UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the fiscal year ended December 31, 2001 OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from __________________ to
_______________
Commission File Number 0-20707
COLONIAL REALTY LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware 63-1098468
(State of organization) (I.R.S. employer
identification no.)
2101 Sixth Avenue North 35203
Suite 750 (Zip Code)
Birmingham, Alabama
(Address of principal
executive offices)
Registrant's telephone number, including area code: (205) 250-8700 Securities
registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Not applicable Not applicable
Securities registered pursuant to Section 12(g) of the Act: Class A Units of
Limited Partnership Interest
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. YES _X_ NO ___
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |_|
Documents Incorporated by Reference
None.
PART I
Item 1. Business.
As used herein, the terms "CRLP" and "Operating Partnership" include
Colonial Realty Limited Partnership, a Delaware limited partnership, and its
subsidiaries and other affiliates (including, Colonial Properties Services
Limited Partnership and Colonial VRS L.L.C.) or, as the context may require,
Colonial Realty Limited Partnership only. As used herein, the term "Company"
includes Colonial Properties Trust, an Alabama real estate investment trust, and
one or more of its subsidiaries and other affiliates (including CRLP, Colonial
Properties Services Limited Partnership and Colonial Properties Services, Inc.)
or, as the context may require, Colonial Properties Trust only. As used herein,
the terms "we", "us", and "our" refer to Colonial Realty Limited Partnership.
This annual report on Form 10-K contains certain "forward-looking
statements", including but not limited to anticipated timetables for
acquisitions, developments and expansions, expected economic growth in
geographic markets where CRLP owns or expects to own properties, and plans for
continuing CRLP's diversified strategy. These statements involve risks and
uncertainties that may cause actual results to be materially different from
those anticipated. Prospective investors should specifically consider, in
connection with these forward-looking statements, the various risk factors
identified herein and in CRLP's filings with the SEC, which could cause actual
results to differ, including downturns in local or national economies,
competitive factors, the availability of suitable properties for acquisition at
favorable prices, and other risks inherent in the real estate business.
CRLP is the Operating Partnership of the Company, which is one of the
largest owners, developers and operators of multifamily, retail and office
properties in the Sunbelt region of the United States. The Company is a
fully-integrated real estate company, whose activities include ownership of a
diversified portfolio of 108 properties as of December 31, 2001, located in
Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina,
Tennessee, Texas, and Virginia, development of new properties, acquisition of
existing properties, build-to-suit development, and the provision of management,
leasing, and brokerage services for commercial real estate. As of December 31,
2001, CRLP owned 49 multifamily apartment communities containing a total of
16,256 apartment units (the "Multifamily Properties"), 17 office properties
containing a total of approximately 3.5 million square feet of office space (the
"Office Properties"), 42 retail properties containing a total of approximately
14.9 million square feet of retail space (the "Retail Properties"), and certain
parcels of land adjacent to or near certain of these properties (the "Land").
(The Multifamily Properties, the Office Properties, the Retail Properties, and
the Land are referred to collectively as the "Properties"). As of December 31,
2001, the Multifamily Properties, the Office Properties, and the Retail
Properties that had achieved stabilized occupancy were 93%, 92% and 90% leased,
respectively.
CRLP's executive offices are located at 2101 Sixth Avenue North, Suite
750, Birmingham, Alabama, 35203 and its telephone number is (205) 250-8700. CRLP
was formed in Delaware on August 6, 1993.
Formation of the Company and the Operating Partnership
The Company and the Operating Partnership were formed to succeed to
substantially all of the interests of Colonial Properties, Inc., an Alabama
corporation ("Colonial"), its affiliates and certain other entities in a
diversified portfolio of multifamily, office, and retail properties located in
Alabama, Florida, and Georgia and to the development, acquisition, management,
leasing, and brokerage businesses of Colonial.
On September 29, 1993, (i) the Company consummated an initial public
offering (the "IPO") of 8,480,000 of its common shares of beneficial interest,
$.01 par value per share ("Common Shares"), (ii) the Operating Partnership
assumed ownership of 36 Properties (or interests therein) held by Thomas H.
Lowder, James K. Lowder, Robert E. Lowder, and their mother, Catherine Lowder
(the "Lowder family"), and third-party partners of the Lowder family, and the
operating businesses of Colonial, (iii) the Company transferred to the Operating
Partnership, in exchange for 8,480,000 units of limited partnership interest in
the Operating Partnership ("OP Units"), (iv) the Operating Partnership repaid
approximately $150.2 million of indebtedness and prepayment penalties associated
therewith secured by certain of the Properties, and (v) the Operating
Partnership established a $35.0 million line of credit with SouthTrust Bank,
which has since been increased to $300.0 million, to fund development activities
and property acquisitions and for general corporate purposes (collectively, the
"Formation Transactions").
Recent Developments
Since the Company's IPO, CRLP has acquired new properties representing
a total investment of over $1.3 billion.
Multifamily Properties--During 2001, CRLP completed development of 440
apartment units in two multifamily communities and acquired land on which it
intends to develop additional multifamily communities. The aggregate investment
in the multifamily developments during 2001 was $39.0 million. As of December
31, 2001, CRLP has 544 apartment units in 3 multifamily communities under
development or redevelopment. Management anticipates that the 3 multifamily
projects will be completed during 2002. Management estimates that it will invest
an additional $3.3 million to complete these multifamily communities.
Office Properties--During 2001, CRLP increased its office portfolio by
318,161 square feet with the development of two office buildings. In addition,
CRLP began development on two office properties in Orlando, Florida. The
aggregate investment in the office developments during 2001 was $57.5 million.
Management estimates that it will invest an additional $33.0 million to complete
these properties.
Retail Properties--During 2001, CRLP completed the redevelopment of two
retail properties, and began the development of one community shopping center in
Birmingham, Alabama. The aggregate investment in the retail developments during
2001 was $61.0 million. Management anticipates that it will invest an additional
$11.4 million to complete the retail development.
Restructuring of Colonial Properties Services, Inc.--In August 2001,
the Company acquired all of the voting and non-voting common stock of Colonial
Properties Services, Inc. ("CPSI") for $4,000 that it did not already own. As a
result, CPSI is now a wholly-owned subsidiary of CRLP.
Third Party Development--In September 2001, CRLP entered into an
agreement pursuant to which CRLP will provide development and other consulting
services to a third-party developer of a $30 million multifamily property
located in Raleigh, North Carolina. CRLP will act as the leasing and management
agent for the property. In addition, CRLP has guaranteed a $3.3 million working
capital loan obtained by three principals of the developer. This loan matures on
August 2, 2002 and may be extended until August 2, 2004 if specified conditions
are met. CRLP will receive a fee in return for this guaranty. CRLP has the right
of first refusal to purchase this property should the developer elect to sell
it.
Orlando Fashion Square Joint Venture--In October 1998, CRLP sold a 50%
interest in our Orlando Fashion Square retail property located in Orlando,
Florida to a third party and subsequently entered into a joint venture agreement
with the third party relating to the management of the property. The joint
venture agreement gives the third party the right, which became effective
December 28, 2001, to convert its 50% interest in the property into the
Company's common shares if specified terms and conditions are met. The
conversion value of the interest would be determined at the time of conversion
in accordance with procedures set forth in the joint venture agreement, and
would be net of the third party's pro rata share of any indebtedness secured by
the property. As of December 31, 2001, the property was subject to mortgage
indebtedness in the amount of $65 million. Based on the terms and conditions of
the conversion feature, CRLP continues to believe that it is unlikely that the
third party will convert its interest into the Company's common shares.
Sale of Common Shares--On February 25, 2002, the Company sold an
aggregate of 570,381 common shares for an aggregate net proceed of approximately
$17.7 million in two separate transactions. The Company sold 260,710 of these
common shares at the purchase price of $33.17 per share, before deducting
underwriting fees, to Salomon Smith Barney Inc. who deposited these common
shares with the Trustee of the Equity Focus Trusts REIT Portfolio Series,
2002-A. In addition, the Company sold the remaining 299,670 common shares to
Cohen & Steers Quality Income Realty Fund, Inc. at the purchase price of $33.17
per share, before deducting placement agent fees paid to Merrill Lynch who acted
as the Company's placement agent.
The following is a summary of CRLP's acquisition, disposition, and
development activity in 2001.
Acquisition and Disposition Activity
During 2001, CRLP disposed of a total of nine properties for an
aggregate sale price of $83.5 million and certain land and outparcels for $5.3
million.
Between August 2001 and September 2001, CRLP sold four Multifamily
Properties located in Macon, Georgia, Mobile, Alabama, Auburn, Alabama, and
Savannah, Georgia that contained 701 units in the aggregate for a total sale
price of approximately $21.2 million.
In September 2001, CRLP sold two Retail Properties located in Florida,
representing 304,168 square feet for a total sale price of $19.3 million.
In October 2001, CRLP sold one Multifamily Property located in
Bradenton, Florida that contained 376 units for a total sale price of $23.7
million.
In November 2001, CRLP sold one Office Property located in Birmingham,
Alabama that contained 34,357 square feet for a total sales price of $3.8
million.
In December 2001, CRLP sold one Multifamily Property located in Macon,
Georgia that contained 296 units for a sales price of approximately $15.5
million, $11.6 million of which was paid in the form of a note receivable
payable in three months and the remainder of which was paid in cash.
There were no property acquisitions in 2001.
Development Activity
During 2001, CRLP completed development of 440 new apartment units in
two multifamily communities and acquired land on which it intends to develop
additional multifamily communities during 2002 and 2003. The aggregate cost of
this multifamily development activity during 2001 was $39.0 million. As of
December 31, 2001, CRLP had 544 apartment units in three multifamily communities
under development or redevelopment. Management anticipates that the three
multifamily projects will be completed during 2002. Management expects to invest
an additional $3.3 million over this period to complete these multifamily
projects.
During 2001, CRLP completed development of two office buildings,
representing 318,161 square feet, and began development of two office properties
in Orlando, Florida. The aggregate investment in the office developments during
2001 was $57.5 million. Management estimates that it will invest an additional
$33.0 million to complete these projects.
During 2001, CRLP completed the redevelopment of two retail properties,
and began the development of one community shopping center in Alabama. The
aggregate investment in the retail developments during 2001 was $61.0 million.
Management anticipates that it will invest an additional $11.4 million to
complete the retail developments.
The table below provides an overview of CRLP's development and
redevelopment activity during 2001:
Summary of 2001
Development Activity
Completion or Type of Units (M) Cost or
Anticipated Name of Property GLA (R/O) Anticipated
Completion Date Property (1) Location (2) (3) Cost (4)
- ----------------- ------------------------------------------ ------------------ --------- -------- --------
Developments:
1st Qtr 02 CG at TownPark - Sarasota Sarasota, FL M 272 $ 21,188
1st Qtr 02 CV at Walton Way (redevelopment) Augusta, Ga M 256 3,500
2nd Qtr 02 CG at TownPark - Lake Mary Orlando, FL M 456 38,133
4th Qtr 01 Colonial Center at Mansell Overlook 500 Atlanta, GA O 163,248 19,114
4th Qtr 01 Colonial Center at TownPark 100 Orlando, FL O 154,913 17,974
3rd Qtr 02 Colonial Center at TownPark 200 Orlando, FL O 155,000 21,181
3rd Qtr 02 Colonial Center at TownPark 600 Orlando, FL O 200,000 27,876
1st Qtr 01 Northdale Court (redevelopment) Tampa, FL R 192,726 6,158
4th Qtr 01 Colonial Brookwood Village (redevelopment) Birmingham, AL R 687,078 46,680
3rd Qtr 02 Colonial Promenade Hoover Birmingham, AL R 167,041 18,705
4th Qtr 02 Parkway City Mall (5) Huntsville, AL R 631,000 35,616
--------
Total $ 256,125
========
(1) In the listing of Multifamily Property names, CG has been used as an
abbreviation for Colonial Grand and CV has been used as an
abbreviation for Colonial Village.
(2) M refers to Multifamily Properties, O refers to Office Properties, and
R refers to Retail Properties.
(3) Units (in this table only) refers to multifamily apartment units and
GLA refers to gross leasable area of office and retail space.
(4) Amounts in thousands.
(5) Property is owned through a joint venture, in which the Company is a
50% partner. Cost reflected is 50% of total cost of the project.
Continuing Multifamily Development and Redevelopment Activity
Colonial Village at Walton Way--CRLP continued the redevelopment of
Colonial Village at Walton Way, a 256-unit multifamily community located in
Augusta, Georgia. Project redevelopment costs are expected to total $3.5 million
and will be funded through advances on CRLP's line of credit. CRLP expects to
complete the redevelopment in the first quarter of 2002.
Colonial Grand at TownPark - Sarasota--During the second quarter of
2000, CRLP began the development of Colonial Grand at TownPark - Sarasota, a
272-unit multifamily community located in Sarasota, Florida. The new apartments
will include numerous luxuries, including high-speed Internet access, fitness
center, a swimming pool, and a resident business center. Project development
costs, including land acquisition costs are expected to total $21.2 million and
will be funded through advances on CRLP's line of credit. CRLP expects to
complete the development during the first quarter of 2002.
Colonial Grand at TownPark - Lake Mary--During the third quarter of
2000, CRLP began the development of Colonial Grand at TownPark - Lake Mary, a
456-unit multifamily community located in Orlando, Florida. The new apartments
will include numerous luxuries, including high-speed Internet access, fitness
center, a swimming pool, and a resident business center. Project development
costs, including land acquisition costs are expected to total $38.1 million and
will be funded through advances on CRLP's line of credit. CRLP expects to
complete the development during the first quarter of 2002.
Completed Office Property Development Activity
Colonial Center at Mansell Overlook 500--During the fourth quarter of
2001, CRLP completed the development of Colonial Center at Mansell Overlook 500,
a 163,248 square foot Class A office building located in Atlanta, Georgia. The
building includes the most advanced technology systems available in the market,
including high-speed internet access, fiber optic network infrastructure, and
state-of-the art, customer controlled energy management system. Project
development costs, including land acquisitions totaled $19.1 million and were
funded through advances on CRLP's line of credit.
Colonial Center TownPark 100--During the fourth quarter of 2001, CRLP
completed the development of Colonial Center TownPark 100, a 154,913 square
foot Class A office building in Orlando, Florida, which is part of a mixed-use
development integrating multifamily, office, and retail products. Situated in a
natural environment, the building includes the most advanced technology systems
available in the market, including high-speed internet access and fiber optic
network infrastructure. Additionally, the building includes a fitness center
with lockers and shower facilities. Project development costs, including land
acquisitions totaled $18.0 million and were funded through advances on CRLP's
line of credit.
New Office Property Development
Colonial Center TownPark 200--During the third quarter of 2001, CRLP
began the development of Colonial Center TownPark 200, a 155,000 square foot
Class A office building in Orlando, Florida, which is part of a mixed-use
development integrating multifamily, office, and retail products. The building
will include the most advanced technology systems available in the market,
including high-speed internet access and fiber optic network infrastructure.
Project development costs, including land acquisitions are expected to total
$21.2 million and will be funded through advances on CRLP's line of credit. CRLP
expects to complete the project in the third quarter of 2002.
Colonial Center TownPark 600--During the fourth quarter of 2001, CRLP
began the development of Colonial Center TownPark 600, a 200,000 square foot
Class A office building in Orlando, Florida, which is part of a mixed-use
development integrating multifamily, office, and retail products. This building
is a build-to-suit development for FiServ, Inc., a financial software company
with approximately 14,000 employees worldwide. Project development costs,
including land acquisitions are expected to total $27.9 million and will be
funded through advances on CRLP's line of credit. CRLP expects to complete the
project in the third quarter of 2002.
Completed Retail Redevelopment Activity
Northdale Court--During the first quarter of 2001, CRLP completed the
redevelopment of Northdale Court, a 192,726 square foot strip center located in
Tampa, Florida. Project redevelopment costs totaled $6.2 million and were funded
through advances on CRLP's line of credit.
Colonial Brookwood Village--During the fourth quarter of 2001, CRLP
re-opened the redevelopment and expansion of Colonial Brookwood Village, a
687,078 square foot enclosed mall located in Birmingham, Alabama. The
renovations include a grand entrance offering valet parking, natural lighting
through the use of skylights, custom light fixtures, stone flooring, and plush
area carpeting. The mall also offers an upscale selection of merchants and
restaurants. Project redevelopment and expansion costs totaled $46.7 million and
were funded through CRLP's unsecured line of credit.
New Retail Development Activity
Colonial Promenade Hoover--During the first quarter of 2001, CRLP began
the development of Colonial Promenade Hoover, a 167,041 square foot community
shopping center located in Birmingham, Alabama. The center will be anchored by a
Super Wal-Mart Center. Project development costs including land acquisitions
costs are expected to total $18.7 million and will be funded through CRLP's
unsecured line of credit.
Parkway City Mall--During the first quarter of 2001, CRLP, in
connection with a 50% joint venture partner, began the redevelopment of Parkway
City Mall, a 631,000 square foot mall located in Huntsville, Alabama. The mall
will be anchored by Parisian and Dillard's Department Store. Total project
development costs are expected to total $71.2 million, of which CRLP's portion
will be $35.6 million. The redevelopment is expected to be completed during the
fourth quarter of 2002.
Financing Activity
CRLP funded a portion of its developments and expansions through the
issuance of debt securities and preferred stock. In June 2001, the Company
issued 2,000,000 preferred shares of beneficial interest (Series C Preferred
Shares). The Series C Preferred Shares pay a quarterly dividend at 9.25% per
annum and may be redeemed by the Company on or after June 19, 2006. The Series C
Preferred Shares have no stated maturity, sinking fund or mandatory redemption
and are not convertible into any other securities of the Company. The Series C
Preferred Shares have a liquidation preference of $25.00 per share. The net
proceeds of the offering were approximately $48.1 million and were used to repay
outstanding balances under CRLP's unsecured line of credit. In December 2001,
CRLP completed one unsecured medium-term debt offering of $10.0 million at 7.46%
with a maturity of December 2006. Additionally, during 2001, CRLP received
proceeds of $39.0 million related to the secured financing of two properties,
which are collateralized by the properties.
CRLP continued its asset recycling program, which allows CRLP to sell
mature, slower growing assets and reinvest the proceeds into opportunities with
more growth potential. During 2001, CRLP disposed of six multifamily properties
representing 1,373 units, one office property representing 34,357 square feet,
and two retail properties representing 304,168 square feet. The multifamily,
office, and retail properties were sold for a total sales price of $83.5
million, of which $4.5 million was used to repay a secured loan, $11.6 million
was issued as a note receivable, and the remaining proceeds were used to repay a
portion of the borrowings under CRLP's unsecured line of credit and to support
CRLP's future investment activities.
As of December 31, 2001, CRLP has an unsecured bank line of credit
providing for total borrowings of up to $300 million. This line of credit
agreement bears interest at LIBOR plus 115 basis points, is renewable in March
2003, and provides for a two-year amortization in the case of non-renewal. The
line of credit agreement includes a competitive bid feature that will allow CRLP
to convert up to $150 million under the line of credit to a fixed rate, for a
fixed term not to exceed 90 days. At December 31, 2001, CRLP had $135.0 million
outstanding under the competitive bid feature. The credit facility is primarily
used by CRLP to finance property acquisitions and development and has an
outstanding balance at December 31, 2001, of $261.4 million. The interest rate
of this short-term borrowing facility, including the competitive bid balance, is
3.08% and 7.66% at December 31, 2001 and 2000, respectively.
Business Strategy
Our business objective is to generate stable and increasing cash flow and
portfolio value for our shareholders through a strategy of:
o realizing growth in income from our existing portfolio of properties;
o developing, expanding, and selectively acquiring additional
multifamily, office and retail properties in growth markets located in
the Sunbelt region of the United States, where we have first-hand
knowledge of growth patterns and local economic conditions and believe
we have a competitive advantage due to our size and access to
lower-cost capital;
o selectively acquiring portfolios of properties from established,
high-quality regional developers in exchange for Operating Partnership
units and then foster and harvest our ongoing relationship with the
Operating Partnership unitholders as a resource for construction and
development opportunities, as well as additional acquisitions;
o entering into joint ventures to generate increased returns by providing
leasing, management and development services;
o recycling capital by selectively disposing of slower-growing assets and
reinvesting the proceeds into opportunities with more growth potential;
o managing our own properties, which enables us to better control
operating expenses and establish long-term relationships with our
office and retail tenants;
o maintaining our third-party property management business, which
increases cash flow and establishes additional relationships with
potential tenants; and
o employing a comprehensive capital maintenance program to maintain
properties in first-class condition.
CRLP's business strategy and the implementation of that strategy are
determined by the Company's Board of Trustees and may be changed from time to
time.
Financing Strategy
Our strategy is to maintain coverage ratios in order to sustain our
investment grade status. On December 31, 2001, our total market capitalization
was $2.5 billion and our ratio of debt to total market capitalization was 48.3%.
We calculate debt to total market capitalization as total debt as a percentage
of total debt, including preferred shares and units, plus the market value of
our outstanding common shares and the outstanding units of CRLP. At December 31,
2001, our total debt of approximately $1.2 billion, which excludes approximately
$67.3 million that is attributable to us based on our unconsolidated interests
in several joint ventures, included fixed-rate debt of approximately $926.4
million, or 77.8% of total debt, and floating-rate debt of approximately $264.1
million, or 22.2% of total debt. Certain loan agreements contain restrictive
covenants, which among other things require maintenance of various financial
ratios. At December 31, 2001, we were in compliance with these covenants.
CRLP has entered into several different hedging transactions in an
effort to manage exposure to changes in interest rates. The following table
summarizes the notional values, fair values and other characteristics of CRLP's
derivative financial instruments at December 31, 2001. The notional value at
December 31, 2001 provides an indication of the extent of CRLP's involvement in
these instruments at that time, but does not represent exposure to credit,
interest rate, or market risk.
Interest Fair Value
Product Type Notional Value Rate Maturity (in thousands)
- --------------------------------------------- -------------------------- ------------ ------------- ------------------
1) Interest Rate SWAP, Cash Flow $30.2 - $27.7 million 5.932% 1/01/06 $ (1,549)
2) Interest Rate SWAP, Cash Flow $75.0 million 2.130% 12/10/02 32
3) Interest Rate SWAP, Cash Flow $50.0 million 2.319% 1/01/03 (39)
4) Interest Rate SWAP, Cash Flow $25.0 million 2.430% 1/01/03 (47)
5) Interest Rate SWAP, Fair Value $50.0 million 5.015% 7/26/04 1,293
6) Interest Rate CAP, Cash Flow $21.1 million 6.850% 6/29/04 99
7) Interest Rate CAP, Cash Flow $17.9 million 6.850% 7/06/04 85
8) Interest Rate CAP, Cash Flow $30.4 million 11.200% 6/30/03 1
Most of CRLP's hedges are designated as cash flow hedges. Cash flow
hedges hedge the future cash flows of current or forecasted debt. Interest rate
swaps that convert variable payments to fixed payments, interest rate caps,
floors, collars, and forwards are cash flow hedges. The unrealized gains/losses
in the fair value of these hedges are reported on the balance sheet with a
corresponding adjustment to either accumulated other comprehensive income (loss)
or in earnings--depending on the type of hedging relationship. If the hedging
transaction is a cash flow hedge, then the offsetting gains and losses are
reported in accumulated other comprehensive income (loss). If the hedging
transaction is characterized as a fair value hedge, then the changes in fair
value of the hedge and the hedged item are reflected in earnings. If the fair
value hedging relationship is fully effective, there is no net effect reflected
in income or accumulated other comprehensive income (loss), and any offsets to
the hedging transaction is reflected in notes and mortgages payable. Over time,
the unrealized gains and losses held in accumulated other comprehensive income
(loss) will be reclassified to earnings. This reclassification is consistent
with when the hedged items are also recognized in earnings. Within the next
twelve months, CRLP expects to reclassify to earnings approximately $0.4 million
of the current balance held in accumulated other comprehensive income (loss).
CRLP hedges its exposure to the variability in future cash flows for
forecasted transactions over a maximum period of 12 months. During the
forecasted period, unrealized gains and losses in the hedging instrument will be
reported in accumulated other comprehensive income (loss). Once the hedged
transaction takes place, the hedge gains and losses will be reported in earnings
during the same period in which the hedged item is recognized in earnings.
We may modify our borrowing policy and may increase or decrease our
ratio of debt to total market capitalization. To the extent that our Board of
Trustees determines to seek additional capital, we may raise such capital
through additional equity offerings, debt financings, asset dispositions or
retention of cash flow (subject to provisions in the Internal Revenue Code of
1986 requiring the distribution by a REIT of a certain percentage of taxable
income and taking into account taxes that would be imposed on undistributed
taxable income) or a combination of these methods.
Property Management
CRLP is experienced in the management and leasing of multifamily,
office, and retail properties and believes that the management and leasing of
its own portfolio has helped the Properties maintain consistent income growth
and has resulted in reduced operating expenses from the Properties. The
third-party management, leasing, and brokerage businesses conducted through the
Management Corporation have provided CRLP both with a source of cash flow that
is relatively stable and with the benefits of economies of scale in conjunction
with the management and leasing of its own properties. These businesses also
allow CRLP to establish additional relationships with tenants who may require
additional office or retail space and to identify potential acquisitions.
Operational Structure
We manage our business with three separate and distinct operating
divisions: multifamily, office and retail. We have centralized functions that
are common to each division, including accounting, information technology, due
diligence and administrative services. Decisions regarding acquisitions and
developments and dispositions are also centralized. Each division has an
Executive Vice President that oversees growth and operations and has a separate
management team that is responsible for acquiring, developing, and leasing
properties within each division. This structure allows us to utilize specialized
management personnel for each operating division. Although these divisions
operate independently from one another, constant communication among the
Executive Vice Presidents provides us with unique synergies allowing us to take
advantage of a variety of investment opportunities. In addition, the third-party
management, leasing and brokerage businesses have provided us both with a source
of cash flow that is relatively stable and with the benefits of economies of
scale in conjunction with the management and leasing of our own properties.
These businesses also allow us to establish additional relations with tenants
that may require additional retail or office space and to identify potential
acquisitions. Additional information with respect to each of the operating
divisions is set forth below:
Multifamily Division. Our multifamily division is responsible for all
aspects of multifamily operations, including day-to-day management and leasing
of the 49 multifamily properties, as well as the provision of third-party
management services for apartment communities in which we do not have an
ownership interest or have a non-controlling ownership interest.
Office Division. Our office division is responsible for all aspects of
our commercial office operations, including the provision of management and
leasing services for the 17 office properties, as well as the provision of
third-party management services for office properties in which we do not have an
ownership interest and for brokerage services in other office property
transactions.
Retail Division. Our retail division is responsible for all aspects of
our retail operations, including the provision of management and leasing
services for the 42 retail properties, as well as the provision of third-party
management services for retail properties in which we do not have an ownership
interest and for brokerage services in other retail property transactions.
Employees
CRLP employs approximately 950 persons, including on-site property
employees who provide services for the Properties that CRLP owns and/or manages.
Tax Status
CRLP has no provision for income taxes since all taxable income or loss
or tax credits are passed through to the partners. The Company has made an
election to be taxed as a REIT under Sections 856 through 860 of the Code,
commencing with its taxable year ending December 31, 1993. If the Company
qualifies for taxation as a REIT, the Company generally will not be subject to
Federal income tax to the extent it distributes at least 90% of its REIT taxable
income to its shareholders. Even if the Company qualifies for taxation as a
REIT, the Company may be subject to certain state and local taxes on its income
and property and to federal income and excise taxes on its undistributed income.
Risk Factors
Set forth below are the risks that we believe are material to investors
who purchase or own our units of limited partnership interest. Our units are
redeemable for cash or, at the election of Colonial Properties Trust, on a
one-for-one basis for Colonial Properties Trust's shares of beneficial interest.
Our assets may not generate sufficient income to pay our expenses, and
we may not be able to control our operating costs
If our assets do not generate income sufficient to pay our expenses and
maintain our properties, or if we do not adequately control our operating costs,
we may not be able to pay our expenses, maintain our properties or service our
debt. A number of factors may adversely affect our ability to generate
sufficient income. These factors include:
o whether or not we can attract tenants at favorable rental rates, which
will depend on several factors, including:
-- local conditions such as an oversupply of, or reduction in
demand for, multifamily, retail or office properties;
-- the attractiveness of our properties to residents, shoppers
and tenants, and
-- decreases in market rental rates;
o our ability to collect rent from our tenants.
Factors that may adversely affect our operating costs include:
o the need to pay for insurance and other operating costs, including real
estate taxes, which could increase over time;
o the need periodically to repair, renovate and relet space;
o the cost of compliance with governmental regulation, including zoning
and tax laws;
o the potential for liability under applicable laws;
o interest rate levels; and
o the availability of financing.
Our expenses may remain constant even if our revenues decrease
The expense of owning and operating a property is not necessarily reduced
when circumstances such as market factors and competition cause a reduction in
income from the property. As a result, if revenues drop, we may not be able to
reduce our expenses accordingly. Loan payments are an example of a cost that
will not be reduced if our revenues decrease. If a property is mortgaged and we
are unable to meet the mortgage payments, the lender could foreclose on the
mortgage and take the property, resulting in a further reduction in revenues.
We may be unable to renew leases or relet space as leases expire
If our tenants decide not to renew their leases upon their expiration, we
may not be able to relet the space. Even if the tenants do renew or we can relet
the space, the terms of renewal or reletting, including the cost of required
renovations, may be less favorable than current lease terms. If we are unable to
renew the leases or relet the space promptly, or if the rental rates upon
renewal or reletting are significantly lower than expected rates, then our cash
flow will be adversely affected.
We depend on local economic conditions in our primary markets
All of our properties are located in the Sunbelt region of the United
States. In addition, 16.6% of our net operating income in 2001 derived from
properties located in Birmingham, Alabama, 13.3% from properties located in
Orlando, Florida, and 10.3% from properties located in Huntsville/Decatur,
Alabama. Our performance and ability to pay our expenses, maintain our
properties and service our debt could be adversely affected by economic
conditions in the Sunbelt region and in Birmingham, Orlando and
Huntsville/Decatur in particular.
New acquisitions and developments may fail to perform as expected
Assuming we are able to obtain capital on commercially reasonable terms, we
intend to selectively acquire multifamily, retail or office properties where we
perceive investment opportunities that are consistent with our business
strategies. Newly acquired properties may fail to perform as expected. We may
underestimate the costs necessary to bring an acquired property up to the
standards we have established for its intended market position. In addition, we
may not be in a position or have the opportunity in the future to make suitable
property acquisitions on favorable terms.
Competition for acquisitions could result in increased prices for
properties
We expect other major real estate investors with significant capital to
compete with us for attractive investment opportunities. These competitors
include publicly traded REITs, private REITs, investment banking firms and
private institutional investment funds. This competition could increase prices
for multifamily, retail or office properties.
Our development and expansion activities may result in significant
costs, and new properties may be slow to generate income
We intend to continue to develop new properties and expand existing
properties where we believe that development or expansion is consistent with our
business strategies. New projects subject us to a number of risks, including the
risks that:
o construction delays or cost overruns may increase project costs;
o permanent debt or equity financing may not be available on acceptable
terms to finance new development or expansion projects;
o we may fail to meet anticipated occupancy or rent levels;
o we may fail to secure required zoning, occupancy or other governmental
permits and authorizations; and
o changes in applicable zoning and land use laws may require us to
abandon projects prior to their completion, resulting in the loss of
development costs incurred up to the time of abandonment.
Because real estate investments are illiquid, we may not be able to
sell properties when appropriate
Real estate investments generally cannot be sold quickly. We may not be
able to vary our portfolio promptly in response to economic or other conditions.
This inability to respond to changes in the performance of our investments could
adversely affect our ability to service our debt.
Environmental problems are possible and can be costly
Federal, state and local laws and regulations relating to the protection of
the environment may require a current or previous owner or operator of real
property to investigate and clean up hazardous or toxic substances or petroleum
product releases at the property, without regard to whether the owner or
operator knew or caused the presence of the contaminants. If unidentified
environmental problems arise at one of our properties, we may have to make
substantial payments to a governmental entity or third parties for property
damage and for investigation and clean-up costs. Even if more than one person
may have been responsible for the contamination, we may be held responsible for
all of the clean-up costs incurred. Our liability under environmental laws could
adversely affect our cash flow and our ability to service our debt.
On December 29, 1998, we acquired Bel Air Mall in Mobile, Alabama. During
the course of our environmental due diligence, we identified several different
areas of the property in which contamination is present. One of those areas
involves drycleaner solvent; the others involve petroleum contamination. The
Alabama Department of Environmental Management is overseeing the investigation
and cleanup of the drycleaner contamination. It is possible that a claim could
be asserted against us, as owner of the property, for the investigation and
remediation of the contamination. Under the terms of the purchase and sale
agreement, the former owner of the property purchased a $10 million insurance
policy and established escrow accounts totaling $1,275,000 to cover the costs
associated with investigating and remediating the contaminated areas. In
addition, subject to limitations, the seller will be performing all required
remediation of the drycleaner contamination.
Some potential losses are not covered by insurance
We carry comprehensive liability, fire, extended coverage and rental loss
insurance on all of our properties. We believe the policy specifications and
insured limits of these policies are adequate and appropriate. There are,
however, certain types of losses, such as lease and other contract claims, that
generally are not insured. Should an uninsured loss or a loss in excess of
insured limits occur, we could lose all or a portion of the capital we have
invested in a property, as well as the anticipated future revenue from the
property. In such an event, we might nevertheless remain obligated for any
mortgage debt or other financial obligations related to the property.
Debt financing, financial covenants, our degree of leverage and increases in
interest rates could adversely affect our economic performance
Scheduled debt payments could adversely affect our financial condition
Our business is subject to risks normally associated with debt financing.
If principal payments due at maturity cannot be refinanced, extended or paid
with proceeds of other capital transactions, such as new equity capital, our
cash flow will not be sufficient in all years to repay all maturing debt. If
prevailing interest rates or other factors at the time of refinancing, such as
the possible reluctance of lenders to make commercial real estate loans, result
in higher interest rates, increased interest expense would adversely affect cash
flow and our ability to service our debt.
Our obligation to comply with financial covenants in our debt
agreements could restrict our range of operating activities
Our credit facility contains customary restrictions, requirements and other
limitations on our ability to incur debt, including:
o debt to assets ratios;
o secured debt to total assets ratios;
o debt service coverage ratios; and
o minimum ratios of unencumbered assets to unsecured debt.
The indenture under which our senior unsecured debt is issued contains
financial and operating covenants including coverage ratios. Our indenture also
limits our ability to:
o incur secured and unsecured indebtedness;
o sell all or substantially all or our assets; and
o engage in mergers, consolidations and acquisitions.
Our degree of leverage could limit our ability to obtain additional
financing
Our "debt to market capitalization" ratio, which we calculate as total
debt as a percentage of total debt, including preferred shares and units, plus
the market value of outstanding units, was approximately 48.3% as of December
31, 2001. Increases in our leverage could adversely affect our ability to obtain
additional financing in the future for working capital, capital expenditures,
acquisitions, development or other general corporate purposes, and may make us
more vulnerable to a downturn in business or the economy generally.
Rising interest rates could adversely affect our cash flow
Advances under our credit facility bear interest at a rate of 115 basis
points above LIBOR. We may borrow additional money with variable interest rates
in the future, and may enter into other transactions to limit our exposure to
rising interest rates as appropriate and cost effective. Increases in interest
rates, or the loss of the benefits of hedging agreements, would increase our
interest expense, which would adversely affect cash flow and our ability to
service our debt.
Some of our general partner's trustees and officers have conflicts of interest
and could exercise influence in a manner inconsistent with holders of interests
in the Company
As a result of their substantial ownership of units, Messrs. Thomas
Lowder, the Company's Chairman of the Board, Chief Executive Officer and
President, and James Lowder, Harold Ripps, Herbert Meisler, M. Miller Gorrie,
and William Johnson, each of whom is a trustee of the Company, might seek to
exert influence over our decisions as to sales or refinancings of particular
properties we own. Any such exercise of influence might produce decisions that
are not in the best interest of all of the holders of interests in the Company.
The Lowder family, and their affiliates, holds interests in companies
that have performed construction, management, insurance brokerage and other
services with respect to our properties. These companies may perform similar
services for us in the future. As a result, the Lowder family may realize
benefits from transactions between such companies and the Company that are not
realized by other holders of interests in the Company. In addition, Thomas and
James Lowder, as trustees of the Company, may be in a position to influence the
Company to do business with companies in which the Lowder family has a financial
interest. Our policies may not be successful in eliminating the influence of
conflicts. Moreover, transactions with companies controlled by the Lowder
family, if any, may not be on terms as favorable to us as we could obtain in an
arms-length transaction with a third party.
We are dependent on external sources of capital
To qualify as a REIT, Colonial Properties Trust must distribute to our
shareholders each year at least 90% of our REIT taxable income, excluding any
net capital gain. Because of these distribution requirements, it is not likely
that we will be able to fund all future capital needs from income from
operations. We therefore will have to rely on third-party sources of capital,
which may or may not be available on favorable terms or at all. Our access to
third-party sources of capital depends on a number of things, including the
market's perception of our growth potential and our current and potential future
earnings. Moreover, additional equity offerings may result in substantial
dilution of our shareholders' interests, and additional debt financing may
substantially increase our leverage.
We may change our business policies in the future
Our major policies, including our policies with respect to development,
acquisitions, financing, growth, operations, debt capitalization and
distributions, are determined by the Company's board of trustees. Although it
has no present intention to do so, the board may amend or revise these and other
policies from time to time. A change in these policies could adversely affect
our financial condition, results of operations or ability to service debt.
Colonial Properties Trust intends to qualify as a REIT, but we cannot guarantee
that it will qualify
We believe that Colonial Properties Trust has qualified for taxation as
a REIT for federal income tax purposes commencing with our taxable year ended
December 31, 1993. If Colonial Properties Trust qualifies as a REIT, it
generally will not be subject to federal income tax on our income that it
distributes to its shareholders. Colonial Properties Trust plans to continue to
meet the requirements for taxation as a REIT, but it may not qualify. Many of
the REIT requirements are highly technical and complex. The determination that
it is a REIT requires an analysis of various factual matters and circumstances
that may not be totally within its control. For example, to qualify as a REIT,
at least 95% of its gross income must come from sources that are itemized in the
REIT tax laws. Colonial Properties Trust generally is prohibited from owning
more than 10% of the voting securities or more than 10% of the value of the
outstanding securities of any one issuer, subject to certain exceptions,
including an exception with respect to corporations electing to be "taxable REIT
subsidiaries," and it is also required to distribute to shareholders at least
90% of its REIT taxable income, excluding capital gains. The fact that it holds
most of its assets through CRLP further complicates the application of the REIT
requirements. Even a technical or inadvertent mistake could jeopardize its REIT
status. Furthermore, Congress and the Internal Revenue Service might make
changes to the tax laws and regulations, and the courts might issue new rulings
that make it more difficult, or impossible, for it to remain qualified as a
REIT. We do not believe, however, that any pending or proposed tax law changes
would jeopardize its REIT status.
If Colonial Properties Trust failed to qualify as a REIT, it would be
subject to federal income tax at regular corporate rates. Also, unless the
Internal Revenue Service granted it relief under certain statutory provisions,
it would remain disqualified as a REIT for the four years following the year it
first failed to qualify. If it failed to qualify as a REIT, it would have to pay
significant income taxes and would therefore have less money available for
investments or for distributions to shareholders. This would likely have a
significant adverse affect on the value of its common shares. In addition, it
would no longer be required to make any distributions to shareholders, but it
would still be required to distribute quarterly substantially all of our net
cash revenues to our unitholders.
Item 2. Properties.
General
As of December 31, 2001, CRLP's real estate portfolio consisted of 108
properties consisting of whole or partial ownership interests, located in nine
states in the Sunbelt region of the United States. CRLP acquired 36 properties
in connection with the Formation Transactions, and acquired or developed 96
properties since the Company's initial public offering ("IPO"). Since the
Company's IPO, CRLP has developed 21 additional Multifamily Properties, five
Office Properties, three Retail Properties, and has disposed of 24 properties,
nine of which were sold during 2001. Additionally, CRLP maintains
non-controlling partial interests of 15% to 50% in 14 operating properties. The
108 Properties owned by CRLP at December 31, 2001 consisted of 49 Multifamily
Properties, 17 Office Properties, and 42 Retail Properties, as described in more
detail below.
Summary of Properties
Total 2001 Percent of
Units/ Property Total 2001 Percentage
Number of GLA/ Revenue (2) Property Occupancy at
Type of Property Properties NRA (1) (in thousands) Revenue (2) Dec. 31, 2001 (3)
- ---------------------- ----------- ------------ --------------- ------------- -----------------
Multifamily 49 16,256 (4) $ 119,309 36.8% 92.8%
Office 17 3,518,276 (5) 56,645 17.5% 92.1%
Retail 42 14,950,517 (6) 148,111 45.7% 89.6%
----------- --------------- -------------
Total 108 $ 324,065 100.0%
=========== =============== =============
(1) Units (in this table only) refers to multifamily units, GLA refers to
gross leasable area of retail space and NRA refers to net rentable area
of office space. Information is presented as of December 31, 2001.
(2) Includes CRLP's proportionate share of revenue from those Multifamily,
Office and Retail Properties accounted for under the equity method, and
CRLP's share of the properties disposed of in 2001.
(3) Excludes the units/square feet of development or expansion phases of
two Multifamily Properties, two Office Properties, and two Retail
Properties that had not achieved stabilized occupancy as of December
31, 2001.
(4) Amount includes 2,833 units at 10 Multifamily Properties, in which CRLP
maintains a 15.0% ownership interest.
(5) Amount includes 29,737 square feet at one Office Property, in which
CRLP maintains a 33.33% ownership interest.
(6) Amount includes 1,468,360 square feet at three Retail Properties, in
which CRLP maintains a 50.0% ownership interest.
Multifamily Properties
The 49 Multifamily Properties owned by CRLP at December 31, 2001,
contain a total of 16,256 garden-style apartments and range in size from 104 to
1,080 units. Fourteen of the Multifamily Properties were acquired by CRLP in
connection with the Formation Transactions, and 29 Multifamily Properties have
been acquired since the IPO. Also, since the IPO, CRLP has developed 21
additional Multifamily Properties and disposed of 15 Multifamily Properties.
Twenty-two Multifamily Properties (containing a total of 7,888 units) are
located in Alabama, 16 Multifamily Properties (containing a total of 5,402
units) are located in Florida, six Multifamily Properties (containing a total of
1,382 units) are located in Georgia, two Multifamily Property (containing a
total of 498 units) are located in Mississippi, two Multifamily Properties
(containing a total of 764 units) are located in South Carolina, and one
Multifamily Property (containing 322 units) is located in Texas. Each of the
Multifamily Properties is established in its local market and provides residents
with numerous amenities, which may include a swimming pool, exercise room,
jacuzzi, clubhouse, laundry room, tennis court(s), and/or a playground. All of
the Multifamily Properties are managed by CRLP.
The following table sets forth certain additional information relating
to the Multifamily Properties as of and for the year ended December 31, 2001.
Multifamily Properties
Average Total Percent of
Year Number Approximate Rental Property Total 2001
Multifamily Completed of Rentable Area Percent Rate Revenue for Property
Property (1) Location (2) Units (3) (Square Feet) Occupied Per Unit 2001 Revenue(4)
- ------------------------- -------------- ----------- ----------- ------------- -------- --------- ---------- -----------
Alabama:
CG at Edgewater Huntsville 1990 500 541,650 94.6% $ 683 $ 4,154,193 1.3%
CG at Galleria Birmingham 1986/96 1,080 1,195,186 90.9% 651 7,912,731 2.4%
CG at Galleria Woods Birmingham 1994 244 260,720 96.3% 676 1,874,669 0.6%
CG at Liberty Park Birmingham 2000 300 338,684 93.7% 989 2,984,134 0.9%
CG at Madison Huntsville 2000 336 354,592 93.5% 744 3,098,792 1.0%
CG at Mountain Brook (8) Birmingham 1987/91 392 392,700 93.6% 699 432,805 0.1%
CG at Promenade Montgomery 2000 384 424,372 89.6% 790 3,264,191 1.0%
CG at Riverchase Birmingham 1984/91 468 745,840 94.9% 787 4,102,141 1.3%
CG/CV at Inverness Lakes (8)Mobile 1983/96 498 506,386 86.5% 622 542,699 0.2%
Colony Park (9) Mobile 1975 609,266 0.2%
CV at Ashford Place Mobile 1983 168 139,128 90.5% 532 982,922 0.3%
CV at Cahaba Heights (8) Birmingham 1992 125 131,230 96.8% 765 154,745 0.0%
CV at Hillcrest Mobile 1981 104 114,400 96.2% 624 785,311 0.2%
CV at Hillwood (8) Montgomery 1984 160 150,912 94.4% 578 147,990 0.0%
CV at Huntleigh Woods Mobile 1978 233 199,052 92.3% 470 1,247,376 0.4%
CV at Inverness Birmingham 1986/87/90 586 491,072 95.1% 602 3,806,935 1.2%
CV at McGehee Place Montgomery 1986/95 468 404,188 89.7% 583 2,695,648 0.8%
CV at Monte D'Oro Birmingham 1977 200 295,840 94.0% 710 1,666,473 0.5%
CV at Research Park Huntsville 1987/94 736 809,344 92.9% 596 5,159,295 1.6%
CV at Rocky Ridge (8) Birmingham 1984 226 258,900 96.5% 641 251,371 0.1%
CV at Trussville Birmingham 1996/97 376 410,340 94.4% 727 3,071,147 0.9%
Patio (9) Auburn 1966/83/84 755,302 0.2%
Ski Lodge Tuscaloosa Tuscaloosa 1976/92 304 273,056 97.7% 442 1,561,326 0.5%
----------- ------------- -------- -------- ----------- -----------
Subtotal - Alabama (22 Properties) 7,888 8,437,592 93.1% 664 51,261,462 15.8%
----------- ------------- -------- -------- ----------- -----------
Florida:
CG at Bayshore (9) Bradenton 1997 2,656,572 0.8%
CG at Carrollwood Tampa 1966 244 286,080 95.5% 865 2,445,426 0.8%
CG at Citrus Park Tampa 1999 176 200,288 96.0% 898 1,853,468 0.6%
CG at Cypress Crossing Orlando 1999 250 314,596 93.2% 1,005 2,863,622 0.9%
CG at Gainesville Gainesville 1989/93/94 560 488,624 93.4% 795 5,006,059 1.5%
CG at Heather Glen Orlando 2000 448 524,074 85.9% 896 4,186,297 1.3%
CG at Heathrow Orlando 1997 312 370,028 92.0% 896 3,215,961 1.0%
CG at Hunter's Creek Orlando 1997 496 624,464 91.5% 913 5,193,811 1.6%
CG at Lakewood Ranch Sarasota 1999 288 301,656 97.9% 909 3,348,424 1.0%
CG at Palma Sola Bradenton 1992 340 291,796 95.9% 717 3,076,768 0.9%
CG at Ponte Vedra (8) Jacksonville 1988 240 211,640 93.3% 745 309,773 0.1%
CG at Riverhills (8) Tampa 1991/97 776 690,312 91.1% 645 830,876 0.3%
CG at Town Park Orlando 208 218,400 (7) 990 831,183 (6) 0.3%
CG at Town Park Sarasota 232 243,600 (7) 997 760,540 (6) 0.2%
CV at Cordova Pensacola 1983 152 116,400 94.7% 524 941,313 0.3%
CV at Lake Mary Orlando 1991/95 504 431,396 96.0% 728 4,229,980 1.3%
CV at Oakleigh Pensacola 1997 176 185,680 96.6% 752 1,726,108 0.5%
----------- ------------- -------- -------- ---------- -----------
Subtotal - Florida (16 Properties) 5,402 5,499,034 93.4% 798 43,476,181 13.4%
----------- ------------- -------- -------- ---------- -----------
Georgia:
CG at Barrington Club (8) Macon 1996 176 191,940 84.1% 718 217,241 0.1%
CG at Spring Creek (9) Macon 1992/94 2,189,245 0.7%
CG at Wesleyan Macon 1997 328 382,946 95.1% 717 2,814,604 0.9%
CV at North Ingle (9) Macon 1983 580,094 0.2%
CV at Stockbridge (8) Stockbridge 1993/94 240 253,200 80.4% 738 281,983 0.1%
CV at Timothy Woods Athens 1996 204 211,444 97.5% 782 1,742,553 0.5%
CV at Vernon Marsh Savannah 1986/87 178 151,226 95.5% 658 1,340,971 0.4%
CV at Walton Way Augusta 1984 256 254,264 83.2% 616 1,667,940 0.5%
CV at White Bluff (9) Savannah 1986 674,015 0.2%
----------- ------------- -------- -------- ---------- -----------
Subtotal - Georgia (6 Properties) 1,382 1,445,020 91.9% 705 11,508,646 3.6%
----------- ------------- -------- -------- ---------- -----------
Mississippi:
CG at The Reservoir Jackson 2000 170 195,604 98.8% 819 1,649,149 0.5%
CV at Natchez Trace Jackson 1995/97 328 342,800 97.6% 668 2,469,037 0.8%
----------- ------------- -------- -------- ---------- -----------
Subtotal - Mississippi (2 Property) 498 538,404 98.0% 720 4,118,186 1.3%
----------- ------------- -------- -------- ---------- -----------
South Carolina:
CV at Ashley Plantation Bluffton 1998/2000 414 425,095 80.9% 754 3,274,895 1.0%
CV at Caledon Wood Greenville 1995/96 350 348,305 93.4% 697 2,677,286 0.8%
----------- ------------- -------- -------- --------- -----------
Subtotal - South Carolina (2 Properties) 764 773,400 86.6% 726 5,952,181 1.8%
----------- ------------- -------- -------- --------- -----------
Texas:
CV at Haverhill San Antonio 1997 322 326,914 88.5% 899 2,992,233 0.9%
----------- ------------- -------- -------- --------- -----------
Subtotal - Texas (1 Property) 322 326,914 88.5% 899 2,992,233 0.9%
----------- ------------- -------- -------- --------- -----------
TOTAL (49 Properties) 16,256 17,020,364 92.8% 752(5)$119,308,889 36.8%
=========== ============= ======== ======== =========== ===========
(footnotes on next page)
(1) All Multifamily Properties are 100% owned by CRLP with the exception of
the properties noted in (8) below. In the listing of Multifamily
Property names, CG has been used as an abbreviation for Colonial Grand
and CV as an abbreviation for Colonial Village.
(2) Year initially completed and, where applicable, year(s) in which
additional phases were completed at the Property.
(3) Units (in this table only) refers to multifamily apartment units.
Number of Units includes all apartment units occupied or available for
occupancy at December 31, 2001.
(4) Percent of Total 2001 Property Revenue represents the Multifamily
Property's proportionate share of all revenue from CRLP's 108
Properties, including the partially owned properties.
(5) Represents weighted average rental rate per unit of the 49 Multifamily
Properties at December 31, 2001.
(6) Represents revenues from the date of CRLP's development/expansion of
this Property in 2001 through December 31, 2001.
(7) Expanded or newly developed property currently undergoing lease-up.
(8) These properties were sold by CRLP during 1999 or 2000 to a joint
venture formed by CRLP and an unrelated party. CRLP holds a 15%
non-controlling interest in these joint ventures.
(9) This property was sold during 2001.
The following table sets forth the total number of units, percent
leased and average base rental rate per unit as of the end of each of the last
five years for the Multifamily Properties:
Average Base
Number Percent Rental Rate
Year-End of Units (1) Leased (2) Per Unit
-------- ------------ ----------- --------
December 31, 2001 16,256 92.8% $752
December 31, 2000 17,189 94.0% $707
December 31, 1999 16,415 93.9% $688
December 31, 1998 15,381 93.5% $642
December 31, 1997 13,759 93.8% $631
(1) Units (in this table only) refers to multifamily units owned at year
end, which includes 2,833 units partially owned by CRLP at
December 31, 2001.
(2) Represents weighted average occupancy of the Multifamily Properties
that had achieved stabilized occupancy at the end of the respective
period.
Office Properties
The 17 Office Properties owned by CRLP at December 31, 2001, contain a
total of approximately 3.5 million rentable square feet. Thirteen of the Office
Properties are located in Alabama (representing 61% of the office portfolio's
net rentable square feet) , one is located in Atlanta, Georgia and three are
located in Florida. The Office Properties range in size from approximately
30,000 square feet to 698,000 square feet. Six of the Office Properties were
developed by Colonial, three of the Properties were acquired at various since
the IPO, seven of the Properties were acquired in 1997 and 1998, and one of the
Properties was acquired in 1999. All of the Office Properties are managed by
CRLP.
The following table sets forth certain additional information relating
to the Office Properties as of and for the year ended December 31, 2001.
Office Properties
Average
Base
Net Rent
Rentable Per Total Percent of
Year Area Total Leased Property Total 2001
Office Completed Square Percent Annualized Square Revenue for Property
Property (1) Location (2) Feet Leased Base Rent(2) Foot 2001 (3) Revenue(4)
- ------------------------------ ----------- --------- ------- ------ -------------- ------- ------------- ---------
Alabama:
250 Commerce St Montgomery 1904/81 37,303 100.0% $ 434,223 $ 12.10 $ 443,108 0.1%
AmSouth Center Huntsville 1990 154,421 97.4% 2,907,949 # 21.07 3,346,907 1.0%
Colonial Center Research Park Huntsville 1999 133,482 100.0% 2,122,305 16.16 2,226,265 0.7%
Colonial Plaza Birmingham 1982 170,870 99.2% 3,082,565 20.45 3,387,049 1.0%
Emmett R. Johnson Building Birmingham 1982/95 164,291 90.4% 2,178,543 20.16 2,914,742 0.9%
Independence Plaza Birmingham 1979 105,712 90.7% 1,830,964 16.32 1,561,585 0.5%
International Park Birmingham 1987/89 238,881 94.8% 4,329,595 17.97 4,274,720 1.4%
Interstate Park Montgomery 1982-85/89 225,050 94.4% 3,236,603 15.34 3,221,225 1.0%
Lakeside Office Park Huntsville 1989/90 121,413 100.0% 1,828,651 17.07 1,767,433 0.5%
Land Title Building Birmingham 1975 29,737 100.0% 399,757 15.23 162,153 0.1%
Perimeter Corporate Park Huntsville 1986/89 234,467 97.3% 3,818,773 16.95 3,651,659 1.1%
Progress Center Huntsville 1983-91 224,329 87.4% 2,205,588 11.21 2,508,493 0.8%
Riverchase Center Birmingham 1984-88 301,177 86.2% 3,116,279 14.24 3,611,874 1.1%
Shades Brook Building (5) Birmingham 1979 523,563 0.2%
---------- ------ ----------- ------- ---------- ----
Subtotal-Alabama (13 Properties) 2,141,133 93.8% 31,491,795 16.65 33,600,776 10.4%
---------- ------ ----------- ------- ---------- ----
Florida:
Colonial Center TownPark 100 Orlando 2001 153,569 (8) 2,112,240 (8) 665,074(6) 0.2%
Concourse Center Tampa 1981/85 291,695 94.8% 3,910,572 17.20 5,067,744 1.6%
University Park Plaza Orlando 1985 72,496 73.5% 770,601 15.53 728,172 0.2%
--------- ------ ----------- ------- --------- ----
Subtotal-Florida (3 Properties) 517,760 90.6% 6,793,413 16.92 6,460,990 2.0%
--------- ------ ----------- ------- --------- ----
Georgia:
Colonial Center at Mansell Overlook Atlanta 1987/96/97 698,394 87.9% 16,280,920 23.29 16,475,784 5.1%
Colonial Center at Mansell
Overlook 500 (7) Atlanta 2001 160,989 (8) 2,302,200 (8) 107,842(6) 0.0%
--------- ------ ----------- -------- --------- ----
Subtotal-Georgia (1 Property) 859,383 88.7% 18,583,120 23.29 16,583,626 5.1%
--------- ------ ----------- -------- ---------- ----
TOTAL (17 Properties) 3,518,276 92.1%$ 56,868,328 $ 18.02 $ 56,645,392 17.5%
========= ====== =========== ======== ========== ====
(1) All Office Properties are 100% owned by CRLP with the exception of Land
Title Building, which is 33.33% owned by CRLP.
(2) Year initially completed and, where applicable, most recent year in
which the Property was substantially renovated or in which an
additional phase of the Property was completed.
(3) Total 2001 Office Property revenue is CRLP's share (based on its
percentage ownership of the property) of total Office Property revenue,
unless otherwise noted. However, amounts exclude $486,378 of
straight-line rents reflected in CRLP's Consolidated Financial
Statements for the period ended December 31, 2001.
(4) Percent of Total 2001 Property Revenue represents the Office Property's
proportionate share of all revenue from CRLP's 108 Properties.
(5) This property was sold during 2001.
(6) Represents revenues from the date of CRLP's completion of development
of this Property in 2001 through December 31, 2001.
(7) This property is located within an office complex and is included in
the total as one office property.
(8) This property is currently in lease-up and is not included in the
property totals.
The following table sets out a schedule of the lease expirations for
leases in place as of December 31, 2001, for the Office Properties (including
all lease expirations for partially-owned Properties).
Net Rentable Annualized Percent of Total
Year of Number of Area Of Base Rent of Annual Base Rent
Lease Tenants with Expiring Leases Expiring Represented by
Expiration Expiring Leases (Square Feet) (1) Leases (1)(2) Expiring Leases (1)
- ---------------------------------------------------------------------------------------------------
2002 106 428,963 $ 6,536,131 11.5%
2003 106 453,224 7,015,903 12.3%
2004 102 492,033 7,811,026 13.7%
2005 128 629,370 9,765,540 17.2%
2006 82 451,983 7,061,432 12.4%
2007 36 264,531 4,355,522 7.7%
2008 16 211,380 8,532,237 15.0%
2009 7 76,915 1,062,121 1.9%
2010 9 87,448 1,652,286 2.9%
2011 7 60,174 778,021 1.4%
Thereafter 14 109,629 2,298,109 4.0%
--------------- ---------------- -------------- -------------------
613 3,265,650 $ 56,868,328 100.0%
=============== ================ ============== ===================
(1) Excludes approximately 253,000 square feet of space not leased as of
December 31, 2001.
(2) Annualized base rent is calculated using base rents as of December 31,
2001.
The following sets forth the net rentable area, total percent leased
and average base rent per leased square foot for each of the last five years for
the Office Properties:
Average Base
Rentable Area Total Rent Per Leased
Year-end (Square Feet) (2) Percent Leased Square Foot (1)
-------- ----------------- -------------- ---------------
December 31, 2001 3,518,000 92.1% $18.02
December 31, 2000 3,244,000 94.6% $16.43
December 31, 1999 3,138,000 93.3% $15.29
December 31, 1998 2,707,000 92.2% $14.58
December 31, 1997 1,859,000 95.5% $12.18
- -----------------
(1) Average base rent per leased square foot is calculated using base
rents as of December 31 for each respective year.
(2) Rentable square feet includes 29,737 square feet that is partially
owned by the Company at December 31, 2001.
Retail Properties
The 42 Retail Properties owned by CRLP at December 31, 2001, contain a
total of approximately 14.9 million square feet (including space owned by anchor
tenants). Fifteen of the Retail Properties are located in Alabama, ten are
located in Florida, seven are located in Georgia, six are located in North
Carolina, one is located in South Carolina, one is located in Tennessee, one is
located in Texas, and one is located in Virginia. The Retail Properties consist
of 17 enclosed regional malls, two power centers, and 23 neighborhood shopping
centers. Twelve of the 42 Retail Properties were originally developed by CRLP,
and 30 were acquired between 1994 and 2000. All of the Retail Properties are
managed by CRLP.
The following table sets forth certain information relating to the
Retail Properties as of and for the year ended December 31, 2001.
Retail Properties
Average
Base
Gross Rent
Leasable Per Total Percent of
Year Area Number Total Leased PropertyTotal 2001
Retail Completed (Square Of Percent Annualized Square Revenue forProperty
Property (1) Location (2) Feet) (3) Stores Leased(3)Base Rent Foot(4) 2001(9)Revenue(5)
- ----------------------------------------------------------------------------------------------------------------------------------
Alabama:
Colonial Mall Auburn/Opelika Auburn 1973/84/89 399,713 61 90.1% $2,845,813 $18.43 $ 4,749,010 1.5%
Colonial Mall Bel Air Mobile 1966/90/97 1,071,450 122 90.8% 9,487,190 17.58 13,677,207 4.2%
357,538
Colonial Mall Decatur Decatur 1979/89 494,967 57 86.1% 3,505,701 18.00 5,615,512 1.7%
80,866
Colonial Mall Gadsden Gadsden 1974/91 532,387 69 99.2% 3,542,448 18.26 5,830,518 1.8%
Colonial Promenade Madison Madison 2000 110,712 13 91.9% 1,088,549 13.18 631,389 0.2%
Colonial Promenade Montgomery Montgomery 1990/97 273,196 38 96.3% 2,778,183 14.27 3,094,802 1.0%
145,830
Colonial Promenade Trussvile Birmingham 2000 388,302 25 100.0% 3,466,126 14.85 4,234,496 1.3%
Colonial Promenade Tutwiler Farm Birmingham 2000 516,977 22 100.0% 3,116,307 15.05 3,631,217 1.1%
Colonial Shoppes Bellwood Montgomery 1988 88,482 22 98.4% 793,251 12.61 936,457 0.3%
Colonial Shoppes Inverness Birmingham 1984 28,243 4 91.5% 407,023 13.80 532,853 0.2%
Colonial Shoppes McGehee Montgomery 1986 98,354 15 82.9% 699,599 12.39 862,893 0.3%
Old Springville Shopping Center Birmingham 1982 63,702 13 44.8% 221,257 7.75 401,064 0.1%
Olde Town Shopping Center Montgomery 1978/90 38,814 15 81.2% 290,603 8.92 363,348 0.1%
P&S Building (11) Gadsden 1946/76/91 39,560 1 100.0% 182,874 4.50 178,020 0.1%
Colonial Brookwood Village Birmingham 1973/91/01 455,125 66 (8) 4,323,439 (8) 3,144,688 1.0%
231,953
Parkway City Mall Huntsville 1975 285,545 2 (8) -- (8) 305,521 0.1%
---------- ---- ------ ---------- ----- ---------- -----
Subtotal-Alabama (15 Properties) 5,701,716 545 92.9% 36,931,237 16.01 48,188,995 14.9%
---------- ---- ------ ---------- ----- ---------- -----
Florida:
Colonial Promenade Bardmoor Village St. Petersburg 1981 152,667 31 86.9% 1,297,585 15.70 1,687,140 0.5%
Colonial Promenade Bear Lake Orlando 1990 131,552 23 79.0% 989,265 13.69 1,454,891 0.4%
Colonial Promenade Burnt Store Punta Gorda 1990 198,802 22 91.9% 1,243,854 10.02 1,634,092 0.5%
Colonial Promenade Hunter's Creek Orlando 1993/95 222,136 27 98.6% 2,044,810 16.59 2,579,356 0.8%
Colonial Promenade Lakewood Jacksonville 1995 195,884 54 93.4% 1,954,132 12.59 2,352,746 0.7%
Colonial Promenade Northdale Tampa 1988 175,917 26 98.6% 1,649,052 16.94 1,996,413 0.6%
55,000
Colonial Promenade Tuskawilla (10) Orlando 1990 1,229,781 0.4%
Colonial Promenade University Park Orlando 1986/89 399,128 42 65.4% 2,702,991 13.66 2,847,431 0.9%
Colonial Promenade Wekiva Orlando 1990 208,568 33 96.9% 2,116,647 14.46 2,589,892 0.8%
Colonial Promenade Winter Haven Orlando 1986 197,472 23 91.1% 1,284,255 10.51 1,701,339 0.5%
Colonial Shoppes Paddock Park (10) Ocala 1988 622,807 0.2%
Orlando Fashion Square Orlando 1973/89/93 710,671 122 83.4% 9,501,082 28.06 8,657,648 2.7%
361,432
---------- ---- ------ ---------- ----- ---------- -----
Subtotal-Florida (10 Properties) 3,009,229 403 86.4% 24,783,673 19.43 29,353,536 9.1%
---------- ---- ------ ---------- ----- ---------- -----
Georgia:
Britt David Columbus 1990 109,630 10 71.7% 589,228 13.48 548,903 0.2%
Colonial Mall Glynn Place Brunswick 1986 281,989 62 89.0% 2,841,622 18.53 4,558,681 1.4%
225,558
Colonial Mall Lakeshore Gainesville 1984-97 518,290 61 91.7% 3,408,475 18.39 5,590,200 1.7%
Colonial Mall Macon Macon 1975/88/97 759,500 154 85.1% 10,736,016 25.51 17,707,010 5.5%
682,160
Colonial Mall Valdosta Valdosta 1982-85 326,431 59 94.0% 3,359,807 17.72 6,026,813 1.9%
73,723
Colonial Promenade Beechwood Athens 1963/92 343,569 44 89.6% 2,649,233 10.82 2,956,913 0.9%
Village at Roswell Summit Atlanta 1988 25,510 8 95.1% 378,380 15.42 479,221 0.1%
---------- ---- ------ ---------- ----- ---------- -----
Subtotal-Georgia (7 Properties) 3,346,360 398 88.4% 23,962,761 19.35 37,867,741 11.7%
---------- ---- ------ ---------- ----- ---------- -----
North Carolina:
Colonial Mall Burlington Burlington 1969/86/94 415,983 49 91.9% 2,741,050 20.80 5,027,372 1.6%
Colonial Mall Greenville Greenville 1965/89/99 417,500 61 91.9% 3,578,067 18.79 5,748,000 1.8%
46,051
Colonial Mayberry Mall Mount Airy 1968/86 149,590 23 96.4% 819,468 12.57 1,296,853 0.4%
57,843
Colonial Shoppes Quaker Greensboro 1968/88/97 102,426 29 93.6% 1,059,621 14.83 1,356,269 0.4%
Colonial Shoppes Stanly Locust 1987/96 47,070 7 100.0% 273,137 9.40 339,822 0.1%
Colonial Shoppes Yadkinville Yadkinville 1971/97 90,917 15 100.0% 691,093 7.39 812,611 0.3%
---------- ---- ------ ---------- ----- ---------- -----
Subtotal-North Carolina (6 Properties) 1,327,380 184 93.5% 9,162,436 16.77 14,580,927 4.5%
---------- ---- ------ ---------- ----- ---------- -----
South Carolina:
Colonial Mall Myrtle Beach Myrtle Beach 1986 494,128 70 92.2% 4,341,845 21.06 8,465,869 2.6%
---------- ---- ------ ---------- ----- ---------- -----
Subtotal-South Carolina (1 Property) 494,128 70 92.2% 4,341,845 21.06 8,465,869 2.6%
---------- ---- ------ ---------- ----- ---------- -----
Tennessee:
Rivermont Shopping Center Chattanooga 1986/97 73,539 9 93.9% 351,903 7.66 472,258 0.1%
---------- ---- ------ ---------- ----- ---------- -----
Subtotal-Tennessee (1 Property) 73,539 9 93.9% 351,903 7.66 472,258 0.1%
---------- ---- ------ ---------- ----- ---------- -----
Texas
Temple Mall Temple 1981/96 466,150 55 81.6% 3,244,310 20.70 5,948,458 1.8%
---------- ---- ------ ---------- ----- ---------- -----
Subtotal-Texas (1 Property) 575,127 55 81.6% 3,244,310 20.70 5,948,458 1.8%
---------- ---- ------ ---------- ----- ---------- -----
Virginia:
Colonial Mall Staunton Staunton 1969/86/97 423,038 44 75.2% 1,807,198 11.65 3,233,286 1.0%
---------- ---- ------ ---------- ----- ---------- -----
Subtotal-Virginia (1 Property) 423,038 44 75.2% 1,807,198 11.65 3,233,286 1.0%
---------- ---- ------ ---------- ----- ---------- -----
Total (42 Properties) 14,950,517 1,708 89.6%$104,585,363 $18.03$148,111,070 45.7%
---------- ---- ------ ---------- ----- ---------- -----
(footnotes on next page)
(1) All Retail Properties are 100% owned by CRLP, with the exception of
Orlando Fashion Square, Parkway City Mall, and Colonial Promenade
Madison, which are owned 50% by CRLP.
(2) Year initially completed and, where applicable, year(s) in which the
Property was substantially renovated or an additional phase of the
Property was completed.
(3) Total GLA includes space owned by anchor tenants, but Percent Leased
excludes such space.
(4) Includes specialty store space only.
(5) Percent of Total 2001 Property Revenue represents the Retail Property's
proportionate share of all revenue from the 108 Properties.
(6) Represents space owned by anchor tenants.
(7) Represents revenues from the date of CRLP's acquisition or completion
of development of the Property in 2001 through December 31, 2001.
(8) This property is currently under redevelopment or lease-up and is not
included in the property total.
(9) Amounts exclude $965,475 of straight-line rents reflected in CRLP's
consolidated financial statements for the year ended December 31, 2001.
(10) This property was sold during 2001.
(11) This property is located adjacent to CM Gadsden and is included in the
total as one retail property.
The following table sets forth the total gross leasable area, percent
leased and average base rent per leased square foot as of the end of each of the
last five years for the Retail Properties:
Gross Average
Leasable Area Percent Base Rent Per
Year-End (Square Feet) (1) Leased Leased Square Foot(2)
-------- ----------------- ------ ----------------------
December 31, 2001 14,951,000 89.6% $18.03
December 31, 2000 15,184,000 90.2% $17.38
December 31, 1999 13,947,000 89.9% $16.66
December 31, 1998 11,105,000 91.9% $14.48
December 31, 1997 8,880,000 93.3% $14.38
(1) Includes 1,106,928 square feet partially owned by CRLP at December 31,
2001.
(2) Average base rent per leased square foot is calculated using specialty
store year-end base rent figures.
The following table sets out a schedule of the lease expirations for
leases in place as of December 31, 2001, for the Retail Properties:
Net Rentable Annualized Percent of Total
Year of Number of Area Of Base Rent of Annual Base Rent
Lease Tenants with Expiring Leases Expiring Represented by
Expiration Expiring Leases (Square Feet) (1) Leases (1)(2) Expiring Leases (1)
- -----------------------------------------------------------------------------------------------
2002 329 1,037,034 $ 12,256,316 11.7%
2003 214 979,860 8,792,112 8.4%
2004 226 1,318,175 10,322,617 9.9%
2005 213 823,278 10,502,914 10.0%
2006 185 1,616,058 12,615,076 12.1%
2007 124 1,210,775 8,491,921 8.1%
2008 66 480,569 4,577,328 4.4%
2009 68 578,766 5,418,719 5.2%
2010 91 940,740 8,198,707 7.8%
2011 101 802,500 9,533,540 9.1%
Thereafter 91 3,496,116 13,876,113 13.3%
-------------- --------------- -------------- -------------------
1,708 13,283,871 $ 104,585,363 100.0%
============== =============== ============== ===================
(1) Excludes 1,667,000 square feet of space not leased as of December 31,
2001.
(2) Annualized base rent is calculated using base rents as of December 31,
2001.
Undeveloped Land
CRLP owns various parcels of land, which are held for future
development (collectively, the "Land"). Land adjacent to Multifamily Properties
typically will be considered for potential development of another phase of an
existing Multifamily Property if CRLP determines that the particular market can
absorb additional apartment units. For expansions at Office and Retail
Properties, CRLP owns parcels both contiguous to the boundaries of the
properties, which would accommodate additional office buildings, expansion of
the mall or shopping center, and outparcels which are suitable for restaurants,
financial institutions or free standing retailers.
Property Markets
The table below sets forth certain information with respect to the
geographic concentration of the Properties as of December 31, 2001.
Geographic Concentration of Properties
Geographic Concentration of Properties
Percent
Units Total Of Total
(Multifamily) NRA GLA 2001 Property 2001 Property
State (1) (Office)(3) (Retail) (2) Revenue Revenue
- ---------------- ---------- ------------ ------------ -------------- ---------------
Alabama 7,888 2,141,133 5,701,716 $ 133,051,233 41.1%
Florida 5,402 517,760 3,009,229 79,290,707 24.5%
Georgia 1,382 859,383 3,346,360 65,960,013 20.4%
Mississippi 498 -0- -0- 4,118,186 1.3%
North Carolina -0- -0- 1,327,380 14,580,927 4.5%
South Carolina 764 -0- 494,128 14,418,050 4.4%
Tennessee -0- -0- 73,539 472,258 0.1%
Texas 322 -0- 575,127 8,940,691 2.7%
Virginia -0- -0- 423,038 3,233,286 1.0%
---------- ------------ ------------ -------------- ---------------
Total 16,256 3,518,276 14,950,517 $ 324,065,351 100.0%
========== ============ ============ ============== ===============
(1) Units (in this table only) refer to multifamily apartment units.
(2) GLA refers to gross leaseable area of retail space.
(3) NRA refers to net rentable area of office space.
CRLP believes that the demographic and economic trends and conditions
in the markets where the Properties are located indicate a potential for
continued growth in property net operating income. The Properties are located in
a variety of distinct submarkets within Alabama, Florida, Georgia, Mississippi,
North Carolina, South Carolina, Tennessee, Texas and Virginia. However,
Birmingham, Huntsville and Montgomery, Alabama, Orlando, Tampa and
Sarasota/Bradenton, Florida, and Macon and Atlanta, Georgia, are CRLP's primary
markets. CRLP believes that its markets in these nine states, which are
characterized by stable and increasing population and employment growth, should
continue to provide a steady demand for multifamily, office, and retail
properties.
Mortgage Financing
Certain of the Properties are subject to mortgage indebtedness. The
Properties whose financial results are consolidated in the financial statements
of CRLP are subject to existing mortgage indebtedness and other notes payable in
an aggregate amount as of December 31, 2001, of approximately $1.19 billion
carrying a weighted average interest rate of 5.93% and a weighted average
maturity of 5.2 years. The mortgage indebtedness on the Properties as of
December 31, 2001, is set forth in the table below:
Mortgage Debt and Notes Payable
Anticipated
Annual Debt
Principal Service Estimated
Interest Balance (as of (1/1/02- Maturity Balance Due
Property (1) Rate 12/31/01) 12/31/02) Date on Maturity
- ------------------------------------- ------- --------------- -------------- ----------- -------------
Multifamily Properties:
CG at Carrollwood 7.490% 10,200,000 $ 763,980 08/27/09 $ 10,200,000
CG at Natchez Trace 7.950% 6,730,915 609,195 09/01/35 47,813
CG at Natchez Trace 8.000% 4,013,960 371,388 02/01/37 29,071
CV at Ashley Plantation 7.980% 15,090,000 1,204,182 07/01/10 15,090,000
CV at Ashley Plantation 6.590% 9,557,948 753,727 07/01/10 (5) 8,537,948
CG at Edgewater 6.810% 21,788,244 1,722,844 12/01/10 22,000,000
CG at Madison 2.983% 17,756,649 846,764 07/01/11 (2) 9,350,307
CG at Promenade 6.810% 22,729,100 1,797,239 12/01/10 22,950,000
CG at Galleria Woods 6.910% 9,493,437 771,346 07/01/09 8,459,760
CV at Inverness 2.160% 9,900,000 278,439 07/01/26 (2) 9,900,000
CG at Hunters Creek 7.980% 18,999,000 1,516,120 07/01/10 18,999,000
CG at Hunters Creek 6.590% 11,417,491 895,013 07/01/10 (5) 10,307,491
CG at Galleria 2.160% 22,400,000 630,000 06/15/26 (2) 22,400,000
CG at Research Park 2.160% 12,775,000 359,298 06/15/26 (2) 12,775,000
CG at Riverchase 2.983% 20,921,042 1,000,008 06/29/10 (2) 11,038,141
CV at Vernon Marsh 2.160% 3,400,000 112,537 07/01/26 (2) 3,400,000
CV at Lake Mary 7.980% 14,151,173 1,129,264 07/01/10 4,500,000
CV at Lake Mary 6.590% 8,786,494 694,832 07/01/10 (5) 7,826,494
Office Properties:
Interstate Park 8.500% 3,235,361 643,440 08/01/03 2,648,144
Colonial Center at Mansell Overlook8.250% 16,882,114 1,595,700 01/10/08 13,692,324
Perimeter Corporate Park 8.680% 4,991,218 596,130 12/01/03 4,858,772
Retail Properties:
Colonial Promenade Montgomery 7.490% 12,250,000 917,520 08/27/09 12,250,000
Rivermont Shopping Center 10.125% 1,341,578 272,670 09/01/08 52,091
Colonial Promenade Unversity Park 7.490% 21,500,000 1,610,352 08/27/09 21,500,000
Village at Roswell Summit 8.930% 1,544,012 170,219 09/01/05 1,401,860
Other debt:
Land Loan 8.000% 543,232 43,459 09/30/02 512,385
Line of Credit 3.080% (3) 261,365,000 9,152,171 04/14/03 (4) 261,365,000
Unsecured Senior Notes 8.050% 65,000,000 5,201,865 07/15/06 65,000,000
Unsecured Senior Notes 7.000% 175,000,000 12,136,926 07/15/07 175,000,000
Medium Term Notes 7.050% 50,000,000 3,525,000 12/15/03 50,000,000
Medium Term Notes 7.160% 50,000,000 3,580,000 01/17/03 50,000,000
Medium Term Notes 3.817% 75,000,000 2,862,750 07/26/04 (6) 75,000,000
Medium Term Notes 6.960% 25,000,000 1,740,000 08/01/05 25,000,000
Medium Term Notes 6.980% 25,000,000 1,745,000 09/26/05 25,000,000
Medium Term Notes 8.190% 25,000,000 2,047,500 08/01/04 25,000,000
Medium Term Notes 7.930% 57,500,000 4,559,750 08/01/02 57,500,000
Medium Term Notes 8.820% 25,000,000 2,205,000 02/01/05 25,000,000
Medium Term Notes 8.800% 20,000,000 1,760,000 02/01/10 20,000,000
Medium Term Notes 8.800% 5,000,000 440,000 03/01/10 5,000,000
Medium Term Notes 8.050% 10,000,000 805,000 12/01/10 10,000,000
Medium Term Notes 8.080% 10,000,000 808,000 12/01/10 10,000,000
Medium Term Notes 7.460% 10,000,000 746,000 12/01/06 10,000,000
Fair value derivative instrument 1,292,678 1,292,678
Unamortized Discount on Senior Notes (765,125) (765,125)
--------------- -------------- -------------
TOTAL $ 1,191,790,520 $ 74,620,627 $ 1,144,119,154
=============== ============== =============
----------------
(1) As noted in the table, certain Properties were developed in phases and
separate mortgage indebtedness may encumber each of the various phases.
In the listing of property names, CG has been used as an abbreviation
for Colonial Grand and CV as an abbreviation for Colonial Village.
(2) The maturity date noted represents the date on which credit enhancement
expires for the tax-exempt municipal bonds put in place as part of the
original financing for the Property. The stated maturity date for the
loans is August 1, 2022.
(3) This line of credit facility bears interest at a variable rate, based
on LIBOR plus a spread of 115 basis points. The facility also includes
a competitive bid feature that allows CRLP to convert up to $150
million under the line of credit to a fixed rate, for a fixed term not
to exceed 90 days. At December 31, 2001, CRLP had $135.0 million
outstanding under the competitive bid feature.
(4) This credit facility has a term of three years beginning in March 2000
and provides for a two-year amortization in the event of non-renewal.
Effective December 2001, CRLP entered interest rate swap agreements of
$150.0 million on its line of credit, which fixes the rate on the
floating line for one year at a blended rate of 2.24% plus a spread of
115 basis points.
(5) Represents floating rate debt that has been swapped to a fixed rate of
6.59%.
(6) $50.0 million of this medium term fixed rate debt has been swapped to a
floating index rate of 3-mo LIBOR.
In addition to the foregoing mortgage debt, the ten Multifamily
Properties, one Office Property and three Retail Properties in which CRLP owns
partial interests (and which therefore are not consolidated in the financial
statements of CRLP) also are subject to existing mortgage indebtedness. CRLP's
pro-rata share of such indebtedness as of December 31, 2001, was $67,347,553,
which carried a weighted average interest rate of 6.29%. The maturity dates of
these loans range from January 15, 2006 and February 1, 2015, and as of December
31, 2001, the loans had a weighted average maturity of 4.4 years. In November
2000, CRLP engaged in an interest rate swap agreement on $5.0 million of the
variable rate debt, and fixed the rate on the debt to 7.99% for a term of 15
months.
Item 3. Legal Proceedings.
Neither CRLP nor the Properties are presently subject to any material
litigation nor, to CRLP's knowledge, is any material litigation threatened
against CRLP or the Properties, other than routine litigation arising in the
ordinary course of business which is expected to be covered by liability
insurance.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to CRLP's unitholders during the fourth
quarter of 2001.
PART II
Item 5. Market for Registrant's Common Equity and Related Shareholder
Matters.
There is no established public trading market for the Units. As of
March 11, 2002, there were 110 holders of record of Units.
CRLP has made consecutive quarterly distributions since its formation
in the third quarter of 1993. CRLP's ability to make distributions depends on a
number of factors, including its net cash provided by operating activities,
capital commitments and debt repayment schedules. Holders of Units are entitled
to receive distributions when, as and if declared by the Board of Trustees of
the Company, its general partner, out of any funds legally available for that
purpose.
The following table sets forth the distributions per Unit paid by CRLP
during the periods noted:
Calendar Period Distribution
2001:
First Quarter............................ $ .63
Second Quarter........................... $ .63
Third Quarter............................ $ .63
Fourth Quarter........................... $ .63
2000:
First Quarter............................ $ .60
Second Quarter........................... $ .60
Third Quarter............................ $ .60
Fourth Quarter........................... $ .60
Item 6. Selected Financial Data.
The following table sets forth selected financial and operating
information on a historical basis for CRLP for each of the five years ended
December 31, 2001.
Dollar amounts in thousands, except unit data 2001 2000 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------------
OPERATING DATA
Total revenue $316,325 $302,310 $282,248 $ 257,216 $ 184,126
Expenses:
Depreciation and amortization 72,357 63,884 55,185 48,647 23,533
Other operating expenses 103,326 96,893 94,038 87,821 46,819
Income from operations 140,642 141,533 133,025 120,748 87,267
Interest expense 71,397 71,855 57,211 52,063 40,496
Other income (expense), net 17,154 9,865 9,489 (62) 3,069
Income before extraordinary items 86,399 79,543 85,303 68,623 49,840
Distibutions to preferred unitholders 22,280 19,813 18,531 10,938 1,671
Net income available to common unitholders 64,119 59,312 66,144 57,284 44,519
Per unit - basic and diluted:
Net income 2.00 1.82 1.88 1.64 1.58
Distributions 2.52 2.40 2.32 2.20 2.00
- -------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA
Land, buildings, and equipment, net $ 1,756,255 $ 1,769,500 $ 1,586,332 $ 1,566,840 $ 1,268,430
Total assets 2,014,383 1,943,547 1,864,146 1,756,548 1,396,660
Total debt 1,191,791 1,179,095 1,039,863 909,322 702,044
- -------------------------------------------------------------------------------------------------------------------------
OTHER DATA
Total properties (at end of period) 108 115 111 106 93
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
GENERAL
CRLP is the operating partnership the Company, whose shares are listed on the
New York Stock Exchange. The Company is engaged in the ownership, development,
management, and leasing of multifamily communities, office buildings, retail
malls and shopping centers. The Company owns and operates properties in nine
states in the Sunbelt region of the United States. As of December 31, 2001,
CRLP's real estate portfolio consisted of 49 multifamily communities, 17 office
properties, and 42 retail properties.
CRLP manages its business with three separate and distinct operating divisions:
Multifamily, Office, and Retail. Each division has an Executive Vice President
that oversees growth and operations and has a separate management team that is
responsible for acquiring, developing, and leasing properties within each
division. This structure allows Colonial to utilize specialized management
personnel for each operating division. Although these divisions operate
independently from one another, constant communication among the Executive Vice
Presidents provides CRLP with unique synergy allowing CRLP to take advantage of
a variety of investment opportunities.
The following discussion should be read in conjunction with the Consolidated
Financial Statements and Notes to Consolidated Financial Statements appearing
elsewhere in this report. As used herein, the terms "Colonial" or "CRLP"
includes Colonial Properties Trust, and one or more of its subsidiaries
including, among others, CRLP.
Any statement contained in this report which is not a historical fact, or which
might be otherwise considered an opinion or projection concerning CRLP or its
business, whether express or implied, is meant as, and should be considered, a
forward-looking statement as that term is defined in the Private Securities
Litigation Reform Act of 1996. Forward-looking statements are based upon
assumptions and opinions concerning a variety of known and unknown risks,
including but not limited to changes in market conditions, the supply and demand
for leasable real estate, interest rates, increased competition, changes in
governmental regulations, and national and local economic conditions generally,
as well as other risks more completely described in CRLP's filings with the
Securities and Exchange Commission. If any of these assumptions or opinions
prove incorrect, any forward-looking statements made on the basis of such
assumptions or opinions may also prove materially incorrect in one or more
respects.
Results of Operations--2001 vs. 2000
In 2001, CRLP experienced growth in revenues and operating expenses, which is
primarily the result of the acquisition and development of 14 properties and the
expansion of one property during 2001 and 2000, net of the disposition of 15
properties during 2001 and 2000. As a result of the acquisitions, developments,
expansions, and dispositions, CRLP's income from operations decreased by $0.9
million, or 0.6%, for 2001 when compared to 2000. On a per unit basis, basic net
income is $2.00 for 2001, a 9.9% increase, compared to $1.82 for 2000. The
increase in net income available to common unitholders, on a per unit basis, is
primarily the result of the gain recognized on the sales of nine properties in
2001 of $15.7 million, compared to the gain of $8.2 million recognized in 2000
on the sale of six properties.
Revenues--Total revenues increased by $14.0 million, or 4.6%, during 2001 when
compared to 2000. Of this increase, $8.1 million relates to revenues generated
by properties that were acquired, developed, or expanded during 2001 and 2000,
net of properties disposed. The remaining increase primarily relates to
increases in rental rates at existing properties, lease buyouts, ancillary
income, and the consolidation of Colonial Properties Services, Inc. (CPSI)
during 2001. The office division accounts for the majority of the overall
revenue increase, approximately $6.8 million, while the retail and multifamily
divisions account for $5.7 million and $1.5 million, respectively. The
divisional revenue growth is primarily attributable to the acquisition,
development, and expansion of 8 multifamily properties, 3 office properties, and
4 retail properties, net of the disposition of 11 multifamily properties, one
office property, and 3 retail properties during 2001 and 2000.
Operating Expenses--Total operating expenses increased by $14.9 million, or
9.3%, during 2001 when compared to 2000. Of this increase, $3.5 million relates
to additional property operating expenses and additional depreciation and
amortization of $3.6 million associated with properties that were acquired,
developed, or expanded during 2001 and 2000, net of operating expenses of
properties disposed of during 2001 and 2000. Divisional property operating
expenses increased by $1.9 million, $3.9 million, and $5.8 million for the
multifamily, office, and retail divisions, respectively, during 2001 when
compared to 2000. The increase in divisional property operating expenses is
primarily attributable to the acquisition, development, and expansion of 8
multifamily properties, 3 office properties, and 4 retail properties, net of the
disposition of 11 multifamily properties, one office property, and 3 retail
properties during 2001 and 2000. The remaining change primarily relates to
increases in operating expenses at existing properties and the consolidation of
CPSI during 2001.
Other Income and Expenses--Interest expense decreased by $0.5 million, or 0.6%,
during 2001 when compared to 2000. The decrease in interest expense is primarily
attributable to the decrease in the variable interest rate environment in 2001
as compared to 2000, of which CRLP has $264.1 million of floating rate debt
outstanding as of December 31, 2001. Gains from sales of property increased $7.5
million during 2001 when compared to 2000, as a result of the sale of 9
properties in 2001 as compared to 6 properties in 2000.
Results of Operations--2000 vs. 1999
In 2000, CRLP experienced growth in revenues and operating expenses, which is
the result of the acquisition and development of 16 properties and the expansion
of 4 properties during 2000 and 1999, net of the disposition of 13 properties
during 2000 and 1999. As a result of the acquisitions, developments, expansions,
and dispositions, CRLP's income from operations increased by $8.5 million, or
6.4%, for 2000 when compared to 1999. On a per unit basis, net income is $1.82
for 2000, a 3.2% decrease, compared to $1.88 for 1999. The decrease in net
income available to common shareholders, on a per share basis, is directly
attributable to the increase in depreciation expense as a result of the
acquisition, development, and expansion of 20 properties in 2000 and 1999.
Revenues--Total revenues increased by $20.1 million, or 7.1%, during 2000 when
compared to 1999. Of this increase, $ 16.6 million relates to revenues generated
by properties that were acquired, developed, or expanded during 2000 and 1999,
net of properties disposed. The remaining increase primarily relates to
increases in rental rates at existing properties and lease buyouts during 2000.
The retail division accounts for the majority of the overall revenue increase,
approximately $10.5 million, while the office and multifamily divisions account
for $9.3 million and $0.3 million, respectively. The divisional revenue growth
is primarily attributable to the acquisition, development, and expansion of 12
multifamily properties, 4 office properties, and 4 retail properties, net of the
disposition of 12 multifamily properties and one retail property during 2000 and
1999.
Operating Expenses--Total operating expenses increased by $11.6 million, or
7.7%, during 2000 when compared to 1999. The majority of this increase relates
to additional property operating expenses of $3.6 million and additional
depreciation of $4.1 million associated with properties that were acquired,
developed, or expanded during 2000 and 1999, net of operating expenses of
properties disposed of during 2000 and 1999. Depreciation expense on existing
properties increased by $2.6 million during 2000 when compared to 1999.
Divisional property operating expenses increased by $0.9 million, $4.4 million,
and $5.4 million for the multifamily, office, and retail divisions,
respectively, during 2000 when compared to 1999. The increase in divisional
property operating expenses is primarily attributable to the acquisition,
development, and expansion of 12 multifamily properties, 4 office properties,
and 4 retail properties, net of the disposition of 12 multifamily properties and
one retail property during 2000 and 1999. The remaining change primarily relates
to increases in operating expenses at existing properties.
Other Income and Expenses--Interest expense increased by $14.6 million, or
25.6%, during 2000 when compared to 1999. The increase in interest expense is
primarily attributable to the issuance of $152.5 million in Medium Term Notes
during 2000 and 1999, and the increased usage of CRLP's line of credit in
conjunction with the financing of acquisitions, developments, expansions, and
investment activities.
LIQUIDITY AND CAPITAL RESOURCES
During 2001, CRLP invested $161.8 million in the acquisition, development,
re-development, and expansion of properties. This acquisition and development
activity increased CRLP's multifamily, office, and retail property holdings.
CRLP financed the growth through proceeds from the issuance of $50.0 million of
preferred stock through the Company, public offerings of debt totaling $10.0
million during 2001, advances on its bank line of credit, disposition of assets,
and cash from operations.
Acquisition and Development Activities
Multifamily Properties--During 2001, CRLP completed development of 440 apartment
units in two multifamily communities and acquired land on which it intends to
develop additional multifamily communities. The aggregate investment in the
multifamily developments during 2001 was $39.0 million. As of December 31, 2001,
CRLP has 544 apartment units in 3 multifamily communities under development or
redevelopment. Management anticipates that the 3 multifamily projects will be
completed during 2002. Management estimates that it will invest an additional
$3.3 million to complete these multifamily communities.
Office Properties--During 2001, CRLP increased its office portfolio by 318,161
square feet with the development of two office buildings. In addition, CRLP
began development on two office properties in Orlando, Florida. The aggregate
investment in the office developments during 2001 was $57.5 million. Management
estimates that it will invest an additional $33.0 million to complete these
properties.
Retail Properties--During 2001, CRLP completed the redevelopment of two retail
properties, and began the development of one community shopping center in
Birmingham, Alabama. The aggregate investment in the retail developments during
2001 was $61.0 million. Management anticipates that it will invest an additional
$11.4 million to complete the retail development.
Financing Activities
CRLP funded a portion of its developments and expansions through the issuance of
debt securities and preferred stock of the Company. During June 2001, the
Company issued 2,000,000 preferred shares of beneficial interest (Series C
Preferred Shares). The Series C Preferred Shares pay a quarterly dividend at
9.25% per annum and may be redeemed by the Company on or after June 19, 2006.
The Series C Preferred Shares have no stated maturity, sinking fund or mandatory
redemption and are not convertible into any other securities of the Company. The
Series C Preferred Shares have a liquidation preference of $25.00 per share. The
net proceeds of the offering were approximately $48.1 million and were used to
repay outstanding balances under CRLP's unsecured line of credit. During
December 2001, CRLP completed one unsecured medium-term debt offering of $10.0
million at 7.46% with a maturity of December 2006. Additionally, during 2001,
CRLP received proceeds of $39.0 million related to the secured financing of two
properties, which are collateralized by the properties.
CRLP continued its asset recycling program, which allows CRLP to sell mature,
slower growing assets and reinvest the proceeds into opportunities with more
growth potential. During 2001, CRLP disposed of six multifamily properties
representing 1,373 units, one office property representing 34,357 square feet,
and two retail properties representing 304,168 square feet. The multifamily,
office, and retail properties were sold for a total purchase price of $83.5
million, of which $4.5 million was used to repay a secured loan, $11.6 million
was issued as a note receivable, and the remaining proceeds were used to repay a
portion of the borrowings under CRLP's unsecured line of credit and to support
CRLP's future investment activities.
As of December 31, 2001, CRLP has an unsecured bank line of credit providing for
total borrowings of up to $300 million. This line of credit agreement bears
interest at LIBOR plus 115 basis points, is renewable in March 2003, and
provides for a two-year amortization in the case of non-renewal. The line of
credit agreement includes a competitive bid feature that will allow CRLP to
convert up to $150 million under the line of credit to a fixed rate, for a fixed
term not to exceed 90 days. The credit facility is primarily used by CRLP to
finance property acquisitions and development and has an outstanding balance at
December 31, 2001, of $261.4 million. The interest rate of this short-term
borrowing facility, including the competitive bid balance, is 3.08% and 7.66% at
December 31, 2001 and 2000, respectively.
At December 31, 2001, CRLP's total outstanding debt balance was $1.2 billion.
The outstanding balance includes fixed rate debt of $926.4 million, or 77.8%,
and floating-rate debt of $264.1 million, or 22.2%. CRLP's total market
capitalization as of December 31, 2001 was $2.5 billion and its ratio of debt to
total market capitalization was 48.3%. Certain loan agreements of CRLP contain
restrictive covenants, which among other things require maintenance of various
financial ratios. At December 31, 2001, CRLP was in compliance with these
covenants.
Derivative Instruments
In the normal course of business, CRLP is exposed to the effect of interest rate
changes. CRLP limits these risks by following established risk management
policies and procedures including the use of derivatives. For interest rate
exposures, derivatives are used primarily to align rate movements between
interest rates associated with CRLP's leasing income and other financial assets
with interest rates on related debt, and manage the cost of borrowing
obligations.
CRLP does not use derivatives for trading or speculative purposes. Further, CRLP
has a policy of only entering into contracts with major financial institutions
based upon their credit ratings and other factors. When viewed in conjunction
with the underlying and offsetting exposure that the derivatives are designed to
hedge, CRLP has not sustained a material loss from those instruments nor does it
anticipate any material adverse effect on its net income or financial position
in the future from the use of derivatives.
CRLP has entered into several different hedging transactions in an effort to
manage exposure to changes in interest rates. The following table summarizes the
notional values, fair values and other characteristics of CRLP's derivative
financial instruments at December 31, 2001. The notional value at December 31,
2001 provides an indication of the extent of CRLP's involvement in these
instruments at that time, but does not represent exposure to credit, interest
rate, or market risk.
Interest Fair Value
Product Type Notional Value Rate Maturity (in thousands)
- --------------------------------------------- -------------------------- ------------ ------------- ------------------
1) Interest Rate SWAP, Cash Flow $30.2 - $27.7 million 5.932% 1/01/06 $ (1,549)
2) Interest Rate SWAP, Cash Flow $75.0 million 2.130% 12/10/02 32
3) Interest Rate SWAP, Cash Flow $50.0 million 2.319% 1/01/03 (39)
4) Interest Rate SWAP, Cash Flow $25.0 million 2.430% 1/01/03 (47)
5) Interest Rate SWAP, Fair Value $50.0 million 5.015% 7/26/04 1,293
6) Interest Rate CAP, Cash Flow $21.1 million 6.850% 6/29/04 99
7) Interest Rate CAP, Cash Flow $17.9 million 6.850% 7/06/04 85
8) Interest Rate CAP, Cash Flow $30.4 million 11.200% 6/30/03 1
Most of CRLP's hedges are designated as cash flow hedges. Cash flow hedges hedge
the future cash flows of current or forecasted debt. Interest rate swaps that
convert variable payments to fixed payments, interest rate caps, floors,
collars, and forwards are cash flow hedges. The unrealized gains/losses in the
fair value of these hedges are reported on the balance sheet with a
corresponding adjustment to either accumulated other comprehensive income (loss)
or in earnings--depending on the type of hedging relationship. If the hedging
transaction is a cash flow hedge, then the offsetting gains and losses are
reported in accumulated other comprehensive income (loss). If the hedging
transaction is characterized as a fair value hedge, then the changes in fair
value of the hedge and the hedged item are reflected in earnings. If the fair
value hedging relationship is fully effective, there is no net effect reflected
in income or accumulated other comprehensive income (loss), and any offsets to
the hedging transaction is reflected in notes and mortgages payable. Over time,
the unrealized gains and losses held in accumulated other comprehensive income
(loss) will be reclassified to earnings. This reclassification is consistent
with when the hedged items are also recognized in earnings. Within the next
twelve months, CRLP expects to reclassify to earnings approximately $0.4 million
of the current balance held in accumulated other comprehensive income (loss).
CRLP hedges its exposure to the variability in future cash flows for forecasted
transactions over a maximum period of 12 months. During the forecasted period,
unrealized gains and losses in the hedging instrument will be reported in
accumulated other comprehensive income (loss). Once the hedged transaction takes
place, the hedge gains and losses will be reported in earnings during the same
period in which the hedged item is recognized in earnings.
Colonial is exposed to credit losses in the event of nonperformance by the
counterparties to its interest rate cap and nonderivative financial assets but
has no off-balance-sheet credit risk of accounting loss. CRLP anticipates,
however, that counterparties will be able to fully satisfy their obligations
under the contracts. Colonial does not obtain collateral or other security to
support financial instruments subject to credit risk but monitors the credit
standing of counterparties.
Other Arrangements
In September 2001, CRLP entered into an agreement to provide services to a third
party in connection with the third party's development of a $30 million
multi-family property in North Carolina. CRLP was engaged to serve as
development consultant and leasing and management agent for this property. In
addition, for a fee, CRLP is serving as a guarantor for a $3.3 million working
capital loan obtained by the three principals of the third party entity, which
loan is primarily collateralized jointly and severally by the personal assets of
the borrowers. CRLP has a right of first refusal to purchase the property should
the third party elect to sell. Over the term of the agreement, CRLP expects to
earn market fees for its services.
Critical Accounting Policies
CRLP's accounting policies are critical to understanding the results of
operations as reported in the consolidated financial statements. Significant
accounting policies utilized by CRLP are discussed in more detail in the notes
to consolidated financial statements of CRLP's Annual Report. Management
believes that CRLP's accounting policies that are the most significant and that
require the most judgment are within its accounting for the development of real
estate projects. Management believes that the following accounting policies
within this process are both important to the portrayal of CRLP's financial
condition and results and requires significant judgment or complex estimation
processes. CRLP capitalizes predevelopment costs paid to third parties incurred
on a project. All previously capitalized predevelopment costs are expensed when
it is no longer probable that the project will be completed. Once development of
a project commences, CRLP capitalizes all direct costs incurred to construct the
project, including real estate taxes. In addition, certain allocable overhead
expenses are allocated to the projects and capitalized based on the personnel
assigned to development and the investment in the project relative to all
development projects. Once a project is completed and placed in service, it is
depreciated over its estimated useful life. Buildings and improvements are
depreciated generally over 40 years and leasehold improvements are amortized
over the lives of the applicable leases or the estimated useful life of the
asset, whichever is shorter.
OUTLOOK
Management intends to maintain CRLP's strength through continued
diversification, while pursuing acquisitions and developments that meet CRLP's
criteria for property quality, market strength, and investment return.
Management will continue to use its line of credit to provide short-term
financing for acquisition, development, and expansion activities and plans to
continue to replace significant borrowings under the bank line of credit with
funds generated from the sale of additional equity securities and permanent
financing, as market conditions permit. Management believes that these potential
sources of funds, along with the possibility of issuing limited partnership
units in exchange for properties, will provide CRLP with the means to finance
additional acquisitions, developments, and expansions.
In addition to the issuance of equity and debt, management is investigating
alternate financing methods and sources to raise future capital. Private
placements, joint ventures, and non-traditional equity and debt offerings are
some of the alternatives CRLP is contemplating.
Management anticipates that its net cash provided by operations and its existing
cash balances will provide the necessary funds on a short- and long- term basis
to cover its operating expenses, interest expense on outstanding indebtedness,
recurring capital expenditures, and dividends to unitholders in accordance with
Internal Revenue Code requirements applicable to real estate investment trusts.
INFLATION
Leases at the multifamily properties generally provide for an initial term of
six months to one year and allow for rent adjustments at the time of renewal.
Leases at the office properties typically provide for rent adjustments and the
pass-through of certain operating expenses during the term of the lease.
Substantially all of the leases at the retail properties provide for the
pass-through to tenants of certain operating costs, including real estate taxes,
common area maintenance expenses, and insurance. All of these provisions permit
CRLP to increase rental rates or other charges to tenants in response to rising
prices and, therefore, serve to minimize CRLP's exposure to the adverse effects
of inflation.
An increase in general price levels may immediately precede, or accompany, an
increase in interest rates. At December 31, 2001, CRLP's exposure to rising
interest rates was mitigated by the existing debt level of 48.3% of CRLP's total
market capitalization, the high percentage of fixed rate debt (77.8%), and the
use of interest rate swaps to effectively fix the interest rate on $75.0 million
through December 2002, $75.0 million through January 2003, and approximately
$30.0 million through January 2006. As a result, for the short-term, increases
in interest expense resulting from increasing inflation is anticipated to be
less than future increases in income before interest.
Item 7a. Quantitative and Qualitative Disclosures about Market Risk
CRLP is exposed to interest rate changes primarily as a result of its
line of credit and long-term debt used to maintain liquidity and fund capital
expenditures and expansion of CRLP's real estate investment portfolio and
operations. CRLP's interest rate risk management objective is to limit the
impact of interest rate changes on earnings and cash flows and to lower it's
overall borrowing costs. To achieve its objectives, CRLP borrows primarily at
fixed rates and may enter into derivative financial instruments such as interest
rate swaps, caps and treasury locks in order to mitigate its interest rate risk
on a related financial instrument. CRLP does not enter into derivative or
interest rate transactions for speculative purposes.
The table below presents the principal amounts, weighted average interest rates,
fair values and other terms required by year of expected maturity to evaluate
the expected cash flows and sensitivity to interest rate changes. Also included
is a summary of the CRLP's swap contracts and rate caps at December 31, 2001.
Estimated
Fair
(amounts in thousands) 2002 2003 2004 2005 2006 Thereafter Total Value
- ------------------------------------------------------------------------------------------------------------------------------------
Fixed Rate Debt $ 57,500 243,227 50,000 76,544 75,000 424,166 926,437 939,184
- ------------------------------
Average interest rate
at December 31, 2001 7.9% 4.8% 7.6% 7.6% 8.0% 7.4% 6.8% -
Variable Debt $ 543 126,365 50,000 - - 87,153 264,061 264,061
- ------------------------------
Average interest rate
at December 31, 2001 8.0% 3.2% 5.0% - - 2.5% 3.4% -
Interest Rate SWAPs
- ------------------------------
Variable to fixed $ - 150,000 - - 29,762 - 179,762 (1,603)
Average pay rate - 2.2% - - 6.6% - 3.0% -
Fixed to variable $ - - 50,000 - - - 50,000 1,293
Average pay rate - - 5.2% - - - 5.2% -
Interest Rate Caps $ - 30,379 38,988 - - - 69,367 185
Interest Rate - 11.2% 6.9% - - - 8.8% -
The table incorporates only those exposures that exist as of December 31, 2001;
it does not consider those exposures or positions, which could arise after that
date. Moreover, because firm commitments are not presented in the table above,
the information presented therein has limited predictive value. As a result,
CRLP's ultimate realized gain or loss with respect to interest rate fluctuations
will depend on the exposures that arise during the period, CRLP's hedging
strategies at that time, and interest rates.
Item 8. Financial Statements and Supplementary Data.
The following are filed as a part of this report:
Report of Independent Accountants
Financial Statements:
Consolidated Balance Sheets as of December 31, 2001 and 2000
Consolidated Statements of Income for the years ended December 31,
2001, 2000, and 1999
Consolidated Statements of Partner's Capital for the years ended
December 31, 2001, 2000, and 1999
Consolidated Statements of Cash Flows for the years ended December 31,
2001, 2000, and 1999
Notes to Consolidated Financial Statements
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
December 31, 2001 and 2000
---------- ----------
2001 2000
--------- ----------
ASSETS
Land, buildings, & equipment, net $1,756,255 $1,769,500
Undeveloped land and construction in progress 152,084 81,333
Cash and equivalents 10,127 4,275
Restricted cash 2,255 2,479
Accounts receivable, net 12,309 13,798
Prepaid expenses 7,072 4,086
Notes receivable 12,253 10,524
Deferred debt and lease costs 18,568 17,581
Investment in partially owned entities 31,594 28,129
Other assets 11,866 11,842
---------- ----------
$2,014,383 $1,943,547
---------- ----------
LIABILITIES AND PARTNERS' CAPITAL
Notes and mortgages payable $1,191,791 $1,179,095
Accounts payable 18,430 482
Accounts payable to affiliates 2,271 1,632
Accrued interest 11,485 13,019
Accrued expenses 4,520 1,859
Tenant deposits 3,607 4,009
Unearned rent 8,343 4,442
Other liabilities 1,296 1,517
---------- ---------
Total liabilities 1,241,743 1,206,055
---------- ---------
Redeemable units, at redemption value 347,604 292,570
Preferred units:
Series A Preferred Units 125,000 125,000
Series B Preferred Units 100,000 100,000
Series C Preferred Units 50,000 -0-
Partners' capital excluding redeemable units 150,036 219,922
---------- ----------
$2,014,383 $1,943,547
---------- ----------
The accompanying notes are an integral part of these financial statements.
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except Per Share Data)
For the Years Ended December 31, 2001, 2000 and 1999
--------- --------- ---------
2001 2000 1999
--------- --------- ---------
Revenue:
Base rent $ 251,551 $ 239,359 $ 225,781
Base rent from affiliates 1,135 1,478 1,144
Percentage rent 3,637 5,699 4,683
Tenant recoveries 37,514 37,051 32,913
Other 22,488 18,723 17,727
--------- --------- ---------
Total revenue 316,325 302,310 282,248
--------- --------- ---------
Property operating expenses:
General operating expenses 21,531 21,067 20,324
Salaries and benefits 15,642 15,835 14,547
Repairs and maintenance 29,141 28,685 27,664
Taxes, licenses, and insurance 26,154 22,914 23,061
General and administrative 10,858 8,392 8,442
Depreciation 64,700 59,549 52,913
Amortization 7,657 4,335 2,272
--------- --------- ---------
Total operating expenses 175,683 160,777 149,223
--------- --------- ---------
--------- --------- ---------
Income from operations 140,642 141,533 133,025
--------- --------- ---------
Other income (expense):
Interest expense (71,397) (71,855) (57,211)
Income from partially owned entities 1,510 1,700 2,045
State and local income taxes (15) -0- -0-
Ineffectiveness of hedging activities (15) -0- -0-
Gains from sales of property 15,674 8,165 7,444
--------- --------- ---------
Total other expense (54,243) (61,990) (47,722)
--------- --------- ---------
Income before extraordinary items 86,399 79,543 85,303
Extraordinary loss from early extinguishment of debt -0- (418) (628)
--------- --------- ---------
Net income 86,399 79,125 84,675
Distributions to preferred unitholders (22,280) (19,813) (18,531)
--------- --------- ---------
--------- --------- ---------
Net income available to common unitholders 64,119 59,312 66,144
--------- --------- ---------
Basic net income per unit:
Income before extraordinary item $ 2.00 $ 1.83 $ 1.90
Extraordinary loss from early extinguishment of debt -0- (0.01) (0.02)
--------- --------- ---------
Net income per common unit $ 2.00 $ 1.82 $ 1.88
--------- --------- ---------
Diluted net income per unit:
Income before extraordinary item $ 2.00 $ 1.83 $ 1.90
Extraordinary loss from early extinguishment of debt -0- (0.01) (0.02)
--------- --------- ---------
Net income per common unit $ 2.00 $ 1.82 $ 1.88
--------- --------- ---------
Weighted average common units outstanding 32,003 32,611 35,183
--------- --------- ---------
The accompanying notes are an integral part of these financial statements.
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
(Amounts in Thousands)
For the Years Ended December 31, 2001, 2000 and 1999
Total
Partners'
Capital
--------
Balance, December 31, 1998 $ 529,127
Cash contributions 3,686
Issuance of preferred units 97,406
Distributions (86,295)
Redemption of partnership units (122,144)
Net income 66,144
Earnings in minority interest property 82
Issuance of limited partnership units 14,493
Allocations to redeemable units 27,585
--------
Balance, December 31, 1999 530,084
Cash contributions 10,120
Distributions (79,435)
Redemption of partnership units (37,937)
Net income 59,312
Issuance of limited partnership units 337
Allocations to redeemable units (37,559)
--------
Balance, December 31, 2000 444,922
Cash contributions 4,942
Issuance of preferred units 48,125
Distributions (102,916)
Net income 86,399
Change in fair value of hedging activity (1,403)
Allocations to redeemable units (55,033)
--------
Balance, December 31, 2001 425,036
--------
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
For the Years Ended December 31, 2001, 2000 and 1999
--------- --------- ----------
2001 2000 1999
--------- --------- ----------
Cash flows from operating activities:
Net income $ 86,399 $ 79,125 $ 84,675
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 72,357 63,884 55,185
Income from partially owned entities (1,510) (1,700) (2,045)
Gains from sales of property (15,674) (8,165) (7,444)
Other, net 1,064 1,932 1,767
Decrease (increase) in:
Restricted cash 224 155 263
Accounts receivable 425 (4,621) (2,594)
Prepaid expenses (2,986) (1,327) 805
Other assets (6,874) (11,567) (3,939)
Increase (decrease) in:
Accounts payable (1,840) (13,059) 2,353
Accrued interest (3,051) 1,635 850
Accrued expenses and other 7,346 (1,622) (179)
--------- --------- ----------
Net cash provided by operating activities 135,880 104,670 129,697
--------- --------- ----------
Cash flows from investing activities:
Acquisition of properties -0- (25,535) (45,164)
Development expenditures (48,744) (21,693) (98,414)
Development expenditures paid to an affiliate (89,047) (78,066) (84,256)
Tenant improvements (21,278) (24,592) (8,424)
Proceeds from (issuance of) notes receivable 9,859 (2,679) (88)
Capital expenditures (13,582) (16,194) (18,867)
Proceeds from sales of property, net of selling costs 76,190 57,771 119,552
Distributions from partnerships 2,695 3,968 8,821
Capital contributions to partnerships (4,764) (5,775) (5,237)
--------- --------- ----------
Net cash used in investing activities (88,671) (112,795) (132,077)
--------- --------- ----------
Cash flows from financing activities:
Principal reductions of debt (84,553) (40,346) (59,507)
Proceeds from additional borrowings 48,988 193,518 136,200
Net change in revolving credit balances 46,968 (13,940) 53,848
Proceeds from preferred unit issuance, net of expenses paid 48,122 -0- 97,396
Cash contributions 4,172 10,120 3,686
Redemption of partnership units -0- (37,937) (122,136)
Distributions to common and preferred unitholders (102,916) (99,248) (104,826)
Payment of mortgage financing cost (1,794) (3,979) (1,607)
Other, net (344) (418) (626)
--------- --------- ----------
Net cash provided by (used in) financing activities (41,357) 7,770 2,428
--------- --------- ----------
Increase (decrease) in cash and equivalents 5,852 (355) 48
Cash and equivalents, beginning of period 4,275 4,630 4,582
--------- --------- ----------
Cash and equivalents, end of period $ 10,127 $ 4,275 $ 4,630
--------- --------- ----------
Supplemental disclosures of cash flow information:
Cash paid during the year for interest, net of amounts capitalized $ 74,448 $ 70,210 $ 56,352
--------- --------- ----------
The accompanying notes are an integral part of these financial statements.
1. Organization and Basis of Presentation
Organization - Colonial Realty Limited Partnership (the "Operating
Partnership" or "CRLP"), a Delaware limited partnership, is the operating
partnership of Colonial Properties Trust (the "Company"), an Alabama real estate
investment trust ("REIT") whose shares are listed on the New York Stock Exchange
("NYSE"). CRLP is engaged in the ownership, development, management, and leasing
of multifamily housing communities, office buildings, and retail malls and
centers. CRLP also owns certain parcels of land.
Federal Income Tax Status - The Company, which is considered a
corporation for federal income tax purposes, qualifies as a REIT for federal
income tax purposes and generally will not be subject to federal income tax to
the extent it distributes its REIT taxable income to its shareholders. REITs are
subject to a number of organizational and operational requirements. If the
Company fails to qualify as a REIT in any taxable year, the Company will be
subject to federal income tax on its taxable income at regular corporate rates.
No provision for federal income taxes is included in the financial statements.
The Company may be subject to certain state and local taxes on its income and
property.
Principles of Consolidation - The consolidated financial statements
include the Operating Partnership and Colonial Properties Services Limited
Partnership (in which CRLP holds 99% general and limited partner interests).
Investments in Partially Owned Entities - Partnerships and corporations
in which CRLP owns a 50% or less interest and does not control are reflected in
the consolidated financial statements as investments accounted for under the
equity method. Under this method the investment is carried at cost plus or minus
equity in undistributed earnings or losses since the date of acquisition.
2. Summary of Significant Accounting Policies
Land, Buildings, and Equipment--Land, buildings, and equipment is
stated at the lower of cost, less accumulated depreciation, or net realizable
value. CRLP reviews its long-lived assets and certain intangible assets for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of the asset
to future net cash flows expected to be generated by the asset. If an asset is
considered to be impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the asset exceeds the asset's fair value.
Assets to be disposed of are reported at the lower of their carrying amount or
fair value less cost to sell. Depreciation and amortization are suspended during
the sale period, which is not expected to be greater than one year. Depreciation
is computed using the straight-line method over the estimated useful lives of
the assets, which range from 7 to 40 years. Repairs and maintenance are charged
to expense as incurred. Replacements and improvements are capitalized and
depreciated over the estimated remaining useful lives of the assets. When items
of land, buildings, or equipment are sold or retired, the related cost and
accumulated depreciation are removed from the accounts and any gain or loss is
included in the results of operations.
Undeveloped Land and Construction in Progress--Undeveloped land and
construction in progress is stated at cost. CRLP capitalizes all costs
associated with land development and construction.
Capitalization of Interest--CRLP capitalizes interest during periods in
which property is undergoing development activities necessary to prepare the
asset for its intended use.
Cash and Equivalents--CRLP includes highly liquid marketable securities
and debt instruments purchased with a maturity of three months or less in cash
equivalents.
Restricted Cash--Cash which is legally restricted as to use consists
primarily of tenant deposits. Deferred Debt and Lease Costs--Amortization of
debt costs is recorded using the straight-line method, which approximates the
effective interest method, over the terms of the related debt. Direct leasing
costs are amortized using the straight-line method over the terms of the related
leases.
Derivative Instruments--CRLP adopted Statement of Financial Accounting
Standard (SFAS) No. 133 (subsequently amended by SFAS Nos. 137 and 138),
Accounting for Derivative Instruments and Hedging Activities, on January 1,
2001. This statement requires all derivatives to be recognized on the balance
sheet and measured at fair value. Derivatives that do not qualify for hedge
treatment under SFAS No. 133 must be recorded at fair value with gains or losses
recognized in earnings in the period of change. CRLP has certain involvement
with derivative financial instruments but does not use them for trading or
speculative purposes. Interest rate cap agreements and interest rate swaps are
used to reduce the potential impact of increases in interest rates on
variable-rate debt.
CRLP formally documents all relationships between hedging instruments
and hedged items, as well as its risk management objective and strategy for
undertaking the hedge. This process includes specific identification of the
hedging instrument and the hedge transaction, the nature of the risk being
hedged and how the hedging instrument's effectiveness in hedging the exposure to
the hedged transaction's variability in cash flows attributable to the hedged
risk will be assessed. Both at the inception of the hedge and on an ongoing
basis, CRLP assesses whether the derivatives that are used in hedging
transactions are highly effective in offsetting changes in cash flows or fair
values of hedged items. CRLP is required to discontinue hedge accounting if a
derivative is not determined to be highly effective as a hedge or has ceased to
be a highly effective hedge.
Treasury lock agreements are used by CRLP to set interest rates in
anticipation of public debt offerings. Treasury locks are presented on the
balance sheet, with any gains or losses recorded in Other Comprehensive Income
(Loss) and amortized over the life of the debt. All unutilized treasury locks
are expensed when their future utility expires. All treasury locks were utilized
during 2001 and 2000.
Revenue Recognition--Rental income attributable to leases is recognized
on a straight-line basis over the terms of the leases. Certain leases contain
provisions for additional rent based on a percentage of tenant sales. Percentage
rents are recognized in the period in which sales thresholds are met. Recoveries
from tenants for taxes, insurance, and other property operating expenses are
recognized in the period the applicable costs are incurred.
Other income received from long-term contracts signed in the normal
course of business are recognized in accordance with the terms of the specific
contract. Property management and development fee income is recognized when
earned for services provided to third parties.
Net Income Per Unit--Basic net income per unit is calculated by
dividing the net income available to common unitholders by the weighted average
numbers of common units outstanding during the periods. Diluted net income per
unit is calculated by dividing the net income available to common unitholders by
the weighted average number of common units outstanding during the periods,
adjusted for the assumed conversion of all potentially dilutive unit options.
Use of Estimates--The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the reported amounts of revenues and
expenses. Actual results could differ from those estimates.
Segment Reporting--Reportable segments are identified based upon
management's approach for making operating decisions and assessing performance
of CRLP.
Software Development--CRLP capitalizes certain internally developed
software costs. Capitalized internal software development costs are amortized
using the straight-line method over the estimated useful lives of the software.
Common Unit Repurchases-- During 1999, the Company's Board of Trustees
authorized a common unit repurchase program under which the Company may
repurchase up to $150 million of its currently outstanding common units from
time to time at the discretion of management in open market and negotiated
transactions. To date, the Company has repurchased 5,623,150 units at an all-in
cost of approximately $150 million, which represents an average purchase price
of $26.70. These units are included within treasury stock, which is a reduction
of partners' capital.
Reclassifications--Certain immaterial reclassifications have been made
to the 1999 and 2000 financial statements in order to conform them to the 2001
financial statement presentation. These reclassifications have no impact on
partners' capital or net income.
Recent Pronouncements of the Financial Accounting Standards Board
(FASB)--FASB Statement No. 144 (SFAS No. 144), Accounting for the Impairment or
Disposal on Long-Lived Assets, addresses significant issues relating to the
implementation of FASB Statement No. 121 (SFAS No. 121), Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and
to develop a single accounting model, based on the framework established in SFAS
No. 121, for long-lived assets to be disposed of by sale, whether previously
held and used or newly acquired. SFAS No. 144 is effective for fiscal years
beginning after December 15, 2001. CRLP is currently evaluating the impact that
the adoption of SFAS No. 144 will have on its financial statements.
3. Property Acquisitions and Dispositions
CRLP acquired one operating property during 2000, and two operating
properties during 1999 at aggregate costs of $25.4 million, and $45.8 million,
respectively. CRLP funded these acquisitions with cash proceeds from its public
offerings of debt (see Note 8), advances on bank lines of credit, the issuance
of limited partnership units, the proceeds received from the formation of joint
ventures (see Note 6), the proceeds received from the issuance of preferred
units (see Note 12), and cash from operations. There were no property
acquisitions in 2001.
The properties acquired during 2000 and 1999 are listed below:
Effective
Acquisition
Location Date
-----------------------------------
Office Properties:
Emmett R. Johnson Building Birmingham, AL June 1, 1999
Retail Properties:
The Plaza Mall Greenville, NC August 1, 1999
Temple Mall Temple, TX July 1, 2000
In addition to the acquisition of the operating properties mentioned
above, CRLP also acquired a parcel of land in October 1999 through the issuance
of 388,898 limited partnership units valued at $10.3 million. Also, in September
2000, CRLP acquired a parcel of land from a related party through the issuance
of 12,477 limited partnership units valued at approximately $0.3 million. (see
Note 15)
Results of operations of these properties, subsequent to their
respective acquisition dates, are included in the consolidated financial
statements of CRLP. The cash paid to acquire these properties is included in the
statements of cash flows. The acquisitions during 2000 and 1999 are comprised of
the following:
(in thousands) 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------------------
Assets purchased:
Land, buildings, and equipment $ - $ 26,218 $ 56,026
Other assets - 472 60
- -----------------------------------------------------------------------------------------------------------------------------
- 26,690 56,086
Notes and mortgages assumed - 0 0
Other liabilities assumed or recorded - (818) (660)
Issuance of limited partnership units -
of Colonial Realty Limited Partnership - (337) (10,262)
- -----------------------------------------------------------------------------------------------------------------------------
Cash paid $ - $ 25,535 $ 45,164
- -----------------------------------------------------------------------------------------------------------------------------
During 2001, CRLP disposed of six multifamily properties representing
1,373 units, one office property representing 34,357 square feet, and two retail
properties representing 304,168 square feet. The multifamily, office, and retail
properties were sold for a total purchase price of $83.5 million, of which $4.5
million was used to repay a secured loan, $11.6 million was issued as a note
receivable, and the remaining proceeds were used to repay a portion of the
borrowings under CRLP's unsecured line of credit, and to support CRLP's future
investment activities.
During 2000, CRLP disposed of five multifamily properties representing
1,132 units and one retail property representing 165,684 square feet. The
multifamily and retail properties were sold for a total purchase price of $67.6
million, of which $17.3 million was used to repay four secured loans, $7.2
million was issued as a note receivable, and remaining proceeds were used to
repay a portion of the borrowings under CRLP's unsecured line of credit, fund
additional acquisitions, and to support CRLP's future investment activities.
During 2000, CRLP sold four of these properties to a joint venture
formed by CRLP and an unrelated party. CRLP retained a 15% interest in the joint
venture and serves as manager of the properties. CRLP accounts for its 15%
interest in this joint venture as an equity investment (see Note 6).
During 1999, CRLP disposed of seven multifamily properties,
representing 2,319 units. The properties were sold for a total purchase price of
$119.8 million, of which $15.0 million was used to repay two secured loans, and
the remaining proceeds were used to repay a portion of the borrowings under
CRLP's unsecured line of credit, fund additional acquisitions, and to support
CRLP's future investment activities.
During 1999, CRLP sold six of these properties to a joint venture
formed by CRLP and an unrelated party. CRLP retained a 15% interest in the joint
venture and serves as manager of the properties. CRLP accounts for its 15%
interest in this joint venture as an equity investment (see Note 6).
4. Land, Buildings, and Equipment
Land, buildings, and equipment consists of the following at December
31, 2001 and 2000:
(in thousands)
2001 2000
----------- -----------------
Buildings $ 1,635,898 $ 1,621,355
Furniture and fixtures 49,965 54,127
Equipment 25,706 19,565
Land improvements 47,659 48,300
Tenant improvements 76,919 43,242
----------- -----------------
1,836,147 1,786,589
Accumulated depreciation (310,447) (255,735)
----------- -----------------
1,525,700 1,530,854
Land 230,555 238,646
----------- -----------------
$ 1,756,255 $ 1,769,500
=========== =================
5. Undeveloped Land and Construction in Progress
During 2001 the CRLP completed the construction of two office
development projects and two retail redevelopment projects at a combined total
cost of $89.9 million. The office development projects produced 318,161 square
feet of new office space. The completed development and redevelopment projects
are as follows:
Total
Units/ Total
Completed Developments and Redevelopments: Location Sq. Feet Cost
------------- -------- --------
Office Properties
Colonial Center at Mansell Overlook 500 Atlanta, GA 163,248 $19,114
Colonial Center at TownPark 100 Orlando, FL 154,913 17,974
------- -------
318,161 $37,088
------- -------
Retail Properties
Colonial Brookwood Village (redevelopment) Birmingham, AL 687,078 46,680
Northdale Court (redevelopment) Tampa, FL 192,726 6,158
------- -------
879,804 $52,838
------- -------
Total $89,926
=======
CRLP currently has six active development and redevelopment projects in
progress and various parcels of land available for expansion, construction, or
sale. Undeveloped land and construction in progress is comprised of the
following at December 31, 2001:
Total Costs
Units/ Estimated Capitalized
Square Estimated Total Costs To Date
Feet Completion (in thousands) (in thousands)
----------- ------------ --------------- ----------------
Multifamily Projects:
Colonial Grand at TownPark - Lake Mary 456 2002 $ 38,133 $ 35,374
Colonial Grand at TownPark - Sarasota 272 2002 21,188 20,688
Colonial Village at Walton Way (redevelopment) 256 2002 3,500 3,495
----------- --------------- --------------
Total Multifamily Projects 984 62,821 59,557
Office Projects:
Colonial Center at TownPark 200 155,000 2002 21,181 8,282
Colonial Center at TownPark 600 200,000 2002 27,876 7,816
----------- ------------- --------------
Total Office Projects 355,000 49,057 16,098
Retail Projects:
Colonial Promenade Hoover 167,041 2002 18,705 7,329
Mixed Use Projects Infrastructure:
Colonial TownPark - Lake Mary 33,168 27,050
Colonial TownPark - Sarasota 6,410 4,591
Colonial Center at Mansell 10,794 9,743
Other Projects and Undeveloped Land 27,716
----------------
$ 152,084
================
Interest capitalized on construction in progress during 2001, 2000, and
1999 was $10.6 million, $9.6 million, and $8.7 million, respectively.
6. Investment in Partially Owned Entities
Investment in partially owned entities at December 31, 2001 and 2000
consists of the following:
(in thousands)
Percent
Owned 2001 2000
----------- ------------- -------------
Multifamily:
CMS/Colonial Joint Venture I 15.00% $ 2,195 $ 2,396
CMS/Colonial Joint Venture II 15.00% 745 984
------------- ------------
2,940 3,380
Office:
600 Building Partnership, Birmingham, AL 33.33% (26) (27)
Retail:
Orlando Fashion Square Joint Venture, Orlando, FL 50.00% 20,783 18,981
Parkway Place Limited Partnership, Huntsville, AL 45.00% 8,052 5,742
Colonial Promenade Madison, Huntsville, AL 50.00% (154) 0
------------- ------------
28,681 24,723
Other:
Colonial/Polar-BEK Management Company,
Birmingham, AL 50.00% 39 53
E-2 Data Technology, Birmingham, AL 50.00% (40) 0
------------- ------------
(1) 53
--------------- -------------
$ 31,594 $ 28,129
=============== =============
Effective December 28, 2001, the Orlando Fashion Square joint venture
agreement gives the third party the right to convert its 50% interest in the
property into the Company's common shares if specified terms and conditions are
met.
During September 1999, CRLP entered into a joint venture with CMS. The
CMS/Colonial Joint Venture I owns and operates six multifamily properties
consisting of the following properties: Colonial Village at Stockbridge,
Colonial Grand at Barrington Club, Colonial Grand at Ponte Vedra, Colonial
Village at River Hills, Colonial Grand at Mountain Brook, and Colonial Village
at Cahaba Heights. CRLP's net investment in the joint venture at December 31,
2000 and 1999 is $2.4 million and $2.8 million, respectively. The joint venture
is accounted for using the equity method.
During June 2000, CRLP entered into a second joint venture with CMS.
The CMS/Colonial Joint Venture II owns and operates four multifamily properties
consisting of the following properties: Colonial Grand at Inverness Lakes,
Colonial Village at Inverness Lakes, Colonial Village at Hillwood, and Colonial
Village at Rocky Ridge. CRLP's net investment in the joint venture at December
31, 2000 is $1.0 million. The joint venture is accounted for using the equity
method.
During October 2000, CRLP sold its interest in partnership assets in
the Anderson Block Properties Partnership for $0.3 million, which was primarily
used to repay the secured loan on the associated property.
Combined financial information for CRLP's investments in partially owned
entities for 2001 and 2000 follows:
December 31,
---------------------------------
(in thousands) 2001 2000
---------------------------------
Balance Sheet
Assets
Land, building, & equipment, net $ 243,733 $ 249,035
Construction in progress 54,907 8,948
Other assets 9,878 22,771
---------------------------------
Total assets $ 308,518 $ 280,754
=================================
Liabilities and Partners' Equity
Notes payable $ 213,056 $ 210,611
Other liabilities 7,647 530
Partners' Equity 87,815 69,613
---------------------------------
Total liabilities and partners' capital $ 308,518 $ 280,754
=================================
Statement of Operations
(for the year ended)
Revenues $ 41,706 $ 34,543
Operating expenses (16,890) (11,749)
Interest expense (13,684) (13,045)
Depreciation, amortization, and other (7,923) (5,824)
---------------------------------
Net income $ 3,209 $ 3,925
=================================
(1) The Company's portion of indebtedness, as calculated based on ownership
percentage, at December 31, 2001 and 2000 is $67.3 million and $57.8
million, respectively.
Other Arrangements
In September 2001, the Company entered into an agreement to provide
services to a third party in connection with the third party's development of a
$30 million multi-family property in North Carolina. Colonial was engaged to
serve as development consultant and leasing and management agent for this
property. In addition, for a fee, the Company is serving as a guarantor for a
$3.3 million working capital loan obtained by the three principals of the third
party entity, which loan is primarily collateralized jointly and severally by
the personal assets of the borrowers. The Company has a right of first refusal
to purchase the property should the third party elect to sell. Over the term of
the agreement, the Company expects to earn market fees for its services.
7. Segment Information
CRLP is organized into, and manages its business based on the
performance of three separate and distinct operating divisions: Multifamily,
Office, and Retail. Each division has a separate management team that is
responsible for acquiring, developing, managing, and leasing properties within
each division. The applicable accounting policies of the segments are the same
as those described in the "Summary of Significant Accounting Policies." However,
the pro rata portion of the revenues, net operating income (NOI), and assets of
the partially- owned entities and joint ventures that CRLP has entered into are
included in the applicable segment information. Subsequently, in the
reconciliation to total revenues, total NOI, and total assets, the amounts are
eliminated, as the investment in partially-owned entities and joint ventures are
reflected in the consolidated financial statements as investments accounted for
under the equity method. Management evaluates the performance of its segments
and allocates resources to them based on net operating income (NOI). NOI
consists of revenues in excess of general operating expenses, salaries and
wages, repairs and maintenance, taxes, licenses, and insurance. Segment
information for the years ended December 31, 2001, 2000, and 1999 is as follows:
(in thousands)
- -----------------------------------------------------------------------------------------------------------------
2001 Multifamily Office Retail Total
- -----------------------------------------------------------------------------------------------------------------
Divisional revenues $ 119,309 $ 56,645 $ 148,111 $ 324,065
NOI 80,478 40,494 105,432 226,404
Divisional assets 723,447 377,255 905,964 2,006,666
- -----------------------------------------------------------------------------------------------------------------
2000 Multifamily Office Retail Total
- -----------------------------------------------------------------------------------------------------------------
Divisional revenues $ 118,807 $ 49,755 $ 143,914 $ 312,476
NOI 79,756 35,011 104,017 218,784
Divisional assets 752,249 329,315 869,351 1,950,915
- -----------------------------------------------------------------------------------------------------------------
1999 Multifamily Office Retail Total
- -----------------------------------------------------------------------------------------------------------------
Divisional revenues $ 116,330 $ 41,067 $ 133,752 $ 291,149
NOI 76,245 28,556 96,268 201,069
Divisional assets 777,436 293,545 793,402 1,864,383
- -----------------------------------------------------------------------------------------------------------------
A reconciliation of total segment revenues to total revenues, total
segment NOI to income before extraordinary items, and total divisional assets to
total assets, for the years ended December 31, 2001, 2000, and 1999, is
presented below:
(in thousands)
- -----------------------------------------------------------------------------------------------
Revenues 2001 2000 1999
- -----------------------------------------------------------------------------------------------
Divisional revenues $324,065 $ 312,476 $ 291,149
Unallocated corporate revenues 5,355 2,604 1,932
Partially-owned entities (13,095) (12,770) (10,833)
Total revenues $316,325 $ 302,310 $ 282,248
- -----------------------------------------------------------------------------------------------
(in thousands)
- -----------------------------------------------------------------------------------------------
NOI 2001 2000 1999
- -----------------------------------------------------------------------------------------------
Total divisional NOI $226,404 $ 218,784 $ 201,069
Unallocated corporate revenues 5,355 2,604 1,932
Partially-owned entities (7,815) (7,543) (6,567)
General and administrative (10,858) (8,392) (8,442)
Depreciation (64,700) (59,549) (52,913)
Amortization (7,657) (4,335) (2,272)
Other (87) (36) 218
- -----------------------------------------------------------------------------------------------
Income from operations 140,642 141,533 133,025
- -----------------------------------------------------------------------------------------------
Total other expense (53,396) (62,140) (49,339)
- -----------------------------------------------------------------------------------------------
Income before extraordinary items $ 87,246 $ 79,393 $ 83,686
- ------------------------------------------===============----===============----===============
(in thousands)
- -----------------------------------------------------------------------------------------------
Assets 2001 2000 1999
- -----------------------------------------------------------------------------------------------
Total divisional assets $2,006,666 $1,950,915 $1,864,383
Unallocated corporate assets (1) 113,908 86,860 75,030
Partially-owned entities (106,191) (94,228) (75,267)
- -----------------------------------------------------------------------------------------------
Total assets $2,014,383 $1,943,547 $1,864,146
- -----------------------------------------------------------------------------------------------
(1) Includes CRLP's investment in joint ventures of $31,594, $28,129, and
$24,623 as of December 31, 2001, 2000, and 1999, respectively. (see
Note 6)
8. Notes and Mortgages Payable
Notes and mortgages payable at December 31, 2001 and 2000 consist of
the following:
(in thousands)
2001 2000
----------------- -----------------
Revolving credit agreement $ 261,365 $ 214,397
Mortgages and other notes:
4.00% to 6.00% 162,153 52,975
6.01% to 7.50% 463,390 593,005
7.51% to 9.00% 303,542 314,014
9.01% to 10.25% 1,341 4,704
----------------- -----------------
$ 1,191,791 $ 1,179,095
================= =================
As of December 31, 2001, CRLP has an unsecured bank line of credit
providing for total borrowings of up to $300 million. This line of credit
agreement bears interest at LIBOR plus 115 basis points, is renewable in March
2003, and provides for a two-year amortization in the case of non-renewal. The
line of credit agreement includes a competitive bid feature that will allow CRLP
to convert up to $150 million under the line of credit to a fixed rate, for a
fixed term not to exceed 90 days. The credit facility is primarily used by CRLP
to finance property acquisitions and development and has an outstanding balance
at December 31, 2001, of $261.4 million. The interest rate of this short-term
borrowing facility, including the competitive bid balance, is 3.08% and 7.66% at
December 31, 2001 and 2000, respectively.
During 2001 and 2000, CRLP completed six public offerings of unsecured
medium term debt securities totaling $80.0 million. The proceeds of the
offerings were used to fund acquisitions, development expenditures, repay
balances outstanding on CRLP's revolving credit facility, repay certain notes
and mortgages payable, and for general corporate purposes. Details relating to
these debt offerings are as follows:
Gross
Type of Proceeds
Date Note Maturity Rate (in thousands)
- ----------------- --------------- -------------------------- ----------------
February, 2000 Medium-term February, 2005 8.82% $ 25,000
February, 2000 Medium-term February, 2010 8.80% 20,000
March, 2000 Medium-term March, 2010 8.80% 5,000
December, 2000 Medium-term December, 2010 8.08% 10,000
December, 2000 Medium-term December, 2010 8.05% 10,000
December, 2001 Medium-term December, 2006 7.46% 10,000
----------------
$ 80,000
----------------
Additionally during 2001, CRLP received proceeds of $39.0 million
related to the secured financing of two properties, which is collateralized by
the properties. At December 31, 2001, CRLP had $888.1 million in unsecured
indebtedness including balances outstanding on its bank line of credit and
certain other notes payable. The remainder of CRLP's notes and mortgages payable
are collateralized by the assignment of rents and leases of certain properties
and assets with an aggregate net book value of $354.9 million at December 31,
2001.
The aggregate maturities of notes and mortgages payable, including
CRLP's line of credit at December 31, 2001, are as follows:
(in thousands)
2002 $ 60,447
2003 371,094
2004 102,031
2005 78,250
2006 77,191
Thereafter 502,778
------------------
$ 1,191,791
==================
Based on borrowing rates available to CRLP for notes and mortgages
payable with similar terms, the estimated fair value of CRLP's notes and
mortgages payable at December 31, 2001 and 2000 was approximately $1.16 billion
and $1.15 billion, respectively.
Certain loan agreements of CRLP contain restrictive covenants, which,
among other things, require maintenance of various financial ratios. At December
31, 2001, CRLP was in compliance with those covenants.
Certain shareholders and trustees of the Company have guaranteed
indebtedness of CRLP totaling $0.5 million at December 31, 2001. The Company has
indemnified these individuals from their guarantees of this indebtedness.
Certain partners of CRLP have guaranteed indebtedness of the Company totaling
$27.3 million at December 31, 2001. These individuals have not been indemnified
by the Company.
9. Derivative Instruments
On January 1, 2001, CRLP adopted Statement of Financial Accounting
Standard (SFAS) No. 133, (subsequently amended by SFAS Nos. 137 and 138)
Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133, as
amended, establishes accounting and reporting standards for derivative
instruments. Specifically SFAS No. 133 requires an entity to recognize all
derivatives as either assets or liabilities in the statement of financial
position and to measure those instruments at fair value. Additionally, the fair
value adjustments will affect either shareholders' equity or net income
depending on whether the derivative instrument qualifies as a hedge for
accounting purposes and, if so, the nature of the hedging activity.
As of January 1, 2001, the adoption of the new standard resulted in
derivative instruments reported on the balance sheet as liabilities of $0.9
million and a decrease of $0.9 million to Accumulated Other Comprehensive Loss,
which is a loss not affecting retained earnings in the Consolidated Statement of
Shareholders' Equity.
In the normal course of business, CRLP is exposed to the effect of
interest rate changes. CRLP limits these risks by following established risk
management policies and procedures including the use of derivatives. For
interest rate exposures, derivatives are used primarily to align rate movements
between interest rates associated with CRLP's leasing income and other financial
assets with interest rates on related debt, and manage the cost of borrowing
obligations.
CRLP does not use derivatives for trading or speculative purposes.
Further, CRLP has a policy of only entering into contracts with major financial
institutions based upon their credit ratings and other factors. When viewed in
conjunction with the underlying and offsetting exposure that the derivatives are
designed to hedge, CRLP has not sustained a material loss from those instruments
nor does it anticipate any material adverse effect on its net income or
financial position in the future from the use of derivatives.
CRLP has entered into several different hedging transactions in an
effort to manage exposure to changes in interest rates. The following table
summarizes the notional values, fair values and other characteristics of CRLP's
derivative financial instruments at December 31, 2001. The notional value at
December 31, 2001 provides an indication of the extent of CRLP's involvement in
these instruments at that time, but does not represent exposure to credit,
interest rate, or market risk.
Interest Fair Value
Product Type Notional Value Rate Maturity (in thousands)
- --------------------------------------------- -------------------------- ------------ ------------- ------------------
1) Interest Rate SWAP, Cash Flow $30.2 - $27.7 million 5.932% 1/01/06 $ (1,549)
2) Interest Rate SWAP, Cash Flow $75.0 million 2.130% 12/10/02 32
3) Interest Rate SWAP, Cash Flow $50.0 million 2.319% 1/01/03 (39)
4) Interest Rate SWAP, Cash Flow $25.0 million 2.430% 1/01/03 (47)
5) Interest Rate SWAP, Fair Value $50.0 million 5.015% 7/26/04 1,293
6) Interest Rate CAP, Cash Flow $21.1 million 6.850% 6/29/04 99
7) Interest Rate CAP, Cash Flow $17.9 million 6.850% 7/06/04 85
8) Interest Rate CAP, Cash Flow $30.4 million 11.200% 6/30/03 1
On December 31, 2001, the derivative instruments were reported at their
fair value as Other Liabilities of $0.1 million. The offsetting adjustments are
represented as losses in Accumulated Other Comprehensive Loss of $0.1 million.
Year to date, CRLP has recorded a $15,000 loss in earnings due to some
ineffectiveness on one of their swaps, resulting from a timing difference
regarding rate reset dates.
On July 3, 2001, CRLP terminated a forward-starting swap that was
designated as hedging forecasted debt that did not occur. CRLP reclassified the
balance of $130,000 held in Accumulated Other Comprehensive Income related to
the swap as a gain in earnings.
Most of CRLP's hedges are designated as cash flow hedges. Cash flow
hedges hedge the future cash flows of current or forecasted debt. Interest rate
swaps that convert variable payments to fixed payments, interest rate caps,
floors, collars, and forwards are cash flow hedges. The unrealized gains/losses
in the fair value of these hedges are reported on the balance sheet with a
corresponding adjustment to either accumulated other comprehensive income (loss)
or in earnings--depending on the type of hedging relationship. If the hedging
transaction is a cash flow hedge, then the offsetting gains and losses are
reported in accumulated other comprehensive income (loss). If the hedging
transaction is characterized as a fair value hedge, then the changes in fair
value of the hedge and the hedged item are reflected in earnings. If the fair
value hedging relationship is fully effective, there is no net effect reflected
in income or accumulated other comprehensive income (loss), and any offsets to
the hedging transaction is reflected in notes and mortgages payable. Over time,
the unrealized gains and losses held in accumulated other comprehensive income
(loss) will be reclassified to earnings. This reclassification is consistent
with when the hedged items are also recognized in earnings. Within the next
twelve months, CRLP expects to reclassify to earnings approximately $0.4 million
of the current balance held in accumulated other comprehensive income (loss).
CRLP hedges its exposure to the variability in future cash flows for
forecasted transactions over a maximum period of 12 months. During the
forecasted period, unrealized gains and losses in the hedging instrument will be
reported in accumulated other comprehensive income (loss). Once the hedged
transaction takes place, the hedge gains and losses will be reported in earnings
during the same period in which the hedged item is recognized in earnings.
10. Comprehensive Income (Loss)
Comprehensive income (loss) consisted of the following:
(in thousands) For the year ended
December 31, 2001
---------------
Net income available to common unitholders $ 64,119
Other comprehensive income (loss)
Unrealized income (loss) on cash flow
hedging activities (1,403)
--------------
Comprehensive income $ 62,716
--------------
Accumulated other comprehensive income (loss) consisted of the
following:
(in thousands) Accumulated Other
Comprehensive Income (Loss)
---------------------------
Balance December 31, 2000 $ --
Transition adjustment on cash flow
hedging activities (885)
Current period change in fair value of
derivative instruments (518)
---------------------------
Balance December 31, 2001 $ (1,403)
---------------------------
11. Capital Structure
At December 31, 2001, the Company controlled CRLP as the sole general
partner and as the holder of 65.3% of the common units of CRLP and 63.6% of the
preferred units (Series A Preferred Units and Series C Preferred Units). The
limited partners of CRLP who hold common units, are those persons (including
certain officers and directors) who, at the time of the Initial Public Offering,
elected to hold all or a portion of their interest in the form of units rather
than receiving shares of common stock of the Company, or individuals from whom
the Company acquired certain properties, who elected to receive units in
exchange for the properties. Each unit may be redeemed by the holder thereof for
either one share of Common Stock or cash equal to the fair market value thereof
at the time of such redemption, at the option of CRLP. Additionally, in 1999,
CRLP issued $100 million of Series B Cumulative Redeemable Perpetual Preferred
Units (Series B Units) in a private placement, that are exchangeable for Series
B Preferred Shares of the Company after ten years at the option of the holders
of the Series B Units. (See Note 12)
The Board of Trustees of the Company manages CRLP by directing the
affairs of the Company. The Company's interests in CRLP entitle it to share in
cash distributions from, and in the profits and losses of, CRLP in proportion to
the Company's percentage interest therein and entitle the Company to vote on all
matters requiring a vote of the limited partners.
12. Cash Contributions
During June 2001, the Company issued 2,000,000 preferred units of
beneficial interest (Series C Preferred Units). The Series C Preferred Units pay
a quarterly dividend at 9.25% per annum and may be redeemed by the Company on or
after June 19, 2006. The Series C Preferred Units have no stated maturity,
sinking fund or mandatory redemption and are not convertible into any other
securities of the Company. The Series C Preferred Units have a liquidation
preference of $25.00 per share. The net proceeds of the offering were
approximately $48.1 million and were used to repay outstanding balances under
CRLP's unsecured line of credit.
During January 2000, CRLP initiated and completed an Executive Unit
Purchase Program (Unit Purchase Program), in which the Board of Trustees and
certain members of CRLP's management were able to purchase 425,925 Units of
CRLP. Under the Unit Purchase Program, the Board of Trustees and the members of
management obtained full-recourse personal loans from an unrelated financial
institution, in order to purchase the Units. The Units are pledged as collateral
against the loans. In addition, CRLP has provided a guarantee to the unrelated
financial institution for the personal loans. The value of the Units purchased
under the Unit Purchase Program was approximately $10 million.
In February 1999, CRLP issued 2.0 million units of $50 par value 8.875%
Series B Cumulative Redeemable Perpetual Preferred Units (Preferred Units),
valued at $100 million in a private placement. CRLP has the right to redeem the
Preferred Units, in whole or in part, after five years at the cost of the
original capital contribution plus the cumulative priority return, whether or
not declared. The Preferred Units are exchangeable for 8.875% Series B Preferred
Units of CRLP after ten years at the option of the holders of the Preferred
Units. The proceeds of the issuance, net of offering costs of $2.6 million were
used to repay balances outstanding on CRLP's revolving credit agreement and to
fund development, acquisition, and expansion expenditures.
13. Employee Benefits
Employees of CRLP hired prior to January 1, 2002 participate in a
noncontributory defined benefit pension plan designed to cover substantially all
employees. Pension expense includes service and interest costs adjusted by
actual earnings on plan assets and amortization of prior service cost and the
transition amount. The benefits provided by this plan are based on years of
service and the employee's final average compensation. CRLP's policy is to fund
the minimum required contribution under ERISA and the Internal Revenue Code.
The table below presents a summary of pension plan status as of
December 31, 2001 and 2000, as it relates to the employees of CRLP.
(amounts in thousands) 2001 2000
- ------------------------------------------------------------------- --------------- --------------
Actuarial present value of accumulated benefit obligation
including vested benefits of $$3,101 and $1,462 $ 3,826 $ 1,918
at December 31, 2001 and 2000, respectively
Actuarial present value of projected benefit obligations
at year end $ 6,062 $ 3,460
Fair value of assets at year end $ 4,063 $ 1,135
Accrued pension cost $ 2,077 $ 2,106
Net pension cost for the year $ 829 $ 625
Actuarial assumptions used in determining the actuarial present value of
accumulated benefit obligations at January 1, 2001, are as follows:
2001 2000
--------------- --------------
Weighted-average interest rate 7.25% 7.50%
- --------------------------------------------------------------------------------------------------------
Increase in future compensation levels 4.00% 4.00%
CRLP participates in a salary reduction profit sharing plan covering
substantially all employees. This plan provides, with certain restrictions, that
employees may contribute a portion of their earnings with CRLP matching one-half
of such contributions, solely at CRLP's discretion. Contributions by CRLP were
approximately $321,000, $313,000, and $275,000 for the years ended December 31,
2001, 2000 and 1999, respectively.
14. Leasing Operations
CRLP is in the business of leasing and managing multifamily, office,
and retail property. For properties owned by CRLP, minimum rentals due in future
periods under noncancelable operating leases extending beyond one year at
December 31, 2001, are as follows:
(in thousands)
-----------------
2002 $ 148,893
2003 132,185
2004 115,684
2005 97,114
2006 78,202
Thereafter 271,880
-----------------
$ 843,958
=================
The noncancelable leases are with tenants engaged in retail and office
operations in Alabama, Georgia, Florida, North Carolina, South Carolina,
Tennessee, Texas, and Virginia. Performance in accordance with the lease terms
is in part dependent upon the economic conditions of the respective areas. No
additional credit risk exposure relating to the leasing arrangements exists
beyond the accounts receivable amounts shown in the December 31, 2001 balance
sheet. Leases with tenants in multifamily properties are generally for one year
or less and are thus excluded from the above table. Substantially all of CRLP's
land, buildings, and equipment represent property leased under the above and
other short-term leasing arrangements.
Rental income for 2001, 2000, and 1999 includes percentage rent of $3.6
million, $5.7 million, and $4.7 million, respectively. This rental income was
earned when certain retail tenants attained sales volumes specified in their
respective lease agreements.
15. Related Party Transactions
CRLP has generally used affiliated construction companies to manage and
oversee its development and expansion projects. CRLP paid $33.6 million, $46.7
million, and $62.8 million for property development costs to Lowder Construction
Company, Inc., a construction company owned by The Colonial Company (TCC) (an
affiliate of certain unitholders, and trustees), during the years ended December
31, 2001, 2000 and 1999, respectively. Of these amounts, $30.7million, $43.2
million, and $55.4 million was then paid to unaffiliated subcontractors for the
construction of these development and expansion projects during 2001, 2000 and
1999, respectively. CRLP had outstanding construction invoices and retainage
payable to Lowder Construction Company, Inc. totaling $0.4 million and $1.4
million at December 31, 2001 and 2000, respectively. CRLP also paid $67.0
million, $31.3 million, and $21.5 million for property construction costs to a
construction company owned by a trustee during the years ended December 31,
2001, 2000 and 1999, respectively. Of these amounts, $60.3 million, $28.2
million, and $19.4 million was then paid to unaffiliated subcontractors for the
construction of these development projects during 2001, 2000 and 1999,
respectively. CRLP had outstanding construction invoices and retainage payable
to this construction company totaling $1.8 million and $0.2 million at December
31, 2001 and 2000, respectively.
During September 2000, CRLP purchased a parcel of land from Colonial
Commercial Investments, Inc. (CCI), which is owned by trustees James K. Lowder
and Thomas H. Lowder, through the issuance of 12,477 limited partnership valued
at approximately $0.3 million. Subsequently, in 2001, CRLP sold the parcel of
land to an unrelated party for approximately$0.4 million.
During July 1998, CRLP acquired a 79.8% interest in Colonial Village at
Haverhill. Effective May 1999, CRLP purchased the remaining 20.2% interest in
this property by issuing 157,140 units to the seller. The seller is a trustee of
the Company.
Following is a summary of property acquisitions from entities for which
trustees of the Company are involved as a partner or unitholder:
Date Property and Land Acquired Purchase Price Units Issued
- ----------------------- ------------------------------------------ --------------------- -------------------------
September 2000 Colonial Promenade Montgomery Lot 1 $0.3 million 12,477 CRLP Units
May 1999 Colonial Village at Haverhill $4.2 million(1) 157,140 CRLP Units
(1) Represents the remaining 20.2% interest in the property.
In August 2001, CRLP purchased the 99% voting stock and 1% equity
interest in CPSI from CCI for approximately $4,000. Therefore, effective August
2001, CPSI is consolidated in CRLP's financial statements.
CRLP and its subsidiaries provide certain services to and received
certain services from related entities, which resulted in the following income
(expense) included in the accompanying statements of income:
(Amounts in thousands)
2001 2000 1999
----------------------------------
Rental income $1,135 $1,478 $1,460
Management/other fee income 315 300 262
Insurance brokerage expense (246) (198) (167)
16. Subsequent Events
Distribution
On January 19, 2002, the Board of Trustees declared a cash distribution to
partners of CRLP in the amount of $.66 per share and per partnership unit,
totaling $21.3 million. The distribution was made to partners of record as of
February 1, 2002, and was paid on February 8, 2002.
Equity Offering
On February 25, 2002, the Company entered into a transaction in which
560,380 shares of the Company's common shares were issued, resulting in net
proceeds of $17.8 million to the Company. It is anticipated that 260,710 shares
will be deposited by Salomon Smith Barney into The Equity Focus Trust REIT
Portfolio Series, 2002-A, a newly formed unit investment trust, and 299,670
shares will be deposited into Cohen & Steers Quality Income Realty Fund, Inc.
Subsequently, the Company transferred the net proceeds received to CRLP, which
were used to repay a portion of the outstanding balance on CRLP's unsecured line
of credit.
Report of Independent Accountants
To the Board of Trustees
of Colonial Properties Trust:
In our opinion, the consolidated financial statements listed in the accompanying
index present fairly, in all material respects, the financial position of
Colonial Realty Limited Partnership at December 31, 2001 and 2000, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2001 in conformity with accounting principles
generally accepted in the United States of America. In addition, in our opinion,
the financial statement schedules listed in the accompanying index present
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. These financial
statements and financial statement schedules are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements and financial statement schedules based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Birmingham, Alabama
January 18, 2002, except for Note 16, as
to which the date is February 25, 2002
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
CRLP is managed by the Company, the general partner of CRLP. The
trustees of the Company are as follows:
Thomas H. Lowder, 52, has been a trustee of Colonial Properties Trust
since its formation in July 1993. He is Chairman of the Board, President and
Chief Executive Officer of the Company. Lowder became President of Colonial
Properties, Inc., the Company's predecessor, in 1976, and since that time has
been actively engaged in the acquisition, development, management, leasing and
sale of multifamily, office and retail properties for Colonial Properties.
Lowder's most recent board appointment was his election to the National
Association of Real Estate Investment Trust (NAREIT) Board in June 1999 and
subsequent appointment as Chairman of the Audit Committee. He is also a member
and past president of the Alabama Chapter of the Realtors National Marketing
Institute through which he successfully completed commercial real estate
investment courses to receive the CCIM (Certified Commercial Investment Member)
designation. He is presently a member of the Board of the following
organizations: United Way, Children's Hospital, Birmingham Southern College,
Community Foundation of Greater Birmingham, and Crippled Children's Foundation.
Mr. Lowder is a member of the Executive Committee of the board of trustees.
Carl F. Bailey, 71, has been a trustee of the Company since September
1993. Mr. Bailey is a former co-chairman of BellSouth Telecommunications, Inc.
and former chairman and chief executive officer of South Central Bell Telephone
Company, positions from which he retired in 1991. He worked for South Central
Bell in a number of capacities over the past three and a half decades and was
elected president and a member of the board of directors in 1982. Mr. Bailey is
chairman of TekQuest, Inc., a manufacturing company, and a member of the board
of SouthTrust Corporation. Mr. Bailey serves on the board of trustees of
Birmingham Southern College. Mr. Bailey is a member of the Executive Committee
and is chairman of the Audit Committee of the board of trustees.
M. Miller Gorrie, 66, has been a trustee of the Company since 1993. Mr.
Gorrie is chairman of the board and chief executive officer of Brasfield &
Gorrie, L.L.C., a regional general contracting firm located in Birmingham,
Alabama that is ranked 51st in the ENR's "Top 400 Contractors." He serves on the
boards of Baptist Hospital Foundation, the Metropolitan Development Board of
Birmingham, Economic Development Partnership of Alabama, the Alabama Symphony
Orchestra and the University of Alabama at Birmingham Civil Engineer Advisory
Board. In the past he has served as a director of AmSouth Bank, the Southern
Research Institute, United Way of Central Alabama, the Associated General
Contractors, Alabama Chamber of Commerce, the Building Science Advisory Board of
Auburn University, and the Business Council of Alabama. Mr. Gorrie is chairman
of the Executive Committee and is a member of the Executive Compensation
Committee of the board of trustees.
William M. Johnson, 55, has been a trustee of the Company since July
1997, in connection with the Company's acquisition from Mr. Johnson, by merger,
of seven office buildings and retail space totaling 560,600 square feet in
Mansell 400 Business Center, the largest Class-A multi-tenant office park in the
North Fulton (Atlanta, Georgia) area. In 1978, Mr. Johnson founded Johnson
Development Company, a real estate development, construction and management firm
where he directed the development of 1.2 million square feet of office,
warehouse, retail and hotel space having a value in excess of $117 million. Mr.
Johnson is a member of the board of trustees of Asbury Theological Seminary, a
member of the Board of Directors of Reach Out Youth Solutions, and is Chairman
of the World Parish Ministries. Mr. Johnson also serves as a strategic planning
advisor for several para-church ministries. In 1999, Mr. Johnson established a
family foundation that provides financial assistance to twenty-eight local,
national and international ministries. Mr. Johnson is a member of the Executive
Compensation Committee and Executive Committee of the board of trustees of the
Company.
James K. Lowder, 52, has been a trustee of the Company since its
formation in July 1993. Mr. Lowder is also chairman of the board of The Colonial
Company, chairman of the board of Lowder Construction Company, Inc., Lowder New
Homes, Inc., Colonial Insurance Agency, Inc., Lowder Realty Company, Inc.,
Colonial Commercial Development, Inc., Colonial Homes, Inc., American Colonial
Insurance Company, Colonial Commercial Realty, Inc. and Colonial Commercial
Investments, Inc. He is a member of the Home Builders Association of Alabama,
and the Greater Montgomery Home Builders Association, and is a member of the
board of directors of Alabama Power Company. Mr. Lowder is a member of the
Executive Compensation Committee of the board of trustees. Mr. Lowder is the
brother of Thomas H. Lowder, who is an incumbent trustee.
Herbert A. Meisler, 74, has been a trustee of the Company since 1995.
Together with Mr. Ripps, he formed The Rime Companies, a real estate
development, construction and management firm specializing in the development of
multifamily properties. In December 1994, the Company purchased ten multifamily
properties from partners associated with The Rime Companies. While with The Rime
Companies, Mr. Meisler oversaw the development and construction of approximately
15,000 multifamily apartment units in the Southeastern United States. He
currently serves on the board of directors of the Community Foundation of South
Alabama and the Mobile Airport Authority and was Philanthropist of the Year in
Mobile, Alabama. He is a past director of the Alabama Eye and Tissue Bank and
past president of the Mobile Jewish Welfare Fund. Mr. Meisler is a member of the
Executive Compensation Committee (and its Option Plan Subcommittee) and the
Audit Committee of the board of trustees.
Claude B. Nielsen, 51, has been a trustee of the Company since
September 1993. Since 1990, Mr. Nielsen has been president and chief executive
officer of Coca-Cola Bottling Company United, Inc., headquartered in Birmingham,
Alabama, serving also as chief operating officer from 1990 to 1991 and as chief
executive officer since 1991. Prior to 1990, Mr. Nielsen served as president of
Birmingham Coca-Cola Bottling Company. Mr. Nielsen is on the board of directors
of AmSouth Bancorporation and also serves as a board member of the Birmingham
Airport Authority. Mr. Nielsen is chairman of the Executive Compensation
Committee, a member of the Executive Committee of the board of trustees and is
chairman of its Option Plan Subcommittee.
Harold W. Ripps, 63, has been a trustee of the Company since 1995.
Together with Herbert A. Meisler, another member of the board of trustees, he
formed The Rime Companies, a real estate development, construction and
management firm specializing in the development of multifamily properties. In
December 1994, the Company purchased ten multifamily properties from partners
associated with The Rime Companies. While with The Rime Companies, Mr. Ripps
oversaw the development and construction of approximately 15,000 multifamily
apartment units in the Southeastern United States. He is a member of the
executive committee of the Birmingham Council of Boy Scouts of America, the
board of trustees of Birmingham Southern College and the President's Council of
the University of Alabama in Birmingham. Mr. Ripps is a member of the Executive
Committee of the board of trustees.
Donald T. Senterfitt, 82, has been a trustee of the Company since
September 1993. Mr. Senterfitt is chairman of the board of directors of Colonial
Bank, Central Florida. He is a former director and vice chairman of SunTrust
Banks, Inc., a bank holding company. He is past president of the American
Bankers Association and former general counsel to the Florida Bankers
Association, having served both organizations in a number of other capacities.
Mr. Senterfitt is a member and a 1997 Laureate of the Mid-Florida Business Hall
of Fame and a member of the President's Council of the University of Florida. He
is a member of the board of directors of CITE, Inc., the Center for
Independence, Technology and Education, a non-profit organization which serves
the needs of blind, visually handicapped and multi-handicapped children and
adults, and served as its president for three years. Mr. Senterfitt is a member
of the Audit Committee of the board of trustees of the Company.
Executive Officers of the Company
The following is a biographical summary of the executive officers of
the Company:
Thomas H. Lowder, 52, has been a trustee of Colonial Properties Trust
since its formation in July 1993. He is Chairman of the Board, President and
Chief Executive Officer of the Company. Lowder became President of Colonial
Properties, Inc., the Company's predecessor, in 1976, and since that time has
been actively engaged in the acquisition, development, management, leasing and
sale of multifamily, office and retail properties for Colonial Properties.
Lowder's most recent board appointment was his election to the National
Association of Real Estate Investment Trust (NAREIT) Board in June 1999 and
subsequent appointment as Chairman of the Audit Committee. He is a current
member of the National Association of Industrial and Office Parks, and the
International Council of Shopping Centers. He is also a member and past
president of the Alabama Chapter of the Realtors National Marketing Institute
through which he successfully completed commercial real estate investment
courses to receive the CCIM (Certified Commercial Investment Member)
designation. He is presently a member of the Board of the following
organizations: United Way, Children's Hospital, Birmingham Southern College,
Community Foundation of Greater Birmingham, The John Carroll Catholic High
School Educational Foundation and Crippled Children's Foundation. He is past
Chairman of the Birmingham Area Chapter of the American Red Cross. Lowder served
as Chairman of the 2001 United Way Campaign for Central Alabama. He graduated
with honors from Auburn University with a Bachelor of Science Degree.
C. Reynolds Thompson, III, 39, Chief Operating Officer of the Company
since September 1999, responsible for the Multifamily, Office, Retail and
Mixed-Use divisions. Thompson oversees the management, acquisition, leasing and
development of properties within its three operating divisions and development
in the mixed-use division. Prior to his appointment as Chief Operating Officer,
Thompson was Chief Investment Officer, responsible for investment strategies,
market research, due diligence, mergers and acquisitions, joint venture
development and cross-divisional acquisitions. Prior to his position as Chief
Investment Officer, Thompson served as Executive Vice President--Office
Division, with responsibility for management of all office properties owned
and/or managed by the Company, from May 1997 to May 1998. Thompson joined
Colonial Properties Trust in February 1997 as Senior Vice President--Office
Acquisitions, with responsibility for all acquisitions of office properties.
Prior to joining Colonial Properties Trust, Thompson worked for CarrAmerica
Realty Corporation in office building acquisitions and due diligence. His
fourteen-year real estate background includes acquisitions, development,
leasing, and management of office properties in the south. Thompson is a member
of the Executive Committee of the Metropolitan Development Board, an active
member of the National Association of Industrial and Office Parks, and he serves
on the Board of Trustees for the Alabama Real Estate Research and Education
Center. Thompson holds a Bachelor of Science Degree from Washington and Lee
University.
Howard B. Nelson, Jr., 54, Chief Financial Officer of the Company, with
general responsibility for financing matters since May 1997. Nelson was Senior
Vice President and Chief Operating Officer of the Company, with responsibility
for the day-to-day management of the Company, from September 1993 to May 1997.
He joined Colonial Properties in 1984 as Vice President and became Senior Vice
President- Finance in 1987. Nelson presently serves on the Birmingham-Southern
College Edward Lee Norton Board of Advisors for Management and Professional
Education, and the Business Council of Alabama's Progress PAC Board of
Directors. Nelson has served in the past on the Accounting and Technology
committee of the Real Estate Roundtable, as treasurer, vice president, president
and board member of the Birmingham Chapter of the National Association of
Industrial and Office Parks (NAIOP), the College of Business Advisory Council of
Auburn University and on the Board of Directors of the Children's Harbor Family
Center. Nelson holds a Bachelor of Science Degree from Auburn University.
John P. Rigrish, 53, Chief Administrative Officer-Executive Vice
President of the Company, with responsibilities for the supervision of
Accounting Operations, Information Technology, Human Resources and Employee
Services since 1998. Prior to joining Colonial Properties, Rigrish worked for
BellSouth in Corporate Administration and Services. Rigrish holds a Bachelor of
Science degree from Samford University and did his postgraduate study at
Birmingham-Southern College. He served on the Edward Lee Norton Board of
Advisors for Management and Professional Education at Birmingham-Southern
College and the Board of Directors of Senior Citizens, Inc. in Nashville,
Tennessee.
Paul F. Earle, 43, Executive Vice-President-Multifamily Division of the
Company, with responsibility for management of all multifamily properties owned
and/or managed by the Company, since May 1997. He joined Colonial in 1991 and
has served as Vice President - Acquisitions, as well as Senior Vice President -
Multifamily Division. Mr. Earle serves as Chairman of the Alabama Multifamily
Council and is an active member of the National Apartment Association. He also
serves as President of the Board of Directors of Big Brother/Big Sisters and is
a Board member of the National Multifamily Housing Council. Before joining
Colonial, Mr. Earle was the President and Chief Operating Officer of American
Residential Management, Inc., Executive Vice President of Great Atlantic
Management, Inc. and Senior Vice President of Balcor Property Management, Inc.
Daryl K. Mangan, 58, Executive Vice President-Retail Division of the
Company, with general responsibility for management of all retail properties
owned and managed by the Company since December 2001. His thirty-year real
estate background includes acquisitions, dispositions, development, leasing, and
management of retail properties including his position as Executive Vice
President at Equitable Real Estate Investment Management, Inc where he was
responsible for the management of a $6 billion retail portfolio consisting of 75
regional malls and 40 other retail properties. Prior to joining Colonial
Properties Trust, Mangan worked for Cole National as Vice President responsible
for development. Mangan also worked for Safeco Properties, Inc. as Senior Vice
President responsible for the Company's national shopping center portfolio and
for Federated Department Stores, Inc as Senior Vice President responsible for
development where he concentrated on remodeling, expanding and re-merchandising
the retail portfolio. Mangan is an active member of The International Council of
Shopping Centers where he serves as a judge for the Design and Development
Awards Program. Mangan holds a Bachelor of Administration Degree in Design and
Industry and Masters Degree in Business Administration from California State
University.
John N. Hughey, 42, Executive Vice President-Retail Development
Division of the Company, with responsibility for all retail development since
December 2001. He joined Colonial Properties in 1982 and assumed management
responsibility for an increasing number of shopping centers until being named
Senior Vice President - Retail Division of Colonial in 1991 and was named
Executive Vice President in May 1997. Hughey served as the Alabama/Mississippi
State Operations Chairman for the International Council of Shopping Centers from
1993-1995. He holds a Bachelor of Science Degree from Auburn University.
Charles A. McGehee, 55, Executive Vice President - Mixed-Use
Development Division of the Company, with responsibility for the Company's
development of properties with mixed-use product types since September 1999.
McGehee also oversees land acquisitions and dispositions. From September 1993 to
September 1999 McGehee was responsible for Land Acquisitions and Development,
Brokerage and Dispositions for Colonial Properties. From January 1990 to
September 1993 McGehee was Senior Vice President - Office Division. He joined
the Company in 1976 as Vice President of Retail Leasing and was responsible for
leasing all retail space owned and/or managed by Colonial Properties. Mr.
McGehee has served as president and as a board member of the National
Association of Industrial and Office Parks (NAIOP) and is a member of the Board
of Directors of the Birmingham Area Board of Realtors. McGehee is currently on
the Board of Trustees for the Birmingham Chamber of Commerce. He holds a
Bachelor of Science Degree from Auburn University.
Robert A. "Bo" Jackson, 47, Executive Vice President-Office Division of
the Company, with general responsibility for management of all office properties
owned and managed by the Company. Prior to joining Colonial Properties, Jackson
worked for Beacon Properties as a Vice President responsible for leasing
performance, new office development and acquisitions throughout the Southeast.
He has been involved in over 10 million square feet of Atlanta urban and
suburban office development. Jackson has received professional accolades from
The Atlanta Board of Realtors, The Downtown Developers Group and The National
Association of Industrial and Office Parks (NAIOP). Jackson is active member of
NAIOP and an active member of the Urban Land Institute. He is also a member of
the Board of Directors of the Greater North Fulton Chamber of Commerce. Jackson
holds a Bachelor of Science Degree in Business Administration from the
University of Delaware.
Kenneth E. Howell, 52, has been Senior Vice President-Chief Accounting
Officer of the Company, with general responsibility for the supervision of
accounting for all of the properties owned and/or managed by the Company, since
August 1998. Mr. Howell joined the Company in 1981, and served as Controller for
Colonial from 1986-1998. From 1981-1986 he held the position of Assistant
Controller of the Colonial Company, parent company of the then private Colonial
Properties, Inc. He serves on the Auburn University School of Accountancy
Advisory Board. Mr. Howell holds a Bachelor of Science Degree in Business
Administration from Auburn University.
Item 11. Executive Compensation.
The following table sets forth certain information concerning the
annual and long-term compensation for the chief executive officer and the four
other most highly compensated executive officers of the Company (the "Named
Executive Officers"):
Summary Compensation Table
Annual Compensation Long-Term Compensation
----------------------------------------- -----------------------------------------------
Restricted Securities All
Other Annual Share Underlying Other
Name and Principal Position Year Salary ($)Bonus ($)(1) Compensation Awards($)(1) Options (#) Compensation(2)
- --------------------------- ---- ---------------------- ------------ -------------- ----------- ---------------
Thomas H. Lowder 2001 $328,269 $ -- -- $474,586 81,060 $5,100
Chairman of the Board 2000 315,000 -- -- 119,000 37,500 5,062
President and Chief 1999 315,000 -- -- 47,600 50,000 4,800
Executive Officer 1998 310,000 -- -- 94,640 -- 2,721
C. Reynolds Thompson, III 2001 271,884 111,720 -- 214,988 47,988 5,100
Chief Operating Officer 2000 248,000 40,000 -- -- 20,000 5,100
1999 199,213 -- -- 41,300 16,667 4,800
1998 149,500 22,500 -- 38,500 -- 2,906
Howard B. Nelson, Jr. 2001 228,269 -- -- 247,448 35,666 5,100
Chief Financial Officer and 2000 215,000 15,190 -- 22,134 12,500 5,100
Secretary 1999 215,000 -- -- 37,800 16,667 4,800
1998 208,000 -- -- 53,200 -- 2,721
Robert A. Jackson 2001 188,269 137,000 -- 26,114 23,994 1,461
Executive Vice President 2000 175,000 98,100 -- -- 10,000 3,062
Office Division 1999 155,000 25,000 -- -- 13,333 3,479
1998 130,000 64,000 -- 20,148 -- --
Paul F. Earle 2001 186,884 -- -- 220,015 23,994 4,205
Executive Vice President- 2000 163,000 -- -- 70,924 10,000 3,661
Multifamily Division 1999 155,000 12,200 -- 69,217 13,333 3,704
1998 145,000 10,000 -- 21,000 -- 2,847
(1) The Company's incentive compensation plan permits officers to elect to
receive all or part of their annual bonus in the form of restricted
shares instead of cash. Officers who elect to receive up to 50% of
their bonus in restricted shares receive shares having a market value
on the issue date equal to 125% of the deferred amount. Officers who
elect to receive more than 50% of their annual bonus in restricted
shares receive shares having a market value on the issue date equal to
140% of the deferred amount. For 2001, Messrs. Lowder, Thompson,
Nelson, Jackson and Earle elected to receive 100%, 51%, 100%, 0% and
100%, respectively, of their bonuses in restricted shares. The
restricted shares issued to Messrs. Lowder, Thompson, Nelson and Earle
vest over 3 years, with 50% vesting on the first anniversary of the
issue date and the remaining 25% vesting in equal installments on the
second and third anniversaries of the issue date. In addition to these
shares, Messrs. Lowder, Thompson, Nelson, Jackson and Earle received
2,765, 1,611, 1,199, 806 and 806, respectively, of performance based
restricted shares. The performance based restricted shares vest in
eight years or on an accelerated scale based on the Company's
performance. The number and value of restricted shares held by the
Named Executive Officers as of December 31, 2001 were as follows: Mr.
Lowder - 8,489 shares ($264,432); Mr. Thompson - 2,925 shares
($91,114); Mr. Nelson - 3,371 shares ($105,007); Mr. Jackson - 400
shares ($12,460) and Mr. Earle- 4,714 shares ($146,841). Dividends are
paid on restricted shares at the same rate paid to all other holders
of common shares.
(2) All Other Compensation consists solely of employer contributions to
the Company's 401(k) plan.
The following table sets forth certain information concerning option
exercises during 2001 and unexercised options held by the Named Executive
Officers at December 31, 2001:
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
Number of Value of Unexercised
Shares Securities Underlying In-the-Money
Acquired Value Unexercised Options Options
Name on Exercise(#) Realized($) at December 31, 2001 at December 31, 2001(1)
- ---- -------------- ----------- -----------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
Thomas H. Lowder...... -- -- 91,335 144,450 $ 492,980 $ 688,352
C. Reynolds Thompson, III -- -- 13,166 70,844 70,844 341,784
Howard B. Nelson, Jr.. 9,910 $66,905 27,667 48,150 98,505 229,451
Robert A. Jackson..... 7,333 26,306 10,000 43,882 4,625 175,144
Paul F. Earle......... -- -- 13,333 38,520 50,745 183,560
- ------------------------
(1) Based on the closing price of $31.15 per Common Share on December 31, 2001,
as reported by the New York Stock Exchange.
The following table sets forth certain information relating to options
to purchase common shares granted to the Named Executive Officers during 2001:
Option Grants in Last Fiscal Year
Individual Grants
- -------------------------------------------------------------------------
Percent
Number of of Total
Securities Options
Underlying Granted to Exercise
Options Employees in Price Expiration Option
Name Granted (#) 1 Fiscal Year ($/Sh) Date Value2
- -------------------------------------------------------------------------------------------------------
Thomas H. Lowder...... 84,450 19.10% $ 26.88 1/25/11 $ 86,139
C. Reynolds Thompson, III 44,410 10.04% 26.88 1/25/11 45,298
Howard B. Nelson, Jr.. 28,150 6.37% 26.88 1/25/11 28,713
Robert A. Jackson..... 20,549 4.65% 26.88 1/25/11 20,960
Paul F. Earle......... 22,520 5.09% 26.88 1/25/11 22,970
(1) All options granted in 2001 become exercisable in five equal annual
installments beginning on the first anniversary of the date of grant
and have a term of ten years.
(2) The Black-Scholes option pricing model was chosen to estimate the
value of the options set forth in this table. The Company's use of
this model should not be construed as an endorsement of its accuracy
of valuing options. All option valuation models, including the
Black-Scholes model, require a prediction about the future movement of
the share price. The following assumptions were made for the purposes
of calculating the option value: an option term of 10 years,
volatility of 14.56%, dividend yield at 8.19%, and interest rate of
5.09%. The real value of the options to purchase common shares in this
table depends upon the actual performance of the Company's common
shares, the option holder's continued employment throughout the option
period, and the date on which the options are exercised.
The Company maintains a retirement plan for all of the employees of the
Company and its subsidiaries hired before January 1, 2002. An employee becomes
eligible to participate in the plan on January 1 or July 1 following the first
anniversary of the person's employment by the Company or one of its consolidated
or unconsolidated subsidiaries or age 21 if later. Benefits are based upon the
number of years of service (maximum 25 years) and the average of the
participant's earnings during the five highest years of compensation during the
final 10 years of employment. Each participant accrues a benefit at a specified
percentage of compensation up to the Social Security covered compensation level,
and at a higher percentage of compensation above the Social Security covered
compensation level. A participant receives credit for a year of service for
every year in which 1,000 hours are completed in the employment of the Company
or its predecessor or any of the Company's subsidiaries.
The following table reflects estimated annual benefits payable upon
retirement under the retirement plan as a single life annuity commencing at age
65. These benefits ignore the lower benefit rate applicable to earnings below
the Social Security covered compensation level.
Pension Plan Table
Years of Service
------------------------------------------------------------------------------------
Remuneration 5 10 15 20 25
- ------------
$125,000 $ 9,500 $19,000 $28,500 $38,000 $47,500
$150,000 $11,400 $22,800 $34,200 $45,600 $57,000
$170,000 or over $12,920 $25,840 $38,760 $51,680 $64,600
The benefits shown are limited by the current statutory limitations
which restrict the amount of benefits which can be paid from a qualified
retirement plan. The statutory limit on compensation which may be recognized in
calculating benefits is $170,000 in 2001. This limit is scheduled to increase
periodically with the cost of living.
Covered compensation under the plan includes the employees' base salary
and other earnings received from the Company. Thomas H. Lowder has 27 years of
covered service under the plan, Howard B. Nelson, Jr. has 17 years of service,
C. Reynolds Thompson, III has 5 years of service, Robert A. Jackson has 4 years
of service, and Paul F. Earle has 10 years of service.
Employment Agreement
Thomas H. Lowder, the president and chief executive officer of the
Company, entered into an employment agreement with the Company in September
1993. This agreement provides for an initial term of three years, with automatic
renewals for successive one-year terms if neither party delivers notice of
non-renewal at least six months prior to the next scheduled expiration date. The
agreement provides for annual compensation of at least $275,000 and incentive
compensation on substantially the same terms as set forth in the description of
the Annual Incentive Plan. See "Report on Executive Compensation - Annual
Incentive Plan." The agreement includes provisions restricting Mr. Lowder from
competing with the Company during employment and, except in certain
circumstances, for two years after termination of employment. In addition, in
the event of disability or termination by the Company without cause or by the
employee with cause, the agreement provides that the Company must pay Mr. Lowder
the greater of (i) his base compensation and benefits for the remainder of the
employment term or (ii) six months' base compensation and benefits.
EXECUTIVE COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
None of the five members of the Executive Compensation Committee is an
employee of the Company. As described below, M. Miller Gorrie and James K.
Lowder, who are members of the committee, own interests in certain entities
that, during 2001, were parties to certain transactions involving the Company.
The Company engaged Lowder Construction Company, Inc., of which Mr. J.
Lowder serves as the chairman of the board and which is indirectly owned by
Messrs. J. Lowder and T. Lowder, to serve as construction manager for two
multifamily developments and one retail development project during 2001. The
Company paid a total of $33.6 million ($30.7 million of which was then paid to
unaffiliated subcontractors) for the construction of these development projects
during 2001. The Company had outstanding construction invoices and retainage
payable to Lowder Construction Company, Inc. totaling $0.4 million at December
31, 2001.
Brasfield & Gorrie General Contractors, Inc. ("B&G"), a corporation of
which Mr. Gorrie is a shareholder and chairman of the board, was engaged to
serve as construction manager for six office and retail development projects
during 2001. The Company paid B&G a total of $67.0 million ($60.3 million of
which was then paid to unaffiliated subcontractors) during 2001. The Company had
outstanding construction invoices and retainage payable to this company totaling
$1.8 million at December 31, 2001.
A subsidiary of the Company provided management and leasing services
during 2001 to certain entities in which Messrs. J. Lowder, T. Lowder and R.
Lowder have an interest. The aggregate amount of fees paid to the subsidiary by
such entities during 2001 was approximately $0.2 million.
Colonial Insurance Company, a corporation indirectly owned by the
Lowder family, provided insurance brokerage services for the Company during
2001. The aggregate amount paid by the Company to Colonial Insurance Company for
these services for the year ended December 31, 2001, was approximately $0.2
million. The Company performed Risk Management Administrative Services for which
Colonial Insurance Company paid the Company $0.1 million during 2001.
The Company leased space to certain entities in which the Lowder family
has an interest and received rent from these entities totaling approximately
$1.1 million during 2001.
CERTAIN TRANSACTIONS
During fiscal year 2001, the Company engaged in certain transactions in
which certain of its trustees and executive officers had a financial interest.
Several of these transactions, which involved members of the Executive
Compensation Committee, are described above under the caption "Compensation
Committee Interlocks and Insider Participation," and were approved by a majority
of the Company's independent trustees.
A subsidiary of the Company currently is negotiating to acquire a 20%
interest in three aircraft from NRH Enterprises, L.L.C., an entity in which Mr.
Ripps indirectly has an approximate 33% interest. The purchase price is expected
to be $1,440,000. The subsidiary also expects to enter into a joint ownership
agreement with the other owners of the aircraft, including NRH Enterprises.
Under that agreement, the subsidiary expects to be obligated to pay to NRH
Enterprises, as agent for all of the owners of the aircraft, a monthly fee of
$10,000, plus $1,400 per hour of Company flight time, to cover the operating
expenses of the aircraft. The subsidiary does not expect NRH Enterprises to be
compensated for its services as agent. In addition, the subsidiary expects to
enter into an aircraft services agreement with MEDJET Assistance, L.L.C., an
entity in which Mr. Ripps indirectly has an approximate 40% interest. Under this
agreement, the subsidiary expects to be obligated to pay a monthly fee of $5,000
to MEDJET Assistance for managing the use, maintenance, storage and supervision
of the aircraft. The subsidiary expects this $5,000 monthly fee to be paid by
NRH, on behalf of the subsidiary, from the $10,000 monthly fee referred to
above. Separately, the subsidiary paid or will pay to NRH Enterprises a total of
$63,353 for periodically leasing the aircraft in 2001 and 2002 (through the date
of this proxy statement).
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding the beneficial ownership of
Units as of March 11, 2002 for (1) each person known by CRLP to be the
beneficial owner of more than five percent of the CRLP's outstanding Units, (2)
each trustee of the Company and each Named Executive Officer and (3) the
trustees and executive officers of the Company as a group. Each person named in
the table has sole voting and investment power with respect to all Units shown
as beneficially owned by such person, except as otherwise set forth in the notes
to the table. References in the table to "Units" are to units of limited
partnership interest in the Operating Partnership. The extent to which a person
held common shares of Beneficial interest of Colonial Properties Trust as of
March 11, 2002, under the caption "Voting Securities and Principal Holders
Thereof", and is incorporated by reference in this Annual Report and shall be
deemed a part hereof. Unless otherwise provided in the table, the address of
each beneficial owner is Colonial Plaza, Suite 750, 2101 Sixth Avenue North,
Birmingham, Alabama 35203.
Name and Business Address Number of Percent of
of Beneficial Owner Units Units (1)
- ------------------------------------- -------- ---------
Colonial Properties Trust................... 21,875,050 66.3%
Thomas H. Lowder .. ........................ 2,938,373 (2) 8.9%
James K. Lowder ............................ 2,938,373 (3) 8.9%
2000 Interstate Parkway
Suite 400
Montgomery, Alabama 36104
Robert E. Lowder ........................... 1,750,372 (4) 5.3%
One Commerce Street
Montgomery, Alabama 36104
Carl F. Bailey ............................. 17,595 *
M. Miller Gorrie ........................... 266,523 (5) *
William M. Johnson ......................... 920,455 (6) 2.8%
Herbert A. Meisler ......................... 544,529 (7) 1.7%
Claude B. Nielsen .......................... 5,865 *
Harold W. Ripps ............................ 1,925,975 5.8%
Donald T. Senterfitt ....................... 2,159 *
C. Reynolds Thompson, III .................. 17,595 *
Howard B. Nelson, Jr. ...................... 17,595 *
Robert A. Jackson .......................... 17,595 *
Paul F. Earle .............................. 17,595 *
All executive officers and trustees as a group
(17 persons) ........................... 9,694,742 (8) 29.4%
- ----------------------
* Less than 1%
(1) The number of units outstanding as of March 11, 2002 was 33,017,790.
(2) Includes 466,521 Units owned by Thomas Lowder, 89,285 Units owned by
Thomas Lowder Investments, LLC, 1,369,396 Units owned by CCI, 1,012,976
Units owned by EPJV and 195 Units held in trust for the benefit of
Thomas Lowder's children. Units owned by CCI are reported twice in this
table, once as beneficially owned by Thomas Lowder and again as
beneficially owned by James Lowder. Units owned by EPJV are reported
three times in this table, as beneficially owned by each of Thomas
Lowder, James Lowder, and Robert Lowder.
(3) Includes 466,521 Units owned by James Lowder, 89,285 Units owned by
James Lowder Investments, LLC, 1,369,396 Units owned by CCI, 1,012,976
Units owned by EPJV and 195 Units held in trust for the benefit of
James Lowder's children.
(4) Includes 737,201 Units owned by Robert Lowder, 1,012,976 Units owned by
EPJV and 195 Units held in trust for the benefit of Robert Lowder's
children.
(5) Includes 157,140 Units owned by MJE, LLC., and 109,383 Units owned by
Mr. Gorrie.
(6) Includes 568,281 Units owned by Mr. Johnson, 74,505 Units owned by
William M. Johnson Investments I, LLP, an entity controlled by Mr.
Johnson, 177,669 Units held in the William M. Johnson and Phyliss B.
Johnson Foundation, Inc. and 100,000 units held in the William M.
Johnson and Phyllis B. Johnson Supporting Foundation, Inc..
(7) Includes 471,872 Units owned by Meisler Enterprises L.P., a limited
partnership of which Mr. Meisler and his wife are sole partners, and
72,657 Units directly owned by Mr. Meisler.
(8) Units held by CCI and EPJV have been counted only once for this
purpose.
Item 13. Certain Relationships and Related Transactions.
The information required by this item is hereby incorporated by
reference to the material appearing in the Proxy Statement under the captions
"Executive Compensation Committee Interlocks and Insider Participation" and
"Certain Transactions."
Part IV
Item 14. Exhibits, Financial Schedules, and Reports on Form 8-K.
14(a)(1) and (2) Financial Statements and Schedules
Index to Financial Statements and Financial Statement Schedule
Financial Statements:
The following financial statements of CRLP are included in Part II,
Item 8 of this report:
Consolidated Balance Sheets as of December 31, 2001 and 2000
Consolidated Statements of Income for the years ended December 31,
2001, 2000, and 1999
Consolidated Statements of Partner's Capital for the years ended
December 31, 2001, 2000, and 1999
Consolidated Statements of Cash Flows for the years ended December 31,
2001, 2000, and 1999
Notes to Consolidated Financial Statements
Report of Independent Accountants
Financial Statement Schedule:
Schedule III Real Estate and Accumulated Depreciation
Report of Independent Accountants
All other schedules have been omitted because the required information
of such other schedules is not present in amounts sufficient to require
submission of the schedule or because the required information is included in
the consolidated financial statements.
14(a)(3) Exhibits
* 3.1 Declaration of Trust of Company.
* 3.2 Bylaws of the Company.
(phi) 10.1 Third Amended and Restated Agreement of Limited
Partnership of the Operating Partnership, as amended.
+ 10.2.1 Registration Rights and Lock-Up Agreement dated September
29, 1993, among the Company and the persons named therein.
(psi) 10.2.2 Registration Rights and Lock-Up Agreement dated March 25,
1997, among the Company and the persons named therein.
(psi) 10.2.3 Registration Rights and Lock-Up Agreement dated November 4,
1994, among the Company and the persons named therein.
(psi) 10.2.4 Registration Rights and Lock-Up Agreement dated August 20,
1997, among the Company and the persons named therein.
(psi) 10.2.5 Registration Rights and Lock-Up Agreement dated November 1,
1997, among the Company and the persons named therein.
(psi) 10.2.6 Registration Rights and Lock-Up Agreement dated July 1,
1997, among the Company and the persons named therein.
(psi) 10.2.7 Registration Rights and Lock-Up Agreement dated July 1,
1996, among the Company and the persons named therein.
(psi)(psi) 10.2.8 Registration Rights and Lock-Up Agreement dated February 23,
1999, among the Company Belcrest Realty Corporation, and
Belair Real Estate Company.
(psi)(psi) 10.2.9 Registration Rights and Lock-Up Agreement dated July 1,
1998, among the Company and the persons named therein.
(psi)(psi) 10.2.10 Registration Rights and Lock-Up Agreement dated July 31,
1997, among the Company and the persons named therein.
(psi)(psi) 10.2.11 Registration Rights and Lock-Up Agreement dated November 18,
1998, among the Company and the persons named therein.
(psi)(psi) 10.2.12 Registration Rights and Lock-Up Agreement dated December 29,
1994, among the Company and the persons named therein.
(psi)(psi) 10.2.13 Registration Rights and Lock-Up Agreement dated April 30,
1999, among the Company and the persons named therein.
+ 10.6++ Officers and Trustees Indemnification Agreement.
+ 10.7 Partnership Agreement of the Management Partnership.
** 10.8 Articles of Incorporation of the Management Corporation,
as amended.
+ 10.9 Bylaws of the Management Corporation.
++ 10.10 Credit Agreement between the Colonial Realty Limited
Partnership and SouthTrust Bank, National Association,
AmSouth Bank N.A., Wells Fargo Bank, National
Association, Wachovia Bank N.A., First National Bank of
Commerce, N.A., and PNC Bank, Ohio, National Association
dated July 10, 1997 and related promissory notes.
(psi)(psi) 10.11.1 Amendment to Credit Agreement dated July 10, 1998.
(psi)(psi) 10.11.2 Second Amendment to Credit Agreement dated August 21, 1998.
+ 10.12++ Annual Incentive Plan.
++++ 10.13 Indenture dated as of July 22, 1996, by and between
Colonial Realty Limited Partnership and Bankers Trust
Company, as amended.
(psi)(psi) 10.13.1 First Supplemental Indenture dated as of December 31, 1998,
by and between Colonial Realty Limited Partnership and
Bankers Trust Company.
(phi) 10.14 Executive Unit Purchase Program - Program Summary
(phi) 10.15 Form of Promissory Note
(phi) 10.16 Reimbursement Agreement dated January 25, 2000 between
Colonial Realty Limited Partnership and Employee Unit
Purchase Plan participants.
12.1 Ratio of Earnings to Fixed Charges
23.1 Consent of PricewaterhouseCoopers LLP
- --------------------
* Incorporated by reference to the Company's Form 8-K dated
November 5, 1997.
** Incorporated by reference to the same titled and number exhibit in
the Company's Annual Report on Form 10-K dated December 31, 1994.
(psi) Incorporated by reference to the same titled and number exhibit in the
Company's Annual Report on Form 10-K dated December 31, 1997.
+ Incorporated by reference to the same titled and numbered exhibit in
the Company's Registration Statement on Form S-11, No. 33-65954.
++ Management contract or compensatory plan required to be filed pursuant
to Item 14(c) of Form 10-K.
++ Incorporated by reference to the same titled and number exhibit in
the Company's Quarterly Report on Form 10-Q dated June 30, 1997.
++++ Incorporated by reference to (i) Exhibit D to the Form 8-K dated
July 19, 1996, filed by Colonial Realty Limited Partnership, and
(ii) Exhibit B to the Form 8-K dated December 6, 1996, filed by
Colonial Realty Limited Partnership.
(psi)(psi)Incorporated by reference to the same titled and numbered exhibit in
the Company's Annual Report on Form 10-K dated December 31, 1998.
(phi) Incorporated by reference to the same titled and numbered exhibit in
the Company's Annual Report on Form 10-K dated December 31, 1999.
14(b) Reports on Form 8-K
Reports on Form 8-K filed during the last quarter of 2001:
None
14(c) Exhibits
The list of Exhibits filed with this report is set forth in
response to Item 14(a)(3).
14(d) Financial Statements
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, on March
28, 2002.
COLONIAL REALTY LIMITED PARTNERSHIP
a Delaware limited partnership
By: Colonial Properties Trust, its general partner
By: /s/ Howard B. Nelson Jr.
----------------------------
Howard B. Nelson, Jr.
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities with Colonial Properties Trust indicated on
March 28, 2002.
Signature
/s/ Thomas H. Lowder Chairman of the Board,
- --------------------------------------------------- President, and Chief
Thomas H. Lowder Executive Officer
/s/ Howard B. Nelson, Jr. Chief Financial Officer
- ---------------------------------------------------
Howard B. Nelson, Jr.
/s/ Kenneth E. Howell Senior Vice President-
- --------------------------------------------------- Chief Accounting Officer
Kenneth E. Howell
/s/ Carl F. Bailey Trustee
- ---------------------------------------------------
Carl F. Bailey
/s/ M. Miller Gorrie Trustee
- ---------------------------------------------------
M. Miller Gorrie
/s/ William M. Johnson Trustee
- ---------------------------------------------------
William M. Johnson
/s/ James K. Lowder Trustee
- ---------------------------------------------------
James K. Lowder
/s/ Herbert A. Meisler Trustee
- ---------------------------------------------------
Herbert A. Meisler
/s/ Claude B. Nielsen Trustee
- ---------------------------------------------------
Claude B. Nielsen
/s/ Harold W. Ripps Trustee
- ---------------------------------------------------
Harold W. Ripps
/s/ Donald T. Senterfitt Trustee
- ---------------------------------------------------
Donald T. Senterfitt
SCHEDULE III
COLONIAL PROPERTIES TRUST
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2001
Initial Cost to Cost Gross Amount at Which
Company Capitalized Carried at Close of Period
----------------------------------- ----------------
Buildings and Subsequent to
Description Encumbrances Land Improvements Acquisition Land
- -------------------------------- ---------------- ---------------- ---------------- ------------- ----------------
Multifamily:
CG at Carrollwood 10,200,000 1,464,000 10,657,840 1,952,166 1,464,000
CG at Citrus Park -0- 1,323,593 -0- 11,307,239 1,328,323
CG at Cypress Crossing -0- 8,781,859 -0- 12,718,923 2,125,136
CG at Edgewater 21,788,244 1,540,000 12,671,606 13,523,499 2,602,325
CG at Galleria 22,400,000 4,600,000 39,078,925 4,544,363 4,600,000
CG at Galleria II -0- 758,439 7,902,382 78,002 758,439
CG at Galleria Woods -0- 1,220,000 12,480,949 557,006 1,220,000
CG at Heather Glen -0- 3,800,000 -0- 30,851,561 4,134,235
CG at Heathrow -0- 2,560,661 17,612,990 647,610 2,560,661
CG at Hunter's Creek 30,416,491 33,264,022 -0- 683,394 5,308,112
CG at Lakewood Ranch -0- 2,320,442 -0- 19,883,349 2,148,814
CG at Liberty Park -0- 2,296,019 -0- 24,965,175 2,296,019
CG at Madison 17,756,649 1,689,400 -0- 21,626,713 1,831,550
CG at Natchez Trace 10,744,875 1,312,000 16,568,050 211,403 1,197,591
CG at Palma Sola -0- 1,479,352 -0- 13,235,401 1,479,352
CG at Promenade 22,729,100 1,479,352 -0- 26,531,576 1,668,104
CG at Research Park 12,775,000 3,680,000 29,322,067 2,636,383 3,680,000
CG at Reservoir -0- 1,020,000 -0- 13,185,751 1,122,893
CG at Riverchase 20,921,042 2,340,000 25,248,548 2,040,730 2,340,000
CG at Wesleyan -0- 720,000 12,760,587 6,846,367 1,404,780
CV at Ashford Place -0- 537,600 5,839,838 357,581 537,600
CV at Ashley Plantation 24,647,948 1,160,000 11,284,785 14,701,578 2,215,490
CV at Caledon Wood -0- 2,100,000 19,482,210 552,616 2,108,949
CV at Cordova -0- 134,000 3,986,304 608,346 134,000
CV at Gainesville -0- 3,360,000 24,173,649 4,271,532 3,361,850
CV at Haverhill -0- 1,771,000 17,869,452 2,583,538 1,771,000
CV at Hillcrest -0- 332,800 4,310,671 353,223 332,800
CV at Huntleigh Woods -0- 745,600 4,908,990 1,107,189 745,600
CV at Inverness 9,900,000 1,713,668 10,352,151 768,323 1,077,849
CV at Inverness II/III/IV -0- 635,819 5,927,265 8,687,589 1,859,142
CV at Lake Mary -0- 2,145,480 -0- 19,896,535 3,634,094
CV at McGehee Place -0- 795,627 -0- 17,565,287 842,321
CV at Monte D'Oro -0- 1,000,000 6,994,227 1,876,124 1,000,000
CV at Oakleigh -0- 880,000 9,685,518 283,431 884,365
CV at Timothy Woods -0- 1,020,000 11,910,546 239,379 1,024,347
CV at Trussville -0- 1,504,000 18,800,253 1,072,831 1,510,409
CV at Vernon Marsh 3,400,000 960,984 3,511,596 3,627,851 960,984
CV at Walton Way -0- 1,024,000 7,877,766 3,646,178 1,024,000
Ski Lodge - Tuscaloosa -0- 1,064,000 6,636,685 1,445,993 1,064,000
Retail:
Britt David Shopping Center -0- 1,755,000 4,951,852 495,111 1,755,000
Colonial Brookwood Mall -0- 8,136,700 24,435,002 52,248,108 8,171,373
Colonial Mall Auburn-Opelika -0- 103,480 -0- 17,974,238 723,715
Colonial Mall Bel Air -0- 7,517,000 80,151,190 6,451,133 7,517,000
Colonial Mall Burlington -0- 4,120,000 25,632,587 2,141,653 4,137,557
Colonial Mall Decatur -0- 3,262,800 23,636,229 3,617,797 3,262,800
Colonial Mall Gadsden -0- 639,577 -0- 22,292,513 639,577
Colonial Mall Glynn Place -0- 3,588,178 22,514,121 2,387,350 3,603,469
Colonial Mall Greenville -0- 4,433,000 24,812,243 6,080,035 4,433,000
Colonial Mall Lakeshore -0- 4,646,300 30,973,239 3,023,420 4,666,100
Colonial Mall Mrytle Beach -0- 9,099,972 33,663,654 5,019,463 9,163,149
Colonial Mall Staunton -0- 2,895,000 15,083,542 4,039,704 2,907,337
Colonial Mall Temple -0- 2,981,736 23,503,930 1,385,064 2,981,736
Colonial Mall Valdosta -0- 5,377,000 30,239,796 2,707,909 4,478,413
Colonial Malll Macon -0- 1,684,875 -0- 95,400,612 5,508,562
Colonial Mayberry Mall -0- 862,500 3,778,590 638,227 866,175
Colonial Promenade Bardmoor -0- 1,989,019 9,047,663 645,534 1,989,019
Colonial Promenade Beechwood -0- 2,565,550 19,647,875 3,321,398 2,576,483
Colonial Promenade Burnt Store -0- 3,750,000 8,198,677 207,443 3,750,000
Colonial Promenade Hunter's Creek -0- 4,181,760 13,023,401 317,065 4,181,760
Colonial Promenade Lakewood -0- 2,984,522 11,482,512 2,760,264 2,997,240
Colonial Promenade Montgomery 12,250,000 3,788,913 11,346,754 1,489,088 4,332,432
Colonial Promenade Montgomery North -0- 2,400,000 5,664,858 588,167 2,401,182
Colonial Promenade Northdale -0- 3,059,760 8,054,090 6,562,220 3,059,760
Colonial Promenade Trussville -0- 4,201,186 -0- 28,123,770 4,213,537
Colonial Promenade Tutwiler Farm -0- 10,287,026 -0- 17,432,206 10,288,138
Colonial Promenade University Park 21,500,000 6,946,785 20,104,517 1,119,455 6,946,785
Colonial Promenade Wekiva -0- 2,817,788 15,302,375 434,101 2,817,788
Colonial Promenade Winter Haven -0- 1,768,586 3,928,903 4,907,833 4,045,045
Colonial Shoppes at Inverness -0- 1,680,000 1,387,055 93,216 1,687,159
Colonial Shoppes Bear Lake -0- 2,134,440 6,551,683 353,610 2,134,440
Colonial Shoppes Bellwood -0- 330,000 -0- 5,220,419 330,000
Colonial Shoppes McGehee -0- 197,152 -0- 5,934,311 197,152
Colonial Shoppes Quaker Village -0- 931,000 7,901,874 690,184 934,967
Colonial Shoppes Stanley -0- 450,000 1,657,870 132,379 451,918
Colonial Shoppes Yadkinville -0- 1,080,000 1,224,136 3,367,898 1,084,602
Old Springville Shopping Center -0- 272,594 -0- 3,399,921 277,975
Olde Town Shopping Center -0- 343,325 -0- 2,842,835 343,325
P&S Building -0- 104,089 558,646 254,962 104,089
Rivermont Shopping Center 1,341,578 515,250 2,332,486 349,675 517,446
Village at Roswell Summit 1,544,012 450,000 2,563,642 225,619 451,918
Office:
250 Commerce Street -0- 25,000 200,200 2,462,004 25,000
AmSouth Center -0- 764,961 -0- 19,693,622 764,961
Colonial Center @ Mansell Overlook 16,882,114 4,540,000 44,012,971 73,473,683 9,673,627
Colonial Center at Research Park -0- 1,003,865 -0- 12,234,198 1,003,865
Colonial Center Town Park 100 -0- 1,391,500 -0- 15,860,495 1,515,878
Colonial Plaza -0- 1,001,375 12,381,023 5,792,899 1,005,642
Concourse Center -0- 4,875,000 25,702,552 1,169,951 4,875,000
Emmett R. Johnson Bldg -0- 1,794,672 14,801,258 889,045 1,794,672
Independence Plaza -0- 1,505,000 6,018,476 3,105,196 1,505,000
International Park -0- 1,279,355 5,668,186 19,014,125 3,087,151
Interstate Park 3,235,361 1,125,990 7,113,558 11,432,666 1,125,988
Lakeside Office Park -0- 423,451 8,313,291 1,473,863 425,255
Perimeter Corporate Park 4,991,218 1,422,169 18,377,648 2,669,097 1,422,169
Progress Center -0- 521,037 14,710,851 2,240,869 523,258
Riverchase Center -0- 1,916,727 22,091,651 2,593,304 1,924,895
Shoppes at Mansell -0- 600,000 3,089,565 37,434 600,000
University Park -0- 396,960 2,971,049 2,200,468 396,959
Active Development Projects:
CG at North Heathrow Phase II -0- 3,363,141 -0- 616,882
CG at Town Park (Lake Mary) -0- 3,555,408 -0- 31,875,757
CG at Wesleyan III -0- 230,643 -0- 8,288
Colonial Center Mansell Overlook -0- 2,664,265 -0- 8,148,581
Colonial Center Town Park -0- 1,391,500 -0- 14,726,427
CP Hoover -0- 5,605,476 -0- 2,727,268
CV at Town Park (Sarasota) -0- 1,566,765 -0- 19,166,726
Other Miscellaneous Projects -0- -0- -0- 5,438,326
Unimproved Land and Corporate Assets:
Colonial Mall Valdosta -0- 975,506 -0- 233,227
Colonial Town Park Infrastructure -0- 25,933,612 -0- 1,116,671
Corporate Assets -0- -0- -0- 5,172,022
CV at Town Park Infrastructure -0- 1,184,919 -0- 3,406,186
Lakewood Ranch -0- 47,990 -0- 522,734
McGehee Place Land -0- 114,166 -0- -0-
Other Land -0- 1,143,896 -0- -0-
Twin Lakes -0- 10,117,524 -0- 928,904
------------- -------------- -------------- -------------- --------------
$ 269,423,632 $ 303,347,453 $1,036,663,122 $ 878,778,557 $ 229,957,575
============= ============== ============== ============== ==============
SCHEDULE III
COLONIAL REALTY LIMITED PARTNERSHIP
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2001
Gross Amount at Which Date
Carried at Close of Period Acquired/
---------------------------
Buildings and Accumulated Date Placed in Depreciable
Description Improvements Total Depreciation Completed Service Lives-Years
- ------------------------------ ----------- ------------ ---------- ----------- ---------- -------------
Multifamily:
CG at Carrollwood 12,610,006 $ 14,074,006 3,603,589 1966 1994 7-40 Years
CG at Citrus Park 11,302,509 $ 12,630,832 1,548,968 1999 1997 7-40 Years
CG at Cypress Crossing 19,375,646 $ 21,500,782 2,543,214 1999 1998 7-40 Years
CG at Edgewater 25,132,779 $ 27,735,105 5,503,865 1990 1994 7-40 Years
CG at Galleria 43,623,288 $ 48,223,288 8,582,458 1986 1994 7-40 Years
CG at Galleria II 7,980,384 $ 8,738,823 1,538,770 1996 1996 7-40 Years
CG at Galleria Woods 13,037,955 $ 14,257,955 2,738,598 1994 1996 7-40 Years
CG at Heather Glen 30,517,326 $ 34,651,561 2,537,897 2000 1998 7-40 Years
CG at Heathrow 18,260,599 $ 20,821,261 3,686,347 1997 1994/97 7-40 Years
CG at Hunter's Creek 28,639,304 $ 33,947,416 5,511,556 1996 1996 7-40 Years
CG at Lakewood Ranch 20,054,976 $ 22,203,791 2,334,460 1999 1997 7-40 Years
CG at Liberty Park 24,965,175 $ 27,261,194 1,742,291 2000 1998 7-40 Years
CG at Madison 21,484,563 $ 23,316,113 1,818,511 2000 1998 7-40 Years
CG at Natchez Trace 16,893,862 $ 18,091,453 2,703,102 1995/97 1997 7-40 Years
CG at Palma Sola 13,235,402 $ 14,714,753 5,783,591 1992 1992 7-40 Years
CG at Promenade 26,342,824 $ 28,010,928 2,105,077 1992 1992 7-40 Years
CG at Research Park 31,958,450 $ 35,638,450 7,285,238 1987/94 1994 7-40 Years
CG at Reservoir 13,082,858 $ 14,205,751 964,225 2000 1998 7-40 Years
CG at Riverchase 27,289,278 $ 29,629,278 5,782,441 1984/91 1994 7-40 Years
CG at Wesleyan 18,922,174 $ 20,326,954 3,042,748 1997 1996/97 7-40 Years
CV at Ashford Place 6,197,419 $ 6,735,019 964,099 1983 1996 7-40 Years
CV at Ashley Plantation 24,930,873 $ 27,146,363 3,003,804 1997 1998 7-40 Years
CV at Caledon Wood 20,025,877 $ 22,134,826 3,033,866 1995/96 1997 7-40 Years
CV at Cordova 4,594,649 $ 4,728,650 2,883,597 1983 1983 7-40 Years
CV at Gainesville 28,443,331 $ 31,805,181 7,666,489 1989/93/94 1994 7-40 Years
CV at Haverhill 20,452,990 $ 22,223,990 2,403,758 1998 1998 7-40 Years
CV at Hillcrest 4,663,894 $ 4,996,694 788,660 1981 1996 7-40 Years
CV at Huntleigh Woods 6,016,179 $ 6,761,779 1,435,120 1978 1994 7-40 Years
CV at Inverness 11,756,293 $ 12,834,142 2,741,204 1986/87/90 1986/87/90 7-40 Years
CV at Inverness II/III/IV 13,391,532 $ 15,250,673 4,588,616 1997 1997 7-40 Years
CV at Lake Mary 18,407,921 $ 22,042,015 6,191,963 1991/95 1991/95 7-40 Years
CV at McGehee Place 17,518,594 $ 18,360,914 6,213,111 1986/95 1986/95 7-40 Years
CV at Monte D'Oro 8,870,351 $ 9,870,351 2,088,345 1977 1994 7-40 Years
CV at Oakleigh 9,964,584 $ 10,848,949 1,663,389 1997 1997 7-40 Years
CV at Timothy Woods 12,145,578 $ 13,169,925 1,949,411 1996 1997 7-40 Years
CV at Trussville 19,866,675 $ 21,377,084 3,401,011 1996/97 1997 7-40 Years
CV at Vernon Marsh 7,139,447 $ 8,100,431 2,315,240 1986/87 1986/93 7-40 Years
CV at Walton Way 11,523,944 $ 12,547,944 884,530 1970/88 1998 7-40 Years
Ski Lodge - Tuscaloosa 8,082,678 $ 9,146,678 1,976,564 1976/92 1994 7-40 Years
Retail:
Britt David Shopping Center 5,446,963 $ 7,201,963 910,590 1990 1994 7-40 Years
Colonial Brookwood Mall 76,648,437 $ 84,819,810 3,413,412 1973/91 1997 7-40 Years
Colonial Mall Auburn-Opelika 17,354,003 $ 18,077,718 10,411,367 1973/84/89 1973/84/89 7-40 Years
Colonial Mall Bel Air 86,602,323 $ 94,119,323 7,530,627 1966/90/97 1998 7-40 Years
Colonial Mall Burlington 27,756,683 $ 31,894,240 3,255,116 1969/86/94 1997 7-40 Years
Colonial Mall Decatur 27,254,026 $ 30,516,826 5,069,478 1979/89 1993 7-40 Years
Colonial Mall Gadsden 22,292,513 $ 22,932,090 12,097,169 1974/91 1974 7-40 Years
Colonial Mall Glynn Place 24,886,181 $ 28,489,649 3,306,431 1986 1997 7-40 Years
Colonial Mall Greenville 30,892,278 $ 35,325,278 2,409,168 1965/89/99 1999 7-40 Years
Colonial Mall Lakeshore 33,976,859 $ 38,642,959 4,373,226 1984-87 1997 7-40 Years
Colonial Mall Mrytle Beach 38,619,941 $ 47,783,089 5,529,317 1986 1996 7-40 Years
Colonial Mall Staunton 19,110,909 $ 22,018,246 2,454,638 1969/86/97 1997 7-40 Years
Colonial Mall Temple 24,888,994 $ 27,870,730 1,298,736 2000 7-40 Years
Colonial Mall Valdosta 33,846,292 $ 38,324,705 4,235,363 1982-85 1997 7-40 Years
Colonial Malll Macon 91,576,925 $ 97,085,487 26,975,218 1975/88/97 1975/88 7-40 Years
Colonial Mayberry Mall 4,413,141 $ 5,279,317 548,390 1968/86 1997 7-40 Years
Colonial Promenade Bardmoor 9,693,197 $ 11,682,216 1,391,187 1981 1996 7-40 Years
Colonial Promenade Beechwood 22,958,340 $ 25,534,823 2,882,195 1963/92 1997 7-40 Years
Colonial Promenade Burnt Store 8,406,120 $ 12,156,120 1,624,357 1990 1994 7-40 Years
Colonial Promenade Hunter's Creek 13,340,466 $ 17,522,226 1,917,975 1993/95 1996 7-40 Years
Colonial Promenade Lakewood 14,230,058 $ 17,227,298 1,646,940 1995 1997 7-40 Years
Colonial Promenade Montgomery 12,292,323 $ 16,624,755 3,564,899 1990 1993 7-40 Years
Colonial Promenade Montgomery N 6,251,843 $ 8,653,025 635,022 1997 1995 7-40 Years
Colonial Promenade Northdale 14,616,310 $ 17,676,070 1,435,972 1988/00 1995 7-40 Years
Colonial Promenade Trussville 28,111,419 $ 32,324,956 1,121,291 2000 1998 7-40 Years
Colonial Promenade Tutwiler Farm 17,431,095 $ 27,719,233 434,737 2000 1999 7-40 Years
Colonial Promenade University Par 21,223,972 $ 28,170,757 8,225,951 1986/89 1993 7-40 Years
Colonial Promenade Wekiva 15,736,476 $ 18,554,264 2,204,933 1990 1996 7-40 Years
Colonial Promenade Winter Haven 6,560,277 $ 10,605,322 1,126,811 1986 1995 7-40 Years
Colonial Shoppes at Inverness 1,473,112 $ 3,160,271 194,855 1984 1997 7-40 Years
Colonial Shoppes Bear Lake 6,905,293 $ 9,039,733 1,213,799 1990 1995 7-40 Years
Colonial Shoppes Bellwood 5,220,419 $ 5,550,419 1,548,077 1988 1988 7-40 Years
Colonial Shoppes McGehee 5,934,311 $ 6,131,463 1,818,015 1986 1986 7-40 Years
Colonial Shoppes Quaker Village 8,588,090 $ 9,523,058 941,721 1968/88/97 1997 7-40 Years
Colonial Shoppes Stanley 1,788,331 $ 2,240,249 238,486 1987/96 1997 7-40 Years
Colonial Shoppes Yadkinville 4,587,432 $ 5,672,034 488,171 1971/97 1997 7-40 Years
Old Springville Shopping Center 3,394,540 $ 3,672,515 2,855,351 1982 1982 7-40 Years
Olde Town Shopping Center 2,842,835 $ 3,186,160 998,961 1978/90 1978/90 7-40 Years
P&S Building 813,608 $ 917,697 577,577 1946/76/91 1974 7-40 Years
Rivermont Shopping Center 2,679,965 $ 3,197,411 333,746 1986/97 1997 7-40 Years
Village at Roswell Summit 2,787,343 $ 3,239,261 304,180 1988 1997 7-40 Years
Office:
250 Commerce Street 2,662,204 $ 2,687,204 2,424,716 1904/81 1980 7-40 Years
AmSouth Center 19,693,622 $ 20,458,583 8,154,298 1990 1990 7-40 Years
Colonial Center @ Mansell Overloo 112,353,028 $122,026,654 8,026,382 1987/96/97/00 1997 7-40 Years
Colonial Center at Research Park 12,234,198 $ 13,238,063 862,975 1999 1998 7-40 Years
Colonial Center Town Park 100 15,736,117 $ 17,251,995 217,860 2001 2000 7-40 Years
Colonial Plaza 18,169,655 $ 19,175,297 1,846,619 1982 1997 7-40 Years
Concourse Center 26,872,503 $ 31,747,503 2,312,745 1981/85 1998 7-40 Years
Emmett R. Johnson Bldg. 15,690,303 $ 17,484,975 974,405 1982/95 1999 7-40 Years
Independence Plaza 9,123,672 $ 10,628,672 746,049 1981/92 1998 7-40 Years
International Park 22,874,515 $ 25,961,666 1,915,252 1987/89 1997 7-40 Years
Interstate Park 18,546,226 $ 19,672,214 6,693,601 1982-85/89 1982-85/89 7-40 Years
Lakeside Office Park 9,785,349 $ 10,210,605 1,120,112 1989/90 1997 7-40 Years
Perimeter Corporate Park 21,046,745 $ 22,468,914 2,038,164 1986/89 1998 7-40 Years
Progress Center 16,949,499 $ 17,472,757 2,008,952 1983-91 1997 7-40 Years
Riverchase Center 24,676,787 $ 26,601,682 3,172,291 1984-88 1997 7-40 Years
Shoppes at Mansell 3,126,999 $ 3,726,999 269,877 1996/97 1998 7-40 Years
University Park 5,171,518 $ 5,568,477 2,498,997 1985 1985 7-40 Years
Active Development Projects:
CG at North Heathrow Phase II 3,980,022 $ 3,980,022 N/A 1997 N/A
CG at Town Park (Lake Mary) 35,431,166 $ 35,431,166 246,336 N/A 2000 N/A
CG at Wesleyan III 238,931 $ 238,931 N/A 1996 N/A
Colonial Center Mansell Overlook 10,812,846 $ 10,812,846 N/A 1997 N/A
Colonial Center Town Park 16,117,927 $ 16,117,927 N/A 2000 N/A
CP Hoover 8,332,744 $ 8,332,744 N/A 2001 N/A
CV at Town Park (Sarasota) 20,733,491 $ 20,733,491 394,271 N/A 2000 N/A
Other Miscellaneous Projects 5,438,326 $ 5,438,326 N/A 2001 N/A
Unimproved Land and Corporate Assets:
Colonial Mall Valdosta 1,208,733 $ 1,208,733 N/A 1997 N/A
Colonial Town Park Infrastructure 27,050,283 $ 27,050,283 N/A 1999 N/A
Corporate Assets 5,172,022 $ 5,160,938 3,422,209 N/A N/A N/A
CV at Town Park Infrastructure 4,591,105 $ 4,591,105 N/A 2000 N/A
Lakewood Ranch 570,724 $ 570,724 N/A 1999 N/A
McGehee Place Land 114,166 $ 114,166 N/A 1981 N/A
Other Land 1,143,896 $ 1,143,896 N/A N/A N/A
Twin Lakes 11,046,428 $ 11,046,428 N/A 2000 N/A
------------- -------------- -------------
$1,988,831,558 $2,218,778,048 $ 310,439,292
============= ============== =============
NOTES TO SCHEDULE III
COLONIAL REALTY LIMITED PARTNERSHIP
DECEMBER 31, 2001
(1) The aggregate cost for Federal Income Tax purposes was approximately
$1.8 billion at December 31, 2001.
(2) See description of mortgage notes payable in Note 8 of Notes to
Consolidated Financial Statements.
(3) The following is a reconciliation of real estate to balances reported
at the beginning of the year:
RECONCILATION OF REAL ESTATE
2001 2000 1999
--------------- ---------------- ----------------
Real estate investments:
Balance at beginning of year $ 2,106,563,153 $ 2,006,823,011 $ 1,863,798,665
Acquisitions of new property -0- 29,608,188 48,577,019
Improvements and development 194,303,821 138,186,127 222,513,472
Dispositions of property (82,088,926) (68,054,173) (128,066,145)
--------------- ---------------- ----------------
Balance at end of year $ 2,218,778,048 $ 2,106,563,153 $ 2,006,823,011
=============== ================ ================
RECONCILIATION OF ACCUMULATED DEPRECIATION
2001 2000 1999
--------------- ---------------- ----------------
Accumulated depreciation:
Balance at beginning of year $ 255,730,341 $ 206,448,061 $169,451,798
Depreciation 64,692,784 59,548,811 52,912,745
Depreciation of disposition of property (9,983,833) (10,266,531) (15,916,482)
--------------- ---------------- ----------------
Balance at end of year $310,439,292 $255,730,341 $206,448,061
=============== ================ ================