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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSMISSION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER 1-12080
COMMISSION FILE NUMBER 0-28226
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POST PROPERTIES, INC.
POST APARTMENT HOMES, L.P.
(Exact name of registrants as specified in their charters)
GEORGIA 58-1550675
GEORGIA 58-2053632
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
4401 NORTHSIDE PARKWAY, SUITE 800, ATLANTA, GEORGIA 30327
(Address of principal executive offices -- zip code)
(404) 846-5000
(Registrant's telephone number, including area code)
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Securities registered pursuant to section 12(b) of the Act:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ----------------
Common Stock, $.01 par value New York Stock Exchange
8 1/2% Series A Cumulative New York Stock Exchange
Redeemable Preferred Shares,
$.01 par value
7 5/8% Series B Cumulative New York Stock Exchange
Redeemable Preferred Shares,
$.01 par value
7 5/8% Series C Cumulative New York Stock Exchange
Redeemable Preferred Shares,
$.01 par value
Securities registered pursuant to Section 12(g) of the Act: None
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
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Units of Limited Partnership None
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Indicate by check mark whether the Registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days.
Post Properties, Inc.: YES [x] NO [ ]
Post Apartment Homes, L.P.: YES [x] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the shares of common stock held by
non-affiliates (based upon the closing sale price on the New York Stock
Exchange) on March 10, 2000 was approximately $1,454,345,000. As of March 10,
2000, there were 39,042,806 shares of common stock, $.01 par value,
outstanding.
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement in connection with its Annual
Meeting of Shareholders to be held May 17, 2000 are incorporated by reference
in Part III.
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POST PROPERTIES, INC.
POST APARTMENT HOMES, L.P.
TABLE OF CONTENTS
ITEM FINANCIAL INFORMATION PAGE
NO. NO.
--- ---
PART I
1. Business.............................................................................. 1
2. Properties............................................................................ 8
3. Legal Proceedings..................................................................... 10
4. Submission of Matters to a Vote of Security Holders................................... 10
X. Executive Officers of the Registrant.................................................. 10
PART II
5. Market Price of the Registrant's Common Stock and Related Stockholder Matters......... 14
6. Selected Financial Data............................................................... 15
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................................... 19
7A. Quantitative and Qualitative Disclosures about Market Risk............................ 30
8. Financial Statements and Supplementary Data........................................... 32
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure........................................................... 32
PART III
10. Directors and Executive Officers of the Registrant.................................... 33
11. Executive Compensation................................................................ 33
12. Security Ownership of Certain Beneficial Owners and Management........................ 33
13. Certain Relationships and Related Transactions........................................ 33
PART IV
14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K..................... 34
3
PART I
ITEM 1. BUSINESS
THE COMPANY
Post Properties, Inc. (the "Company") is one of the largest developers and
operators of upscale multifamily apartment communities in the Southeastern and
Southwestern United States. The Company currently owns 86 stabilized
communities (the "Communities") containing 29,720 apartment units located
primarily in metropolitan Atlanta, Georgia; Dallas, Texas and Tampa, Florida.
In addition, the Company currently has under construction or in initial
lease-up 16 new communities and additions to three existing communities in the
Atlanta, Georgia; Dallas, Houston and Austin, Texas; Tampa and Orlando,
Florida; Denver, Colorado; Charlotte, North Carolina; Phoenix, Arizona and
Washington D. C. metropolitan areas that will contain an aggregate of 6,018
apartment units upon completion. For the year ended December 31, 1999, the
average economic occupancy rate (defined as gross potential rent less vacancy
losses, model expenses and bad debt divided by gross potential rent) of the 76
Communities stabilized for the entire year was 96.4%. The average monthly
rental rate per apartment unit at these Communities for December 1999 was $885.
The Company also manages through affiliates 13,553 additional apartment units
owned by third parties. The Company is a fully integrated organization with
multifamily development, acquisition, operation and asset management expertise.
The Company has approximately 2,035 employees, none of whom is a party to a
collective bargaining agreement.
Since its founding in 1971, the Company has pursued three distinctive core
business strategies that have remained substantially unchanged:
Investment Building
Investment building means taking a long-term view of the assets the Company
creates. The Company develops communities with the intention of operating them
for periods that are relatively long by the standards of the apartment
industry. Key elements of the Company's investment building strategy include
instilling a disciplined team approach to development decisions, selecting
sites in urban infill locations in strong primary markets, consistently
constructing new apartment communities with a uniformly high quality, and
conducting ongoing property improvements.
Promotion of the Post(R) Brand Name
The Post(R) brand name strategy has been integral to the success of the Company
and, to the knowledge of the Company, has not been successfully duplicated
within the multifamily real estate industry in any major U.S. market. For such
a strategy to work, a company must develop and implement systems to achieve
uniformly high quality and value throughout its operations. As a result of the
Company's efforts in developing and maintaining its communities, the Company
believes that the Post(R) brand name is synonymous with quality upscale
apartment communities that are situated in desirable locations and provide
superior resident service. Key elements in implementing the Company's brand
name strategy include extensively utilizing the trademarked brand name,
adhering to quality in all aspects of the Company's operations, developing and
implementing leading edge training programs, and coordinating the Company's
advertising programs to increase brand name recognition.
Service Orientation
The Company's mission statement is: "To provide the superior apartment living
experience for our residents." By striving to provide a superior product and
superior service, the Company believes that it will be able to achieve its
long-term goals. The Company believes that it provides its residents with
superior product and superior service through its uniformly high quality
construction, selective urban infill locations, award winning landscaping and
numerous amenities, including on site business centers, on site courtesy
officers, urban vegetable gardens and state of the art fitness centers.
The Company believes that with the implementation of these strategies,
multifamily properties in its primary markets have the potential over the long
term to provide investment returns that exceed national averages. According to
recent market surveys, employment growth, population growth and household
formation growth in the Company's primary markets have exceeded, and are
forecasted to continue to exceed, national averages.
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The Company is a self-administered and self-managed equity real estate
investment trust (a "REIT"). In 1993, the Company completed an initial public
offering of its Common Stock (the "Initial Offering") and a business
combination involving entities under varying common ownership. Proceeds from
the Initial Offering were used by the Company, in part, to acquire a
controlling interest in Post Apartment Homes, L.P. (the "Operating
Partnership"), the Company's principal operating subsidiary, which was formed
to succeed to substantially all of the ownership interest in a portfolio of 40
Post(R) multifamily apartment communities, all of which were developed by the
Company and owned by affiliates of the Company, and to the development,
leasing, landscaping and management business of the Company and certain other
affiliates.
The Company, through wholly owned subsidiaries, is the sole general partner of,
and controls a majority of the limited partnership interests in, the Operating
Partnership. The Company conducts all of its business through the Operating
Partnership and its subsidiaries.
The Company's and the Operating Partnership's executive offices are located at
4401 Northside Parkway, Suite 800, Atlanta, Georgia 30327 and their telephone
number is (404) 846-5000. Post Properties, Inc., a Georgia corporation, was
incorporated on January 25, 1984, and is the successor by merger to the
original Post Properties, Inc., a Georgia corporation, which was formed in
1971. The Operating Partnership is a Georgia limited partnership that was
formed in July 1993 for the purpose of consolidating the operating and
development businesses of the Company and the Post(R) apartment portfolio
described herein.
THE OPERATING PARTNERSHIP
The Operating Partnership, through the operating divisions and subsidiaries
described below, is the entity through which all of the Company's operations
are conducted. At December 31, 1999, the Company, through wholly owned
subsidiaries, controlled the Operating Partnership as the sole general partner
and as the holder of 88.2% of the common units in the Operating Partnership
("Units") and 64.1% of the preferred Units (the "Perpetual Preferred Units").
The other limited partners of the Operating Partnership, who hold units, are
those persons (including certain officers and directors of the Company) who, at
the time of the Initial Offering, elected to hold all or a portion of their
interest in the form of Units rather than receiving shares of Common Stock.
Each Unit may be redeemed by the holder thereof for either one share of Common
Stock or cash equal to the fair market value thereof at the time of such
redemption, at the option of the Operating Partnership. The Operating
Partnership presently anticipates that it will cause shares of Common Stock to
be issued in connection with each such redemption rather than paying cash (as
has been done in all redemptions to date). With each redemption of outstanding
Units for Common Stock, the Company's percentage ownership interest in the
Operating Partnership will increase. In addition, whenever the Company issues
shares of stock, the Company will contribute any net proceeds therefrom to the
Operating Partnership and the Operating Partnership will issue an equivalent
number of Units or Perpetual Preferred Units, as appropriate, to the Company.
As the sole shareholder of the Operating Partnership's sole general partner,
the Company has the exclusive power under the agreement of limited partnership
of the Operating Partnership to manage and conduct the business of the
Operating Partnership, subject to the consent of the holders of the Units in
connection with the sale of all or substantially all of the assets of the
Operating Partnership or in connection with a dissolution of the Operating
Partnership. The board of directors of the Company manages the affairs of the
Operating Partnership by directing the affairs of the Company. The Operating
Partnership cannot be terminated, except in connection with a sale of all or
substantially all of the assets of the Company, for a period of 50 years
without a vote of limited partners of the Operating Partnership. The Company's
indirect limited and general partner interests in the Operating Partnership
entitle it to share in cash distributions from, and in the profits and losses
of, the Operating Partnership in proportion to the Company's percentage
interest therein and indirectly entitle the Company to vote on all matters
requiring a vote of the limited partners.
As part of the formation of the Operating Partnership, a new holding company,
Post Services, Inc. ("Post Services") was organized as a separate corporate
subsidiary of the Operating Partnership. Post Services, in turn, owns all the
outstanding stock of two operating subsidiaries, RAM Partners, Inc. ("RAM") and
Post Landscape Services, Inc. ("Post Landscape"). Certain officers and
directors of the Company received 99%, collectively, of the voting common stock
of Post Services, and the Operating Partnership received 1% of the voting
common stock and 100%
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of the nonvoting common stock of Post Services. The voting and nonvoting common
stock of Post Services held by the Operating Partnership represents 99% of the
equity interests therein. The voting common stock held by officers and
directors in Post Services is subject to an agreement that is designed to
ensure that the stock will be held by one or more officers of Post Services.
The by-laws of Post Services provide that a majority of the board of directors
of Post Services must be persons who are not employees, members of management
or affiliates of the Company or its subsidiaries. This by-law provision cannot
be amended without the vote of 100% of the outstanding voting common stock of
Post Services. Post Services currently has the same board of directors as the
Company.
OPERATING DIVISIONS
The major operating divisions of the Operating Partnership include:
Post Apartment Management
Post Apartment Management is responsible for the day-to-day operations of all
the Post(R) communities including community leasing, property management and
personnel recruiting, training and development, maintenance and security. Post
Apartment Management also conducts short-term corporate apartment leasing
activities and is the largest division in the Company.
Post Apartment Development
Post Apartment Development conducts the development and construction activities
of the Company. These activities include site selection, zoning and regulatory
approvals, project design, and the full range of construction management
services.
Post Corporate Services
Post Corporate Services provides executive direction and control to the
Company's other divisions and subsidiaries and has responsibility for the
creation and implementation of all Company financing and capital strategies.
All accounting, management reporting, information systems, human resources,
legal and insurance services required by the Company and all of its affiliates
are centralized in Post Corporate Services.
OPERATING SUBSIDIARIES
The operating subsidiaries of the Operating Partnership, each of which is
wholly owned by Post Services, include:
RAM
RAM provides third party asset management and leasing services for multifamily
properties that do not operate under the Post(R) name. RAM's clients include
pension funds, independent private investors, financial institutions and
insurance companies. RAM's asset management contracts generally are subject to
annual renewal or are terminable upon specified notice. As of December 31,
1999, RAM managed 67 properties (located in Georgia, Florida, Tennessee,
Kansas, Missouri, North Carolina, Texas and Virginia) with 13,553 units under
management.
Post Landscape Group
As a result of the reputation the Company developed in connection with the
landscaping of Post(R) communities, in 1990, the Company began providing third
party design landscape services for clients other than Post(R) communities.
Projects with third parties include the design, installation and maintenance of
the landscape for golf courses, office parks, commercial buildings and other
commercial enterprises, and private residences. Post Landscape Group provides
such third party landscape services.
See Note 14 to the Company's Consolidated Financial Statements for information
regarding the industry segments into which the Company organizes its
operations.
3
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HISTORY OF POST PROPERTIES, INC.
During the five-year period from January 1, 1995 through December 31, 1999, the
Company and affiliates have developed and completed 9,051 apartment units in 28
apartment communities, acquired 7,186 units in 28 apartment communities (26
communities containing 6,296 apartment units were as a result of the merger
with Columbus Realty Trust (the "Merger") and sold six apartment communities
containing an aggregate of 1,362 apartment units. Historically, the Company has
primarily developed its apartment communities to the Company's specifications
as opposed to buying or refurbishing existing properties built by others. The
Company and its affiliates have sold apartment communities after holding them
for investment periods that typically have been seven to twelve years after
development. The following table shows the results of the Company's
developments during this period:
1999 1998 1997 1996 1995
--------- ---------- ---------- --------- ---------
Units completed ........................ 1,955 2,025 2,128 2,258 685
Units acquired(1) ...................... -- -- 6,296 890 --
Units sold ............................. (198) -- (416) (180) (568)
Total units owned by Company
affiliates ............................ 29,720 27,963 25,938 17,930 14,962
Total apartment rental income (in
thousands) ............................ $ 318,697 $ 275,755 $ 185,732 $ 158,618 $ 133,817
(1) As part of the Merger, the Company acquired 26 communities containing 6,296
units. Of the communities acquired in the Merger, 14 communities containing
3,916 units were built by Columbus and 12 communities containing 2,380
units were acquired by Columbus.
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CURRENT DEVELOPMENT ACTIVITY
The Company currently has under construction or in initial lease-up 16 new
communities and additions to three existing communities that will contain an
aggregate of 6,018 units upon completion. The Company's communities under
development or in initial lease-up are summarized in the following table:
ACTUAL OR ACTUAL OR
ESTIMATED ESTIMATED
QUARTER OF QUARTER QUARTER OF
# OF CONSTRUCTION FIRST UNITS STABILIZED
METROPOLITAN AREA UNITS COMMENCEMENT AVAILABLE OCCUPANCY
- ----------------- ----- -------------- --------------- --------------
ATLANTA, GA
Post Parkside(TM) .................. 188 1Q'99 4Q'99 2Q'00
Post Spring(TM) .................... 452 3Q'99 2Q'00 3Q'01
Post Stratford(TM) ................. 250 2Q'99 1Q'00 1Q'01
-----
890
-----
CHARLOTTE, NC
Post Uptown Place(TM) .............. 227 3Q'98 1Q'00 3Q'00
Post Gateway Place(TM) ............. 232 3Q'99 3Q'00 2Q'01
-----
459
-----
DALLAS, TX
Post Block 588(TM) ................. 127 4Q'98 1Q'00 2Q'00
Post Addison Circle(TM) II ......... 610 1Q'98 1Q'99 2Q'00
Post Addison Circle(TM) III ........ 264 3Q'99 3Q'00 2Q'01
Legacy Town Center City
Apartment Homes by Post ......... 384 3Q'99 3Q'00 4Q'01
Uptown Village by Post(TM) II ...... 196 3Q'99 2Q'00 4Q'00
-----
1,581
-----
HOUSTON, TX
Post Midtown Square(TM) I .......... 479 1Q'98 2Q'99 3Q'00
Post Midtown Square(TM)Phase II .... 188 1Q'00 1Q'01 4Q'01
-----
667
-----
TAMPA, FL
Post Harbour Place(TM)Phase II ..... 319 4Q'98 1Q'00 1Q'01
-----
DENVER, CO
Post Uptown Square(TM) I ........... 449 1Q'98 3Q'99 4Q'00
Post Uptown Square(TM)Phase II ..... 247 1Q'00 1Q'01 4Q'01
-----
696
-----
PHOENIX, AZ
Post Roosevelt Square(TM) .......... 410 4Q'98 1Q'00 1Q'01
-----
ORLANDO, FL
Post Parkside(TM) .................. 244 1Q'99 2Q'99 3Q'00
-----
WASHINGTON, DC
Post Pentagon Row .................. 504 2Q'99 4Q'00 1Q'02
-----
AUSTIN, TX
Post West Avenue Lofts(TM) ......... 248 3Q'99 4Q'00 3Q'01
-----
TOTAL 6,018
=====
The Company is also currently conducting feasibility and other pre-development
studies for possible new Post(R) communities in selected market areas.
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COMPETITION
All of the Communities are located in developed areas that include other
upscale apartments. The number of competitive upscale apartment properties in a
particular area could have a material effect on the Company's ability to lease
apartment units at the Communities or at any newly developed or acquired
communities and on the rents charged. The Company may be competing with others
that have greater resources than the Company. In addition, other forms of
residential properties, including single family housing, provide housing
alternatives to potential residents of upscale apartment communities.
AMERICANS WITH DISABILITIES ACT
The Communities and any newly acquired apartment communities must comply with
Title III of the Americans with Disabilities Act (the "ADA") to the extent that
such properties are "public accommodations" and/or "commercial facilities" as
defined by the ADA. Compliance with the ADA requirements could require removal
of structural barriers to handicapped access in certain public areas of the
Company's Communities where such removal is readily achievable. The ADA does
not, however, consider residential properties, such as apartment communities,
to be public accommodations or commercial facilities, except to the extent
portions of such facilities, such as the leasing office, are open to the
public. The Company believes that its properties comply with all present
requirements under the ADA and applicable state laws. Noncompliance could
result in imposition of fines or an award of damages to private litigants. If
required to make material additional changes, the Company's results of
operations could be adversely affected.
ENVIRONMENTAL REGULATIONS
The Company is subject to Federal, state and local environmental regulations
that apply to the development of real property, including construction
activities, the ownership of real property, and the operation of multifamily
apartment communities.
In developing properties and constructing apartments, the Company utilizes
environmental consultants to determine whether there are any flood plains,
wetlands or environmentally sensitive areas that are part of the property to be
developed. If flood plains are identified, development and construction is
planned so that flood plain areas are preserved or alternative flood plain
capacity is created in conformance with Federal and local flood plain
management requirements.
Storm water discharge from a construction facility is evaluated in connection
with the requirements for storm water permits under the Clean Water Act. This
is an evolving program in most states. The Company currently anticipates it
will be able to obtain storm water permits for existing or new development.
The Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. sec. 9601 et seq. ("CERCLA"), and applicable state superfund laws
subject the owner of real property to claims or liability for the costs of
removal or remediation of hazardous substances that are disposed of on real
property in amounts that require removal or remediation. Liability under CERCLA
and applicable state superfund laws can be imposed on the owner of real
property or the operator of a facility without regard to fault or even
knowledge of the disposal of hazardous substances on the property or at the
facility. The presence of hazardous substances in amounts requiring response
action or the failure to undertake remediation where it is necessary may
adversely affect the owner's ability to sell real estate or borrow money using
such real estate as collateral. In addition to claims for cleanup costs, the
presence of hazardous substances on a property could result in a claim by a
private party for personal injury or a claim by an adjacent property owner for
property damage.
The Company has instituted a policy that requires an environmental
investigation of each property that it considers for purchase or that it owns
and plans to develop. The environmental investigation is conducted by a
qualified environmental consultant. If there is any indication of
contamination, sampling of the property is performed by the environmental
consultant. The environmental investigation report is reviewed by the Company
and counsel prior to purchase of any property. If necessary, remediation of
contamination, including underground storage tanks, is undertaken prior to
development.
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The Company has not been notified by any governmental authority of any
noncompliance, claim, or liability in connection with any of the Communities.
The Company has not been notified of a claim for personal injury or property
damage by a private party in connection with any of the Communities in
connection with environmental conditions. The Company is not aware of any other
environmental condition with respect to any of the Communities that could be
considered to be material.
ITEM 2. PROPERTIES
At February 10, 2000, the Communities consisted of 86 stabilized Post(R)
multifamily apartment communities located in the following metropolitan areas:
METROPOLITAN AREA COMMUNITIES # OF UNITS % OF TOTAL
----------------- ----------- ---------- ----------
Atlanta, GA............................ 41 16,298 54.8%
Dallas, TX............................. 23 6,062 20.4%
Houston, TX............................ 1 309 1.0%
Tampa, FL.............................. 9 3,185 10.7%
Jackson, MS............................ 3 983 3.3%
Orlando, FL............................ 2 1,248 4.2%
Fairfax, VA............................ 2 700 2.4%
Nashville, TN.......................... 4 533 1.8%
Charlotte, NC.......................... 1 402 1.4%
--------- --------- ---------
86 29,720 100.0%
========= ========= =========
The Company or its predecessors developed all but 14 of the Post(R) Communities
and currently manages all of the Communities. Fifty-one of the Communities have
in excess of 300 apartment units, with the largest Community having a total of
916 apartment units. Seventy-seven of the eighty-six Communities, comprising
approximately 91% of the Communities' apartment units, were completed after
January 1, 1986. The average age of the Communities is approximately nine
years. The average economic occupancy rate was 96.4% and 96.5%, respectively,
and the average monthly rental rate per apartment unit was $851 and $826,
respectively, for communities stabilized for each of the entire years ended
December 31, 1999 and 1998. See "Selected Financial Information."
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COMMUNITY INFORMATION
DECEMBER 1999 1999
AVERAGE NUMBER AVERAGE AVERAGE
YEAR UNIT SIZE OF RENTAL RATES ECONOMIC
COMMUNITIES LOCATION(1) COMPLETED (SQUARE FEET) UNITS PER UNIT OCCUPANCY(2)
- ----------- ----------- --------- ------------- ------ ----------- ------------
GEORGIA
Post Ashford(R).................... Atlanta 1987 872 222 $ 824 96.4%
Post Briarcliff(TM)................ Atlanta 1999 1,062 688 1,094 N/A (4)
Post Bridge(R)..................... Atlanta 1986 847 354 725 97.3%
Post Brookhaven(R)................. Atlanta 1990-92(3) 991 735 988 96.6%
Post Canyon(R)..................... Atlanta 1986 899 494 741 98.0%
Post Chase(R)...................... Atlanta 1987 938 410 734 94.1%
Post Chastain(R)................... Atlanta 1990 965 558 1,050 95.4%
Post Collier Hills(R).............. Atlanta 1997 967 396 1,047 96.0%
Post Corners(R).................... Atlanta 1986 860 460 733 94.9%
Post Court(R)...................... Atlanta 1988 838 446 701 95.7%
Post Creek(TM)..................... Atlanta 1983(5) 1,180 810 934 95.5%
Post Crest(R)...................... Atlanta 1996 1,073 410 1,050 98.3%
Post Crossing(R)................... Atlanta 1995 1,067 354 1,096 96.0%
Post Dunwoody(R)................... Atlanta 1989-96(3) 941 530 993 95.9%
Post Gardens(R).................... Atlanta 1998 1,066 397 1,248 96.2%
Post Glen(R)....................... Atlanta 1997 1,113 314 1,228 97.3%
Post Lane(R)....................... Atlanta 1988 840 166 761 97.2%
Post Lenox Park(TM)................ Atlanta 1995 1,030 206 1,137 96.9%
Post Lindbergh(R).................. Atlanta 1998 960 396 1,098 N/A (4)
Post Mill(R)....................... Atlanta 1985 952 398 765 97.6%
Post Oak(TM)....................... Atlanta 1993 1,003 182 1,073 98.0%
Post Oglethorpe(R)................. Atlanta 1994 1,205 250 1,317 96.3%
Post Park(R)....................... Atlanta 1988-90(3) 904 770 817 96.2%
Post Parkwood(R)................... Atlanta 1995 1,071 125 977 97.3%
Post Peachtree Hills(R)............ Atlanta 1992-94(3) 982 300 1,072 95.7%
Post Pointe(R)..................... Atlanta 1988 835 360 711 95.8%
Post Renaissance(R)(6)............. Atlanta 1992-94(3) 890 342 1,016 95.6%
Post Ridge(R)...................... Atlanta 1998 1,045 434 1,076 N/A (4)
Post River(R)...................... Atlanta 1991-98(3) 1,015 213 1,256 95.7%
Post Summit(R)..................... Atlanta 1990 957 148 914 97.4%
Post Terrace(R).................... Atlanta 1996 1,144 296 1,137 95.8%
Post Valley(R)..................... Atlanta 1988 854 496 716 97.6%
Post Village(R).................... Atlanta 764 97.0%
The Arbors........................ 1983 1,063 301
The Fountains..................... 1987 850 352
The Gardens....................... 1986 891 494
The Hills......................... 1984 953 241
The Meadows....................... 1988 817 350
Post Vinings(R).................... Atlanta 1989-91(3) 964 403 849 97.5%
Post Walk(R)....................... Atlanta 1984-87(3) 932 476 852 97.3%
Post Woods(R)...................... Atlanta 1977-83(3) 1,057 494 925 96.2%
Riverside by Post(TM).............. Atlanta 1998 989 527 1,569 N/A (4)
------ ------ ------ ------
Subtotal/Average--Georgia......... 973 16,298 947 96.4%
------ ------ ------ ------
TEXAS
Addison Circle Apartment Homes
by Post(TM) - Phase I............. Dallas 1998 896 460 917 95.9%
The American Beauty Mill by Post(TM) Dallas 1998 980 80 980 93.0%
Cole's Corner(TM)................... Dallas 1998 796 186 982 94.8%
Columbus Square by Post(TM)......... Dallas 1996 861 218 1,139 96.2%
Post Parkwood(R).................... Dallas 1962-70(3) 1,042 96 975 97.1%
Post Ascension(TM).................. Dallas 1985-95(3) 929 166 813 95.7%
Post Hackberry Creek(TM)............ Dallas 1988-96(3) 865 432 798 95.3%
Post Lakeside(TM)................... Dallas 1986 791 327 819 97.7%
Post Townlake(TM)/Parks............. Dallas 1986-87(3) 869 398 750 96.9%
Post White Rock(TM)................. Dallas 1988 659 207 736 96.8%
Post Winsted(TM).................... Dallas 1996 728 314 778 96.0%
The Shores by Post(TM).............. Dallas 1988-97(3) 874 907 924 96.0%
The Abbey of State-Thomas by Post(TM) Dallas 1996 1,276 34 1,924 96.4%
The Commons at Turtle Creek by Post(TM) Dallas 1985 645 158 781 97.4%
The Heights of State-Thomas by Post(TM) Dallas 1998 813 198 1,013 96.6%
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AVERAGE DECEMBER 1999 1999
UNIT SIZE NUMBER AVERAGE AVERAGE
YEAR (SQUARE OF RENTAL RATES ECONOMIC
COMMUNITIES LOCATION(1) COMPLETED FEET) UNITS PER UNIT OCCUPANCY(2)
- ----------- ----------- --------- --------- ------ ------------- ------------
TEXAS CONTINUED
Heights II.......................... Dallas 1999 894 170 1,074 N/A (4)
The Meridian of State-Thomas by
Post(TM)......................... Dallas 1991 798 132 1,089 96.1%
The Residences on McKinney by
Post(TM)......................... Dallas 1986 749 196 1,031 94.3%
The Rice by Post(TM)................ Houston 1998 977 309 1,369 N/A (4)
The Vineyard by Post(TM)............ Dallas 1996 728 116 949 97.4%
The Vintage by Post(TM)............. Dallas 1993 781 161 937 96.3%
The Worthington of State-Thomas
by Post(TM)...................... Dallas 1993 818 332 1,143 96.2%
Uptown Village by Post(TM).......... Dallas 1995 767 300 924 97.0%
Post Windhaven(TM)(7)............... Dallas 1991 825 474 611 100.0%
----- ------ ------- ------
Subtotal/Average -- Texas.......... 848 6,371 919 96.3%
----- ------ ------- ------
FLORIDA
Post Bay(R)......................... Tampa 1988 782 312 723 93.9%
Post Court(R)....................... Tampa 1991 1,018 228 827 95.1%
Post Fountains at Lee Vista(R)...... Orlando 1988 835 508 695 96.7%
Post Harbour Place.................. Tampa 1999 1,037 206 1,279 N/A (4)
Post Hyde Park(R)................... Tampa 1996 1,009 389 1,060 N/A (4)
Post Lake(R)........................ Orlando 1988 850 740 677 96.1%
Post Rocky Point(R)................. Tampa 1996-98 (3) 1,018 916 1,025 N/A (4)
Post Village(R)..................... Tampa 768 94.8%
The Arbors......................... 1991 967 304
The Lakes.......................... 1989 895 360
The Oaks........................... 1991 968 336
Post Walk(R) at
Old Hyde Park Village.............. Tampa 1997 984 134 1,259 95.9%
----- ------ ------- ------
Subtotal/Average -- Florida........ 942 4,433 862 95.4%
----- ------ ------- ------
MISSISSIPPI
Post Mark(TM)....................... Jackson 1984 988 256 625 95.9%
Post Pointe(R)...................... Jackson 1997 812 241 621 93.2%
Post Trace(R)....................... Jackson 1989-95 (3) 734 486 577 94.2%
----- ------ ------- ------
Subtotal/Average -- Mississippi 845 983 600 94.4%
----- ------ ------- ------
VIRGINIA
Post Corners(R) at Trinity Centre... Fairfax 1996 1,030 336 1,022 99.4%
Post Forest(R)...................... Fairfax 1990 889 364 989 99.8%
----- ------ ------- ------
Subtotal/Average -- Virginia....... 960 700 1,005 99.6%
----- ------ ------- ------
NORTH CAROLINA
Post Park at Phillips Place(R)...... Charlotte 1998 912 402 1,238 96.7%
----- ------ ------- ------
TENNESSEE
Post Hillsboro Village(R)........... Nashville 1998 910 201 1,054 96.7%
Post Green Hills(R)................. Nashville 1996 1,056 166 1,121 97.8%
Post Bennie Dillon(TM).............. Nashville 1999 719 86 1,061 N/A (4)
The Lee Apartments ................. Nashville 1924 (8) 808 80 678 98.7%
----- ------ ------- ------
Subtotal/Average -- Tennessee...... 873 533 1,020 97.4%
----- ------ ------- ------
TOTAL............................ 908 29,720 $ 923 96.4%
===== ====== ======= ======
(1) Refers to greater metropolitan areas of cities indicated.
(2) Average economic occupancy is defined as gross potential rent less
vacancy losses, model expenses and bad debt divided by gross potential
rent for the period, expressed as a percentage.
(3) These dates represent the respective completion dates for multiple
phases of a community.
(4) During 1999, this community or a phase in this community was in
lease-up and, therefore, is not included.
(5) This community was completed by the Company in 1983, sold during 1986,
managed by the Company through 1993 and reacquired by the Company in
1996.
(6) The Company has a leasehold interest in the land underlying Post
Renaissance pursuant to a ground lease that expires on January 1,
2040.
(7) Post Windhaven(TM) is subject to a master lease with Electronic Data
Systems.
(8) The Company acquired this community in 1996.
9
12
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM X. EXECUTIVE OFFICERS OF THE REGISTRANT
The persons who are executive officers of the Company and its affiliates and
their positions are as follows:
NAME POSITIONS AND OFFICES HELD
---- --------------------------
John A. Williams........................ Chairman of the Board, Chief Executive Officer and Director
John T. Glover.......................... Vice Chairman and Director
Jeffrey A. Harris....................... President and Chief Operating Officer
W. Daniel Faulk, Jr..................... President -- Post Apartment Development and Chief Development
Officer
Arthur E. Lomenick...................... Senior Executive Vice President -- Post Apartment Development
R. Byron Carlock, Jr.................... Executive Vice President and Chief Investment Officer -- Post
Corporate Services
Sherry W. Cohen......................... Executive Vice President and Secretary -- Post Corporate Services
James F. Duffy.......................... Executive Vice President -- Post Apartment Development
R. Gregory Fox.......................... Executive Vice President and Chief Accounting Officer -- Post
Corporate Services
Martha J. Logan......................... Executive Vice President -- Post Apartment Management
John B. Mears........................... Executive Vice President -- Post Apartment Development
Michelle G. Toups....................... Executive Vice President -- Post Apartment Management
Thomas L. Wilkes........................ Executive Vice President -- Post Apartment Management
Terry L. Chapman........................ Senior Vice President -- Post Apartment Management
Douglas S. Gray......................... Senior Vice President -- Post Corporate Services
John D. Hooks........................... Senior Vice President -- Post Apartment Management
Joseph R. Taylor........................ Senior Vice President -- Post Apartment Development
Sheila James Teabo...................... Senior Vice President -- Post Apartment Management
Janie S. Maddox......................... Vice President -- Post Corporate Services
William F. Leseman...................... Executive Vice President -- RAM Partners, Inc.
William C. Lincicome.................... Executive Vice President -- Post Landscape Group, Inc.
Janet M. Appling........................ Vice President -- Post Corporate Apartments
The following is a biographical summary of the experience of the executive
officers of the Company:
John A. Williams. Mr. Williams is the Chairman of the Board and Chief Executive
Officer of the Company and is a Director. Mr. Williams founded the business of
the Company in 1971 and since that time has acted as Chairman and Chief
Executive Officer. Mr. Williams is currently serving on the board of directors
of Crawford & Co. and the Atlanta Regional Commission and is Chairman of Metro
Atlanta Chamber of Commerce. Mr. Williams is 57 years old.
John T. Glover. Mr. Glover has been the Vice Chairman of the Company since
February 29, 2000 and a Director since 1984. From 1984 through February 29,
2000, Mr. Glover was President, Chief Operating Officer, and Treasurer of the
Company. Mr. Glover is a Director of SunTrust Bank, Haverty's Furniture
Companies, Inc. and Emory Healthcare, Inc. Mr. Glover is 53 years old.
Jeffrey A. Harris. Mr. Harris has been with the Company for fifteen years and,
as of March 1, 2000, is currently the President and Chief Operating Officer of
the Company. From December 1998 to December 1999, he was President
10
13
of Post Apartment Management. From October 1995 to December 1998, he was
President of Post Management Services. Prior thereto, Mr. Harris was President
of Post Apartment Management from March 1995, Executive Vice President of Post
Apartment Management from April 1993 and Senior Vice President from 1989. Mr.
Harris is a former President of and currently serves on the Board of Directors
of the Atlanta Apartment Association. Mr. Harris is 42 years old.
W. Daniel Faulk, Jr. Mr. Faulk has been with the Company for thirteen years and
is currently President of Post Apartment Development and Chief Development
Officer. From April 1993 to December 1999, he was President of Post Apartment
Development, which is responsible for the development and construction of all
Post(R) apartment communities. Prior thereto, Mr. Faulk was President of Post
Atlanta since February 1987. Mr. Faulk is currently on the board of directors
of Mountain National Bank. Mr. Faulk is 57 years old.
Arthur E. Lomenick. Mr. Lomenick joined the Company in October 1997 and, since
December 1998, has been Senior Executive Vice President of Post Apartment
Development. From October 1997 to December 1998, he was an Executive Vice
President of Post West. He is responsible for new development in the Western
United States. Mr. Lomenick was a Senior Vice President of Columbus Realty
Trust ("Columbus") from October 1994 through October 1997 and was Vice
President from October 1993 to October 1994. Previously, Mr. Lomenick served as
Vice President, Investments, for Memphis Real Estate since January 1993. Mr.
Lomenick is 44 years old.
R. Byron Carlock, Jr. Mr. Carlock joined the Company in June 1998 as Executive
Vice President and Chief Investment Officer. Mr. Carlock was Chairman of The
Carlock Companies, Inc. from March 1998 through June 1998 and was President and
Chief Operating Officer of W.B. Johnson Properties, LLC from March 1997 through
February 1998. From June 1987 through March 1997 Mr. Carlock served the
Trammell Crow organization in various capacities including Managing Director of
Crow Investment Trust, Director of Trammell Crow Capital Markets, Associate of
Trammell Crow Ventures and Development Associate of Trammell Crow Company. Mr.
Carlock is a council member of the Urban Land Institute and a board member of
CHARIS Community Housing. Mr. Carlock is 37 years old.
Sherry W. Cohen. Ms. Cohen has been with the Company for fifteen years. Since
October 1997, she has been an Executive Vice President of Post Corporate
Services responsible for supervising and coordinating legal affairs and
insurance. Since April 1990, Ms. Cohen had also been Corporate Secretary. She
was a Senior Vice President with Post Corporate Services from July 1993 to
October 1997. Prior thereto, Ms. Cohen was a Vice President of Post Properties,
Inc. since April 1990. Ms. Cohen is 45 years old.
James F. Duffy. Mr. Duffy joined the Company in October 1997 and, since
December 1998, has been Executive Vice President of Post Apartment Development.
He is responsible for the construction of all Post apartment communities
located in the Western United States. From October 1997 to December 1998 he was
an Executive Vice President of Post West. He was a Senior Vice President of
Columbus from May 1996 through October 1997. Prior to his affiliation with
Columbus, Mr. Duffy was President of the JFD Group, a business consulting firm
specializing in the commercial construction industry from 1993 to 1996. Prior
thereto, he was President of the W. B. Moore Company from 1991 to 1993. Mr.
Duffy is 55 years old.
R. Gregory Fox. Mr. Fox has been with the Company since February 1996 and,
since December 1998, has served as Executive Vice President of Post Corporate
Services and the Company's Chief Accounting Officer responsible for financial
reporting and planning, accounting, management information systems and human
resources. From February 1996 to December 1998, Mr. Fox was a Senior Vice
President. Prior to joining the Company, he was a senior manager in the audit
division of Price Waterhouse LLP where he was employed for ten years. Mr. Fox
is a Certified Public Accountant. Mr. Fox is 40 years old.
Martha J. Logan. Ms. Logan has been with the Company for eight years. Since
December 1998, she has been Executive Vice President of Post Apartment
Management. From October 1997 to December 1998, Ms. Logan was Executive Vice
President of Post Management Services. From October 1995 to October 1997, she
was President of Post Management Services. Prior thereto, Ms. Logan was
President of RAM since July 1994, Executive Vice President of RAM from January
1994 and Vice President of RAM since 1991. Ms. Logan is 45 years old.
11
14
John B. Mears. Mr. Mears has been with the Company since November 1993 and,
since December 1998, has been Executive Vice President of Post Apartment
Development. From October 1997 to December 1998, he was an Executive Vice
President of Post East Development. He is responsible for new development in
the Eastern United States. Prior thereto, he was a Senior Vice President of
Post Apartment Development since July 1994. Prior to joining the Company, Mr.
Mears was an associate in the Real Estate Investment Banking Group at Merrill
Lynch and Company since July 1992. Mr. Mears is 36 years old.
Michelle G. Toups. Ms. Toups joined the Company in November 1996 and is
currently an Executive Vice President for Post Apartment Management responsible
for the operations of Post(R) communities in the Eastern United States. From
November 1996 through December 1999, she was a Group Vice President for Post
Apartment Management. Prior thereto, she was a Senior Vice President at
Security Capital Atlantic for more than three years. Ms. Toups is 46 years old.
Thomas L. Wilkes. Mr. Wilkes joined the Company in October 1997 and, since
December 1998, has been an Executive Vice President and Director of Operations
for Post Apartment Management responsible for the operations of Post(R)
communities in the Western United States. From October 1997 to December 1998 he
was an Executive Vice President and Director of Operations of Post West. Mr.
Wilkes was a Senior Vice President of Columbus from October 1993 through
October 1997. Mr. Wilkes served as President of CRH Management Company, a
multifamily property management firm and a member of the Columbus Group, since
its formation in October 1990 to December 1993. Mr. Wilkes is a Certified
Property Manager. Mr. Wilkes is 40 years old.
Terry L. Chapman. Mr. Chapman has been with the Company for twenty-six years
and, since December 1998, has been a Senior Vice President of Post Apartment
Management. From October 1997 to December 1998, he was a Senior Vice President
of Post Management Services. Prior thereto, he was an Executive Vice President
of Post Management Services for more than five years. He is responsible for
maintenance, quality assurance, security, and preventive maintenance for all
Post(R) communities. Mr. Chapman is 53 years old.
Douglas S. Gray. Mr. Gray joined the Company in December 1997 and, since
January 1999, has been a Senior Vice President of Post Corporate Services
responsible for financial planning and asset management. He was a Vice
President of Post Corporate Services from December 1997 to December 1998. Prior
to joining Post, Mr. Gray was Vice President of Dutch Institutional Holding Co.
from July 1994 to November 1997. Prior thereto, he was Director of Property
Services for The Landmarks Group from June 1988 to June 1994. Mr. Gray is 40
years old.
John D. Hooks. Mr. Hooks has been with the Company for twenty-one years and
since December 1998 has been a Senior Vice President of Post Apartment
Management. From October 1997 to December 1998 Mr. Hooks was a Senior Vice
President of Post Management Services. He is responsible for landscape design,
installation and maintenance on all Post(R) communities. Prior thereto, he was
an Executive Vice President of Post Landscape since July 1993. He was the
Senior Vice President of Landscape from January 1987 to July 1993. Mr. Hooks is
45 years old.
Joseph R. Taylor. Mr. Taylor has been with the Company thirteen years and is
currently a Senior Vice President of Post Apartment Development. He is
responsible for the construction of all Post apartment communities located in
the Eastern United States. Prior thereto, he was a Vice President in 1998, a
Senior Project Manager in 1997, and a Project Manager for more than 5 years in
Post Apartment Development. Mr. Taylor is 36 years old.
Sheila James Teabo. Ms. Teabo has been with the Company thirteen years and is
currently a Senior Vice President of Post Apartment Management responsible for
the operations of certain Post(R) communities in the Eastern United States.
From 1995 through 1997, she was a Regional Vice President of Post Apartment
Management. Prior thereto, she was an Area Vice President for more than three
years of Post Apartment Management. Ms. Teabo is 36 years old.
Janie S. Maddox. Ms. Maddox has been with the Company for twenty-three years.
Since November 1995, she has been a Vice President of Post Corporate Services
responsible for public relations. Prior thereto, she was a Senior Vice
President of Post Management Services primarily responsible for human resources
since 1990. Ms. Maddox is 52 years old.
12
15
William F. Leseman. Mr. Leseman has been with the Company for ten years. Since
October 1997, he has been Executive Vice President of RAM responsible for its
operations. Prior thereto, he was a Senior Vice President of RAM from 1995
through September 1997. Prior thereto, Mr. Leseman was Senior Vice President of
Post Management Services from 1994 to 1995 and an Area Vice President of Post
Management Services from 1989 to 1994. Mr. Leseman is 40 years old.
William C. Lincicome. Mr. Lincicome has been with the Company for nine years.
Since September 1996, he has been Executive Vice President of Post Landscape
Group responsible for its operations. He was an independent architectural
consultant from April 1996 to September 1996 and was Vice President and
Director of Land Planning of Post Landscape Services from 1989 to 1996. Mr.
Lincicome is 47 years old.
Janet M. Appling. Ms. Appling has been with the Company 23 years and is
currently a Vice President of Post Corporate Apartments responsible for its
operations. Prior thereto, she was the Director of Post Corporate Apartments
since 1986. Ms. Appling is 45 years old.
13
16
PART II
ITEM 5. MARKET PRICE OF THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The Common Stock is traded on the New York Stock Exchange ("NYSE") under the
symbol "PPS." The following table sets forth the quarterly high and low closing
sales prices per share reported on the NYSE, as well as the quarterly dividends
declared per share:
DIVIDENDS
QUARTER ENDED HIGH LOW DECLARED
------------------------- ---------- ---------- -----------
1998
First Quarter............ $ 41.2500 $ 38.1250 $ 0.650
Second Quarter........... 41.2500 38.5000 0.650
Third Quarter............ 40.2500 36.3750 0.650
Fourth Quarter........... 40.7500 36.8750 0.650
1999
First Quarter............ $ 38.8125 $ 35.2500 $ 0.700
Second Quarter........... 42.0625 35.3750 0.700
Third Quarter............ 41.0000 38.8750 0.700
Fourth Quarter........... 39.7500 36.7500 0.700
On February 17, 2000, the Company had 1,914 common shareholders of record.
The Company pays regular quarterly dividends to holders of shares of Common
Stock. Future distributions by the Company will be at the discretion of the
board of directors and will depend on the actual funds from operations of the
Company, the Company's financial condition and capital requirements, the annual
distribution requirements under the REIT provisions of the Internal Revenue
Code of 1986, as amended (the "Code") and such other factors as the board of
directors deems relevant. For a discussion of the Company's credit agreements
and their restrictions on dividend payments, see Liquidity and Capital
Resources at Management's Discussion and Analysis of Financial Condition and
Results of Operations.
During 1999, the Company did not sell any unregistered securities.
There is no established public trading market for the Units. As of February 17,
2000, the Operating Partnership had 110 holders of record of Units of the
Operating Partnership.
For each quarter during 1998 and 1999, the Operating Partnership paid a cash
distribution to holders of Units equal in amount to the dividend paid on the
Company's common stock for such quarter.
During 1999, the Operating Partnership did not sell any unregistered
securities, other than the Series D Preferred Units, as disclosed in "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources" and the Form 10-Q for the
quarterly period ended September 30, 1999.
14
17
ITEM 6. SELECTED FINANCIAL DATA
POST PROPERTIES, INC.
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND APARTMENT UNIT DATA)
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
OPERATING DATA:
Revenue:
Rental .......................................... $ 318,697 $ 275,755 $ 185,732 $ 158,618 $ 133,817
Property management - third-party (1) ........... 3,368 3,164 2,421 2,828 2,764
Landscape services - third-party (1) ............ 9,118 7,252 5,148 4,882 4,647
Other ........................................... 14,744 12,734 6,815 5,247 3,477
--------- --------- --------- --------- ---------
Total revenue ............................... 345,927 298,905 200,116 171,575 144,705
--------- --------- --------- --------- ---------
Property operating and maintenance
expense (exclusive of depreciation
and amortization) ............................. 113,152 99,717 67,515 58,202 49,912
Depreciation .................................... 58,013 46,646 29,048 23,603 20,819
Property management expenses - third-party (1) . 2,925 2,499 1,959 2,055 2,166
Landscape services expenses - third-party (1) ... 7,904 6,264 4,284 3,917 3,950
Interest expense ................................ 33,192 31,297 24,658 22,131 22,698
Amortization of deferred loan costs ............. 1,496 1,185 980 1,352 1,967
General and administrative ...................... 7,788 8,495 7,364 7,716 6,071
Minority interest in consolidated property
partnerships .................................. 511 397 -- -- 451
--------- --------- --------- --------- ---------
Total expense .............................. 224,981 196,500 135,808 118,976 108,034
--------- --------- --------- --------- ---------
Income before minority interest of unitholders,
net gain (loss) on sale of assets, loss on unused
treasury locks, loss on relocation of corporate
office and extraordinary item ................... 120,946 102,405 64,308 52,599 36,671
Net gain (loss) on sale of assets ................. (1,522) -- 3,270 854 1,746
Loss on unused treasury locks ..................... -- (1,944) -- -- --
Loss on relocation of corporate office ............ -- -- (1,500) -- --
Minority interest of preferred unitholders in
Operating Partnership ........................... (1,851) -- -- -- --
Minority interest of common unitholders in
Operating Partnership ........................... (12,598) (11,511) (11,131) (9,984) (8,429)
--------- --------- --------- --------- ---------
Income before extraordinary item .................. 104,975 88,950 54,947 43,469 29,988
Extraordinary item, net of minority
interest (2) .................................... (458) -- (75) -- (870)
--------- --------- --------- --------- ---------
Net income ........................................ 104,517 88,950 54,872 43,469 29,118
Dividends to preferred shareholders ............... (11,875) (11,473) (4,907) (1,063) --
--------- --------- --------- --------- ---------
NET INCOME AVAILABLE TO
COMMON SHAREHOLDERS ............................. $ 92,642 $ 77,477 $ 49,965 $ 42,406 $ 29,118
========= ========= ========= ========= =========
PER COMMON SHARE DATA:
Income before extraordinary item
(net of preferred dividends) - basic ............ $ 2.42 $ 2.21 $ 2.11 $ 1.95 $ 1.63
Net income available to common
shareholders - basic ............................ 2.41 2.21 2.11 1.95 1.58
Income before extraordinary item
(net of preferred dividends) - diluted .......... 2.39 2.18 2.09 1.94 1.63
Net income available to common
shareholders - diluted .......................... 2.38 2.18 2.09 1.94 1.58
Dividends declared ................................ 2.80 2.60 2.38 2.16 1.96
15
18
DECEMBER 31,
1999 1998 1997 1996 1995
---------- ---------- ----------- ----------- ---------
BALANCE SHEET DATA:
Real estate, before accumulated
depreciation.................................... $2,582,785 $2,255,074 $ 1,936,011 $ 1,109,342 $ 937,924
Real estate, net of accumulated
depreciation.................................... 2,279,769 2,007,926 1,734,916 931,670 781,100
Total assets..................................... 2,350,173 2,066,713 1,780,563 958,675 812,984
Total debt....................................... 989,583 800,008 821,209 434,319 349,719
Shareholders' equity............................. 1,058,862 1,051,686 756,920 398,993 343,624
DECEMBER 31,
1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------
OTHER DATA:
Cash flow provided from (used in):
Operating activities .................... $ 153,038 $ 148,618 $ 109,554 $ 78,966 $ 57,362
Investing activities .................... $ (317,960) $ (328,216) $ (208,377) $ (166,762) $ (114,531)
Financing activities .................... $ 149,638 $ 189,873 $ 109,469 $ 79,021 $ 60,885
Funds from operations(3) .................... $ 162,581 $ 136,146 $ 87,392 $ 74,212 $ 56,798
Weighted average common shares
outstanding -- basic .................... 38,460,689 35,028,596 23,664,044 21,787,648 18,382,299
Weighted average common Units
outstanding -- basic .................... 43,663,373 40,244,351 28,880,928 26,917,723 23,541,639
Weighted average common shares
outstanding -- diluted ................... 38,916,987 35,473,587 23,887,906 21,879,248 18,387,894
Weighted average common Units
outstanding -- diluted .................. 44,119,671 40,689,342 29,104,790 27,009,323 23,547,234
Total stabilized communities
(at end of period) ...................... 85 83 78 49 42
Total stabilized apartment units
(at end of period) ...................... 29,032 27,568 25,938 17,930 14,962
Average economic occupancy
(fully stabilized communities)(4) ....... 96.4% 96.5% 94.8% 95.3% 96.0%
(1) Consists of revenues and expenses from property management and
landscape services provided to properties owned by third parties.
(2) The extraordinary item resulted from costs associated with the early
extinguishment of indebtedness. The extraordinary item has been
reduced by the portion related to the minority interest of the
unitholders calculated on the basis of weighted average Units
outstanding for the year.
(3) The Company uses the National Association of Real Estate Investment
Trust ("NAREIT") definition of FFO, which was adopted for periods
beginning after January 1, 1996. FFO for any period means the
consolidated net income available to common shareholders of the
Company and its subsidiaries for such period excluding gains or losses
from debt restructuring and sales of property, plus depreciation of
real estate assets, and after adjustment for unconsolidated
partnerships and joint ventures, all determined on a consistent basis
in accordance with generally accepted accounting principles ("GAAP").
FFO presented herein is not necessarily comparable to FFO presented by
other real estate companies due to the fact that not all real estate
companies use the same definition. However, the Company's FFO is
comparable to the FFO of real estate companies that use the current
NAREIT definition. FFO should not be considered as an alternative to
net income (determined in accordance with GAAP) as an indicator of the
Company's financial performance or to cash flow from operating
activities (determined in accordance with GAAP) as a measure of the
Company's liquidity, nor is it necessarily indicative of sufficient
cash flow to fund all of the Company's needs or ability to service
indebtedness or make distributions. NAREIT's definition of FFO
excludes items classified by GAAP as extraordinary or unusual and
significant non-recurring events that materially distort the
comparative measurement of performance over time. Effective January 1,
2000 NAREIT amended its definition of FFO to include in FFO all
non-recurring events, except for those that are defined as
extraordinary items under GAAP and gains and losses from sales of
property. The Company will use the amended definition of FFO in
reporting results for all periods on or after January 1, 2000. The
Company does not expect use of the amended definition to materially
affect FFO.
(4) Amount represents average economic occupancy for communities
stabilized for both the current and prior respective periods. Average
economic occupancy is defined as gross potential rent less vacancy
losses, model expenses and bad debt divided by gross potential rent
for the period, expressed as a percentage. The calculation of average
economic occupancy does not include a deduction for concessions and
employee discounts (average economic occupancy, taking account of
these amounts, would have been 95.0% for both years ended December 31,
1999 and 1998). Concessions were $2,847 and $3,141 and employee
discounts were $583 and $519 for the years ended December 31, 1999 and
1998, respectively. A community is considered by the Company to have
achieved stabilized occupancy on the earlier to occur of (i)
attainment of 95% physical occupancy on the first day of any month, or
(ii) one year after completion of construction.
16
19
POST APARTMENT HOMES, L.P.
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AND APARTMENT UNIT DATA)
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
OPERATING DATA:
Revenue:
Rental ....................................... 318,697 275,755 185,732 158,618 133,817
Property management -- third-party(1) ........ 3,368 3,164 2,421 2,828 2,764
Landscape services -- third-party(1) ......... 9,118 7,252 5,148 4,882 4,647
Other ........................................ 14,744 12,734 6,815 5,247 3,477
--------- --------- --------- --------- ---------
Total revenue .............................. 345,927 298,905 200,116 171,575 144,705
--------- --------- --------- --------- ---------
Property operating and maintenance
expense (exclusive of depreciation
and amortization) ............................ 113,152 99,717 67,515 58,202 49,912
Depreciation (real estate and non-real estate .. 58,013 46,646 29,048 23,603 20,819
assets)
Property management expenses -- third-party(1) . 2,925 2,499 1,959 2,055 2,166
Landscape services expenses -- third-party(1) .. 7,904 6,264 4,284 3,917 3,950
Interest expense ............................... 33,192 31,297 24,658 22,131 22,698
Amortization of deferred loan costs ............ 1,496 1,185 980 1,352 1,967
General and administrative ..................... 7,788 8,495 7,364 7,716 6,071
Minority interest in consolidated
property partnerships ........................ 511 397 -- -- 451
--------- --------- --------- --------- ---------
Total expenses ............................. 224,981 196,500 135,808 118,976 108,034
--------- --------- --------- --------- ---------
Income before net gain (loss) on sale of assets,
loss on unused treasury locks, loss on
relocation of corporate office, and .......... 120,946 102,405 64,308 52,599 36,671
extraordinary item
Net gain (loss) on sale of assets .............. (1,522) -- 3,270 854 1,746
Loss on unused treasury locks .................. -- (1,944) -- -- --
Loss on relocation of corporate office ......... -- -- (1,500) -- --
--------- --------- --------- --------- ---------
Income before extraordinary item ............... 119,424 100,461 66,078 53,453 38,417
Extraordinary item(2) .......................... (521) -- (93) -- (1,120)
--------- --------- --------- --------- ---------
Net income ..................................... 118,903 100,461 65,985 53,453 37,297
Distributions to preferred unitholders ......... (13,726) (11,473) (4,907) (1,063) --
--------- --------- --------- --------- ---------
NET INCOME AVAILABLE TO
COMMON UNITHOLDERS ........................... $ 105,177 $ 88,988 $ 61,078 $ 52,390 $ 37,297
========= ========= ========= ========= =========
PER COMMON UNIT DATA:
Income before extraordinary item
(net of preferred distributions) -- basic .... $ 2.42 $ 2.21 $ 2.11 $ 1.95 $ 1.63
Net income available to common
unitholders -- basic ......................... 2.41 2.21 2.11 1.95 1.58
Income before extraordinary item
(net of preferred distributions) -- diluted .. 2.39 2.18 2.09 1.94 1.63
Net income available to common
unitholders -- diluted ....................... 2.38 2.18 2.09 1.94 1.58
Distributions declared ......................... 2.80 2.60 2.38 2.16 1.96
17
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DECEMBER 31,
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- ---------
BALANCE SHEET DATA:
Real estate, before accumulated
depreciation ........................... $ 2,582,785 $ 2,255,074 $ 1,936,011 $ 1,109,342 $ 937,924
Real estate, net of accumulated
depreciation............................ 2,279,769 2,007,926 1,734,916 931,670 781,100
Total assets ........................... 2,350,173 2,066,713 1,780,563 958,675 812,984
Total debt ............................. 989,583 800,008 821,209 434,319 349,719
Partners' equity ....................... 1,251,342 1,177,051 869,304 482,434 425,489
DECEMBER 31,
1999 1998 1997 1996 1995
----------- ----------- ------------ ----------- ------------
OTHER DATA:
Cash flow provided from (used in):
Operating activities ................. $ 153,038 $ 148,618 $ 109,554 $ 78,966 $ 57,362
Investing activities ................. $ (317,960) $ (328,216) $ (208,377) $ (166,762) $ (114,531)
Financing activities ................. $ 149,638 $ 189,873 $ 109,469 $ 79,021 $ 60,885
Funds from operations(3) ............... $ 162,581 $ 136,146 $ 87,392 $ 74,212 $ 56,798
Weighted average common Units
outstanding -- basic .................. 43,663,373 40,244,351 28,880,928 26,917,723 23,541,639
Weighted average common Units
outstanding -- diluted ................ 44,119,671 40,689,342 29,104,790 27,009,323 23,547,234
Total stabilized communities
(at end of period) ................... 85 83 78 49 42
Total stabilized apartment units
(at end of period) ................... 29,032 27,568 25,938 17,930 14,962
Average economic occupancy
(fully stabilized communities)(4)..... 96.4% 96.5% 94.8% 95.3% 96.0%
(1) Consists of revenues and expenses from property management and
landscape services provided to properties owned by third parties.
(2) The extraordinary item resulted from costs associated with the early
extinguishment of indebtedness. The extraordinary item has been
reduced by the portion related to the minority interest of the
unitholders calculated on the basis of weighted average Units
outstanding for the year.
(3) The Company uses the National Association of Real Estate Investment
Trust ("NAREIT") definition of FFO, which was adopted for periods
beginning after January 1, 1996. FFO for any period means the
consolidated net income available to common unitholders of the Company
and its subsidiaries for such period excluding gains or losses from
debt restructuring and sales of property, plus depreciation of real
estate assets, and after adjustment for unconsolidated partnerships
and joint ventures, all determined on a consistent basis in accordance
with generally accepted accounting principles ("GAAP"). FFO presented
herein is not necessarily comparable to FFO presented by other real
estate companies due to the fact that not all real estate companies
use the same definition. However, the Company's FFO is comparable to
the FFO of real estate companies that use the current NAREIT
definition. FFO should not be considered as an alternative to net
income (determined in accordance with GAAP) as an indicator of the
Company's financial performance or to cash flow from operating
activities (determined in accordance with GAAP) as a measure of the
Company's liquidity, nor is it necessarily indicative of sufficient
cash flow to fund all of the Company's needs or ability to service
indebtedness or make distributions. NAREIT's definition of FFO
excludes items classified by GAAP as extraordinary or unusual and
significant non-recurring events that materially distort the
comparative measurement of performance over time. Effective January 1,
2000 NAREIT amended its definition of FFO to include in FFO all
non-recurring events, except for those that are defined as
extraordinary items under GAAP and gains and losses from sales of
property. The Company will use the amended definition of FFO in
reporting results for all periods on or after January 1, 2000. The
Company does not expect use of the amended definition to materially
affect FFO.
(4) Amount represents average economic occupancy for communities
stabilized for both the current and prior respective periods. Average
economic occupancy is defined as gross potential rent less vacancy
losses, model expenses and bad debt divided by gross potential rent
for the period, expressed as a percentage. The calculation of average
economic occupancy does not include a deduction for concessions and
employee discounts (average economic occupancy, taking account of
these amounts, would have been 95.0% for each of the years ended
December 31, 1999 and 1998). Concessions were $2,847 and $3,141 and
employee discounts were $583 and $519 for the years ended December 31,
1999 and 1998, respectively. A community is considered by the Company
to have achieved stabilized occupancy on the earlier to occur of (i)
attainment of 95% physical occupancy on the first day of any month, or
(ii) one-year after completion of construction.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT APARTMENT UNIT DATA)
OVERVIEW
The following discussion should be read in conjunction with all of the
financial statements appearing elsewhere in this report. The following
discussion is based primarily on the Consolidated Financial Statements of Post
Properties, Inc. (the "Company") and Post Apartment Homes, L.P. (the "Operating
Partnership"). Except for the effect of minority interest in the Operating
Partnership, the following discussion with respect to the Company is the same
for the Operating Partnership.
As of December 31, 1999, there were 44,027,748 Units outstanding, of which
38,834,323 or 88.2%, were owned by the Company and 5,193,425, or 11.8% were
owned by other limited partners (including certain officers and directors of
the Company). As of December 31, 1999, there were 7,800,000 preferred units
outstanding, of which 5,000,000 were owned by the Company.
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
The Operating Partnership recorded net income available to common unitholders
of $105,177, $88,988, and $61,078 for the years ended December 31, 1999, 1998
and 1997, respectively. The Company recorded net income available to common
shareholders of $92,642, $77,477 and $49,965 for the years ended December 31,
1999, 1998 and 1997, respectively. The Company's increases in net income
available to common shareholders of $15,165, from 1998 to 1999, and $27,512,
from 1997 to 1998 were primarily related to the Merger (1997 to 1998 only),
increased rental rates for fully stabilized communities and an increase in
units placed in service.
COMMUNITY OPERATIONS
The Company's net income is generated primarily from the operation of its
apartment communities. For purposes of evaluating comparative operating
performance, the Company categorizes its operating communities based on the
period each community reaches stabilized occupancy. A community is generally
considered by the Company to have achieved stabilized occupancy on the earlier
to occur of (i) attainment of 95% physical occupancy on the first day of any
month or (ii) one year after completion of construction.
At December 31, 1999, the Company's portfolio of apartment communities
consisted of the following: (i) 68 communities that were completed and
stabilized for all of the current and prior year, (ii) seven communities that
achieved full stabilization during the prior year, (iii) 10 communities which
reached stabilization during 1999, and (iv) 16 communities and additions to
three existing communities currently in the development or lease-up stage.
For communities with respect to which construction is completed and the
community has become fully operational, all property operating and maintenance
expenses are expensed as incurred and those recurring and non-recurring
expenditures relating to acquiring new assets, materially enhancing the value
of an existing asset, or substantially extending the useful life of an existing
asset are capitalized. (See "Capitalization of Fixed Assets and Community
Improvements").
The Company has adopted an accounting policy related to communities in the
development and lease-up stage whereby substantially all operating expenses
(including pre-opening marketing expenses) are expensed as incurred. The
Company treats each unit in an apartment community separately for cost
accumulation, capitalization and expense recognition purposes. Prior to the
commencement of leasing activities, interest and other construction costs are
capitalized and reflected on the balance sheet as construction in progress.
Once a unit is placed in service, all operating expenses allocated to that
unit, including interest, are expensed as incurred. During the lease-up phase,
the sum of interest expense on completed units and other operating expenses
(including pre-opening marketing expenses) will initially exceed rental
revenues, resulting in a "lease-up deficit," which continues until such time as
rental revenues exceed such expenses. Lease up deficits for the years ended
December 31, 1999, 1998, and 1997 were $2,798, $2,063 and $1,339, respectively.
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In order to evaluate the operating performance of its communities, the Company
has presented financial information which summarizes the revenue in excess of
specified expense on a comparative basis for all of its operating communities
combined and for communities which have reached stabilization prior to January
1, 1998.
ALL OPERATING COMMUNITIES
The operating performance for all of the Company's apartment communities
combined for the years ended December 31, 1999, 1998 and 1997 is summarized as
follows:
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
-------------------------------- -----------------------------------
% %
1999 1998 CHANGE 1998 1997 CHANGE
--------- --------- -------- --------- --------- --------
Rental and other revenue:
Fully stabilized communities(1) .................... $ 236,923 $ 228,878 3.5% $ 228,878 $ 207,686 10.2%
Adjustment for acquired communities(2) ............. -- -- n/m -- (36,594) n/m
Communities stabilized during 1998 ................. 22,197 19,149 15.9% 19,149 5,441 n/m
Development and lease-up communities(3) ............ 58,486 23,708 146.7% 23,708 8,328 n/m
Sold communities(4) ................................ 318 3,867 (91.8)% 3,867 3,205 20.7%
Other revenue(5) ................................... 14,753 12,415 18.8% 12,415 4,392 182.7%
--------- --------- ------ --------- --------- ------
332,677 288,017 15.5% 288,017 192,458 49.7%
--------- --------- ------ --------- --------- ------
Property operating and maintenance expense
(exclusive of depreciation and amortization):
Fully stabilized communities(1) .................... 73,114 72,013 1.5% 72,013 54,556 32.0%
Adjustment for acquired
communities(2) .................................... -- -- n/m -- (689) n/m
Communities stabilized during 1998 ................. 7,028 6,183 13.7% 6,183 2,123 191.2%
Development and lease-up communities(3) ............ 22,580 11,199 101.6% 11,199 3,174 n/m
Sold communities(4) ................................ 128 621 (79.4)% 621 1,147 (45.9)%
Other expenses(6) .................................. 10,302 9,701 6.2% 9,701 7,204 34.7%
--------- --------- ------ --------- --------- ------
113,152 99,717 13.5% 99,717 67,515 47.7%
--------- --------- ------ --------- --------- ------
Revenue in excess of specified expense .............. $ 219,525 $ 188,300 16.6% $ 188,300 $ 124,943 50.7%
========= ========= ====== ========= ========= ======
Recurring capital expenditures:(7)
Carpet ............................................. $ 2,864 $ 2,550 12.3% $ 2,550 $ 1,617 57.7%
Other .............................................. 5,777 4,929 17.2% 4,929 2,058 139.5%
--------- --------- ------ --------- --------- ------
Total ............................................ $ 8,641 $ 7,479 15.5% $ 7,479 $ 3,675 103.5%
========= ========= ====== ========= ========= ======
Average apartment units in service .................. 29,304 27,416 6.9% 27,416 19,413 41.2%
========= ========= ====== ========= ========= ======
(1) Communities which reached stabilization prior to January 1, 1998.
Includes fully stabilized communities acquired as a result of the Merger.
(2) The adjustment for acquired communities represents the operating results
of the fully stabilized communities owned by Columbus prior to the
Merger.
(3) Communities in the "construction", "development" or "lease-up" stage
during 1999 and, therefore, not considered fully stabilized for all of
the periods presented.
(4) Includes one community containing 416 units, which was sold on May 22,
1997 and one community containing 198 units which was sold March 19,
1999. The revenues and expenses for these communities had previously been
included in the fully stabilized group.
(5) Other revenue includes revenue on furnished apartment rentals above the
unfurnished rental rates and any revenue not directly related to property
operations.
(6) Other expenses includes certain indirect central office operating
expenses related to management, grounds maintenance, and costs associated
with furnished apartment rentals.
(7) In addition to those expenses which relate to property operations, the
Company incurs recurring and non-recurring expenditures relating to
acquiring new assets, materially enhancing the value of an existing
asset, or substantially extending the useful life of an existing asset,
all of which are capitalized.
n/m - not meaningful
For the year ended December 31, 1999, rental and other revenue increased
$44,660 or 15.5% compared to 1998, primarily as a result of the completion of
new communities and increased rental rates for existing communities.
For the year ended December 31, 1998, rental and other revenue increased
$95,559 or 49.7% compared to 1997, primarily as a result of the Merger,
completion of new communities and increased rental rate for existing
communities.
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Property operating and maintenance expenses (exclusive of depreciation and
amortization) increased from 1998 to 1999 primarily due to an increase in the
number of units placed in service through the development of communities.
Property operating and maintenance expenses (exclusive of depreciation and
amortization) increased from 1997 to 1998 primarily as a result of the Merger
and completion of new communities.
For the years ended December 31, 1999 and 1998, recurring capital expenditures
increased $1,162 or 15.5% and $3,804 or 103.5%, respectively, compared to the
prior years, primarily due to additional units placed in service, the Merger
(for 1997 to 1998) and the timing and extent of scheduled capital improvements.
FULLY STABILIZED COMMUNITIES
The Company defines fully stabilized communities as those which have reached
stabilization prior to the beginning of the previous calendar year. To enhance
comparability, Management has presented 1997 rental and other revenue and
property operating and maintenance expense on a pro forma and historical basis.
The adjustment for acquired communities represents the rental and other revenue
and property operating and maintenance expenses, for the periods prior to the
date of the Merger, of the 5,950 fully stabilized apartment units that were
acquired through the Merger.
The operating performance of the 68 communities containing an aggregate of
23,462 units which were stabilized as of January 1, 1998, are summarized as
follows:
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
----------------------------------- --------------------------------------
% %
1999 1998 CHANGE 1998 1997 CHANGE
--------- --------- -------- ---------- ---------- --------
Rental and other revenue(1) ................... $ 236,923 $ 228,878 3.5% $ 228,878 $ 207,686 10.2%
Adjustment for acquired communities(2) ........ -- -- -- -- (36,594) n/m
--------- --------- ---------- ----------
Historical - rental and other revenue(3) ...... 236,923 228,878 3.5% 228,878 171,092 33.8%
--------- --------- ---------- ----------
Property operating and maintenance
expense (exclusive of depreciation
and amortization)(1) ......................... 73,114 72,013 1.5% 72,013 54,556 32.0%
Adjustment for acquired communities(2) ........ -- -- -- -- (689) n/m
--------- --------- ---------- ----------
Historical-property operating and maintenance
expense (exclusive of depreciation and
amortization)(3)(4) .......................... 73,114 72,013 1.5% 72,013 53,867 33.7%
--------- --------- ---------- ----------
Revenue in excess of specified expense(3) ..... $ 163,809 $ 156,865 4.4% $ 156,865 $ 117,225 33.8%
========= ========= ========== ==========
Average economic occupancy(3)(5) .............. 96.4% 96.5% 96.5% 92.7%
========= ========= ========== ==========
Average monthly rental rate per apartment
unit(3)(6) ................................... $ 851 $ 826 3.0% $ 826 $ 773 6.9%
========= ========= ========== ==========
Apartment units in service ..................... 23,462 23,462 23,462 23,462
========= ========= ========== ==========
(1) Communities which reached stabilization prior to January 1, 1998.
Includes fully stabilized communities acquired in October 1997 through
the Merger. As a result, 1997 rental and other revenue and property
operating and maintenance expense are presented on a pro forma basis.
(2) The adjustment for acquired communities represents the operating results
of the fully stabilized communities owned by Columbus prior to the
Merger.
(3) Represents the Company's historical results of operations for fully
stabilized communities.
(4) In addition to those expenses which relate to property operations, the
Company incurs recurring and non-recurring expenditures relating to
acquiring new assets, materially enhancing the value of an existing
asset, or substantially extending the useful life of an existing asset,
all of which are capitalized. For the years ended December 31, 1999 and
1998, recurring expenditures were $8,215 and $7,082 or $350 and $302 on a
per unit basis, respectively.
(5) Average economic occupancy is defined as gross potential rent less
vacancy losses, model expenses and bad debt divided by gross potential
rent for the period, expressed as a percentage. The calculation of
average economic occupancy does not include a deduction for concessions
and employee discounts. (Average economic occupancy, taking account of
these amounts would have been 95.0% for both years ended December 31,
1999 and 1998.) Concessions were $2,847 and $3,141 and employee discounts
were $583 and $519 for the years ended December 31, 1999 and 1998,
respectively.
(6) Average monthly rental rate is defined as the average of the gross actual
rental rates for leased units and the average of the anticipated rental
rates for unoccupied units.
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Rental and other revenue increased from 1998 to 1999 primarily due to increased
rental rates. The increase in property and maintenance expense (exclusive of
depreciation and amortization) from 1998 to 1999 was primarily due to increased
personnel and property tax expenses partially offset by a decline in utilities
expense as a result of water submetering.
Rental and other revenue increased from 1997 to 1998 due to increased rental
rates and the number of units in service as a result of the Merger. The
increase in property and maintenance expenses (exclusive of depreciation and
amortization) from 1997 to 1998 was primarily due to an increase in personnel
costs and the number of units in service as a result of the Merger.
THIRD PARTY SERVICES
THIRD PARTY MANAGEMENT SERVICES
The Company provides asset management, leasing and other consulting services to
non-related owners of apartment communities through its subsidiary, RAM. The
operating performance of RAM for the years ended December 31, 1999, 1998 and
1997 is summarized as follows:
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
-------------------------------- ---------------------------------
% %
1999 1998 CHANGE 1998 1997 CHANGE
-------- -------- -------- -------- -------- --------
Property management and
other revenue ................... $ 3,368 $ 3,164 6.4% $ 3,164 $ 2,444 29.5%
Property management expense ...... 2,925 2,499 17.0% 2,499 1,887 32.4%
Depreciation expense ............. 27 34 (20.6)% 34 44 (22.7)%
-------- -------- -------- --------
Revenue in excess of specified
expense ......................... $ 416 $ 631 (34.1)% $ 631 $ 513 23.0%
======== ======== ======== ========
Average apartment units in service 12,572 11,046 13.8% 11,046 9,061 21.9%
======== ======== ======== ========
The change in revenue in excess of specified expense from 1998 to 1999 is
primarily attributable to the management of more communities in lease-up phases
as a result of turnover in management contract. The change from 1997 to 1998 is
primarily attributable to the change in the average number and average gross
revenue of units managed.
THIRD PARTY LANDSCAPE SERVICES
The Company provides landscape maintenance, design and installation services to
non-related parties through a subsidiary, Post Landscape Group, Inc., formerly
Post Landscape Services, Inc. ("Post Landscape Group").
The operating performance of Post Landscape Group for the years ended December
31, 1999, 1998 and 1997 are summarized as follows:
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------- ------------------------------
% %
1999 1998 CHANGE 1998 1997 CHANGE
--------- -------- -------- -------- --------- --------
Landscape services and
other revenue.......................... $ 9,118 $ 7,252 25.7% $ 7,252 $ 5,148 40.9%
Landscape services expense............... 7,904 6,264 26.2% 6,264 4,284 46.2%
Depreciation expense..................... 293 173 69.4% 173 107 61.7%
--------- -------- -------- ---------
Revenue in excess of specified
expense................................ $ 921 $ 815 13.0% $ 815 $ 757 7.7%
========= ======== ======== =========
The change in landscape services revenue and landscape services expense from
1998 to 1999 and 1997 to 1998 is primarily due to an increase in landscape
contracts.
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OTHER INCOME AND EXPENSES
Depreciation expense increased from 1998 to 1999 and from 1997 to 1998
primarily as a result of an increase in units in service, additional leasehold
improvements and technology expenditures and communities acquired in the Merger
(1997 to 1998 only).
Interest expense increased from 1998 to 1999 and from 1997 to 1998 primarily
due to an increase in debt used to fund the development of new communities and
additional debt incurred in connection with the Merger (1997 to 1998 only).
Amortization of deferred loan costs increased from 1997 to 1998 due largely to
two public debt issuances completed by the Company in 1998. From 1998 to 1999,
amortization of deferred loan costs increased primarily due to two secured debt
issuances completed by the Company in 1999. See "Liquidity and Capital
Resources" below. General and administrative expenses increased from 1997 to
1998 primarily as a result of the Merger. General and administrative expenses
decreased from 1998 to 1999 as a result of a reduction in personnel related
expenditures and an increase in development support.
The net gain on sale of assets in 1997 resulted from the sale of a community
and the net loss on sale of assets in 1999 resulted from the net loss on the
sale of one community and two tracts of land.
The loss on unused treasury locks in 1998 resulted from the termination of
treasury locks intended for debt securities that were not issued by the
Operating Partnership.
The loss on relocation of corporate office in 1997 resulted from the relocation
of the Company's corporate office prior to the end of the lease term on the
Company's corporate office space.
The extraordinary items in 1997 and 1999, net of the minority interest portion,
resulted from the costs associated with the early retirement of debt.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
The Company's net cash provided by operating activities increased from $109,554
in 1997 to $148,618 in 1998, principally due to increased property operating
income. Net cash provided by operating activities increased from $148,618 in
1998 to $153,038 in 1999 primarily due to increased net income partially offset
by a net decrease in cash from changes in current assets. This change in
current assets is primarily attributable to $7,750 of employee loans (see
Related Party footnote to Consolidated Financial Statements), $9,500 in tax
increment financing receivables associated with public/private development
projects and additional expenditures for pre-development activities. Net cash
used in investing activities increased from $208,377 in 1997 to $328,216 in
1998, primarily due to increases in spending on construction and acquisition of
real estate assets. Net cash used in investing activities decreased from
$328,216 in 1998 to $317,960 in 1999 primarily due to proceeds from the sale of
one community in March 1999 and reduced capital expenditures. Net cash provided
by financing activities increased from $109,469 in 1997 to $189,873 in 1998
primarily due to proceeds from the public issuances of preferred stock and
common stock during 1998. Net cash provided by financing activities decreased
from $189,873 in 1998 to $149,638 in 1999 primarily due to reduced proceeds
from debt and equity offerings partially offset by reduced debt payments.
The Company has elected to be taxed as a Real Estate Investment Trust ("REIT")
under Sections 856 through 860 of the Code commencing with its taxable year
ended December 31, 1993. REITs are subject to a number of organizational and
operational requirements, including a requirement that they currently
distribute 95% of their ordinary taxable income. As a REIT, the Company
generally will not be subject to Federal income tax on net income.
At December 31, 1999, the Company had total indebtedness of $989,583 and cash
and cash equivalents of $5,870. The Company's indebtedness includes
approximately $179,277 in conventional mortgages payable and $235,880 in
tax-exempt bond indebtedness secured by communities, senior unsecured notes of
$390,000, and other unsecured
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26
debt and borrowings under unsecured lines of credit totaling approximately
$184,426. A schedule of indebtedness is included in Item 7.
The Company expects to meet its short-term liquidity requirements generally
through its net cash provided by operations and borrowings under credit
arrangements and expects to meet certain of its long-term liquidity
requirements, such as scheduled debt maturities, repayment of financing of
construction and development activities and possible property acquisitions,
through long-term secured and unsecured borrowings, possible sale of properties
and the issuance of debt securities