UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended: Commission File Number: 0-20707
March 31, 2003
COLONIAL REALTY LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware 63-1098468
(State of organization) (IRS Employer
Identification Number)
2101 Sixth Avenue North 35203
Suite 750 (Zip Code)
Birmingham, Alabama
(Address of principal executive offices)
(205) 250-8700
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. YES x NO
--- ---
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12-b-2).
YES x NO
---- ----
COLONIAL REALTY LIMITED PARTNERSHIP
INDEX TO FORM 10-Q
Page
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Condensed Balance Sheets as of
March 31, 2003 and December 31, 2002 3
Consolidated Condensed Statements of Income for the 4
Three Months Ended March 31, 2003 and 2002
Consolidated Condensed Statements of Cash Flows
for the Three Months Ended March 31, 2003 and 2002 5
Notes to Consolidated Condensed Financial Statements 6
Report of Independent Accountants 12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
Item 3. Quantitative and Qualitative Disclosures about Market Risk 18
Item 4. Controls and Procedures 18
PART II: OTHER INFORMATION
Item 2. Changes in Securities 19
Item 6. Exhibits and Reports on Form 8-K 19
SIGNATURES 20
EXHIBITS 21
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
--------------------
(Unaudited)
March 31, December 31,
2003 2002
----------- -----------
ASSETS
Land, buildings, & equipment, net .................. $ 1,912,401 $ 1,947,072
Undeveloped land and construction in progress ...... 87,046 82,520
Cash and equivalents ............................... 15,984 6,236
Restricted cash .................................... 1,425 1,481
Accounts receivable, net ........................... 9,389 10,395
Prepaid expenses ................................... 6,417 7,560
Notes receivable ................................... 1,175 1,307
Deferred debt and lease costs, net ................. 22,455 23,157
Investment in unconsolidated subsidiaries .......... 35,874 36,265
Other assets ....................................... 14,371 13,780
----------- -----------
$ 2,106,537 $ 2,129,773
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Notes and mortgages payable ........................ $ 1,240,984 $ 1,262,193
Accounts payable ................................... 14,333 16,749
Accrued interest ................................... 11,724 13,974
Accrued expenses ................................... 10,663 6,516
Tenant deposits .................................... 3,152 3,201
Unearned rent ...................................... 2,531 7,736
Other liabilities .................................. 4,434 4,497
----------- -----------
Total liabilities .......................... 1,287,821 1,314,866
----------- -----------
Redeemable units, at redemption value .............. 344,679 366,156
Preferred units:
Series A Preferred Units ................... 125,000 125,000
Series B Preferred Units ................... 100,000 100,000
Series C Preferred Units ................... 50,000 50,000
Partners' capital .................................. 202,424 177,338
Accumulated other comprehensive loss ............... (3,387) (3,587)
----------- -----------
Total partners' capital ................... 474,037 448,751
----------- -----------
$ 2,106,537 $ 2,129,773
=========== ===========
The accompanying notes are an integral part of these financial statements.
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per unit data)
---------------------
Three Months Ended
March 31,
--------------------
2003 2002
-------- --------
Revenue:
Minimum rent .................................................. $ 65,204 $ 61,483
Percentage rent ............................................... 571 467
Tenant recoveries ............................................. 10,265 9,936
Other property related revenue ................................ 5,122 4,232
Other non-property related revenue ............................ 1,098 1,764
-------- --------
Total revenue ................................................. 82,260 77,882
-------- --------
Operating Expenses:
Property operating expenses:
General operating expenses .................................... 5,775 5,284
Salaries and benefits ......................................... 3,647 3,787
Repairs and maintenance ....................................... 8,239 7,110
Taxes, licenses, and insurance ................................ 7,945 7,546
General and administrative .................................... 4,803 3,805
Depreciation .................................................. 19,494 17,432
Amortization .................................................. 1,982 2,078
-------- --------
Total operating expenses ...................................... 51,885 47,042
-------- --------
Income from operations ........................................ 30,375 30,840
-------- --------
Other income (expense):
Interest expense .............................................. (16,576) (15,763)
Income from investments ....................................... 85 344
Loss on hedging activities .................................... (237) (7)
Gains from sales of property .................................. 29 9,808
Other ......................................................... 181 (32)
-------- --------
Total other expense ........................................... (16,518) (5,650)
-------- --------
Income from continuing operations ............................. 13,857 25,190
-------- --------
Income from discontinued operations ........................... 246 549
Gain on disposal of discontinued operations ................... 9,627 --
-------- --------
Income from discontinued operations ........................... 9,873 549
-------- --------
Net income .................................................... 23,730 25,739
-------- --------
Dividends to preferred unitholders ............................ (6,109) (6,109)
-------- --------
Net income available to common unitholders .................... $ 17,621 $ 19,630
-------- --------
Net income per common unit - Basic:
Income from continuing operations ............. $ 0.23 $ 0.58
Income from discontinued operations ........... 0.29 0.02
-------- --------
Net income per common unit - Basic ............ $ 0.52 $ 0.60
-------- --------
Net income per common unit - Diluted:
Income from continuing operations ............. $ 0.23 $ 0.58
Income from discontinued operations ........... 0.29 0.02
-------- --------
Net income per common unit - Diluted .......... $ 0.52 $ 0.60
-------- --------
Average units outstanding:
Basic ......................................... 33,812 32,525
Diluted ....................................... 33,981 32,743
-------- --------
Net income available to common unitholders .................... $ 17,621 $ 19,630
Other comprehensive income (loss)
Unrealized income (loss) on cash flow hedging activities 200 (393)
-------- --------
Comprehensive income .......................................... $ 17,821 $ 19,237
-------- --------
The accompanying notes are an integral part of these financial statements.
COLONIAL REALTY LIMITED PARTNERSHIP
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
-------------------
Three Months Ended
March 31,
--------------------
2003 2002
-------- --------
Cash flows from operating activities:
Net income .................................................. $ 23,730 $ 25,739
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization .......................... 21,670 19,866
Income from unconsolidated subsidiaries ................ (85) (344)
Gains from sales of property ........................... (9,656) (9,808)
Other .................................................. 88 1,140
Decrease (increase) in:
Restricted cash ........................................ 56 (2,467)
Accounts receivable .................................... 918 (419)
Prepaid expenses ....................................... 1,143 (74)
Other assets ........................................... (2,300) (3,375)
Increase (decrease) in:
Accounts payable ....................................... (2,416) (6,740)
Accrued interest ....................................... (2,250) 1,901
Accrued expenses and other ............................. (1,339) 171
-------- --------
Net cash provided by operating activities ......... 29,559 25,590
-------- --------
Cash flows from investing activities:
Acquisition of properties .................................... -0- (16,721)
Development expenditures ..................................... (3,316) (15,762)
Tenant improvements .......................................... (4,167) (4,085)
Capital expenditures ......................................... (3,134) (3,637)
Proceeds from notes receivable ............................... 132 23
Proceeds from sales of property, net of selling costs ........ 30,734 18,172
Distributions from unconsolidated subsidiaries ............... 615 527
Capital contributions to unconsolidated subsidiaries ......... (139) (2,873)
-------- --------
Net cash provided by (used in) investing activities 20,725 (24,356)
-------- --------
Cash flows from financing activities:
Principal reductions of debt ................................. (90,174) (801)
Proceeds from additional borrowings .......................... 63,686 52,750
Net change in revolving credit balances ...................... 5,451 (57,404)
Cash contributions ........................................... 8,430 26,047
Capital distributions ........................................ (28,551) (27,390)
Other, net ................................................... 622 (300)
-------- --------
Net cash used in financing activities ............. (40,536) (7,098)
-------- --------
Increase (decrease) in cash and equivalents ....... 9,748 (5,864)
Cash and equivalents, beginning of period .............................. 6,236 10,127
-------- --------
Cash and equivalents, end of period .................................... $ 15,984 $ 4,263
======== ========
The accompanying notes are an integral part of these financial statements.
COLONIAL REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
March 31, 2003
(Unaudited)
The consolidated financial statements of Colonial Realty Limited
Partnership have been prepared pursuant to the Securities and Exchange
Commission ("SEC") rules and regulations. The following notes, which represent
interim disclosures as required by the SEC, highlight significant changes to the
notes to the December 31, 2002 audited consolidated financial statements of
Colonial Realty Limited Partnership and should be read together with the
financial statements and notes thereto included in the Form 10-K.
Note 1 -- Organization and Business
Colonial Realty Limited Partnership ("CRLP") is the operating
partnership of Colonial Properties Trust (the "Company"), an Alabama real estate
investment trust whose shares are traded on the New York Stock Exchange. The
Company was originally formed as a Maryland real estate investment trust on July
9, 1993 and reorganized as an Alabama real estate investment trust under a new
Alabama REIT statute on August 21, 1995. The Company is a fully integrated,
self-administered and self-managed REIT that is one of the largest owners,
developers and operators of multifamily, office and retail properties in the
Sunbelt region of the United States. The Company owns 40 multifamily apartment
communities, 21 office properties, 43 retail properties, and certain parcels of
land adjacent to or near some of these properties.
Note 2 -- Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements include CRLP and Colonial
Properties Services Limited Partnership (in which CRLP holds 99% general and
limited partner interests). Entities in which CRLP owns, directly or indirectly
a fifty percent or less interest and does not control are reflected in the
consolidated financial statements as investments accounted for under the equity
method. Under this method the investment is carried at cost plus or minus equity
in undistributed earnings or losses since the date of acquisition.
Use of Estimates
The preparation of consolidated condensed financial statements in
conformity with accounting principles generally accepted in the United States
("GAAP") requires management to make estimates and assumptions that affect the
reported amounts of assets and liablities and disclosure of contingent assets
and liablities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting periods. Actual results could
differ from those estimates.
Unaudited Interim Statements
The consolidated financial statements as of and for the three months
ended March 31, 2003 and 2002 and related footnote disclosures are unaudited. In
the opinion of management, such financial statements reflect all adjustments
necessary for a fair presentation of the results of the interim periods. All
such adjustments are of a normal, recurring nature.
Reclassifications
Certain reclassifications have been made to the previously reported
2002 statements in order to provide comparability with the 2003 statements
reported herein. These reclassifications have no impact on partners' capital or
net income.
Recent Pronouncements of the Financial Accounting Standards Board
("FASB")
In April 2002, FASB issued SFAS 145, Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.
SFAS 145 rescinds SFAS 4, which required all gains and losses from
extinguishment of debt to be aggregated and, if material, classified as an
extraordinary item, net of related income tax effect. As a result, the criteria
in Accounting Principles Board Opinion 30, will now be used to classify those
gains and losses. SFAS 64 amended SFAS 4, and is no longer necessary because
SFAS 4 has been rescinded. SFAS 44 and the amended sections of SFAS 13 are not
applicable to CRLP and therefore have no effect on CRLP's financial statements.
SFAS 145 is effective for fiscal years beginning after May 15, 2002 with early
application encouraged. The adoption of SFAS 145 on January 1, 2003 has not had
a material effect on CRLP.
On November 25, 2002, the FASB issued FASB Interpretation No. 45 (FIN
45), Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others, an Interpretation of
FASB Statements No. 5, 57 and 107 and Rescission of FASB Interpretation No. 34.
FIN 45 clarifies the requirements of SFAS 5, Accounting for Contingencies,
relating to the guarantor's accounting for, and disclosure of, the issuance of
certain types of guarantees. The disclosure provisions of the Interpretation are
effective for financial statements that end after December 15, 2002. However,
the provisions for initial recognition and measurement are effective on a
prospective basis for guarantees that are issued or modified after December 31,
2002, irrespective of a guarantor's year end. See Note 15, Guarantees and Other
Arrangements, for additional discussion of CRLP's financial guarantees as of
December 31, 2002. The initial adoption of this standard did not have an impact
on the financial condition or results of operations. Management does not believe
the provisions of this standard will have a material impact on future operations
of CRLP.
On January 15, 2003, FASB completed its redeliberations of the project
related to the consolidation of variable interest entities which culminated with
the issuance of FASB Interpretation No. 46 (FIN 46), Consolidation of Variable
Interest Entities. FIN 46 states that if a business enterprise has a controlling
financial interest in a variable interest entity, the assets, liabilities and
results of the activities of the variable interest entity should be included in
the consolidated financial statements of the business enterprise. This
Interpretation explains how to identify variable interest entities and how an
enterprise assesses its interests in a variable interest entity to decide
whether to consolidate that entity. FIN 46 also requires existing unconsolidated
variable interest entities to be consolidated by their primary beneficiaries if
the entities do not effectively disperse risks among parties involved. Variable
interest entities that effectively disperse risks will not be consolidated
unless a single party holds an interest or combination of interests that
effectively recombines risks that were previously dispersed. This Interpretation
applies immediately to variable interest entities created after January 31,
2003, and to variable interest entities in which an enterprise obtains an
interest after that date. It applies in the first fiscal year or interim period
beginning after June 15, 2003, to variable interest entities in which an
enterprise holds a variable interest that it acquired before February 1, 2003.
The application of this interpretation is not expected to have a material effect
on CRLP's consolidated financial statements.
Note 3 -- Capital Structure
At March 31, 2003, the Company controlled CRLP as the sole general
partner and as the holder of 69.3% of the common units of CRLP ("Redeemable
Units") and 63.6% of the preferred units (the "Series A Preferred Units" and
"Series C Preferred Units). The limited partners of CRLP who hold units, are
those persons (including certain officers and directors) who, at the time of the
Initial Public Offering, elected to hold all or a portion of their interest in
the form of Units rather than receiving shares of common stock of the Company,
or individuals from whom the Company acquired certain properties, who elected to
receive Units in exchange for the properties. Each Unit may be redeemed by the
holder thereof for either one share of Common Stock or cash equal to the fair
market value thereof at the time of such redemption, at the option of CRLP.
Additionally, in 1999, CRLP issued $100 million of Series B Cumulative
Redeemable Perpetual Preferred Units ("Series B Units") in a private placement,
that are exchangeable for Series B Preferred Shares of the Company after ten
years at the option of the holders of the Series B Units.
The Board of Trustees of the Company manages CRLP by directing the
affairs of the Company. The Company's interests in CRLP entitle it to share in
cash distributions from, and in the profits and losses of, CRLP in proportion to
the Company's percentage interest therein and entitle the Company to vote on all
matters requiring a vote of the limited partners.
Note 4 -- Dispositions
On February 28, 2003, CRLP sold Colonial Promenade Bardmoor, a 152,667
square foot retail asset located in St. Petersburg, Florida. The total sales
price was $17.1 million, which was used to repay a portion of the borrowings
under CRLP's unsecured line of credit and to support CRLP's investment
activities.
On March 28, 2003, CRLP sold Colonial Grand at Citrus Park, a 176-unit
multifamily apartment complex located in Tampa, Florida. The property was sold
for a total price of $13.8 million, which was used to repay a portion of the
borrowings under CRLP's unsecured line of credit and to support CRLP's
investment activities.
Note 5 -- Net Income Per Unit
The following table sets forth the computation of basic and diluted
earnings per unit:
(amounts in thousands, except per unit data)
Three Months Three Months
Ended Ended
March 31, March 31,
2003 2002
--------------- ---------------
Numerator:
Net Income $ 23,730 $ 25,739
Less: Preferred stock dividends (6,109) (6,109)
--------------- ---------------
Net income available to common unitholders $ 17,621 $ 19,630
--------------- ---------------
Denominator:
Denominator for basic net income per unit -
weighted average common units 33,812 32,525
Effect of dilutive securities:
Trustee and employee stock options, treasury method 169 218
--------------- ---------------
Denominator for diluted net income per unit -
adjusted weighted average common units 33,981 32,743
--------------- ---------------
Basic net income per unit $ 0.52 $ 0.60
Diluted net income per unit $ 0.52 $ 0.60
--------------- ---------------
Options to purchase 509,592 common shares at a weighted average
exercise price of $33.52 per share were outstanding during 2003, but were not
included in the computation of diluted net income per share because the options'
exercise price was greater than the average market price of the common shares
and, therefore, the effect would be antidilutive.
Note 6 -- Segment Information
CRLP is organized into, and manages its business based on the
performance of three separate and distinct operating divisions: Multifamily,
Office, and Retail. Each division has a separate management team that is
responsible for acquiring, developing, managing, and leasing properties within
each division. The applicable accounting policies of the segments are the same
as those described in the "Summary of Significant Accounting Policies" in CRLP's
2002 Annual Report. The pro rata portion of the revenues, net operating income
(NOI), and assets of the partially- owned entities and joint ventures that CRLP
has entered into are included in the applicable segment information.
Additionally, the revenues and NOI of properties sold that are classified as
discontinued operations are also included in the applicable segment information.
In reconciling the segment information presented below to total revenues, income
from continuing operations, and total assets, investments in partially-owned
entities and joint ventures are eliminated as equity investments and their
related activity are reflected in the consolidated financial statements as
investments accounted for under the equity method and discontinued operations
are reported separately. Management evaluates the performance of its segments
and allocates resources to them based on net operating income (NOI). NOI
consists of revenues in excess of general operating expenses, salaries and
wages, repairs and maintenance, taxes, licenses, and insurance. Segment
information and the reconciliation of total segment revenues to total revenues,
total segment NOI to income from continuing, and total divisional assets to
total assets, for the three months ended March 31, 2003 and 2002, and for the
periods ended March 31, 2003 and December 31, 2002 is presented below:
Three Months Ended
March 31,
------------------------------------
(in thousands) 2003 2002
---------------- ----------------
Revenues:
Divisional Property Revenues
Multifamily $ 24,406 $ 28,275
Office 22,669 14,995
Retail 38,836 37,463
---------------- ----------------
Total Divisional Property Revenues: 85,911 80,733
Partially-owned subsidiaries (3,927) (3,141)
Unallocated corporate revenues 983 1,654
Discontinued operations revenues (707) (1,364)
---------------- ----------------
Total Consolidated Revenues: $ 82,260 $ 77,882
---------------- ----------------
NOI:
Divisional NOI
Multifamily $ 15,325 $ 18,675
Office 15,884 10,507
Retail 27,213 26,068
---------------- ----------------
Total Divisional NOI: 58,422 55,250
Partially-owned subsidiaries (2,269) (1,827)
Unallocated corporate revenues 983 1,654
Discontinued operations NOI (440) (904)
General and administrative expenses (4,803) (3,805)
Depreciation (19,494) (17,432)
Amortization (1,982) (2,078)
Other (42) (18)
---------------- ----------------
Income from operations 30,375 30,840
---------------- ----------------
Total other expense (16,518) (5,650)
---------------- ----------------
Income from continuing operations $ 13,857 $ 25,190
---------------- ----------------
(in thousands) March 31, December 31,
Assets: 2003 2002
---------------- ----------------
Divisional Assets:
Multifamily $ 630,263 $ 645,840
Office 596,511 594,795
Retail 889,145 906,555
---------------- ----------------
Total Divisional Assets 2,115,919 2,147,190
Partially-owned subsidiaries (115,829) (116,375)
Unallocated corporate assets (1) 106,447 98,958
---------------- ----------------
$ 2,106,537 $ 2,129,773
---------------- ----------------
(1) Includes the Company's investment in partially-owned entities of
$35,874 as of March 31, 2003, and $36,265 as of December 31, 2002.
Note 7 -- Financial Instruments: Derivatives and Hedging
CRLP's objective in using derivatives is to add stability to interest
expense and to manage its exposure to interest rate movements or other
identified risks. To accomplish this objective, CRLP primarily uses interest
rate swaps and caps as part of its cash flow hedging strategy. Interest rate
swaps designated as cash flow hedges involve the receipt of variable-rate
amounts in exchange for fixed-rate payments over the life of the agreements
without exchange of the underlying principal amount. During the quarter ended
March 31 ,2003, such derivatives were used to hedge the variable cash flows
associated with existing variable-rate debt and existing lines of credit.
CRLP has entered into several different hedging transactions in an
effort to manage its exposure to changes in interest rates. The following table
summarizes the notional values, fair values and other characteristics of CRLP's
derivative financial instruments at March 31, 2003. The notional value at March
31, 2003 provides an indication of the extent of CRLP's involvement in these
instruments at that time, but does not represent exposure to credit, interest
rate, or market risk.
Fair Value
Interest At March 31, 2003
Product Type Notional Value Rate Maturity (in thousands)
- ------------------------------------- ------------------------- ------------- -------------- -------------------------
Interest Rate SWAP, Cash Flow $30.2 - $27.7 million 5.932% 1/01/06 $ (2,936)
Interest Rate SWAP, Cash Flow $50.0 million 2.113% 1/02/04 (359)
Interest Rate SWAP, Cash Flow $50.0 million 1.637% 1/02/04 (178)
Interest Rate SWAP, Cash Flow $50.0 million 1.615% 1/02/04 (169)
Interest Rate SWAP, Fair Value $50.0 million 5.015% 7/26/04 2,363
Interest Rate CAP, Cash Flow $21.1 million 6.850% 6/29/04 -
Interest Rate CAP, Cash Flow $17.9 million 6.850% 7/06/04 -
Interest Rate CAP, Cash Flow $30.4 million 11.200% 6/30/03 -
Interest Rate CAP, Cash Flow $17.1 million 4.840% 4/1/04 -
Interest Rate CAP, Cash Flow $27.0 million 4.840% 4/1/04 -
Interest Rate CAP, Cash Flow $8.7 million 4.840% 4/1/04 -
CRLP does not use derivatives for trading or speculative purposes.
Further, CRLP has a policy of only entering into contracts with major financial
institutions based upon their credit ratings and other factors. When viewed in
conjunction with the underlying and offsetting exposure that the derivatives are
designed to hedge, CRLP has not sustained a material loss from those instruments
nor does it anticipate any material adverse effect on its net income or
financial position in the future from the use of derivatives.
At March 31, 2003, derivatives with a fair value of $2.4 million were
included in other assets and derivatives with a fair value of $3.6 million were
included in other liabilities. The change in net unrealized gains/losses of $0.2
million in the quarter ending March 31, 2003 for derivatives designated as cash
flow hedges is a component of partners' capital. Hedge ineffectiveness of
$56,000 on cash flow hedges was recognized in other income (expense) during the
quarter ended March 31, 2003. As a result of an impending reduction of CRLP's
outstanding line of credit balance below the $150.0 million total hedged
notional amount, in accordance with SFAS 133, CRLP was required to dedesignate
one of its $50.0 million hedges against its line of credit. CRLP elected to
dedesignate its $50.0 million swap with an interest rate of 1.615%. In
connection therewith, CRLP reflected a charge of $181,000 in other income
(expense).
Amounts reported in accumulated other comprehensive income related to
derivatives will be reclassified to interest expense as interest payments are
made on CRLP's variable-rate debt. Over the next 12 months, CRLP estimates that
an additional $2.4 million will be reclassified to earnings of the current
balance held in accumulated other comprehensive income (loss).
Note 8 -- Subsequent Events
Interest Rate SWAP Transactions
During April 2003, CRLP terminated its $50.0 million reverse interest
rate swap agreement on its medium-term notes and received $2.3 million, which
will be amortized over the remaining life of the original swap agreement.
Additionally, CRLP terminated its $50.0 million interest rate swap agreement,
with an interest rate of 1.615%, on its unsecured line of credit related to the
dedesignation of the hedge as discussed in Note 7.
Financing Activities
On April 4, 2003, CRLP completed a $125.0 million public debt offering
of unsecured senior notes. The notes, which mature in April 2013, bear a coupon
rate of 6.15%, and were priced to yield an effective rate of 6.18% over the ten
year term. CRLP used the net proceeds of the offering to repay a portion of the
outstanding balance on its unsecured line of credit.
On April 30, 2003, the Company issued $125.0 million or 5,000,000
depositary shares, each representing 1/10 of a share of 8.125% Series D
Cumulative Redeemable Preferred Shares of Beneficial Interest (Series D
Preferred Shares). The Series D Preferred Shares may be called by the Company on
or after April 30, 2008 and have a liquidation preference of $25.00 per
depositary share. The Series D Preferred Shares have no stated maturity, sinking
fund or mandatory redemption and are not convertible into any other securities
of the Company. The net proceeds of the offering, which funded on April 30,
2003, were approximately $121.1 million and were used to redeem the Company's
$125.0 million 8.75% Series A Cumulative Redeemable Preferred Shares of
Beneficial Interest on May 7, 2003.
Distribution
On April 24, 2003, a cash distribution was declared to partners of CRLP
in the amount of $0.665 per unit, totaling $22.6 million. The distribution was
declared to partners of record as of May 5, 2003, and was paid on May 12, 2003.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
Colonial Properties Trust:
We have reviewed the accompanying consolidated condensed balance sheet
of Colonial Realty Limited Partnership (the "Partnership") as of March 31, 2003,
and the related consolidated condensed statements of income for the three-month
periods ended March 31, 2003 and 2002, and the consolidated condensed statements
of cash flows for the three-month periods ended March 31, 2003 and 2002. These
financial statements are the responsibility of the Partnership's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted in the United States of
America, the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying consolidated condensed financial
statements for them to be in conformity with accounting principles generally
accepted in the United States of America.
We have previously audited, in accordance with auditing standards
generally accepted in the United States of America, the consolidated balance
sheet as of December 31, 2002, and the related consolidated statements of
income, partners' capital, and cash flows for the year then ended (not presented
herein); and in our report dated January 17, 2003, except for Note 16, as to
which the date is February 28, 2003, we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the information set
forth in the accompanying consolidated condensed balance sheet as of December
31, 2002, is fairly stated in all material respects in relation to the
consolidated balance sheet from which it has been derived.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Birmingham, Alabama
May 12, 2003
COLONIAL REALTY LIMITED PARTNERSHIP
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
The following discussion and analysis of the consolidated financial
condition and consolidated results of operations should be read together with
the consolidated financial statements of Colonial Realty Limited Partnership and
notes thereto contained in this Form 10-Q. This report on Form 10-Q contains
certain "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause our, and our
affiliates, or the industry's actual results, performance, achievements or
transactions to be materially different from any future results, performance,
achievements or transactions expressed or implied by such forward-looking
statements. A number of important factors could cause actual results to differ
materially from those indicated by the forward-looking statements, including,
but not limited to, the risks described in our 2002 Annual Report on Form 10-K
filed with the Securities and Exchange Commission on March 28, 2003. Such
factors include, among others, the following:
o National, regional and local economic and business conditions that will,
among other things, affect:
o Demand for multifamily, office and retail properties,
o The ability of the general economy to recover timely from the current
economic downturn,
o Availability and creditworthiness of tenants,
o The level of lease rents, and
o The availability of financing for both tenants and us;
o Adverse changes in the real estate markets, including, among other things:
o Competition with other companies, and
o Risks of real estate acquisition and development (including the
failure of pending developments to be completed on time and within
budget);
o Actions, strategies and performance of affiliates that we may not control
or companies in which we have made investments;
o Ability to obtain insurance at a reasonable cost;
o Ability of our general partner to maintain its status as a REIT for
federal and state income tax purposes;
o Governmental actions and initiatives; and
o Environmental/safety requirements.
General
As used herein, the terms "CRLP", "we", "us", "our" and "Operating Partnership"
refer to Colonial Realty Limited Partnership, a Delaware limited partnership,
and its subsidiaries and other affiliates, including, Colonial Properties
Services Limited Partnership and Colonial VRS L.L.C. or, as the context may
require, Colonial Realty Limited Partnership only. As used herein, the term
"Company" includes Colonial Properties Trust, an Alabama real estate investment
trust, and one or more of its subsidiaries and other affiliates, including CRLP,
Colonial Properties Services Limited Partnership and Colonial Properties
Services, Inc. or, as the context may require, Colonial Properties Trust only.
We are the Operating Partnership of the Company, which is one of the
largest owners, developers and operators of multifamily, office and retail
properties in the Sunbelt region of the United States. The Company is a
fully-integrated real estate company, whose activities include ownership of a
diversified portfolio of 104 properties as of March 31, 2003, located in
Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina,
Tennessee, Texas, and Virginia, development of new properties, acquisition of
existing properties, build-to-suit development, and the provision of management,
leasing, and brokerage services for commercial real estate.
As of March 31, 2003, we owned 40 multifamily apartment communities
containing a total of 14,380 apartment units (the "multifamily properties"), 21
office properties containing a total of approximately 5.2 million square feet of
office space (the "office properties"), 43 retail properties containing a total
of approximately 15.3 million square feet of retail space (the "retail
properties"), and certain parcels of land adjacent to or near certain of these
properties (the "land"). The multifamily properties, the office properties, the
retail properties and the land are referred to collectively as the "properties".
As of March 31, 2003, the multifamily properties, the office properties, and the
retail properties that had achieved stabilized occupancy were 93%, 92% and 89%
leased, respectively.
Critical Accounting Policies and Estimates
Refer to our 2002 Annual Report on Form 10-K for a discussion of our
critical accounting policies, which include real estate development, principles
of consolidation, revenue recognition, valuation of receivables, and accounting
policies for derivatives. During the quarter ended March 31, 2003, there were no
material changes to these policies.
Results of Operations -- Three Months Ended March 31, 2003 and 2002
Revenue -- Total revenue from continuing operations increased by $4.4
million, or 5.6%, for the first quarter of 2003 when compared to the first
quarter of 2002. Revenues generated by properties that were acquired, developed,
or re-developed during 2002 and the first quarter of 2003 increased $8.9 million
during the first quarter of 2003 when compared to the first quarter of 2002.
However, the increase in revenues generated by properties that were acquired,
developed, or re-developed was offset by a decrease in revenues from properties
disposed in which CRLP maintains a continuing interest, of $3.9 million during
the first quarter of 2003 when compared to the first quarter of 2002. The
remaining decrease primarily relates to several factors. Our multifamily
properties are experiencing increases in move-in concessions, which is a
function of the continued decline in apartment fundamentals over the past year.
The decline is attributable to a declining employment growth and a robust single
family housing market driven by lower interest rates. In addition, we have
experienced decreases in other non-property related revenue which primarily
consist of management and development fees, somewhat offset by an increase in
other property related revenue as a result of lease buyouts during the first
quarter of 2003.
Same-property revenue decreased by $0.8 million, or 1.1%, for the first
quarter of 2003 when compared to the first quarter of 2002. This decrease is
primarily related to an increase in move-in concessions in our multifamily
properties during the first quarter of 2003 as a result of a slowdown in the
U.S. economy during the last year, decreases in overall physical occupancy
percentages within our office and retail divisions, offset by lease buyouts that
occurred in our office and retail divisions in the first quarter of 2003.
Operating Expenses -- Total operating expenses from continuing
operations increased by $4.8 million, or 10.3%, for the first quarter of 2003
when compared to the first quarter of 2002. Operating expenses related to
properties that were acquired, developed, or re-developed during 2002 and the
first quarter of 2003 increased $5.2 million during the first quarter of 2003
when compared to the first quarter of 2002. However, the increase in operating
expenses related to properties that were acquired, developed, or re-developed
was offset by a decrease in operating expenses from properties disposed in which
CRLP maintains a continuing interest of $2.2 million during the first quarter of
2003 compared to the first quarter of 2002. The remaining increase is primarily
attributable to an increase in real estate taxes, utilities expenses, repairs
and maintenance expenses at our existing properties and general corporate
overhead expenses.
Same-property operating expenses (including depreciation and
amortization) increased by $1.1 million, or 2.8%, for the first quarter of 2003
when compared to the first quarter of 2002. The increase is primarily associated
with increases in repairs and maintenance expenses, utilities expenses, and
depreciation expense.
Other Income and Expense -- Interest expense increased by $0.8 million,
or 5.2%, for the first quarter of 2003 when compared to the first quarter of
2002. The increase in interest expense is primarily attributable to an increase
in the total debt outstanding of $1.24 billion at March 31, 2003 as compared to
$1.19 billion at March 31, 2002, offset by a decrease in CRLP's weighted average
interest rate. Overall, CRLP's weighted average interest rate decreased from
6.04% at March 31, 2002 to 5.74% at March 31, 2003.
Additionally, gains (losses) on sales of property from continuing
operations decreased $9.8 million in the first quarter of 2003 when compared to
the first quarter of 2002, as a result of CRLP maintaining a continuing
involvement in the properties sold in the first quarter of 2002. CRLP does not
have a continuing interest in the properties sold in the first quarter of 2003,
in accordance with SFAS 144. Therefore, in accordance with SFAS 144, the gains
from the sales of properties in the first quarter of 2003 are classified as
income from discontinued operations. See Liquidity and Capital Resources for
further discussion.
Liquidity and Capital Resources
The Company has made an election to be taxed as a REIT under Sections
856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"),
commencing with its taxable year ending December 31, 1993. If the Company
qualifies for taxation as a REIT, the Company generally will not be subject to
Federal income tax to the extent it distributes at least 90% of its REIT taxable
income to its shareholders. Even if the Company qualifies for taxation as a
REIT, the Company may be subject to certain state and local taxes on its income
and property and to federal income and excise taxes on its undistributed income.
During the first quarter of 2003, CRLP invested $6.8 million in the
development of properties and $8.7 million in recurring capital expenditures,
which includes building improvements, tenant improvements, leasing commissions
and corporate capital expenditures at our wholly-owned properties and our
percentage of investments in unconsolidated subdidiaries. CRLP financed this
growth through advances on its bank line of credit, cash from operations,
proceeds from CRLP's dividend reinvestment plan, and disposition of assets. As
of March 31, 2003, CRLP has an unsecured bank line of credit providing for total
borrowings of up to $320 million. This line of credit agreement bears interest
at LIBOR plus a spread calculated from a pricing grid based on CRLP's unsecured
debt ratings. Based on CRLP's debt ratings at March 31, 2003, the spread was 105
basis points. The line of credit is renewable in November 2005, and provides for
a one-year extension. The line of credit agreement includes a competitive bid
feature that will allow CRLP to convert up to $160 million under the line of
credit to a fixed rate, for a fixed term not to exceed 90 days. The credit
facility is primarily used by CRLP to finance property acquisitions and
developments and has an outstanding balance at March 31, 2003, of $213.6
million. The interest rate of this short-term borrowing facility, including the
competitive bid balance, is 2.70% and 3.13% at March 31, 2003 and 2002,
respectively.
At March 31, 2003, CRLP's total outstanding debt balance was $1.24
billion. The outstanding balance includes fixed-rate debt of $961.6 million, or
77.5% of the total debt balance, and floating-rate debt of $279.3 million, or
22.5% of the total debt balance. CRLP's floating rate debt includes $25.0
million of commercial paper outstanding at an average interest rate of 1.87%,
which is due at various dates over the next three months. CRLP's total market
capitalization as of March 31, 2003 was $2.6 billion and its ratio of debt to
market capitalization was 47.0%. Certain loan agreements of CRLP contain
restrictive covenants, which among other things require maintenance of various
financial ratios. At March 31, 2003, CRLP was in compliance with these
covenants.
CRLP continued its asset recycling program, which allows CRLP to sell
mature, slower growing assets and reinvest the proceeds into opportunities with
more growth potential. During the first quarter of 2003, CRLP sold Colonial
Grand at Citrus Park, a multifamily asset located in Tampa, Florida, and
Colonial Promenade Bardmoor, a retail asset located in St. Petersburg, Florida.
Colonial Grand at Citrus Park, a 176-unit complex was sold for a total purchase
price of $13.8 million. Colonial Promenade Bardmoor, a 152,667 square foot
retail asset was sold for $17.1 million. In accordance with the provisions of
SFAS No. 144, as CRLP does not maintain a continuinig involvement in the sold
properties, the gains from these sales have been classified as discontinued
operations. Proceeds from both sales transactions was used to repay a portion of
the borrowings under CRLP's unsecured line of credit and to support CRLP's
investment activities.
Through its taxable REIT subsidiary, CPSI, the Company provides
management services for properties owned by third parties, and provides
construction management and development services for third parties, for which
the Company recognizes management and development fees. Additionally, the
Company makes the following types of investments through CPSI; (a) purchases
undeveloped land and sells parcels of land to third parties, (b) develops a
property, and upon completion sells the property to a third party, or (c)
purchases an operating property to be sold to a third party within a short
period of time.
CRLP expects to meet its short-term liquidity requirements generally
through its net cash provided by operations, proceeds from CRLP's dividend
reinvestment plan, 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 and the issuance of debt securities or additional equity securities
of CRLP, sales of properties, joint ventures, or, possibly in connection with
acquisitions of land or improved properties, issuance of limited partnership
units of CRLP. CRLP believes that its net cash provided by operations will be
adequate and anticipates that it 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.
Financial Instruments: Derivatives and Hedging
CRLP's objective in using derivatives is to add stability to interest
expense and to manage its exposure to interest rate movements or other
identified risks. To accomplish this objective, CRLP primarily uses interest
rate swaps and caps as part of its cash flow hedging strategy. Interest rate
swaps designated as cash flow hedges involve the receipt of variable-rate
amounts in exchange for fixed-rate payments over the life of the agreements
without exchange of the underlying principal amount. During the quarter ended
March 31 ,2003, such derivatives were used to hedge the variable cash flows
associated with existing variable-rate debt and existing lines of credit.
CRLP has entered into several different hedging transactions in an
effort to manage its exposure to changes in interest rates. The following table
summarizes the notional values, fair values and other characteristics of CRLP's
derivative financial instruments at March 31, 2003. The notional value at March
31, 2003 provides an indication of the extent of CRLP's involvement in these
instruments at that time, but does not represent exposure to credit, interest
rate, or market risk.
Fair Value
Interest At March 31, 2003
Product Type Notional Value Rate Maturity (in thousands)
- ------------------------------------- ------------------------- ------------- -------------- -------------------------
Interest Rate SWAP, Cash Flow $30.2 - $27.7 million 5.932% 1/01/06 $ (2,936)
Interest Rate SWAP, Cash Flow $50.0 million 2.113% 1/02/04 (359)
Interest Rate SWAP, Cash Flow $50.0 million 1.637% 1/02/04 (178)
Interest Rate SWAP, Cash Flow $50.0 million 1.615% 1/02/04 (169)
Interest Rate SWAP, Fair Value $50.0 million 5.015% 7/26/04 2,363
Interest Rate CAP, Cash Flow $21.1 million 6.850% 6/29/04 -
Interest Rate CAP, Cash Flow $17.9 million 6.850% 7/06/04 -
Interest Rate CAP, Cash Flow $30.4 million 11.200% 6/30/03 -
Interest Rate CAP, Cash Flow $17.1 million 4.840% 4/1/04 -
Interest Rate CAP, Cash Flow $27.0 million 4.840% 4/1/04 -
Interest Rate CAP, Cash Flow $8.7 million 4.840% 4/1/04 -
CRLP does not use derivatives for trading or speculative purposes.
Further, CRLP has a policy of only entering into contracts with major financial
institutions based upon their credit ratings and other factors. When viewed in
conjunction with the underlying and offsetting exposure that the derivatives are
designed to hedge, CRLP has not sustained a material loss from those instruments
nor does it anticipate any material adverse effect on its net income or
financial position in the future from the use of derivatives.
At March 31, 2003, derivatives with a fair value of $2.4 million were
included in other assets and derivatives with a fair value of $3.6 million were
included in other liabilities. The change in net unrealized gains/losses of $0.2
million in the quarter ending March 31, 2003 for derivatives designated as cash
flow hedges is a component of partners' capital. Hedge ineffectiveness of
$56,000 on cash flow hedges was recognized in other income (expense) during the
quarter ended March 31, 2003. As a result of an impending reduction of CRLP's
outstanding line of credit balance below the $150.0 million total hedged
notional amount, in accordance with SFAS 133, CRLP was required to dedesignate
one of its $50.0 million hedges against its line of credit. CRLP elected to
dedesignate its $50.0 million swap with an interest rate of 1.615%. In
connection therewith, CRLP reflected a charge of $181,000 in other income
(expense).
Amounts reported in accumulated other comprehensive income related to
derivatives will be reclassified to interest expense as interest payments are
made on CRLP's variable-rate debt. Over the next 12 months, CRLP estimates that
an additional $2.4 million will be reclassified to earnings of the current
balance held in accumulated other comprehensive income (loss).
Outlook
Management intends to maintain CRLP's strength through continued
diversification, while pursuing acquisitions and developments that meet
Colonial's criteria for property quality, market strength, and investment
return. Management will continue to use its line of credit to provide short-term
financing for acquisition, development, and re-development activities and plans
to continue to replace significant borrowings under the bank line of credit with
funds generated from the sale of additional debt and equity securities and
permanent financing, as market conditions permit. Management believes that these
potential sources of funds, along with the possibility of issuing limited
partnership units in exchange for properties, will provide CRLP with the means
to finance additional acquisitions, developments, and expansions.
In addition to the issuance of equity and debt, management is
investigating alternate financing methods and sources to raise future capital.
Private placements, joint ventures, and non-traditional equity and debt
offerings are some of the alternatives CRLP is contemplating.
Management anticipates that its net cash provided by operations and its
existing cash balances will provide the necessary funds on a short- and long-
term basis to cover its operating expenses, interest expense on outstanding
indebtedness, recurring capital expenditures, and dividends to shareholders in
accordance with Internal Revenue Code requirements applicable to real estate
investment trusts.
INFLATION
Leases at the multifamily properties generally provide for an initial
term of six months to one year and allow for rent adjustments at the time of
renewal. Leases at the office properties typically provide for rent adjustments
and the pass-through of certain operating expenses during the term of the lease.
Substantially all of the leases at the retail properties provide for the
pass-through to tenants of certain operating costs, including real estate taxes,
common area maintenance expenses, and insurance. All of these provisions permit
CRLP to increase rental rates or other charges to tenants in response to rising
prices and, therefore, serve to minimize CRLP's exposure to the adverse effects
of inflation.
An increase in general price levels may immediately precede, or
accompany, an increase in interest rates. At March 31, 2003, CRLP's exposure to
rising interest rates was mitigated by the existing debt level of 47.0% of
CRLP's total market capitalization, the high percentage of fixed rate debt
(77.5%), and the use of interest rate swaps to effectively fix the interest rate
on $150.0 million through January 2004, and approximately $30.0 million through
January 2006. As it relates to the short-term, increases in interest expense
resulting from increasing inflation is anticipated to be less than future
increases in income before interest.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
CRLP is exposed to interest rate changes primarily as a result of its
line of credit and long-term debt used to maintain liquidity and fund capital
expenditures and expansion of CRLP's real estate investment portfolio and
operations. CRLP's interest rate risk management objective is to limit the
impact of interest rate changes on earnings and cash flows and to lower its
overall borrowing costs. To achieve its objectives, CRLP borrows primarily at
fixed rates and may enter into derivative financial instruments such as interest
rate swaps, caps and treasury locks in order to mitigate its interest rate risk
on a related financial instrument. CRLP does not enter into derivative or
interest rate transactions for speculative purposes.
The table below presents the principal amounts, weighted average
interest rates, fair values and other terms required by year of expected
maturity to evaluate the expected cash flows and sensitivity to interest rate
changes. Also included is a summary of CRLP's swap contracts and rate caps at
March 31, 2003.
Estimated
Fair
(amounts in thousands) 2003 2004 2005 2006 2007 Thereafter Total Value
- ------------------------------------------------------------------------------------------------------------------------------------
Fixed Rate Debt $57,531 61,000 258,973 75,000 175,000 334,134 961,638 984,928
Average interest rate
at March 31, 2003 7.25% 7.62% 4.82% 7.97% 7.00% 7.43% 6.69% -
Variable Debt $ 25,461 52,383 63,648 - - 137,854 279,346 279,346
Average interest rate
at March 31, 2003 1.89% 3.25% 2.36% - - 2.35% 2.46% -
Interest Rate SWAPs
Variable to fixed $ - 150,000 - 28,885 - - 178,885 (3,642)
Average pay rate - 2.84% - 6.59% - - 2.95% -
Fixed to variable $ - 50,000 - - - - 50,000 2,363
Average pay rate - 3.25% - - - - 3.25% -
Interest Rate Cap $30,379 91,738 - - - - 122,117 -
Interest Rate 11.20% 5.69% - - - - 7.07% -
The table incorporates only those exposures that exist as of March 31,
2003 and it does not consider those exposures or positions that could arise
after that date. Moreover, because firm commitments are not presented in the
table above, the information presented therein has limited predictive value. As
a result, CRLP's ultimate realized gain or loss with respect to interest rate
fluctuations will depend on the exposures that arise during the period, CRLP's
hedging strategies at that time, and interest rates.
Item 4. Controls and Procedures.
Within 90 days prior to the date of filing of this report, CRLP's
management, including the Chief Executive Officer and the Chief Financial
Officer, carried out an evaluation of the design and operation of CRLP's
disclosure controls and procedures. Based on this evaluation, CRLP's Chief
Executive Officer and Chief Financial Officer concluded that CRLP's disclosure
controls and procedures are effective for gathering, analyzing and disclosing
the information CRLP is required to disclose in the reports it files under the
Securities Exchange Act of 1934, within the time periods specified in the
Securities and Exchange Commission's rules and forms. There have been no
significant changes in CRLP's internal controls or in other factors that could
significantly affect internal controls subsequent to the date of this
evaluation.
COLONIAL REALTY LIMITED PARTNERSHIP
PART II -- OTHER INFORMATION
Item 2. Changes in Securities.
The Company from time to time issues common shares of beneficial
interest ("Common Shares") pursuant to its Dividend Reinvestment and Share
Purchase Plan, its Non-Employee Trustee Share Option Plan, its Non-Employee
Trustee Share Plan, and its Employee Share Option and Restricted Share Plan, in
transactions that are registered under the Securities Act of 1933, as amended
(the "Act"). Pursuant to CRLP's Third Amended and Restated Agreement of Limited
Partnership, each time the Company issues Common Shares pursuant to the
foregoing plans, CRLP issues to Colonial Properties Trust, its general partner,
an equal number of Units for the same price at which the Common Shares were
sold, in transactions that are not registered under the Act in reliance on
Section 4(2) of the Act. During the quarter ended March 31, 2003, CRLP issued
319,125 Units in such transactions for an aggregate of approximately $9.0
million.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
12. Ratio of Earnings to Fixed Charges
15. Letter re: Unaudited Interim Financial Information
99.1 CEO and CFO Certifications pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf by the
undersigned hereunto duly authorized.
COLONIAL REALTY LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Colonial Properties Trust,
its general partner
Date: May 15, 2003 By: /s/ Howard B. Nelson, Jr.
-------------------------------
Howard B. Nelson, Jr.
Chief Financial Officer
(Duly Authorized Officer
and Principal Financial Officer)
Date: May 15, 2003 /s/ Kenneth E. Howell
-------------------------------
Kenneth E. Howell
Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer)
CERTIFICATIONS UNDER
SECTION 302 OF THE SARBANES-OXLEY ACT
CERTIFICATION
I, Thomas H. Lowder, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Colonial Realty
Limited Partnership;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: May 15, 2003
/s/ Thomas H. Lowder
---------------------
Thomas H. Lowder
Chief Executive Officer
CERTIFICATIONS UNDER
SECTION 302 OF THE SARBANES-OXLEY ACT
CERTIFICATION
I, Howard B. Nelson Jr., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Colonial Realty
Limited Partnership;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: May 15, 2003
/s/ Howard B. Nelson, Jr.
------------------------
Howard B. Nelson, Jr.
Chief Financial Officer