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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997 OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to
---------------
Commission File Number 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: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. YES |X| NO |_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |_|
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 Colonial
Properties Holding Company, Inc., CRLP, Colonial Properties Services Limited
Partnership and Colonial Properties Services, Inc.) or, as the context may
require, Colonial Properties Trust only.
This annual report on Form 10-K contains certain "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
including but not limited to anticipated timetables for acquisitions,
developments and expansions, expected economic growth in geographic markets
where CRLP owns or expects to own properties, and plans for continuing CRLP's
diversified strategy. These statements involve risks and uncertainties that may
cause actual results to be materially different from those anticipated.
Prospective investors should specifically consider, in connection with these
forward-looking statements, the various factors identified herein and in CRLP's
filings with the SEC which could cause actual results to differ, including
downturns in local or national economies, competitive factors, the availability
of suitable properties for acquisition at favorable prices, and other risks
inherent in the real estate business.
CRLP is managed by the Company, through Colonial Properties Holding
Company, Inc. ("CPHC"), the general partner of CRLP. (The Company intends to
dissolve CPHC during the first half of 1998 and thereby become the direct
general partner of CRLP.) 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. It is a
fully-integrated real estate company, whose activities include ownership of a
diversified portfolio of 93 properties as of December 31, 1997, located in
Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina,
Tennessee and Virginia, development of new properties, acquisition of existing
properties, build-to-suit development, and the provision of management, leasing,
and brokerage services for commercial real estate. As of December 31, 1997, CRLP
owns 43 multifamily apartment communities containing a total of 13,759 apartment
units (the "Multifamily Properties"), 37 retail properties containing a total of
approximately 10.6 million square feet of retail space (the "Retail
Properties"), 13 office properties containing a total of approximately 1.9
million square feet of office space (the "Office Properties"), and certain
parcels of land adjacent to or near five of these properties (the "Land"). (The
Multifamily Properties, the Retail Properties, the Office Properties and the
Land are referred to collectively as the "Properties"). As of December 31, 1997,
the Multifamily Properties that had achieved stabilized occupancy, the Retail
Properties, and the Office Properties were 93.8%, 93.3% and 95.5% leased,
respectively.
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
The Operating Partnership was formed to succeed to substantially all of
the interests of Colonial Properties, Inc., an Alabama corporation ("Colonial"),
its affiliates and certain others in a diversified portfolio of multifamily,
retail, and office properties located in Alabama, Florida, and Georgia and to
the development, acquisition, management, leasing, and brokerage businesses of
Colonial.
2
On September 29, 1993, (i) the Company consummated an initial public
offering (the "IPO") of 8,480,000 of its common shares of beneficial interest,
$.01 par value per share ("Common Shares"), (ii) the Operating Partnership
assumed ownership of 36 Properties (or interests therein) held by Thomas H.
Lowder, James K. Lowder, Robert E. Lowder, and their mother, Catherine Lowder
(the "Lowder family"), and third-party partners of the Lowder family, and the
operating businesses of Colonial, (iii) the Company transferred the net proceeds
from the IPO through CPHC to the Operating Partnership, in exchange for
8,480,000 units of limited partnership interest in the Operating Partnership
("OP Units"), (iv) the Operating Partnership repaid approximately $150.2 million
of indebtedness and prepayment penalties associated therewith secured by certain
of the Properties, and (v) the Operating Partnership established a $35.0 million
line of credit with SouthTrust Bank, which has since been increased to $200.0
million, to fund development activities and property acquisitions and for
general corporate purposes (collectively, the "Formation Transactions"). On
October 28, 1993, the underwriters of the IPO exercised an over-allotment option
to purchase an additional 686,200 shares.
Recent Developments
Since the Company's IPO, CRLP has significantly expanded its portfolio of
Properties and its operating businesses. Acquisitions by CRLP of new properties
represent a total investment of over $1.0 billion. CRLP has also completed the
expansion of six multifamily properties since the Company's IPO, adding a total
of 1,088 units to its multifamily portfolio. CRLP currently has 11 active
expansion and development projects in progress for Multifamily Properties
(including additional phases of six existing Multifamily Properties). CRLP has
also disposed of six Multifamily Properties representing 2,464 apartment units
and one Office Property representing 25,000 square feet of office space.
The following is a summary of CRLP's acquisition, disposition, and
development activity in 1997.
Acquisition and Disposition Activity
CRLP acquired nine retail shopping centers, including one in Alabama, two
in Georgia, one in Florida, three in North Carolina, one in Virginia and one in
Tennessee containing approximately 1.1 million leasable square feet for a total
purchase price of $70.0 million. CRLP also acquired seven regional malls,
including one in Alabama, three in Georgia, two in North Carolina and one in
Virginia containing approximately 3.2 million leasable square feet for a total
purchase price of $180.6 million.
CRLP acquired five Multifamily Properties, including one in Alabama, one
in Florida, one in Georgia, one in Mississippi and one in South Carolina
containing 1,434 units for a total purchase price of $82.7 million. In
connection with a regional mall acquisition in Alabama, CRLP disposed of in an
exchange transaction, two multifamily properties located in Florida containing
368 apartment units and having a net book value of $14.0 million. In connection
with the acquisitions of three malls in Georgia, CRLP sold to a third party four
multifamily properties in Alabama containing a total of 2,096 apartment units
for a total sale price of $54.8 million, which resulted in a net gain of $2.6
million. The purchaser of the multifamily properties paid the sale price by
assuming an existing mortgage of $10 million and paying the remainder in cash.
CRLP also acquired four Office Properties, including three in Alabama and
one in Georgia containing approximately 1.0 million square feet of office space
for a total purchase price of $97.1 million. In connection with an office
acquisition in Alabama, CRLP disposed of in an exchange transaction a 25,000
square foot office building located in Alabama having a net book value of $2.0
million.
The acquisition agreements for three of the properties acquired in 1997
provide for CRLP to make additional payments to the sellers if certain lease-up
conditions are satisfied. CRLP expects to make additional payments to the
sellers of $8.3 million in 1998 pursuant to these provisions.
Also in 1997, CRLP purchased a 62.5% interest that it did already own in
two multi-tenant office buildings at an office park in Birmingham. The purchase
of these outside interests made CRLP the sole owner of the two buildings, which
total 93,000 square feet. At the same time, CRLP sold its 25 percent interest in
a 129,000 square foot building in the same office complex. CRLP also purchased a
50% interest in a 168,000 square foot office building in Birmingham, increasing
CRLP's ownership to 100%.
3
Development Activity
During 1997 CRLP constructed 1,172 new apartment units in seven
multifamily communities (two of which were completed during the year) and
acquired land on which it intends to develop additional multifamily communities
during 1998. The aggregate cost of this multifamily development activity was
$50.5 million. As of December 31, 1997, CRLP had 1,170 apartment units in eleven
multifamily communities under development and expansion. Management anticipates
that four of the multifamily projects will be completed during the first half of
1998 and four others will be completed during the second half of the year. The
remaining multifamily projects are expected to be completed during the first
half of 1999. Management expects to invest approximately $64.2 million over
these periods to complete these projects.
During 1997 CRLP also completed its 422,000 square foot expansion of its
regional mall in Macon, Georgia and completed a 239,000 square foot expansion of
a community shopping center in Montgomery, Alabama. The aggregate cost of this
retail development activity was $28.6 million.
The table below provides an overview of CRLP's acquisition and development
activity during 1997:
4
Summary of 1997
Acquisition and Development
Activity
Cost or
Completion or Type of Units (M) Anticipated
Anticipated Name of Property GLA (R/O) Cost (in
Completion Date Property (1) Location (2) (3) Thousands) (4)
- ----------------- --------------------------------- --------------------- ----------- --------- ----------------
Acquisitions:
1st Qtr 97 .. Riverchase Center Birmingham, AL O 306,000 $ 24,200
1st Qtr 97 .. Heatherbrooke Center Birmingham, AL R 28,000 3,000
1st Qtr 97 .. Beechwood Shopping Center Athens, GA R 336,000 22,200
2nd Qtr 97 .. CV at Trussville Birmingham, AL M 376 20,500
2nd Qtr 97 .. Brookwood Village Birmingham, AL R 694,000 32,500
2nd Qtr 97 .. Lakeside Office Park Huntsville, AL O 121,000 8,800
2nd Qtr 97 .. Progress Center Huntsville, AL O 225,000 15,600
3rd Qtr 97 .. CV at Timothy Woods Athens, GA M 204 12,800
3rd Qtr 97 .. CV at Oakleigh Pensacola, FL M 176 10,500
3rd Qtr 97 .. Mansell Office Park Atlanta, GA O 352,000 48,500
3rd Qtr 97 .. CG at Natchez Trace Jackson, MS M 328 17,600
4th Qtr 97 .. Lakewood Plaza Jacksonville, FL R 195,000 14,400
4th Qtr 97 .. CV at Caledon Wood Greenville, SC M 350 21,300
4th Qtr 97 .. Georgia Malls Portfolio (3 Properties) Brunswick, Gainesville, R 1,428,200 97,000
and Valdosta, GA
4th Qtr 97 .. Retail Portfolio (8 Properties) NC/VA/TN R 1,490,500 78,500
4th Qtr 97 .. Village at Roswell Summit Atlanta, GA R 25,000 3,000
Developments:
1st Qtr 97 .. CG at Heathrow Orlando, FL M 312 20,500
1st Qtr 97 .. CG at Bayshore Bradenton, FL M 212 11,600
4th Qtr 97 .. CV at River Hills (expansion) Tampa, FL M 276 14,900
4th Qtr 97 .. CV at Inverness (expansion) Birmingham, AL M 84 6,700
4th Qtr 97 .. CG at Bayshore II (expansion) Bradenton, FL M 164 9,300
4th Qtr 97 .. CG at Wesleyan Macon, GA M 240 13,500
2nd Qtr 98 .. CG at Hunter's Creek Orlando, FL M 496 33,300
3rd Qtr 98 .. CG at Inverness Lakes (expansion) Mobile, AL M 132 8,000
4th Qtr 98 .. CG at Wesleyan II (expansion) Macon, GA M 88 6,200
4th Qtr 98 .. CG at Edgewater (expansion) Huntsville, AL M 192 11,500
1st Qtr 99 .. CV at Citrus Park Tampa, FL M 176 12,300
1st Qtr 99 .. CG at Cypress Crossing Orlando, FL M 250 20,000
2nd Qtr 99 .. CG at Lakewood Ranch Sarasota, FL M 288 20,300
1st Qtr 97 .. Macon Mall (expansion) Macon, GA R 422,000 52,000
4th Qtr 97 .. Montgomery Promenade (expansion) Montgomery, AL R 239,000 7,000
---------
Total $ 677,500
=========
(1)In the listing of Multifamily Property names, CG has been used as an
abbreviation for Colonial Grand and CV has been used as an abbreviation for
Colonial Village.
(2)M refers to Multifamily Properties, R refers to Retail Properties, and O
refers to Office Properties.
(3)Units (in this table only) refers to multifamily apartment units and GLA
refers to gross leasable area of retail and office space.
(4) Amounts in thousands.
(5)Includes 249,000 square feet of GLA and 173,000 square feet of space owned by
an anchor.
(6)Includes 109,000 square feet of GLA and 130,000 square feet of space owned by
an anchor.
5
Multifamily Property Acquisitions
Colonial Village at Trussville--On April 1, 1997, CRLP acquired Colonial
Village at Trussville, a 376-unit multifamily community in Birmingham, Alabama.
The $20.5 million purchase price was financed through the issuance of 57,072 OP
Units, valued at $1.6 million, and an advance on CRLP's unsecured line of
credit. Colonial Village at Trussville was constructed in 1996 and 1997. The
development consists of 20 two- and three-story buildings and a separate
clubhouse on approximately 28 acres of land. Amenities include two swimming
pools and a wading pool, a car care center, a fitness center, tennis courts, a
playground, and leasable garages. The community was in lease up at December 31,
1997. Colonial Village at Trussville was purchased from a partnership whose
partners included a director of Colonial Properties Holding Company, Inc.
Colonial Village at Timothy Woods--On July 11, 1997, CRLP acquired
Colonial Village at Timothy Woods, a 204-unit multifamily community in Athens,
Georgia. The purchase price of $12.8 million was financed through the issuance
of 27,275 OP Units, valued at $800,000, and an advance on CRLP's unsecured line
of credit. The community was developed in 1996 and was 89% leased at December
31, 1997. Amenities include a swimming pool, a fitness center, car wash,
garages, and two tennis courts. Colonial Village at Timothy Woods was purchased
from a corporation whose shareholders included two directors of Colonial
Properties Holding Company, Inc.
Colonial Village at Oakleigh--On July 14, 1997, CRLP acquired Colonial
Village at Oakleigh, a 176-unit multifamily community in Pensacola, Florida. The
purchase price of $10.5 million was financed through the issuance of 35,522 OP
Units, valued at $1.0 million, and an advance on CRLP's unsecured line of
credit. The community was developed in 1997 and was 95% leased at December 31,
1997. Amenities include a swimming pool, a fitness center, car wash, garages and
covered parking, and alarm systems.
Colonial Grand at Natchez Trace--On August 29, 1997, CRLP acquired
Colonial Grand at Natchez Trace, a 328-unit multifamily community in Jackson,
Mississippi. The community was constructed in three phases between 1995 and
1997, and was 99% leased at December 31, 1997. The purchase price of $17.6
million was financed through the assumption of two mortgages totaling $11.0
million with a weighted average interest rate of 8.09%, and an advance on CRLP's
unsecured line of credit. Amenities include a swimming pool, a clubhouse with an
exercise room, and three lighted tennis courts.
Colonial Village at Caledon Wood--On October 31, 1997, CRLP acquired
Colonial Village at Caledon Wood, a 350-unit multifamily community in
Greenville, South Carolina. The 25-acre community was developed in 1995 and
1996, and was 86% leased at December 31, 1997. The purchase price of $21.3
million was financed through an advance on CRLP's unsecured line of credit.
Amenities include two swimming pools, two clubhouses with recreation rooms, a
fitness center, and lighted tennis courts.
CRLP intends to continue to pursue acquisitions in the Sunbelt region of
the United States that meet CRLP's acquisition criteria for property quality,
market strength, and investment return.
Completed Multifamily Expansion and Development Activity
Colonial Grand at Heathrow--CRLP completed construction on a 312-unit
development located in Heathrow (Orlando), Florida. CRLP acquired the land (30
acres) in December 1994 at a cost of $2.2 million. The development is located
adjacent to Heathrow International Business Center and Heathrow Country Club.
The apartment community offers a variety of amenities, including a clubhouse
with conference and computer rooms, an exercise center, tennis and basketball
courts, a swimming pool, and laundry facilities. Project development costs,
including land acquisition costs, totaled $20.5 million and were funded through
advances on CRLP's line of credit. CRLP completed construction in the first
quarter of 1997 and completed lease-up during the third quarter of 1997.
6
Colonial Grand at Bayshore--CRLP completed construction on a 212-unit
development located in Bradenton, Florida. The community offers a variety of
amenities, including a clubhouse, an exercise center, a swimming pool
overlooking a five-acre lake, tennis and basketball courts, a children's
playground, tenant garages, and storage units. Project costs, including land
acquisition costs, totaled $11.6 million and were funded through advances on
CRLP's line of credit. CRLP completed construction in the second quarter of 1997
and completed lease-up during the third quarter of 1997.
Continuing Multifamily Expansion and Development Activity
Colonial Village at River Hills--CRLP completed construction on a 276-unit
expansion of Colonial Village at River Hills located in Tampa, Florida. The
community amenities include a clubhouse, a swimming pool, an exercise center, an
air-conditioned racquetball court, tennis courts, and laundry facilities.
Project development costs, including land acquisition costs, totaled $14.9
million and were funded through advances on CRLP's line of credit. CRLP
completed construction in the fourth quarter of 1997 and expects to complete
lease-up during the second quarter of 1998.
Colonial Village at Inverness--CRLP completed construction on an 84-unit
expansion of Colonial Village at Inverness located in Birmingham, Alabama.
Project development costs, including land acquisition costs, totaled $6.7
million and were funded through advances on CRLP's line of credit. CRLP
completed construction in the fourth quarter of 1997 and expects to complete
lease-up in the first quarter of 1998.
Colonial Grand at Bayshore II--CRLP completed construction on a 164-unit
expansion to this development located in Bradenton, Florida. CRLP acquired the
land (12.5 acres) at a cost of $1.0 million pursuant to an option acquired at
the time CRLP purchased the land for the existing Colonial Grand at Bayshore
development in November 1995. This expansion phase offers the same amenities as
the existing community. Project development costs, including land acquisition
costs, totaled $9.3 million and were funded through advances on CRLP's line of
credit. CRLP completed construction in the fourth quarter of 1997 and expects to
complete lease-up during the second quarter of 1998.
Colonial Grand at Wesleyan--CRLP completed construction on a 240-unit
development located in Macon, Georgia. CRLP acquired the land (49.8 acres) at a
cost of $1.4 million, which was determined pursuant to an option acquired at the
time of the Company's IPO in September 1993. The new community offers a variety
of amenities, including a clubhouse, an exercise center, a swimming pool, tennis
courts, and storage units for rent. Project development costs, including land
acquisition costs, totaled $13.5 million and were funded through advances on
CRLP's line of credit. CRLP completed construction in the fourth quarter of 1997
and expects to complete lease-up during the second quarter of 1998.
Colonial Grand at Hunter's Creek--CRLP continued construction on a
496-unit development located in Orlando, Florida. CRLP acquired the land (36
acres) at a cost of $4.0 million. The new apartment community will offer a
variety of amenities, including a swimming pool and spa, an exercise room,
enclosed garages, tennis courts, and a car wash. Project development costs,
including land acquisition costs, are expected to total $33.3 million and will
be funded through advances on CRLP's line of credit. CRLP expects to complete
construction in the second quarter of 1998 and to complete lease-up during the
first quarter of 1999.
New Multifamily Expansion and Development Activity
Colonial Grand at Inverness Lakes II--CRLP began construction on a
132-unit expansion of Colonial Grand at Inverness Lakes located in Mobile,
Alabama during the third quarter of 1997. Project development costs, including
land acquisition costs, are expected to total $8.0 million and will be funded
through advances on CRLP's line of credit. CRLP expects to complete construction
in the third quarter of 1998 and to complete lease-up during the third quarter
of 1999.
7
Colonial Grand at Edgewater II--CRLP began construction on a 192-unit
expansion of Colonial Grand at Edgewater in Huntsville, Alabama during the third
quarter of 1997. Project development costs, including land acquisition costs,
are expected to total $11.5 million and will be funded through advances on
CRLP's line of credit. CRLP expects to complete construction in the fourth
quarter of 1998 and to complete lease-up during the third quarter of 1999.
Colonial Grand at Wesleyan II--CRLP began construction on an 88-unit
expansion of Colonial Grand at Wesleyan located in Macon, Georgia during the
third quarter of 1997. Project development costs, including land acquisition
costs, are expected to total $6.2 million and will be funded through advances on
CRLP's line of credit. CRLP expects to complete construction in the fourth
quarter of 1998 and to complete lease-up during the fourth quarter of 1998.
Colonial Village at Citrus Park--CRLP began construction on a 176-unit
development located in Tampa, Florida during the fourth quarter of 1997. The new
apartment community will offer a variety of amenities, including a swimming
pool, fitness center, resident business center, garages, covered parking and a
gated entry. Project development costs, including land acquisition costs, are
expected to total $12.3 million and will be funded through advances on CRLP's
line of credit. CRLP expects to complete construction in the first quarter of
1999 and to complete lease-up during the second quarter of 1999.
Colonial Grand at Lakewood Ranch--CRLP began construction on a 288-unit
development located in Sarasota, Florida during the fourth quarter of 1997. The
new apartments will feature numerous luxuries that include crown molding, tiled
floors, chair railings, intrusion alarms, fireplaces and screened patios on all
first floor units. Amenities will include a swimming pool, fitness center,
tennis courts and a gated entry. Project development costs, including land
acquisition costs, are expected to total $20.3 million and will be funded
through advances on CRLP's line of credit. CRLP expects to complete construction
in the second quarter of 1999 and to complete lease-up during the second quarter
of 2000.
Colonial Grand at Cypress Crossing-- CRLP began construction on a 250-unit
development located in Orlando, Florida during the fourth quarter of 1997. The
new apartment community will offer a variety of amenities, including a swimming
pool, fitness center, resident business center, garages, covered parking and a
gated entry. Project development costs, including land acquisition costs, are
expected to total $20.0 million and will be funded through advances on CRLP's
line of credit. CRLP expects to complete construction in the first quarter of
1999 and to complete lease-up during the fourth quarter of 1999.
Retail Property Acquisitions
Beechwood Shopping Center--On March 24, 1997, CRLP acquired Beechwood
Shopping Center, a 336,000 square foot community shopping center in Athens,
Georgia. The purchase price of $22.2 million was financed through the
assumption of debt totaling $11.9 million and an advance on CRLP's unsecured
line of credit. The center includes a 34,000 square foot Harris-Teeter, a
29,000 square foot Rhodes Furniture, a 10,000 square foot CVS/Pharmacy, and
39,000 square feet occupied by the U.S. Post Office. The center, which was
built in 1963 and renovated in 1992, was 98% leased at December 31, 1997.
Heatherbrooke Center--Also on March 24, 1997, CRLP acquired Heatherbrooke
Center, a 28,000 square foot community shopping center in Birmingham, Alabama.
The $3.0 million purchase price of the center was financed through the issuance
of 16,303 OP Units, valued at $0.5 million, and an advance on CRLP's unsecured
line of credit. AMI-Brookwood Medical Center occupies 18,000 square feet in the
center. Heatherbrooke Center was built in 1984 and was 100% leased at December
31, 1997.
8
Brookwood Village--On May 13, 1997, CRLP acquired Brookwood Village, a
694,000 square foot regional mall and convenience center in Birmingham, Alabama,
for a purchase price of $32.5 million. The mall includes a 232,000 square foot
Rich's and a 106,000 square foot McRae's. The mall was constructed in 1973,
renovated in 1991 and was 86% leased at December 31, 1997. CRLP funded the
acquisition through the exchange of two multifamily properties in Florida and an
advance on CRLP's unsecured line of credit.
Lakewood Plaza--On October 14, 1997, CRLP acquired Lakewood Plaza, a
195,000 square foot community shopping center located in southwest Jacksonville,
Florida, for a purchase price of $14.4 million. The center includes a 48,000
square foot Winn Dixie and a 10,000 square foot Beall's Department Store. The
center was refurbished in 1995 and was 89% leased at December 31, 1997. The
purchase price was funded through the issuance of 74,709 OP Units, valued at
$2.1 million, and an advance on CRLP's unsecured line of credit. The acquisition
agreement provides for CRLP to make an additional payment to the seller if
certain lease-up conditions are satisfied. CRLP expects to make an additional
payment of approximately $400,000 during 1998 pursuant to this provision.
Georgia Malls Portfolio--On November 4, 1997, CRLP acquired three enclosed
shopping malls in Georgia (including Glynn Place Mall in Brunswick, Georgia,
Lakeshore Mall in Gainesville, Georgia, and Valdosta Mall in Valdosta, Georgia)
for an aggregate purchase price of $97.0 million. The portfolio contains a total
of 1.4 million square feet of gross leasable area. In connection with the
acquisition, which was structured as a tax-deferred, like-kind exchange, CRLP
agreed to sell to a third party four multifamily properties for an aggregate
sales price of $54.8 million, which the third-party purchaser paid by assuming
an existing mortgage of $10.0 million and paying $44.8 million in cash. CRLP
used the cash portion of the sales price, together with an advance on CRLP's
line of credit in the approximate amount of $52.2 million, to pay the purchase
price of the three malls. The three properties have anchor tenants including
Sears, Belk, JC Penney, and Kmart, and collectively were 91% leased at December
31, 1997.
Retail Portfolio--On December 5, 1997, and January 20, 1998, CRLP
completed the acquisition of eight retail properties consisting of three
enclosed malls located in Staunton, Virginia and Burlington and Mount Airy,
North Carolina and five community shopping centers located in Abingdon,
Virginia, Greensboro, Locust, and Yadkinville, North Carolina and Chattanooga,
Tennessee. The portfolio contains a total of 1.5 million square feet of gross
leasable area and was acquired for a total purchase price of $78.5 million. The
purchase price was funded through the issuance of 661,517 OP Units, valued at
$19.5 million, the assumption of $5.7 million of debt , and an advance on CRLP's
unsecured line of credit. The eight properties collectively were 97% leased at
December 31, 1997. The acquisition agreement for the mall in Staunton, Virginia
provides for CRLP to make an additional payment to the seller if certain
lease-up conditions are satisfied. CRLP expects to make an additional payment of
approximately $1.8 million pursuant to this provision.
Village at Roswell Summit--On December 31, 1997, CRLP acquired through
merger the Village at Roswell Summit, a 25,000 square foot community shopping
center in Atlanta, Georgia, for a purchase price of $3.0 million. The purchase
price was funded through the assumption of $1.7 million of debt with an interest
rate of 8.93%, and an advance on CRLP's unsecured line of credit. The center was
90% leased at December 31, 1997. Village at Roswell Summit was purchased from a
partnership whose partners included a director of Colonial Properties Holding
Company, Inc.
Retail Expansion Activity
Macon Mall--During the first quarter of 1997, CRLP completed its 422,000
square foot expansion of Macon Mall, a super regional mall located in Macon,
Georgia. The mall expansion includes new anchor tenants Parisian, Inc. and
Dillard Department Stores, Inc. together with 50 specialty shops, which have
joined existing department stores including Macy's Primary Real Estate, Inc.,
Belk-Matthews Company of Macon, Georgia, a Georgia Corporation, Sears, Roebuck
and Company and J.C. Penney Company, Inc. Macon Mall now contains approximately
1,439,000 square feet of retail shopping space. The project expansion costs
totaled $52 million and were funded through advances on CRLP's line of credit.
CRLP expects to complete lease-up of this expansion during the first quarter of
1998.
9
Montgomery Promenade--During the fourth quarter of 1997, CRLP completed
the 239,000 square foot expansion of Montgomery Promenade, a power center
containing approximately 209,000 square feet located in Montgomery, Alabama. The
expansion, which is known as Montgomery Promenade North, increases the shopping
center to 448,000 square feet of leasable area and includes a 130,000 square
foot tenant-owned Home Depot. Montgomery Promenade is anchored by Winn Dixie
Market Place, Stein Mart, Michael's Arts & Crafts, Goody's, Books-A-Million, and
K & B Drugs. Project expansion costs totaled $8.1 million and were funded
through advances on CRLP's line of credit. CRLP expects to complete lease-up
during the first quarter of 1998.
Office Property Acquisitions
Riverchase Center--In two transactions on January 1 and January 8, 1997,
CRLP acquired Riverchase Center 2100 and a 73.05% interest in Riverchase Center
2200/2300. Riverchase Center is an office park comprised of eight one-level
buildings in Birmingham, Alabama. Major tenants include AT & T, BellSouth, and
Hewlett Packard. The purchase price of $20.8 million was funded by the
assumption of $8.7 million in mortgage debt, the issuance of 25,163 OP Units,
valued at $700,000, and an advance on CRLP's unsecured line of credit.
Effective November 1, 1997, CRLP purchased the remaining 26.95% interest in the
property by issuing 114,798 OP Units. Riverchase Center was built between 1984
and 1988 and was 87% leased at December 31, 1997.
Lakeside Office Park--On May 22, 1997, CRLP acquired Lakeside Office Park,
an office park comprised of two three-story brick and glass multi-tenant
buildings in Huntsville, Alabama totaling 121,000 square feet of leasable area.
Major tenants include Lockheed Martin, Accugraph, and IBM. The purchase price
of $8.8 million was funded by an advance on CRLP's unsecured line of credit.
Lakeside Office Park was built during 1989 and 1990 and was 96% leased at
December 31, 1997.
Progress Center--On June 26, 1997, CRLP acquired Progress Center, an
office park comprised of five one-story multi-tenant buildings in Huntsville,
Alabama totaling 225,000 square feet of leasable area. Major tenants include
McDonnell Douglas, ADTRAN, Nichols Research Corporation, IKON, and Telos
Engineering. The purchase price of $15.6 million was funded through the
exchange of CRLP's 25,000 square foot Whitesburg office building, which was
also in Huntsville, and by an advance on CRLP's unsecured line of credit.
Progress Center was built in phases from 1983 to 1991 and was 96% leased at
December 31, 1997.
Mansell Office Park--On July 31, 1997, CRLP acquired through merger
Mansell Office Park in Atlanta, Georgia, comprised of six buildings totaling
352,000 square feet, for a purchase price of $48.5 million. Major tenants
include Compdent, Electronic Data Services (EDS), Motorola, NationsBank, and
Xerox. The purchase price was funded by the assumption of $31.7 million in
mortgage debt, the issuance of 540,235 OP Units, valued at $15.7 million, and an
advance on CRLP's unsecured line of credit. Mansell Office Park was built
between 1987 and 1996 and was 100% leased at December 31, 1997. As a result of
this transaction, the seller, William M. Johnson, was elected as a director of
Colonial Properties Holding Company, Inc. In connection with its acquisition of
this property, CRLP also agreed to acquire an additional office property
consisting of 163,000 square feet of net rentable area and an additional retail
property containing 21,000 square feet of gross leasable area. The purchase
price of the additional properties, which are located in or near the Mansell
Office Park, is expected to be approximately $24.3 million (subject to increase
if certain lease-up conditions are satisfied), which will be paid through the
issuance of OP Units, the assumption of debt and an advance on CRLP's unsecured
line of credit. CRLP expects to acquire the additional properties by the end of
the second quarter of 1998.
10
Financing Activity
CRLP funded a large portion of its acquisitions and developments through
the issuance of debt securities and through cash contributions from the Company
through the issuance of its common and preferred shares. During 1997, the
Company and CRLP completed the following equity and debt transactions:
Common Share Offerings
(in thousands)
-------------------------
Number of Price Gross Offering Net
Date Common Per Costs Proceeds
Shares Share Proceeds
- ----------------------- -------- -------- ------- -------
January 1,500,000 $ 29.8750 $ 44,812 $ 1,457 $ 43,355
July 1,700,000 $ 30.9375 $ 52,594 $ 2,945 $ 49,649
December 165,632 $ 30.1875 $ 5,000 $ 330 $ 4,670
Preferred Share Offering
(in thousands)
-------------------------
Number of Price
Date Preferred Per Gross Offering Net
Shares Share Proceeds Costs Proceeds
- ----------------------- -------- -------- ------- -------
November 5,000,000 $ 25.0000 $ 125,000 $ 4,451 $ 120,549
Debt Offerings
Gross
Type of Proceeds
Date Note Maturity Rate (in thousands)
- ----------------- --------------- -------------------------- ----------------
January Medium-term January, 2003 7.16% $ 50,000
July Medium-term July, 2004 6.96% $ 75,000
August Medium-term August, 2005 6.96% $ 25,000
September Medium-term September, 2005 6.98% $ 25,000
On July 10, 1997, CRLP increased the borrowing capacity under its unsecured line
of credit from $125 million to $200 million. The credit facility, which is used
by CRLP primarily to finance additional property investments, bears interest at
a rate ranging between 100 and 150 basis points above LIBOR and is renewable
annually. As of December 31, 1997, the balance outstanding on CRLP's line of
credit was $117.1 million, bearing interest at a rate of 110 basis points above
LIBOR.
Business Strategy
The general business strategy of the Company and CRLP is to generate
stable and increasing cash flow and portfolio value for its shareholders. The
Company and CRLP (and their predecessor) have implemented this strategy
principally by (i) realizing growth in income from its existing portfolio of
properties, (ii) developing, expanding, and selectively acquiring additional
multifamily, retail, and office properties in growth markets located in the
Sunbelt region of the United States, where CRLP has first-hand knowledge of
growth patterns and local economic conditions, (iii) managing its own
properties, which has enabled it to better control operating expenses and
establish long-term relationships with its retail and office tenants, (iv)
maintaining the Company's third-party property management business, which has
increased cash flow and established additional relationships with tenants, and
(v) employing a comprehensive capital maintenance program to maintain properties
in first-class condition. CRLP's business strategy and the implementation of
that strategy are determined by CRLP's partners and may be changed from time to
time.
11
Financing Strategy
CRLP intends to maintain a ratio of long-term debt to total market
capitalization (i.e., the total debt divided by the market value of issued and
outstanding Common Shares and Units plus total debt) in the range of 30% to 45%.
CRLP's total market capitalization as of December 31, 1997, was $1.8 billion,
and its ratio of debt to total market capitalization was 39.8%. At December 31,
1997, CRLP's total debt included fixed-rate debt of $531.3 million, or 75.7% of
total debt, and floating-rate debt of $170.7 million, or 24.3% of total debt.
CRLP has obtained interest rate protection for $67.8 million of the
floating-rate debt.
CRLP may from time to time reevaluate its borrowing policies in light of
then current economic conditions, relative costs of debt and equity capital,
market values of properties, growth and acquisition opportunities, and other
factors. CRLP may modify its borrowing policy and may increase or decrease its
ratio of debt to total market capitalization. To the extent that the partners of
CRLP determine to seek additional capital, CRLP may raise such capital through
additional equity offerings by the Company, debt financings, or retention of
cash flow (subject to provisions in the Code requiring the distribution by a
REIT of a certain percentage of taxable income and taking into account taxes
that would be imposed on undistributed taxable income) or a combination of these
methods.
Property Management
CRLP is experienced in the management and leasing of multifamily, retail,
and office properties and believes that the management and leasing of its own
portfolio has helped the Properties maintain consistent income growth and has
resulted in reduced operating expenses from the Properties. This also allows
CRLP to establish additional relationships with tenants who may require
additional retail or office space and to identify potential acquisitions.
Operational Structure
Multifamily Division--The multifamily division of CRLP is responsible for
all aspects of CRLP's multifamily operations, including day-to-day management
and leasing of the 43 Multifamily Properties, as well as development and
acquisition of additional multifamily properties. The multifamily division also
is responsible for the provision of third-party management services for
apartment communities in which CRLP does not have an ownership interest. The
multifamily division has regional offices in Birmingham, Mobile and Montgomery,
Alabama, Orlando and Tampa, Florida, and Stockbridge, Georgia.
Retail Division--CRLP's retail division is responsible for all aspects of
CRLP's retail operations, including the provision of management and leasing
services for the 37 Retail Properties, as well as the development and
acquisition of additional retail properties. The retail division also is
responsible for the provision of third-party management services for retail
properties in which CRLP does not have an ownership interest and for brokerage
services in other retail property transactions. The retail division has regional
offices in Birmingham, Alabama, Orlando, Florida, Macon, Georgia and Burlington,
North Carolina.
Office Division--CRLP's office division is responsible for all aspects of
CRLP's commercial office operations, including the provision of management and
leasing services for the 13 Office Properties, as well as the development and
acquisition of additional office properties. The office division also is
responsible for the provision of third-party management services for office
properties in which CRLP does not have an ownership interest and for brokerage
services in other office property transactions. The office division has a
regional office in Atlanta, Georgia.
12
Employees
CRLP employs approximately 800 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 Internal Revenue
Code of 1986, as amended (the "Code"), commencing with its taxable year ending
December 31, 1993. If the Company qualifies for taxation as a REIT, the Company
generally will not be subject to Federal income tax to the extent it distributes
at least 95% of its REIT taxable income to its shareholders. Even if the Company
qualifies for taxation as a REIT, the Company may be subject to certain state
and local taxes on its income and property and to federal income and excise
taxes on its undistributed income.
13
Item 2. Properties.
General
CRLP acquired 36 properties in connection with the Formation Transactions,
and acquired or developed 19 additional properties and an additional phase of an
existing property in 1994, six additional properties in 1995, 11 additional
properties in 1996, and 25 additional properties in 1997. Since the Company's
initial public offering ("IPO"), CRLP has developed four additional Multifamily
Properties and has disposed of eight properties, all through tax-deferred,
like-kind exchanges. The 93 Properties owned by CRLP at December 31, 1997,
consisted of 43 Multifamily Properties, 37 Retail Properties, and 13 Office
Properties, as described in more detail below.
Summary of Properties
Total 1997 Percent of Percentage
Units/ Property Total 1997 Occupancy at
Type of Number of GLA/ Revenue (2) Property Dec. 31, 1997
Property Properties NRA (1) (in thousands) Revenue (2) (3)
- ------------ ----------- -------- -------------- ------------ ------------
Multifamily 43 13,759 $ 95,503 51.8% 93.8%
Retail .... 37 10,558,000 71,179 38.6% 93.3%
Office .... 13 1,859,000 17,761 9.6% 95.5%
----------- -----
Total . 93 $ 184,443 100.0%
=========== =====
(1) Units (in this table only) refers to multifamily apartment units, GLA
refers to gross leasable area of retail space and NRA refers to net
rentable area of office space. Information is presented as of December 31,
1997.
(2) Includes CRLP's proportionate share of revenue from those Office Properties
accounted for under the equity method, and CRLP's share of the properties
disposed of in 1997.
(3) Excludes 1,972 units of expansion phases of five Multifamily Properties
that had not achieved stabilized occupancy as of December 31, 1997.
Multifamily Properties
The 43 Multifamily Properties owned by CRLP at December 31, 1997, contain
a total of 13,759 garden-style apartments and range in size from 104 to 1,080
apartment units. Fourteen of the Multifamily Properties were acquired by CRLP in
connection with the Formation Transactions, 13 Properties and one additional
phase of an existing Property were acquired during 1994, seven Properties were
acquired during 1996 and five Properties were acquired during 1997. Also, since
the Company's IPO CRLP has developed four additional Multifamily Properties.
Twenty Multifamily Properties (containing a total of 6,985 apartment units) are
located in Alabama, 13 Multifamily Properties (containing a total of 4,502
apartment units) are located in Florida, eight Multifamily Properties
(containing a total of 1,594 apartments units) are located in Georgia, one
Multifamily Property (containing a total of 328 apartment units) is located in
Mississippi, and one Multifamily Property (containing a total of 350 apartment
units) is located in South Carolina. Each of the Multifamily Properties is
established in its local market and provides residents with numerous amenities,
which may include a swimming pool, exercise room, jacuzzi, clubhouse, laundry
room, tennis court(s), and/or a playground. All of the Multifamily Properties
are managed by CRLP.
14
The following table sets forth certain additional information relating to the
Multifamily Properties as of and for the year ended December 31, 1997.
Multifamily Properties
Average Total Multifamily Percent of
Year Number Approximate Rental Property Total 1997
Multifamily Completed of Rentable Area Percent Rate Revenue for Property
Property (1) Location (2) Units (3) (Square Feet) Occupied Per Unit 1997 Revenue (4)
- ----------------------- --------------- ----------- ---------- ------------ -------- -------- --------- -------------
Alabama:
CV at Ashford Place ...... Mobile 1983 168 139,000 95.8% $ 488 $ 1,007,257 0.5%
CV at Rocky Ridge ........ Birmingham 1984 226 259,000 92.0% 598 1,491,752 0.8%
Colony Park .............. Mobile 1975 201 130,000 92.5% 387 879,268 0.5%
CG at Galleria Woods ..... Birmingham 1994 244 261,000 92.6% 656 1,710,598 0.9%
CG at Mountain Brook ..... Birmingham 1987/91 392 393,000 89.5% 679 2,679,375 1.5%
CV at Trussville ......... Birmingham 1996/97 376 410,000 (7) 674 1,424,920 0.8%
CV at Cahaba Heights ..... Birmingham 1992 125 131,000 92.0% 701 923,694 0.5%
CG at Edgewater .......... Huntsville 1990 308 323,000 98.4% 571 2,153,980 1.2%
CV at Inverness .......... Birmingham 1986/87/90 586 395,000 90.8% 540 2,955,040 1.6%
CV at Huntleigh Woods .... Mobile 1978 233 199,000 99.6% 433 1,250,658 0.7%
CG/CV at Inverness
Lakes Mobile ...... 1983/96 366 362,000 96.8% 572 2,837,271 1.5%
CV at McGehee Place ...... Montgomery 1986/95 468 404,000 92.5% 539 2,526,700 1.4%
CV at Monte D'Oro ........ Birmingham 1977 200 296,000 97.5% 650 1,531,823 0.8%
Patio .................... Auburn 1966/83/84 240 179,000 95.8% 411 1,118,992 0.6%
CV at Hillcrest .......... Mobile 1981 104 114,000 100.0% 590 740,351 0.4%
CG at Galleria ........... Birmingham 1986/96 1,080 1,195,000 92.3% 614 6,095,519 3.3%
CG at Research Park ...... Huntsville 1987/94 736 809,000 97.0% 555 5,282,727 2.9%
CG at Riverchase ......... Birmingham 1984/91 468 746,000 94.2% 746 3,888,784 2.1%
Ski Lodge Tuscaloosa ..... Tuscaloosa 1976/92 304 273,000 94.1% 406 1,402,641 0.8%
CV at Hillwood ........... Montgomery 1984 160 151,000 95.6% 550 959,472 0.5%
Other ................ 9,773,474 5.3%
-------- ----------- ----- ------- ----------- ----
Subtotal - Alabama (20 Properties) ... 6,985 7,169,000 94.1% 582 52,634,296 28.6%
-------- ----------- ----- ------- ----------- ----
Florida:
CG at Kirkman ...............Orlando 1991 370 337,000 92.2% 759 3,361,931 1.8%
CG at Carrollwood ...........Tampa 1966 244 286,000 96.3% 803 2,224,130 1.2%
CG at Bayshore ..............Bradenton 1997 332 369,000 (7) 722 1,364,051 0.7%
CG at Heathrow ..............Orlando 1997 312 370,000 95.5% 817 2,984,876 1.6%
CG at Hunter's Creek ........Orlando 1997 496 624,000 (7) 833 1,968,151 1.1%
CG at Palma Sola ............Bradenton 1992 340 292,000 91.2% 689 2,341,892 1.3%
CG at Palm Aire .............Sarasota 1991 248 252,000 99.2% 785 2,219,046 1.2%
CG at Gainesville ...........Gainesville 1989/93/94 560 489,000 93.6% 720 4,551,652 2.5%
CG at Ponte Vedra ...........Jacksonville 1988 240 212,000 95.4% 666 1,723,195 0.9%
CV at Oakleigh ..............Pensacola 1997 176 186,000 94.7% 683 751,218 0.4%
CV at River Hills ...........Tampa 1991/97 528 465,000 (7) 614 2,519,441 1.4%
CV at Lake Mary .............Orlando 1991/95 504 431,000 98.0% 628 3,764,405 2.0%
CV at Cordova ...............Pensacola 1983 152 116,000 98.7% 497 896,927 0.5%
Other ................... 972,311 0.5%
-------- ----------- ----- ------ ----------- ----
Subtotal - Florida (13 Properties) ... 4,502 4,429,000 95.2% 714 31,643,226 17.1%
-------- ----------- ----- ------ ----------- ----
Georgia:
CG at Barrington ............Macon 1996 176 201,000 80.1% 658 1,249,780 0.7%
CG at Wesleyan ..............Macon 1997 240 240,000 (7) 621 600,453 0.3%
North Ingle Villas ..........Macon 1983 140 133,000 82.1% 550 732,141 0.4%
CV at White Bluff ...........Savannah 1986 120 108,000 91.7% 631 871,295 0.5%
CV at Vernon Marsh ..........Savannah 1986/87 178 151,000 95.5% 610 1,264,803 0.7%
CG at Spring Creek ..........Macon 1992/94 296 328,000 91.6% 618 2,104,184 1.1%
CV at Stockbridge ...........Stockbridge 1993/94 240 253,000 96.3% 672 1,790,655 1.0%
CV at Timothy Woods .........Athens 1996 204 211,000 89.2% 740 825,338 0.4%
------- ----------- ----- ------ ----------- ----
Subtotal - Georgia (8 Properties) .... 1,594 1,625,000 90.1% 641 9,438,649 5.1%
------- ----------- ----- ------ ----------- ----
Mississippi:
CG at Natchez Trace .........Jackson 1995/97 328 343,000 99.0% 637 1,025,654 0.6%
------- ----------- ----- ------ ----------- ----
Subtotal - Mississippi (1 Property) .. 328 343,000 99.0% 637 1,025,654 0.6%
------- ----------- ----- ------ ----------- ----
South Carolina:
CV at Caledon Wood ..........Greenville 1995/96 350 367,000 86.0% 727 761,142 0.4%
------- ----------- ----- ------ ----------- ----
Subtotal - South Carolina (1 Property) 350 367,000 86.0% 727 761,142 0.4%
------- ----------- ----- ------ ----------- ----
TOTAL (43 Properties) ................ 13,759 13,933,000 93.8% $ 631 (5) $95,502,967 51.8%
======= =========== ===== ======== =========== ====
(footnotes on next page)
15
(1)All Multifamily Properties are 100% owned by CRLP. In the listing of
Multifamily Property names, CG has been used as an abbreviation for Colonial
Grand and CV as an abbreviation for Colonial Village.
(2)Year initially completed and, where applicable, year(s) in which additional
phases were completed at the Property.
(3)Units (in this table only) refers to multifamily apartment units. Number of
Units includes all apartment units occupied or available for occupancy at
December 31, 1997.
(4)Percent of Total 1997 Property Revenue represents the Multifamily Property's
proportionate share of all revenue from the 93 Properties and the Properties
disposed of in 1997.
(5)Represents weighted average rental rate per unit of the 43 Multifamily
Properties at December 31, 1997.
(6)Represents revenues from the date of CRLP's acquisition of this Property in
1997 through December 31, 1997.
(7) Expanded or newly developed property currently undergoing lease-up. (8)
Represents revenues from the Properties disposed of in 1997.
The following table sets forth the total number of apartment units,
percent leased and average base rental rate per apartment unit as of the end of
each of the last five years for the Multifamily Properties:
Average Base
Number Percent Rental Rate
Year-End of Units (1) Leased (2) Per Unit
December 31, 1997 13,759 93.8% $631
December 31, 1996 13,617 94.8% $579
December 31, 1995 11,239 95.7% $552
December 31, 1994 10,972 96.0% $531
December 31, 1993 3,618 96.7% $510
(1)Units (in this table only) refers to multifamily apartment units owned at
year end.
(2)Represents weighted average occupancy of the Multifamily Properties that had
achieved stabilized occupancy at the end of the respective period.
Retail Properties
The 37 Retail Properties owned by CRLP at December 31, 1997, contain a
total of approximately 10.6 million square feet (including space owned by anchor
tenants). Ten of the Retail Properties are located in Alabama, 11 are located in
Florida, seven are located in Georgia, five are located in North Carolina, one
is located in South Carolina, one is located in Tennessee, and two Retail
Properties are located in Virginia. The Retail Properties consist of 12 enclosed
regional malls (Briarcliffe Mall, Brookwood Village, Gadsden Mall, Glynn Place
Mall, Holly Hill Mall, Lakeshore Mall, Macon Mall, Mayberry Mall, River Oaks
Center, Staunton Mall, Valdosta Mall, and Village Mall), two power centers, and
23 neighborhood shopping centers. Nine of the 37 Retail Properties were
originally developed by CRLP, two were acquired in 1994, six were acquired in
1995, four were acquired in 1996, and 16 were acquired in 1997. All of the
Retail Properties are managed by CRLP.
16
The following table sets forth certain information relating to the Retail
Properties as of and for the year ended December 31, 1997.
Retail Properties
Average
Base
Gross Rent
Leasable Per Total Retail Percent of
Year Area Number Total Leased Property Total 1997
Retail Completed (Square Of Percent Annualized Square Revenue for Property
Property (1) Location (2) Feet) (3) Stores Leased (3) Base Rent Foot (4) 1997 Revenue (5)
- ---------------------------------------------------------------------------------------------------------------------------------
Alabama:
River Oaks ...........Decatur 1979/89 494,000 58 88.3% $3,293,000 $ 14.90 $ 4,828,318 2.6%
81,000(6)
Brookwood Village ....Birmingham 1973/91 463,000 69 86.3% 3,836,000 12.74 3,631,284 (7) 2.0%
231,000(6)
Gadsden Mall .........Gadsden 1974/91 492,000 61 96.9% 2,705,000 14.14 4,500,473 2.4%
Village Mall .........Auburn 1973/84/89 399,000 63 93.5% 2,606,000 14.44 4,026,642 2.2%
Montgomery Promenade .Montgomery 1990/97 274,000 31 98.3% 1,679,000 14.80 2,214,901 1.2%
174,000(6)
McGehee Place ........Montgomery 1986 55,000 13 86.3% 526,000 11.51 691,375 0.4%
50,000(6)
Bellwood .............Montgomery 1988 37,000 15 86.1% 401,000 10.91 500,703 0.3%
50,000(6)
Old Springville ......Birmingham 1982 64,000 14 100.0% 405,000 8.39 500,277 0.3%
Heatherbrooke Center .Birmingham 1984 28,000 5 100.0% 393,000 11.85 370,728 (7) 0.2%
Olde Town ............Montgomery 1978/90 39,000 15 95.3% 336,000 9.66 427,795 0.2%
---------- ------- ----- ---------- ----- ----------- -----
Subtotal-Alabama (10 Properties) ..... 2,931,000 344 92.0% 16,180,000 13.36 21,692,496 11.8%
---------- ------- ----- ---------- ----- ----------- -----
Florida:
University Park ......Orlando 1986/89 399,000 41 94.6% 2,763,000 13.65 3,668,053 2.0%
Country Lake .........Orlando 1990 217,000 28 97.3% 1,063,000 10.57 1,716,094 0.9%
Burnt Store Square ...Punta Gorda 1990 199,000 21 90.2% 1,241,000 11.64 1,549,115 0.8%
Winter Haven .........Orlando 1986 197,000 24 89.4% 1,292,000 11.50 1,440,257 0.8%
Northdale Court ......Tampa 1988 193,000 27 81.5% 1,322,000 9.50 1,949,345 1.1%
55,000(6)
Bear Lake ............Orlando 1990 125,000 20 85.8% 839,000 12.97 1,117,744 0.6%
Paddock Park .........Ocala 1988 87,000 20 97.6% 663,000 11.89 859,833 0.5%
Bardmoor Village .....St. Petersburg 1981 158,000 27 98.1% 1,355,000 15.45 1,772,679 1.0%
Island Walk ..........Orlando 1993/95 222,000 24 98.2% 1,914,000 15.00 2,262,172 1.2%
Wekiva Riverwalk .....Orlando 1990 209,000 26 82.7% 1,950,000 18.61 2,457,767 1.3%
Lakewood Plaza .......Jacksonville 1995 195,000 39 88.9% 1,366,000 9.30 470,071 (7) 0.3%
---------- ------- ----- ---------- ----- ----------- -----
Subtotal-Florida (11 Properties) ..... 2,256,000 297 91.5% 15,768,000 12.40 19,263,130 10.4%
---------- ------- ----- ---------- ----- ----------- -----
Georgia:
Macon Mall ...........Macon 1975/88/97 757,000 158 (8) 9,778,000 22.59 15,903,335 8.6%
682,000(6)
Beechwood Center .....Athens 1963/92 336,000 51 98.1% 2,404,000 10.29 2,329,786 (7) 1.3%
Britt David ..........Columbus 1990 110,000 10 100.0% 746,000 12.48 936,002 0.5%
Lakeshore Mall .......Gainesville 1984-97 518,000 64 93.6% 3,358,000 16.45 850,449 (7) 0.5%
Valdosta Mall ........Valdosta 1982-85 325,000 53 93.7% 2,831,000 15.93 844,207 (7) 0.5%
74,000(6)
Glynn Place Mall .....Brunswick 1986 285,000 54 84.7% 2,581,000 15.22 620,856 (7) 0.3%
226,000(6)
Village at Roswell Summit..Atlanta 1988 25,000 11 90.0% 320,000 14.77 - (7) 0.0%
---------- ------- ----- ---------- ----- ----------- -----
Subtotal-Georgia (7 Properties) ...... 3,338,000 401 93.4% 22,018,000 17.93 21,484,635 11.7%
---------- ------- ----- ---------- ----- ----------- -----
North Carolina:
Holly Hill Mall ...... Burlington 1969/86/94 422,000 57 98.8% 2,591,000 13.94 820,231 (7) 0.4%
Mayberry Mall ........ Mount Airy 1968/86 150,000 19 95.4% 712,000 10.37 163,627 (7) 0.1%
55,000(6)
Quaker Village ....... Greensboro 1968/88/97 114,000 32 100.0% 1,028,000 10.02 202,015 (7) 0.1%
Yadkin Plaza ......... Yadkinville 1971/97 94,000 13 100.0% 651,000 6.20 59,046 (7) 0.0%
Stanly Plaza ......... Locust 1987/96 47,000 7 100.0% 249,000 7.27 44,373 (7) 0.0%
---------- ------- ----- ---------- ----- ----------- -----
Subtotal-North Carolina (5 Properties) 882,000 128 98.6% 5,231,000 10.71 1,289,292 0.7%
---------- ------- ----- ---------- ----- ----------- -----
South Carolina:
Briarcliffe Mall .....Myrtle Beach 1986 488,000 78 96.7% 4,066,000 15.55 6,725,317 3.6%
---------- ------- ----- ---------- ----- ----------- -----
Subtotal-South Carolina (1 Property) . 488,000 78 96.7% 4,066,000 15.55 6,725,317 3.6%
---------- ------- ----- ---------- ----- ----------- -----
Tennessee:
Rivermont Shopping Center..Chattanooga 1986/97 75,000 8 95.4% 366,000 6.57 75,381 0.0%
---------- ------- ----- ---------- ----- ----------- -----
Subtotal-Tennessee (1 Property) ...... 75,000 8 95.4% 366,000 6.57 75,381 0.0%
---------- ------- ----- ---------- ----- ----------- -----
Virginia:
Staunton Mall ........Staunton 1969/86/97 422,000 46 93.2% 1,841,000 9.92 467,986 0.3%
Abingdon Towne Centre ..Abingdon 1987/96 166,000 19 100.0% 1,001,000 9.81 180,352 0.1%
---------- ------- ----- ---------- ----- ----------- -----
Subtotal-Virginia (2 Properties) ..... 588,000 65 95.1% 2,842,000 9.81 648,338 0.4%
---------- ------- ----- ---------- ----- ----------- -----
Total (37 Properties) ................ 10,558,000 1,321 93.3% $66,471,000 $ 14.38 $ 71,178,589 38.6%
========== ======= ===== ========== ===== =========== =====
(footnotes on next page)
17
(1) All Retail Properties are 100% owned 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 1997 Property Revenue represents the Retail Property's
proportionate share of all revenue from the 93 Properties.
(6) Represents space owned by anchor tenants.
(7)Represents revenues from the date of CRLP's acquisitions of the Property in
1997 through December 31, 1997.
(8) Expanded or newly developed property currently undergoing lease-up.
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, 1997 8,880,000 93.3% $14.38
December 31, 1996 4,856,000 93.8% $14.66
December 31, 1995 3,758,000 93.1% $13.23
December 31, 1994 2,467,000 95.8% $12.61
December 31, 1993 2,158,000 95.0% $12.27
(1) Excludes 1,678,000 square feet of space owned by anchor tenants.
(2) Average base rent per leased square foot is calculated using
specialty store year-end base rent figures.
The following table sets out a schedule of the lease expirations for
leases in place as of December 31, 1997, 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)
- --------------------------------------------------------------------------------
1998 280 872,122 $ 8,928,000 13.5%
1999 220 702,133 6,984,000 10.1%
2000 205 938,119 8,148,000 12.3%
2001 119 530,314 4,577,000 6.9%
2002 130 513,252 5,230,000 7.9%
2003 56 272,291 2,944,000 4.4%
2004 52 530,403 3,541,000 5.4%
2005 60 220,151 3,380,000 5.1%
2006 57 614,853 4,825,000 7.3%
2007 82 544,787 5,427,000 8.2%
2008-2015 60 2,353,575 12,488,000 18.9%
---------- ------------ -------------- -----------
1,321 8,092,000 $ 66,472,000 100.0%
========== ============ ============== ===========
(1)Excludes 1,678,000 square feet of space owned by anchor tenants and 788,000
square feet of space not leased as of December 31, 1997.
(2) Annualized base rent is calculated using base rents as of December 31, 1997.
18
Office Properties
The 13 Office Properties owned by CRLP at December 31, 1997, contain a
total of approximately 1.9 million rentable square feet. Eleven of the Office
Properties are located in Alabama (representing 77% of the office portfolio's
net rentable square feet) , one is located in Atlanta, Georgia and one is
located in Orlando, Florida. The Office Properties range in size from
approximately 30,000 square feet to 352,000 square feet. Four of the Office
Properties were developed by Colonial, five of the Properties were acquired at
various times between 1980 and 1990, and four of the Properties were acquired in
1997. All of the Office Properties are managed by CRLP.
The following table sets forth certain additional information relating to the
Office Properties as of and for the year ended December 31, 1997.
Office Properties
Average
Base
Net Rent
Rentable Per Total Office Percent of
Year Area Total Leased Property Total 1997
Office Completed Square Percent Annualized Square Revenue for Property
Property (1) Location (2) Feet Leased Base Rent Foot 1997 (3) Revenue (4)
- -------------------- ------------ ----------- ------------ --------- ------------ --------- ------------ ----------
Alabama:
Interstate Park ......Montgomery 1982-85/89 227,000 95.0% $ 2,717,000 $ 12.76 $ 2,987,935 1.5%
Riverchase Center ....Birmingham 1984-88 306,000 87.2% 2,779,000 9.95 2,673,025 (7) 1.3%
International Park ...Birmingham 1987/89 93,000 100.0% 1,119,000 14.23 1,283,943 (8) 0.7%
Colonial Plaza .......Birmingham 1982 168,000 100.0% 2,410,000 14.66 1,784,666 (8) 1.0%
Progress Center ......Huntsville 1983-91 225,000 96.1% 1,732,000 8.26 1,031,030 (7) 0.6%
Lakeside Office Park .Huntsville 1989/90 121,000 96.0% 1,330,000 11.40 858,403 (7) 0.5%
AmSouth Center .......Huntsville 1990 157,000 92.6% 2,489,000 17.64 2,878,541 1.6%
P&S Building .........Gadsden 1946/76/91 40,000 100.0% 178,000 4.50 178,020 0.1%
250 Commerce St ......Montgomery 1904/81 35,000 100.0% 297,000 8.44 373,764 0.2%
Anderson Block (5) ...Montgomery 1981/83 34,000 96.1% 188,000 5.83 116,484 0.1%
Land Title Bldg ......Birmingham 1975 30,000 100.0% 383,000 12.85 142,583 0.1%
Other ................ 110,266 (6) 0.1%
------------ ------ ------------ ------- ------------ ---
Subtotal-Alabama (11 Properties) 1,436,000 94.6% 15,622,000 11.66 14,418,660 7.8%
------------ ------ ------------ ------- ------------ ---
Florida:
University Park Plaza ..Orlando 1985 71,000 92.0% 813,000 14.37 871,548 0.5%
------------ ------ ------------ ------- ------------ ---
Subtotal-Florida (1 Property) .. 71,000 92.0% 813,000 14.37 871,548 0.5%
------------ ------ ------------ ------- ------------ ---
Georgia:
Mansell Office Park ..Atlanta 1987/96/97 352,000 100.0% 4,200,000 12.45 2,471,239 (7) 1.3%
------------ ------ ------------ ------- ------------ ---
Subtotal-Georgia (1 Property) .. 352,000 100.0% 4,200,000 12.45 2,471,239 1.3%
------------ ------ ------------ ------- ------------ ---
TOTAL (13 Properties) .......... 1,859,000 95.5% $ 20,635,000 $ 12.18 $ 17,761,447 9.6%
============ ====== ============ ======= ============ ===
(1)All Office Properties are 100% owned by CRLP with the exceptions of Anderson
Block and Land Title Building, which are each 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 1997 Office Property revenue is CRLP's share (based on its percentage
ownership of the property) of total Office Property revenue, unless otherwise
noted.
(4)Percent of Total 1997 Property Revenue represents the Office Property's
proportionate share of all revenue from the 93 Properties and the Properties
disposed of in 1997.
(5)CRLP has a leasehold interest in this Property.
(6)Represents revenues from the Property disposed of in 1997.
(7)Represents revenues from the date of CRLP's acquisition of this
Property in 1997 through December 31, 1997.
(8)Represents CRLP's percentage of 1997 revenues prior to CRLP's
purchase of the remaining interests in this Property, and CRLP's 100%
interest in 1997 revenues subsequent to the purchase of the remaining
interest in this Property.
19
The following table sets out a schedule of the lease expirations for leases
in place as of December 31, 1997, for the Office Properties (including all lease
expirations for partially-owned Properties):
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)
- --------------------------------------------------------------------------------
1998 101 599,000 $ 6,497,000 31.5%
1999 69 296,000 3,467,000 16.8%
2000 57 283,000 3,426,000 16.6%
2001 26 204,000 2,371,000 11.5%
2002 16 68,000 820,000 4.0%
2003 4 87,000 1,314,000 6.4%
2004 2 23,000 254,000 1.2%
2005 3 66,000 1,170,000 5.7%
2006 4 108,000 1,204,000 5.8%
2007 1 6,000 112,000 0.5%
---------- ------------ -------------- -----------
283 1,740,000 $ 20,635,000 100.0%
========== ============ ============== ===========
(1) Excludes 119,000 square feet of space not leased as of December 31, 1997.
(2) Annualized base rent is calculated using base rents as of December 31, 1997.
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:
Net Average Base
Rentable Area Total Rent Per Leased
Year-end (Square Feet) Percent Leased Square Foot (1)
December 31, 1997 1,859,000 95.5% $12.18
December 31, 1996 1,009,000 97.4% $13.80
December 31, 1995 1,009,000 94.0% $13.52
December 31, 1994 1,009,000 95.0% $12.99
December 31, 1993 1,007,000 93.7% $13.05
- -----------------
(1)Average base rent per leased square foot is calculated using base rents as of
December 31 for each respective year.
Undeveloped Land
CRLP owns eight undeveloped land parcels consisting of approximately 103.2
acres (collectively, the "Land"). These parcels are adjacent to five of the
Properties and are suitable for potential expansion at those Properties. The
Land suitable for expansion is located adjacent to a Multifamily Property and
four Retail Properties. Land adjacent to Multifamily Properties typically will
be considered for potential development of another phase of an existing
Multifamily Property if CRLP determines that the particular market can absorb
additional apartment units. CRLP currently owns one such parcel. For expansions
at Retail Properties, CRLP owns parcels both contiguous to the boundaries of
Retail Properties, which would accommodate expansion of the mall or shopping
center, and outparcels which are suitable for restaurants, financial
institutions or free standing retailers. CRLP owns seven such parcels.
20
Options to Acquire Additional Land--In addition to the Land, CRLP has
options to acquire certain additional land parcels owned by the Lowder family
(collectively, the "Option Parcels"). The name, location, proposed use and
acreage of each Option Parcel is as follows:
Site Name Location Proposed Use Acres
North Macon (Wimbleton Forest).Macon, GA Retail/Multifamily 38.1
Osprey (Sarasota) ............Sarasota, FL Mixed Use 73.9
Interstate Park................Montgomery, AL Office 11.3
Huntsville Research Park.......Huntsville, AL Office 9.8
Each option has a term of five years from the date of the closing of the
Company's IPO, subject to earlier termination if the Company elects not to
exercise a right of first opportunity on a proposed sale of such Option Parcel
by the Lowder family. The Company also has a five-year right of first
opportunity with respect to each Option Parcel beginning on the expiration date
of the option term (if the option is not exercised).
Property Markets
The table below sets forth certain information with respect to the
geographic concentration of the Properties as of December 31, 1997.
Geographic Concentration of Properties
Percent
Of Total
Units Total 1997
(Multifamily) GLA NRA 1997 Property Property
State (1) (Retail) (2) (Office)(3) Revenue Revenue
- ------------- --------- ------------ ----------- ------------- --------
Alabama 6,985 2,931,000 1,436,000 $ 88,745,452 48.2%
Florida 4,502 2,256,000 71,000 51,777,904 28.0%
Georgia 1,594 3,338,000 352,000 33,394,523 18.1%
Mississippi 328 -0- -0- 1,025,654 0.6%
North Carolina -0- 882,000 -0- 1,289,292 0.7%
South Carolina 350 488,000 -0- 7,486,459 4.0%
Tennessee -0- 75,000 -0- 75,381 0.0%
Virginia -0- 588,000 -0- 648,338 0.4%
--------- ------------ ----------- ------------- -------
Total 13,759 10,558,000 1,859,000 $ 184,443,003 100.0%
========= ============ =========== ============= =======
(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 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 eight states, which are characterized by
stable and increasing population and employment growth, should continue to
provide a steady demand for multifamily, retail, and office properties.
21
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, 1997, of approximately $702.0 million
carrying a weighted average interest rate of 7.23% and a weighted average
maturity of 7.3 years. The mortgage indebtedness on the Properties as of
December 31, 1997, is set forth in the table below:
Mortgage Debt and Notes Payable
Anticipated
Annual Debt
Principal Service Estimated
Interest Balance (as of (1/1/98- Maturity Balance Due
Property (1) Rate 12/31/97) 12/31/98) Date (2) on Maturity
- ------------------------------- ---------- ------------- ------------- ---------- --------------
Multifamily Properties:
CG at Carrollwood 8.870% $ 6,230,000 $ 552,601 03/05/05 $ 6,230,000
CG at Natchez Trace 7.950% 6,859,693 577,803 09/01/35 47,813
8.000% 4,081,678 351,254 02/01/37 29,071
CV at Rocky Ridge 5.900% 6,000,000 354,000 08/01/02(3) 6,000,000
7.625% 1,335,000 188,648 08/01/02(3) 841,667
CG at Galleria Woods 6.875% 7,253,376 645,715 07/15/99 7,035,235
CG at Mountain Brook 8.000% 12,101,956 1,134,426 01/10/00 11,742,632
CV at Cahaba Heights 8.060% 3,696,965 376,726 05/10/00 3,502,055
CG at Edgewater 7.500% 9,811,501 10,481,759 11/15/98 9,685,749
CV at Inverness 5.96%(4) 9,900,000 347,490 06/15/26(5) 9,900,000
CV at Huntleigh Woods 9.500% 2,992,056 (8) 21,280 (8) 05/01/02 2,992,056 (8)
CV at Inverness Lakes 5.900% 4,000,000 236,000 07/31/02(6) 4,000,000
7.625% 1,663,333 204,037 07/31/02(7) 1,234,167
CG at Galleria 4.540% 22,400,000 786,240 06/15/26(5) 22,400,000
CG at Research Park 4.800% 12,775,000 448,403 06/15/26(5) 12,775,000
CG at Riverchase 7.150% 9,081,348 9,134,047 12/31/98 8,967,396
Ski Lodge-Tuscaloosa 9.500% 4,779,642 (8) 33,994 (8) 05/01/02 4,779,642 (8)
CV at Vernon Marsh 5.96%(4) 4,500,000 157,950 06/15/26(5) 4,500,000
CV at White Bluff 5.96%(4) 3,400,000 119,340 06/15/26(5) 3,400,000
CV at Hillwood 5.900% 3,330,000 196,470 07/31/02(6) 3,330,000
7.625% 1,593,333 197,203 07/31/02(7) 1,179,167
Retail Properties:
Bellwood 10.125% 2,973,419 324,825 01/01/99 2,948,518
Island Walk 8.800% 10,253,337 1,059,766 10/01/01 9,578,044
Mayberry Mall 9.220% 3,401,032 362,787 10/01/01 3,237,064
Montgomery Promenade 9.250% 10,810,000 999,925 07/01/00 10,810,000
Rivermont Shopping Center 10.125% 1,789,378 270,656 09/01/08 52,091
University Park Plaza 8.870% 14,445,000 1,281,272 03/05/05 14,445,000
Village at Roswell Summit 8.930% 1,652,438 168,057 09/01/05 1,401,860
Office Properties:
International Park 8.650% 2,011,911 216,795 10/01/99 1,931,425
Interstate Park 8.500% 4,481,137 643,443 08/01/03 2,648,144
Riverchase Center 7.880% 8,479,599 897,960 12/01/00 7,766,043
Mansell Office Park 8.250% 17,571,480 1,595,700 01/10/08 15,285,811
8.625% 14,007,994 1,333,754 06/01/00 13,682,324
Other debt:
Land Loan 7.010% 668,364 712,178 09/30/98 649,897
Line of Credit,
incl. Comp. Bid 6.756%(9) 117,086,000 7,910,330 07/(10)8 117,086,000
Unsecured Senior Notes 7.500% 64,886,337 4,875,000 07/15/01 65,000,000
Unsecured Senior Notes 8.050% 64,741,683 5,232,500 07/15/06 65,000,000
Medium Term Notes 7.050% 50,000,000 3,525,000 12/15/03 50,000,000
Medium Term Notes 7.160% 50,000,000 3,580,000 01/17/03 50,000,000
Medium Term Notes 6.690% 75,000,000 5,017,500 07/26/04 75,000,000
Medium Term Notes 6.960% 25,000,000 1,740,000 08/01/05 25,000,000
Medium Term Notes 6.980% 25,000,000 1,745,000 09/26/05 25,000,000
------------- ------------- --------------
TOTAL $ 702,043,990 $ 70,037,834 $ 681,093,871
============= ============= ==============
(footnotes presented on the next page)
22
(1)As noted in the table, certain Properties were developed in phases and
separate mortgage indebtedness may encumber each of the various phases. In
the listing of property names, CG has been used as an abbreviation for
Colonial Grand and CV as an abbreviation for Colonial Village.
(2)All of the mortgages can be prepaid at any time, subject to prepayment
penalties calculated typically on a yield maintenance basis, except for the
mortgages encumbering CV at Rocky Ridge, CV at Inverness Lakes, CV at
Hillwood, and CG at Natchez Trace, which are closed to prepayment for varying
lengths of time.
(3)The maturity date noted represents the date on which credit enhancement
expires for the tax-exempt municipal bonds put in place as part of the
original financing for the Property. The stated maturity date for the loans
is August 1, 2007.
(4)Represents the maximum interest rate payable by CRLP for the next nine months
on these loans as the result of an interest rate protection agreement entered
into by CRLP. The loans (which are financed through tax-exempt bonds) secured
by these Properties (or phases thereof) bear interest at a variable rate,
determined weekly at the rate necessary to produce a bid in the process of
remarketing the bonds equal to par plus accrued interest, based on comparable
issues in the market. The interest rate for these debt obligations as of
December 31, 1997, was 3.80% for these Properties.
(5)These loans are financed through tax-exempt bonds which are credit enhanced
by Fannie Mae. The loans, which bear interest at a weekly variable interest
rate, require monthly interest payments through June 2006 and principal and
interest payments from July 2006 through June 2026. The weighted average
interest rate of these five loans was 3.87% at December 31, 1997.
(6)The maturity date noted represents the date on which credit enhancement
expires for the tax-exempt municipal bonds put in place as part of the
original financing for the Property. The stated maturity date for the loans
is August 1, 2022.
(7)The maturity date noted represents the date on which credit enhancement
expires for the tax-exempt municipal bonds put in place as part of the
original financing for the Property. The stated maturity date for the loans
is August 1, 2010.
(8)The principal balances outstanding on these loans were repaid in February
1998 through advances on CRLP's unsecured line of credit. The amounts
presented for anticipated annual debt service for these loans represent the
principal and interest paid during 1997 (excluding the final principal
balance paid). The amounts presented for estimated balance due on maturity
for these loans represent the outstanding balances that were repaid in
February 1998.
(9)This line of credit facility bears interest at a variable rate, based on
LIBOR plus a spread that ranges from 100 to 150 basis points. At December 31,
1997, line of credit facility bore interest at a rate of 110 basis points
above LIBOR. The facility also includes a competitive bid feature that allows
CRLP to convert up to $100 million under the line of credit to a fixed rate,
for a fixed term not to exceed 90 days. At December 31, 1997, $45 million was
outstanding under a competitive bid loan which bore interest at a weighted
average rate of 6.60%.
(10) This credit facility has a term of one year beginning in July 1997 and
provides for a two-year amortization in the event of non-renewal.
In addition to the foregoing mortgage debt, the two Office 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,
1997, was $1,057,000 which carried a weighted average interest rate of 9.3%. The
maturity dates of these loans range from May 31, 1998 to July 17, 2000, and as
of December 31, 1997, the loans had a weighted average maturity of 1.8 years.
Item 3. Legal Proceedings.
Neither 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 unit holders during the fourth
quarter of 1997.
23
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
9, 1998, there were 69 holders of record of Units.
CRLP has made consecutive quarterly distributions since its formation in
the third quarter of 1993. The current indicated annual distribution rate is
$2.20 per Unit ($.55 per Unit per quarter). 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
Directors of CPHC, 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
1998:
First Quarter...........$ .55
1997:
First Quarter...........$ .52
Second Quarter..........$ .52
Third Quarter...........$ .52
Fourth Quarter..........$ .52
1996:
First Quarter...........$ .50
Second Quarter..........$ .50
Third Quarter...........$ .50
Fourth Quarter..........$ .50
24
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, 1997. The historical operating data for the year ended December 31,
1993, has been partially derived from the historical financial statements of the
Colonial Group, whose real estate interests were acquired in connection with the
formation of CRLP in 1993. The "Colonial Group" consists of Colonial Properties,
Inc., Equity Partners Joint Venture, Colonial Properties Management Association,
and certain real estate interests of Thomas H. Lowder, Robert E. Lowder, James
K. Lowder, Catherine K. Lowder and the Bellwood Trust.
Dollar amounts in thousands, 1997 1996 1995 1994 1993
except unit data
- -----------------------------------------------------------------------
OPERATING DATA
Total revenue $184,126 134,881 111,437 63,958 42,629
Expenses:
Depreciation and 33,278 23,533 20,615 13,060 7,874
amortization
Other operating expenses 63,581 46,819 42,282 24,011 16,777
Income from operations 87,267 64,529 48,540 26,887 17,978
Interest expense 40,496 24,584 23,972 10,820 12,772
Other income (expense), net 3,069 1,104 674 582 (1,697)
Income before extraordinary 49,840 41,049 25,242 16,650 3,509
items
Dividends to preferred 1,671 - - - -
unitholders
Net income (loss) available 44,519 40,538 25,242 16,650 (3,775)
to common unitholders
Per unit - basic and diluted:
Net income 1.55 1.58 1.28 1.17 -
Distributions 2.08 2.00 1.90 1.73 -
- -----------------------------------------------------------------------
BALANCE SHEET DATA
Land, buildings, and
equipment, net $ 1,268,430 801,798 624,514 555,577 236,058
Total assets 1,396,660 947,947 681,297 603,135 290,925
Total debt 702,044 506,435 354,100 344,234 110,432
- -----------------------------------------------------------------------
OTHER DATA
Total properties (at end of 93 73 61 55 36
period)
25
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
GENERAL
Colonial Realty Limited Partnership (CRLP or the Operating Partnership), a
Delaware limited partnership, is the operating partnership of Colonial
Properties Trust, an Alabama real estate investment trust (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,
retail malls and shopping centers, and office buildings. The Company owns and
operates properties in eight states in the Southern region of the United States.
As of December 31, 1997, CRLP's real estate portfolio consisted of 43
multifamily communities, 37 retail properties, and 13 office properties.
CRLP manages its business with three separate and distinct operating divisions:
Multifamily, Retail, and Office. Each division has an Executive Vice President
that oversees growth and operations and has a separate management team that is
responsible for acquiring, developing, and leasing properties within each
division. This structure allows CRLP 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 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.
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--1997 vs. 1996
In 1997, CRLP experienced growth in revenues, operating expenses, and net income
available to common unitholders which resulted from the acquisition and
development of 43 properties during 1997 and 1996. As a result of the
acquisitions and developments, CRLP's net income before dividends to preferred
unitholders increased by $5.0 million, or 18.0%, for 1997 when compared to 1996.
On a per unit basis, net income available to commone unitholders was $1.55 for
1997, a 3.2% decrease, compared to $1.58 for 1996. The decrease in net income
available to common unitholders, on a per unit basis, is directly attributable
to the extraordinary loss from early extinguishment of debt and the dividends
paid to the preferred unitholders.
Revenues--Total revenues increased by $49.2 million, or 36.5%, during 1997 when
compared to 1996. Of this increase, $43.4 million relates to revenues generated
by properties that were acquired or developed during 1997 and 1996. The
remaining increase primarily relates to increases in rental rates at existing
properties.
26
Operating Expenses--Total operating expenses increased by $26.5 million, or
37.7%, during 1997 when compared to 1996. The majority of this increase, $21.5
million, relates to additional operating expenses associated with properties
that were acquired or developed during 1997 and 1996. Depreciation expense at
existing properties increased by $1.8 million during 1997 when compare to 1996.
The remaining increase primarily relates to the resolution of prior year
reserves for certain tax contingencies, increases in operating expenses at
existing properties, and overall increases in corporate overhead and personnel
costs associated with CRLP's continued growth.
Other Income and Expenses--Interest expense increased by $15.9 million, or
64.7%, during 1997 when compared to 1996. The increase in interest expense is
primarily attributable to the assumption of $75 million of debt, the issuance of
$175 million in Medium Term Notes, and the increased usage of CRLP's Line of
Credit in conjunction with the financing of acquisitions and developments.
Results of Operations--1996 vs. 1995
In 1996, CRLP experienced growth in revenues and operating expenses which
resulted from the acquisition and development of 22 properties during 1996 and
1995. As a result of the acquisitions and developments, CRLP's net income before
dividends to preferred shareholders increased by $12.6 million, or 84.2%, for
1996 when compared to 1995. On a per share basis, net income was $1.58 for 1996,
a 22.5% increase, compared to $1.29 for 1995.
Revenues--Total revenues increased by $24.0 million, or 21.6%, during 1996 when
compared to 1995. Of this increase, $21.7 million relates to revenues generated
by properties that were acquired or developed during 1996 and 1995. The
remaining increase primarily relates to increases in rental rates at existing
properties.
Operating Expenses--Total operating expenses increased by $8.1 million, or
13.0%, during 1996 when compared to 1995. The change is due to an increase of
$9.4 million related to additional operating expenses associated with properties
that were acquired or developed during 1997 and 1996 and a decrease of $1.9
million due to the resolution of certain state tax contingencies.
Other Income and Expenses--Interest expense increased by $0.5 million, or 2.2%,
during 1996 when compared to 1995. The change in interest expense is primarily
attributable to an increase in indebtedness incurred to finance acquisitions and
developments, which was offset by the repayment of two mortgages and one
revolving credit agreement and an increase in capitalized interest during the
year.
LIQUIDITY AND CAPITAL RESOURCES
During 1997, CRLP invested $523 million in the acquisition and development of
properties. This acquisition and development activity increased CRLP's
multifamily, retail, and office property holdings. CRLP financed the growth
through proceeds from public offerings of equity and debt totaling $403 million
during 1997, advances on its bank line of credit, the issuance of limited
partnership units in CRLP, and cash from operations. In connection with the
acquisition activity, CRLP sold or exchanged six multifamily properties and one
office property. CRLP also used these sources of funds, along with exchanging or
selling properties, to repay or transfer $120 million on 17 mortgage loans.
Acquisition and Development Activities
Multifamily Properties--During 1997, CRLP added 1,434 apartment units through
the acquisition of five multifamily communities at an aggregate cost of $84
million. In a continuing effort to diversify its portfolio, CRLP sold or
exchanged six multifamily communities, which had a net book value of $68 million
and consisted of 2,464 apartment units. CRLP also completed development of 1,172
27
apartment units in seven multifamily communities during 1997 and acquired land
on which it intends to develop additional multifamily communities during 1998.
The aggregate investment in the multifamily developments during 1997 was $50.5
million. As of December 31, 1997, CRLP has 1,170 apartment units in seven
multifamily communities under development or expansion. Management anticipates
that the seven multifamily projects will be completed during 1998 and the first
half of 1999. Management estimates that it will invest an additional $63 million
to complete these multifamily communities.
Retail Properties--During 1997, CRLP added 4.9 million square feet of retail
shopping space through the acquisition of nine community shopping centers and
seven enclosed malls at an aggregate cost of $250.6 million. CRLP also completed
the 422,000 square foot expansion of a regional mall in Macon, Georgia and the
239,000 square foot expansion of a community shopping center in Montgomery,
Alabama at an aggregate cost during 1997 of $28.6 million.
Office Properties--During 1997, CRLP increased its office portfolio by one
million square feet with the acquisition of four office properties and the
purchase of additional interest in two joint ventures. The office properties are
located in Alabama and Georgia and were purchased at an aggregate cost of $104.5
million. In connection with one of the acquisitions, CRLP exchanged an office
property which had a net book value of $2.0 million and consisted of 25,000
square feet.
In an effort to take advantage of current market conditions CRLP both develops
and acquires rental properties. CRLP contracts the services of two affiliated
construction firms for its development activities. The owners of the affiliated
firms serve on Colonial's Board of Trustees and have vested interests in the
continued improvement of Colonial's real estate portfolio. Management believes
that this relationship affords CRLP a competitive advantage in terms of
construction quality and identification of development opportunities.
Financing Activities
CRLP funded a large portion of its acquisitions and developments through the
issuance of debt securities and through cash contributions from the Company
through the issuance of its common and preferred shares. During 1997, the
Company and CRLP completed the following equity and debt transactions:
Common Share Offerings
(in thousands)
Number of Price Per Gross Offering Net
Date Common Shares Share Proceeds Costs Proceeds
- -------------------------------------------------------------------
January 1,500,000 $29.8750 $44,812 $1,457 $43,355
July 1,700,000 $30.9375 $52,594 $2,945 $49,649
December 165,632 $30.1875 $ 5,000 $ 330(1) $ 4,670
(1) Includes $90,000 in shelf registration fees paid to the Securities and
Exchange Commission.
Preferred Share Offering
(in thousands)
Number of Price Per Gross Offering Net
Date Preferred Shares Share Proceeds Costs Proceeds
- -------------------------------------------------------------------
November 5,000,000 $25.0000 $125,000 $4,451 $120,549
Debt Offerings
Gross
Type of Proceeds
Date Note Maturity Rate (in thousands)
- -------------------------------------------------------------------
January Medium-term January, 2003 7.16% $50,000
July Medium-term July, 2004 6.96% $75,000
August Medium-term August, 2005 6.96% $25,000
September Medium-term September, 2005 6.98% $25,000
28
On July 10, 1997, CRLP increased the borrowing capacity under its unsecured line
of credit from $125 million to $200 million. The credit facility, which is used
by CRLP primarily to finance additional property investments, bears interest at
a rate ranging between 100 and 150 basis points above LIBOR and is renewable
annually. As of December 31, 1997, the balance outstanding on CRLP's line of
credit was $117.1 million.
At December 31, 1997, CRLP's total outstanding debt balance was $702.0 million.
The outstanding balance includes fixed rate debt of $531.3 million, or 75.7%,
and floating-rate debt of $170.7 million, or 24.3%. CRLP has obtained interest
rate protection for $67.8 million of the floating-rate debt under two
agreements. One agreement, for $17.8 million, limits the debt to an interest
rate of 5.96% through September 30, 1998, and the other agreement, for $50.0
million, limits the debt to an interest rate of 8.00% through May 2, 2000.
CRLP's total market capitalization as of December 31, 1997 was $1.76 billion and
its ratio of debt to total market capitalization was 39.8%. Certain loan
agreements of CRLP contain restrictive covenants which, among other things,
require maintenance of various financial ratios. At December 31, 1997, CRLP was
in compliance with these covenants.
Outlook
Management intends to maintain CRLP's strength through continued
diversification, while pursuing acquisitions that meet Colonial's criteria for
property quality, market strength, and investment return. Management will
continue to use its line of credit to provide short-term financing for
acquisition and development activities and plans to continue to replace
significant borrowings under the bank line of credit with funds generated from
the sale of additional equity securities and permanent financing, as market
conditions permit. Management believes that these potential sources of funds,
along with the possibility of issuing limited partnership units of CRLP in
exchange for properties, will provide CRLP with the means to finance additional
acquisitions and development.
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. Colonial continues to work
diligently to improve its credit rating, in order to reduce its cost of raising
future capital.
Cash and equivalents increased by $1.2 million during 1997. Management
anticipates that its net cash provided by operations and its existing cash
balances will provide the necessary funds on a short- and long- term basis to
cover its operating expenses, interest expense on outstanding indebtedness,
recurring capital expenditures, and dividends to shareholders in accordance with
Internal Revenue Code requirements applicable to real estate investment trusts.
CRLP is aware of the potential issues associated with the data conversion and
system upgrades necessary for its computer systems to be year 2000 compliant.
Management is also currently in the process of addressing the operational impact
the year 2000 issue will have on the properties owned by CRLP. CRLP expects to
incur internal staff costs as well as other expenses related to facilities
enhancements necessary to prepare the systems for the year 2000. CRLP currently
believes that, with modifications to existing software at the corporate level
and upgrading operational systems at the property level, the year 2000 issue
will not have a material impact on the operations of CRLP. However, if such
modifications or upgrades are not completed timely or if software vendors,
suppliers, or other companies upon whose systems Colonial relies in the ordinary
course of business have failed to appropriately address the conversion issue,
then the year 2000 issue may have a material impact on the operations of CRLP.
At the current time, CRLP has not determined the cost that will ultimately be
incurred to be year 2000 compliant.
29
Recently Issued Accounting Standard
Statement of Financial Accounting Standard No. 131 (SFAS 131), Disclosures about
Segments of an Enterprise and Related Information, establishes new disclosure
guidelines for reporting financial information related to operating segments.
Under SFAS 131, CRLP will be required to disclose operating results and other
financial information related to its multifamily, retail, and office divisions.
CRLP is required to adopt SFAS 131 for fiscal year ending December 31, 1998.
Inflation
Substantially all of the leases at the retail properties provide for the
pass-through to tenants of certain operating costs, including real estate taxes,
common area maintenance expenses, and insurance. Leases at the multifamily
properties generally provide for an initial term of six months to one year and
allow for rent adjustments at the time of renewal. Leases at the office
properties typically provide for rent adjustments and the pass-through of
certain operating expenses during the term of the lease. All of these provisions
permit 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.
30
Item 8. Financial Statements and Supplementary Data.
The following financial statements are filed as a part of this report:
Report of Independent Accountants
Financial Statements:
Consolidated Balance Sheets as of December 31, 1997 and 1996
Consolidated Statements of Income for the years ended December
31, 1997, 1996, and 1995
Consolidated Statements of Partners' Capital for the years ended
December 31, 1997, 1996, and 1995
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996, and 1995
Notes to Consolidated Financial Statements
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Colonial Properties Holding Company, Inc.
We have audited the accompanying consolidated balance sheets of Colonial Realty
Limited Partnership as of December 31, 1997 and 1996 and the consolidated
statements of income, partners' capital, and cash flows for each of the three
years in the period ended December 31, 1997. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Colonial Realty
Limited Partnership as of December 31, 1997 and 1996 and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1997 in conformity with generally accepted accounting
principles.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
January 19, 1998, except for Note 13, as to which the date is February
17, 1998
31
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
December 31, 1997 and 1996
- ---------------------------------------------------------------
1997 1996
- ---------------------------------------------------------------
ASSETS
Land, buildings, & equipment, net $1,268,430 $ 801,798
Undeveloped land and construction in 98,555 113,689
progress
Cash and equivalents 4,534 3,340
Restricted cash 2,665 2,450
Accounts receivable, net 7,174 4,779
Prepaid expenses 3,038 4,468
Notes receivable 575 584
Deferred debt and lease costs 7,031 6,288
Investment in partnerships (28) 5,028
Other assets 4,686 5,523
- ---------------------------------------------------------------
$ 1,396,660 $ 947,947
- ---------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Notes and mortgages payable $ 702,044 $ 506,435
Accounts payable 11,913 7,451
Accounts payable to affiliates 2,320 9,973
Accrued interest 6,526 5,465
Accrued expenses 2,700 1,585
Tenant deposits 3,715 2,926
Unearned rent 2,253 924
- ---------------------------------------------------------------
Total liabilities 731,471 534,759
- ---------------------------------------------------------------
Redeemable units, at redemption value 299,492 256,098
- ---------------------------------------------------------------
Partners' capital, excluding 365,697 157,090
redeemable units
- ---------------------------------------------------------------
$ 1,396,660 $ 947,947
- ---------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
32
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except Per
Unit Data)
For the Years Ended December 31,
1997, 1996, 1995
- -----------------------------------------------------------------------
1997 1996 1995
- -----------------------------------------------------------------------
Revenue:
Base rent $ 154,063 115,174 94,835
Base rent from affiliates 879 758 836
Percentage rent 2,161 1,841 1,782
Tenant recoveries 17,349 10,717 7,621
Other 9,674 6,391 5,816
- -----------------------------------------------------------------------
Total revenue 184,126 134,881 110,890
- -----------------------------------------------------------------------
Property operating expenses:
General operating expenses 12,603 9,530 8,355
Salaries and benefits 10,283 8,606 7,363
Repairs and maintenance 18,669 13,073 10,890
Taxes, licenses, and insurance 15,578 11,538 9,617
General and administrative 6,448 4,071 5,547
Depreciation 31,956 22,025 18,044
Amortization 1,322 1,509 2,446
- -----------------------------------------------------------------------
Total operating expenses 96,859 70,352 62,262
- -----------------------------------------------------------------------
Income from operations 87,267 64,529 48,628
- -----------------------------------------------------------------------
Other income (expense):
Interest expense (40,496) (24,584) (24,060)
Income from partnerships 502 635 499
Gains from sales of property 2,567 469 175
- -----------------------------------------------------------------------
Total other expense (37,427) (23,480) (23,386)
- -----------------------------------------------------------------------
Income before extraordinary items 49,840 41,049 25,242
Extraordinary loss from early (3,650) (511) -0-
extinguishment of debt
- -----------------------------------------------------------------------
Net income $ 46,190 $ 40,538 $ 25,242
Dividends to preferred unitholders (1,671) -0- -0-
- -----------------------------------------------------------------------
Net income available to common
unitholders $ 44,519 $ 40,538 $ 25,242
- -----------------------------------------------------------------------
Basic and Diluted net income per unit:
- -----------------------------------------
Income before extraordinary items $ 1.64 $ 1.60 $ 1.28
Extraordinary loss from early
extinguishment of debt (0.09) (0.02) -0-
- -----------------------------------------------------------------------
Net income per common unit $ 1.55 $ 1.58 $ 1.28
- -----------------------------------------------------------------------
Weighted average common units
outstanding 28,719 25,703 19,694
- -----------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
33
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
(Amounts in Thousands)
For the Years Ended December 31, 1997, 1996, 1995
- --------------------------------------------------------------
Total
Partners'
Capital
- --------------------------------------------------------------
Balance, December 31, 1994 $ 63,641
Cash contributions 73,742
Distributions (35,222)
Net income 25,242
Issuance of limited 1,630
partnership units
Allocations to redeemable units (26,017)
Other (17)
- --------------------------------------------------------------
Balance, December 31, 1995 102,999
Cash contributions 106,847
Distributions (51,819)
Net income 40,538
Issuance of limited 7,027
partnership units
Allocations to redeemable units (48,502)
- --------------------------------------------------------------
Balance, December 31, 1996 157,090
Cash contributions 101,324
Cash contributions related to 120,549
preferred units
Distributions (59,471)
Net income 44,519
Issuance of limited 45,079
partnership units
Allocations to redeemable units (43,393)
- --------------------------------------------------------------
Balance, December 31, 1997 $ 365,697
- --------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
34
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
For the Years Ended December 31,
1997, 1996, 1995
- ------------------------------------------------------------------
1997 1996 1995
- ------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 44,519 40,538 25,242
Adjustments to reconcile net
income to net cash
provided by operating
activities:
Depreciation and amortization 33,278 23,533 20,615
Income from partnerships (502) (635) (499)
Gains from sales of property (2,567) 468 175
Other, net 4,204 90 (214)
Decrease (increase) in:
Restricted cash (215) (371) (933)
Accounts and notes receivable (2,620) (3,246) 218
Prepaid expenses 879 (248) (173)
Other assets 424 (1,187) (1,855)
Increase (decrease) in:
Accounts payable (3,191) 10 4,583
Accrued interest 1,061 3,570 139
Accrued expenses and other (5,421) 404 (131)
- ------------------------------------------------------------------
Net cash provided by 69,849 62,926 47,167
operating activities
- ------------------------------------------------------------------
Cash flows from investing activities:
Acquisition of properties (301,931) (125,926) (67,581)
Development expenditures (37,589) (22,168) (3,741)
Development expenditures paid to (46,481) (70,414) (21,646)
an affiliate
Tenant improvements (2,792) (1,029) (1,061)
Capital expenditures (12,325) (6,825) (2,804)
Proceeds from sales of property, 54,092 1,254 328
net of selling costs
Distributions from partnerships 719 984 998
Capital contributions to (320) (14) (230)
partnerships
- ------------------------------------------------------------------
Net cash used in investing (346,627) (224,138) (95,737)
activities
- ------------------------------------------------------------------
Cash flows from financing activities:
Principal reductions of debt (122,880) (45,798) (19,232)
Proceeds from additional 175,246 179,540 62,220
borrowings
Net change in revolving credit 68,271 (21,877) (33,206)
balances
Cash contributions 101,324 106,847 73,742
Cash contributions from the 120,549 -0- -0-
issuance of preferred units
Capital distributions (59,471) (51,819) (35,222)
Capital distributions to (1,671) -0- -0-
preferred unitholders
Payment of mortgage financing cost (1,417) (3,416) (945)
Other, net (3,650) (510) -0-
- ------------------------------------------------------------------
Net cash provided by 277,972 162,967 47,357
financing activities
- ------------------------------------------------------------------
Increase (decrease) in cash 1,194 1,755 (1,213)
and equivalents
Cash and equivalents, beginning of 3,340 1,585 2,798
period
- ------------------------------------------------------------------
Cash and equivalents, end of period $ 4,534 3,340 1,585
- ------------------------------------------------------------------
Supplemental disclosures of cash flow information:
Cash paid during the year for
interest $ 39,435 20,077 23,609
- ------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
35
COLONIAL REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Basis of Presentation
Organization--Colonial Realty Limited Partnership (The "Operating
Partnership")(CRLP), a Delaware limited partnership, was formed on August 6,
1993, to succeed as owner of substantially all of the predecessor interests of
Colonial Properties, Inc. (CPI), Equity Partners Joint Venture, and Colonial
Properties Management Association, and certain real estate interests of Thomas
H. Lowder, Robert E. Lowder, James K. Lowder, Catherine K. Lowder, and the
Bellwood Trust (collectively referred to as the Colonial Group for purposes of
these financial statements). CRLP is the operating partnership of Colonial
Properties Trust, an Alabama real estate investment trust (the "Company") whose
shares are listed on the New York Stock Exchange ("NYSE"). The Company is
engaged in the ownership, development, management, and leasing of multifamily
housing communities, retail malls and centers, and office buildings. Certain
parcels of land are also included.
Federal Income Tax Status--No provision for income taxes is provided since
all taxable income or loss or tax credits are passed through to the partners.
The Company, which is considered a corporation for federal income tax purposes,
qualifies as a real estate investment trust 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.
Principles Of Consolidation--The consolidated financial statements include
the Operating Partnership and Colonial Properties Services Limited Partnership
(in which Colonial Realty Limited Partnership holds 99% general and limited
partner interests).
Investments In Partnerships--Partnerships in which CRLP owns a fifty
percent or less interest and does not control are reflected in the consolidated
financial statements as investments accounted for under the equity method. Under
this method the investment is carried at cost plus or minus equity in
undistributed earnings or losses since the date of acquisition.
2. Summary of Significant Accounting Policies
Land, Buildings, and Equipment--Land, buildings, and equipment is stated
at the lower of cost, less accumulated depreciation, or net realizable value.
Where an impairment of a property's value is determined to be other than
temporary, an allowance for the estimated potential loss is established to
record the property at its net realizable value. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets, which
range from 7 to 40 years. Repairs and maintenance are charged to expense as
incurred. Replacements and improvements are capitalized and depreciated over the
estimated remaining useful lives of the assets. When items of land, buildings,
or equipment are sold or retired, the related cost and accumulated depreciation
are removed from the accounts and any gain or loss is included in the results of
operations.
Undeveloped Land and Construction in Progress--Undeveloped land and
construction in progress is stated at the lower of cost or net realizable value.
CRLP capitalizes all costs associated with land development including
construction period interest and property taxes.
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 mortgage costs is recorded
using the straight-line method, which approximates the effective interest
method, over the terms of the related mortgages. Leasing commissions and fees
are amortized using the straight-line method over the terms of the related
leases.
36
Derivatives--CRLP has only limited involvement with derivative financial
instruments and does not use them for trading purposes. Interest rate cap
agreements are used to reduce the potential impact of increases in interest
rates on variable-rate debt. Premiums paid for purchased interest rate cap
agreements are amortized to expense over the terms of the caps. Unamortized
premiums are included in other assets in the balance sheets. Amounts receivable
under cap agreements are accrued as a reduction of interest expense.
Revenue Recognition--Rental income attributable to leases is recognized on
a straight-line basis over the terms of the leases.
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 numbers of common units outstanding during the periods,
adjusted for the assumed conversion of all potentially dilutive securities.
Use of Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the reported amounts of revenues and expenses. Actual results
could differ from those estimates.
Recently Issued Accounting Standard--Statement of Financial Accounting
Standards No. 131 (SFAS 131), Disclosures about Segments of an Enterprise and
Related Information, establishes new disclosure guidelines for reporting
financial information related to operating segments. Under SFAS 131, CRLP will
be required to disclose operating results and other financial information
related to its multifamily, retail and office divisions. CRLP is required to
adopt SFAS 131 for fiscal year ending December 31, 1998.
Reclassifications--Certain immaterial reclassifications have been made to
the 1995 and 1996 financial statements in order to conform them to the 1997
financial statement presentation.
3. Property Acquisitions and Dispositions
CRLP acquired 25 properties during 1997, 11 properties during 1996, and
six properties during 1995 at aggregate costs of $430.6 million, $173.7 million,
and $68.4 million, respectively. CRLP funded these acquisitions with cash
proceeds from its public offerings of equity (see Note 8) and debt (see Note 7),
advances on bank lines of credit, the issuance of limited partnership units in
CRLP, the exchange of certain properties, proceeds from the sale of certain
properties, and cash from operations. The acquisition agreements for three of
the properties acquired in 1997 provide for CRLP to make additional payments if
certain lease-up conditions are satisfied. CRLP expects to make additional
payments to the sellers of $8.3 million in 1998 pursuant to these provisions.
In connection with the Brookwood Village acquisition, which was structured
as a tax-deferred, like-kind exchange, CRLP exchanged two multifamily properties
in Florida containing 368 apartment units with a net book value of $14.0
million. In connection with the Progress Center acquisition, which was also
structured as a tax-deferred, like-kind exchange, CRLP exchanged a 25,000 square
foot office building in Alabama with a net book value of $2.0 million. In
connection with the acquisitions of Glynn Place Mall, Lakeshore Mall and
Valdosta Mall, CRLP sold to a third party four multifamily properties in Alabama
containing a total of 2,096 apartment units for a total sale price of $54.8
million, which resulted in a net gain of $2.6 million. In connection with this
sale, the purchaser of these multifamily properties assumed an existing mortgage
of $10 million and paid the remainder in cash.
37
The properties acquired during 1997, 1996, and 1995 are listed below:
Effective
Acquisition
Location Date
- --------------------------------------------------------------------
Retail Properties:
Bear Lake Village Orlando, FL July 1, 1995
Country Lake Village Orlando, FL July 1, 1995
Winter Haven Village Orlando, FL July 1, 1995
River Oaks Center Decatur, AL July 14, 1995
Northdale Court Tampa, FL October 1, 1995
Paddock Park Ocala, FL November 16, 1995
Briarcliffe Mall Myrtle Beach, SC July 1, 1996
Wekiva Riverwalk Orlando, FL October 1, 1996
Bardmoor Village St. Petersburg, FL October 1, 1996
Island Walk Orlando, FL October 1, 1996
Heatherbrooke Center Birmingham, AL March 24, 1997
Beechwood Shopping Center Athens, GA March 27, 1997
Brookwood Village Birmingham, AL May 13, 1997
Lakewood Plaza Jacksonville, FL October 1, 1997
Glynn Place Mall Brunswick, GA November 1, 1997
Lakeshore Mall Gainesville, GA November 1, 1997
Valdosta Mall Valdosta, GA November 1, 1997
Holly Hill Mall Burlington, NC November 1, 1997
Mayberry Mall Mount Airy, NC November 1, 1997
Quaker Village Greensboro, NC November 1, 1997
Yadkin Plaza Yadkinville, NC November 1, 1997
Stanly Plaza Locust, NC November 1, 1997
Rivermont Shopping Center Chattanooga, TN November 1, 1997
Staunton Mall Staunton, VA November 1, 1997
Abingdon Town Centre Abingdon, VA November 1, 1997
Village at Roswell Summit Atlanta, GA December 31, 1997
Effective
Acquisition
Location Date
- -----------------------------------------------------------------------------
Multifamily Properties:
Colonial Village at Ashford Place Mobile, AL April 1, 1996
Colonial Village at Hillcrest Mobile, AL April 1, 1996
Colonial Grand at Spring Creek Macon, GA April 1, 1996
Colonial Grand at Galleria Woods Birmingham, AL April 15, 1996
Colonial Grand at Mountain Brook Birmingham, AL May 10, 1996
Colonial Village at Cahaba Heights Birmingham, AL May 10, 1996
Colonial Grand at Barrington Macon, GA September 13, 1996
Colonial Village at Trussville Birmingham, AL April 1, 1997
Colonial Village at Timothy Woods Athens, GA July 1, 1997
Colonial Grand at Oakleigh Pensacola, FL July 1, 1997
Colonial Grand at Natchez Trace Jackson, MS August 1, 1997
Colonial Village at Caledon Wood Greenville, SC October 1, 1997
Office Properties:
Riverchase Center Birmingham, AL January 1, 1997
Lakeside Office Park Huntsville, AL May 23, 1997
Progress Center Huntsville, AL June 24, 1997
Mansell Business Park Atlanta, GA July 31, 1997
Also in 1997, CRLP purchased the 62.5% interests in two multi-tenant
office buildings at International Park in Birmingham. The purchase of these
outside interests increased CRLP's ownership from a 37.5% interest to full
ownership in the two buildings containing 93,000 square feet. At the same time,
CRLP sold its 25% interest in a 129,000 square foot building in the same office
complex. CRLP also purchased the remaining 50% interest in a 168,000 square foot
office building in Birmingham. This purchase increased CRLP's ownership from 50%
to 100%.
Results of operations of these properties, subsequent to their respective
acquisition dates, are included in the consolidated financial statements of
CRLP. The cash paid to acquire these properties is included in the statements of
cash flows. The acquisitions during 1997, 1996, and 1995 are comprised of the
following:
(in thousands) 1997 1996 1995
- --------------------------------------------------------------------------------
Assets purchased:
Land, buildings, and equipment $430,614 $173,277 $68,322
Other assets 4 455 43
- --------------------------------------------------------------------------------
430,618 173,732 68,365
Notes and mortgages assumed (74,910) (40,444) -0-
Other liabilities assumed or recorded (8,716) (1,774) (784)
Issuance of limited partnership units of
Colonial Realty Limited Partnership (45,061) (5,587) -0-
- --------------------------------------------------------------------------------
Cash paid $301,931 $125,927 $67,581
================================================================================
38
The properties disposed during 1997 are listed below:
Effective
Disposition
Location Date
- --------------------------------------------------------------------------------
Multifamily Properties:
Sunchase Bradenton, FL May 13, 1997
Polos West Orlando, FL May 13, 1997
Ski Lodge I Birmingham, AL November 1, 1997
Ski Lodge II Birmingham, AL November 1, 1997
Ski Lodge III Birmingham, AL November 1, 1997
Vieux Carre Montgomery, AL November 1, 1997
Office Property:
Whitesburg Building Huntsville, AL June 24, 1997
CRLP's unaudited pro forma results of operations, assuming these
acquisitions and dispositions had been effected by CRLP prior to January 1,
1995, are as follows:
For the Year Ended For the Year Ended For the Year Ended
December 31, 1997 December 31, 1996 December 31, 1995
(in thousands) (unaudited) (unaudited) (unaudited)
- --------------------------------------------------------------------------------
Revenues $214,712 $184,712 $160,721
================================================================================
Income before minority
interest $ 65,980 $ 66,234 $ 59,310
================================================================================
Net income available to
common shareholders $ 33,913 $ 34,070 $ 29,365
================================================================================
Net income per share -
basic and diluted $ 1.60 $ 1.61 $ 1.39
================================================================================
On January 9, 1998, CRLP acquired Perimeter Corporate Park, an office park
comprised of two multi-tenant buildings in Huntsville, Alabama totaling 233,000
square feet of leasable area. The total purchase price of $19.5 million was
funded by the assumption of $5.5 million in mortgage debt and an advance on
CRLP's bank line of credit agreement. On January 15, 1998, CRLP also acquired
Independence Plaza, a 106,000 square foot multi-level office building in
Birmingham, Alabama. The total purchase price of $7.9 million was funded through
an advance on CRLP's bank line of credit agreement. The effects of these
acquisitions are not included in CRLP's accompanying consolidated financial
statements or in the pro forma information above.
4. Land, Buildings, and Equipment
Land, buildings, and equipment consists of the following at December 31,
1997 and 1996:
(in thousands) 1997 1996
- --------------------------------------------------------------------------------
Buildings $1,140,504 $ 736,621
Furniture and fixtures 30,145 23,443
Equipment 3,087 2,569
Land improvements 27,343 18,328
Tenant improvements 15,273 11,969
- --------------------------------------------------------------------------------
1,216,352 792,930
Accumulated depreciation (124,254) (101,549)
- --------------------------------------------------------------------------------
1,092,098 691,381
Land 176,332 110,417
- --------------------------------------------------------------------------------
$1,268,430 $ 801,798
================================================================================
39
5. Undeveloped Land and Construction in Progress
During 1997 CRLP completed the construction of two
multifamily expansion projects at a combined total cost of $32.1 million and two
retail expansion projects at a combined total cost of $67.6 million. The
multifamily expansion projects produced 524 new apartment units (428 units
completed during 1996 and 96 units completed during 1997), 312 units at Colonial
Grand at Heathrow in Orlando, Florida, and 212 units at Colonial Grand at
Bayshore in Bradenton, Florida. The retail expansion projects produced 661,000
square feet of leasable space. CRLP currently has 11 active expansion and
development projects in progress and various parcels of land available for
expansion, construction, or sale. During 1997 CRLP completed construction on
1,172 apartment units (including the 96 units in completed projects mentioned
above), and CRLP has an additional 1,170 apartment units in progress at December
31, 1997. Undeveloped land and construction in progress is comprised of the
following at December 31, 1997:
Total Costs
Units/ Estimated Capitalized
Square Estimated Total Costs To Date
Feet Completion (in thousands) (in thousands)
- --------------------------------------------------------------------------------------------------------
Multifamily Projects:
Colonial Village at Inverness (expansion) 84 1998 $ 6,700 $ 6,624
Colonial Village at Riverchase (expansion) 276 1998 14,900 14,181
Colonial Grand at Inverness Lakes (expansion) 132 1998 8,000 2,956
Colonial Grand at Edgewater (expansion) 192 1998 11,500 3,871
Colonial Grand at Bayshore II (expansion) 164 1998 9,300 9,213
Colonial Grand at Wesleyan II (expansion) 88 1998 6,200 789
Colonial Grand at Wesleyan 240 1998 13,500 13,480
Colonial Grand at HunterOs Creek 496 1998 33,300 33,257
Colonial Village at Citrus Park 176 1999 12,300 1,324
Colonial Grand at Lakewood Ranch 288 1999 20,300 2,320
Colonial Grand at Cypress Crossing 250 1999 20,000 4,333
- --------------------------------------------------------------------------------------------------------
2,386 156,000 92,348
Other Projects and Undeveloped Land 6,207
- --------------------------------------------------------------------------------------------------------
$156,000 $98,555
========================================================================================================
Interest capitalized on construction in progress during 1997, 1996, and 1995 was
$4.1 million, $3.7 million and $868,000, respectively.
6. Investment in Partnerships
Investment in partnerships at December 31, 1997 and 1996 consists of the
following:
(in thousands)
Percent
Owned 1997 1996
- --------------------------------------------------------------------------------
Office:
600 Building Partnership, Birmingham, AL 33.34% $ (8) 5
Anderson Block Properties, Montgomery, AL 33.33% (38) (53)
Hoar/Colonial/Polar-BEK Partnership I,
Birmingham, AL 37.50% -0- (430)
Hoar/Colonial/Polar-BEK Partnership II,
Birmingham, AL 37.50% -0- (35)
Polar-Bek/Colonial Partnership I,
Birmingham, AL 50.00% -0- 5,000
Polar-BEK/Rubaiyat/Colonial Partnership,
Birmingham, AL 25.00% -0- 506
- --------------------------------------------------------------------------------
(46) 4,993
- --------------------------------------------------------------------------------
40
Other:
Colonial/Polar-BEK Management Company,
Birmingham, AL 50.00% 18 35
- --------------------------------------------------------------------------------
18 35
- --------------------------------------------------------------------------------
$(28) 5,028
================================================================================
7. Notes and Mortgages Payable
Notes and mortgages payable at December 31, 1997 and 1996 consist of the
following:
(in thousands)
1997 1996
- --------------------------------------------------------------------------------
Revolving credit agreement $117,086 $ 48,815
Mortgages and other notes:
4.50% to 6.00% 66,305 76,605
6.01% to 7.50% 316,701 154,179
7.51% to 9.00% 175,207 180,081
9.01% to 10.25% 26,745 46,755
- --------------------------------------------------------------------------------
$702,044 $506,435
================================================================================
As of December 31, 1997, CRLP has one unsecured bank line of credit
providing for total borrowings of up to $200 million. This line of credit
agreement bears interest at LIBOR plus 100 to 150 basis points, is renewable
annually and provides for a two-year amortization in the case of non-renewal.
The agreement evidencing the line of credit includes a competitive bid feature
that will allow CRLP to convert up to $100 million under the line of credit to a
fixed rate, for a fixed term not to exceed 90 days. The credit facility is
primarily used by CRLP to finance property acquisitions and development and had
an outstanding balance at December 31, 1997, of $117.1 million. The weighted
average interest rate of this short-term borrowing facility was 6.70% and 6.81%
at December 31, 1997 and 1996, respectively.
During 1997 and 1996, CRLP completed five public offerings of unsecured
medium term debt securities totaling $225 million. In July 1996 CRLP completed a
public offering of senior, unsecured debt securities totaling $130 million. The
securities were issued in two series of $65 million each requiring semi-annual
payments of interest only. The proceeds of the offerings were used to fund
acquisitions and development expenditures, repay balances outstanding on CRLP's
revolving credit agreement, 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)
- --------------------------------------------------------------------------------
July, 1996 Senior July, 2001 7.50% $65,000
July, 1996 Senior July, 2006 8.05% $65,000
December, 1996 Medium-term December, 2003 7.05% $50,000
January, 1997 Medium-term January, 2003 7.16% $50,000
July, 1997 Medium-term July, 2004 6.96% $75,000
August, 1997 Medium-term August, 2005 6.96% $25,000
September, 1997 Medium-term September, 2005 6.98% $25,000
CRLP has entered into interest rate cap agreements which limit debt of
$17.8 million to an interest rate of 5.96% through September 30, 1998 and limit
debt of $50 million to an interest rate of 8.00% through May 2, 2000. CRLP paid
$602,000 for the interest rate caps, which are being amortized over the lives of
41
the agreements. In December 1997 and January 1998 CRLP entered into two 90-day
treasury lock agreements. The agreements are for notional amounts of $25 million
each with interest rates of 5.859% and 5.567%, respectively. CRLP is exposed to
credit losses in the event of nonperformance by the counterparties to its
interest rate cap and nonderivative financial assets but has minimal
off-balance-sheet credit risk of accounting loss. CRLP anticipates, however,
that counterparties will be able to fully satisfy their obligations under the
contracts. CRLP does not obtain collateral or other security to support
financial instruments subject to credit risk but monitors the credit standing of
counterparties. The interest rate risk related to commitments to enter treasury
lock agreements at December 31, 1997 is immaterial to CRLP.
At December 31, 1997, CRLP had $472.1 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 $370.5 million at December 31, 1997.
The aggregate maturities of notes and mortgages payable at December 31,
1997, are as follows:
(in thousands)
- --------------------------------------------------------------------------------
1998 $138,622
1999 13,927
2000 49,150
2001 79,031
2002 8,557
Thereafter 412,757
- --------------------------------------------------------------------------------
$702,044
================================================================================
A substantial majority of CRLP's notes and mortgages payable have been
recently financed or are covered by interest rate cap agreements, and as such,
the balances outstanding on these notes and mortgages are considered to be the
fair values. CRLP's line of credit arrangement bears interest at a rate that
varies with changes in LIBOR; therefore, the balances outstanding are considered
to be the fair value.
Certain loan agreements of CRLP contain restrictive covenants which, among
other things, require maintenance of various financial ratios. At December 31,
1997, CRLP was in compliance with these covenants.
Certain partners of CRLP have guaranteed indebtedness of CRLP totaling
$32.8 million at December 31, 1997.
8. Cash Contributions
During 1997, 1996 and 1995, the Company completed six public offerings of
common stock totaling 11,415,632 common shares of beneficial interest (Common
Shares). In November 1997 the Company completed its first public offering of
preferred stock totaling 5,000,000 preferred shares of beneficial interest
(Preferred Shares). The Series A Preferred Shares pay a quarterly dividend at
8.75% per annum and may be called by the Company on or after November 6, 2002.
The Preferred Shares have no stated maturity, sinking fund or mandatory
redemption and are not convertible into any other securities of the Company. In
connection with the offering of Preferred Shares, CRLP issued a like amount of
preferred units to the Company (through Colonial Properties Holding Company,
Inc.) in exchange for the Company's proceeds from its preferred share offering.
The proceeds of the offerings were used to fund acquisition and development
expenditures, repay balances outstanding on CRLP's revolving credit agreement,
repay certain notes and mortgages payable, and for general corporate purposes.
Details relating to these equity offerings are as follows:
42
(in thousands)
Type of Number of Price Per Gross Offering Net
Date Offering Shares Share Proceeds Costs Proceeds
- ----------------------------------------------------------------------------------------------
May, 1995 Common 3,450,000 $22.7500 $ 78,488 $4,832 $ 73,656
January, 1996 Common 4,600,000 $24.6250 $ 113,275 $6,632 $106,643
January, 1997 Common 1,500,000 $29.8750 $ 44,812 $1,457 $ 43,355
July, 1997 Common 1,700,000 $30.9375 $ 52,594 $2,945 $ 49,649
November, 1997 Preferred 5,000,000 $25.0000 $ 125,000 $4,451 $120,549
December, 1997 Common 165,632 $30.1875 $ 5,000 $ 330(1) $ 4,670
(1) Includes $90,000 in shelf registration fees paid to the Securities and
Exchange Commission.
9. Employee Benefits
Employees of CRLP and Colonial Properties Services, Inc. ("CPSI")
participate in a noncontributory defined benefit pension plan designed to cover
substantially all employees. Pension expense includes service and interest costs
adjusted by actual earnings on plan assets and amortization of prior service
cost and the transition amount. The benefits provided by this plan are based on
years of service and the employee's final average compensation. 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, 1997 and 1996, as it relates to the employees of CRLP and CPSI.
(Amounts in thousands) 1997 1996
- --------------------------------------------------------------------------------
Actuarial present value of accumulated benefit
obligation including vested benefits
of $828 and $528 at December 31, 1997 and 1996,
respectively $ 961 $ 587
Actuarial present value of projected benefit obligations
at year end $1,957 $1,439
Fair value of assets at year end $ 861 $ 644
Accrued pension cost $ 536 $ 274
Net pension cost for the year $ 310 $ 337
Actuarial assumptions used in determining the actuarial present value of
projected benefit obligations at January 1, 1997 and 1996 are as follows:
1997 1996
- --------------------------------------------------------------------------------
Weighted-average interest rate 7.25% 7.75%
- --------------------------------------------------------------------------------
Increase in future compensation levels 4.25% 4.50%
CRLP and CPSI participate in a salary reduction profit sharing plan
covering substantially all employees. This plan provides, with certain
restrictions, that employees may contribute a portion of their earnings with
CRLP and CPSI matching one-half of such contributions, solely at CRLP and CPSI's
discretion. Contributions by CRLP and CPSI were $159,000, $164,000 and $155,000
for the years ended December 31, 1997, 1996 and 1995, respectively.
43
10. Leasing Operations
CRLP is in the business of leasing and managing commercial, retail, and
residential property. For properties owned by CRLP, minimum rentals due in
future periods under noncancelable operating leases extending beyond one year at
December 31, 1997, are as follows:
(in thousands)
-------------------------------------------------------------------------
1998 $ 76,458
1999 64,230
2000 54,693
2001 47,253
2002 40,626
Thereafter 177,486
-------------------------------------------------------------------------
$ 460,746
=========================================================================
The noncancelable leases are with tenants engaged in retail and commercial
operations in Alabama, Georgia, Florida, North Carolina, South Carolina,
Tennessee, and Virginia. Performance in accordance with the lease terms is in
part dependent upon the economic conditions of the respective areas. No
additional credit risk exposure relating to the leasing arrangements exists
beyond the accounts receivable amounts shown in the December 31, 1997 balance
sheet. Leases with tenants in multifamily properties are generally for one year
or less and are thus excluded from the above table. Substantially all of CRLP's
land, buildings, and equipment represent property leased under the above and
other short-term leasing arrangements.
Rental income for 1997, 1996, and 1995 includes contingent rent of $2.2
million, $1.8 million, and $1.8 million, respectively. This rental income was
earned when certain retail tenants attained sales volumes specified in their
respective lease agreements.
11. Related Party Transactions
CRLP has generally used affiliated construction companies to manage and
oversee its development projects. CRLP paid $41.3 million, $42.6 million, and
$16.1 million for property development costs to Lowder Construction Company,
Inc., a construction company owned by The Colonial Company ("TCC") (an affiliate
of certain shareholders and minority interest holders), during the years ended
December 31, 1997, 1996, and 1995, respectively. CRLP had outstanding
construction invoices and retainage payable to Lowder Construction Company, Inc.
totaling $2.3 million and $6.7 million at December 31, 1997 and 1996,
respectively. CRLP also paid $5.2 million, $27.9 million, and $5.5 million for
property development costs to two construction companies owned by three trustees
during the years ended December 31, 1997, 1996, and 1995, respectively. CRLP had
outstanding construction invoices and retainage payable to these construction
companies totaling $3.2 million at December 31, 1996. There were no outstanding
construction invoices and retainage payable to these construction companies at
December 31, 1997.
Colonial Commercial Investments, Inc. ("CCI"), which is owned by directors
James K. Lowder and Thomas H. Lowder has guaranteed indebtedness totaling $1.4
million at December 31, 1997 for Anderson Block Properties, which is a
partnership accounted for by CRLP under the equity method (listed in Note 6).
CRLP has indemnified CCI from its guarantees of this indebtedness.
In connection with the Riverchase Center acquisition, CRLP initially
acquired a 73% interest in a portion of the office complex. Effective November
1, 1997, CRLP purchased the remaining 27% interest in the property by issuing
114,798 limited partnership units in CRLP ("CRLP Units") to the seller. The
seller is also a director of Colonial Properties Holding Company, Inc..
In November 1997, CRLP purchased Polar BEK's 50% interest in Polar
BEK/Colonial Partnership I (a partnership previously accounted for under the
equity method of accounting), a partnership which owned a 168,000 square foot
office building in Birmingham for $7.4 million. This purchase increased CRLP's
ownership from 50% to 100%.
Following is a summary of property acquisitions from entities for which
directors of Colonial Properties Holding Company, Inc. are involved as a partner
or shareholder:
Date Property and Land Acquired Purchase Price
- ----------------------------------------------------------------------------------------------------------------------
March 1997 Heatherbrooke Center $3.0 million including 16,303 CRLP Units and debt
April 1997 Colonial Village at Trussville $20.5 million including 57,072 CRLP Units and debt
July 1997 Colonial Village at Timothy Woods $12.8 million including 27,275 CRLP Units and debt
August 1997 Mobile, Alabama Land $475,000 including 10,822 CRLP Units and debt
December 1997 Village at Roswell Summit $3.0 million including 34,777 CRLP Units and debt
July 1996 Macon, Georgia Land $1.4 million including 58,466 CRLP Units and debt
44
At December 31, 1997, CRLP had options outstanding in the amount of $10.5
million to acquire land from a related party. During 1997 and 1996 CRLP, through
CPSI, exercised options in the amount of $366,000 and $2.4 million,
respectively. In December 1997, CPSI acquired a parcel of land from CCI and sold
the land, along with an adjoining parcel of land, to an unaffiliated third party
for a net gain of $60,000. Also in December 1997, CPSI sold a separate parcel of
land to CCI, which resulted in a net gain of $120,000.
CRLP and its subsidiaries provided certain services to and received
certain services from related entities which resulted in the following income
(expense) included in the accompanying statements of income:
(Amounts in thousands)
1997 1996 1995
- --------------------------------------------------------------------------------
Rental income $ 879 $ 758 $ 836
Management/leasing fee income 368 356 321
Insurance brokerage expense (182) (187) (168)
Rental expense (156) (211) (209)
12. Net Income Per Unit
The following table sets forth the computation of basic and diluted
earnings per unit:
(Amounts in thousands, except per unit data)
1997 1996 1995
- --------------------------------------------------------------------------------
Numerator:
Numerator for basic and diluted net
income per unit - net income available
to common unitholders $44,519 $40,538 $25,242
================================================================================
Denominator:
Denominator for basic and diluted net income per unit -
weighted average common units 28,719 25,703 19,694
================================================================================
Basic and Diluted net income per unit $ 1.53 $ 1.58 $ 1.29
================================================================================
13. Subsequent Events
On January 24, 1998, the directors of Colonial Properties Holding Company,
Inc. declared a cash distribution to partners of CRLP in the amount of $.55 per
partnership unit, totaling $16.9 million. The distribution was made to partners
of record as of February 4, 1998, and was paid on February 11, 1998.
On February 17, 1998, the Company issued 375,540 Common Shares through
participation with 10 other REITs in a registered unit investment trust. The net
proceeds of $10.7 million were contributed to CRLP and used to repay a portion
of the outstanding balance on CRLP's unsecured line of credit.
45
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
46
PART III
Item 10. Directors and Executive Officers of the Registrant.
CRLP is managed by the Company, through Colonial Properties Holding
Company, Inc. ("CPHC"), the general partner of CRLP. The directors and executive
officers of the Company are as follows:
Directors of the Company
Thomas H. Lowder, 48, has been chairman of the board, president and chief
executive officer of the Company and CPHC, a trustee of the Company, and a
director of CPHC since 1993. Mr. Lowder became President of Colonial Properties,
Inc., the Company's predecessor, in 1976 and since that time has been actively
engaged in the acquisition, development, management, leasing and sale of
multifamily, retail and office properties for the Company. Mr. Lowder is a
member and past president of the Alabama Chapter of the Commercial Investment
Real Estate Institute. Mr. Lowder is a former state Chairman of the Young
Presidents' Organization and is a member of the Birmingham Area Board of
Realtors, the National Association of Industrial Office Parks, the International
Council of Shopping Centers and the National Association of Real Estate
Investment Trusts (NAREIT). He serves on the Board of Directors of, among other
companies, the Children's Hospital of Alabama, American Red Cross -Birmingham
Area Chapter and the United Way of Central Alabama. Mr. Lowder is a member of
the Executive Committee of the Board of Trustees, a member of the executive
committee of the board of directors of CPHC, and a member of the board of
directors of Colonial Properties Services, Inc. (the "Management Corporation"),
which conducts the Company's third-party management, leasing and brokerage
operations.
Carl F. Bailey, 67, has been a trustee of the Company and a director of
CPHC and the Management Corporation 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 president of BDI and is a member
of the board of directors 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. He also is a member of the executive committee of the board of
directors of CPHC.
M. Miller Gorrie, 62, is a trustee of the Company and a director of CPHC.
Mr. Gorrie is chairman of the board and chief executive officer of Brasfield &
Gorrie, L.L.C., a general contracting firm located in Birmingham, Alabama that
is ranked consistently among ENR's "Top 100 Contractors." He serves on the board
of directors of, among other organizations, American Cast Iron Pipe Co.,
Winsloew Furniture Co. and the Metropolitan Development Board. He is a past
director of AmSouth Bank of Alabama, the Southern Research Institute, the
Alabama Chamber of Commerce, the Associated General Contractors, the Building
Science Advisory Board of Auburn University, the Business Council of Alabama and
the United Way of Alabama. Mr. Gorrie is chairman of the Executive Committee and
is a member of the Executive Compensation Committee of the Board of Trustees. He
also is chairman of the executive committee and a member of the executive
compensation committee of the board of directors of CPHC, and is a member of the
executive compensation committee of the board of directors of the Management
Corporation.
47
William M. Johnson, 51, is a trustee of the Company and a director of
CPHC. Mr. Johnson is president and chief executive officer of Johnson
Development Company, a real estate development, construction and management firm
which he founded in 1978. As chief executive officer, 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. In July 1997, the Company
acquired from Mr. Johnson, by merger, six office buildings representing 352,000
square feet in Mansell 400 Business Center, the largest Class-A multi-tenant
office park in the North Fulton (Atlanta, Georgia) area. Mr. Johnson was
appointed a trustee of the Company in connection with the transaction. The
Company expects to complete the merger in June 1998, after which Mr. Johnson
will have contributed to the Company a total of 560,600 square feet of Class A
office and retail space. Mr. Johnson has been an active member of the Roswell
United Methodist Church and the North Fulton Chamber of Commerce, was the
founding chairman of the board of the Coalition for Drug-Free North Fulton, and
is a member of the board of directors and the executive committee of the
American Tract Society Ministry. Mr. Johnson is a member of the Executive
Compensation Committee of the Board of Trustees and a member of the executive
compensation committee of the board of directors of CPHC.
James K. Lowder, 48, has been a trustee of the Company since its formation
in July 1993 and is a director of CPHC. Mr. Lowder is also chairman of the board
and chief executive officer of The Colonial Company, chairman of the board of
Lowder Construction Company, Inc. and chairman of the board of Lowder New Homes,
Inc. and Lowder Realty Company, Inc. He also is a member of the Alabama
Association of Realtors, the Montgomery Board of Realtors, 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 and
the executive compensation committee of the board of directors of CPHC. Mr.
Lowder is the brother of Thomas H. Lowder, the president and chief executive
officer of the Company and the chairman of the Board of Trustees.
Herbert A. Meisler, 70, is a trustee of the Company and a director of
CPHC. 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. 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. He also is a
member of the executive compensation committee of the board of directors of
CPHC.
Claude B. Nielsen, 47, has been a trustee of the Company and a director of
CPHC since September 1993. Since 1990, Mr. Nielsen has been president 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. He also currently serves as a board member of the Birmingham
Civil Rights Institute and the Birmingham Airport Authority and as chairman of
the 1998 United Way Campaign for Central Alabama. Mr. Nielsen is chairman of the
Executive Compensation Committee of the Board of Trustees and is chairman of its
Option Plan Subcommittee. Mr. Nielsen also is chairman of the executive
compensation committee of the board of directors of CPHC.
Harold W. Ripps, 59, is a trustee of the Company and a director of CPHC.
Together with Mr. Meisler, they 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 President's Advisory Committee 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. He also is a
member of the executive committee of the board of directors of CPHC and is a
member of the board of directors and the executive compensation committee of the
Management Corporation.
48
Donald T. Senterfitt, 78, has been a trustee of the Company and a director
of CPHC since September 1993. Mr. Senterfitt 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, and served both organizations in a variety of other
capacities. He currently serves as president and chief executive officer of The
Pilot Group, L.C., a financial institutions consulting firm headquartered in
Orlando, Florida. Mr. Senterfitt is a member of the Audit Committee of the Board
of Trustees.
Executive Officers of the Company
Thomas H. Lowder, 48, has been chairman of the board, president and chief
executive officer of the Company and CPHC, a trustee of the Company, and a
director of CPHC since 1993. Mr. Lowder became President of Colonial Properties,
Inc., the Company's predecessor, in 1976 and since that time has been actively
engaged in the acquisition, development, management, leasing and sale of
multifamily, retail and office properties for the Company. Mr. Lowder is a
member and past president of the Alabama Chapter of the Commercial Investment
Real Estate Institute. Mr. Lowder is a former state Chairman of the Young
Presidents' Organization and is a member of the Birmingham Area Board of
Realtors, the National Association of Industrial Office Parks, the International
Council of Shopping Centers and the National Association of Real Estate
Investment Trusts (NAREIT). He serves on the Board of Directors of, among other
companies, the Children's Hospital of Alabama, American Red Cross -Birmingham
Area Chapter and the United Way of Central Alabama. Mr. Lowder is a member of
the Executive Committee of the Board of Trustees, a member of the executive
committee of the board of directors of CPHC, and a member of the board of
directors of Colonial Properties Services, Inc. (the "Management Corporation"),
which conducts the Company's third-party management, leasing and brokerage
operations.
Howard B. Nelson, Jr., 50, has been Chief Financial Officer of the Company
and CPHC, with general responsibility for financing matters since May 1997. Mr.
Nelson was Senior Vice President and Chief Operating Officer of the Company and
CPHC, with responsibility for the day-to-day management of the Company, from
September 1993 to May 1997. He joined Colonial in 1984 as a vice president and
became Senior Vice President-Finance in 1987. Mr. Nelson has served as
treasurer, vice president, president, and board member of the Birmingham Chapter
of the National Association of Industrial and Office Parks as well as vice
president and board member of the Building Owners and Managers Association of
Metropolitan Birmingham. He also serves on the Board of Directors of the
Children's Harbor Family Center and the College of Business Advisory Council of
Auburn University. He holds a Bachelor of Science Degree from Auburn University.
Paul F. Earle, 40, has been Executive Vice-President-Multifamily Division
of CPHC, with responsibility for management of all multifamily properties owned
and/or managed by the Company, since May 1997. He joined Colonial in 1991 and
has served as Vice President-Acquisitions, as well as Senior Vice
President--Multifamily Division. Mr. Earle serves as Chairman of the Alabama
Multifamily Council and is an active member of the National Apartment
Association. He also serves on the Board of Directors of Big Brother/Big
Sisters. Before joining Colonial, Mr. Earle was the President and Chief
Operating Officer of American Residential Management, Inc., Executive Vice
President of Great Atlantic Management, Inc., and Senior Vice President of
Balcor Property Management, Inc.
John N. Hughey, 38, has been Executive Vice President-Retail Division of
CPHC, with responsibility for all retail properties owned and/or managed by the
Company, since May 1997. He joined Colonial in 1982 and assumed responsibility
for an increasing number of shopping centers until being named to Senior Vice
President-Retail Division of Colonial in 1991. Mr. Hughey served as the
Alabama/Mississippi State Operations Chairman for the International Council of
Shopping Centers from 1993-1995. He holds a Bachelor of Science Degree from
Auburn University.
49
Charles A. McGehee, 52, has been Executive Vice President-Land
Acquisitions, Brokerage and Dispositions of CPHC, with responsibility for the
Company's acquisitions and dispositions and the sales brokerage departments,
since May 1997. Mr. McGehee was Senior Vice President--Multifamily
Acquisitions/Development from September 1993 to May 1997 and Senior Vice
President--Office Division from January 1990 to September 1993. He joined
Colonial in 1976 as vice president of retail leasing and was responsible for
leasing all retail space owned and/or managed by Colonial. Mr. McGehee has
served as president and a board member of the National Association of Industrial
and Office Parks as well as a member of the board of directors of the Birmingham
Area Board of Realtors. He holds a Bachelor of Science Degree from Auburn
University.
C. Reynolds Thompson, III, 35, has been Executive Vice President--Office
Division of CPHC, with responsibility for management of all office properties
owned and/or managed by the Company, since May 1997. Mr. Thompson joined
Colonial in February 1997 as Senior Vice President--Office Acquisitions, with
responsibility for all acquisitions of office properties. Prior to joining
Colonial, Mr. Thompson worked for CarrAmerica Realty Corporation in office
building acquisitions and due diligence. Mr. Thompson's ten year real estate
background includes acquisitions, development, leasing, and management of office
properties in the south. He is an active member of the National Association of
Industrial and Office Parks and holds a Bachelor of Science degree from
Washington and Lee University.
Douglas B. Nunnelley, 55, has been Senior Vice President and Secretary of
the Company and CPHC, with general responsibility for regulatory, accounting,
management information systems, and insurance matters, since May 1997. He joined
Colonial in 1993 as Senior Vice President and Chief Financial Officer. From 1979
until 1993, Mr. Nunnelley served as Executive Vice President, Comptroller, and
Chief Accounting Officer of the AmSouth Bancorporation, and as Senior Vice
President and Comptroller of the First National Bank of Birmingham. He serves on
the Board of Directors of Eastern Health Systems, Inc. Mr. Nunnelley holds a
Bachelor of Science Degree in accounting from the University of Alabama and is a
graduate of the Stonier Graduate School of Banking at Rutgers University and is
a Certified Public Accountant.
Kenneth E. Howell, 48, has been Vice President, Controller and Chief
Accounting Officer of the Company and CPHC, with general responsibility for the
supervision of accounting, management information systems, and payroll and
benefits for all of the properties owned and/or managed by the Company, since
1981. He joined Colonial in 1981 and holds a Bachelor of Science Degree in
business administration from Auburn University.
SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange of 1934 requires CRLP's directors
and executive officers to file reports with the SEC on Forms 3, 4 and 5 for the
purpose of reporting their ownership of and transactions in Units. During 1997,
each of the directors and executive officers of CRLP identified above filed a
late Form 3. In addition, each of Messrs. Gorrie, Nelson, and Ripps was late in
filing one Form 4 to report an acquisition of Units, and each of Thomas H.
Lowder and James K. Lowder was late in filing three Forms 4 to report three
acquisitions of Units.
50
Item 11. Executive Compensation.
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 ($) Compensation Awards($)(1) Options (#) Compensation(2)
- ------------------------------------------------------------------------------------------------------------------------------------
Thomas H. Lowder 1997 $295,000 $225,000 -- $89,250 16,000 $3,453
Chairman of the Board, 1996 285,000 30,000 -- 68,950 16,000 4,500
President and Chief Executive 1995 285,000 110,000 -- 62,775 15,835 4,500
Officer
Howard B. Nelson, Jr. 1997 198,000 120,000 -- 51,000 10,000 3,453
Chief Financial Officer 1996 171,726 23,000 -- 34,475 8,500 4,500
1995 145,000 68,000 -- 26,100 6,450 4,159
Paul F. Earle... 1997 125,000 75,000 -- 19,125 3,500 3,453
Executive Vice President - 1996(3) 107,006 21,006 -- -- -- 3,841
Multifamily Division
John N. Hughey.. 1997 120,000 75,000 -- 19,125 3,500 3,453
Executive Vice President - 1996 104,998 50,000 -- 14,775 3,500 3,145
Retail Division 1995 95,000 62,000 -- 13,388 3,295 3,088
Charles A. McGehee 1997 125,000 75,000 -- 19,125 3,500 3,453
Executive Vice President - 1996 120,000 20,000 -- 17,238 4,000 4,500
Land, Brokerage and 1995 110,000 63,000 -- 15,413 3,815 3,276
Dispositions
(1) The number and value of restricted shares held by the Named Executive
Officers as of December 31, 1997 were as follows: Mr. Lowder - 6,156
shares ($185,450); Mr. Nelson - 3,184 shares ($95,918); Mr. Earle - 600
shares ($18,075); Mr. Hughey - 1,316 shares ($39,705); and Mr. McGehee -
1,984 shares ($59,768). Dividends are paid on restricted shares at the
same rate paid to all other holders of Common Shares.
(2) All Other Compensation consists solely of employer contributions to the
Company's 401(k) Plan.
(3) Mr. Earle became an executive officer of the Company in 1996.
The following table sets forth certain information concerning exercised
and unexercised options held by the Named Executive Officers at December 31,
1997:
Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year-End Option Values
Number of Value of Unexercised
Shares Securities Underlying In-the-Money
Acquired Value Unexercised Options Options
Name on Exercise(#) Realized($) at December 31, 1997 at December 31, 1997(1)
- --------------------------------------------------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------------------------------------------------------------------------------
Thomas H. Lowder -- -- 31,890 31,945 $218,550 $96,274
Howard B. Nelson, Jr. -- -- 10,593 17,817 70,873 46,485
Paul F. Earle -- -- 833 5,167 4,583 9,167
John N. Hughey -- -- 6,193 6,932 41,591 20,659
Charles A. McGehee -- -- 6,977 7,438 47,542 23,727
- ------------------------
(1)Based on the closing price of $30.125 per Common Share on December 31, 1997,
as reported by the New York Stock Exchange.
51
The following table sets for the certain information relating to options
to purchase Common Shares granted to the Named Executive Officers during 1997:
Option Grants in Last Fiscal Year
Individual Grants
- ---------------------------------------------------------
Percent Potential Realizable
Number of of Total Value at Assumed
Securities Options Annual Rates of Share
Underlying Granted to Exercise Price Appreciation for
Options Employees in Price Expiration Option Term
Name Granted(#) Fiscal Year ($/Sh) Date 5% 10%
- ------------------------------------------------------------------------------ ------------------
Thomas H. Lowder 16,000 20.25% $31.875 1/22/07 $320,736 $812,809
Howard B. Nelson, Jr. 10,000 12.66% 31.875 1/22/07 200,460 508,005
Paul F. Earle 3,500 4.43% 31.875 1/22/07 70,161 177,802
John N. Hughey 3,500 4.43% 31.875 1/22/07 70,161 177,802
Charles A. McGehee 3,500 4.43% 31.875 1/22/07 70,161 177,802
All options granted in 1997 become exercisable in three equal annual
installments beginning on the first anniversary of the date of grant and have a
term of ten years.
Defined Benefit Plan
The Company maintains a Retirement Plan (the "Plan") for all of the
employees of the Company and its subsidiaries. The Plan also has been adopted by
the Management Corporation. 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 wage base, and at a higher percentage of compensation
above the Social Security wage base. Employment by Colonial, the Company's
predecessor, or certain of its affiliated entities is treated as covered service
for purposes of the Plan. 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 subsidiaries.
The following table reflects estimated annual benefits payable upon
retirement under the 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
- ------------
$100,000 $ 7,600 $15,200 $22,800 $30,400 $38,000
125,000 $ 9,500 $19,000 $28,500 $38,000 $47,500
150,000 $11,400 $22,800 $34,200 $45,600 $57,000
$160,000 or $12,160 $24,320 $36,480 $48,640 $60,800
over
52
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 $160,000 in 1998. This limit is scheduled to increase periodically
with the cost of living.
Covered compensation under the Plan includes only the employees' base
salary. Thomas H. Lowder has 23 years of covered service under the Plan, Howard
B. Nelson, Jr. has 13 years of service, Paul F. Earle has six years of service,
John N. Hughey has 15 years of service, and Charles A. McGehee has 17 years of
service.
Employment Agreement
Thomas H. Lowder, the chief executive officer of the Company, entered into
an employment agreement with the Company in September 1993. This agreement
provided for an initial term of three years, and is renewable automatically 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. The employment agreement provides for certain
severance payments in the event of disability or termination by the Company
without cause or by the employee with cause.
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, William M.
Johnson, James K. Lowder and Harold W. Ripps, who are members of the Committee,
own interests in certain entities that, during 1997, were parties to certain
transactions involving the Company.
On March 24, 1997, the Company acquired Inverness Family Medical Center, a
28,000 square foot community shopping center, from a partnership in which
Messrs. Gorrie and J. Lowder, among other, owned interests, for approximately
$3.0 million. The Company paid the purchase price with approximately $1.5
million in cash and 16,303 units of limited partnership interest in the
Operating Partnership ("Units"). In connection with the transaction, Mr. Gorrie
received 369 Units, and Equity Partner Joint Venture ("EPJV"), a partnership in
which each of Messrs. J. Lowder, T. Lowder and Robert E. Lowder owns a one-third
interest, received 12,244 Units. In addition, Howard B. Nelson, Jr., the
Company's chief financial officer, received 369 Units in the transaction.
On April 1, 1997, the Company acquired Colonial Village at Trussville, a
multi-family property located in Birmingham, Alabama, from an entity owned in
part by Mr. Ripps. The Company paid a total purchase price of $20.5 million for
the property, including the issuance of 57,072 Units to Mr. Ripps.
53
On July 11, 1997, the Company acquired Colonial Village at Timothy Woods, a
multi-family property located in Athens, Georgia, from Colonial Commercial
Investments, Inc. ("CCI"), a corporation owned by Messrs. J. Lowder and T.
Lowder. The Company paid a total purchase price of $12.8 million, including the
issuance of 27,275 Units.
On July 31, 1997, the Company acquired through merger from Mr. Johnson six
office buildings located in the Mansell 400 Office Center for a purchase price
of $48.5 million. The Company paid the purchase price through the issuance of
540,235 Units, the assumption of indebtedness in the amount of $31.7 million and
the payment of $1.1 million in cash. In connection with the acquisition, the
Company also agreed to acquire certain adjacent or nearby properties for a total
purchase price of approximately $27.3 million. The Company acquired one of these
properties, the Village at Roswell Summit, on December 31, 1997 for
approximately $3.0 million, including the issuance to Mr. Johnson of 34,777
Units. The Company expects to acquire the remaining properties during 1998.
On August 8, 1997, the Company purchased from Messrs. J. Lowder, T. Lowder
and Robert E. Lowder certain undeveloped land located in Mobile, Alabama for a
purchase price of $475,000. The Company paid the purchase price through the
issuance of 5,411 Units to each of Messrs. J. Lowder and T. Lowder and the
payment of $158,333 in cash to Robert E. Lowder.
On November 1, 1997, the Company purchased from Mr. Gorrie his 27%
interest in the Riverchase Center, an office property located in Birmingham,
Alabama in which the Company owned the remaining 73% interest. The Company paid
the purchase price of $3.4 million through the issuance of 114,798 Units.
Brasfield & Gorrie General Contractors, Inc. ("B&G"), a corporation of
which Mr. Gorrie is a shareholder and chairman of the board, was engaged during
1995 to construct the expansion of the Company's Macon Mall. The Company paid
B&G a total of $5.2 million ($5.0 million of which was then paid to unaffiliated
subcontractors) during 1997 pursuant to this engagement.
CCI has guaranteed indebtedness of a partnership accounted for by the
Company under the equity method in the aggregate amount of $1.4 million. The
Company has indemnified CCI against any liability it may incur under this
guarantee.
The Management Corporation provided management and leasing services during
1997 to certain entities in which Mr. J. Lowder and his brothers T. Lowder and
Robert E. Lowder have an interest. The aggregate amount of fees paid to the
Management Corporation by such entities during 1997 was approximately $368,000.
54
Colonial Insurance Company, a corporation indirectly owned by the Lowder
family, provided insurance brokerage services for the Company during 1997. The
aggregate amount paid by the Company to Colonial Insurance Company for these
services for the year ended December 31, 1997, was approximately $182,000.
The Company leased space to certain entities in which the Lowder family
has an interest and received rent from these entities totaling approximately
$879,000 during 1997.
The Company engaged Lowder Construction Company, Inc., of which Mr. J.
Lowder serves as chairman of the board and which is indirectly owned by Mr. J.
Lowder and T. Lowder, to serve as construction manager for ten multifamily
development and expansion projects during 1997. The Company paid a total of
$41.3 million ($39.8 million of which was then paid to unaffiliated
subcontractors) for the construction of these development and expansion projects
during 1997.
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 9, 1998, for (1) each person known by CRLP to be
the beneficial owner of more than five percent of CRLP's outstanding Units, (2)
each trustee of the Company (each of whom also serves as a director of CPHC) and
each of the chief executive officer and the four other most highly compensated
executive officers of the Company (the "Named Executive Officers") (each of whom
also is an executive officer of CPHC) and (3) the trustees and executive
officers of Colonial 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. The extent
to which a person held Common Shares of Colonial as of March 9, 1998, is set
forth in Colonial's Proxy Statement dated March 24, 1998, 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 Number of Percent of
Address of Beneficial Owner Units Units(1)
- ----------------------------------------------------------------
Colonial Properties Trust
(through Colonial Properties
Holding Company, Inc.) 21,289,507 (2) 67.3%
Thomas H. Lowder 2,836,759 (3) 9.0%
James K. Lowder 2,836,759 (4) 9.0%
2000 Interstate Parkway
Suite 400
Montgomery, Alabama 36104
Robert E. Lowder 1,750,177 (5) 5.5%
One Commerce Street
Montgomery, Alabama 36104
Carl F. Bailey -0- *
M. Miller Gorrie 115,167 0.4%
55
William M. Johnson 575,012 (6) 1.8%
Herbert A. Meisler 526,934 (7) 1.7%
Claude B. Nielsen -0- *
Harold W. Ripps 1,908,380 6.0%
Donald T. Senterfitt -0- *
John N. Hughey -0- *
Charles A. McGehee -0- *
Paul F. Earle -0- *
Howard B. Nelson, Jr. 369 *
All executive officers and
trustees as a group (16 persons) 8,153,856 (8) 25.8%
* Less than 1%
- ------------------------------------
(1) The number of Units outstanding as of March 9, 1998, was 31,635,251.
(2) Does not include 316,353 units of general partnership interest held by
CPHC, representing a one percent equity interest in CRLP.
(3) Includes 538,211 Units owned by Thomas Lowder, 1,285,572 Units owned by
Colonial Commercial Investments, Inc. ("CCI"), a corporation owned equally
by Thomas and James Lowder, and 1,012,976 Units owned by Equity Partners
Joint Venture ("EPJV"), a general partnership of which Thomas, James and
Robert Lowder are the sole general partners. 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 the
Lowder brothers.
(4) Includes 538,211 Units owned by James Lowder, 1,285,572 Units owned by CCI
and 1,012,976 Units owned by EPJV.
(5) Includes 523,546 Units owned by Robert Lowder, 213,655 Units owned by CBC
Realty, Inc. ("CBC"), a corporation wholly owned by Robert Lowder, and
1,012,976 Units owned by EPJV.
(6) Includes 561,958 Units owned by Mr. Johnson, 348 Units owned by VRS Corp.
I, a corporation wholly owned by Mr. Johnson, and 12,706 Units owned by
Mr. Johnson's wife.
(7) Includes 526,934 Units owned by Meisler Enterprises, L.L.C., a limited
liability company of which Mr. Meisler and his wife are the sole members.
(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 included in Item 11 of this
Form 10-K.
56
Part IV
Item 14. Exhibits, Financial Schedules, and Reports on Form 8-K.
14(a)(1) and (2) Financial Statements and Schedules
Index to Financial Statements and Financial Statement Schedules
Financial Statements:
The following financial statements of CRLP are included in Part II, Item 8
of this report:
Report of Independent Accountants
Consolidated Balance Sheets as of December 31, 1997 and 1996
Consolidated Statements of Income for the years ended
December 31, 1997, 1996, and 1995
Consolidated Statements of Partners' Capital for the years
ended December 31, 1997, 1996, and 1995
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996, and 1995
Notes to Consolidated Financial Statements
Financial Statement Schedules:
Schedule IIIReal Estate and Accumulated Depreciation
Report of Independent Accountants
All other schedules have been omitted because the required information of
such other schedules is not present in amounts sufficient to require submission
of the schedule or because the required information is included in the
consolidated financial statements.
14(a)(3) Exhibits
*3.1 Declaration of Trust of Company.
*3.2 Bylaws of the Company.
**10.1 Second Amended and Restated Agreement of
Limited Partnership of the Operating
Partnership, as amended.
+10.2.1 Registration Rights and Lock-Up Agreement dated September 29,
1993, among the Company and the persons named therein.
10.2.2 Registration Rights and Lock-Up Agreement
dated March 25, 1997, among the Company and
the persons named therein. (EDGAR Version Only)
10.2.3 Registration Rights and Lock-Up Agreement
dated November 4, 1994, among the Company and
the persons named therein. (EDGAR Version Only)
10.2.4 Registration Rights and Lock-Up Agreement
dated August 20, 1997, among the Company and
the persons named therein. (EDGAR Version Only)
10.2.5 Registration Rights and Lock-Up Agreement
dated November 1, 1997, among the Company and
the persons named therein. (EDGAR Version Only)
57
10.2.6 Registration Rights and Lock-Up Agreement
dated July 1, 1997, among the Company and the
persons named therein. (EDGAR Version Only)
10.2.7 Registration Rights and Lock-Up Agreement
dated July 1, 1996, among the Company and the
persons named therein. (EDGAR Version Only)
(PI)10.3.1 First Amended and Restated Employee Share
++ Option and Restricted Share Plan.
+/-10.3.2 Non-employee Trustee Share Option Plan.
++
+/-+/-10.3.3 Non-employee Trustee Share Plan.
++
(OMEGA)10.3.4 Employee Share Purchase Plan.
++
+10.5 Non-employee Trustee Option Agreement.
+10.6 ++ Employment Agreement between the Company and
Thomas H. Lowder.
+10.7 Officers and Trustees Indemnification
Agreement.
+10.8 Partnership Agreement of the Management
Partnership.
**10.9 Articles of Incorporation of the Management
Corporation, as amended.
+10.10 Bylaws of the Management Corporation.
**10.11 Articles of Incorporation of CPHC, as amended.
+10.12 Bylaws of CPHC.
+10.13 Land Option Agreement.
++10.14 Credit agreement between the Colonial Realty
Limited Partnership and SouthTrust Bank,
National Association, AmSouth Bank, N.A.,
Wells Fargo Bank, National Association,
Wachovia Bank, N.A., First National Bank of
Commerce, N.A., and PNC Bank, Ohio, National
Association dated July 10, 1997 and related
promissory notes.
+10.16 ++ Annual Incentive Plan.
++++10.17 Indenture dated as of July 22, 1996, by and between Colonial
Realty Limited Partnership and Bankers Trust Company, as
amended
21.1 List of Subsidiaries. (EDGAR Version Only)
23.1 Consent of Coopers & Lybrand L.L.P.
27 Financial Data Schedules (EDGAR Version Only)
- --------------------
* Incorporated by reference to the Annexes to Colonial's Proxy Statement dated
September 1, 1995.
**Incorporated by reference to the same titled and number exhibit in Colonial's
Annual Report on Form 10-K dated December 31, 1994.
+ Incorporated by reference to the same titled and numbered exhibit in
Colonial'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 CRLP's
Quarterly Report on Form 10-Q dated June 30, 1997.
++++ Incorporated by reference to (i) Exhibit D to the Form 8-K dated July 19,
1996, filed by Colonial Realty Limited Partnership, and (ii) Exhibit B to the
Form 8-K dated December 6, 1996, filed by Colonial Realty Limited Partnership.
(PI) Incorporated by reference to Colonial's Registration
Statement on Form S-8, No. 333-27203.
+/- Incorporated by reference to Colonial's Registration Statement
on Form S-8, No. 333-27203.
+/-+/- Incorporated by reference to Colonial's Registration
Statement on Form S-8, No. 333-27205.
(OMEGA) Incorporated by reference to Colonial's Registration
Statement on Form S-8, No. 333-27201.
58
14(b) Reports on Form 8-K
Reports on Form 8-K filed during the last quarter of 1997: Form 8-K dated
December 10, 1997, reported certain property acquisitions during 1997
under Item 5, "Other Events."
14(c) Exhibits
The list of Exhibits filed with this report is set forth in response to
Item 14(a)(3).
14(d) Financial Statements
None.
59
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, on March
20, 1998.
COLONIAL REALTY LIMITED PARTNERSHIP
a Delaware limited partnership
By: Colonial Properties Holding Company, Inc.,
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 the capacities indicated on March 20, 1998.
Signature
/s/ Thomas H. Lowder Chairman of the Board, President,
- ------------------------------
Thomas H. Lowder and Chief Executive Officer
/s/ Howard B. Nelson, Jr.Chief Financial Officer
- ------------------------------
Howard B. Nelson, Jr.
/s/ Kenneth E. Howell Vice President, Controller, and
Assistant Secretary
- ------------------------------
Kenneth E. Howell (Chief Accounting Officer)
/s/ Carl F. Bailey Director
- ------------------------------
Carl F. Bailey
/s/ M. Miller Gorrie Director
- ------------------------------
M. Miller Gorrie
/s/ William M. Johnson Director
- ------------------------------
William M. Johnson
/s/ James K. Lowder Director
- ------------------------------
James K. Lowder
/s/ Herbert A. Meisler Director
- ------------------------------
Herbert A. Meisler
/s/ Claude B. Nielsen Director
- ------------------------------
Claude B. Nielsen
/s/ Harold W. Ripps Director
- ------------------------------
Harold W. Ripps
/s/ Donald T. Senterfitt Director
- ------------------------------
Donald T. Senterfitt
60
SCHEDULE III
COLONIAL REALTY LIMITED PARTNERSHIP
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1997
Initial Cost to Cost Gross Amount at Which
Company Capitalized Carried at Close of Period
Buildings and Subsequent to Buildings and
Description Encumbrances Land Improvements Acquisition Land Improvements Total
- ------------------------------------------------------------------------------------------------------------------------------------
Multifamily:
CG at Barrington $ -0- $ 880,000 $ 8,605,143 $ 63,036 $ 880,000 $ 8,668,179 $ 9,548,179
CG at Bayshore -0- 1,265,561 10,196,833 132,179 1,265,561 10,329,012 11,594,573
CG at Carrollwood 6,230,000 1,464,000 10,657,840 748,737 1,464,000 11,406,577 12,870,577
CG at Edgewater 9,811,501 1,540,000 12,671,606 126,285 1,540,000 12,797,891 14,337,891
CG at Gainesville -0- 3,360,000 24,173,649 2,614,403 3,361,850 26,786,202 30,148,052
CG at Galleria 22,400,000 4,600,000 39,078,925 1,070,959 4,600,000 40,149,884 44,749,884
CG at Galleria II -0- 758,439 7,902,382 16,387 758,439 7,918,769 8,677,208
CG at Galleria Woods 7,253,376 1,220,000 12,480,949 103,462 1,220,000 12,584,411 13,804,411
CG at Heathrow -0- 2,560,661 17,612,990 339,580 2,560,661 17,952,570 20,513,231
CG at Inverness Lakes -0- 641,334 8,873,906 197,150 641,334 9,071,056 9,712,390
CG at Kirkman -0- 2,220,000 21,747,240 591,752 2,220,000 22,338,992 24,558,992
CG at Mountain Brook 12,101,956 1,960,000 21,181,118 188,669 1,960,000 21,369,787 23,329,787
CG at Natchez Trace 10,941,371 1,312,000 16,568,050 23,741 1,312,000 16,591,791 17,903,791
CG at Palm Aire -0- 1,488,000 13,515,075 192,548 1,489,500 13,706,123 15,195,623
CG at Palma Sola -0- 1,479,352 -0- 12,352,103 1,479,352 12,352,103 13,831,455
CG at Ponte Vedra -0- 1,440,000 10,038,593 413,749 1,440,000 10,452,342 11,892,342
CG at Research Park 12,775,000 3,680,000 31,686,621 (1,814,626) 3,680,000 29,871,995 33,551,995
CG at Riverchase 9,081,348 2,340,000 25,248,548 536,523 2,340,000 25,785,071 28,125,071
CG at Spring Creek -0- 1,184,000 13,243,975 164,251 1,184,000 13,408,226 14,592,226
CG at Wesleyan -0- 720,000 12,760,587 5,448 720,000 12,766,035 13,486,035
Colony Park -0- 409,401 4,345,599 301,264 409,406 4,646,859 5,056,264
CV at Ashford Place -0- 537,600 5,839,838 59,784 537,600 5,899,622 6,437,222
CV at Cahaba Heights 3,696,965 625,000 6,548,683 142,591 625,000 6,691,274 7,316,274
CV at Caledon Wood -0- 2,100,000 19,482,210 -0- 2,100,000 19,482,210 21,582,210
CV at Cordova -0- 134,000 3,986,304 295,277 134,000 4,281,581 4,415,581
CV at Hillcrest -0- 332,800 4,310,671 53,392 332,800 4,364,063 4,696,863
CV at Hillwood 4,923,333 511,700 5,508,300 174,256 511,700 5,682,556 6,194,256
CV at Huntleigh Woods 2,992,056 745,600 4,908,990 555,874 745,600 5,464,864 6,210,464
CV at Inverness 9,900,000 1,713,668 10,352,151 7,941,736 1,713,668 18,293,887 20,007,555
CV at Inverness Lakes 5,663,333 735,080 7,254,920 278,424 735,080 7,533,344 8,268,424
CV at Lake Mary -0- 2,145,480 -0- 19,068,913 3,634,094 17,580,299 21,214,393
CV at McGehee Place -0- 795,627 -0- 16,657,470 842,321 16,610,776 17,453,097
CV at Monte D'Oro -0- 1,000,000 6,994,227 881,623 1,000,000 7,875,850 8,875,850
CV at Oakleigh -0- 880,000 9,685,518 151,072 1,024,334 9,692,256 10,716,590
CV at River Hills II -0- 857,080 -0- 8,976,348 857,079 8,976,349 9,833,428
CV at Rocky Ridge 7,335,000 644,943 8,325,057 154,091 644,943 8,479,148 9,124,091
CV at Stockbridge -0- 960,000 11,975,947 185,421 960,000 12,161,368 13,121,368
CV at Timothy Woods -0- 1,020,000 11,910,546 27,892 1,020,000 11,938,438 12,958,438
CV at Trussville -0- 1,504,000 18,800,253 589,448 1,504,000 19,389,701 20,893,701
CV at Vernon Marsh 3,400,000 960,984 3,511,596 3,067,840 960,984 6,579,436 7,540,420
CV at White Bluff 4,500,000 699,128 4,920,872 251,830 699,128 5,172,702 5,871,830
North Ingle Villas -0- 497,574 4,122,426 334,401 497,574 4,456,827 4,954,401
Patio I, II & III -0- 249,876 3,305,124 1,918,124 366,717 5,106,407 5,473,124
Ski Lodge - Tuscaloosa 4,779,642 1,064,000 6,636,685 385,614 1,064,000 7,022,299 8,086,299
S-1
Retail:
Abingdon Town Centre -0- 2,051,250 6,687,616 -0- 2,051,250 6,687,616 8,738,866
Bardmoor Village -0- 2,143,152 9,746,573 14,481 2,143,152 9,761,054 11,904,206
Bear Lake Village -0- 2,134,440 6,551,683 61,109 2,134,440 6,612,792 8,747,232
Beechwood Shopping Center -0- 2,565,550 19,647,875 214,717 2,565,550 19,862,592 22,428,142
Bellwood 2,973,419 330,000 -0- 3,138,776 330,000 3,138,776 3,468,776
Briarcliffe Mall -0- 9,099,972 33,663,654 733,323 9,099,972 34,396,977 43,496,949
Britt David -0- 1,755,000 4,951,852 -0- 1,755,000 4,951,852 6,706,852
Brookwood Village -0- 8,136,700 24,435,002 815,382 8,136,700 25,250,384 33,387,084
Burnt Store Square -0- 3,750,000 8,198,677 39,806 3,750,000 8,238,483 11,988,483
Country Lake Village -0- 3,659,040 6,783,697 46,259 3,659,040 6,829,956 10,488,996
Gadsden Mall -0- 639,577 -0- 18,815,847 639,577 18,815,847 19,455,424
Glynn Place Mall -0- 3,588,178 22,514,121 20,711 3,588,178 22,534,832 26,123,010
Heatherbrooke Center -0- 1,680,000 1,387,055 79,264 1,680,000 1,466,319 3,146,319
Holly Hill Mall -0- 4,120,000 25,632,587 30,396 4,120,000 25,662,983 29,782,983
Island Walk 10,253,337 4,181,760 13,023,401 51,966 4,181,760 13,075,367 17,257,127
Lakeshore Mall -0- 4,646,300 30,973,239 21,226 4,646,300 30,994,465 35,640,765
Lakewood Plaza -0- 2,984,522 11,482,512 11,138 2,984,522 11,493,650 14,478,172
Macon Mall -0- 1,021,733 -0- 89,406,602 4,928,601 85,499,734 90,428,335
Mayberry Mall 3,401,032 862,500 3,778,590 8,290 862,500 3,786,880 4,649,380
McGehee Place -0- 197,152 -0- 3,799,891 197,152 3,799,891 3,997,043
Montgomery Promenade 10,810,000 3,788,913 11,346,754 990,022 4,332,432 11,793,257 16,125,689
Montgomery Promenade North -0- 2,400,000 5,664,858 -0- 2,400,000 5,664,858 8,064,858
Northdale Court -0- 3,059,760 8,054,090 22,871 3,059,760 8,076,961 11,136,721
Old Springville -0- 272,594 -0- 3,340,930 277,975 3,335,549 3,613,524
Olde Town -0- 343,325 -0- 2,445,304 343,325 2,445,304 2,788,629
Paddock Park -0- 1,532,520 3,754,879 66,765 1,532,520 3,821,644 5,354,164
Quaker Village -0- 931,000 7,901,874 -0- 931,000 7,901,874 8,832,874
River Oaks -0- 3,262,800 23,636,229 576,083 3,262,800 24,212,312 27,475,112
Rivermont Shopping Center 1,789,378 515,250 2,332,486 7,240 515,250 2,339,726 2,854,976
Stanly Plaza -0- 450,000 1,657,870 -0- 450,000 1,657,870 2,107,870
Staunton Mall -0- 2,895,000 15,083,542 -0- 2,895,000 15,083,542 17,978,542
University Park Plaza 14,445,000 6,946,785 20,104,517 269,075 6,946,785 20,373,592 27,320,377
Valdosta Mall -0- 5,377,000 30,239,796 20,832 5,377,000 30,260,628 35,637,628
Village at Roswell Summit 1,652,438 450,000 2,563,642 -0- 450,000 2,563,642 3,013,642
Village Mall -0- 103,480 -0- 14,381,208 319,528 14,165,160 14,484,688
Wekiva Riverwalk -0- 2,817,788 15,302,375 43,924 2,817,788 15,346,299 18,164,087
Winter Haven Village -0- 1,768,586 3,928,903 4,338,922 4,045,045 5,991,366 10,036,411
Yadkin Plaza -0- 1,080,000 1,224,136 -0- 1,080,000 1,224,136 2,304,136
S-2
Office:
250 Commerce Street -0- 25,000 200,200 2,252,870 25,000 2,453,070 2,478,070
AmSouth Center -0- 764,961 -0- 16,594,852 764,961 16,594,852 17,359,813
Colonial Plaza -0- 1,001,375 12,381,023 13,638 1,001,375 12,394,661 13,396,036
International Park 2,011,911 1,279,355 5,668,186 99,830 1,279,355 5,768,016 7,047,371
Interstate Park 4,481,137 1,125,990 7,113,558 8,663,186 1,125,988 15,776,746 16,902,734
Lakeside Office Park -0- 423,451 8,313,291 121,822 423,451 8,435,113 8,858,564
Mansell Office Park 31,579,474 4,540,000 44,012,971 337,397 4,540,000 44,350,368 48,890,368
P&S Building -0- 104,089 -0- 773,576 104,089 773,576 877,665
Progress Center -0- 521,037 14,710,851 356,689 521,037 15,067,540 15,588,577
Riverchase Center 8,479,597 1,916,727 22,091,651 151,889 1,916,727 22,243,540 24,160,267
University Park -0- 396,960 -0- 4,305,866 396,960 4,305,866 4,702,826
Active Development Projects:
CG at Bayshore II -0- 9,213,320 -0- -0- 984,000 8,229,320 9,213,320
CG at Cypress Crossing -0- 4,332,601 -0- -0- 1,909,932 2,422,669 4,332,601
CG at Edgewater II -0- 3,871,062 -0- -0- 999,221 2,871,841 3,871,062
CG at Hunter's Creek -0- 33,264,022 -0- -0- 4,725,936 28,538,086 33,264,022
CG at Inverness Lakes II -0- 2,956,482 -0- -0- 477,259 2,479,223 2,956,482
CG at Lakewood Ranch -0- 2,320,442 -0- -0- 1,816,934 503,508 2,320,442
CG at Research Park II -0- 3,538 -0- -0- 3,538 -0- 3,538
CG at Wesleyan II -0- 788,868 -0- -0- 720,000 68,868 788,868
CV at Citrus Park -0- 1,323,593 -0- -0- 1,199,760 123,833 1,323,593
CV at Inverness IV -0- 6,710,610 -0- -0- 630,858 6,079,752 6,710,610
CV at McGehee Place -0- 90,733 -0- -0- 58,549 32,184 90,733
CV at River Hills III -0- 14,462,674 -0- -0- 1,694,075 12,768,599 14,462,674
Other Miscellaneous Projects -0- 185,914 -0- -0- -0- 185,914 185,914
Unimproved Land:
Macon Mall Outparcels -0- 663,142 -0- -0- 663,142 -0- 663,142
McGehee Place Land 668,364 439,471 -0- -0- 439,471 -0- 439,471
North Heathrow Land -0- 5,487,137 -0- -0- 5,487,137 -0- 5,487,137
Village Mall -0- 404,187 -0- -0- 404,187 -0- 404,187
-----------------------------------------------------------------------------------------------------------------------------
$ 230,329,968 $ 253,395,256 $ 977,715,763 $ 258,002,996 $197,839,569 $1,291,274,447 $1,489,114,015
===================================================================================================
S-3
(INFORMATION CONTINUED FROM PREVIOUS TABLE)
SCHEDULE III, CONTINUED
COLONIAL REALTY LIMITED PARTNERSHIP
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1997
Date
Acquired/
Accumulated Date Placed in Depreciable
Description Depreciation Completed Service Lives-Year
- -----------------------------------------------------------------------------------------
Multifamily:
CG at Barrington $ 431,389 1996 1996 7-40 Years
CG at Bayshore 443,040 1997 1985/97 7-40 Years
CG at Carrollwood 1,594,539 1966 1994 7-40 Years
CG at Edgewater 1,807,397 1990 1994 7-40 Years
CG at Gainesville 3,284,411 1989/93/94 1994 7-40 Years
CG at Galleria 3,102,045 1986 1994 7-40 Years
CG at Galleria II 395,443 1996 1996 7-40 Years
CG at Galleria Woods 757,786 1994 1996 7-40 Years
CG at Heathrow 905,027 1997 1994/97 7-40 Years
CG at Inverness Lakes 603,138 1996 1996 7-40 Years
CG at Kirkman 2,504,039 1991 1994 7-40 Years
CG at Mountain Brook 954,956 1987/91 1996 7-40 Years
CG at Natchez Trace 248,598 1995/97 1997 7-40 Years
CG at Palm Aire 1,741,412 1991 1994 7-40 Years
CG at Palma Sola 3,347,872 1992 1992 7-40 Years
CG at Ponte Vedra 1,027,570 1988 1994 7-40 Years
CG at Research Park 2,813,761 1987/94 1994 7-40 Years
CG at Riverchase 2,249,290 1984/91 1994 7-40 Years
CG at Spring Creek 790,076 1992/94 1996 7-40 Years
CG at Wesleyan 150,044 1997 1996/97 7-40 Years
Colony Park 504,066 1975 1993 7-40 Years
CV at Ashford Place 258,255 1983 1996 7-40 Years
CV at Cahaba Heights 342,207 1992 1996 7-40 Years
CV at Caledon Wood 166,624 1995/96 1997 7-40 Years
CV at Cordova 2,181,133 1983 1983 7-40 Years
CV at Hillcrest 191,353 1981 1996 7-40 Years
CV at Hillwood 634,492 1984 1993 7-40 Years
CV at Huntleigh Woods 447,971 1978 1994 7-40 Years
CV at Inverness 3,695,685 1986/87/90 1986/87/90 7-40 Years
CV at Inverness Lakes 815,481 1983/96 1993 7-40 Years
CV at Lake Mary 3,580,282 1991/95 1991/95 7-40 Years
CV at McGehee Place 3,677,362 1986/95 1986/95 7-40 Years
CV at Monte D'Oro 615,354 1977 1994 7-40 Years
CV at Oakleigh 176,590 1997 1997 7-40 Years
CV at River Hills II 2,404,003 1991 1991 7-40 Years
CV at Rocky Ridge 905,670 1984 1993 7-40 Years
CV at Stockbridge 1,348,362 1993/94 1994 7-40 Years
CV at Timothy Woods 211,292 1996 1997 7-40 Years
CV at Trussville 528,574 1996/97 1997 7-40 Years
CV at Vernon Marsh 1,504,331 1986/87 1986/93 7-40 Years
CV at White Bluff 556,169 1986 1993 7-40 Years
North Ingle Villas 496,783 1983 1983 7-40 Years
Patio I, II & III 553,002 1966/83/84 1994/93/93 7-40 Years
Ski Lodge - Tuscaloosa 601,280 1976/92 1994 7-40 Years
S-1
Retail:
Abingdon Town Centre 27,865 1987/96 1997 7-40 Years
Bardmoor Village 332,165 1981 1996 7-40 Years
Bear Lake Village 425,571 1990 1995 7-40 Years
Beechwood Shopping Center 371,483 1963/92 1997 7-40 Years
Bellwood 898,419 1988 1988 7-40 Years
Briarcliffe Mall 1,006,829 1986 1996 7-40 Years
Britt David 392,021 1990 1994 7-40 Years
Brookwood Village 380,641 1973/91 1997 7-40 Years
Burnt Store Square 721,350 1990 1994 7-40 Years
Country Lake Village 432,573 1990 1995 7-40 Years
Gadsden Mall 8,036,149 1974/91 1974 7-40 Years
Glynn Place Mall 93,750 1986 1997 7-40 Years
Heatherbrooke Center 27,698 1984 1997 7-40 Years
Holly Hill Mall 106,782 1969/86/94 1997 7-40 Years
Island Walk 459,924 1993/95 1996 7-40 Years
Lakeshore Mall 129,174 1984-87 1997 7-40 Years
Lakewood Plaza 47,840 1995 1997 7-40 Years
Macon Mall 15,677,827 1975/88/97 1975/88 7-40 Years
Mayberry Mall 15,742 1968/86 1997 7-40 Years
McGehee Place 1,134,760 1986 1986 7-40 Years
Montgomery Promenade 2,088,214 1990 1993 7-40 Years
Montgomery Promenade North -0- 1997 1995 7-40 Years
Northdale Court 438,674 1988 1995 7-40 Years
Old Springville 2,558,418 1982 1982 7-40 Years
Olde Town 620,383 1978/90 1978/90 7-40 Years
Paddock Park 202,862 1988 1995 7-40 Years
Quaker Village 32,924 1968/88/97 1997 7-40 Years
River Oaks 1,463,231 1979/89 1993 7-40 Years
Rivermont Shopping Center 9,682 1986/97 1997 7-40 Years
Stanly Plaza 6,908 1987/96 1997 7-40 Years
Staunton Mall 62,834 1969/86/97 1997 7-40 Years
University Park Plaza 5,709,782 1986/89 1993 7-40 Years
Valdosta Mall 125,950 1982-85 1997 7-40 Years
Village at Roswell Summit -0- 1988 1997 7-40 Years
Village Mall 7,742,483 1973/84/89 1973/84/89 7-40 Years
Wekiva Riverwalk 520,755 1990 1996 7-40 Years
Winter Haven Village 319,706 1986 1995 7-40 Years
Yadkin Plaza 5,101 1971/97 1997 7-40 Years
S-2
Office:
250 Commerce Street 2,286,805 1904/81 1980 7-40 Years
AmSouth Center 5,384,009 1990 1990 7-40 Years
Colonial Plaza 25,980 1982 1997 7-40 Years
International Park 95,529 1987/89 1997 7-40 Years
Interstate Park 4,228,248 1982-85/89 1982-85/89 7-40 Years
Lakeside Office Park 122,464 1989/90 1997 7-40 Years
Mansell Office Park 457,529 1987/96/97 1997 7-40 Years
P&S Building 393,176 1946/76/91 1974 7-40 Years
Progress Center 185,392 1983-91 1997 7-40 Years
Riverchase Center 510,103 1984-88 1997 7-40 Years
University Park 1,600,448 1985 1985 7-40 Years
Active Development Projects:
CG at Bayshore II 54,217 N/A 1985 N/A
CG at Cypress Crossing -0- N/A 1997 N/A
CG at Edgewater II -0- N/A 1997 N/A
CG at Hunter's Creek 320,071 N/A 1996 N/A
CG at Inverness Lakes II -0- N/A 1994 N/A
CG at Lakewood Ranch -0- N/A 1997 N/A
CG at Research Park II -0- N/A 1985 N/A
CG at Wesleyan II -0- N/A 1996 N/A
CV at Citrus Park -0- N/A 1997 N/A
CV at Inverness IV 35,227 N/A 1985 N/A
CV at McGehee Place -0- N/A 1987 N/A
CV at River Hills III 362,235 N/A 1985 N/A
Other Miscellaneous Projects -0- N/A 1993 N/A
Unimproved Land:
Macon Mall Outparcels -0- N/A 1987 N/A
McGehee Place Land -0- N/A 1981 N/A
North Heathrow Land -0- N/A 1997 N/A
Village Mall -0- N/A 1981 N/A
-----------------------------------------------------------------------------
$ 124,236,057
===================================================
S-3
NOTES TO SCHEDULE III
COLONIAL REALTY LIMITED PARTNERSHIP
December 31, 1997
(1) The aggregate cost for Federal Income Tax purposes was approximately
$1,151,629,000 at December 31, 1997.
(2) See description of mortgage notes payable in Note 7 of Notes to
Consolidated Financial Statements.
(3) The following is a reconciliation of real estate to balances reported at
the beginning of the year:
Reconciliation of Real Estate
1997 1996 1995
--------------- --------------- -------------
Real estate investments:
Balance at beginning of year $ 1,017,009,315 $ 736,937,703 $ 640,680,718
Acquisitions of new property 451,256,964 173,276,789 67,326,328
Improvements and development 97,564,705 107,834,251 29,121,438
Dispositions of property (76,716,969) (1,039,428) (190,781)
--------------- --------------- -------------
Balance at end of year $ 1,489,114,015 $ 1,017,009,315 $ 736,937,703
=============== =============== =============
Reconciliation of Accumulated Depreciation
1997 1996 1995
--------------- --------------- -------------
Accumulated depreciation:
Balance at beginning of year $101,541,658 $79,780,292 $61,773,344
Depreciation 31,945,960 22,015,054 18,044,446
Depreciation of disposition of property (9,251,561) (253,688) (37,498)
--------------- --------------- -------------
Balance at end of year $124,236,057 $101,541,658 $79,780,292
=============== =============== =============
S-4
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Colonial Properties Holding Company, Inc.:
Our report on the consolidated financial statements of Colonial Realty Limited
Partnership is included in Item 8 of this Form 10-K. In connection with our
audits of such financial statements, we have also audited the related financial
statement schedules listed in the index in Item 14 of this Form 10-K.
In our opinion, the financial statements referred to above, when considered in
relation to the basic financial statements taken as a whole, present fairly, in
all material respects, the information required to be included therein.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
January 19, 1998