired in January 2004 for the future development of an apartment community that we currently expect will comprise 261 apartment homes.

In July 2003, we acquired an apartment community located in Washington, D.C. comprising 211 apartment homes for approximately $54.6 million in cash, including approximately $1.6 million of closing costs.

       In May 2003, we acquired an apartment community located in Dallas comprising 334 apartment homes for approximately $33.5 million in cash.

       In February 2003, we acquired an apartment community located in Austin that is subject to a long-term ground lease and is comprised of 239 apartment homes and 7,366 square feet of retail space for approximately $30.2 million in cash.

In May 2004, we acquired Income Growth Property Management, Inc. ("IGPM"), a property management company based in San Diego, CA that managed 2,141 apartment homes in 17 multifamily apartment communities located in the San Diego and Inland Empire (San Bernardino/Riverside) areas at the time of acquisition. The purchase price of approximately $2.2 million, inclusive of related commissions, is structured to be paid in three installments based on retention of the management contracts in place upon acquisition. The purchase price may increase if certain additional management contracts are obtained. As of September 30, 2004, we had funded $1.5 million of the $2.2 million purchase price. The second and third installments are expected to be paid in the second quarters of 2005 and 2006, respectively.

In May 2003, we acquired property management contracts for 10,684 apartment homes in 32 multifamily apartment communities from Archstone Management Services Incorporated. The services rendered under acquired management contracts for 9,184 apartment homes transitioned to us over the ensuing three month period. The services to be rendered under the remaining management contracts for 1,500 apartment homes did not transition to us in 2003 for various reasons associated with the underlying assets, including sale prior to transition and location. The purchase price of approximately $5.4 million was paid in three installments and was based on the retention of the contracts acquired. The final installment of $1.1 million was determined and paid in the second quarter of 2004.

NYSTRS Joint Venture Arrangements

The GN Apartment Fund LLC was formed in June 2004. Our ownership interest in this venture is 50%. We serve as the managing member of the venture and have responsibility for all day-to-day operating matters and as property manager. In connection with the formation transactions, we contributed 100% of our ownership interest in two communities in South Florida comprising 411 apartment homes with an agreed upon fair value of $51.1 million, subject to $30.7 million of indebtedness, and $7.2 million in cash in return for a 50% ownership interest in the venture. Our venture partner, New York State Teachers' Retirement System ("NYSTRS"), as advised by JP Morgan Fleming Asset Management, contributed 98% of its ownership interest in two communities in Temecula, CA comprising 532 apartment homes with an agreed upon fair value of $66.1 million, subject to $31.4 million of indebtedness, and other net liabilities of $0.6 million, in return for its 50% ownership interest in the venture and $6.5 million in cash. Our initial investment in this joint venture is equal to the net book value of the assets and liabilities we contributed to the venture.

In October 2004, we entered into another joint venture arrangement with NYSTRS whereby we sold to NYSTRS a 49% member interest in our wholly-owned subsidiary, Henry Adams House Apartments LLC, which owns one community in Washington, D.C. comprising 211 apartment homes. We serve as the managing member of the venture and have responsibility for all day-to-day operating matters and as property manager. In connection with the formation transactions, the community owned by Henry Adams House Apartments LLC was deemed to have a fair value of $54.7 million, subject to $35.6 million of indebtedness. In return for its 49% member interest, NYSTRS paid us $9.7 million in cash, including $0.3 million related to its share of due diligence costs. This sale was contemplated as part of the original June 2004 formation transactions. This transaction did not meet the criteria for gain recognition.

In connection with these transactions, we have discussed making future investments with NYSTRS through the formation of additional joint ventures whereby the ventures, on a collective basis, intend to own, operate, acquire and develop up to $800 million of multifamily apartment communities located primarily in the San Diego, Inland Empire and Washington, D.C. markets. We have granted NYSTRS a three-year right-of-first-opportunity for investment opportunities in San Diego and Washington, D.C. that exceed $50 million and those that exceed $35 million in the Inland Empire.

On September 29, 2004, we entered into a $100 million secured debt arrangement which bears interest at a fixed rate of 4.37% and matures October 5, 2009. The net proceeds of approximately $99.1 million were used to pay down outstanding borrowings under our interim financing vehicles. There are no principal amortization payment requirements and the loan is secured by five wholly-owned assets.

Senior Unsecured Note Exchange

On September 27, 2002, we issued $40 million of senior unsecured notes in two series in a private placement to an institutional investor: $30 million at an interest rate of 5.86% maturing in September 2009 and $10 million at an interest rate of 6.10% maturing in September 2010. The net proceeds of $39.7 million, together with the net proceeds of $39.7 million from the concurrent issuance by the Trust of the 7.875% Series C Preferred Shares, were used to retire approximately $82.5 million of senior unsecured notes at an interest rate of 8.3% that were scheduled to mature in December 2002. We did not incur any prepayment costs in connection with the early debt retirement. Pursuant to a registration rights agreement with the purchaser of the $40 million of senior unsecured notes, we registered new notes with the Securities and Exchange Commission, and offered to exchange those new notes for the original notes. The new notes, also issued in two series, are identical in all material respects to the original 5.86% notes due 2009 and the 6.10% notes due 2010, except that the new notes are freely tradable by a holder. The exchange offer was consummated on September 5, 2003 and did not generate any cash proceeds for us.

5. RECENT ACCOUNTING PRONOUNCEMENTS

In January 2003, FIN 46, "Consolidation of Variable Interest Entities," was issued, and was subsequently replaced by FIN 46R in December 2003. In general, a variable interest entity ("VIE") is an entity that either (a) does not have equity investors with voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities. Previously, a company generally had only consolidated another entity in its financial statements if it controlled the entity through voting interests. FIN 46R changes that by requiring a VIE to be consolidated by a company if that company is subject to a majority of the risk of loss from the VIE's activities or is entitled to receive a majority of the entity's residual returns or both. The provisions of FIN 46R are effective for the first interim period ending after March 15, 2004. The adoption of FIN 46R did not result in the consolidation of any previously unconsolidated entities.

In May 2003, SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity,” was issued. SFAS No. 150 effective for us July 1, 2003) establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. Upon adoption of SFAS No. 150, we reclassified our mandatorily redeemable Series Z Preferred Units to the liability section of our balance sheet and, beginning July 1, 2003, have recorded distributions on the Series Z Preferred Units as interest expense in our statements of operations. The adoption of SFAS No. 150 did not have a significant impact on our financial statements.

In July 2003, EITF Abstracts, Topic No. D-42, "The Effect on the Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred Stock," was clarified. Topic No. D-42 requires that, in arriving at net earnings available to common shareholders in the calculation of earnings per share, the excess of (1) the fair value of the consideration transferred to the holders of preferred stock over (2) the carrying amount of the preferred stock in the balance sheet be subtracted from net earnings. In July 2003, it was clarified that the carrying amount of the preferred stock should be reduced by the issuance costs of the preferred stock, regardless of where in the stockholders' equity section those costs were initially classified upon issuance. Prior to this clarification, we had not considered issuance costs in determining the carrying amount of preferred stock. This clarification of Topic No. D-42 was required to be reflected retroactively in the third quarter of 2003, by restating the financial statements of prior periods in accordance with the provisions of paragraphs 27-30 of APB Opinion No. 20, “Accounting Changes.” We redeemed our Series B Preferred Units in November 2003. The redemption price of the Series B Preferred Units exceeded the related carrying value by the $1.3 million of issuance costs originally incurred and classified as a reduction to partners’ capital. In the fourth quarter of 2003, the $1.3 million excess was reflected as a reduction to earnings in arriving at net income available to common unitholders, in a manner similar to distributions on the preferred units, in accordance with this clarification. We will also apply the provisions of Topic No. D-42 to any future redemptions of preferred stock.

6. DISCONTINUED OPERATIONS

       We adopted SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” effective January 1, 2002. SFAS No. 144 requires, among other things, that the operating results of certain real estate assets which have been sold subsequent to January 1, 2002, or otherwise qualify as held for sale (as defined by SFAS No. 144), be reflected as discontinued operations in the consolidated statements of operations for all periods presented. Under SFAS No. 144, an asset is generally considered to qualify as held for sale when (1) management, having the authority to approve the action, commits to a plan to sell the asset, (2) an active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated and (3) the sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale, within one year. During the nine months ended September 30, 2004, we sold the following operating apartment communities: one during the first quarter, one during the second quarter and three during the third quarter. The three communities sold during the third quarter were classified as held for sale as of June 30, 2004. During 2003, we sold the following operating apartment communities: one during the first quarter, two during the third quarter and two during the fourth quarter. The operating results for these ten wholly-owned assets sold or classified as held for sale are reflected as discontinued operations in the accompanying statements of operations for all periods presented. Interest expense has been allocated to the results of the discontinued operations in accordance with EITF No. 87-24. We had no assets that qualified as held for sale as defined by SFAS No. 144 at September 30, 2004 or December 31, 2003.

       During the second quarter of 2004, we contributed our interest in two operating apartment communities, Gables Palma Vista and Gables Wellington, to the GN Apartment Fund LLC, a joint venture in which we have a 50% interest. Due to our continuing involvement with the operations of these two communities, the operating results of these assets are included in continuing operations for all periods presented.

       Condensed financial information of the results of operations for the real estate assets sold or held for sale reflected as discontinued operations is as follows:

7. EARNINGS PER UNIT

Basic earnings per unit are computed based on net income available to common unitholders and the weighted average number of common units outstanding. Diluted earnings per unit reflect the assumed issuance of common units under the Trust’s share option and incentive plan. The numerator and denominator used for both basic and diluted earnings per unit computations are as follows:

8. SEGMENT REPORTING

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our senior management group.

We own, operate and develop multifamily apartment communities in major markets located in Texas, Georgia, Florida, Washington, D.C., San Diego/Inland Empire and Tennessee. Such apartment communities generate rental revenue and other income through the leasing of apartment homes to a diverse base of residents. The operating performance of each of our communities is affected by the supply and demand dynamics within the immediate submarket or neighborhood of the major market that each community is located in. 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, our apartment communities have been aggregated into one reportable segment. This segment comprised 94% and 92% of our total revenues for the three months ended September 30, 2004 and 2003, respectively, and 94% and 93% of our total revenues for the nine months ended September 30, 2004 and 2003, respectively.

The primary financial measure for our reportable business segment is net operating income (NOI), which represents total property revenues less property operating and maintenance expenses. Property operating and maintenance expenses represent direct property operating and maintenance expenses as reflected in our accompanying statements of operations and exclude certain expenses included in the determination of net income such as property management and other indirect operating expenses, hurricane damage costs, interest expense and depreciation and amortization expense. These items are excluded from NOI in order to provide results that are more closely related to a property’s results of operations. NOI is also used by industry analysts and investors to measure operating performance of our apartment communities. Current year NOI is compared to prior year NOI and current year budgeted NOI as a measure of financial performance. The NOI yield or return on total capitalized costs is an additional measure of financial performance.

NOI from our wholly-owned apartment communities included in continuing operations, and a reconciliation thereof to income from continuing operations before equity in income of joint ventures and gain on sale (this caption in the accompanying statements of operations is the most directly comparable GAAP measure to NOI) is as follows:

        All other measurements for our reportable segment are disclosed in our consolidated financial statements.

        We also provide management, development and construction, corporate apartment home and brokerage services to third parties and unconsolidated joint ventures. These operations, on an individual and aggregate basis, do not meet the quantitative thresholds for segment reporting set forth in SFAS No. 131.

9. STOCK OPTIONS

       Beginning January 1, 2003, we adopted the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” as amended by SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure,” for stock-based employee compensation. Under the prospective method of adoption selected by us, the recognition provisions of SFAS No. 123 apply to all new employee option awards granted by the Trust after December 31, 2002. Prior option awards will continue to be accounted for under APB Opinion No. 25, “Accounting for Stock Issued to Employees,” under which no compensation cost has been recognized since all options have been granted with an exercise price equal to the fair value of the Trust’s common shares on the date of grant. Had compensation cost on all outstanding and unvested option awards been determined consistent with SFAS No. 123, our net income available to common unitholders and earnings per unit would have been reduced to the following pro forma amounts:

10. COMMITMENTS AND CONTINGENCIES

Development and Construction Commitments

We currently have eight communities under development that are expected to comprise 2,382 apartment homes upon completion. The estimated costs to complete the development of these assets total $137 million at September 30, 2004, including $4 million of costs pertaining to the single-family lot development adjacent to our Gables Montecito development community. These costs are expected to be initially funded by $28 million in construction loan proceeds and $109 million in borrowings under our credit facilities. We also have an indirect 20% ownership interest in one development community that is expected to comprise 76 apartment homes upon completion. As of September 30, 2004, we had fulfilled our funding commitment related to this community. The remaining $2 million of the costs to complete this community are expected to be funded by construction loan proceeds.

At September 30, 2004, we owned four parcels of land on which we intend to develop four communities that we currently expect will comprise 779 apartment homes upon completion. We also had rights to acquire additional parcels of land, either through options or long-term conditional contracts, on which we believe we could develop 11 communities that we currently expect would comprise an estimated 2,449 apartment homes upon completion. Any future development is subject to obtaining permits and other governmental approvals, as well as our ongoing business review, and may not be undertaken or completed.

       We have letter of credit and performance obligations of approximately $8.7 million related to our wholly-owned development and construction activities. As the related development and construction activities are completed, such obligations will be reduced accordingly.

       We are currently serving as general contractor for the construction and/or renovation of four apartment communities for third parties and an unconsolidated joint venture under "cost plus a fee" contracts with guaranteed maximum prices on the costs of construction of approximately $39 million in aggregate. The construction of these assets was 61% complete in aggregate at September 30, 2004.  Under these contracts, we are obligated to fund any construction cost overruns that are not recovered through a change order. In addition, we are entitled to a share of the savings generated under these contracts, if any, in the form of an incentive fee.  Because our clients are obligated to fund the costs that are incurred on their behalf pursuant to the related contract, we net the reimbursement of these costs against the billings for such costs. Development and construction fees are recognized when earned using the percentage of completion method. During the three months ended September 30, 2004 and 2003, we recognized $0.4 million and $1.0 million, respectively, in development and construction fees under related contracts with gross billings of $8.6 million and $8.6 million, respectively. During the nine months ended September 30, 2004 and 2003, we recognized $1.3 million and $2.0 million, respectively, in development and construction fees under related contracts with gross billings of $27.5 million and $28.0 million, respectively. Such development and construction fees are included in ancillary services revenues in the accompanying statements of operations.

Operating Leases

       We are party to two long-term ground leases for two apartment communities in Austin with initial terms expiring in 2044 and 2065. We have paid the ground lease rent in full for these leases through the initial term. The prepaid lease payments, net of accumulated amortization, are included in other assets, net in the accompanying balance sheets. We are party to long-term ground leases for an apartment community in Atlanta and an apartment community in Austin with initial terms expiring in 2075 and 2069, respectively. The payments under the Atlanta lease and the Austin lease are made on a monthly and quarterly basis, respectively. We are also party to operating leases for office space with various terms. Rent incurred under these operating leases was $568 and $522 for the three months ended September 30, 2004 and 2003, respectively, and was $1,662 and $1,566 for the nine months ended September 30, 2004 and 2003, respectively. Future minimum lease payments under these operating leases at September 30, 2004 are as follows:

Joint Venture Indebtedness and Related Recourse Guarantee Obligations

       The apartment community owned and operated by the Arbors of Harbortown JV, in which we have a 25% ownership interest, is secured by a $16.4 million tax-exempt bond obligation which bears interest at a low-floater rate. The credit enhancement for the bond obligation is provided by our venture partner and expires in May 2006. The maturity date of the underlying bond issue is April 2013.   None of the bond indebtedness is recourse to us.

       The apartment community owned by the GRAP JV, in which we have a 20% ownership interest, is secured by a $28.0 million permanent loan that bears interest at a fixed rate of 4.2% and matures in November 2008. None of this indebtedness is recourse to us.

       Two of the four communities owned by the Gables Residential Apartment Portfolio JV Two (the “GRAP JV Two”), in which we have a 20% ownership interest, are secured by construction loans with committed fundings of $21.8 million. The loans have initial maturity dates of October 2004 and June 2005 and have two extension options that, if exercised, would result in final maturity dates of April 2007 and June 2007, respectively. As of September 30, 2004, there was an aggregate of $20.4 million of indebtedness outstanding under these construction loans which currently bear interest at spreads over LIBOR of 1.60% and 1.70%. We have a limited payment guaranty on these two loans, pursuant to which we are obligated to pay to the lender a stipulated percentage of all amounts of principal, interest and any other indebtedness becoming due and payable on the loans that is not paid by the borrower, subject to a maximum guaranteed amount of $7.1 million. At September 30, 2004, the portion of the $20.4 million of outstanding principal that is recourse to us is $6.1 million. There are no principal amortization requirements through the initial maturity dates. The inability of the venture to pay any principal or interest under these loans when due would require us to perform under this guaranty obligation. To the extent we are required to make a payment to the lender under the guaranty agreement, our venture partner would be obligated to pay us its share of that payment based on its ownership interest percentage in the venture. We have not recorded a liability on our accompanying consolidated balance sheets in connection with this recourse obligation that was entered into prior to January 1, 2003.

      The remaining two communities owned by the GRAP JV Two are secured by permanent loans totaling $39.5 million which mature in November 2008 and bear interest at fixed rates of 4.25% and 4.30%. None of the indebtedness associated with these two permanent loans is recourse to us.

       The four apartment communities owned and operated by the GN Apartment Fund LLC, in which we have a 50% ownership interest, are secured by permanent loans totaling $62.1 million. Two of the loans totaling $31.4 million mature in July 2009 and bear interest at a fixed rate of 6.07%. The other two loans totaling $30.7 million mature in July 2011 and bear interest at a fixed rate of 4.12%. None of this indebtedness is recourse to us.

IGPM Acquisition

In May 2004, we acquired IGPM, a property management company that managed 2,141 apartment homes in 17 multifamily apartment communities at the time of acquisition. The purchase price of approximately $2.2 million, inclusive of related commissions, is structured to be paid in three installments based on retention of the management contracts in place upon acquisition. The purchase price may increase if certain additional management contracts are obtained. As of September 30, 2004, we had funded $1.5 million of the $2.2 million purchase price. The second and third installments are expected to be paid in the second quarters of 2005 and 2006, respectively.

Contingencies

The entities comprising Gables Realty Limited Partnership are subject to various legal proceedings and claims that arise in the ordinary course of business. We believe that these matters are generally covered by insurance. While the resolution of these matters cannot be predicted with certainty, we believe that the final outcome of such matters will not have a material adverse effect on our financial statements.

In October 2004, we sold 49% of our ownership interest in an apartment community located in Washington, D.C. comprising 211 apartment homes in connection with the formation of a joint venture with NYSTRS (Note 4).

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Amounts in Thousands, Except Property and Per Unit Data)                                                                                                  ..

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 8, 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 ongoing 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 exceeds 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 on a same store basis since 2002 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. During the first half of 2004, we raised rents in a number of our markets based on expectations of improving economic fundamentals. We expected an initial decrease in occupancy from raising rents that would not be immediately offset by the increased rent levels. During the second quarter of 2004, economic occupancy decreased below our targeted threshold. As a result, in the third quarter of 2004, we lowered rents in order to increase economic occupancy back to acceptable levels given current economic fundamentals in our markets. We expect that operating fundamentals for our business will improve 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 during the remainder of 2004.

On a same store basis, we expect (1) total property revenues in 2004 to decline slightly from 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.

Forward-Looking Statements

This report contains forward-looking statements within the meaning of the federal securities laws. Actual results or developments could differ materially from those projected in such statements as a result of the risk factors set forth in the relevant paragraphs of “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our accompanying consolidated financial statements and notes thereto.

Secondary Common Share Offerings

Since its initial public offering in January 1994, the Trust has issued a total of 17,331 common shares in nine offerings, generating $426.8 million in net proceeds which were generally used (1) to reduce outstanding indebtedness under our interim financing vehicles utilized to fund our development and acquisition activities and (2) for general working capital purposes, including funding of future development and acquisition activities. The most recent offering, involving the issuance of 2,500 common shares that generated $79.0 million in net proceeds, closed on August 26, 2003.

        On June 18, 1998, we issued 180 shares of 5.0% Series Z Cumulative Redeemable Preferred Shares with a liquidation preference of $25.00 per share in connection with the acquisition of a parcel of land for future development. The Series Z Preferred Shares, which are subject to mandatory redemption on June 18, 2018, may be redeemed at the Trust’s option at any time for $25.00 per share plus accrued and unpaid dividends. Dividends on the Series Z Preferred Shares are cumulative from the issuance date and the first dividend payment date is June 18, 2008. Thereafter, dividends will be paid annually in arrears. The Series Z Preferred Shares are not subject to any sinking fund or convertible into any other securities of the Trust.

Issuances of Common Operating Partnership Units

       Since the IPO, we have issued a total of 4,487 common units in connection with the 1998 acquisition of the real estate assets and operations of Trammell Crow Residential South Florida, the acquisition of other operating apartment communities and the acquisition of parcels of land for future development. The most recent issuance of common units on June 17, 2004 was related to the acquisition of a parcel of land for the future development of an apartment community expected to comprise 416 apartment homes upon completion. The purchase price of $12.3 million was financed in part through the issuance of 66 common units.

Issuance of Preferred Operating Partnership Units

       On November 12, 1998, we issued 2,000 of our 8.625% Series B Preferred Units to an institutional investor. The net proceeds from this issuance of $48.7 million were used to reduce outstanding indebtedness under our interim financing vehicles. On November 17, 2003, the Operating Partnership redeemed each of the 2,000 outstanding Series B Preferred Units at $25.00 per unit plus accrued and unpaid distributions. The redemption price of the Series B Preferred Units exceeded the related carrying value by the $1.3 million of issuance costs that were originally incurred and classified as a reduction to partners’ capital. In the fourth quarter of 2003, the $1.3 million excess was reflected as a reduction to earnings in arriving at net income available to common unitholders in accordance with the July 2003 clarification of EITF Abstracts, Topic No. D-42, "The Effect on the Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred Stock." See Note 5 to the accompanying consolidated financial statements.

Portfolio and Other Financing Activity

Community Dispositions Subject to Discontinued Operations Reporting

       In July 2004, we sold three apartment communities located in South Florida comprising 836 apartment homes. Two of such communities were encumbered by $28.0 million of tax-exempt variable-rate bonds that were enhanced by letters of credit with an expiration date of April 2008. The net proceeds from such sale were $69.5 million and were used to repay the $28.0 million bond indebtedness and to pay down outstanding borrowings under our interim financing vehicles. In connection with the sale transaction, we incurred approximately $0.4 million of debt extinguishment costs, including $0.2 million of credit enhancement prepayment costs and $0.2 million relating to the write-off of unamortized deferred financing costs. This amount is reflected in the accompanying consolidated statements of operations as “debt extinguishment costs associated with the sale of real estate assets.” Such costs are excluded from the gain on sale of real estate assets because the debt was not part of the disposal group. The gain from the sale of these communities, exclusive of the debt extinguishment costs, was $23.1 million and was recognized in the third quarter of 2004.

       In May 2004, we sold an apartment community located in Atlanta comprising 603 apartment homes. The community was encumbered by $10.5 million of tax-exempt fixed-rate bonds that had a scheduled maturity date of January 2025. The net proceeds from the sale of $25.6 million were used to defease the $10.5 million bond indebtedness and to pay down outstanding borrowings under our interim financing vehicles. In connection with the sale transaction, we incurred $1.0 million of debt extinguishment costs, including $0.6 million of defeasance costs and $0.4 million relating to the write-off of unamortized deferred financing costs. This amount is reflected in the accompanying consolidated statements of operations as “debt extinguishment costs associated with the sale of real estate assets.” Such costs are excluded from the gain on sale of real estate assets because the debt was not part of the disposal group. The gain from the sale of this community, exclusive of the debt extinguishment costs, was $14.2 million and was recognized in the second quarter of 2004.

        In March 2004, we sold an apartment community located in Orlando comprising 231 apartment homes. The net proceeds from this sale were $27.0 million and were used to pay down outstanding borrowings under our interim financing vehicles. In connection with the sale transaction, we were relieved of a $2.0 million note payable obligation. The gain from the sale of this community was $2.4 million and was recognized in the first quarter of 2004.

       During 2003, we sold four apartment communities located in Houston comprising 1,373 apartment homes and an apartment community located in Dallas comprising 300 apartment homes. The net proceeds from these sales were $112.1 million and were used to pay down outstanding borrowings under our interim financing vehicles. The aggregate gain from the sale of these five communities was $37.7 million. One of these sales occurred during the first quarter of 2003, resulting in a $5.0 million gain which was recognized in the first quarter of 2003. Two of these sales occurred during the third quarter of 2003, resulting in a $12.4 million gain which was recognized in the third quarter of 2003. The other sales occurred during the fourth quarter of 2003.

Historical operating results, gains and debt extinguishment costs associated with the sale of real estate assets are reflected as discontinued operations in the accompanying consolidated statements of operations. See Note 6 to the accompanying consolidated financial statements for further discussion.

Community and Land Dispositions Not Subject to Discontinued Operations Reporting

In September 2004, we acquired and sold a 1.5 acre parcel of land in Arlington, Virginia. The net proceeds from the sale were $26.7 million and resulted in a $11.9 million gain, net of an applicable income tax provision of $0.9 million, which was recognized in the third quarter of 2004.

In August 2004, we sold our 8.3% ownership interest in the CMS Tennessee Multifamily JV, which owns three apartment communities located in Tennessee comprising 1,118 apartment homes. The net proceeds from this sale were $1.1 million, resulting in a gain of $1.7 million which was recognized in the third quarter of 2004.

In June 2004, we sold a 50% interest in two apartment communities located in South Florida comprising 411 apartment homes in connection with the formation of a new joint venture, GN Apartment Fund LLC. This transaction did not meet the criteria for gain recognition. See “NYSTRS Joint Venture Arrangements” below for further discussion.

In March 2004, we sold our 20% ownership interest in an apartment community located in Houston comprising 186 apartment homes to our partner in the Gables Residential Apartment Portfolio JV (the "GRAP JV"). The net proceeds from this sale were $1.6 million, resulting in a gain of $0.4 million which was recognized in the first quarter of 2004.

In February 2004, we sold a parcel of land in San Antonio. The net proceeds from this sale were $1.7 million and resulted in no gain or loss.

Historical operating results and gains are included in continuing operations in the accompanying consolidated statements of operations. See Note 6 to the accompanying consolidated financial statements for further discussion.

Community Acquisitions

In September 2004, we acquired an apartment community located in Atlanta comprising 324 units for approximately $42.5 million in cash.

In August 2004, we acquired an apartment community located in Dallas comprising 54 units for approximately $7.0 million in cash.

In July 2004, we acquired an apartment community located in Dallas comprising 55 apartment homes for approximately $16.9 million in cash.

In June 2004, we acquired an apartment community located in Dallas comprising 30 apartment homes for approximately $2.0 million in cash.

In June 2004, we acquired an apartment community located in Atlanta comprising 272 apartment homes for approximately $32.9 million in cash.

In May 2003, we acquired an apartment community located in Dallas comprising 334 apartment homes for approximately $33.5 million in cash.

In February 2003, we acquired an apartment community located in Austin that is subject to a long-term ground lease and is comprised of 239 apartment homes and 7,366 square feet of retail space for approximately $30.2 million in cash.

Other Acquisitions

In May 2004, we acquired Income Growth Property Management, Inc. ("IGPM"), a property management company based in San Diego, CA that managed 2,141 apartment homes in 17 multifamily apartment communities located in the San Diego and Inland Empire (San Bernardino/Riverside) areas at the time of acquisition. The purchase price of approximately $2.2 million, inclusive of related commissions, is structured to be paid in three installments based on retention of the management contracts in place upon acquisition. The purchase price may increase if certain additional management contracts are obtained. As of September 30, 2004, we had funded $1.5 million of the $2.2 million purchase price. The second and third installments are expected to be paid in the second quarters of 2005 and 2006, respectively.

In May 2003, we acquired property management contracts for 10,684 apartment homes in 32 multifamily apartment communities from Archstone Management Services Incorporated (“Archstone Management Business”). The services rendered under acquired management contracts for 9,184 apartment homes transitioned to us over the ensuing three month period. The services to be rendered under the remaining management contracts for 1,500 apartment homes did not transition to us in 2003 for various reasons associated with the underlying assets, including sale prior to transition and location. The purchase price of approximately $5.4 million was paid in three installments and was based on the retention of the contracts acquired. The final installment of $1.1 million was determined and paid in the second quarter of 2004.

NYSTRS Joint Venture Arrangements

The GN Apartment Fund LLC was formed in June 2004. Our ownership interest in this venture is 50%. We serve as the managing member of the venture and have responsibility for all day-to-day operating matters and as property manager. In connection with the formation transactions, we contributed 100% of our ownership interest in two communities in South Florida comprising 411 apartment homes with an agreed upon fair value of $51.1 million, subject to $30.7 million of indebtedness, and $7.2 million in cash in return for a 50% ownership interest in the venture. Our venture partner, New York State Teachers' Retirement System ("NYSTRS"), as advised by JP Morgan Fleming Asset Management, contributed 98% of its ownership interest in two communities in Temecula, CA comprising 532 apartment homes with an agreed upon fair value of $66.1 million, subject to $31.4 million of indebtedness, and other net liabilities of $0.6 million, in return for its 50% ownership interest in the venture and $6.5 million in cash. Our initial investment in this joint venture is equal to the net book value of the assets and liabilities we contributed to the venture.

Critical Accounting Policies and Recent Accounting Pronouncements

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and a summary of our significant accounting policies is included in Notes 4 and 6 to the consolidated financial statements included in our Form 10-K for the year ended December 31, 2003. Note 5 to the accompanying consolidated financial statements includes a summary of recent accounting pronouncements and their actual or expected impact on our consolidated financial statements. Our preparation of the financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting period. Our actual results may differ from these estimates. As an owner, operator and developer of apartment communities, our critical accounting policies relate to revenue recognition, cost capitalization and asset impairment evaluation.

Revenue Recognition

Rental: We lease our residential properties under operating leases with terms generally equal to one year or less. In the second quarter of 2004, we changed our revenue recognition policy for our communities under lease-up whereby we began recognizing revenue on a straight-line basis for these communities. This did not have a significant impact on our financial statements. Rental income for the rest of our communities is recognized when earned, which materially approximates revenue recognition on a straight-line basis.

        Under the terms of residential leases at applicable communities, our residents are obligated to reimburse us for certain utility usage, principally water and electricity, where we are the primary obligor to the public utility entity. These utility reimbursements from residents are reflected as other property revenues in the accompanying consolidated statements of operations.

      Property management: We provide property management services to third parties and unconsolidated joint ventures. Property management fees are recognized when earned.

       Ancillary services: We provide development and construction, corporate rental housing and brokerage services to third parties and unconsolidated joint ventures. Construction services are typically provided under "cost plus a fee" contracts. Because our clients are obligated to fund the costs that are incurred on their behalf pursuant to the related contract, we net the reimbursement of these costs against the billings for such costs. Development and construction fees are recognized when earned using the percentage of completion method. During the three months ended September 30, 2004 and 2003, we recognized $0.4 million and $1.0 million, respectively, in development and construction fees under related contracts with gross billings of $8.6 million and $8.6 million, respectively. During the nine months ended September 30, 2004 and 2003, we recognized $1.3 million and $2.0 million, respectively, in development and construction fees under related contracts with gross billings of $27.5 million and $28.0 million, respectively. Corporate rental housing revenues and brokerage commissions are recognized when earned.

       Gains on sales of real estate assets: Gains on sales of real estate assets are recognized pursuant to the provisions of SFAS No. 66, "Accounting for Sales of Real Estate." The specific timing of the recognition of the sale and the related gain is measured against the various criteria in SFAS No. 66 related to the terms of the transactions and any continuing involvement associated with the assets sold. To the extent the sales criteria are not met, we defer gain recognition until the sales criteria are met.

Cost Capitalization

As a vertically integrated real estate company, we have in-house investment professionals involved in the development, construction and acquisition of apartment communities. Direct internal costs associated with development and construction activities for wholly-owned assets are included in the capitalized development cost of such assets. Direct internal costs associated with development and construction activities for third parties and unconsolidated joint ventures are reflected in ancillary services expense as the related services are being rendered. As required by GAAP, we expense all internal costs associated with the acquisition of operating apartment communities to general and administrative expense in the period such costs are incurred.

Our real estate development pursuits are subject to obtaining 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. We do not always move forward with development of our real estate pursuits, and therefore, we regularly evaluate the viability of real estate pursuits and the recoverability of capitalized pursuit costs. Based on this review, we expense any costs that are deemed unrealizable at that time to general and administrative expense.

During the development and construction of a new apartment community, we capitalize related interest costs, as well as other carrying costs such as property taxes and insurance. We begin to expense these items as the construction of the community becomes substantially complete and the residential apartment homes become available for initial occupancy. Accordingly, we gradually reduce the amounts we capitalize as construction is being completed.

        Expenditures in excess of $1 for purchases of a new asset with a useful life in excess of one year and for replacements and repairs that extend the useful life of the asset are capitalized and depreciated over their useful lives. Recurring value retention capital expenditures are typically incurred every year during the life of an apartment community and include such expenditures as carpet, flooring and appliances. Non-recurring capital expenditures are costs that are generally incurred in connection with a major project impacting an entire community, such as roof replacement, parking lot resurfacing, exterior painting and siding replacement. Value-enhancing capital expenditures are costs for which an incremental value is expected to be achieved from increasing the NOI potential for a community or recharacterizing the quality of the income stream with an anticipated reduction in potential sales cap rate for items such as replacement of wood siding with a masonry-based hardi-board product, amenity upgrades and additions, installation of security gates and additions of covered parking. Recurring value retention and non-recurring and/or value-enhancing capital expenditures do not include costs incurred in connection with a major renovation of an apartment community. Repairs and maintenance, such as landscaping maintenance, interior painting and cleaning and supplies used in such activities, are expensed as incurred.

Depreciation and Asset Impairment Evaluation

        Under GAAP, real estate assets are stated at the lower of depreciated cost or fair value, if deemed impaired. Depreciation is computed on a straight-line basis over the estimated useful lives of 20 to 40 years for buildings and improvements and 5 years for furniture, fixtures and equipment. As required by GAAP, we periodically evaluate our real estate assets to determine if there has been any impairment in their carrying value and record impairment losses if there are indicators of impairment and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. No such impairment losses have been recognized to date.

Purchase Price Allocation for Apartment Community Acquisitions

        In connection with the acquisition of an apartment community, we perform a valuation and allocation to each asset and liability acquired in such transaction, based on their estimated fair values at the date of acquisition. The valuation of assets acquired subsequent to July 1, 2001, the effective date of SFAS No. 141, "Business Combinations," includes both tangible assets and intangible assets. Tangible asset values, consisting of land, buildings and improvements, and furniture, fixtures and equipment, are reflected in real estate assets and depreciated over their estimated useful lives. Intangible asset values, consisting of at-market, in-place leases and resident relationships, are reflected in other assets and amortized over the average remaining lease term of the acquired resident relationships.

Discontinued Operations

     We adopted SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” effective January 1, 2002. SFAS No. 144 requires, among other things, that the operating results of certain real estate assets which have been sold subsequent to January 1, 2002, or otherwise qualify as held for sale (as defined by SFAS No. 144), be reflected as discontinued operations in the consolidated statements of operations for all periods presented. Under SFAS No. 144, an asset is generally considered to qualify as held for sale when (1) management, having the authority to approve the action, commits to a plan to sell the asset, (2) an active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated and (3) the sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale, within one year. During the nine months ended September 30, 2004, we sold the following operating apartment communities: one during the first quarter, one during the second quarter and three during the third quarter. The three communities sold during the third quarter were classified as held for sale as of June 30, 2004. During 2003, we sold the following operating apartment communities: one during the first quarter, two during the third quarter and two during the fourth quarter. The operating results for these ten wholly-owned assets sold or classified as held for sale are reflected as discontinued operations in the accompanying statements of operations for all periods presented. Interest expense has been allocated to the results of the discontinued operations in accordance with EITF No. 87-24. We had no assets that qualified as held for sale as defined by SFAS No. 144 at September 30, 2004 or December 31, 2003.

       During the second quarter of 2004, we contributed our interest in two operating apartment communities, Gables Palma Vista and Gables Wellington, to the GN Apartment Fund LLC, a joint venture in which we have a 50% interest. Due to our continuing involvement with the operations of these two communities, the operating results of these assets are included in continuing operations
for all periods presented.

Results of Operations

Comparison of operating results for the three months ended September 30, 2004 (the “2004 Period”) to the three months ended September 30, 2003 (the “2003 Period”)

       Our net income is generated primarily from the operation of our apartment communities and the disposition of assets that no longer meet our investment criteria. For purposes of evaluating comparative operating performance, we categorize our operating communities based on the period each community reaches a stabilized occupancy and expense level. A community is considered to have achieved stabilized occupancy on the earlier to occur of (1) attainment of 93% physical occupancy or (2) one year after completion of construction. The combined operating performance for all of our wholly-owned apartment communities that are included in continuing operations for the 2004 Period and the 2003 Period is summarized as follows:

(a) Communities that were owned and fully stabilized throughout both the 2004 Period and the 2003 Period ("same-store").

(b) Communities that were under development/lease-up, in renovation or not fully operational, acquired, or had not reached a stabilized operating expense level subsequent to July 1, 2004, as applicable. Includes the results of Belmar, Gables Augusta, Gables Beach Park, Gables Druid Hills, Gables Floresta, Gables Grandview, Gables Highland Park, Gables Lindbergh, Gables Normandy, Gables Parkwood, Gables Rock Springs, Gables State Thomas Ravello and Gables Woodley Park.

(c) Communities that were sold subsequent to July 1, 2003. Includes the results of Gables Palma Vista and Gables Wellington which we contributed to the GN Apartment Fund LLC in the 2004 Period.

(d) Represents direct property operating and maintenance expenses as reflected in the accompanying consolidated statements of operations and excludes certain expenses included in the determination of net income such as property management and other indirect operating expenses, hurricane damage costs, interest expense and depreciation and amortization expense.

(e) Calculated as total property revenues less property operating and maintenance expenses (d). See Note 8, Segment Reporting, to the accompanying financial statements for further discussion of our use of NOI as the primary financial measure of performance for our apartment communities. In addition, NOI from this reportable segment is reconciled to the most directly comparable GAAP measure in Note 8.

Total property revenues increased $4,023, or 7.5%, from $53,532 to $57,555 due to an increase in the number of apartment homes resulting from the development, lease-up and acquisition of additional communities, as well as an increase in the number of available apartment homes associated with renovation activities at several of our communities. These increases were partially offset by a 0.9% decrease in same-store performance as a result of supply and demand fundamentals in our markets along with a decrease resulting from the contribution of two communities to a new joint venture during the second quarter of 2004.

Property operating and maintenance expenses, as reflected in our consolidated statements of operations, increased $2,109, or 10.3%, from $20,524 to $22,633 due to an increase in the number of apartment homes resulting from the development, lease-up and acquisition of additional communities, as well as an increase in the number of available apartment homes associated with renovation activities at several of our communities. In addition, same-store expenses increased 3.1% due to increases in payroll, property tax, redecorating and maintenance expenses. Same-store expense comparisons in certain markets are skewed as a result of recording property tax true-up adjustments and appeal settlements in the 2003 Period. These increases were offset in part by a decrease in property operating and maintenance expenses resulting from the contribution of two communities to a new joint venture during the second quarter of 2004.

Additional information for the 58 same-store apartment communities presented in the preceding table is as follows:

	Number of	% of 2004	Physical Occupancy	Economic Occupancy	% Change from the 2003 Period to the 2004 Period in
Market	Apartment Homes	Period NOI	in the 2004 Period (a)	in the 2004 Period (a)	Economic Occupancy	Revenues		Expenses	NOI
South Florida	3,482	28.8%	95.4%	93.5%	0.3%		3.5%	-3.4%		7.8%
Houston	3,857	22.4%	93.5%	90.4%	-2.9%		-5.2%	3.1%		-10.5%
Atlanta	3,796	20.8%	94.4%	90.0%	-0.3%		-0.5%	1.0%		-1.5%
Austin	1,677	11.6%	90.0%	88.8%	-2.9%		-3.0%	12.2%		-12.2%
Dallas	1,300	10.9%	95.4%	93.0%	0.5%		-1.4%	8.0%		-6.7%
Washington, D.C.	82	1.8%	97.8%	97.1%	4.6%		3.0%	25.8%		-4.3%
Other	1,012	3.7%	91.1%	82.5%	-0.9%		0.1%	10.7%		-8.5%
Totals	15,206	100.0%	93.9%	90.9%	-0.9%		-0.9%	3.1%		-3.6%

(a) Physical occupancy represents gross potential rent less physical vacancy loss as a percentage of gross potential rent. Economic occupancy represents actual rental revenue collected divided by gross potential rent. Thus, economic occupancy differs from physical occupancy in that it takes into account concessions, non-revenue producing apartment homes and delinquencies.

Property management revenues decreased $84, or 3.6%, from $2,345 to $2,261 due primarily to a net decrease of approximately 3,000 apartment homes managed for third parties and unconsolidated joint ventures from an average of 29,000 in the 2003 Period to 26,000 in the 2004 Period. The net decrease in the number of apartment homes managed for third parties is due primarily to increased sales activity resulting from attractive apartment valuations, offset in part by the May 2004 acquisition of IGPM.

Ancillary services revenues decreased $652, or 30.5%, from $2,139 to $1,487 due primarily to a decrease of $662 in development and construction fee revenue due to volume declines in services rendered and the recognition of $403 in incentive fees in the 2003 Period resulting from our share of the savings generated under the GRAP JV construction contract. In addition, corporate rental housing revenue decreased $183 due to volume declines in services rendered. Such decreases were offset in part by an increase of $193 in brokerage services revenue due to volume increases in services rendered.

Interest income increased $66, or 2,200.0%, from $3 to $69 due to an increase in interest-bearing deposits, partially offset by a decrease in interest rates.

Other revenues decreased $280, or 66.0%, from $424 to $144 due primarily to income earned during the 2003 Period related to various non-routine items.

Real estate asset depreciation and amortization increased $1,683, or 13.9%, from $12,080 to $13,763 due primarily to the impact of the development and acquisition of additional communities and capital improvements made to existing operating communities, as well as a non-recurring adjustment recorded to depreciation in the 2004 Period of $280.

Property management expense for communities owned by us and third parties increased $825, or 21.9%, from $3,768 to $4,593 due primarily to the May 2004 acquisition of IGPM and increases in asset management, marketing and internal audit support costs. In addition, a non-recurring credit to property management expense of $250 was recorded in the 2003 Period. The average number of apartment homes under management decreased by approximately 4,500 from an average of 50,000 in the 2003 Period to an average of 45,500 in the 2004 Period.

        Ancillary services expense increased $64, or 6.5%, from $992 to $1,056, due to increases in development and construction expenses, brokerage and corporate rental housing expenses of $38, $13, and $13, respectively.

        Interest expense and credit enhancement fees increased $667, or 6.2%, from $10,687 to $11,354. An increase in outstanding indebtedness associated with the November 2003 redemption of our Series B Preferred Units and an increase in operating debt associated with the development and acquisition of additional communities was offset in part by a decrease in interest rates for variable-rate borrowings and a decrease in outstanding indebtedness associated with 2004 and 2003 sale activities and the August 2003 issuance of 2,500 common shares.

        Amortization of deferred financing costs decreased $14, or 2.8%, from $494 to $480 due primarily to certain loan costs becoming fully amortized in the 2004 Period, partially offset by increased financing costs associated with the modification of our unsecured revolving credit facility in December 2003.

        General and administrative expense increased $519, or 25.3%, from $2,052 to $2,571 due primarily to increases in professional fees, abandoned real estate pursuit costs, insurance costs, director fees and internal acquisition costs associated with the acquisition of operating apartment communities. The increase in professional fees relates primarily to compliance with Sarbanes-Oxley requirements.

        Corporate asset depreciation and amortization increased $268, or 46.5%, from $576 to $844 due primarily to an increase in amortization resulting from the management contracts acquired in connection with the May 2003 acquisition of the Archstone Management Business and the May 2004 acquisition of IGPM.

        Hurricane damage costs of $1,500 in the 2004 Period represent estimated costs to address landscaping and minor structural damage sustained at our Florida and Georgia apartment communities in connection with Hurricane Frances and Hurricane Jeanne.

        Equity in income of joint ventures increased $141, or 256.4%, from $55 to $196 due primarily to an increase related to the GN Apartment Fund LLC, which was formed in June 2004. These increases were offset in part by hurricane damage costs sustained at two apartment communities owned by the GN Apartment Fund LLC.

        Our share of the operating results for the apartment communities owned by the unconsolidated joint ventures in which we have an interest during the 2004 Period and the 2003 Period is as follows:

Gain on sale of joint venture interest of $1,726 in the 2004 Period relates to the sale of our 8.3% ownership interest in the CMS Tennessee Multifamily JV.

Gain on sale of land, net of applicable income tax provision, of $11,899 in the 2004 Period relates to the sale of a 1.5 acre parcel of land in Arlington, Virginia.

Income from discontinued operations increased $9,158, or 67.3%, from $13,616 to $22,774 due primarily to the $23,084 gain on sale of discontinued operations recognized in the 2004 Period, partially offset by the $12,368 gain on sale of discontinued operations recognized in the 2003 Period.

Distributions to preferred unitholders decreased $1,078, or 32.9%, from $3,272 to $2,194 due to the $50 million redemption of our Series B Preferred Units in November 2003.

Comparison of operating results for the nine months ended September 30, 2004 (the “2004 Period”) to the nine months ended September 30, 2003 (the “2003 Period”)

Our net income is generated primarily from the operation of our apartment communities and the disposition of assets that no longer meet our investment criteria. For purposes of evaluating comparative operating performance, we categorize our operating communities based on the period each community reaches a stabilized occupancy and expense level. A community is considered to have achieved stabilized occupancy on the earlier to occur of (1) attainment of 93% physical occupancy or (2) one year after completion of construction. The combined operating performance for all of our wholly-owned apartment communities that are included in continuing operations for the 2004 Period and the 2003 Period is summarized as follows:

(a) Communities that were owned and fully stabilized throughout both the 2004 Period and the 2003 Period ("same-store").

(b) Communities that were under development/lease-up, in renovation or not fully operational, acquired, or had not reached a stabilized operating expense level subsequent to January 1, 2004, as applicable. Includes the results of Belmar, Gables Augusta, Gables Beach Park, Gables Druid Hills, Gables Floresta, Gables Grandview, Gables Highland Park, Gables Lindbergh, Gables Normandy, Gables Parkwood, Gables Rock Springs, Gables State Thomas Ravello and Gables Woodley Park.

(c) Communities that were sold subsequent to January 1, 2003. Includes the results of Gables Palma Vista and Gables Wellington which we contributed to the GN Apartment Fund LLC in the 2004 Period.

Total property revenues increased $12,932 or 8.3%, from $155,763 to $168,695 due to an increase in the number of apartment homes resulting from the development, lease-up and acquisition of additional communities, as well as an increase in the number of available apartment homes associated with renovation activities at several of our communities. These increases were partially offset by a 2.4% decrease in same-store performance as a result of supply and demand fundamentals in our markets along with a decrease resulting from the contribution of two communities to a new joint venture during the 2004 Period.

Property operating and maintenance expenses, as reflected in our consolidated statements of operations, increased $6,954, or 12.1%, from $57,635 to $64,589 due to an increase in the number of apartment homes resulting from the development, lease-up and acquisition of additional communities, as well as an increase in the number of available apartment homes associated with renovation activities at several of our communities. In addition, same-store expenses increased 2.8% due to increases in payroll, redecorating, maintenance and property tax expenses partially offset by a decrease in landscaping expenses. Same-store expense comparisons in certain markets are skewed as a result of recording property tax true-up adjustments and appeal settlements in the 2004 Period and 2003 Period, as applicable.

Additional information for the 56 same-store apartment communities presented in the preceding table is as follows:

	Number of	% of 2004	Physical Occupancy	Economic Occupancy	% Change from the 2003 Period to the 2004 Period in
Market	Apartment Homes	Period NOI	in the 2004 Period (a)	in the 2004 Period (a)	Economic Occupancy	Revenues		Expenses	NOI
South Florida	3,310	27.4%	95.0%	93.0%	-0.1%		1.9%	1.6%		2.0%
Houston	3,857	23.6%	93.3%	91.1%	-2.7%		-5.3%	2.1%		-9.8%
Atlanta	3,614	20.2%	93.4%	89.5%	-1.9%		-3.2%	3.2%		-7.1%
Austin	1,677	12.3%	90.7%	89.6%	-1.8%		-3.8%	0.9%		-6.8%
Dallas	1,300	11.1%	95.1%	93.0%	0.1%		-2.3%	3.0%		-5.3%
Washington, D.C.	82	1.9%	96.2%	95.8%	1.0%		1.6%	15.6%		-3.2%
Other	1,012	3.5%	89.1%	81.0%	-4.4%		-3.2%	11.2%		-14.7%
Totals	14,852	100.0%	93.5%	90.8%	-1.5%		-2.4%	2.8%		-5.4%

Property management revenues increased $348, or 5.7%, from $6,145 to $6,493 due primarily to a net increase of approximately 400 apartment homes managed for third parties and unconsolidated joint ventures from an average of 25,500 in the 2003 Period to 25,900 in the 2004 Period. This net increase in the number of apartment homes managed is due primarily to the May 2003 acquisition of the Archstone Management Business and the May 2004 acquisition of IGPM. Such increases have been substantially offset by a decrease in the number of apartment homes managed for third parties due primarily to increased sales activity resulting from attractive apartment valuations.

Ancillary services revenues decreased $1,427, or 26.1%, from $5,465 to $4,038 due primarily to a decrease of $1,004 in corporate rental housing revenue due to volume declines in services rendered, as well as a decrease of $727 in development and construction fee revenue due to volume declines in services rendered and the recognition of $403 in incentive fees in the 2003 Period resulting from our share of the savings generated under the GRAP JV construction contract. These decreases were offset in part by an increase of $304 in brokerage services revenue due to volume increases in services rendered.

Interest income decreased $55, or 33.5%, from $164 to $109 due to a decrease in interest-bearing deposits and a decrease in interest rates.

Other revenues increased $459, or 84.4%, from $544 to $1,003 due primarily to income earned during the 2004 Period related to various non-routine items.

Real estate asset depreciation and amortization increased $5,596, or 16.1%, from $34,811 to $40,407 due primarily to the impact of the development and acquisition of additional communities and capital improvements made to existing operating communities, as well as a non-recurring adjustment recorded to depreciation in the 2004 Period of $987.

Property management expense for communities owned by us and third parties increased $2,094, or 19.2%, from $10,898 to $12,992 due primarily to the May 2003 acquisition of the Archstone Management Business, the May 2004 acquisition of IGPM and increases in asset management, marketing, internal audit and information technology support costs. In addition, a non-recurring credit to property management expense of $250 was recorded in the 2003 Period. The average number of apartment homes under management remained relatively constant at approximately 46,000 for both periods.

Ancillary services expense decreased $172, or 5.2%, from $3,302 to $3,130 due primarily to a decrease in corporate rental housing expenses of $139 and a decrease in development and construction expenses of $63, offset in part by an increase of $30 in brokerage services expenses.

Interest expense and credit enhancement fees increased $1,482, or 4.7%, from $31,419 to $32,901. An increase in outstanding indebtedness associated with the November 2003 redemption of our Series B Preferred Units and an increase in operating debt associated with the development and acquisition of additional communities was offset in part by a decrease in interest rates for variable-rate borrowings and a decrease in outstanding indebtedness associated with 2004 and 2003 sale activities, the May 2003 issuance of our Series D Preferred Shares and the August 2003 issuance of 2,500 common shares.

Amortization of deferred financing costs increased $101, or 7.2%, from $1,400 to $1,501 due primarily to increased financing costs associated with the modification of our unsecured revolving credit facility in February 2003 and December 2003, partially offset by certain loan costs becoming fully amortized in the 2004 Period.

General and administrative expense increased $1,639, or 24.6%, from $6,657 to $8,296 due primarily to increases in professional fees, abandoned real estate pursuit costs, travel expenses related to our national meeting in the 2004 Period, insurance costs, director fees and internal acquisition costs associated with the acquisition of operating apartment communities. The increase in professional fees relates primarily to compliance with Sarbanes-Oxley requirements.

Corporate asset depreciation and amortization increased $656, or 46.9%, from $1,400 to $2,056 due primarily to an increase in amortization resulting from the management contracts acquired in connection with the May 2003 acquisition of the Archstone Management Business and the May 2004 acquisition of IGPM.

Equity in income of joint ventures increased $490, or 196.0%, from $250 to $740 due primarily to the sale of our 20% ownership interest in an apartment community located in Houston to our joint venture partner, resulting in a $432 gain recognized in the 2004 Period.

Our share of the operating results for the apartment communities owned by the unconsolidated joint ventures in which we have an interest during the 2004 Period and the 2003 Period is as follows:

(a) Communities that were owned and fully stabilized throughout the 2004 Period.
(b) Communities in the development and/or lease-up phase that were not fully stabilized during all or any of the 2004 Period.
(c) Communities that were acquired subsequent to January 1, 2004. Includes the results of Gables Palma Vista, Gables Wellington, Gables Solana Ridge and Gables Tuscany Ridge from the June 9, 2004 GN Apartment Fund LLC formation date.
(d) Communities that were sold subsequent to January 1, 2004.

Gain on sale of joint venture interest of $1,726 in the 2004 Period relates to the sale of our 8.3% ownership interest in the CMS Tennessee Multifamily JV.

Gain on sale of land, net of applicable income tax provision, of $11,899 in the 2004 Period relates to the sale of a 1.5 acre parcel of land in Arlington, Virginia.

Income from discontinued operations increased $18,017, or 83.2%, from $21,649 to $39,666 due primarily to the $39,664 gain on sale of discontinued operations recognized in the 2004 Period, partially offset by the $17,410 gain on sale of discontinued operations recognized in the 2003 Period.

Distributions to preferred unitholders decreased $1,363, or 17.2%, from $7,944 to $6,581 due primarily to the $50 million redemption of our Series B Preferred Units in November 2003, offset in part by the $75 million issuance of the Series D Preferred Shares in May 2003.

Liquidity and Capital Resources

Cash Flows from Operating, Investing and Financing Activities

Net cash provided by operating activities increased from $69,427 for the nine months ended September 30, 2003 to $70,239 for the nine months ended September 30, 2004 due primarily to an increase in accounts payable and accrued expenses resulting from a change between periods in the timing of the payment of various expense items included in operating activities. This increase was offset by a decrease in net income (before gain on sale of assets and depreciation and amortization expense) due primarily to (1) the decline between periods in the operating performance of our same-store communities and ancillary services and (2) increases in property management expense and general and administrative expense.

Net cash used in investing activities decreased from $143,391 for the nine months ended September 30, 2003 to $86,254 for the nine months ended September 30, 2004 due primarily to increased sales activity as we take advantage of attractive apartment valuations for apartment communities by continuing to sell assets that are no longer consistent with our strategy. The proceeds from such sales activities are used in combination with proceeds from financing activities to satisfy our real estate development and acquisition funding requirements. Our cash investments in real estate assets increased modestly between periods.

Net cash provided by financing activities decreased from $75,199 for the nine months ended September 30, 2003 to $20,955 for the nine months ended September 30, 2004 due primarily to a decrease in cash needed from financing activities to fund investment activities given the increased sales activity previously noted.

The Trust has elected to be taxed as a REIT under the Internal Revenue 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. We utilize Gables Residential Services, a taxable REIT subsidiary, to provide management and other services to third parties that we, as a REIT, may be prohibited from providing. Taxable REIT subsidiaries are subject to federal, state and local income taxes.

Contractual Obligations

A summary of our contractual obligations at September 30, 2004 is as follows:

(a)    Outstanding indebtedness for each tax-exempt bond issue is reflected in the preceding table using the earlier of the related bond maturity date or the bond
         enhancement facility maturity date, as applicable.
(b)    Includes two ground leases relating to apartment communities owned and operated by us.
(c)    Amount represents the maximum amount contingently payable for the contracts in place at the acquisition date in accordance with the purchase agreement.
(d)    Includes cumulative distributions of $2,250 from the June 1998 issuance date that are payable in June 2008. Distributions from June 2008 to the June
        2018 mandatory redemption date are payable annually and thus are excluded from the preceding table.

We have various standing or renewable service contracts with vendors related to the operation of our communities. These contracts have terms generally equal to one year or less and provide for cancellation with insignificant or no penalties.

In addition to these contractual obligations, we currently have eight communities under development that are expected to comprise 2,382 apartment homes upon completion. The estimated costs to complete the development of these assets total $137 million at September 30, 2004, including $4 million of costs pertaining to the single-family lot development adjacent to our Gables Montecito development community. These costs are expected to be initially funded by $28 million in construction loan proceeds and $109 million in borrowings under our credit facilities described below. We also have an indirect 20% interest in one development community that is expected to comprise 76 apartment homes upon completion. As of September 30, 2004, we had fulfilled our funding commitment related to this community. The remaining $2 million of the costs to complete this community are expected to be funded by construction loan proceeds.

At September 30, 2004, we owned four parcels of land on which we intend to develop four communities that we currently expect will comprise 779 apartment homes upon completion. We also had rights to acquire additional parcels of land, either through options or long-term conditional contracts, on which we believe we could develop 11 communities that we currently expect would comprise an estimated 2,449 apartment homes upon completion. Any future development is subject to obtaining permits and other governmental approvals, as well as our ongoing business review, and may not be undertaken or completed.

Additional information regarding our development activity is included in the “Development and Lease-up Communities” table below.

Our common and preferred distributions historically have been paid from cash provided by recurring real estate activities. We anticipate that such distributions will continue to be paid from cash provided by recurring real estate activities that include both operating activities and asset disposition activities when evaluated over a twelve-month period. This twelve-month evaluation period is relevant due to the timing of disposition activities and the payment of particular expense items that are accrued monthly but are paid on a less frequent basis, such as real estate taxes and interest on our senior unsecured notes.

We have met and expect to continue to meet our short-term liquidity requirements through net cash provided by recurring real estate activities. Our net cash from recurring real estate activities has been adequate, and we believe that it will continue to be adequate, to meet both operating requirements and payment of dividends in accordance with REIT requirements. Recurring value retention capital expenditures and non-recurring and/or value-enhancing capital expenditures, in addition to regularly scheduled principal amortization payments, are also expected to be funded from recurring real estate activities that include both operating and asset disposition activities. We anticipate that acquisition, construction, development and renovation activities as well as land purchases, will be initially funded primarily through borrowings under our credit facilities and construction loans described below.

We expect to meet our long-term liquidity requirements, including the balloon principal payments due at maturity of our notes payable and possible land and property acquisitions, through long-term secured and unsecured borrowings, the issuance of debt securities or equity securities, private equity investments in the form of joint ventures, or through the disposition of assets which, in our evaluation, may no longer meet our investment requirements.

We have an unsecured revolving credit facility with a committed capacity of $300 million provided by a syndicate of banks that has a maturity date of May 2005. This facility was modified in February 2003 and December 2003 to, among other things, increase the committed capacity under the facility from $225 million to $252 million and from $252 million to $300 million, respectively. Syndicated borrowings under this facility currently bear interest at our option of LIBOR plus 0.95% or prime minus 0.25%. Fees for letters of credit issued under this facility are equal to the spread over LIBOR for syndicated borrowings. In addition, we pay a facility fee currently equal to 0.20% of the $300 million committed capacity. The spread over LIBOR for syndicated borrowings and the facility fee may be adjusted up or down based on changes in our senior unsecured credit ratings and our leverage ratios. There are five stated pricing levels for (1) the spread over LIBOR for syndicated borrowings ranging from 0.70% to 1.25% and (2) the facility fee ranging from 0.15% to 0.30%. A competitive bid option is available for borrowings up to 50% of the $300 million committed capacity, or $150 million. This option allows participating banks to bid to provide us loans at a rate that is lower than the stated rate for syndicated borrowings. At September 30, 2004, we had outstanding under the facility (1) $65 million in borrowings outstanding under the competitive bid option at an average interest rate of 2.31%, (2) $45 million in syndicated borrowings at an interest rate of 2.77% and (3) $49 million of letters of credit, including $46 million of letters of credit enhancing four tax-exempt variable rate notes payable totaling $45 million. Thus, we had $141 million of availability under the facility at September 30, 2004. We expect to renew and/or renegotiate the facility prior to the May 2005 maturity date, however there can be no assurance that such renewal and/or renegotiation will occur.

We have a $37.5 million unsecured borrowing facility with a bank that has a maturity date of May 2005. The interest rate and maturity date related to each advance under this facility is agreed to by both parties prior to each advance. We had $10.5 million in borrowings outstanding under this facility at September 30, 2004 at an interest rate of 2.40%.

We have a $10 million unsecured revolving credit facility with a bank that has a maturity date of May 2005. Borrowings under this facility bear interest at the same scheduled interest rates for syndicated borrowings as the $300 million credit facility. We had $2.1 million in borrowings outstanding under this facility at September 30, 2004 at an interest rate of 2.67%.

At September 30, 2004, we have committed fundings under six construction-related financing vehicles for three wholly-owned development communities totaling $53.4 million from a bank. At September 30, 2004, we had drawn $25.1 million under these variable-rate financing vehicles and therefore have $28.3 million of remaining capacity. Borrowings under these vehicles bear interest at a weighted average rate of 3.63% at September 30, 2004. During the third quarter of 2004, we repaid two construction-related financing vehicles secured by one wholly-owned development community totaling $21.5 million.

Our secured and unsecured debt agreements generally contain representations, financial and other covenants and events of default typical for each specific type of facility or borrowing.

The indentures under which our publicly traded and other unsecured fixed-rate debt securities have been issued, and the terms of our $100 million secured debt arrangement, contain the following limitations on the incurrence of indebtedness: (1) a maximum leverage ratio of 60% of total assets; (2) a minimum debt service coverage ratio of 1.50:1; (3) a maximum secured debt ratio of 40% of total assets; and (4) a minimum amount of unencumbered assets of 150% of total unsecured debt. Our indentures also include other affirmative and restrictive covenants.

Our ability to borrow under our unsecured credit facilities and secured construction loans is subject to our compliance with a number of financial covenants, affirmative covenants and other restrictions on an ongoing basis. The principal financial covenants currently impacting our leverage are: (1) our total debt may not exceed 60.0% of our total assets; (2) our annualized interest coverage ratio may not be less than 2.0:1; (3) our annualized fixed charge coverage ratio may not be less than 1.75:1; (4) our total secured debt may not exceed 35% of our total assets, and the recourse portion of our secured debt may not exceed 10% of our total assets; (5) our unencumbered assets may not be less than 167% of our total unsecured debt; (6) our tangible net worth may not be less than $749.6 million; and (7) our floating rate debt may not exceed 30% of our total assets. Such financing vehicles also restrict the amount of capital we can invest in specific categories of assets, such as unimproved land, properties under construction, non-multifamily properties, debt or equity securities, and unconsolidated affiliates.

In addition, we have a covenant under our unsecured credit facilities and secured construction loans that restricts our ability to make distributions in excess of stated amounts, which in turn restricts the Trust’s ability to declare and pay dividends. The covenant currently provides that, during any twelve-month period, we may distribute up to the sum of (a) 100% of our consolidated income available for distribution, as defined in the agreement, and (b) for the period from and after July 1, 2004 through the agreement termination date, the aggregate sum of $5 million. This provision contains an exception to this limitation to allow us 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 our ability to make distributions sufficient for the Trust to pay dividends under its current dividend policy.

Our credit facilities, construction loans and indentures are cross-defaulted and also contain cross default provisions with other of our material indebtedness. We were in compliance with covenants and other restrictions included in our debt agreements as of September 30, 2004. The indentures and the $300 million credit facility agreement containing the financial covenants discussed above, as well as the other material terms of our indebtedness, including definitions of the many terms used in and the calculations required by financial covenants, have been filed with the Securities and Exchange Commission as exhibits to our periodic or other reports.

Our tax-exempt bonds contain customary covenants for this type of financing which require a specified percentage of the apartments in the bond-financed communities to be rented to individuals based upon income levels specified by U.S. government programs.

We do not have any off-balance sheet arrangements that we believe have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

We account for our joint venture arrangements using the equity method. Total indebtedness of our unconsolidated joint ventures is $166.4 million at September 30, 2004. We have a $7.1 million maximum limited payment guaranty on two joint venture construction loans with committed fundings aggregating $21.8 million. At September 30, 2004, there is $20.4 million of principal outstanding under these loans and the portion of this that is recourse to us is $6.1 million. We do not believe that we will have any funding obligations under this limited payment guaranty. The remaining $146.0 million of joint venture indebtedness is not recourse to us.

Inflation

Substantially all of the leases at our apartment communities are for a term of one year or less. In the event of significant inflation, this may enable us to realize increased rents upon renewal of existing leases or the beginning of new leases. Short-term leases generally minimize our risk from the adverse effects of inflation, although these leases generally permit residents to leave at the end of the lease term without penalty and therefore expose us to the effect of a decline in market rents. In a deflationary rent environment, as is currently being experienced in some of our markets, we are exposed to declining rents more quickly under these shorter term leases.

This report contains forward-looking statements within the meaning of the federal securities laws. The words "believe," "expect," "anticipate," "intend," "plan," "estimate," "assume" and other similar expressions which are predictions of or indicate future events and trends and which do not relate solely to historical matters identify forward-looking statements. These statements include, among other things, statements regarding our intent, belief or expectations with respect to the following:

You should not rely on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and may cause our actual results, performance or achievements to differ materially from anticipated future results, or the performance or achievements expressed or implied by such forward-looking statements. Factors that might cause such a difference include, but are not limited to:

While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

The projections and estimates contained in the table above 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 and estimated in such statements. Risks associated with our development, construction and lease-up activities, which could impact the forward-looking statements made, include: development 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.

(a) Interest Rate represents the weighted average interest rate incurred on our indebtedness, exclusive of deferred financing cost amortization
      and credit enhancement fees, as applicable.
(b) Total Rate represents the Interest Rate (a) plus credit enhancement fees, as applicable.
(c) Our credit facilities bear interest at various spreads over LIBOR.
(d) Interest associated with construction activities is capitalized as a cost of development and does not impact current earnings. The qualifying
      construction expenditures at September 30, 2004 for purposes of interest capitalization were $123,356.
(e) Excludes (i) $62,138 of indebtedness related to a joint venture in which we own a 50% interest, (ii) $16,350 of tax-exempt bonds related
      to a joint venture in which we own a 25% interest and (iii) $87,889 of indebtedness related to joint ventures in which we own a 20% interest.

SUPPLEMENTAL DISCUSSION - Funds From Operations

Funds from operations (“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 the National Association of Real Estate Investment Trusts (“NAREIT”). FFO, as defined by NAREIT, represents net income (loss) determined in accordance with 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.

       We present FFO with a supplemental adjustment to exclude debt extinguishment costs associated with the sale of real estate assets. These debt extinguishment costs are incurred when the sale of an asset encumbered by debt requires us to pay the extinguishment costs prior to the debt’s stated maturity and to write-off unamortized loan costs at the date of the extinguishment.
Such costs are excluded from the gain on sale of real estate assets reported in accordance with GAAP because the debt was not part of the disposal group. However, we view the debt extinguishment costs associated with the sale of real estate assets as an incremental cost of the sale transaction because we extinguished the debt in connection with the consummation of the sale transaction and we had no intent to extinguish the debt absent such transaction. We believe that this supplemental adjustment more appropriately reflects the results of our operations exclusive of the impact of our sale transactions.

A reconciliation of FFO available to common unitholders from net income available to common unitholders (the most directly comparable GAAP measure to FFO available to common unitholders) is as follows:

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our capital structure includes the use of fixed-rate and variable rate indebtedness. As such, we are exposed to the impact of changes in interest rates. We periodically seek input from third-party consultants regarding market interest rate and credit risk in order to evaluate our interest rate exposure. In some situations, we may utilize derivative financial instruments in the form of rate caps, rate swaps or rate locks to hedge interest rate exposure by modifying the interest rate characteristics of related balance sheet instruments and prospective financing transactions. We do not utilize such instruments for trading or speculative purposes. We did not have any derivative instruments in place at September 30, 2004 or December 31, 2003.

We typically refinance maturing debt instruments at then-existing market interest rates and terms, which may be more or less favorable than the interest rates and terms on the maturing debt.

Refer to our Annual Report on Form 10-K for the year ended December 31, 2003 for detailed disclosure about quantitative and qualitative disclosures about market risk. Quantitative and qualitative disclosures about market risk have not materially changed since December 31, 2003.

ITEM 4. CONTROLS AND PROCEDURES

We carried out an evaluation under the supervision and with the participation of senior management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness as of September 30, 2004 of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15 under the Securities Exchange Act 1934, as amended (the “Exchange Act”). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. We continue to review and document our disclosure controls and procedures, including our internal controls and procedures for financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.

There was no change in internal control over financial reporting that occurred in the third quarter of 2004 that has materially affected or is reasonably likely to materially affect our internal controls over financial reporting.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Part I	Financial Information	Page
Item 1:	Unaudited Financial Statements
	Consolidated Balance Sheets as of September 30, 2004 and December 31, 2003	3
	Consolidated Statements of Operations for the three and nine months ended September 30, 2004 and 2003	4
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2004 and 2003	5
	Notes to Consolidated Financial Statements	5
Item 2:	Management's Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4:	Controls and Procedures	41
Part II	Other Information
Item 1:	Legal Proceedings	42
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3:	Defaults Upon Senior Securities	42
Item 4:	Submission of Matters to a Vote of Security Holders	42
Item 5:	Other Information	42
Item 6:	Exhibits	42

	Signatures	43

GABLES REALTY LIMITED PARTNERSHIP CONSOLIDATED BALANCE SHEETS (Unaudited and Amounts in Thousands, Except Per Unit Data)

	September 30,			December 31, .
	2004 .			2003 .
ASSETS:
Real estate assets:
Land		$ 299,232			$ 283,015
Buildings and improvements		1,353,859			1,367,086
Furniture, fixtures and equipment		141,083			140,077
Construction in progress		176,085			146,041
Investment in joint ventures		30,591			11,456
Undeveloped land		37,538			15,822
Real estate assets before accumulated depreciation		2,038,388			1,963,497
Less: accumulated depreciation		(308,584	)		(297,464	)
Net real estate assets		1,729,804			1,666,033

Cash and cash equivalents		10,855			5,915
Restricted cash		3,603			6,116
Deferred financing costs, net		3,929			5,029
Other assets, net		41,370			41,983
Total assets		$ 1,789,561			$1,725,076

LIABILITIES AND PARTNERS’ CAPITAL:
Notes payable		$ 1,054,302			$1,003,100
Accrued interest payable		6,067			13,751
Preferred distributions payable		374			374
Real estate taxes payable		21,139			15,792
Accounts payable and accrued expenses – construction		10,619			12,549
Accounts payable and accrued expenses – operating		24,364			16,466
Security deposits		3,894			4,048
Series Z Preferred Units, at $25.00 liquidation preference, 180 units issued and outstanding, including accrued and unpaid distributions		5,914			5,746
Total liabilities		1,126,673			1,071,826

Limited partners’ common capital interest (4,243 and 4,353 common units, respectively), at cash redemption value		139,635			148,595

Commitments and contingencies

Partners’ capital:
General partner (335 and 331 common units, respectively)		6,781			6,675
Limited partner (28,948 and 28,449 common units, respectively)		401,472			382,980
Preferred partners (1,600 Series C-1 Preferred Units and 3,000 Series D Preferred Units), at $25.00 liquidation preference		115,000			115,000
Total partners’ capital		523,253			504,655

Total liabilities, partners' capital interest and partners’ capital		$ 1,789,561			$ 1,725,076
See notes to consolidated financial statements.

GABLES REALTY LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited and Amounts in Thousands, Except Per Unit Data)
	Nine Months Ended September 30,
		2004		2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$ 66,997		$ 42,458
Adjustments to reconcile net income to net cash provided by operating activities from continuing operations:
Income from discontinued operations		(39,666	)	(21,649	)
Depreciation and amortization		43,964		37,611
Equity in income of joint ventures		(740	)	( 250	)
Gain on sale of land, net of applicable income tax provision		(11,899	)	-
Gain on sale of joint venture interest		(1,726	)	-
Long-term compensation expense		1,411		1,288
Operating distributions received from joint ventures		1,061		1,122
Change in operating assets and liabilities:
Restricted cash		1,677		1,048
Other assets		589		1,990
Other liabilities, net		5,928		(2,771	)
Net cash provided by operating activities from continuing operations		67,596		60,847
Net cash provided by operating activities from discontinued operations		2,643		8,580
Net cash provided by operating activities		70,239		69,427
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition, development, construction and renovation of real estate assets		(217,071	)	(192,302	)
Recurring value retention capital expenditures		(7,429	)	( 8,085	)
Non-recurring and/or value-enhancing capital expenditures		(4,434	)	( 7,051	)
Restricted cash held in escrow, net				349
Net proceeds from sale of undeveloped land		28,368		-
Net proceeds from sale of discontinued operations		122,090		70,065
Investment in joint ventures		(7,879	)	( 1,050	)
Net proceeds from sale of joint venture real estate assets		1,580		-
Net proceeds from sale of joint venture interest		1,113		-
Other		(2,592	)	( 4,968	)
Net cash used in investing activities		(86,254	)	(143,391	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions from the Trust related to:
Net proceeds from the issuance of Series D Preferred Shares		-		72,419
Net proceeds from common share offering		-		78,968
Costs associated with exchange of Series C Preferred Shares		-		(100	)
Proceeds from the exercise of share options		5,313		6,147
Payments of deferred financing costs		(1,204	)	( 1,266	)
Notes payable proceeds		429,188		224,401
Notes payable repayments		(345,312	)	(241,192	)
Debt extinguishment costs associated with the sale of real estate assets		(837	)	-
Principal escrow payments released from (deposited into) escrow, net		836		( 393	)
Preferred distributions paid		(6,581	)	( 8,270	)
Common distributions paid ($1.8075 per unit)		(60,448	)	( 55,515	)
Net cash provided by (used it) financing activities		20,955		75,199
Net change in cash and cash equivalents		$ 4,940		$ 1,235
Cash and cash equivalents, beginning of period		5,915		6,281
Cash and cash equivalents, end of period		$ 10,855		$ 7,516
Supplemental disclosure of cash flow information:
Cash paid for interest		$ 46,457		$ 46,802
Interest capitalized		6,485		6,344
Cash paid for interest, net of amounts capitalized		$ 39,972		$ 40,458
See notes to consolidated financial statements.

	2004			2003				2004				2003

Total property revenues	$	57,555		$	53,532			$	168,695			$	155,763
Less: Property operating and maintenance expenses	(22,633)			(20,524)				(64,589)				(57,635)
Net operating income (NOI)	$	34,922		$		33,008		$		104,106.		$	98,128


Less other expenses:
Real estate asset depreciation and amortization	(13,763)			(12,080)				(40,407)				(34,811)
Property management (owned and third party)	(4,593)			(3,768)				(12,992)				(10,898)
Ancillary services	(1,056)			(992)				(3,130)				(3,302)
Interest expense and credit enhancement fees	(11,354)			(10,687)				(32,901)				(31,419)
Amortization of deferred financing costs	(480)			(494)				(1,501)				(1,400)
General and administrative	(2,571)			(2,052)				(8,296)				(6,657)
Corporate asset depreciation and amortization	(844)			(576)				(2,056)				(1,400)
Hurricane damage costs	(1,500)			-				(1,500)				-
Total other expenses	(36,161)			(30,649)				(102,783)				(89,887)


Add other revenues:
Property management revenues	2,261			2,345				6,493				6,145
Ancillary services revenues	1,487			2,139				4,038				5,465
Interest income	69			3				109				164
Other revenues	144			424				1,003				544
Total other revenues	3,961			4,911				11,643				12,318


Income from continuing operations before equity in income of joint ventures and gain on sale	$		2,722	$			7,270	$			12,966	$		20,559

2004	$ 570
2005	2,316
2006	2,258
2007	2,060
2008	1,707
2009 and thereafter	34,618
Total	$43,529

DELAWARE (State of Incorporation)		58-2077966 (I.R.S. Employer Identification No.)

	Three Months Ended September 30,			Nine Months Ended September 30,
		2004	2003	2004	2003
Basic and diluted income available to common unitholders (numerator):
Income from continuing operations (net of preferred distributions) – basic and diluted		$14,349	$ 4,053	$20,750	$12,865

Income from discontinued operations – basic and diluted		$22,774	$13,616	$39,666	$21,649

Net income available to common unitholders – basic and diluted		$37,123	$17,669	$60,416	$34,514


Common units (denominator):
Average common units outstanding – basic		33,525	31,525	33,421	30,752
Incremental units from assumed conversions of:
Stock options		73	128	94	83
Other		15	11	14	10
Average common units outstanding – diluted		33,613	31,664	33,529	30,845

	Number of 2004 Period Apt. Homes
				2004 Period		2003 Period	$ Change			% Change
Rental and other property revenues:
Same-store communities (a)		15,206	$42,154		$42,555		$ (401	)	-0.9%
Triple net master lease communities		728	1,862		1,850		12		0.6%
Communities stabilized in the 2004 Period, but not in the 2003 Period		1,759	5,835		5,524		311		5.6%
Communities not stabilized in the 2004 Period (b)		2,884	7,704		2,009		5,695		283.5%
Sold communities (c)		411	-		1,594		(1,594	)	-100.0%
Total property revenues		20,988	$57,555		$53,532		$4,023		7.5%

Property operating and maintenance expenses (d):
Same-store communities (a)			$17,144		$16,621		$ 523		3.1%
Triple net master lease communities			216		204		12		5.9%
Communities stabilized in the 2004 Period, but not in the 2003 Period			2,357		2,088		269		12.9%
Communities not stabilized in the 2004 Period (b)			2,916		1,003		1,913		190.7%
Sold communities (c)			-		608		(608	)	-100.0%
Total property operating and maintenance expenses			$22,633		$20,524		$2,109		10.3%

Property net operating income (NOI) (e):
Same-store communities (a)			$25,010		$25,934		$(924	)	-3.6%
Triple net master lease communities			1,646		1,646		-		0.0%
Communities stabilized in the 2004 Period, but not in the 2003 Period			3,478		3,436		42		1.2%
Communities not stabilized in the 2004 Period (b)			4,788		1,006		3,782		375.9%
Sold communities (c)			-		986		(986	)	-100.0%
Total property net operating income (NOI)			$34,922		$33,008		$1,914		5.8%

Total property NOI as a percentage of total property revenues			60.7%		61.7%		-		-1.0%

	2004 Period										Total 2003 Period
	Stabilized (a)		Development & Lease-up (b)		Acquisitions (c)		Sales (d)		Total
Our share of joint venture results:
Rental and other property revenues	$	2,627	$	-	$	-	$	110	$	2,737	$	1,207
Property operating and maintenance expenses (exclusive of items shown separately below)	(1,039)		-		-		(49)		(1,088)		(541)
Property net operating income (NOI)	$	1,588	$	-	$	-	$	61	$	1,649	$	666
Interest expense and credit enhancement fees	(608)		-		-		(48)		(656)		(214)
Amortization of deferred costs	(27)		-		-		(1)		(28)		(19)
Other	(16)		-		-		(4)		(20)		(10)
Hurricane damage costs	(61)		-		-		-		(61)		-
Funds from operations (FFO)	$	876	$	-	$	-	$	8	$	884	$	423
Gain on sale of operating real estate assets	-		-		-		-		-		-
Real estate asset depreciation	(653)		-		-		(35)		(688)		(368)
Equity in income of joint ventures	$	223	$	-	$	-	$	(27)	$	196	$	55

Number of operating communities	9	-	-	3	12	9

Number of apartment homes in operating communities	2,614	-	-	1,118	3,732	2,975
Average percent occupied during the period	94%	-	-	91%	93%	87%

Property net operating income (NOI) (e):
Same-store communities (a)	$	74,636	$	78,930	$	(4,294)	-5.4%
Triple net master lease communities	4,939		4,939		-		0.0%
Communities stabilized in the 2004 Period, but not in the 2003 Period	12,038		9,448		2,590		27.4%
Communities not stabilized in the 2004 Period (b)	10,806		1,763		9,043		512.9%
Sold communities (c)	1,687		3,048		(1,361)		-44.7%
Total property net operating income (NOI)	$	104,106	$	98,128	$	5,978	6.1%

Total property NOI as a percentage of total property revenues	61.7%		63.0%		-		-1.3%

	Payments Due by Year
	2004	2005	2006	2007	2008	2009 & Thereafter	Total

Regularly scheduled principal amortization payments	$ 359	$ 1,384	$ 1,280	$ 1,379	$ 972	$ 2,072	$ 7,446
Balloon principal payments due at maturity (a)	-	284,398	276,666	206,398	62,200	217,194	1,046,856
Total notes payable	$ 359	$285,782	$277,946	$207,777	$63,172	$219,266	$1,054,302


Operating leases (b)	570	2,316	2,258	2,060	1,707	34,618	43,529

Deferred purchase price of IGPM (c)	-	327	327	-	-	-	654

Manditorily redeemable Series Z Preferred Units (d)	-	-	-	-	2,250	4,500	6,750

Total	$ 929	$288,425	$280,531	$209,837	$67,129	$258,384	$1,105,235

						Percent at September 30, 2004 Complete Leased Occupied			Actual or Estimated Quarter of
Market	Community	No. of Apt. Homes		Total Budgeted Cost	Cost to Complete				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 III (b)		193	$ 19	$ 15	17%	--	--	1 Q 2004	1 Q 2005	4 Q 2005	4 Q 2005
Austin, TX	Gables Grandview		458	56	2	97%	59%	58%	1 Q 2003	4 Q 2003	4 Q 2004	4 Q 2005
Dallas, TX	Gables Uptown Place (c)		311	44	33	6%	--	--	2 Q 2004	4 Q 2005	3 Q 2006	4 Q 2006
Houston, TX	Gables Augusta (c)		312	34	1	97%	88%	73%	1 Q 2003	1 Q 2004	4 Q 2004	2 Q 2005
Houston, TX	Gables Upper Kirby (c)		144	21	14	15%	--	--	2 Q 2004	3 Q 2005	1 Q 2006	3 Q 2006
South FL	Gables Floresta		311	39	1	97%	74%	70%	1 Q 2003	4 Q 2003	4 Q 2004	2 Q 2005
South FL	Gables Montecito (d)		450	61	47	9%	--	--	2 Q 2004	4 Q 2005	1 Q 2007	2 Q 2007
Washington, D.C.	Gables Rothbury		203	25	20	5%	--	--	3 Q 2004	2 Q 2005	4 Q 2005	2 Q 2006
	Wholly-Owned Totals		2,382	$ 299	$ 133
Co-Investment Development/Lease-up Community:
Tampa, FL	Gables West Park Village III (e)	76		$ 10	$ 2	(f) 87%	--	--	4 Q 2003	--	4 Q 2004	-- .
	Co-Investment Totals	76		$ 10	$ 2
(a) Stabilized occupancy is defined as the earlier to occur of (i) 93% physical occupancy or (ii) one year after completion of construction. (b) This community represents the reconstruction of 56 apartment homes previously owned and operated by us into 193 apartment homes. (c) These communities are secured by construction loans with an aggregate committed capacity of $53 million, of which $25 million was outstanding at September 30, 2004. (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 disclosure above. At September 30, 2004, $9 million in costs have been incurred pertaining to the single family lots, and the estimated cost to complete is $4 million. Such costs are included in construction in progress in the accompanying consolidated balance sheet. (e) This community is owned by the GRAP JV Two, in which we hold an indirect 20% interest, and is expected to be sold to a condominium converter upon completion. (f) Construction loan proceeds are expected to fund all $2 million of the costs to complete at September 30, 2004.

		No. of Apt.		September 30, 2004			September 30, 2004 Market Rent Per
Community		Homes		Occupancy			Home	Square Foot

Atlanta, GA
Briarcliff Gables	104		92%			$1,042		$0.84
Buckhead Gables	162		94%			778		1.03
Gables Cityscape	182		98%		(a)	792		0.93
Gables Druid Hills	272		---		(b)	1,070		0.94
Gables Lindbergh	324		92%			1,236		1.22
Gables Metropolitan I (JV)	435		94%			1,217		1.09
Gables Metropolitan II (JV)	274		96%			1,270		1.14
Gables Mill	438		97%			768		0.83
Gables Montclair	183		97%			1,479		0.96
Gables Northcliff	82		96%			1,164		0.75
Gables Paces	80		99%			1,900		1.15
Gables Rock Springs I & II	365		96%			1,302		1.16
Gables Vinings	315		95%			947		0.89
Gables Walk	310		95%			973		0.82
Gables Wood Arbor	140		96%			632		0.69
Gables Wood Crossing	268		93%			685		0.71
Gables Wood Glen	380		91%			595		0.60
Gables Wood Knoll	312		93%			663		0.67
Roswell Gables I	384		95%			793		0.73
Roswell Gables II	284		95%			793		0.67
Spalding Gables	252		94%			836		0.84
Wildwood Gables	546		94%			863		0.76
Totals/Averages	6,092		95%			$ 951		$0.88

South FL
Belmar	36		---		(c)	$1,466		$0.96
Cotton Bay	444		98%			806		0.82
Gables Boca Place	180		97%			1,086		1.11
Gables Boynton Beach I	252		95%			972		0.81
Gables Boynton Beach II	296		96%			966		0.80
Gables Kings Colony	480		99%			928		1.02
Gables Mizner on the Green	246		97%			1,587		1.25
Gables Palma Vista (JV)	189		96%			1,647		1.14
Gables San Michele I	249		94%			1,567		1.12
Gables San Michele II	343		94%			1,557		1.12
Gables San Remo	180		96%			1,319		0.97
Gables Town Colony	172		95%			1,016		1.18
Gables Town Place	312		96%			901		1.08
Gables Wellington (JV)	222		96%			1,088		0.94
Mahogany Bay	328		96%			855		0.85
Totals/Averages	3,929		96%			$1,126		$1.00

Portfolio Indebtedness Summary at September 30, 2004

Type of Indebtedness	Balance	Interest Rate (a)	Total Rate (b)	Years to Maturity

Fixed Rate:
Unsecured fixed-rate notes	$498,486	6.59%	6.59%	2.14
Secured fixed-rate notes	216,827	6.23%	6.23%	4.59
Total fixed-rate indebtedness	$715,313	6.48%	6.48%	3.00

Variable Rate:
Secured tax-exempt variable-rate loans	$142,955	1.70%	2.69%	2.15
Unsecured variable-rate credit facilities (c)	122,609	2.49%	2.49%	0.62
Unsecured tax-exempt variable-rate loans	48,365	1.77%	2.87%	1.75
Secured variable-rate construction loans	25,060	3.63%	3.63%	2.00

Total variable-rate indebtedness	$338,989	2.14%	2.71%	1.53

Total portfolio debt (c), (d), (e)	$1,054,302	5.08%	5.27%	2.45

	No. of Apt.		September 30, 2004		September 30, 2004 Market Rent Per
Community	Homes		Occupancy		Home	Square Foot

Houston, TX
Gables Austin Colony	237	91%		$941		$0.96
Gables Cityscape	252	95%		807		0.95
Gables Citywalk/Waterford Sq.	317	98%		835		1.03
Gables Edgewater	292	95%		878		1.00
Gables Lions Head	277	96%		770		0.91
Gables Metropolitan Uptown	318	97%		849		0.93
Gables of First Colony	324	94%		1,002		1.01
Gables Piney Point	246	94%		862		0.93
Gables Pin Oak Green	581	94%		845		0.83
Gables Pin Oak Park	474	95%		858		0.84
Gables Rivercrest I	140	95%		780		0.93
Gables Rivercrest II	140	95%		761		0.90
Gables Windmill Landing	259	93%		714		0.82
Totals/Averages	3,857	95%		$847		$0.91

Dallas, TX
Gables Ellis Street	245	93%		$1,520		$1.26
Gables Highland Park	55	89%		3,121		1.60
Gables Knoxbridge	334	98%		1,055		1.24
Gables Mirabella	126	96%		1,149		1.26
Gables Normandy	54	87%		1,141		1.03
Gables Parkwood	30	83%		822		1.31
Gables Pearl Street	108	98%		1,313		1.21
Gables Spring Park	188	91%		909		0.86
Gables State Thomas Ravello	290	96%		1,584		1.39
Gables State Thomas Townhomes	177	97%		1,815		1.21
Gables Turtle Creek CityPlace	232	97%		1,422		1.35
Gables Turtle Creek Dominion	150	95%		1,219		1.21
Gables Valley Ranch	319	97%		877		0.86
Totals/Averages	2,308	95%		$1,306		$1.20

Austin, TX
Gables at the Terrace	308	94%		$1,105		$1.16
Gables Barton Creek	160	94%		1,397		1.20
Gables Bluffstone	256	94%		990		1.01
Gables Central Park	273	87%		1,402		1.49

Three months ended		Nine months ended
September 30,		September 30,
2004	2003	2004	2003


Net income available to common unitholders	$ 37,123	$ 17,669	$ 60,416	$ 34,514

Real estate asset depreciation and amortization:
Wholly-owned real estate assets - continuing operations	13,763	12,080	40,407	34,811
Wholly-owned real estate assets - discontinued operations	-	1,244	1,260	4,341
Joint venture real estate assets	688	368	1,574	1,057
Total	14,451	13,692	43,241	40,209

Gain on sale of operating real estate assets:
Wholly-owned real estate assets - discontinued operations	(23,084)	(12,368)	(39,664)	(17,410)
Joint venture real estate assets	-	-	(432)	-
Joint venture interest	(1,726)	-	(1,726)	-
Total	(24,810)	(12,368)	(41,822)	(17,410)

FFO available to common unitholders – basic and diluted	$ 26,764	$ 18,993	$ 61,835	$ 57,313

Debt extinguishment costs associated with the sale of real estate assets	395	-	1,381	-

FFO available to common unitholders, after a supplemental
adjustment to exclude debt extinguishment costs associated
with the sale of real estate assets – basic and diluted	$ 27,159	$ 18,993	$ 63,216	$ 57,313

Average common units outstanding - basic	33,525	31,525	33,421	30,752
Incremental units from assumed conversions of:
Stock options	73	128	94	83
Other	15	11	14	10
Average common units outstanding - diluted	33,613	31,664	33,529	30,845


Item	1:			Legal Proceedings
				None


Item	2:			Unregistered Sales of Equity Securities and Use of Proceeds
				As of September 30, 2004, we had 79 holders of common units (one general partner and 78 limited partners). 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 July 1, 2004 and ending on September 30, 2004, in connection with issuances of common shares by the Trust during that time period, the Operating Partnership issued an aggregate of 2,709 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	3:			Defaults Upon Senior Securities
				None


Item	4:			Submission of Matters to a Vote of Security Holders
				None


Item	5:			Other Information
				On August 31, 2004, the lenders under the Fifth Amended and Restated Revolving Credit Facility agreed to waive certain financial covenants impacting our leverage. Pursuant to the waiver letter (1) our total debt may not exceed 60% of our total assets, (2) our unencumbered assets may not be less than 167% of our total unsecured debt and (3) during any twelve-month period, we may only distribute up to the sum of (a) 100% of our consolidated income available for distribution, as defined in the agreement, and (b) for the period from and after July 1, 2004 through the agreement termination date, the aggregate sum of $5 million.


Item	6:			Exhibits
		*	10.1	Waiver letter dated August 31, 2004 related to the Fifth Amended and Restated Revolving Credit Facility dated February 20, 2003, as amended by the First Amendment thereto dated December 12, 2003 (committed capacity level of $300,000,000)
		*	31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer)
		*	31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer)
		**	32.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
				_____________
				* Filed herewith
				** Furnished herewith

		GABLES REALTY LIMITED PARTNERSHIP
		By: Gables GP, Inc. Its: General Partner
Date:	November 9, 2004	/s/ Marvin R. Banks, Jr.
Date:	November 9, 2004	Marvin R. Banks, Jr. Senior Vice President and Chief Financial Officer (Authorized Officer of the Registrant and Principal Financial Officer) /s/ Dawn H. Severt Dawn H. Severt Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)