POST APARTMENT HOMES LP - 10-K Annual Report

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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, 1998

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
------------------- ----------------

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, 1999 was approximately $1,362,264,000. As of March 10,
1999, there were 38,172,011 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 7, 1999 are incorporated by reference
in Part III.

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POST PROPERTIES, INC.
POST APARTMENT HOMES, L.P.

TABLE OF CONTENTS

FINANCIAL INFORMATION

ITEM PAGE
NO. NO.
- ---- ----

PART I

1 Business .................................................................... 1

2 Properties .................................................................. 7

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 13

6 Selected Financial Data ..................................................... 14

7 Management's Discussion and Analysis of Financial Condition
and Results of Operations ................................................... 18

7A Quantitative and Qualitative Disclosures about Market Risk .................. 31

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

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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 84 stabilized
communities (the "Communities") containing 27,963 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 12 new communities and additions to five existing communities in the
Atlanta, Georgia; Dallas and Houston, Texas; Tampa, Florida; Denver, Colorado;
Charlotte, North Carolina; Phoenix, Arizona and Nashville, Tennessee
metropolitan areas that will contain an aggregate of 4,758 apartment units
upon completion. For the year ended December 31, 1998, 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 71 Communities
stabilized for the entire year was 96.5%. The average monthly rental rate per
apartment unit at these Communities for December 1998 was $834. The Company
also manages through affiliates approximately 11,754 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 1,860 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, for over 25 years, 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 niche and 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 locations, award winning landscaping and numerous
amenities, including, for example, 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, (i) 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, 1998, the Company, through wholly owned
subsidiaries, controlled the Operating Partnership as the sole general partner
and as the holder of 87.9% of the common units in the Operating Partnership
("Units") and 100% of the preferred Units (the "Perpetual Preferred Units").
The other limited partners of the Operating Partnership 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,
1998, RAM managed 60 properties (located in Georgia, Florida, Tennessee,
Kansas, Missouri, North Carolina, Texas and Virginia) with approximately 11,754
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 landscape services for clients other than Post(R) communities. Projects
with third parties include the maintenance and design of the landscape for
office parks, commercial buildings and other commercial enterprises, and
private residences. Post Landscape Group provides such third party landscape
services.

HISTORY OF POST PROPERTIES, INC.

During the five-year period from January 1, 1994 through December 31, 1998,
the Company and affiliates have developed and completed 7,671 apartment units
in 24 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 five apartment
communities containing an aggregate of 1,164 apartment units. Historically,
the Company has primarily developed its apartment communities to the Company's

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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:

1998 1997 1996 1995 1994
-------- --------- --------- --------- --------

Units completed ....................... 2,025 2,128 2,258 685 575
Units acquired(1) ..................... -- 6,296 890 -- --
Units sold ............................ -- (416) (180) (568) --

Total units owned by Company affiliates
at February 28, 1999 ................. 27,963 25,938 17,930 14,962 14,845
Total apartment rental income (in
thousands) ........................... $275,755 $ 186,126 $ 158,618 $ 133,817 $115,309

(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 12 new
communities and additions to five existing communities that will contain an
aggregate of 4,758 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
Parkside by Post(TM) ..................... 188 1Q'99 4Q'99 2Q'00
Riverside by Post(TM)- Phase II .......... 328 1Q'98 1Q'99 2Q'00
Post Ridge(R)- Phase II .................. 202 2Q'98 3Q'98 2Q'99
Post Briarcliff(TM)- Phase I ............. 388 2Q'97 2Q'98 2Q'99
Post Briarcliff(TM)- Phase II ............ 300 2Q'98 2Q'99 2Q'00
-----
1,406
-----
CHARLOTTE, NC
Uptown Place by Post(TM) ................. 227 3Q'98 4Q'99 3Q'00
-----

DALLAS, TX
Lofts By Post ............................ 127 4Q'98 3Q'99 2Q'00
The Wilson Building by Post(TM) .......... 135 2Q'98 2Q'99 3Q'99
Addison Circle by Post(TM)
- Phase II ............................ 610 1Q'98 1Q'99 3Q'00
The Heights of State Thomas
by Post(TM)- Phase II ................. 204 4Q'97 4Q'98 3Q'99
-----
1,076
-----
HOUSTON, TX
Midtown Square by Post ................... 479 1Q'98 3Q'99 4Q'00
-----

TAMPA, FL
Post Rocky Point(R)- Phase III ........... 290 2Q'97 2Q'98 2Q'99
Harbour Island City Apartment
Homes by Post(TM) ..................... 206 3Q'97 3Q'98 2Q'99
Post Hyde Park(TM)- Phase III ............ 119 2Q'98 1Q'99 3Q'99
-----
615
-----
DENVER, CO
Uptown Square by Post(TM) ................ 454 1Q'98 3Q'99 4Q'00
-----

NASHVILLE, TN
Bennie Dillon by Post(TM) ................ 86 2Q'98 2Q'99 3Q'99
-----

PHOENIX, AZ
Roosevelt Square by Post ................. 415 4Q'98 4Q'99 1Q'01
-----
TOTAL .................................... 4,758
=====

The Company is also currently conducting feasibility and other pre-development
studies for possible new Post(R) communities in its primary 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 28, 1999, the Communities consisted of 84 stabilized Post(R)
multifamily apartment communities located in the following metropolitan areas:

METROPOLITAN AREA COMMUNITIES # OF UNITS % OF TOTAL
----------------- ----------- ---------- ----------

Atlanta, GA............................ 40 15,079 53.9%
Dallas, TX............................. 24 6,225 22.3%
Houston, TX............................ 1 309 1.1%
Tampa, FL.............................. 8 2,570 9.2%
Jackson, MS............................ 3 983 3.5%
Orlando, FL............................ 2 1,248 4.5%
Fairfax, VA............................ 2 700 2.5%
Nashville, TN.......................... 3 447 1.6%
Charlotte, NC.......................... 1 402 1.4%
--------- --------- ---------
84 27,963 100.0%
========= ========= =========

The Company or its predecessors developed all but 14 of the Post(R) Communities
and currently manages all of the Communities. Forty-seven of the Communities
have in excess of 300 apartment units, with the largest Community having a total
of 907 apartment units. Seventy-six of the eighty-four Communities, comprising
approximately 90% of the Communities' apartment units, were completed after
January 1, 1986. The average age of the Communities is approximately eight
years. The average economic occupancy rate was 96.5% and 95.2%, respectively,
and the average monthly rental rate per apartment unit was $816 and $790,
respectively, for communities stabilized for each of the entire years ended
December 31, 1998 and 1997. See "Selected Financial Information".

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COMMUNITY INFORMATION

DECEMBER 1998 1998
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 $ 788 96.7%
Post Bridge(R) ........................... Atlanta 1986 847 354 687 96.8%
Post Brookhaven(R) ....................... Atlanta 1990-92 (3) 991 735 952 96.4%
Post Canyon(R) ........................... Atlanta 1986 899 494 712 97.5%
Post Chase(R) ............................ Atlanta 1987 938 410 703 95.2%
Post Chastain(R) ......................... Atlanta 1990 965 558 1,008 96.1%
Post Collier Hills(R) .................... Atlanta 1997 967 396 1,009 97.2%
Post Corners(R) .......................... Atlanta 1986 860 460 704 96.2%
Post Court(R) ............................ Atlanta 1988 838 446 674 96.6%
Post Creek(TM) ........................... Atlanta 1983 (5) 1,180 810 895 96.2%
Post Crest(R) ............................ Atlanta 1996 1,073 410 991 97.4%
Post Crossing(R) ......................... Atlanta 1995 1,067 354 1,059 97.0%
Post Dunwoody(R) ......................... Atlanta 1989-96 (3) 941 530 947 96.1%
Post Gardens(R) .......................... Atlanta 1998 1,066 397 1,198 N/A (4)
Post Glen(R) ............................. Atlanta 1997 1,113 314 1,179 97.5%
Post Lane(R) ............................. Atlanta 1988 840 166 734 97.6%
Post Lenox Park(TM) ...................... Atlanta 1995 1,030 206 1,108 97.1%
Post Lindbergh ........................... Atlanta 1998 960 395 1,072 N/A (4)
Post Mill(R) ............................. Atlanta 1985 952 398 731 97.7%
Post Oak(TM) ............................. Atlanta 1993 1,003 182 1,026 97.3%
Post Oglethorpe(R) ....................... Atlanta 1994 1,205 250 1,262 96.8%
Post Park(R) ............................. Atlanta 1988-90 (3) 904 770 785 96.6%
Post Parkwood(R) ......................... Atlanta 1995 1,071 125 948 96.5%
Post Peachtree Hills(R) .................. Atlanta 1992-94 (3) 982 300 1,045 96.2%
Post Pointe(R) ........................... Atlanta 1988 835 360 683 95.6%
Post Renaissance(R)(6) ................... Atlanta 1992-94 (3) 890 342 961 95.6%
Post Ridge(R) ............................ Atlanta 1998 1,045 232 1,052 N/A (4)
Post River(R) ............................ Atlanta 1991-98 (3) 1,015 213 1,226 N/A (4)
Post Summit(R) ........................... Atlanta 1990 957 148 883 96.0%
Post Terrace(R) .......................... Atlanta 1996 1,144 296 1,094 95.3%
Post Valley(R) ........................... Atlanta 1988 854 496 671 97.1%
Post Village(R) .......................... Atlanta 736 95.1%
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) 964 403 809 97.1%
Post Walk(R) ............................. Atlanta 1984-87 (3) 932 476 827 94.6%
Post Woods(R) ............................ Atlanta 1977-83 (3) 1,057 494 888 95.5%
Riverside by Post(TM) .................... Atlanta 1998 989 199 1,385 N/A (4)
----- -------- ------ ----
Subtotal/Average-- Georgia .............. 971 15,079 887 96.3%
----- -------- ------ ----
TEXAS
Addison Circle Apartment Homes
by Post(TM)- Phase I ................... Dallas 1998 896 460 894 N/A (4)
The American Beauty Mill by Post(TM) ..... Dallas 1998 980 80 979 N/A (4)
Cole's Corner(TM) ........................ Dallas 1998 796 186 949 N/A (4)
Columbus Square by Post(TM) .............. Dallas 1996 861 218 1,108 96.5%
Villas of Parkway Village(TM) ............ Dallas 1986 1,308 136 1,087 94.8%
Post Parkwood(R) ......................... Dallas 1962-70 (3) 1,042 96 946 97.5%
Post Ascension(TM) ....................... Dallas 1985-95 (3) 929 165 798 97.0%
Post Hackberry Creek(TM) ................. Dallas 1988-96 (3) 865 432 793 95.7%
Post Lakeside(TM) ........................ Dallas 1986 791 327 801 96.1%
Post Reflections(TM) ..................... Dallas 1986 797 198 655 93.3%
Post Townlake(TM)/Parks .................. Dallas 1986-87 (3) 869 398 729 98.2%
Post White Rock(TM) ...................... Dallas 1988 659 207 701 96.3%
Post Winsted(TM) ......................... Dallas 1996 728 314 739 96.6%
The Shores by Post(TM) ................... Dallas 1988-97 (3) 874 907 884 96.5%
The Abbey of State-Thomas by Post(TM) .... Dallas 1996 1,276 34 1,919 97.1%
The Commons at Turtle Creek by Post(TM) .. Dallas 1985 645 158 755 97.8%
The Heights of State-Thomas by Post(TM) .. Dallas 1998 813 198 992 N/A (4)

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DECEMBER 1998 1998
AVERAGE NUMBER AVERAGE AVERAGE
YEAR UNIT SIZE OF RENTAL RATES ECONOMIC
COMMUNITIES LOCATION(1) COMPLETED (SQUARE UNITS PER UNIT OCCUPANCY(2)
- ----------- ----------- --------- -------- ----- -------- ------------
FEET)
-----

TEXAS CONTINUED
The Meridian of State-Thomas by
Post(TM)........................ Dallas 1991 798 132 1,058 97.4%
The Residences on McKinney by
Post(TM)........................ Dallas 1986 749 196 1,015 96.6%
The Rice by Post(TM)................ Houston 1998 977 309 1,347 N/A (4)
The Vineyard by Post(TM)............ Dallas 1996 728 116 886 96.2%
The Vintage by Post(TM)............. Dallas 1993 781 161 892 97.7%
The Worthington of State-Thomas Dallas 1993 818 332 1,132 97.3%
by Post(TM)......................
Uptown Village by Post(TM).......... Dallas 1995 767 300 873 97.9%
Post Windhaven(TM)(7).............. Dallas 1991 825 474 531 100.0%
----- ----- ----- -----
Subtotal/Average-- Texas........ 863 6,534 880 96.9%
----- ----- ----- -----
FLORIDA
Post Bay(R)........................ Tampa 1988 782 312 703 95.3%
Post Court(R)...................... Tampa 1991 1,018 228 800 95.4%
Post Fountains at Lee Vista(R)..... Orlando 1988 835 508 668 95.9%
Post Hyde Park(R).................. Tampa 1996 1,009 270 1,001 99.3%
Post Lake(R)....................... Orlando 1988 850 740 666 96.9%
Post Rocky Point(R)................ Tampa 1996-98 (3) 1,018 626 1,462 N/A (4)
Post Village(R).................... Tampa 744 95.5%
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 1,215 97.6%
----- ------ ------ -----
Subtotal/Average-- Florida...... 933 3,818 871 94.6%
----- ------ ------ -----
MISSISSIPPI
Post Mark(TM)....................... Jackson 1984 988 256 615 96.6%
Post Pointe(R)..................... Jackson 1997 812 241 617 94.4%
Post Trace(R)...................... Jackson 1989-95 (3) 734 486 580 96.1%
----- ------ ----- -----
Subtotal/Average-- Mississippi 845 983 598 95.8%
----- ------ ----- -----
VIRGINIA
Post Corners(R)at Trinity Centre.. Fairfax 1996 1,030 336 980 98.6%
Post Forest(R)..................... Fairfax 1990 889 364 936 98.7%
----- ------ ----- -----
Subtotal/Average-- Virginia..... 960 700 957 98.7%
----- ------ ----- -----
NORTH CAROLINA
Post Park at Phillips Place(R).... Charlotte 1998 912 402 1,110 N/A (4)
----- ------ ----- -----
TENNESSEE
Post Hillsboro Village(R)......... Nashville 1998 910 201 1,057 N/A (4)
Post Green Hills(R)............... Nashville 1996 1,056 166 1,103 95.6%
The Lee Apartments .............. Nashville 1924 (8) 808 80 663 97.3%
----- ------ ------ -----
Subtotal/Average-- Tennessee 925 447 1,004 95.9%
----- ------ ------ -----

TOTAL......................... 915 27,963 $ 880 96.5%
===== ====== ====== =====

(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 1998, 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) This community was acquired by the Company 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............................ President, Chief Operating Officer, Treasurer and Director
W. Daniel Faulk, Jr....................... President--Post Apartment Development
Jeffrey A. Harris......................... President--Post Apartment Management
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
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
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.

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 56 years old.

John T. Glover. Mr. Glover is the President, Chief Operating Officer, and
Treasurer of the Company and is a Director. Mr. Glover joined the Company in
1984 and since that time has acted as its President. Mr. Glover is a Director
of SunTrust Banks of Georgia Inc., SunTrust Bank, Atlanta, N.A. and Haverty's
Furniture Companies, Inc. In addition, he is a member of the board of directors
of NAREIT, the National Realty Committee and the National Multi-Housing
Council. Mr. Glover is 52 years old.

W. Daniel Faulk, Jr. Mr. Faulk has been with the Company for twelve years.
Since April 1993, he has been 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 56 years old.

10
13

Jeffrey A. Harris. Mr. Harris has been with the Company for fourteen years.
Since December 1998, he has been President 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 Management Division from March
1995, Executive Vice President of Post Management Division from April 1993 and
Senior Vice President from 1989. Mr. Harris was President of and is on the
Board of Directors of the Atlanta Apartment Association. Mr. Harris is 41
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 43 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 36 years old.

Sherry W. Cohen. Ms. Cohen has been with the Company for fourteen 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 44 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 54 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 39 years old.

Martha J. Logan. Ms. Logan has been with the Company for seven 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
has been 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 44 years old.

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

11
14

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 35
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. 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 39 years old.

Terry L. Chapman. Mr. Chapman has been with the Company for twenty-five 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 52 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 strategic 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 39 years old.

John D. Hooks. Mr. Hooks has been with the Company for twenty 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 44 years
old.

Janie S. Maddox. Ms. Maddox has been with the Company for twenty-two 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 51 years old.

William F. Leseman. Mr. Leseman has been with the Company for nine years. Since
October 1997, he has been Executive Vice President of RAM responsible for its
operations. Prior thereto, he was an Executive Vice President of RAM. Since
October 1995, 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 39 years old.

William C. Lincicome. Mr. Lincicome has been with the Company for eight years.
Since October 1997, he has been Executive Vice President of Post Landscape
Group responsible for its operations. Prior thereto, he was Executive Vice
President of Post Landscape Services since September 1996. 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 46 years old.

12
15

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
- ------------- ---------- --------- -------------

1997
First Quarter ................ $ 43.37 $ 37.62 $ 0.595
Second Quarter ............... 42.00 37.25 0.595
Third Quarter ................ 41.50 37.00 0.595
Fourth Quarter ............... 40.62 36.12 0.595

1998
First Quarter ................ $ 41.25 $ 38.12 $ 0.650
Second Quarter ............... 41.25 38.50 0.650
Third Quarter ................ 40.25 36.37 0.650
Fourth Quarter ............... 40.75 36.87 0.650

On March 10, 1999, the Company had 1,849 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.

During 1998, the Company did not sell any unregistered securities. 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.

There is no established public trading market for the Units. As of March 10,
1999, the Operating Partnership had 121 holders of record of Units of the
Operating Partnership.

13
16

ITEM 6. SELECTED FINANCIAL DATA

POST PROPERTIES, INC.
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND APARTMENT UNIT DATA)

YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------

OPERATING DATA:
Revenue:
Rental ...................................................... $275,755 $185,732 $158,618 $133,817 $115,309
Property management - third party (1) ....................... 3,164 2,421 2,828 2,764 2,508
Landscape services - third party (1) ........................ 7,252 5,148 4,882 4,647 3,799
Other ....................................................... 12,695 6,815 5,247 3,477 3,123
-------- -------- -------- -------- --------
Total revenue ........................................... 298,866 200,116 171,575 144,705 124,739
-------- -------- -------- -------- --------
Property operating and maintenance
expense (exclusive of depreciation
and amortization) ......................................... 99,773 67,515 58,202 49,912 43,376
Depreciation (real estate assets) ........................... 45,214 27,991 22,676 20,127 19,967
Depreciation (non-real estate assets) ....................... 1,409 1,057 927 692 241
Property management expenses - third party (1) .............. 2,499 1,959 2,055 2,166 2,229
Landscape services expenses - third party (1) ............... 6,259 4,284 3,917 3,950 3,098
Interest expense ............................................ 31,297 24,658 22,131 22,698 19,231
Amortization of deferred loan costs ......................... 1,209 980 1,352 1,967 1,999
General and administrative .................................. 8,404 7,364 7,716 6,071 6,269
Minority interest in consolidated property partnership ...... 397 -- -- 451 680
-------- -------- -------- -------- --------
Total expense .......................................... 196,461 135,808 118,976 108,034 97,090
-------- -------- -------- -------- --------
Income before minority interest of unitholders,
net gain on sale of assets, loss on unused
treasury locks, loss on relocation of corporate
office and extraordinary item ............................... 102,405 64,308 52,599 36,671 27,649
Net gain on sale of assets .................................... -- 3,270 854 1,746 1,494
Loss on unused treasury locks ................................. (1,944) -- -- -- --
Loss on relocation of corporate office ........................ -- (1,500) -- -- --
Minority interest of unitholders in
Operating Partnership ....................................... (11,511) (11,131) (9,984) (8,429) (6,951)
-------- -------- -------- -------- --------
Income before extraordinary item .............................. 88,950 54,947 43,469 29,988 22,192
Extraordinary item, net of minority
interest (2) ................................................ -- (75) -- (870) (3,293)
-------- -------- -------- -------- --------
Net income .................................................... 88,950 54,872 43,469 29,118 18,899
Dividends to preferred shareholders ........................... (11,473) (4,907) (1,063) -- --
-------- -------- -------- -------- --------
NET INCOME AVAILABLE TO
COMMON SHAREHOLDERS ......................................... $ 77,477 $ 49,965 $ 42,406 $ 29,118 $ 18,899
======== ======== ======== ======== ========

PER COMMON SHARE DATA:
Income before extraordinary item
(net of preferred dividend) - basic ......................... $ 2.21 $ 2.11 $ 1.95 $ 1.63 $ 1.32
Net income available to common
shareholders - basic ........................................ 2.21 2.11 1.95 1.58 1.12
Income before extraordinary item
(net of preferred dividend) - diluted ....................... 2.18 2.09 1.94 1.63 1.32
Net income available to common
shareholders - diluted ...................................... 2.18 2.09 1.94 1.58 1.12
Dividends declared ............................................ 2.60 2.38 2.16 1.96 1.80

14

17

DECEMBER 31,
---------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- --------- ---------- ---------- ----------

BALANCE SHEET DATA:
Real estate, before accumulated
depreciation............................ $2,255,074 $1,936,011 $ 1,109,342 $ 937,924 $ 828,585
Real estate, net of accumulated
depreciation............................ 2,007,926 1,734,916 931,670 781,100 686,009
Total assets.............................. 2,066,713 1,780,563 958,675 812,984 710,973
Total debt................................ 800,008 821,209 434,319 349,719 362,045
Shareholders' equity...................... 1,051,686 756,920 398,993 343,624 240,196

DECEMBER 31,
---------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- --------- ---------- ---------- ----------

OTHER DATA:
Cash flow provided from (used in):
Operating activities ................... $ 141,440 $ 109,544 $ 78,966 $ 57,362 $ 43,807
Investing activities ................... $ (321,038) $ (208,377) $ (166,762) $ (114,531) $ (99,364)
Financing activities ................... $ 189,873 $ 109,469 $ 79,021 $ 60,885 $ 46,508
Funds from operations (3) ................ $ 136,146 $ 87,392 $ 74,212 $ 56,798 $ 47,616
Weighted average common shares
outstanding - basic .................... 35,028,596 23,664,044 21,787,648 18,382,299 16,847,999

Weighted average common shares and
units outstanding - basic............... 40,244,351 28,880,928 26,917,723 23,541,639 22,125,890
Weighted average common shares
outstanding - diluted................... 35,473,587 23,887,906 21,879,248 18,387,894 16,848,165
Weighted average common shares and
units outstanding - diluted............. 40,689,342 29,104,790 27,009,323 23,547,234 22,126,056
Total stabilized communities
(at end of period)...................... 83 78 49 42 42
Total stabilized apartment units
(at end of period)...................... 27,568 25,938 17,930 14,962 14,845
Average economic occupancy
(fully stabilized communities) (4)...... 96.5% 94.8% 95.3% 96.0% 96.4%

(1) Consists of revenues and expenses from property management and
landscape services provided to properties owned by third parties
(including services provided to third-party owners of properties
previously developed and sold by the Company that operate under the
Post(R) name).
(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.
(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 94.9% and 93.9% for the years ended
December 31, 1998 and 1997, respectively). Concessions were $2,953 and
$903 and employee discounts were $465 and $267 for the years ended
December 31, 1998 and 1997, 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.

15
18

POST APARTMENT HOMES, L.P.
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AND APARTMENT UNIT DATA)

YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
------- ----- ------- ------- ------

OPERATING DATA:
Revenue:
Rental ...................................... $275,755 $185,732 $158,618 $133,817 $115,309
Property management-third party (1) ......... 3,164 2,421 2,828 2,764 2,508
Landscape services-third party (1) .......... 7,252 5,148 4,882 4,647 3,799
Other ....................................... 12,695 6,815 5,247 3,477 3,123
-------- -------- -------- -------- --------
Total revenue .......................... 298,866 200,116 171,575 144,705 124,739
-------- -------- -------- -------- --------
Property operating and maintenance
expense (exclusive of depreciation
and amortization) ........................... 99,773 67,515 58,202 49,912 43,376
Depreciation (real estate assets) ............. 45,214 27,991 22,676 20,127 19,967
Depreciation (non-real estate assets) 1,409 1,057 927 692 241
Property management expenses-third party (1) .. 2,499 1,959 2,055 2,166 2,229
Landscape services expenses-third party (1) ... 6,259 4,284 3,917 3,950 3,098
Interest expense .............................. 31,297 24,658 22,131 22,698 19,231
Amortization of deferred loan costs 1,209 980 1,352 1,967 1,999
General and administrative .................... 8,404 7,364 7,716 6,071 6,269
Minority interest in consolidated
property partnership ........................ 397 -- -- 451 680
-------- -------- -------- -------- --------
Total expenses ......................... 196,461 135,808 118,976 108,034 97,090
-------- -------- -------- -------- --------

Income before net gain on sale of assets, loss on
unused treasury locks, loss on relocation of
corporate office, and extraordinary item .... 102,405 64,308 52,599 36,671 27,649
Net gain on sale of assets .................... -- 3,270 854 1,746 1,494
Loss on unused treasury locks ................. (1,944) -- -- -- --
Loss on relocation of corporate office ........ -- (1,500) -- -- --
-------- -------- -------- -------- --------
Income before extraordinary item .............. 100,461 66,078 53,453 38,417 29,143
Extraordinary item (2) ........................ -- (93) -- (1,120) (4,413)
-------- -------- -------- -------- --------
Net income .................................... 100,461 65,985 53,453 37,297 24,730
Distributions to preferred unitholders (11,473) (4,907) (1,063) -- --
-------- -------- -------- -------- --------
NET INCOME AVAILABLE TO
COMMON UNITHOLDERS .......................... $ 88,988 $ 61,078 $ 52,390 $ 37,297 $ 24,730
======== ======== ======== ======== ========
PER COMMON UNIT DATA:
Income before extraordinary item
(net of preferred distribution) - basic...... $ 2.21 $ 2.11 $ 1.95 $ 1.63 $ 1.32
Net income available to common
unitholders - basic.......................... 2.21 2.11 1.95 1.58 1.12
Income before extraordinary item
(net of preferred distribution) -
diluted...................................... 2.18 2.09 1.94 1.63 1.32
Net income available to common
unitholders - diluted....................... 2.18 2.09 1.94 1.58 1.12
Distributions declared (3)..................... 2.60 2.38 2.16 1.96 1.80

16

19

DECEMBER 31,
----------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- -------- --------

BALANCE SHEET DATA:
Real estate, before
accumulated $2,255,074 $1,936,011 $1,109,342 $937,924 $828,585
depreciation.........
Real estate, net of
accumulated 2,007,926 1,734,916 931,670 781,100 686,009
depreciation.........
Total assets......... 2,066,713 1,780,563 958,675 812,984 710,973
Total debt........... 800,008 821,809 434,319 349,719 362,045
Partners' equity..... 1,177,051 869,304 482,434 425,489 313,367

DECEMBER 31,
------------------------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ ------------

OTHER DATA:
Cash flow provided from (used in):
Operating activities................. $ 141,440 $ 109,554 $ 78,966 $ 57,362 $ 43,807
Investing activities................. $ (321,038) $ (208,377) $ (166,762) $ (114,531) $ (99,364)
Financing activities ................ $ 189,873 $ 109,469 $ 79,021 $ 60,885 $ 46,508
Funds from operations (3) ............... $ 136,146 $ 87,392 $ 74,212 $ 56,798 $ 47,616
Weighted average common Units
outstanding - basic.................. 40,244,351 28,880,928 26,917,723 23,541,639 22,125,890
Weighted average common Units
outstanding - diluted ............... 40,689,342 29,104,790 27,009,323 23,547,234 22,126,056
Total stabilized communities
(at end of period)................... 83 78 49 42 42
Total stabilized apartment units
(at end of period)................... 27,568 25,938 17,930 14,962 14,845
Average economic occupancy
(fully stabilized communities) (4)... 96.5% 94.8% 95.3% 96.0% 96.4%

(1) Consists of revenues and expenses from property management and
landscape services provided to properties owned by third parties
(including services provided to third-party owners of properties
previously developed and sold by the Company that operate under the
Post(R) name).
(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.
(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 94.9% and 93.9% for the years ended December 31, 1998
and 1997, respectively). Concessions were $2,953 and $903 and employee
discounts were $465 and $267 for the years ended December 31, 1998 and
1997, 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, 1998, there were 43,267,458 Units outstanding, of which
38,051,734 or 87.9%, were owned by the Company and 5,215,724, or 12.1% were
owned by other limited partners (including certain officers and directors of the
Company). As of December 31, 1998, there were 5,000,000 Perpetual Preferred
Units outstanding, all of which were owned by the Company.

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

The Operating Partnership recorded net income available to common unitholders of
$88,988, $61,078, and $52,390 for the years ended December 31, 1998, 1997 and
1996, respectively. The Company recorded net income available to common
shareholders of $77,477, $49,965, and $42,406 for the years ended December 31,
1998, 1997 and 1996, respectively. The Company's increase in net income
available to common shareholders of $27,512, from 1997 to 1998, and $7,559, from
1996 to 1997 were primarily related to the Merger, 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, 1998, the Company's portfolio of apartment communities consisted
of the following: (i) 64 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) 12 communities which reached
stabilization during 1998, and (iv) 17 communities currently in the development
or lease-up stage, including additions to five existing communities.

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.

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Therefore, 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, 1997. The Company has also presented financial information
reflecting the dilutive impact of lease-up deficits incurred for communities in
the development and lease-up stage and not yet operating at break-even.

ALL OPERATING COMMUNITIES

The operating performance for all of the Company's apartment communities
combined for the years ended December 31, 1998, 1997 and 1996 is summarized as
follows:

YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
---------------------------------- ------------------------------
% %
1998 1997 CHANGE 1997 1996 CHANGE
-------- -------- ------- -------- --------- ------

Rental and other revenue:
Fully stabilized
communities (1)........................ $210,293 $202,690 3.8% $202,690 $186,621 8.6%
Adjustment for acquired communities (2). -- (35,577) n/m (35,577) (37,953) (6.3)%
Communities stabilized during 1997...... 25,053 8,571 192.3% 8,571 69 n/m
Development and lease-up communities (3) 39,466 10,634 271.1% 10,634 5,969 78.2%
Sold communities (4).................... -- 1,494 n/m 1,494 5,309 (71.9)%
Other revenue (5)....................... 13,166 4,646 183.4% 4,646 3,524 31.8%
-------- -------- -------- --------
287,978 192,458 49.6% 192,458 163,539 17.7%
-------- -------- -------- --------

Property operating and maintenance expense
(exclusive of depreciation and
amortization):
Fully stabilized communities (1)........ 66,403 64,869 2.4% 64,869 61,325 5.8%
Adjustment for acquired
communities (2)........................ -- (12,362) n/m (12,362) (13,156) (6.0)%
Communities stabilized during 1997...... 7,712 2,819 173.6% 2,819 280 906.8%
Development and lease-up communities (3) 16,503 4,363 278.2% 4,363 2,176 100.5%
Sold communities (4).................... -- 657 n/m 657 2,033 (67.7)%
Other expenses (6)...................... 9,155 7,169 27.7% 7,169 5,544 29.3%
-------- -------- -------- --------
99,773 67,515 47.8% 67,515 58,202 16.0%
-------- -------- -------- --------
Revenue in excess of specified expense.... $188,205 $124,943 50.6% $124,943 $105,337 18.6%
======== ======== ======== ========

Recurring capital expenditures: (7)
Carpet................................... $ 2,550 $ 1,617 57.7% $ 1,617 $ 1,087 48.8%
Other.................................... 4,929 2,058 139.5% 2,058 1,874 9.8%
-------- -------- -------- --------
Total................................ $ 7,479 $ 3,675 103.5% $ 3,675 $ 2,961 24.1%
======== ======== ======== ========
Average apartment units in service........ 27,416 19,413 41.2% 19,413 17,089 13.6%
======== ======== ======== ========

(1) Communities which reached stabilization prior to January 1, 1997.
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 1998 and, therefore, not considered fully stabilized for all of
the periods presented.
(4) Includes one community, containing 180 units, which was sold on July
19, 1996 and one community, containing 416 units, which was sold on May
22, 1997. 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, 1998, rental and other revenue increased $95,520
or 49.6% compared to 1997, primarily as a result of communities acquired in the
Merger and an increase in units placed in service, partially offset by a
decrease in rental and other revenue due to the sale of one community during the
second quarter of 1997.

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For the year ended December 31, 1997, rental and other revenue increased $28,919
or 17.7% compared to 1996, primarily as a result of communities acquired in the
Merger and an increase in units placed in service, partially offset by a
decrease in rental and other revenue due to the sale of one community during the
third quarter of 1996.

Property operating and maintenance expenses (exclusive of depreciation and
amortization) increased from 1997 to 1998 and from 1996 to 1997 primarily due to
the increase in the units placed in service through the development and
acquisition of communities, including the Merger.

For the years ended December 31, 1998 and 1997, recurring capital expenditures
increased $3,804 or 103.5% and $714 or 24.1%, respectively, compared to the
prior years, primarily due to additional units placed in service, due largely to
the Merger, and the timing 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 and 1996 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 4,882 fully stabilized apartment units
acquired through the Merger.

The operating performance of the 64 communities containing an aggregate of
21,819 units which were stabilized as of January 1, 1997 (including 4,882 units
acquired in the Merger for 1998), are summarized as follows:

YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------ ---------------------------------
% %
1998 1997 CHANGE 1997 1996 CHANGE
-------- -------- ------ -------- -------- ------

Rental and other and other revenue (1)........ $210,293 $202,690 3.8% $202,690 $186,621 8.6%
Adjustment for acquired communities (2)....... -- (35,577) n/m (35,577) (37,953) (6.3%)
-------- -------- -------- --------
Historical - rental and other revenue (3)..... 210,293 167,113 25.8% 167,113 148,668 12.4%
-------- -------- -------- --------
Property operating and maintenance
Expense (exclusive of depreciation
And amortization) (1)....................... 66,403 64,869 2.4% 64,869 61,325 5.8%
Adjustment for acquired communities (2)....... -- (12,362) n/m (12,362) (13,156) (6.0%)
-------- -------- -------- --------
Historical-property operating and maintenance
Expense (exclusive of depreciation and
amortization) (3)(4)........................ 66,403 52,507 26.5% 52,507 48,169 9.0%
-------- -------- -------- --------
Revenue in excess of specified expense (3).... $143,890 $114,606 25.6% $114,606 $100,499 14.0%
======== ======== ======== ========

Average economic occupancy (3)(5)............. 96.5% 94.9% 94.9% 92.3%
======== ======== ======== ========
Average monthly rental rate per apartment
Unit (3)(6)................................. $ 816 $ 801 1.9% $ 801 $ 772 3.8%
======== ======== ======== ========
Apartment units in service.................... 21,819 16,937 16,937 16,937
======== ======== ======== ========

(1) Communities which reached stabilization prior to January 1, 1997.
Includes fully stabilized communities acquired in October 1997 through
the Merger. As a result, 1997 and 1996 rental and other revenue and
property operating and maintenance expense is presented on a pro forma
basis.
(2) The adjustment for acquired communities represents the operating
results of the mature 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, 1998 and
1997, recurring expenditures were $6,614 and $3,428 or $303 and $202 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 94.9% and 93.9% for the years ended
December 31, 1998 and 1997, respectively.) Concessions were $2,953 and
$1,263 and employee discounts were $465 and $361 for the years ended
December 31, 1998 and 1997, respectively.

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(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.

Rental and other revenue increased from 1997 to 1998 due to the increase in
units in service as a result of the Merger and increased rental rates and
occupancy for fully stabilized communities owned prior to the Merger. The
increase in property and maintenance expense (exclusive of depreciation and
amortization) from 1997 to 1998 was primarily due to an increase in units in
service as a result of the Merger.

Rental and other revenue increased from 1996 to 1997 due to higher rental rates
and occupancy. The increase in property and maintenance expense (exclusive of
depreciation and amortization) from 1996 to 1997 was primarily due to an
increase in personnel costs which was substantially offset by a decrease in ad
valorem real estate taxes.

LEASE-UP DEFICITS

As noted in the overview of Community Operations, 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
as well as other construction costs are capitalized and reflected on the balance
sheet as construction in progress. Once a unit is placed in service, all
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
typically exceed rental revenues, resulting in a "lease-up deficit," which
continues until rental revenues exceed such expenses.

The Company calculates "lease-up deficit" on a quarterly basis, and accumulates
the quarterly deficits to the annual deficit. Only those communities which were
dilutive during each quarter are included and, accordingly, different
communities may be included in each quarter within each year. For each of the
years ended December 31, 1996 through 1998, the "lease-up deficit" charged to
and included in results of operations are summarized as follows:

YEAR ENDED DECEMBER 31,
-----------------------------------
1998 1997 1996
------- ------- -------

Rental and other revenue................................ $ 5,679 $ 1,467 $ 974
Property operating and maintenance expense (exclusive of
Depreciation and amortization)........................ 5,082 1,442 1,056
------- ------- -------

Revenue in excess of specified expense.................. 597 25 (82)
Interest expense........................................ 2,660 1,364 673
------- ------- -------
Lease-up deficit........................................ $(2,063) $(1,339) $ (755)
======= ======= =======

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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, 1998, 1997 and
1996 is summarized as follows:

YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
---------------------------------- ------------------------------
% %
1998 1997 CHANGE 1997 1996 CHANGE
------- ------ ------ ------ ------ ------

Property management and
other revenue........................ $ 3,164 $2,444 29.5% $2,444 $2,562 (4.6)%
Property management expense........... 1,759 1,313 34.0% 1,313 1,244 5.5%
General and administrative expense.... 740 574 28.9% 574 502 14.3%
Depreciation expense.................. 34 44 (22.7)% 44 66 (33.3)%
------- ------ ------ ------
Revenue in excess of specified (31.6)%
expense.............................. $ 631 $ 513 23.0% $ 513 $ 750
======= ====== ====== ======

Average apartment units in service.... 11,046 9,061 21.9% 9,061 8,852 2.4%
======= ====== ====== ======

The change in property management revenues and expenses from 1997 to 1998 and
from 1996 to 1997 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, 1998, 1997 and 1996 are summarized as follows:

YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------- -------------------------------
% %
1998 1997 CHANGE 1997 1996 CHANGE
------ ------ ------ ------ ------ ------

Landscape services and
other revenue...................... $7,252 $5,148 40.9% $5,148 $4,882 5.4%
Landscape services expense........... 5,394 3,675 46.8% 3,675 3,459 6.2%
General and administrative expense... 865 609 42.0% 609 458 33.0%
Depreciation expense................. 173 107 61.7% 107 76 40.8%
------ ------ ------ ------
Revenue in excess of specified
expense............................ $ 820 $ 757 8.3% $ 757 $ 889 (14.8)%
====== ====== ====== ======

The change in landscape services revenue, landscape services expense and general
and administrative expense from 1997 to 1998 and 1996 to 1997 is primarily due
to an increase in landscape contracts.

OTHER INCOME AND EXPENSES

Depreciation expense increased from 1997 to 1998 and from 1996 to 1997 primarily
due to the communities acquired in the Merger and the completion of new
communities.

Interest expense increased from 1997 to 1998 and from 1996 to 1997 primarily due
to additional debt incurred in connection with the Merger and the development of
new communities.

Amortization of deferred loan costs increased from 1997 to 1998 due largely to
two public debt issuances completed by the Company in 1998. See "Liquidity and
Capital Resources" below. From 1996 to 1997, amortization of deferred loan costs
decreased primarily due to interest rate protection agreements becoming fully
amortized. General and administrative expenses increased from 1997 to 1998
primarily as a result of the Merger. General and administrative expenses
decreased from 1996 to 1997 as a result of a reduction in executive incentive
compensation.

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The gain on sale of assets resulted from the sale of a community in 1997 and the
sale of a community and other assets in 1996.

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 a decision to
relocate the corporate office prior to the end of the lease term on the
Company's corporate office space.

The extraordinary item in 1997, 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 $78,966
in 1996 to $109,554 in 1997 and to $141,440 in 1998, principally due to
increased property operating income. Net cash used in investing activities
increased from $166,762 in 1996 to $208,377 in 1997 and to $321,038 in 1998,
primarily due to increases in spending on construction and acquisition of real
estate assets. Net cash provided by financing activities increased from $79,021
in 1996 to $109,469 in 1997 and to $189,873 in 1998. The increase from 1996 to
1997 is primarily a result of an increase in net borrowings, while the increase
from 1997 to 1998 is primarily the result of the proceeds from the public
issuances of preferred stock and common stock during 1998.

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, 1998, the Company had total indebtedness of $800,008 and cash
and cash equivalents of $21,154. The Company's indebtedness includes
approximately $46,128 in conventional mortgages payable and $235,880 in
tax-exempt bond indebtedness secured by communities, senior unsecured notes of
$456,000, and other unsecured debt and borrowings under unsecured lines of
credit totaling approximately $62,000. A schedule of indebtedness is included
later in this 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 or additional equity securities of the
Company or Units of the Operating Partnership in connection with acquisitions of
land or improved properties. The Company believes that its net cash provided by
operations will continue to be adequate to meet both operating requirements and
payment of dividends by the Company in accordance with REIT requirements in both
the short and the long term. The budgeted expenditures for improvements and
renovations to certain of the communities are expected to be funded from
property operations.

Lines Of Credit
On June 30, 1998, the Company entered into a $25,000 Loan Sales Line of Credit
with a bank. The interest rate and maturity date related to each draw on this
facility will be agreed to between the Company and the bank prior to each such
draw. This facility expires on June 29, 1999. There was no outstanding balance
on this facility at December 31, 1998.

In February 1999, the Company's syndicated line of credit (the "Revolver") was
amended, increasing its capacity to $275,000. The Revolver matures on April 30,
2001 and borrowings currently bear interest at LIBOR plus .675% or prime minus
.25%. The Revolver provides for the rate to be adjusted up or down based on
changes in the credit

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26

ratings on the Company's senior unsecured debt. The Revolver also includes a
money market competitive bid option for short-term funds up to $137,500 at rates
below the stated line rate.