10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Form 10-K

[X]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For fiscal year ended December 31, 2007

OR

[ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from       to      

Commission file number 1-12080

Commission file number 0-28226

POST PROPERTIES, INC.

POST APARTMENT HOMES, L.P.

(Exact name of registrants as specified in their charters)

Georgia Georgia	58-1550675 58-2053632
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

4401 Northside Parkway, Suite 800, Atlanta, Georgia 30327

(Address of principal executive office — zip code)

(404) 846-5000

(Registrant’s telephone number, including area code)

Securities registered pursuant to section 12(b) of the Act:

Title of each class	Name of Each Exchange on Which Registered
Common Stock, $.01 par value	New York Stock Exchange
81/2% Series A Cumulative	New York Stock Exchange
Redeemable Preferred Shares, $.01 par value
75/8% Series B Cumulative	New York Stock Exchange
Redeemable Preferred Shares, $.01 par value

Securities registered pursuant to Section 12(g) of the Act: None

Title of each class	Name of Each Exchange on Which Registered
None	None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Post Properties, Inc.	Yes	[X]	No	[  ]
Post Apartment Homes, L.P.	Yes	[  ]	No	[X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Post Properties, Inc.	Yes	[  ]	No	[X]
Post Apartment Homes, L.P.	Yes	[  ]	No	[X]

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.  [X]

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 June 30, 2007 was approximately $2,237,043,221. As of February 15, 2008, there were 43,923,107 shares of common stock, $.01 par value, outstanding.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or smaller reporting company . See definition of accelerated filer, large accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.

Post Properties, Inc.	Large Accelerated Filer	[X]	Accelerated Filer  [  ]
	Non-Accelerated Filer	[  ]	(Do not check if a smaller reporting company)  Smaller Reporting Company  [  ]
Post Apartment Homes, L.P.	Large Accelerated Filer	[  ]	Accelerated Filer  [  ]
	Non-Accelerated Filer	[X]	(Do not check if a smaller reporting company)  Smaller Reporting Company  [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Post Properties, Inc.	Yes	[  ]	No	[X]
Post Apartment Homes, L.P.	Yes	[  ]	No	[X]

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Part III of this report are incorporated by reference from the Post Properties, Inc.’s Proxy Statement in connection with its Annual Meeting of Shareholders or will be provided by an amendment to this report.

TABLE OF CONTENTS

FINANCIAL INFORMATION

Item			Page
No.			No.
PART I
	1.	Business		1
	1A.	Risk Factors		8
	1B.	Unresolved Staff Comments		16
	2.	Properties		17
	3.	Legal Proceedings		20
	4.	Submission of Matters to a Vote of Security Holders		20
	X.	Executive Officers of the Registrant		20
PART II
	5.	Market for Registrant’s Common Stock, Related Shareholder Matters and Issuer Purchases of Equity Securities		21
	6.	Selected Financial Data		23
	7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		25
	7A.	Quantitative and Qualitative Disclosures about Market Risk		50
	8.	Financial Statements and Supplementary Data		51
	9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		51
	9A.	Controls and Procedures		51
	9B.	Other Information		51
PART III
	10.	Directors, Executive Officers and Corporate Governance		52
	11.	Executive Compensation		52
	12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters		52
	13.	Certain Relationships and Related Transactions, and Director Independence		52
	14.	Principal Accountant Fees and Services		52
PART IV
	15.	Exhibits, Financial Statements and Schedules		53
EX-10.8 AMENDED AND RESTATED EMPLOYEE STOCK PLAN
EX-10.12 MULTI-FAMILY NOTE
EX-10.14 FORM OF CHANGE IN CONTROL AGREEMENT
EX-10.15 FORM OF CHANGE IN CONTROL AGREEMENT
EX-10.16 FORM OF CHANGE IN CONTROL AGREEMENT
EX-21.1 LIST OF SUBSIDIARIES
EX-23.1 CONSENT OF DELOITTE & TOUCHE LLP-POST PROPERTIES, INC.
EX-23.2 CONSENT OF DELOITTE & TOUCHE LLP - POST APARTMENT HOMES, L.P. AND POST PROPERTIES, INC.
EX-23.3 CONSENT OF PRICEWATERHOUSECOOPERS LLP-POST PROPERTIES,INC.
EX-23.4 CONSENT OF PREICEWATERHOUSECOOPERS LLP-POST APARTMENT HOMES, LLP AND POST PROPERTIES, INC.
EX-31.1 SECTION 302, CERTIFICATION OF THE CEO
EX-31.2 SECTION 302, CERTIFICATION OF THE CFO
EX-32.1 SECTION 906, CERTIFICATION OF THE CEO
EX-32.2 SECTION 906, CERTIFICATION OF THE CFO

PART I

ITEM 1.   BUSINESS

The Company

Post Properties, Inc. and its subsidiaries develop, own and manage upscale multifamily apartment communities in selected markets in the United States. As used in this report, the term “Company” includes Post Properties, Inc. and its subsidiaries, including Post Apartment Homes, L.P. (the “Operating Partnership”), unless the context indicates otherwise. The Company, through its wholly-owned subsidiaries, is the general partner and owns a majority interest in the Operating Partnership which, through its subsidiaries, conducts substantially all of the on-going operations of the Company. At December 31, 2007, approximately 41.3%, 19.2%, 12.3% and 10.3% (on a unit basis) of the Company’s communities were located in the Atlanta, Georgia, Dallas, Texas, the greater Washington, D.C. and Tampa, Florida metropolitan areas, respectively. At December 31, 2007, the Company owned 22,578 apartment units in 63 apartment communities, including 1,747 apartment units in five communities held in unconsolidated entities and 2,266 apartment units in seven communities (and the expansion of one community) currently under construction and/or in lease-up. The Company is also developing and selling 535 for-sale condominium homes in four communities (including 137 units in one community held in an unconsolidated entity) and is converting apartment homes in two communities initially consisting of 349 units into for-sale condominium homes through a taxable REIT subsidiary. The Company is a fully integrated organization with multifamily development, operations and asset management expertise. The Company has approximately 778 employees, 16 of whom are parties to a collective bargaining agreement.

The Company is a self-administrated and self-managed equity real estate investment trust (a “REIT”). A REIT is a legal entity which holds real estate interests and is generally not subject to federal income tax on the income it distributes to its shareholders.

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^® 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, 2007, the Company, through wholly-owned subsidiaries, controlled the Operating Partnership as the sole general partner and as the holder of 98.9% of the common units in the Operating Partnership (the “Common Units”) and 100% of the preferred units (the “Perpetual Preferred Units”). The other limited partners of the Operating Partnership who hold Common Units are those persons who, at the time of the Company’s initial public offering, elected to hold all or a portion of their interests in the form of Common Units rather than receiving shares of common stock. Holders of Common Units may cause the Operating Partnership to redeem any of their Common Units for, at the option of the Operating Partnership, either one share of Common Stock or cash equal to the fair market value thereof at the time of such redemption. The Operating Partnership presently anticipates that it will cause shares of common stock to be issued in connection with each such redemption (as has been done in all redemptions to date) rather than paying cash. With each redemption of outstanding Common Units for common stock, the Company’s percentage ownership interest in the Operating Partnership will increase. In addition, whenever the Company issues shares of common and preferred stock, the Company will contribute any net proceeds to the Operating Partnership, and the Operating Partnership will issue an equivalent number of Common 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 limited partnership agreement of the Operating Partnership to manage and conduct the business of the Operating Partnership, subject to the consent of a majority of the outstanding Common 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. In general, the Operating Partnership cannot be terminated, except in connection with a sale of all or substantially all of the assets of the Company, until January 2044 without the approval of each limited partner who received Common Units of the Operating Partnership in connection with the Company’s initial public offering. The Company’s indirect limited and general partner interests in the Operating Partnership entitle it to share in cash

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distributions from, and in the profits and losses of, the Operating Partnership in proportion to the Company’s percentage interest in the Operating Partnership and indirectly entitle the Company to vote on all matters requiring a vote of the Operating Partnership.

As part of the formation of the Operating Partnership, a holding company, Post Services, Inc. (“Post Services”) was organized as a separate corporate subsidiary of the Operating Partnership. Through Post Services and its subsidiaries, the Operating Partnership will develop and sell for-sale condominium homes and provide other services to third parties. Post Services is a “taxable REIT subsidiary” as defined in the Internal Revenue Code. The Operating Partnership owns 100% of the voting and nonvoting common stock of Post Services, Inc.

Possible Business Combination

On January 23, 2008 the Company announced that its Board of Directors has authorized management to initiate a formal process to pursue a possible business combination or other sale transaction and to seek proposals from potentially interested parties. The formal process was commenced by the Company immediately following the announcement and is continuing. There can be no assurance that the initiation of a formal process will result in any transaction leading to a business combination or other sale transaction.

Business Strategy

The Company’s mission is to deliver superior satisfaction and value to its residents, associates and investors, with a vision to be the first choice in quality multifamily living. Key elements of the Company’s business strategy are as follows:

Investment, Disposition and Acquisition Strategy

The Company’s investment, disposition and acquisition strategy is aimed to achieve a real estate portfolio that has uniformly high quality, low average age properties and cash flow diversification. The Company plans to achieve its objectives by reducing its asset concentration in Atlanta, Georgia, while at the same time, building critical mass in other core markets where it may currently lack the portfolio size to achieve operating efficiencies and the full value of the Post^® brand. The Company defines critical mass for this purpose as at least 2,000 apartment units or $200 million of investment in a particular market. The Company’s goal ultimately is to reduce its concentration in Atlanta, Georgia, measured by dollars invested, to not more than 30% of the portfolio.

The Company plans to achieve its objectives by selling older and less competitively located properties, and it may also consider selling joint venture interests in some of its core properties or selectively converting some of these properties to for-sale (condominium) housing depending on market conditions. The Company expects that this strategy will provide capital to reinvest in new communities in dynamic neighborhoods and may also allow for leveraged returns through joint venture structures that preserve Post^® branded property and asset management.

The Company is focusing on a limited number of major cities and has regional value creation capabilities. The Company has investment and development personnel to pursue acquisitions, development, rehabilitations and dispositions of apartment communities and select multifamily for-sale (condominium) opportunities that are consistent with its market strategy. The Company’s value creation capabilities include the regional value creation teams in Atlanta, Georgia (focusing on the Southeast), Washington, DC (focusing on the mid-Atlantic market and New York, New York) and Dallas, Texas (focusing on the Southwest, currently limited to the Texas market). The Company operates in nine markets as of December 31, 2007. The Company entered the Raleigh, North Carolina market in 2007 with its purchase of an approximately 124-acre site and expects to commence construction on this site in 2008.

Key elements of the Company’s investment and acquisition strategy include instilling a disciplined team approach to development and acquisition decisions and selecting sites and properties in infill suburban and urban locations in strong primary markets that serve the higher-end multifamily consumer. The Company plans to develop, construct and continually maintain and improve its apartment communities consistent with quality standards management believes are synonymous with the Post^® brand. New acquisitions will be limited to properties that meet, or that are expected to be repositioned and improved to meet, its quality and location requirements. The Company will generally pursue acquisitions either to rebalance its property portfolio, using the proceeds of asset sales to redeploy capital in markets where critical mass is desired, or to pursue opportunistic purchases on a selective basis where market conditions warrant.

Post^® Brand Name Strategy

The Post^® brand name has been cultivated for more than 36 years, and its promotion has been integral to the Company’s success. Company management believes that the Post^® brand name is synonymous with quality upscale apartment communities that are situated in desirable locations and that provide a high level of resident service. The Company

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believes that it provides its residents with a high level of service, including attractive landscaping and numerous amenities, including controlled access, high-speed connectivity, on-site business centers, on-site courtesy officers, urban vegetable gardens and fitness centers at a number of its communities.

Key elements in implementing the Company’s brand name strategy include extensively utilizing the trademarked brand name and coordinating its advertising programs to increase brand name recognition. During recent years, the Company implemented new marketing campaigns, started new customer service programs designed to maintain high levels of resident satisfaction and provided employees and residents new opportunities for community involvement, all intended to enhance what it believes is a valuable asset.

In early 2005, the Company launched a new for-sale housing brand, Post Preferred Homes^tm, which serves as the unified marketing umbrella for the Company’s for-sale ventures, including developing new communities and converting existing assets into upscale for-sale condominium housing in several key markets. The Company’s for-sale ventures are marketed under the Post Preferred Homes^tm brand to differentiate for-sale product from the Company’s rental portfolio while capitalizing on the Company’s unique brand heritage.

Service and Associate Development Strategy

The Company’s service orientation strategy includes utilizing independent third parties to regularly measure resident satisfaction and providing performance incentives to its associates linked to delivering a high level of service and enhancing resident satisfaction. The Company also achieves its objective by investing in the development and implementation of training programs focused on associate development, improving the quality of its operations and the delivery of resident service.

Operating Strategy

The Company’s operating strategy includes striving to be an innovator and a leader in anticipating customer needs while achieving operating consistency across its properties. The Company also will continue to explore opportunities to improve processes and technology that drive efficiency in its business. Since 2005, the Company implemented new property operating, centralized procurement and revenue pricing software for this purpose.

Financing Strategy

The Company’s financing strategy is to maintain a strong balance sheet and to maintain its investment grade credit rating. The Company plans to achieve its objectives by generally maintaining total effective leverage (debt and preferred equity) as a percentage of undepreciated real estate assets to not more than 55%, by generally limiting variable rate indebtedness as a percentage of total indebtedness to not more than 25% of aggregate indebtedness, and by maintaining adequate liquidity through its unsecured lines of credit. At December 31, 2007, the Company’s total effective leverage (debt and preferred equity) as a percentage of undepreciated real estate assets and its total variable rate indebtedness as a percentage of total indebtedness were below these percentages.

Operating Divisions

The major operating divisions of the Company include Post Apartment Management, Post Investment Group and Post Corporate Services. Each of these operating divisions is discussed below.

Post Apartment Management

Post Apartment Management is responsible for the day-to-day operations of all Post^® communities including community leasing, property management, 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 (based on the number of employees).

Post Investment Group

Post Investment Group is responsible for all development, acquisition, rehabilitation, disposition, for-sale (condominium) and asset management activities of the Company. For development, this includes site selection, zoning and regulatory approvals, project design and construction management. This division is also responsible for apartment community acquisitions as well as property dispositions and strategic joint ventures that the Company undertakes as part of its investment strategy. The division recommends and executes major value added renovations and redevelopments of existing communities as well as direction for investment levels within each city and any new geographic market areas and new product types that the Company may consider.

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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, capital and risk management strategies. All accounting, management reporting, compliance, information systems, human resources, legal, risk management and insurance services required by the Company and all of its affiliates are centralized in Post Corporate Services.

Operating Segments

The Post Apartment Management division of the Company manages the owned apartment communities based on the operating segments associated with the various stages in the apartment ownership lifecycle. The Company’s primary operating segments are described below. In addition to these segments, all commercial properties and other ancillary service and support operations are reviewed and managed separately and in the aggregate by Company management.

•  Fully stabilized communities — those apartment communities which have been stabilized (the earlier of the point at which a property reaches 95% occupancy or one year after completion of construction) for both the current and prior year.

•  Communities stabilized during prior year — communities which reached stabilized occupancy in the prior year.

•  Development, rehabilitation and lease-up communities — those communities that are under development, rehabilitation and in lease-up but were not stabilized by the beginning of the current year, including communities that stabilized during the current year.

•  Condominium conversion and other communities — those portions of existing apartment communities being converted into condominiums and other communities converted to joint venture ownership that are reflected in continuing operations under Statement of Financial Accounting Standards (“SFAS”) No. 144 (see note 1 to the consolidated financial statements).

•  Acquired communities — those communities acquired in the current or prior year.

A summary of segment operating results for 2007, 2006 and 2005 is included in note 15 to the Company’s consolidated financial statements. Additionally, segment operating performance for such years is discussed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this annual report on Form 10-K.

Summary of Investment and Disposition Activity

During the five-year period from January 1, 2003 through December 31, 2007, the Company and its affiliates have developed and completed 823 apartment units in four apartment communities and sold 28 apartment communities containing an aggregate of 12,518 apartment units. During the same period, the Company acquired six apartment communities containing 1,837 units. The Company and its affiliates have sold apartment communities after holding them for investment periods that generally range up to twenty years after acquisition or development. The following table shows a summary of the Company’s development and sales activity during these periods.

	2007			2006			2005			2004			2003
Units developed and completed		439			—			—			—			468
Units acquired		350			669	(3)		319			499			—
Units sold		(807	)(1)		(1,342	)(4)		(3,051	)(6)		(3,880	)		(2,236	)
Units sold as condominiums or currently being converted into for-sale condominiums		—			—			(731	)(7)		—			—
Total units completed and owned by the Company and its affiliates (including units held for sale) at year-end		20,546	(2)		20,564	(5)		21,237	(8)		24,700			28,081
Total revenues from continuing operations (in thousands)	$	307,542		$	291,545		$	272,271		$	258,534		$	243,729

(1)	Excludes 1,202 units in three apartment communities that were converted to joint venture ownership where the Company retained a 25% ownership interest.
(2)	Excludes 1,937 units currently under development or in lease-up at December 31, 2007.
(3)	Excludes 150 units currently in lease-up, as the community was undergoing renovation upon purchase.
(4)	Includes a net reduction of two apartment units to reflect the addition of four apartment units at one community and a reduction of six apartment units at another community to facilitate an expansion.
(5)	Excludes 1,181 apartment units currently under development or in lease-up at December 31, 2006.
(6)	Includes reduction of four apartment units that were combined with other units.
(7)	Represents all units within communities that began conversion into condominiums in 2005. Of these units, 219, 282 and 106 units were sold in 2005, 2006 and 2007 respectively.
(8)	Excludes 205 apartment units under development at December 31, 2005.

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Current Development Activity

At December 31, 2007, the Company had six communities and one community expansion under development containing 2,116 apartment units, and 305 for-sale condominium homes under development in four communities (including 137 units in one community held in an unconsolidated entity). These communities are summarized in the table below.

														Costs
												Company		Incurred
		Number				Company			Estimated			Share of		as of
Community	Location	of Units		Retail Sq. Ft.		Ownership			Cost			Est. Cost		12/31/07
														(Company Share)
Apartments:
Post Alexandertm	Atlanta, GA		307		—		100	%	$	62.4		$	62.4	$	39.8
Post Walk® at Citrus Park Village	Tampa, FL		296		—		100	%		41.6			41.6		8.6
Post Eastsidetm	Dallas, TX		435		37,900		100	%		56.7			56.7		21.8
Post Hyde Park® (expansion)	Tampa, FL		84		—		100	%		18.8	(4)		18.8		14.9
Post Frisco Bridgestm	Dallas, TX		269		29,000		100	%		41.3			41.3		7.8
Post Park®	Wash. DC		396		1,700		100	%		84.7			84.7		14.1
Post West Austintm	Austin, TX		329		—		100	%		53.2			53.2		13.8
Total Apartments			2,116		68,600				$	358.7		$	358.7	$	120.8
Condominiums:
The Residences at 3630 Peachtreetm(5)	Atlanta, GA		137		—		50	%	$	93.4		$	47.6	$	11.1
Four Seasons Residences	Austin, TX		168		8,000		100	%		133.5			133.5		18.9
Total Condominiums			305		8,000				$	226.9		$	181.1	$	30.0

Estimated

Quarter

Quarter of

Quarter of

Estimated

Units

of Const.

First Units

Stabilized

Units

Quarter

Under

Units

Community

Start

Available

Occupancy(1)

Leased(2)

Sell-out

Contract(3)

Closed(2)

Apartments:

Post Alexandertm

2Q 2006

1Q 2008

2Q 2009

—

N/A

N/A

N/A

Post Walk® at Citrus Park Village

1Q 2008

1Q 2009

1Q 2010

—

N/A

N/A

N/A

Post Eastsidetm

4Q 2006

2Q 2008

4Q 2009

—

N/A

N/A

N/A

Post Hyde Park® (expansion)

4Q 2006

4Q 2007

3Q 2008

21

N/A

N/A

N/A

Post Frisco Bridgestm

3Q 2007

4Q 2008

2Q 2010

—

N/A

N/A

N/A

Post Park®

4Q 2007

1Q 2009

2Q 2010

N/A

N/A

N/A

Post West Austintm

4Q 2007

1Q 2009

3Q 2009

—

N/A

N/A

N/A

Total Apartments

21

Condominiums:

The Residences at 3630 Peachtreetm(5)

3Q 2007

3Q 2009

N/A

N/A

4Q 2010

—

—

Four Seasons Residences

1Q 2008

4Q 2009

N/A

N/A

4Q 2010

54

—

Total Condominiums

54

—

(1)	The Company defines stabilized occupancy as the earlier to occur of (i) the attainment of 95% physical occupancy on the first day of any month or (ii) one year after completion of construction.
(2)	As of January 28, 2008.
(3)	As of January 28, 2008, represents the total number of units under contract for sale upon completion and delivery of the units. There can be no assurance that condominium homes under contract will close.
(4)	Total estimated construction costs for the Post Hyde Park® expansion include the estimated replacement costs of six apartment units at the Company’s existing Hyde Park community that are being demolished to accommodate the expansion.
(5)	The amounts reflected for this project represent the condominium portion of a mixed-use development currently being developed in an entity owned with other third-party developers. This condominium portion of the project is co-owned with an Atlanta-based condominium development partner.

Competition

All of the Company’s apartment and for-sale (condominium) communities are located in developed markets that include other upscale apartments and for-sale (condominium) projects owned by numerous public and private companies. Some of these companies may have substantially greater resources and greater access to capital than the Company, allowing

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them to grow at rates greater than the Company. The number of competitive upscale apartment and for-sale (condominium) properties and companies in a particular market could have a material effect on the Company’s ability to lease apartment units at its apartment communities, including any newly developed or acquired communities, and on the rents charged, and could have a material effect on the Company’s ability to sell for-sale (condominium) units and on the selling prices of such units. In addition, other forms of residential properties, including single family housing and town homes, provide housing alternatives to potential residents of upscale apartment communities or potential purchasers of for-sale (condominium) units.

The Company competes for residents in its apartment communities based on its high level of resident service, the quality of its apartment communities (including its landscaping and amenity offerings) and the desirability of its locations. Resident leases at its apartment communities are priced competitively based on market conditions, supply and demand characteristics, and the quality and resident service offerings of its communities. The Company does not seek to compete on the basis of providing the low-cost solution for all residents.

Americans with Disabilities Act and Fair Housing Act

The Company’s multi-family housing communities and any newly acquired multi-family housing 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 multi-family housing communities where such removal is readily achievable. The ADA does not, however, consider residential properties, such as multi-family housing 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 must also comply with the Fair Housing Act (the “FHA”), which requires that apartment communities first occupied after March 13, 1991 be accessible to persons with disabilities.

Noncompliance with the FHA and ADA could result in the imposition of fines, awards of damages to private litigants, payment of attorneys’ fees and other costs to plaintiffs, substantial litigation costs and substantial costs of remediation. Compliance with the FHA could require removal of structural barriers to handicapped access in a community, including the interiors of multi-family housing units covered under the FHA. In addition to the ADA and FHA, state and local laws exist that impact the Company’s multi-family housing communities with respect to access thereto by persons with disabilities. Further, legislation or regulations adopted in the future may impose additional burdens or restrictions on the Company with respect to improved access by persons with disabilities. The ADA, FHA, or other existing or new legislation may require the Company to modify its existing properties. These laws may also restrict renovations by requiring improved access to such buildings or may require the Company to add other structural features that increase its construction costs.

Within the past few years, there has been heightened scrutiny of multifamily housing communities for compliance with the requirements of the FHA and ADA. In November 2006, the Equal Rights Center, or ERC, filed a lawsuit against the Company and the Operating Partnership alleging various violations of the FHA and the ADA at certain properties designed, constructed or operated by the Company and the Operating Partnership. The ERC seeks compensatory and punitive damages in unspecified amounts, an award of attorneys’ fees and costs of suit, as well as preliminary and permanent injunctive relief that includes retrofitting multi-family housing units and public use areas to comply with the FHA and ADA and prohibiting construction or sale of noncompliant units or complexes.

At this stage in the proceeding, it is not possible to predict or determine the outcome of the legal proceeding, nor is it possible to estimate the amount of loss, if any, that would be associated with an adverse decision. The Company cannot ascertain the ultimate cost of compliance with the ADA, FHA or other similar state and local legislation and such costs are not likely covered by insurance policies. The cost associated with ongoing litigation or compliance could be substantial and could adversely affect the Company’s business, results of operations and financial condition.

Environmental Regulations

The Company is subject to federal, state and local environmental laws, ordinances, and regulations that apply to the development of real property, including construction activities, the ownership of real property, and the operation of multifamily apartment and for-sale (condominium) communities.

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 third-party environmental consultant in accordance with recognized industry standards. The environmental investigation report is reviewed by the Company and counsel prior to purchase and/or development of any property. If the environmental

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investigation identifies evidence of potentially significant environmental contamination that merits additional investigation, sampling of the property is performed by the environmental consultant.

If necessary, remediation or mitigation of contamination, including removal of contaminated soil and/or underground storage tanks, placement of impervious barriers, or creation of land use or deed restrictions, is undertaken either prior to development or at another appropriate time. When performing remediation activities, the Company is subject to a variety of environmental requirements. In some cases, the Company obtains state approval of the selected remediation and mitigation measures by entering into voluntary environmental cleanup programs administered by state agencies.

In developing properties and constructing apartment and for-sale (condominium) communities, the Company utilizes independent environmental consultants to determine whether there are any flood plains, wetlands or other environmentally sensitive areas that are part of the property to be developed. If flood plains are identified, development and construction work 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. If wetlands or other environmentally sensitive areas are identified, the Company plans and conducts its development and construction activities and obtains the necessary permits and authorizations in compliance with applicable legal standards. In some cases, however, the presence of wetlands and/or other environmentally sensitive areas could preclude, severely limit, or otherwise alter the proposed site development and construction activities.

Storm water discharge from a construction site is subject to the storm water permit requirements mandated under the Clean Water Act. In most jurisdictions, the state administers the permit programs. The Company currently anticipates that it will be able to obtain and materially comply with any storm water permits required for new development. The Company has obtained and is in material compliance with the construction site storm water permits required for its existing development activities.

The Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) and comparable state laws subject the owner or operator of real property or a facility and persons who arranged for off-site disposal activities to claims or liability for the costs of removal or remediation of hazardous substances that are released at, in, on, under, or from real property or a facility. In addition to claims for cleanup costs, the presence of hazardous substances on or the release of hazardous substances from a property or a facility could result in a claim by a private party for personal injury or property damage or could result in a claim from a governmental agency for other damages, including natural resource damages. Liability under CERCLA and comparable state laws can be imposed on the owner or the operator of real property or a facility without regard to fault or even knowledge of the release of hazardous substances and other regulated materials on, at, in, under, or from the property or facility. Environmental liabilities associated with hazardous substances also could be imposed on the Company under other applicable environmental laws, such as the Resource Conservation and Recovery Act (and comparable state laws), or common-law principles. The presence of hazardous substances in amounts requiring response action or the failure to undertake necessary remediation may adversely affect the owner’s ability to use or sell real estate or borrow money using such real estate as collateral.

Various environmental laws govern certain aspects of the Company’s ongoing operation of its communities. Such environmental laws include those regulating the existence of asbestos-containing materials in buildings, management of surfaces with lead-based paint (and notices to residents about the lead-based paint), use of active underground petroleum storage tanks, and waste-management activities. The failure to comply with such requirements could subject the Company to a government enforcement action and/or claims for damages by a private party.

The Company has not been notified by any governmental authority of any material noncompliance, claim, or liability in connection with environmental conditions associated with any of its apartment and for-sale (condominium) communities. The Company has not been notified of a material claim for personal injury or property damage by a private party relating to any of its apartment and for-sale (condominium) communities in connection with environmental conditions. The Company is not aware of any environmental condition with respect to any of its apartment and for-sale (condominium) communities that could be considered to be material.

It is possible, however, that the environmental investigations of the Company’s properties might not have revealed all potential environmental liabilities associated with the Company’s real property and its apartment and for-sale (condominium) communities or the Company might have underestimated any potential environmental issues identified in the investigations. It is also possible that future environmental laws, ordinances, or regulations or new interpretations of existing environmental laws, ordinances, or regulations will impose material environmental liabilities on the Company; the current environmental conditions of properties that the Company owns or operates will be affected adversely by hazardous substances associated with other nearby properties or the actions of third parties unrelated to the Company; or our residents and/or commercial tenants may engage in activities prohibited by their leases or otherwise expose the Company to liability under applicable environmental laws, ordinances, or regulations. The costs of defending any future

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environmental claims, performing any future environmental remediation, satisfying any such environmental liabilities, or responding to any changed environmental conditions could materially adversely affect the Company’s financial conditions and results of operations.

Where You Can Find More Information

The Company makes its annual report on Form l0-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to such reports filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, available (free of charge) on or through its Internet website, located at http://www.postproperties.com, as soon as reasonably practicable after they are filed with or furnished to the SEC.

ITEM 1A.   RISK FACTORS
(Dollars In thousands, except per share amounts)

The following risk factors apply to the Company and the Operating Partnership. All indebtedness described in the risk factors has been incurred by the Operating Partnership.

Unfavorable changes in apartment markets and economic conditions could adversely affect occupancy levels and rental rates.

Market and economic conditions in the various metropolitan areas of the United States where the Company operates, particularly Atlanta, Georgia, Dallas, Texas, Tampa, Florida and the greater Washington, D.C. area where a substantial majority of the Company’s apartment communities are located, may significantly affect occupancy levels and rental rates and therefore profitability. Factors that may adversely affect these conditions include the following:

•  the economic climate, which may be adversely impacted by a reduction in jobs, industry slowdowns and other factors;

•  local conditions, such as oversupply of, or reduced demand for, apartment homes;

•  declines in household formation;

•  favorable residential mortgage rates;

•  rent control or stabilization laws, or other laws regulating rental housing, which could prevent the Company from raising rents to offset increases in operating costs; and

•  competition from other available apartments and other housing alternatives and changes in market rental rates.

Any of these factors could adversely affect the Company’s ability to achieve desired operating results from its communities.

Development and construction risks could impact the company’s profitability.

The Company intends to continue to develop and construct apartment communities and may convert existing apartment communities into condominiums or develop for-sale (condominium) housing. Development activities may be conducted through wholly-owned affiliated companies or through joint ventures with unaffiliated parties. The Company’s development and construction activities may be exposed to the following risks:

•  the Company may be unable to obtain, or face delays in obtaining, necessary zoning, land-use, building, occupancy, and other required governmental permits and authorizations, which could result in increased development costs;

•  the Company may incur construction costs for a property that exceed original estimates due to increased materials, labor or other costs or unforeseen environmental conditions, which could make completion of the property uneconomical, and the Company may not be able to increase rents or for-sale (condominium) unit sales prices to compensate for the increase in construction costs;

•  the Company may abandon development opportunities that it has already begun to explore, and it may fail to recover expenses already incurred in connection with exploring those opportunities, causing potential impairment losses to be incurred;

•  the Company has at times been and may continue to be unable to complete construction and lease-up of a community on schedule and meet financial goals for development projects;

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•  because occupancy rates and rents at a newly developed community may fluctuate depending on a number of factors, including market and economic conditions, the Company may be unable to meet its profitability goals for that community; and

•  land costs and construction costs have been increasing in the Company’s markets, and may continue to increase in the future and, in some cases, the costs of upgrading acquired communities have, and may continue to, exceed original estimates and the Company may be unable to charge rents, or sales prices with respect to for-sale (condominium) product, that would compensate for these increases in costs.

Possible difficulty of selling apartment communities could limit the Company’s operational and financial flexibility.

Purchasers may not be willing to pay acceptable prices for apartment communities that the Company wishes to sell. A weak market may limit the Company’s ability to change its portfolio promptly in response to changing economic conditions. Also, if the Company is unable to sell apartment communities or if it can only sell apartment communities at prices lower than are generally acceptable, then the Company may have to take on additional leverage in order to provide adequate capital to execute its development and construction and acquisitions strategy. Furthermore, a portion of the proceeds from the Company’s overall property sales in the future may be held in escrow accounts in order for some sales to qualify as like-kind exchanges under Section 1031 of the Internal Revenue Code of 1986, as amended (the “Code”) so that any related capital gain can be deferred for federal income tax purposes. As a result, the Company may not have immediate access to all of the cash flow generated from property sales.

The Company is subject to increased exposure to economic and other competitive factors due to the concentration of its investments in certain markets.

At December 31, 2007, approximately 41.3%, 19.2%, 12.3% and 10.3% (on a unit basis) of the Company’s communities were located in the Atlanta, Georgia, Dallas, Texas, greater Washington, D.C. and Tampa, Florida metropolitan areas, respectively. The Company is therefore subject to increased exposure to economic and other competitive factors specific to its markets within these geographic areas.

Failure to generate sufficient cash flows could affect the Company’s debt financing and create refinancing risk.

The Company is subject to the risks normally associated with debt financing, including the risk that its cash flow will be insufficient to make required payments of principal and interest. Although the Company may be able to use cash flow generated by its apartment communities or through the sale of for-sale (condominium) housing to make future principal payments, it may not have sufficient cash flow available to make all required principal payments and still meet the distribution requirements that the Company must satisfy in order to maintain its status as a real estate investment trust or “REIT” for federal income tax purposes. The following factors, among others, may affect the cash flows generated by the Company’s apartment communities and through the sale of for-sale (condominium) housing:

•  the national and local economies;

•  local real estate market conditions, such as an oversupply of apartment homes or competing for-sale (condominium) housing;

•  the perceptions by prospective residents or buyers of the safety, convenience and attractiveness of the Company’s communities and the neighborhoods in which they are located;

•  the Company’s ability to provide adequate management, maintenance and insurance for its apartment communities;

•  rental expenses for its apartment communities, including real estate taxes, insurance and utilities; and

•  the level of mortgage interest rates and its impact on the demand for prospective buyers of for-sale (condominium) housing.

Expenses associated with the Company’s investment in apartment communities, such as debt service, real estate taxes, insurance and maintenance costs, are generally not reduced when circumstances cause a reduction in cash flows from operations from that community. If a community is mortgaged to secure payment of debt and the Company is unable to make the mortgage payments, the Company could sustain a loss as a result of foreclosure on the community or the exercise of other remedies by the mortgagor. The Company is likely to need to refinance at least a portion of its outstanding debt as it matures. There is a risk that the Company may not be able to refinance existing debt or that the terms of any refinancing will not be as favorable as the terms of the existing debt. As of December 31, 2007, the Company had outstanding

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mortgage indebtedness of $266,791 (none of which matures in 2008), senior unsecured debt of $535,000 (none of which matures in 2008) and unsecured line of credit borrowings of $257,275.

The Company could become more highly leveraged which could result in an increased risk of default and in an increase in its debt service requirements.

The Company’s stated goal is to generally maintain total effective leverage (debt and preferred equity) as a percentage of undepreciated real estate assets to not more than 55%, to generally limit variable rate indebtedness as a percentage of total indebtedness to not more than 25% of aggregate indebtedness, and to maintain adequate liquidity through the Company’s unsecured lines of credit.

At December 31, 2007, the Company’s total effective leverage (debt and preferred equity) as a percentage of undepreciated real estate assets and the Company’s total variable rate indebtedness as a percentage of total indebtedness were below these percentages. If management adjusts the Company’s stated goal in the future, the Company could become more highly leveraged, resulting in an increase in debt service that could adversely affect funds from operations, adversely affect the Company’s ability to make expected distributions to its shareholders and the Operating Partnership’s ability to make expected distributions to its limited partners and result in an increased risk of default on the obligations of the Company and the Operating Partnership. In addition, the Company’s and the Operating Partnership’s ability to incur debt is limited by covenants in bank and other credit agreements and in the Company’s outstanding senior unsecured notes. The Company manages its debt to be in compliance with its stated policy and with these debt covenants, but subject to compliance with these covenants, the Company may increase the amount of outstanding debt at any time without a concurrent improvement in the Company’s ability to service the additional debt. Accordingly, the Company could become more leveraged, resulting in an increased risk of default on its obligations and in an increase in debt service requirements, both of which could adversely affect the Company’s financial condition and ability to access debt and equity capital markets in the future.

Debt financing may not be available and equity issuances could be dilutive to the company’s shareholders.

The Company’s ability to execute its business strategy depends on its access to an appropriate blend of debt financing, including unsecured lines of credit and other forms of secured and unsecured debt, and equity financing, including common and preferred equity. As a result of the Company’s announcement that its Board of Directors had authorized management, working with financial and legal advisors, to initiate a formal process to pursue a possible business combination or other sale transaction and to seek proposals from potentially interested parties, both Standard and Poors and Moody’s rating agencies placed the Company’s credit rating outlook on “credit watch” or “developing,” pending the outcome of the process which could negatively impact the Company’s ability to refinance its existing indebtedness or obtain new debt financing in the short term.

Debt financing may not be available in sufficient amounts, or on favorable terms or at all. If the Company issues additional equity securities to finance developments and acquisitions instead of incurring debt, the interests of existing shareholders could be diluted.

The Company’s condominium conversion and for-sale (condominium) housing business involves unique business risks and challenges.

The Company’s ability to successfully complete a condominium conversion or other for-sale housing project, sell the units and achieve management’s economic goals in connection with the transaction is subject to various risks and challenges, which if they materialize, may have an adverse effect on the Company’s business, results of operations and financial condition including:

•  the inability to obtain approvals to rezone the property and releases from financing obligations and increases in costs resulting from delays in obtaining such approvals and releases;

•  understanding the costs necessary to bring a newly developed or converted for-sale (condominium) property up to standards required for its intended market position;

•  lack of demand by prospective buyers;

•  oversupply of condominiums in a given market;

•  the inability of buyers to qualify for financing;

•  lower than anticipated sale prices;

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•  the inability to close on sales of individual units under contract;

•  competition from other condominiums and other types of residential housing; and

•  liability claims from condominium associations or others asserting that construction performed was defective, resulting in litigation and/or settlement discussions.

In general, profits realized to date from the Company’s sale of condominium homes have been more volatile than the Company’s core apartment rental operations. In addition, the Company believes that the demand of prospective buyers, the supply and competition from other condominiums and other types of residential housing, and the level of mortgage interest rates and the affordability of housing, among other factors, could have a significant impact on its ability to sell for-sale units and on the sales prices achieved. If the Company is unable to sell for-sale condominium homes, the Company could decide to rent unsold units or could cause a condominium community to revert to a rental apartment community. If these risks were to materialize, it could cause the Company to realize impairment losses in future periods and it could cause economic returns that are materially lower than anticipated. In addition, if the Company is unable to sell for-sale units, the expenses and carrying costs associated with the ownership of such units would continue.

Unfavorable changes in for-sale (condominium) housing in the Company’s markets and general economic conditions could adversely affect the profitability of the Company’s condominium conversion and newly developed for-sale housing business.

In total, the Company has converted five apartment communities since 2005, initially consisting of 731 units (including one held in a joint venture), into for-sale condominium homes. As of the end of 2007, three of these condominium conversion projects were sold out. The other two projects, consisting of a 206-unit project in Tampa, FL and a 143-unit project in Houston, TX, had, on average, closed the sales of approximately 64% of their total units as of the end of 2007. Beginning in the second quarter of 2007, the Company also began closing condominium homes at two of its newly developed for-sale condominium projects, containing 230 homes. As of January 28, 2008, the Company had seven condominium homes under contract and had closed 132 homes at these communities. In late 2006 and continuing into 2007, there was a softening in the condominium and single family housing markets due to increasing mortgage financing rates, increasing supplies of such assets, tighter credit standards and a significant slow down in the residential housing market in the U.S. Further, in the second half of 2007, the turbulence in weakening credit markets accelerated, resulting in a further decline in for-sale housing markets. As a result, the pace of condominium closings began to slow in the second half of 2006 with a further slowing in the second half of 2007. It is likely that closings will continue to be slow at these communities into 2008. Additionally, a significant portion of the condominium closings at the Company’s two newly developed for-sale condominium projects resulted from contracts entered into prior to the third quarter of 2007 when credit standards tightened and markets increased in volatility resulting in a further slowing of the demand for for-sale housing. There can be no assurance of the amount or pace of future for-sale condominium sales and closings. To the extent that condominium pricing pressure continues or worsens or we are required to hold unsold units longer than anticipated (requiring us to continue to pay debt service), the profitability of these projects may be materially adversely affected.

Acquired apartment communities may not achieve anticipated results.

The Company may selectively acquire apartment communities that meet its investment criteria. The Company’s acquisition activities and their success may be exposed to the following risks:

•  an acquired community may fail to achieve expected occupancy and rental rates and may fail to perform as expected;

•  the Company may not be able to successfully integrate acquired properties and operations; and

•  the Company’s estimates of the costs of repositioning or redeveloping the acquired property may prove inaccurate, causing the Company to fail to meet its profitability goals.

Increased competition and increased affordability of residential homes could limit the Company’s ability to retain its residents, lease apartment homes or increase or maintain rents.

The Company’s apartment communities compete with numerous housing alternatives in attracting residents, including other apartment communities and single-family rental homes, as well as owner occupied single and multi-family homes. Competitive housing in a particular area and the increasing affordability of owner occupied single and multi-family homes caused by declining housing prices, mortgage interest rates and government programs to promote home ownership could adversely affect the Company’s ability to retain its residents, lease apartment homes and increase or maintain rents.

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Limited investment opportunities could adversely affect the Company’s growth.

The Company expects that other real estate investors will compete to acquire existing properties and to develop new properties. These competitors include insurance companies, pension and investment funds, developer partnerships, investment companies and other apartment REITs. This competition could increase prices for properties of the type that the Company would likely pursue, and competitors may have greater resources than the Company. As a result, the Company may not be able to make attractive investments on favorable terms, which could adversely affect its growth.

The Company may not be able to maintain its current dividend level.

For the full year of 2008, management of the Company currently expects to maintain its current quarterly dividend payment rate to common shareholders of $0.45 per share. At this dividend rate, the Company currently expects that net cash flows from operations reduced by annual operating capital expenditures for 2008 will not be sufficient to fund the dividend payments to common and preferred shareholders by approximately $10,000 to $15,000 (excluding any costs associated with a possible business combination or other sale transaction). The Company intends to use primarily the proceeds from 2008 asset (including condominium) sales to fund the additional cash flow necessary to fully fund the dividend payments to common shareholders. In prior periods, the additional funding, in excess of cash flows from operating activities less operating capital expenditures, required to pay the quarterly dividends was funded through a combination of line of credit borrowings and proceeds from asset sales. The Company’s board of directors reviews the dividend quarterly, and there can be no assurance that the current dividend level will be maintained.

Changing interest rates could increase interest costs and could affect the market price of the Company’s securities.

The Company has incurred, and expects to continue to incur, debt bearing interest at rates that vary with market interest rates. Therefore, if interest rates increase, the Company’s interest costs will rise to the extent its variable rate debt is not hedged effectively. Further, while the Company’s stated goal is to limit variable rate debt to not more than 25% of total indebtedness, management may adjust these levels over time. In addition, an increase in market interest rates may lead purchasers of the Company’s securities to demand a higher annual yield, which could adversely affect the market price of the Company’s common and preferred stock and debt securities.

Interest rate hedging contracts may be ineffective and may result in material charges.

From time to time when the Company anticipates issuing debt securities, it may seek to limit exposure to fluctuations in interest rates during the period prior to the pricing of the securities by entering into interest rate hedging contracts. The Company may do this to increase the predictability of its financing costs. Also, from time to time, the Company may rely on interest rate hedging contracts to limit its exposure under variable rate debt to unfavorable changes in market interest rates. If the pricing of new debt securities is not within the parameters of, or market interest rates produce a lower interest cost than the Company incurs under, a particular interest rate hedging contract, the contract may be ineffective. Furthermore, the settlement of interest rate hedging contracts has at times involved and may in the future involve material charges. These charges are typically related to the extent and timing of fluctuations in interest rates. Despite the Company’s efforts to minimize its exposure to interest rate fluctuations, the Company may not maintain coverage for all of its outstanding indebtedness at any particular time. If the Company does not effectively protect itself from this risk, it may be subject to increased interest costs resulting from interest rate fluctuations.

Failure to succeed in new markets may limit the company’s growth.

The Company may from time to time commence development activity or make acquisitions outside of its existing market areas if appropriate opportunities arise. The Company’s historical experience in its existing markets does not ensure that it will be able to operate successfully in new markets. The Company may be exposed to a variety of risks if it chooses to enter new markets. These risks include, among others:

•  an inability to evaluate accurately local apartment or for-sale (condominium) housing market conditions and local economies;

•  an inability to obtain land for development or to identify appropriate acquisition opportunities;

•  an inability to hire and retain key personnel; and

•  lack of familiarity with local governmental and permitting procedures.

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Compliance or failure to comply with laws requiring access to the Company’s properties by persons with disabilities could result in substantial cost.

The Company’s multi-family housing communities and any newly acquired multi-family housing communities must comply with Title III of the Americans with Disabilities Act, or 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 multi-family housing communities where such removal is readily achievable. The ADA does not, however, consider residential properties, such as multi-family housing 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 must also comply with the Fair Housing Act , or the FHA, which requires that multi-family housing communities first occupied after March 13, 1991 be accessible to persons of disabilities. Noncompliance with the FHA and ADA could result in the imposition of fines, awards of damages to private litigants, payment of attorneys’ fees and other costs to plaintiffs, substantial litigation costs and substantial costs of remediation. Compliance with the FHA could require removal of structural barriers to handicapped access in a community, including the interiors of apartment units covered under the FHA. In addition to the ADA and FHA, state and local laws exist that impact the Company’s multi-family housing communities with respect to access thereto by persons with disabilities. Further, legislation or regulations adopted in the future may impose additional burdens or restrictions on the company with respect to improved access by persons with disabilities. The ADA, FHA, or other existing or new legislation may require the Company to modify its existing properties. These laws may also restrict renovations by requiring improved access to such buildings or may require the Company to add other structural features that increase its construction costs.

Within the past few years, there has been heightened scrutiny of multifamily housing communities for compliance with the requirements of the FHA and ADA. In November 2006, the Equal Rights Center, or ERC, filed a lawsuit against the Company and the Operating Partnership alleging various violations of the FHA and the ADA at certain properties designed, constructed or operated by the Company and the Operating Partnership. The ERC seeks compensatory and punitive damages in unspecified amounts, an award of attorneys’ fees and costs of suit, as well as preliminary and permanent injunctive relief that includes retrofitting multi-family housing units and public use areas to comply with the FHA and ADA and prohibiting construction or sale of noncompliant units or complexes.

Due to the preliminary nature of the litigation, it is not possible to predict or determine the outcome of the legal proceeding, nor is it possible to estimate the amount of loss, if any, that would be associated with an adverse decision. The Company cannot ascertain the ultimate cost of compliance with the ADA, FHA or other similar state and local legislation and such costs are not likely covered by insurance policies. The cost associated with ongoing litigation or compliance could be substantial and could adversely affect the Company’s business, results of operations and financial condition. In addition, in connection with certain property dispositions or formations of strategic joint ventures, the Company may be required to provide indemnification against liabilities associated with the litigation.

Any weaknesses identified in the Company’s system of internal controls by the Company and its independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 could have an adverse effect on the Company’s business.

Section 404 of the Sarbanes-Oxley Act of 2002 requires that companies evaluate and report on their systems of internal control over financial reporting. In addition, the Company’s independent registered public accounting firm must report on management’s evaluation of those controls. In future periods, the Company may identify deficiencies in its system of internal controls over financial reporting that may require remediation. There can be no assurances that any such future deficiencies identified may not be material weaknesses that would be required to be reported in future periods.

Losses from natural catastrophes may exceed insurance coverage.

The Company carries comprehensive liability, fire, flood, extended coverage and rental loss insurance on its properties, which are believed to be of the type and amount customarily obtained on real property assets. The Company intends to obtain similar coverage for properties acquired or developed in the future. However, some losses, generally of a catastrophic nature, such as losses from floods or wind storms, may be subject to limitations. The Company exercises discretion in determining amounts, coverage limits and deductibility provisions of insurance, with a view to maintaining appropriate insurance on its investments at a reasonable cost and on suitable terms; however, the Company may not be able to maintain its insurance at a reasonable cost or in sufficient amounts to protect it against potential losses. Further, the Company’s insurance costs could increase in future periods. If the Company suffers a substantial loss, its insurance coverage may not be sufficient to pay the full current market value or current replacement value of the lost investment.

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Inflation, changes in building codes and ordinances, environmental considerations and other factors also might make it infeasible to use insurance proceeds to replace a property after it has been damaged or destroyed.

Potential liability for environmental contamination could result in substantial costs.

The Company is in the business of owning, operating, developing, acquiring and, from time to time, selling real estate. Under various federal, state and local environmental laws, as a current or former owner or operator, the Company could be required to investigate and remediate the effects of contamination of currently or formerly owned real estate by hazardous or toxic substances, often regardless of its knowledge of or responsibility for the contamination and solely by virtue of its current or former ownership or operation of the real estate. In addition, the Company could be held liable to a governmental authority or to third parties for property and other damages and for investigation and clean-up costs incurred in connection with the contamination. These costs could be substantial, and in many cases environmental laws create liens in favor of governmental authorities to secure their payment. The presence of such substances or a failure to properly remediate any resulting contamination could materially and adversely affect the Company’s ability to borrow against, sell or rent an affected property.

Costs associated with moisture infiltration and resulting mold remediation may be costly.

As a general matter, concern about indoor exposure to mold has been increasing as such exposure has been alleged to have a variety of adverse effects on health. As a result, there has been a number of lawsuits in the Company’s industry against owners and managers of apartment communities relating to moisture infiltration and resulting mold. The Company has implemented guidelines and procedures to address moisture infiltration and resulting mold issues if and when they arise. The Company believes that these measures will minimize the potential for any adverse effect on its residents. The terms of its property and general liability policies generally exclude certain mold-related claims. Should an uninsured loss arise against the Company, the Company would be required to use its funds to resolve the issue, including litigation costs. The Company makes no assurance that liabilities resulting from moisture infiltration and the presence of or exposure to mold will not have a future adverse impact on its business, results of operations and financial condition.

The Company’s joint ventures and joint ownership of properties and partial interests in corporations and limited partnerships could limit the Company’s ability to control such properties and partial interests.

Instead of purchasing certain apartment communities directly, the Company has invested and may continue to invest as a co-venturer. The Company has also chosen to sell partial interests in certain apartment communities to co-venturers and may continue this strategy in the future. Joint venturers often have shared control over the operations of the joint venture assets. Therefore, it is possible that the co-venturer in an investment might become bankrupt, or have economic or business interests or goals that are inconsistent with the Company’s business interests or goals, or be in a position to take action contrary to the Company’s instructions, requests, policies or objectives. Consequently, a co-venturer’s actions might subject property owned by the joint venture to additional risk. Although the Company seeks to maintain sufficient influence of any joint venture to achieve its objectives, the Company may be unable to take action without the Company’s joint venture partners’ approval, or joint venture partners could take actions binding on the joint venture without the Company’s consent. Additionally, should a joint venture partner become bankrupt, the Company could become liable for such partner’s share of joint venture liabilities.

The Company may be unable to renew leases or relet units as leases expire.

When the Company’s residents decide not to renew their leases upon expiration, the Company may not be able to relet their units. Even if the residents do renew or the Company can relet the units, the terms of renewal or reletting may be less favorable than current lease terms. Because virtually all of the Company’s leases are for apartments, they are generally for no more than one year. If the Company is unable to promptly renew the leases or relet the units, or if the rental rates upon renewal or reletting are significantly lower than expected rates, then the Company’s results of operations and financial condition will be adversely affected. Consequently, the Company’s cash flow and ability to service debt and make distributions to security holders would be reduced.

The Company may fail to qualify as a REIT for federal income tax purposes.

The Company’s qualification as a REIT for federal income tax purposes depends upon its ability to meet on a continuing basis, through actual annual operating results, distribution levels and diversity of stock ownership, the various qualification tests and organizational requirements imposed upon REITs under the Code. The Company believes that it has qualified for taxation as a REIT for federal income tax purposes commencing with its taxable year ended December 31, 1993, and plans to continue to meet the requirements to qualify as a REIT in the future. Many of these requirements,

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however, are highly technical and complex. Therefore, the Company may not have qualified or may not continue to qualify in the future as a REIT. The determination that the Company qualifies as a REIT for federal income tax purposes requires an analysis of various factual matters that may not be totally within the Company’s control. Even a technical or inadvertent mistake could jeopardize the Company’s REIT status. Furthermore, Congress and the Internal Revenue Service (“IRS”) might make changes to the tax laws and regulations, and the courts might issue new decisions that make it more difficult, or impossible, for the Company to remain qualified as a REIT. The Company does not believe, however, that any pending or proposed tax law changes would jeopardize its REIT status.

If the Company were to fail to qualify for taxation as a REIT in any taxable year, and certain relief provisions of the Internal Revenue Code did not apply, the Company would be subject to tax (including any applicable alternative minimum tax) on its taxable income at regular corporate rates, leaving less money available for distributions to its shareholders. In addition, distributions to shareholders in any year in which the Company failed to qualify would not be deductible by the Company for federal income tax purposes nor would they be required to be made. Unless entitled to relief under specific statutory provisions, the Company also would be disqualified from taxation as a REIT for the four taxable years following the year during which it ceased to qualify as a REIT. It is not possible to predict whether in all circumstances the Company would be entitled to such statutory relief. The Company’s failure to qualify as a REIT likely would have a significant adverse effect on the value of its securities.

The Operating Partnership may fail to be treated as a partnership for federal income tax purposes.

Management believes that the Operating Partnership qualifies, and has so qualified since its formation, as a partnership for federal income tax purposes and not as a publicly traded partnership taxable as a corporation. No assurance can be provided, however, that the IRS will not challenge the treatment of the Operating Partnership as a partnership for federal income tax purposes or that a court would not sustain such a challenge. If the IRS were successful in treating the Operating Partnership as a corporation for federal income tax purposes, then the taxable income of the Operating Partnership would be taxable at regular corporate income tax rates. In addition, the treatment of the Operating Partnership as a corporation would cause the Company to fail to qualify as a REIT. See “The Company may fail to qualify as a REIT for federal income tax purposes” above.

The Company’s real estate assets may be subject to impairment charges.

The Company continually evaluates the recoverability of the carrying value of its real estate assets for impairment indicators. Factors considered in evaluating impairment of the Company’s existing real estate assets held for investment include significant declines in property operating profits, recurring property operating losses and other significant adverse changes in general market conditions that are considered permanent in nature. Generally, a real estate asset held for investment is not considered impaired if the undiscounted, estimated future cash flows of the asset over its estimated holding period are in excess of the asset’s net book value at the balance sheet date. Assumptions used to estimate annual and residual cash flow and the estimated holding period of such assets require the judgment of management.

In years prior to 2005, the Company recorded impairment charges on assets held for investment and assets designated as held for sale. There can be no assurance that the Company will not take additional charges in the future related to the impairment of its assets. For the years ended December 31, 2007, 2006 and 2005, management believes it has applied reasonable estimates and judgments in determining the proper classification of its real estate assets. However, should external or internal circumstances change requiring the need to shorten the holding periods or adjust the estimated future cash flows of certain of the Company’s assets, the Company could be required to record additional impairment charges. If any real estate asset held for investment is considered impaired, a loss is provided to reduce the carrying value of the asset to its fair value, less selling costs. Any future impairment could have a material adverse affect on the Company’s results of operations and funds from operations in the period in which the charge is taken.

The formal process initiated by the Company to pursue a possible business combination or other sale transaction may not result in a transaction.

The Company has commenced a formal process to pursue a possible business combination or other sale transaction and to seek proposals from potentially interested parties. There can be no assurance that the initiation of a formal process will result in any transaction leading to a business combination or other sale transaction.

Additionally, if a business combination or other sale transaction does not occur, to the extent that the market price reflects an assumption that such a combination would occur, the Company’s stock price may be adversely affected.

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The formal process to pursue a possible business combination or other sale transaction may divert management attention and the Company may not be able to retain key personnel.

The formal process initiated by the Company to pursue a possible business combination or other sale transaction may require management to divert some of its focus from the day to day operations of the business. Additionally, the Company may not be able to retain key personnel, who may choose to leave the Company as a result of the uncertainty created by the formal process. The diversion of management focus from the day to day operations of the business or the loss of key personnel could have an adverse impact on the Company’s results of operations.

The Company’s shareholders may not be able to effect a change in control.

The articles of incorporation and bylaws of the Company and the partnership agreement of the Operating Partnership contain a number of provisions that could delay, defer or prevent a transaction or a change in control that might involve a premium price for the Company’s shareholders or otherwise be in their best interests, including the following:

Preferred shares.  The Company’s articles of incorporation provide that the Company has the authority to issue up to 20,000,000 shares of preferred stock, of which 2,900,000 were outstanding as of December 31, 2007. The board of directors has the authority, without the approval of the shareholders, to issue additional shares of preferred stock and to establish the preferences and rights of such shares. The issuance of preferred stock could have the effect of delaying or preventing a change of control of the Company, even if a change of control were in the shareholders’ interest.

Consent Rights of the Unitholders.  Under the partnership agreement of the Operating Partnership, the Company may not merge or consolidate with another entity unless the merger includes the merger of the Operating Partnership, which requires the approval of the holders of a majority of the outstanding units of the Operating Partnership. If the Company were to ever hold less than a majority of the units, this voting requirement might limit the possibility for an acquisition or a change of control.

Ownership Limit.  One of the requirements for maintenance of the Company’s qualification as a REIT for federal income tax purposes is that no more than 50% in value of its outstanding capital stock may be owned by five or fewer individuals, including entities specified in the Internal Revenue Code, during the last half of any taxable year. To facilitate maintenance of its qualification as a REIT for federal income tax purposes, the ownership limit under the Company’s articles of incorporation prohibits ownership, directly or by virtue of the attribution provisions of the Internal Revenue Code, by any person or persons acting as a group of more than 6.0% of the issued and outstanding shares of the Company’s common stock, subject to certain exceptions, including an exception for shares of common stock held by Mr. John A. Williams and Mr. John T. Glover, the Company’s former chairman and former vice chairman, respectively, and certain investors for which the Company has waived the ownership limit. Together, these limitations are referred to as the “ownership limit.” Further, the Company’s articles of incorporation include provisions allowing it to stop transfers of and redeem its shares that are intended to assist the Company in complying with these requirements. While the Company has committed that it will not utilize the ownership limit in its articles of incorporation as an anti-takeover device, these provisions could still deter, delay or defer someone from taking control of the Company.

Terrorist attacks and the possibility of wider armed conflict may have an adverse effect on the Company’s business and operating results and could decrease the value of the Company’s assets.

Terrorist attacks and other acts of violence or war could have a material adverse effect on the Company’s business and operating results. Attacks or armed conflicts that directly impact one or more of the Company’s apartment communities could significantly affect the Company’s ability to operate those communities and thereby impair its ability to achieve the Company’s expected results. Further, the Company’s insurance coverage may not cover any losses caused by a terrorist attack. In addition, the adverse effects that such violent acts and threats of future attacks could have on the U.S. economy could similarly have a material adverse effect on the Company’s business and results of operations. Finally, if the United States enters into and remains engaged in a wider armed conflict, the Company’s business and operating results could be adversely effected.

ITEM 1B.   UNRESOLVED STAFF COMMENTS

None.

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ITEM 2.   PROPERTIES

At December 31, 2007, the Company owned 57 Post^® multifamily apartment communities, including five communities held in unconsolidated entities and one community and a portion of another community that were in lease-up at December 31, 2007. These communities are summarized below by metropolitan area.

Metropolitan Area	Communities		# of Units		% of Total
Atlanta, GA		21		8,493		41.3	%
Dallas, TX		13		3,939		19.2	%
Greater Washington, D.C.		7		2,538		12.3	%
Tampa, FL		4		2,111		10.3	%
Charlotte, NC		4		1,388		6.8	%
Houston, TX		2		837		4.1	%
Orlando, FL		2		595		2.9	%
New York, NY		2		337		1.6	%
Austin, TX		2		308		1.5	%
		57		20,546		100.0	%

Thirty-five of the communities have in excess of 300 apartment units, with the largest community having a total of 1,334 apartment units. The average age of the communities is approximately 9.8 years. The average economic occupancy rate was 94.7% for the years ended December 31, 2007 and 2006 and the average monthly rental rate per apartment unit was $1,245 and $1,187, respectively, for the 43 communities stabilized for each of the years ended December 31, 2007 and 2006. See “Selected Financial Information.”

At December 31, 2007, the Company also had 2,032 apartment units in six communities under construction.

At December 31, 2007, the Company is also developing and selling four ground-up condominium projects, consisting of 535 homes (including 137 units in one community held in an unconsolidated entity). The Company is also converting apartment homes in two communities initially consisting of 349 units into for-sale condominium homes through a taxable REIT subsidiary, at December 31, 2007.

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COMMUNITY INFORMATION

					December 2007		2007
					Average		Average
		Year	No. of		Rental Rates		Economic
Communities	Location(1)	Completed	Units		Per Unit		Occupancy(2)
Georgia
Post Biltmoretm(3)	Atlanta	2001		276	$	1,169		97.2	%
Post Briarclifftm	Atlanta	1999		688		1,148		95.3	%
Post Brookhaven®	Atlanta	1990-1992(4)		735		991		95.6	%
Post Chastain®(7)	Atlanta	1990		558		1,115		78.7	%
Post Collier Hills®(3)	Atlanta	1997		396		1,028		96.4	%
Post Crest®(3)	Atlanta	1996		410		1,045		95.1	%
Post Crossing®	Atlanta	1995		354		1,076		95.1	%
Post Dunwoody®	Atlanta	1989-1996(4)		530		1,017		95.2	%
Post Gardens®	Atlanta	1998		397		1,168		94.0	%
Post Glen®	Atlanta	1997		314		1,160		94.5	%
Post Lenox Park®	Atlanta	1995		206		1,076		93.7	%
Post Lindbergh®(3)	Atlanta	1998		396		1,084		97.1	%
Post Oglethorpe®	Atlanta	1994		250		1,291		93.9	%
Post Parksidetm	Atlanta	2000		188		1,364		96.6	%
Post Peachtree Hills®	Atlanta	1992-1994(4)		300		1,096		95.9	%
Post Renaissance®(5)	Atlanta	1992-1994(4)		342		1,055		96.4	%
Post Ridge®	Atlanta	1998		434		1,067		95.7	%
Post Riverside®	Atlanta	1998		523		1,412		93.2	%
Post Springtm	Atlanta	2000		452		1,017		96.6	%
Post Stratfordtm(5)	Atlanta	2000		250		1,162		91.7	%
Post Woods®	Atlanta	1977-1983(4)		494		927		96.7	%
Subtotal/Average — Georgia				8,493	$	1,104		94.1	%
Texas
Post Abbeytm	Dallas	1996		34	$	1,915		92.6	%
Post Addison Circletm	Dallas	1998-2000(4)		1,334		1,007		94.6	%
Post Barton Creektm	Austin	1998		160		1,431		98.2	%
Post Cole’s Cornertm	Dallas	1998		186		1,086		96.3	%
Post Gallerytm	Dallas	1999		34		3,025		89.6	%
Post Heightstm	Dallas	1998-1999(4)		368		1,143		94.5	%
Post Legacy	Dallas	2000		384		976		96.6	%
Post Meridiantm	Dallas	1991		133		1,167		93.8	%
Post Midtown Square®	Houston	1999-2000(4)		529		1,120		93.8	%
Post Park Mesatm	Austin	1992		148		1,194		93.7	%
Post Rice Loftstm(5)	Houston	1998		308		1,381		92.7	%
Post Squaretm	Dallas	1996		218		1,206		95.9	%
Post Uptown Villagetm	Dallas	1995-2000(4)		496		973		95.6	%
Post Vineyardtm	Dallas	1996		116		1,071		96.3	%
Post Vintagetm	Dallas	1993		161		1,043		94.6	%
Post Wilson Buildingtm(5)	Dallas	1999		143		1,242		93.7	%
Post Worthingtontm(7)	Dallas	1993		332		1,387		84.6	%
Subtotal/Average — Texas				5,084	$	1,134		93.9	%

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COMMUNITY INFORMATION

					December 2007		2007
					Average		Average
		Year	No. of		Rental Rates		Economic
Communities	Location(1)	Completed	Units		Per Unit		Occupancy(2)
Florida
Post Bay at Rocky Pointtm(6)	Tampa	1997		150	$	1,475		N/A
Post Harbour Placetm	Tampa	1999-2002(4)		578		1,418		93.6	%
Post Hyde Park®(6)	Tampa	1996-2008		467		1,361		N/A
Post Lake® at Baldwin Park(6)	Orlando	2004-2007		350		1,526		N/A
Post Parksidetm	Orlando	1999		245		1,449		93.6	%
Post Rocky Point®	Tampa	1996-1998(4)		916		1,200		92.9	%
Subtotal/Average — Florida				2,706	$	1,365		93.3	%
North Carolina
Post Ballantyne	Charlotte	2004		323	$	1,112		92.9	%
Post Gateway Placetm	Charlotte	2000		436		1,137		94.9	%
Post Park at Phillips Place®	Charlotte	1998		402		1,335		93.4	%
Post Uptown Placetm	Charlotte	2000		227		1,182		95.0	%
Subtotal/Average — North Carolina				1,388	$	1,196		94.0	%
Greater Washington, D.C.
Post Carlyle Squaretm(6)	D.C.	2006		205	$	2,145		N/A
Post Corners at Trinity Centre	Fairfax Co., VA	1996		336		1,446		94.8	%
Post Fallsgrove	Rockville, MD	2003		361		1,595		94.3	%
Post Forest®	Fairfax Co., VA	1990		364		1,395		95.0	%
Post Massachusetts Avenue tm(3)	D.C.	2002		269		2,597		92.8	%
Post Pentagon Row tm(5)	Arlington Co., VA	2001		504		2,218		94.5	%
Post Tysons Corner tm	Fairfax Co., VA	1990		499		1,626		94.0	%
Subtotal/Average — Washington, D.C.				2,538	$	1,830		94.2	%
New York
Post Luminaria tm	New York	2002		138	$	3,754		94.8	%
Post Toscana tm	New York	2003		199		3,970		96.4	%
Subtotal/Average — New York				337	$	3,881		95.8	%
Total				20,546	$	1,289		94.1	%

(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 communities are owned in unconsolidated entities.
(4)	These dates represent the respective completion dates for multiple phases of a community.
(5)	The Company has a leasehold interest in the land underlying these communities.
(6)	During 2007, these communities, or portions thereof, were in lease-up and, therefore, the average economic occupancy information for these communities is not included above.
(7)	These communities are undergoing rehabilitation.

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ITEM 3.   LEGAL PROCEEDINGS

In November 2006, the Equal Rights Center (“ERC”) filed a lawsuit against the Company and the Operating Partnership in the United States District Court for the District of Columbia. This suit alleges various violations of the Fair Housing Act (“FHA”) and the Americans with Disabilities Act (“ADA”) at properties designed, constructed or operated by the Company and the Operating Partnership in the District of Columbia, Virginia, Colorado, Florida, Georgia, New York, North Carolina and Texas. The plaintiff seeks compensatory and punitive damages in unspecified amounts, an award of attorneys’ fees and costs of suit, as well as preliminary and permanent injunctive relief that includes retrofitting multi-family units and public use areas to comply with the FHA and the ADA and prohibiting construction or sale of noncompliant units or complexes. On April 18, 2007, ERC filed a motion for a preliminary injunction to prohibit the Company and the Operating Partnership from selling any alleged noncompliant apartment communities or condominium units while the litigation is ongoing. On July 25, 2007 the court entered an order denying ERC’s motion for the preliminary injunction. Discovery is being conducted by both parties. On October 29, 2007, the court granted, in part, ERC’s motion to amend the scheduling order and expand the time permitted for discovery and filing of dispositive motions. As a result, the cutoff for fact discovery was extended to February 29, 2008 with the end of all briefing on dispositive motions set for August 11, 2008. On January 29, 2008, the Operating Partnership and ERC agreed to an extension of discovery dates to accommodate further depositions and inspections. Under the agreement, which must be approved by the court, fact discovery will be completed by April 30, 2008, expert discovery will be completed by August 29, 2008, and summary judgment briefing will be completed by November 10, 2008. No trial date has been set. At this stage in the proceeding, it is not possible to predict or determine the outcome of the lawsuit, nor is it possible to estimate the amount of loss that would be associated with an adverse decision.

The Company is involved in various other legal proceedings incidental to its business from time to time, most of which are expected to be covered by liability or other insurance. Management of the Company believes that any resolution of pending proceedings or liability to the Company which may arise as a result of these various other legal proceedings will not have a material adverse effect on the Company’s results of operations or financial position.

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 as of February 15, 2008 are as follows:

NAME	POSITIONS AND OFFICES HELD
David P. Stockert	President and Chief Executive Officer
Thomas D. Senkbeil	Executive Vice President and Chief Investment Officer
Thomas L. Wilkes	Executive Vice President and President, Post Apartment Management
Christopher J. Papa	Executive Vice President and Chief Financial Officer
Sherry W. Cohen	Executive Vice President and Corporate Secretary
Arthur J. Quirk	Senior Vice President and Chief Accounting Officer

The following is a biographical summary of the experience of the executive officers of the Company:

David P. Stockert.  Mr. Stockert is the President and Chief Executive Officer of the Company. Mr. Stockert has been the Chief Executive Officer since July 2002. From January 2001 to June 2002, Mr. Stockert was President and Chief Operating Officer. From July 1999 to October 2000, Mr. Stockert was Executive Vice President of Duke Realty Corporation, a publicly traded real estate company. From June 1995 to July 1999, Mr. Stockert was Senior Vice President and Chief Financial Officer of Weeks Corporation, also a publicly traded real estate company that was a predecessor by merger to Duke Realty Corporation. From August 1990 to May 1995, Mr. Stockert was an investment banker in the Real Estate Group at Dean Witter Reynolds Inc. (now Morgan Stanley). Mr. Stockert is 45 years old.

Thomas D. Senkbeil.  Mr. Senkbeil has been an Executive Vice President and Chief Investment Officer of the Company since June 2003. From July 2000 to December 2002, Mr. Senkbeil was President and Chief Operating Officer of Carter & Associates, a leading regional full-service real estate firm, overseeing the daily operation of Carter’s four business units: Brokerage, Corporate Real Estate Services, Development, and Property Management and Leasing. Prior to joining Carter & Associates, Mr. Senkbeil was Chief Investment Officer and a member of the board of directors at Duke Realty Corporation and its predecessor, Weeks Corporation, from June 1992 to July 2000. Mr. Senkbeil is 58 years old.

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Thomas L. Wilkes.  Mr. Wilkes has been an Executive Vice President and President of Post Apartment Management since January 2001. From October 1997 through December 2000, he was an Executive Vice President and Director of Operations for Post Apartment Management responsible for the operations of Post communities in the Western United States. Mr. Wilkes was a Senior Vice President of Columbus Realty Trust from December 1993 through October 1997. Mr. Wilkes served as President of CRH Management Company, a member of the Columbus Group, from its formation in October 1990 to December 1993. Mr. Wilkes is a Certified Property Manager. Mr. Wilkes is 48 years old.

Christopher J. Papa.  Mr. Papa has been an Executive Vice President and Chief Financial Officer of the Company since December 2003. Prior to joining the Company, he was an audit partner at BDO Seidman, LLP from June 2003 to November 2003, the Chief Financial Officer at Plast-O-Matic Valves, Inc., a privately-held company, from June 2002 to June 2003, and until June 2002, an audit partner at Arthur Andersen LLP where he was employed for over 10 years. Mr. Papa is a Certified Public Accountant. Mr. Papa is 42 years old.

Sherry W. Cohen.  Ms. Cohen has been with the Company for twenty-three years. Since October 1997, she has been an Executive Vice President of the Company responsible for supervising and coordinating legal affairs and insurance. Since April 1990, Ms. Cohen has 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 53 years old.

Arthur J. Quirk.  Mr. Quirk has been a Senior Vice President and Chief Accounting Officer of the Company since January 2003. Mr. Quirk served as the Company’s Vice President and Chief Accounting Officer from March 2001 to December 2002. From July 1999 to March 2001, Mr. Quirk was Vice President and Controller of Duke Realty Corporation, a publicly traded real estate company. From December 1994 to July 1999, Mr. Quirk was the Vice President and Controller of Weeks Corporation, also a publicly traded real estate company that was a predecessor by merger to Duke Realty Corporation. Mr. Quirk is a Certified Public Accountant. Mr. Quirk is 49 years old.

PART II

ITEM 5.   MARKET FOR REGISTRANT’S COMMON STOCK, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
(In thousands, except per share and shareholder/unitholder amounts)

The Company’s 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 prices per share reported on the NYSE, as well as the quarterly dividends declared per share:

					Dividends
Quarter	High		Low		Declared
2006
First Quarter	$	48.00	$	39.69	$	0.45
Second Quarter		46.32		40.88		0.45
Third Quarter		48.74		44.90		0.45
Fourth Quarter		50.47		44.46		0.45
2007
First Quarter	$	49.25	$	43.88	$	0.45
Second Quarter		55.90		44.24		0.45
Third Quarter		53.37		36.25		0.45
Fourth Quarter		43.97		33.67		0.45

On February 15, 2008, the Company had 1,521 common shareholders of record and 43,923 shares of common stock outstanding.

The Company pays regular quarterly dividends to holders of shares of its common stock. Future dividend payments by the Company will be paid 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 and other factors that the board of directors deems relevant. For a discussion of the Company’s credit agreements and their restrictions on dividend payments, see note 4 to the consolidated financial statements.

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During 2007, the Company did not sell any unregistered securities.

There is no established public trading market for the Common Units. On February 15, 2008, the Operating Partnership had 48 holders of record of Common Units and 470 Common Units outstanding, excluding the 43,923 of Common Units owned by the Company.

For each quarter during 2007 and 2006, the Operating Partnership paid a cash distribution to holders of Common Units equal in amount to the dividends paid on the Company’s common stock for such quarter.

During 2007, the Operating Partnership did not sell any unregistered securities.

In the fourth quarter of 2006, the Company’s board of directors adopted a new stock repurchase program under which the Company may repurchase up to $200,000 of common or preferred stock at market prices from time to time until December 31, 2008. During the first quarter 2007, the Company repurchased 83 shares of common stock totaling approximately $3,694 at an average price of $44.61 under this program. The following table summarizes the Company’s purchases of its equity securities in the three months ended December 31, 2007 (in thousands, except per share amounts).

					Total Number of		Approximate Dollar
					Shares Purchased as		Value of Shares that
					Part of Publicly		May Yet Be
	Total Number of		Average Price		Announced		Purchased Under the
Period	Shares Purchased		Paid Per Share		Plans or Programs		Plans or Programs
October 1, 2007 to October 31, 2007		—	$	—		—	$	196,300
November 1, 2007 to November 30, 2007		—		—		—		196,300
December 1, 2007 to December 31, 2007		—		—		—		196,300
Total		—	$	—		—	$	196,300

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ITEM 6.   SELECTED FINANCIAL DATA

Post Properties, Inc.
(In thousands, except per share and apartment unit data)

	Year Ended December 31,
	2007			2006			2005			2004			2003
STATEMENT OF OPERATIONS DATA
Revenues
Rental	$	290,975		$	274,731		$	257,141		$	243,965		$	230,677
Other		16,567			16,814			15,130			14,569			13,052
Total revenues	$	307,542		$	291,545		$	272,271		$	258,534		$	243,729
Income (loss) from continuing operations(1)	$	114,163		$	29,255		$	3,330		$	(31,578	)	$	(32,812	)
Income from discontinued operations(2)		64,536			72,214			138,618			119,797			46,968
Net income		178,699			101,469			141,948			88,219			14,156
Dividends to preferred shareholders		(7,637	)		(7,637	)		(7,637	)		(8,325	)		(11,449	)
Redemption costs on preferred stock and units		—			—			—			(3,526	)		—
Net income available to common shareholders	$	171,062		$	93,832		$	134,311		$	76,368		$	2,707
PER COMMON SHARE DATA
Income (loss) from continuing operations (net of preferred dividends and redemption costs) — basic	$	2.45		$	0.50		$	(0.11	)	$	(1.09	)	$	(1.17	)
Income from discontinued operations — basic		1.48			1.69			3.45			3.01			1.25
Net income available to common shareholders — basic		3.93			2.19			3.34			1.92			0.07
Income (loss) from continuing operations (net of preferred dividends and redemption costs) — diluted	$	2.41		$	0.50		$	(0.11	)	$	(1.09	)	$	(1.17	)
Income from discontinued operations — diluted		1.46			1.66			3.45			3.01			1.25
Net income available to common shareholders — diluted		3.88			2.15			3.34			1.92			0.07
Dividends declared		1.80			1.80			1.80			1.80			1.80
Weighted average common shares outstanding — basic		43,491			42,812			40,217			39,777			37,688
Weighted average common shares outstanding — diluted		44,129			43,594			40,217			39,777			37,688
BALANCE SHEET DATA
Real estate, before accumulated depreciation	$	2,677,869		$	2,580,092		$	2,416,335		$	2,502,418		$	2,596,376
Real estate, net of accumulated depreciation		2,111,612			2,028,580			1,899,381			1,977,719			2,085,517
Total assets		2,268,141			2,116,647			1,981,454			2,053,842			2,215,451
Total indebtedness		1,059,066			1,033,779			980,615			1,129,478			1,186,322
Shareholders’ equity		1,058,505			956,454			881,009			788,070			796,526
OTHER DATA
Cash flow provided by (used in):
Operating activities	$	97,644		$	94,326		$	86,761		$	79,105		$	91,549
Investing activities		(27,876	)		(104,464	)		70,293			131,873			234,195
Financing activities		(61,874	)		7,391			(150,767	)		(212,189	)		(330,800	)
Total stabilized communities (at end of period)		54			55			57			65			70
Total stabilized apartment units (at end of period)		19,404			20,019			21,237			24,700			27,613
Average economic occupancy (fully stabilized communities)(3)		94.7	%		94.7	%		94.5	%		93.5	%		91.9	%

(1)	Income (loss) from continuing operations in 2007 included gains on the sale of partial interests of three communities totaling approximately $81,268. Income (loss) from continuing operations in 2006 included final proceeds of $325 related to the sale of a technology investment, non-cash income of $1,655 relating to the mark-to-market of an interest rate swap arrangement, a gain on the sale of marketable securities of $573 and a gain on the sale of a land parcel of $503. Income (loss) from continuing operations in 2005 included a $5,267 gain on sale of technology investment and severance charges of $796. Income (loss) from continuing operations in 2004 included the impact of costs associated with the termination of a debt remarketing agreement (interest expense) and an early debt extinguishment loss totaling $14,626. Income (loss) from continuing operations in 2003 included the impact of severance and proxy costs totaling $26,737.
(2)	See note 2 to the consolidated financial statements for a discussion of discontinued operations.
(3)	Calculated based on fully stabilized communities as defined for each year (unadjusted for the impact of assets designated as held for sale in subsequent years). 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 net concessions and employee discounts (average economic occupancy, taking account of these amounts, would have been 93.9%, 94.0%, 93.9%, 93.0% and 90.8% for the years ended December 31, 2007, 2006, 2005, 2004 and 2003, respectively). Net concessions were $1,150, $1,255, $947, $621 and $2,518 for the years ended December 31, 2007, 2006, 2005, 2004 and 2003, respectively. Employee discounts were $781, $765, $398, $442 and $535 for the years ended December 31, 2007, 2006, 2005, 2004 and 2003, 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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Post Apartment Homes, L.P.
(In thousands, except per unit and apartment unit data)

	Year Ended December 31,
	2007			2006			2005			2004			2003
STATEMENT OF OPERATIONS DATA
Revenues
Rental	$	290,975		$	274,731		$	257,141		$	243,965		$	230,677
Other		16,567			16,814			15,130			14,569			13,052
Total revenues	$	307,542		$	291,545		$	272,271		$	258,534		$	243,729
Income (loss) from continuing operations(1)	$	115,654		$	29,673		$	3,104		$	(30,743	)	$	(32,278	)
Income from discontinued operations(2)		65,438			73,613			145,943			127,920			52,375
Net income		181,092			103,286			149,047			97,177			20,097
Distributions to preferred unitholders		(7,637	)		(7,637	)		(7,637	)		(12,105	)		(17,049	)
Redemption costs on preferred units		—			—			—			(3,526	)		—
Net income available to common unitholders	$	173,455		$	95,649		$	141,410		$	81,546		$	3,048
PER COMMON UNIT DATA
Income (loss) from continuing operations (net of preferred distributions and redemption costs) — basic	$	2.45		$	0.50		$	(0.11	)	$	(1.09	)	$	(1.17	)
Income from discontinued operations — basic		1.48			1.69			3.45			3.01			1.24
Net income available to common unitholders — basic		3.93			2.19			3.34			1.92			0.07
Income (loss) from continuing operations (net of preferred distributions and redemption costs) — diluted	$	2.41		$	0.50		$	(0.11	)	$	(1.09	)	$	(1.17	)
Income from discontinued operations — diluted		1.46			1.66			3.45			3.01			1.24
Net income available to common unitholders — diluted		3.88			2.15			3.34			1.92			0.07
Distributions declared		1.80			1.80			1.80			1.80			1.80
Weighted average common units outstanding — basic		44,101			43,645			42,353			42,474			42,134
Weighted average common units outstanding — diluted		44,738			44,427			42,353			42,474			42,134
BALANCE SHEET DATA
Real estate, before accumulated depreciation	$	2,677,869		$	2,580,092		$	2,416,335		$	2,502,418		$	2,596,376
Real estate, net of accumulated depreciation		2,111,612			2,028,580			1,899,381			1,977,719			2,085,517
Total assets		2,268,141			2,116,647			1,981,454			2,053,842			2,215,451
Total indebtedness		1,059,066			1,033,779			980,615			1,129,478			1,186,322
Partners’ equity		1,068,859			970,511			907,773			831,411			928,935
OTHER DATA
Cash flow provided by (used in):
Operating activities	$	97,644		$	94,326		$	86,761		$	79,105		$	91,549
Investing activities		(27,876	)		(104,464	)		70,293			131,873			234,195
Financing activities		(61,874	)		7,391			(150,767	)		(212,189	)		(330,800	)
Total stabilized communities (at end of period)		54			55			57			65			70
Total stabilized apartment units (at end of period)		19,404			20,019			21,237			24,700			27,613
Average economic occupancy (fully stabilized communities)(3)		94.7	%		94.7	%		94.5	%		93.5	%		91.9	%

(1)	Income (loss) from continuing operations in 2007 included gains on the sale of partial interests of three communities totaling approximately $81,268. Income (loss) from continuing operations in 2006 included final proceeds of $325 related to the sale of a technology investment, non-cash income of $1,655 relating to the mark-to-market of an interest rate swap arrangement, a gain on the sale of marketable securities of $573 and a gain on the sale of a land parcel of $503. Income (loss) from continuing operations in 2005 included a $5,267 gain on sale of technology investment and severance charges of $796. Income (loss) from continuing operations in 2004 included the impact of costs associated with the termination of a debt remarketing agreement (interest expense) and an early debt extinguishment loss totaling $14,626. Income (loss) from continuing operations in 2003 included the impact of severance and proxy costs totaling $26,737.
(2)	See note 2 to the consolidated financial statements for a discussion of discontinued operations.
(3)	Calculated based on fully stabilized communities as defined for each year (unadjusted for the impact of assets designated as held for sale in subsequent years). 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 net concessions and employee discounts (average economic occupancy, taking account of these amounts, would have been 93.9%, 94.0%, 93.9%, 93.0% and 90.8% for the years ended December 31, 2007, 2006, 2005, 2004 and 2003, respectively). Net concessions were $1,150, $1,255, $947, $621 and $2,518 for the years ended December 31, 2007, 2006, 2005, 2004 and 2003, respectively. Employee discounts were $781, $765, $398, $442 and $535 for the years ended December 31, 2007, 2006, 2005, 2004 and 2003, 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
(In thousands, except apartment unit data)

Company Overview

Post Properties, Inc. and its subsidiaries develop, own and manage upscale multifamily communities in selected markets in the United States. As used in this report, the term “Company” includes Post Properties, Inc. and its subsidiaries, including Post Apartment Homes, L.P. (the “Operating Partnership”), unless the context indicates otherwise. The Company, through its wholly-owned subsidiaries is the general partner and owns a majority interest in the Operating Partnership which, through its subsidiaries, conducts substantially all of the on-going operations of the Company. At December 31, 2007, the Company owned 22,578 apartment units in 63 apartment communities, including 1,747 apartment units in five communities held in unconsolidated entities and 2,266 apartment units in seven communities (and the expansion of one community) currently under construction and/or in lease-up. The Company is also developing and selling 535 for-sale condominium homes in four communities (including 137 units in one community held in an unconsolidated entity) and is converting apartment homes in two communities initially consisting of 349 units into for-sale condominium homes through a taxable REIT subsidiary. At December 31, 2007, approximately 41.3%, 19.2%, 12.3% and 10.3% (on a unit basis) of the Company’s operating communities were located in the Atlanta, Dallas, the greater Washington D.C. and Tampa metropolitan areas, respectively.

The Company has elected to qualify and operate as a self-administrated and self-managed real estate investment trust (“REIT”) for federal income tax purposes. A REIT is a legal entity which holds real estate interests and is generally not subject to federal income tax on the income it distributes to its shareholders.

At December 31, 2007, the Company owned approximately 98.9% of the common limited partnership interests (“Common Units”) in the Operating Partnership. Common Units held by persons other than the Company represented a 1.1% common minority interest in the Operating Partnership.

In the four year period prior to 2005, the multifamily apartment sector was adversely impacted by the supply of multifamily apartments outpacing demand, due primarily to the availability of capital and the low interest rate environment, demand for multifamily apartments that was adversely impacted by weakness in the overall U.S. economy and the job market, as well as increased rates of homeownership due primarily to historically low mortgage interest rates. In particular, the Sunbelt markets in which a substantial portion of the Company’s apartment communities are located were adversely impacted.

Beginning in 2005, the Company’s operating results benefited from improved fundamentals in the multifamily apartment market, due primarily to improved job growth and overall growth in the U.S. economy and job market, increasing mortgage interest rates and single-family housing prices which have decreased the affordability of housing, as well as moderation in the supply of new market-rate apartments in the primary markets and submarkets where the Company operates. In 2006 and 2007, the Company’s operating results continued to benefit from these improved fundamentals, although the rate of growth has moderated in 2007. This is evidenced by year over year increases in same store operating revenues and property net operating income (“NOI”) of 4.7% and 4.7%, respectively, in 2007 compared to 5.5% and 6.2%, respectively, in 2006 and 3.1% and 2.9%, respectively, in 2005. Some concerns have emerged recently relating to a slowdown in the overall U.S. housing market, attributable in part to continued concerns relating to the impact of rising mortgage delinquencies and tighter credit markets. The Company is forecasting continued moderation in the rate of growth of same store community revenues and NOI in 2008 as more fully discussed in the “Outlook” section below.

The Company has also been active over the past several years repositioning its real estate portfolio and building its development and value creation capabilities centered upon its Southeast, Southwest and Mid-Atlantic regions. During this time, the Company has been a net seller of apartment assets in an effort to exploit opportunities to harvest value and recycle capital through the sale of non-core assets that no longer met the Company’s growth objectives. The Company’s asset sales program has been consistent with its strategy of reducing its concentration in Atlanta, Georgia and Dallas, Texas, building critical mass in fewer markets and leveraging the Post^® brand in order to improve operating efficiencies. The Company has redeployed capital raised from its asset sales to strengthen its balance sheet, by reducing high-coupon preferred equity and debt, and reinvesting in assets that the Company believes demonstrate better growth potential.

In this regard, the Company disposed of 3,047, 1,340 and 807 apartment units in 2005, 2006 and 2007, respectively, for aggregate gross proceeds of approximately $232,000, $175,000 and $91,800 in 2005, 2006 and 2007, respectively. In 2007, the Company also transferred three communities, containing 1,202 apartment units, to a newly formed unconsolidated entity, in which the Company retained a 25% interest. The 75% interest in these communities effectively sold to the institutional partner generated gross proceeds of approximately $136,200. During this same period, the Company

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acquired 319, 819 and 350 apartment units for aggregate gross purchase prices of approximately $37,250, $152,000 and $74,000 in 2005, 2006 and 2007, respectively.

The Company also re-commenced development activities in late 2004 and the pace of new development began to accelerate in 2006. In 2006, the Company started for-rent apartment projects and one expansion containing 826 units and started an 85 unit for-sale condominium project. In 2007 and early 2008, the Company started for-rent apartment projects containing 1,290 units and started an additional 305 for-sale units at two condominium projects (one in an unconsolidated entity). The Company also expects to begin additional development projects in 2008 and 2009.

In early 2005, the Company entered the for-sale condominium housing market to exploit the strategic opportunity for Post to serve those consumers who are choosing to own, rather than rent, their home. As a result, the Company launched a new for-sale brand, Post Preferred Homes^tm, which serves as the unified marketing umbrella for the Company’s for-sale ventures, including developing new communities and converting existing apartment communities into upscale for-sale housing in several key markets.

In total, the Company has converted five apartment communities since 2005, initially consisting of 731 units (including one held in a joint venture), into for-sale condominium homes. As of the end of 2007, three of these condominium conversion projects were sold out. The other two projects, consisting of a 206-unit project in Tampa, FL and a 143-unit project in Houston, TX, had, on average, closed the sales of approximately 64% of their total units as of the end of 2007. In late 2006 and continuing into 2007, there was a softening in the condominium and single family housing markets due to increasing mortgage financing rates, increasing supplies of such assets, tighter credit standards and a significant slow down in the residential housing market in the U.S. Further, in the second half of 2007, the turbulence in weakening credit markets accelerated, resulting in a further decline in for-sale housing markets. As a result, the pace of condominium closings began to slow in the second half of 2006 with a further slowing in the second half of 2007. It is likely that closings will continue to be slow at these communities into 2008. There can be no assurance of the amount or pace of future for-sale condominium sales and closings. As discussed in Note 1 to the consolidated financial statement contained herein, the Company uses the relative sales value method to allocate costs and recognize profits from condominium projects. This method requires the Company to estimate its total condominium projects costs and profits each period. Should the Company adjust its estimates regarding costs and profits expected to be realized from its condominium projects in future periods, the Company may recognize losses in subsequent periods to reduce estimated profits previously recorded or may recognize impairment losses if the carrying value of these assets is not deemed recoverable.

Beginning in the second quarter of 2007, the Company also began closing condominium homes at two of its newly developed for-sale condominium projects, containing 230 homes. The Company expects closings at these communities to continue into 2008. As of January 28, 2008, the Company had seven condominium homes under contract and had closed 132 homes at these communities. As discussed above, the pace of sales activities and closings is expected to slow into 2008 at these communities. A significant portion of the condominium closings at these two communities resulted from contracts entered into prior to the third quarter of 2007 when credit standards tightened and markets increased in volatility resulting in a further slowing of the demand for for-sale housing. There can be no assurances that condominium homes under contract at these communities will close.

The Company’s expansion into for-sale condominium housing exposes the Company to new risks and challenges, which if they materialize, could have an adverse impact on the Company’s business, results of operations and financial condition. As of December 31, 2007, the Company had approximately $219,900 of total estimated capital cost (based on book value and including the Company’s investment in unconsolidated entities) committed to its for-sale condominium conversion and ground-up development projects, including projected development costs expected to be funded relating to 305 for-sale projects currently under construction. In addition, the Company also had, in the aggregate, approximately $154,617 of land held for future development and net investments in unconsolidated land entities as of December 31, 2007, of which a portion may be used to develop future for-sale condominium projects depending upon market conditions. There can be no assurance, however, that land held for future development will be used for such purposes or whether developments will actually commence. See “Risk Factors” elsewhere in this Form 10-K for a discussion of these and other Company risk factors.

The following discussion should be read in conjunction with the selected financial data and with all of the accompanying consolidated financial statements appearing elsewhere in this report. This discussion is combined for the Company and the Operating Partnership as their results of operations and financial condition are substantially the same except for the effect of the 1.4%. 1.9% and 5.0% weighted average common minority interest in the Operating Partnership in 2007, 2006 and 2005, respectively. See the summary financial information in the section below titled, “Results of Operations.”

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Possible Business Combination

On January 23, 2008 the Company announced that its Board of Directors has authorized management to initiate a formal process to pursue a possible business combination or other sale transaction and to seek proposals from potentially interested parties. The formal process was commenced by the Company immediately following the announcement and is continuing. There can be no assurance that the initiation of a formal process will result in any transaction leading to a business combination or other sale transaction.

Disclosure Regarding Forward-Looking Statements

Certain statements made in this report, and other written or oral statements made by or on behalf of the Company, may constitute “forward-looking statements” within the meaning of the federal securities laws. In addition, the Company, or the executive officers on the Company’s behalf, may from time to time make forward-looking statements in reports and other documents the Company files with the SEC or in connection with oral statements made to the press, potential investors or others. Statements regarding future events and developments and the Company’s future performance, as well as management’s expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. Forward-looking statements include statements preceded by, followed by or that include the words “believes,” “expects,” “anticipates,” “plans,” “estimates,” or similar expressions. Examples of such statements in this report include the Company’s anticipated performance for the year ending December 31, 2008 (including the Company’s assumptions for such performance and expected levels of costs and expenses to be incurred in 2008), anticipated apartment community sales in 2008 (including the estimated proceeds, estimated gains on sales and the use of proceeds from such sales), anticipated conversion of apartment communities into condominium homes, development of new for-sale condominium housing and the related sales of the for-sale condominium homes, anticipated future acquisition and development activities, accounting recognition and measurement of guarantees, anticipated refinancing and other new financing needs, the anticipated dividend level in 2008, the Company’s ability to meet new construction, development and other long-term liquidity requirements, and its ability to execute future asset sales. Forward-looking statements are only predictions and are not guarantees of performance. These statements are based on beliefs and assumptions of the Company’s management, which in turn are based on currently available information. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding the market for the Company’s apartment communities, demand for apartments in the markets in which it operates, competitive conditions and general economic conditions. These assumptions could prove inaccurate. The forward-looking statements also involve risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement. Many of these factors are beyond the Company’s ability to control or predict. Such factors include, but are not limited to, the following:

•  The success of the Company’s business strategies described on pages 2 to 3 in this Annual Report on Form 10-K;

•  Future local and national economic conditions, including changes in job growth, interest rates, the availability of financing and other factors;

•  Demand for apartments in the Company’s markets and the effect on occupancy and rental rates;

•  The impact of competition on the Company’s business, including competition for residents in the Company’s apartment communities and buyers of the Company’s for-sale condominium homes and development locations;

•  The Company’s ability to obtain financing, enter into joint venture arrangements in relation to or self-fund the development or acquisition of additional apartment communities and for-sale condominium housing;

•  The uncertainties associated with the Company’s real estate development, including actual costs exceeding the Company’s budgets or development periods exceeding expectations;

•  Uncertainties associated with the timing and amount of apartment community sales and the resulting gains/losses associated with such sales;

•  Uncertainties associated with the Company’s condominium conversion and for-sale housing business, including the timing and volume of condominium sales;

•  Conditions affecting ownership of residential real estate and general conditions in the multi-family residential real estate market;

•  Uncertainties associated with environmental and other regulatory matters;

•  The effects of compliance with the Americans with Disabilities Act and the Fair Housing Act;

•  The effects of changes in accounting policies and other regulatory matters detailed in the Company’s filings with the Securities and Exchange Commission and uncertainties of litigation;

•  The Company’s ability to continue to qualify as a REIT under the Internal Revenue Code;

•  The progress and results of the Company’s formal process to pursue a potential sale or other business combination; and

•  Other factors, including the risk factors discussed on pages 8 to 16 in this Annual Report on Form 10-K.

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Management believes these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and management undertakes no obligation to update publicly any of them in light of new information or future events.

Critical Accounting Policies and New Accounting Pronouncements

In the preparation of financial statements and in the determination of Company operating performance, the Company utilizes certain significant accounting polices and these accounting policies are discussed in note 1 to the Company’s consolidated financial statements. Also discussed in note 1 to the consolidated financial statements, there are new accounting pronouncements issued in 2007 and 2006 that may have an impact on future reported results. The potential impact of certain new pronouncements on the Company is discussed below and in the consolidated financial statements. As the Company is in the business of developing, owning and managing apartment communities and developing, converting and selling for-sale condominiums, its critical accounting policies, ones that are subject to significant management estimates and judgments, relate to cost capitalization, asset impairment evaluation and revenue and profit recognition of for-sale condominium activities.

For communities under development or rehabilitation, the Company capitalizes interest, real estate taxes, and certain internal personnel and associated costs directly related to apartment communities under development and construction. Interest capitalized to projects under development or construction can fluctuate significantly from year to year based on the level of projects under development or construction and to a lesser extent, changes in the weighted average interest rate used in the calculation. For the years ended December 31, 2007, 2006 and 2005, the Company capitalized interest totaling $11,801, $9,942 and $2,907, respectively. The increase in capitalized interest primarily relates to a significantly increased development pipeline over the last few years. The weighted average interest rates used in the calculation of the capitalized interest amounts ranged from 6.6% in 2007 to 6.5% in 2005 and, as a result, were not the primary driver of the changes in interest capitalization discussed above. In future periods, the Company anticipates an increase in development activity in three regional markets which will result in increased interest capitalization over 2007 levels. Aggregate interest capitalization is expected to increase in 2008 even as the average interest rate used in the calculation is expected to be substantially the same or slightly decrease compared to 2007. Due to the predominately fixed rate nature of the Company’s debt, future increases or decreases in short-term interest rates are not expected to have a significant impact on the weighted average interest rate used for interest capitalization purposes. Future increases in short-term and long-term interest rates over time would cause an increase in the weighted average rate used for capitalization and cause interest amounts capitalized to increase.

Internal personnel and associated costs are capitalized to the projects under development or construction based upon the effort associated with such projects. Over the past three years, the Company increased its development personnel in three regional geographic areas in anticipation of increased development activity in 2007 and in future periods. In 2007, 2006 and 2005, the Company expensed $7,063, $6,424 and $4,711, respectively, of development personnel and associated costs. If future development volume increases over 2007 levels, an additional portion of such costs may be capitalized to development projects.

The Company continually evaluates the recoverability of the carrying value of its real estate assets using the methodology summarized in its accounting policies (see note 1 to the consolidated financial statements). Under current accounting literature, the evaluation of the recoverability of the Company’s real estate assets requires the judgment of Company management in the determination of the value of the future cash flows expected from the assets and the estimated holding period for the assets. The Company uses market capitalization rates to determine the estimated residual value of its real estate assets and, generally, takes a long-term view of the holding period of its assets unless specific facts and circumstances warrant shorter holding periods (expected sales, departures from certain geographic markets, etc.). At December 31, 2007 and 2006, management believed it had applied reasonable estimates and judgments in determining the proper classification of its real estate assets. The Company believes the actual results of prior year dispositions have validated the Company’s methodology discussed herein. Should external or internal circumstances change requiring the need to shorten the holding periods or adjust the estimated future cash flows of certain of the Company’s assets, the Company could be required to record future impairment charges.

In 2005, the Company entered into the for-sale condominium business. At December 31, 2007, the Company is selling condominiums at two condominium conversion communities and at two newly developed communities completed in 2007. Under Statement of Financial Accounting Standards No. 66 (“SFAS No. 66”), the Company recognizes revenue and the resulting profit from condominium sales based on the relevant facts and circumstances associated with each condominium project. For condominium conversion projects, revenues are recognized upon the closing of each sale transaction (the “Completed Contract Method”), as all conditions for full profit recognition are generally met at the time

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and the conversion construction periods are typically very short. In 2005 and 2006, all condominium sales were at condominium conversion projects. In 2007, sales occurred at both the condominium conversion and newly developed projects.

Under SFAS No. 66, the Company uses the relative sales value method to allocate costs and recognize profits from condominium conversion sales. Under the relative sales value method, estimates of aggregate project revenues and aggregate project costs are used to determine the allocation of project cost of sales and the resulting profit in each accounting period. In subsequent periods, project cost of sale allocations and profits are adjusted to reflect changes in the actual and estimated costs and estimated revenues of each project. Unexpected increases or decreases in estimated project revenues and project costs could cause future cost of sale and profit margin amounts recognized in the financial statements to be different than the amounts recognized in prior periods. As the Company continues to be active in the condominium business in future periods, changes in estimates of this nature could have a significant impact on reported future results from operations.

For newly developed condominiums, the Company evaluates the factors specified in SFAS No. 66 and the guidance provided by EITF Issue No. 06-8 (“EITF No. 06-8”) to determine the appropriate method of accounting for each project (either the “Percentage of Completion Method” or the “Completed Contract Method”). The factors used to determine the appropriate method are a determination of whether: the purchaser is legally committed to closing in the real estate contract; the construction of the project is beyond a preliminary phase; sufficient units have been contracted to ensure the project will not revert to a rental project; the aggregate project sale proceeds and costs can be reasonably estimated; and the buyer has made an adequate initial and continuing cash investment under the contract in accordance with SFAS No. 66 and EITF No. 06-8. Under the Percentage of Completion Method, revenues and the associated profit would be recognized over the project construction period based on the ratio of total project costs incurred to estimated total project costs. The determination of the profit margins to be reported also requires an estimate of the estimated aggregate revenues to be generated from condominium sales. Increases in estimated revenues and decreases in estimated costs over time would lead to increased profit recognition in future periods. Likewise, decreases in estimated revenues and increases in estimated costs over time would lead to reductions in profit margins in future periods. Additionally, contracts terminated prior to closing under the Percentage of Completion Method would result in the reversal of previously recognized profits and such amounts could be material under market conditions that may lead to a general market value decline for condominiums.

In years prior to 2007, the Company determined that revenues, project cost of sales and the resulting profits at its two newly development condominium projects should be recorded under the Completed Contract Method, similar to the accounting for condominium conversion projects discussed above. This conclusion was based upon the determination that the initial and continuing cash investments received did not meet the requirements of SFAS No. 66 and EITF No. 06-8, as well as other factors. Additionally, the Company commenced the development of two new condominium projects in 2007 (one in an unconsolidated entity), one of which began entering into sales contracts (54 units, or 32% of the total, currently under contract). For the same considerations as the Company’s other newly developed projects, the Company determined that the revenues, costs and profits should be recorded under the Completed Contract Method.

FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement 109,” was issued in July 2006. FIN 48 clarifies guidance on the recognition and measurement of uncertain tax positions and establishes a more likely than not standard for the evaluation of whether such tax positions can be recognized in the Company’s financial statements. Previously recognized tax positions that do not meet the more likely than not criteria will be required to be adjusted on the implementation date. Additionally, FIN 48 requires additional disclosure regarding the nature and amount of uncertain tax positions, if any. The Company implemented FIN 48 on January 1, 2007 and the adoption did not have a material impact on the Company’s financial position and results of operations (see note 8 to the consolidated financial statements).

The Securities and Exchange Commission issued SAB No. 108 (“SAB 108”), “Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements,” in September 2006. SAB 108 requires that companies analyze the effect of financial statement misstatements on both their balance sheet and their income statement and contains guidance on correcting errors under this approach. The Company applied the guidance in SAB 108 on December 31, 2006 and, in accordance with the initial application provisions of SAB 108, adjusted retained earnings as of January 1, 2006. The adjustment was considered to be immaterial individually and in the aggregate in prior years based on the Company’s historical method of determining materiality. The application of SAB 108 resulted in a cumulative effect adjustment to record the prior period impact of accounting for two ground leases with scheduled rent increases on a straight-line basis during periods prior to January 1, 2005, and resulted in an increase in consolidated real estate assets of approximately $3,900, an increase in consolidated liabilities of approximately $8,800 and a decrease in consolidated equity of approximately $4,900 ($4,700 net of minority interest).

SFAS No. 157, “Fair Value Measurements,” was issued in September 2006. SFAS No. 157 provides a definition of fair value and establishes a framework for measuring fair value. SFAS No. 157 clarified the definition of fair value in an effort

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to eliminate inconsistencies in the application of fair value under generally accepted accounting principles. Additional disclosure focusing on the methods used to determine fair value are also required. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and should be applied prospectively. The Company does not expect that the adoption of SFAS No. 157 will have a material impact on the Company’s financial position and results of operations.

SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — including an amendment of FASB Statement No. 115,” was issued in February 2007. SFAS No. 159 gives the Company the irrevocable option to carry most financial assets and liabilities at fair value, with changes in fair value recognized in earnings. SFAS No. 159 is effective for the Company on January 1, 2008. The Company does not expect that the adoption of SFAS No. 159 will have a material impact on the Company’s financial position and results of operations.

SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements,” was issued in December 2007. SFAS No. 160 requires all entities to report noncontrolling (minority) interests in subsidiaries as equity in the consolidated financial statements. SFAS No. 160 is effective for the Company on January 1, 2009. The Company is currently evaluating the potential impact of SFAS No. 160 on the Company’s financial position and results of operations.

SFAS No. 141R, “Business Combinations,” was issued in December 2007. SFAS No. 141R will replace SFAS No. 141 on the date it becomes effective. SFAS No. 141R will require 1) acquirers to recognize all of the assets acquired and liabilities assumed in a business combination, 2) that the acquisition date be used to determine fair value for all assets acquired and all liabilities assumed, and 3) enhanced disclosures for the acquirer surrounding the financial effects of the business combination. The provisions of SFAS 141R will lead to the expensing of acquisition related transaction costs and the potential recognition of acquisition related contingencies. SFAS No. 141R is effective for the Company on January 1, 2009. The Company is currently evaluating the potential impact of SFAS No. 141R on the Company’s financial position and results of operations.

Results of Operations

The following discussion of results of operations should be read in conjunction with the consolidated statements of operations, the accompanying selected financial data and the community operations/segment performance information included below.

The Company’s revenues and earnings from continuing operations are generated primarily from the operation of its apartment communities. For purposes of evaluating comparative operating performance, the Company categorizes its operating apartment communities based on the period each community reaches stabilized occupancy. The Company generally considers a community to have achieved stabilized occupancy on the earlier to occur of (1) attainment of 95% physical occupancy on the first day of any month or (2) one year after completion of construction.

For the year ended December 31, 2007, the Company’s portfolio of operating apartment communities, excluding five communities held in unconsolidated entities, consisted of the following: (1) 43 communities that were completed and stabilized for all of the current and prior year, (2) portions of two communities that are being converted into condominiums that are reflected in continuing operations under SFAS No. 144 (see note 1 to the consolidated financial statements), (3) four operating communities that were acquired in 2007 and 2006, and (4) nine communities in development, rehabilitation and lease-up. These operating segments exclude the operations of apartment communities classified as discontinued operations, condominium conversion communities classified as discontinued operations and apartment communities held in unconsolidated entities for the years presented.

The Company has adopted an accounting policy related to communities in the lease-up stage whereby substantially all operating expenses (including pre-opening marketing and management and leasing personnel expenses) 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 and management and leasing personnel expenses) will initially exceed rental revenues, resulting in a “lease-up deficit,” which continues until such time as rental revenues exceed such expenses. The lease-up deficits for the years ended December 31, 2007 and 2006 was approximately $1,853 and $460, respectively. There was no lease-up deficit in 2005, as no communities were in the lease-up stage.

In order to evaluate the operating performance of its communities for the comparative years listed below, the Company has presented financial information which summarizes the rental and other revenues, property operating and maintenance expenses (excluding depreciation and amortization) and net operating income on a comparative basis for all of its operating communities and for its stabilized operating communities. Net operating income is a supplemental non-GAAP financial measure. The Company believes that the line on the Company’s consolidated statement of operations entitled “net income” is the most directly comparable GAAP measure to net operating income. Net operating income is reconciled

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to GAAP net income in the financial information accompanying the tables. The Company believes that net operating income is an important supplemental measure of operating performance for a REIT’s operating real estate because it provides a measure of the core operations, rather than factoring in depreciation and amortization, financing costs and general and administrative expenses. This measure is particularly useful, in the opinion of the Company, in evaluating the performance of geographic operations, operating segment groupings and individual properties. Additionally, the Company believes that net operating income, as defined, is a widely accepted measure of comparative operating performance in the real estate investment community.

Comparison of Year Ended December 31, 2007 to Year Ended December 31, 2006

The operating performance from continuing operations for all of the Company’s apartment communities summarized by segment for the years ended December 31, 2007 and 2006 is summarized as follows:

	Year Ended December 31,
	2007		2006		% Change
Rental and other property revenues
Fully stabilized communities(1)	$	244,537	$	233,637		4.7	%
Development, rehabilitation and lease-up communities		14,972		9,545		56.9	%
Condominium conversion and other communities(2)		9,810		17,281		(43.2	)%
Acquired communities(3)		13,760		7,027		95.8	%
Other property segments(4)		23,861		23,653		0.9	%
		306,940		291,143		5.4	%
Property operating and maintenance expenses (excluding depreciation and amortization)
Fully stabilized communities(1)		92,337		88,291		4.6	%
Development, rehabilitation and lease-up communities		8,064		5,291		52.4	%
Condominium conversion and other communities(2)		4,353		7,470		(41.7	)%
Acquired communities(3)		5,504		3,098		77.7	%
Other property segments, including corporate management expenses(5)		30,884		29,340		5.3	%
		141,142		133,490		5.7	%
Property net operating income(6)	$	165,798	$	157,653		5.2	%
Capital expenditures(7)(8)
Annually recurring:
Carpet	$	3,334	$	3,718		(10.3	)%
Other		7,301		6,307		15.8	%
Total	$	10,635	$	10,025		6.1	%
Periodically recurring	$	8,422	$	5,698		47.8	%
Average apartment units in service		18,889		18,839		0.3	%

(1)	Communities which reached stabilization prior to January 1, 2006.
(2)	Portions of existing apartment communities being converted into condominiums that are reflected in continuing operations under SFAS No. 144 and communities converted to joint venture ownership in 2007.
(3)	Operating communities acquired subsequent to January 1, 2006.
(4)	Other property segment revenues include revenues from commercial properties, revenues from furnished apartment rentals above the unfurnished rental rates and any property revenue not directly related to property operations. Other property segment revenues exclude other corporate revenues of $602 and $402 for the years ended December 31, 2007 and 2006, respectively.
(5)	Other expenses include expenses associated with commercial properties, furnished apartment rentals and certain indirect central office operating expenses related to management and grounds maintenance.

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(6) A reconciliation of property net operating income to GAAP net income is detailed below.

	December 31,
	2007			2006
Total same store NOI	$	152,200		$	145,346
Property NOI from other operating segments		13,598			12,307
Consolidated property NOI		165,798			157,653
Add (subtract):
Interest income		822			1,261
Other revenues		602			402
Minority interest in consolidated property partnerships		(1,857	)		(257	)
Depreciation		(66,371	)		(65,687	)
Interest expense		(52,116	)		(52,533	)
Amortization of deferred financing costs		(3,297	)		(3,526	)
General and administrative		(21,337	)		(18,502	)
Investment and development		(7,063	)		(6,424	)
Gains on sales of real estate assets, net		100,015			12,881
Equity in income of unconsolidated real estate entities		1,556			1,813
Other income (expense)		(1,098	)		2,592
Minority interest of common unitholders		(1,491	)		(418	)
Income from continuing operations		114,163			29,255
Income from discontinued operations		64,536			72,214
Net income	$	178,699		$	101,469

(7)

In addition to those expenses which relate to property operations, the Company incurs annually recurring and periodically 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. Recurring capital expenditures are those that are generally expected to be incurred on an annual basis. Periodically recurring capital expenditures are those that generally occur less frequently than on an annual basis.

(8)

A reconciliation of property capital expenditures from continuing operations to total annually recurring and periodically recurring capital expenditures as presented in the consolidated statements of cash flows under GAAP is detailed below.

	Year Ended December 31,
	2007		2006
Annually recurring capital expenditures
Continuing operations	$	10,635	$	10,025
Discontinued operations		475		1,120
Total annually recurring capital expenditures per statements of cash flows	$	11,110	$	11,145
Periodically recurring capital expenditures
Continuing operations	$	8,422	$	5,698
Discontinued operations		29		266
Total periodically recurring capital expenditures per statements of cash flows	$	8,451	$	5,964

The Operating Partnership reported net income available to common unitholders of $173,455 and $95,649 for the years ended December 31, 2007 and 2006, respectively, and the Company reported net income available to common shareholders of $171,062 and $93,832 for the years ended December 31, 2007 and 2006, respectively. The increase in net income in 2007, compared to 2006, primarily reflected increased gains on sales of real estate assets in 2007 resulting from gains on land sales of $5,186, gains on sale of three apartment communities of $62,407 and gains on the sale of a 75% interest in three apartment communities of $81,268 in 2007 compared to gains on the sale of three apartment communities of $68,324 and land sale gains of $503 in 2006. The improved operating performance of the Company’s stabilized communities, offset somewhat by reduced other income, also contributed to increased net income between periods. These items are discussed in more detail in the sections below.

Rental and other revenues from property operations increased $15,797 or 5.4% from 2006 to 2007 primarily due to increased revenues from the Company’s fully stabilized communities of $10,900 or 4.7%, increased revenues of $5,427 from development, rehabilitation and lease-up communities and increased revenues from acquired communities of $6,733, offset by reduced revenues from condominium conversion and other communities of $7,471. The revenue increase from fully stabilized communities is discussed more fully below. The revenue increase from development, rehabilitation and lease-up communities primarily reflects the lease-up of two communities in 2007. The revenue increase from acquired communities reflects the Company’s acquisition of two communities in March 2006, one community in July 2006 and one community in July 2007. The revenue decrease from condominium conversion and other communities reflects the reduction of leased units as units were vacated for conversion and sale throughout 2006 and 2007 and due primarily to the transfer and sale of a 75% interest in three communities to an unconsolidated entity in 2007. Property operating and maintenance expenses (exclusive of depreciation and amortization) increased $7,652 or 5.7% primarily due

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to increases from acquisition communities of $2,407, from fully stabilized communities of $4,046 or 4.6% and from development, rehabilitation and lease-up communities of $2,773 between periods, offset by reduced expenses from condominium conversion and other communities of $3,115. The expense increase from acquisition communities reflects a full year of expenses in 2007 from communities acquired in 2006 and five months of expenses from one community acquired in the third quarter of 2007. The expense increase from development, rehabilitation and lease-up communities primarily reflects expenses associated with the lease-up of two communities in 2007. The expense increase from stabilized communities is discussed below. The expense decrease from condominium conversion and other communities primarily reflects the reduced expenses from the transfer and sale of a 75% interest in three communities to an unconsolidated entity in 2007.

In 2007, gains on sales of real estate assets in continuing operations included gains of $5,186 from the sale of three land sites and gains of $81,268 from the transfer of a 75% interest in three communities into a newly formed unconsolidated entity, in which the Company retained a 25% interest. Gains on sales of real estate assets in discontinued operations represented gains of $62,407 from the sale of three apartment communities, containing 807 apartment units. In 2006, gains on sales of real estate assets in continuing operations included a gain of $503 from the sale of a land site. Gains on sales of real estate assets in discontinued operations represented gains of $68,324 from the sale of three apartment communities, containing 1,340 units. The Company may continue to be a seller of apartment communities in future periods depending on market conditions and consistent with its investment strategy of recycling investment capital to fund new development and acquisition activities. The Company may also enter into additional joint venture arrangements in future periods.

In 2007 and 2006, gains on sales of real estate assets also included net gains from condominium sales activities of $13,945 and $12,603, respectively. Net condominium gains of $13,561 and $12,378 for 2007 and 2006, respectively, were included in continuing operations. The increase in aggregate condominium gains between periods primarily reflects the volume, timing and mix of condominium closings. In 2007 and 2006, the Company closed 235 and 219 units, respectively, at wholly owned development and conversion communities. The sales of condominiums in 2006 at condominium conversion communities generated higher profit margins than sales at newly developed communities due to the accumulated depreciation recorded at such communities prior to their conversion into condominiums. Aggregate condominium sales (including those reported in discontinued operations) generated gross proceeds of $78,018 in 2007 and $40,686 in 2006. Approximately 129 unit closings in 2007 occurred at newly developed communities which began closings in the second quarter of 2007. The majority of these contracts were entered into in prior years. The Company expects gains on sales of real estate assets at the Company’s condominium development and conversion communities to continue at a slow pace in 2008 as the backlog of condominiums under contract is lower than in previous quarters and due to the further tightening of credit market conditions in an already slow for-sale housing market.

Depreciation expense increased $684, or 1.0% from 2006 to 2007 primarily due to depreciation expense of $2,603 related to development and lease-up communities as apartment units were placed in service in late 2006 and the first half of 2007, $1,742 related to properties acquired in 2006 and 2007 and approximately $466 of accelerated depreciation related to the retirement of six apartment units and certain enclosed garages at a Florida community to accommodate the expansion of the community in 2007. These increases were offset by reduced depreciation between periods at fully stabilized communities of $3,254 resulting from certain furniture and fixtures (with a five year life) at certain properties becoming fully depreciated in 2006 and due to reduced depreciation of $957 from three communities contributed to an unconsolidated joint venture in 2007.

General and administrative expenses increased $2,835, or 15.3%, from 2006 to 2007 primarily due to higher compensation costs, higher business and charitable contribution expenses, higher legal expenses and higher corporate technology expenses. The increase in compensation costs in 2007 of $1,790 reflected annual compensation increases, increased personnel costs associated with internalizing certain compliance activities and increased incentive awards to management. Approximately $100 of this increase reflects the one-time favorable adjustment in 2006 relating to the implementation of SFAS 123R (stock-based compensation). Business and charitable contributions increased by $354 in 2007 due to the timing and mix of the commitments between years. Legal expenses increased by $255 due to litigation costs associated with the ERC lawsuit which began in the fourth quarter of 2006 and due to a legal expense recovery of approximately $179 in 2006 related to prior year shareholder litigation. The increase in technology expenses of $108 primarily reflects higher consulting and other costs associated with the implementation of enhanced corporate systems and technology support services as well as the timing of such consulting and project expenditures between years. In addition, the Company recorded additional severance charges of $283 in 2007 related to increased accruals of prior year severance arrangements.

Investment and development expenses increased $639 or 9.9% from 2006 and 2007. In 2007, the Company’s development personnel and other costs increased $1,938 over 2006 (exclusive of the specific expense components discussed herein), as

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the Company continued to grow its development pipeline in three regional markets, due to severance charges of approximately $426 relating to development personnel departures in 2007 as well as $444 of write-offs of costs associated with certain abandoned projects. These cost increases were offset by $2,169 of increased capitalization of development personnel to increasing development activity commencing in 2006 and continuing into 2007.

Interest expense included in continuing operations decreased $417 or 1.0% from 2006 to 2007. The decreased expense amounts between periods primarily reflected increased interest capitalization on the Company’s development projects of $1,859 between periods offset somewhat by higher interest expense on higher average debt levels due to increased development activity between years, increased development land acquisition activity in 2006 and 2007 and an apartment acquisition in 2007. Interest expense included in discontinued operations decreased from $4,189 in 2006 to $1,517 in 2007 primarily due to interest expense associated with three communities sold in the second half of 2006 and three communities sold in 2007.

Equity in income of unconsolidated real estate entities decreased $257 or 14.2% from 2006 to 2007. The decrease was primarily due to reduced net gains from condominium sales and reduced net operating income in 2007 at the unconsolidated entity that was converting its apartment community into condominiums, as it completed the sell out of its remaining units in 2007. See note 3 to the consolidated financial statements for a summary of the operating results of the Company’s unconsolidated entities.

Other income (expense) in 2007 included expenses associated with estimated state franchise and other income taxes. Franchise taxes are associated with new margin-based taxes in Texas that are effective in 2007. In 2006, other income (expense) primarily included a gain on the sale of marketable securities of $573, an additional gain on sale of the Company’s prior year investment in Rent.com of $325 resulting in the receipt of previously escrowed proceeds under the prior year sale and net mark-to-market derivative gains of $1,655.

Annually recurring and periodically recurring capital expenditures from continuing operations increased $3,334 or 21.2% from 2006 to 2007. The increase in annually recurring capital expenditures of $610 primarily reflects higher leasing office and model upgrade expenditures in 2007. The increase in periodically recurring capital expenditures of $2,724 primarily reflects increased costs associated with access upgrades at several communities and access upgrades and other non-revenue generating capital expenditures (principally new roofs and HVAC system upgrades) incurred in conjunction with the Company’s rehabilitation of two communities, offset by decreased tenant improvements at the Company’s office and retail properties due to the timing of large tenant improvements in 2006.

Fully Stabilized (Same Store) Communities

The Company defines fully stabilized communities as those which have reached stabilization prior to the beginning of the previous year, adjusted by communities sold and classified as held for sale, communities under rehabilitation and communities converted to joint venture ownership in 2007. For the 2007 to 2006 comparison, fully stabilized communities are defined as those communities which reached stabilization prior to January 1, 2006. This portfolio consisted of 43 communities with 16,308 units, including 16 communities with 6,457 units (39.6%) located in Atlanta, Georgia, 11 communities with 3,464 units (21.2%) located in Dallas, Texas, 3 communities with 1,877 units (11.5%) located in Tampa, Florida, 4 communities with 1,703 units (10.4%) located in the greater Washington D.C. metropolitan area,

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4 communities with 1,388 units (8.5%) located in Charlotte, North Carolina and 5 communities with 1,419 units (8.8%) located in other markets. The operating performance of these communities is summarized as follows:

	Year Ended December 31,
	2007			2006			% Change
Rental and other revenues	$	244,537		$	233,637			4.7	%
Property operating and maintenance expenses (excluding depreciation and amortization)		92,337			88,291			4.6	%
Same store net operating income(1)	$	152,200		$	145,346			4.7	%
Capital expenditures(2)
Annually recurring:
Carpet	$	3,014		$	3,315			(9.1	)%
Other		5,259			5,239			0.4	%
Total annually recurring		8,273			8,554			(3.3	)%
Periodically recurring		4,543			2,633			72.5	%
Total capital expenditures (A)	$	12,816		$	11,187			14.6	%
Total capital expenditures per unit (A ¸ 16,308 units)	$	786		$	686			14.6	%
Average economic occupancy(3)		94.7	%		94.7	%		0.0	%
Average monthly rental rate per unit(4)	$	1,245		$	1,187			4.9	%

(1)	Net operating income of stabilized communities is a supplemental non-GAAP financial measure. See page 32 for a reconciliation of net operating income for stabilized communities to GAAP net income.
(2)	A reconciliation of these segment components of property capital expenditures to total annually recurring and periodically recurring capital expenditures as presented in the consolidated statements of cash flows prepared under GAAP is detailed below.

	Year Ended December 31,
	2007		2006
Annually recurring capital expenditures by operating segment
Same store	$	8,273	$	8,554
Development, rehabilitation and lease-up		809		503
Condominium conversion and other		731		569
Acquired		519		213
Other segments		778		1,306
Total annually recurring capital expenditures per statements of cash flows	$	11,110	$	11,145
Periodically recurring capital expenditures by operating segment
Same store	$	4,543	$	2,633
Development, rehabilitation and lease-up		2,660		702
Condominium conversion and other		758		147
Acquired		21		5
Other segments		469		2,477
Total periodically recurring capital expenditures per statements of cash flows	$	8,451	$	5,964

	The Company uses same store annually recurring and periodically recurring capital expenditures as cash flow measures. Same store annually recurring and periodically recurring capital expenditures are supplemental non-GAAP financial measures. The Company believes that same store annually recurring and periodically recurring capital expenditures are important indicators of the costs incurred by the Company in maintaining same store communities. The corresponding GAAP measures include information with respect to the Company’s other operating segments consisting of communities stabilized in the prior year, condominium conversion communities, lease-up communities, and sold communities in addition to same store information. Therefore, the Company believes that it’s presentation of same store annually recurring and periodically recurring capital expenditures is necessary to demonstrate same store replacement costs over time. The Company believes that the most directly comparable GAAP measure to same store annually recurring and periodically recurring capital expenditures are the lines on the Company’s consolidated statements of cash flows entitled “annually recurring capital expenditures” and “periodically recurring capital expenditures.”
(3)	Average economic occupancy is defined as gross potential rent less vacancy losses, model expenses and bad debt expenses divided by gross potential rent for the period, expressed as a percentage. Gross potential rent is defined as the sum of the gross actual rental rates for leased units and the anticipated rental rates for unoccupied units. The calculation of average economic occupancy does not include a deduction for net concessions and employee discounts. Average economic occupancy including these amounts would have been 93.9% and 93.8% for the years ended December 31, 2007 and 2006, respectively. For the years ended December 31, 2007 and 2006, net concessions were $1,149 and $1,337, respectively, and employee discounts were $781 and $733, respectively.
(4)	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, divided by total units.

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Rental and other property revenues increased $10,900 or 4.7% from 2007 to 2006. This increase resulted primarily from a 4.9% increase in the average monthly rental rate per apartment unit as the average economic occupancy of the portfolio was consistent between years at 94.7%. This increase in average rental rates resulted in a revenue increase of approximately $11,417 between years. This increase in revenue related to rental rates was offset somewhat by increased vacancy losses of $1,385 primarily due to vacancy losses being measured at higher rental rates in 2007. Additionally, other property revenues increased $682 primarily as a result of higher up-front leasing fees and net concessions decreased $186 due to generally reduced concessions in a stronger rental market in 2007. Overall, the improved performance of the operating portfolio reflected the impact of the rental rate increases embedded into the portfolio throughout much of 2006 as well as the continued modest increase in job growth in most of the Company’s markets with the Company’s operations in six of its markets reporting increased revenues at or in excess of 4.0%. The Company believes that the automated pricing software implemented in 2006 partially contributed to the increased revenues in 2007. Average economic occupancy rates in the fourth quarter of 2007 were approximately 1.4% higher than in the fourth quarter of 2006 due to generally stable market conditions and a concerted effort to maintain occupancy through the traditionally slower first quarter leasing season. Average rental rate increases between years were somewhat lower in the fourth quarter at 3.0% compared to the full year of 4.9%. The Company expects this moderating trend to continue into 2008 and anticipates establishing rental rate structures that will enable average occupancy rates to remain at mid-90% levels. See the “Outlook” section below for an additional discussion of trends for 2008.

Property operating and maintenance expenses (exclusive of depreciation and amortization) increased $4,046 or 4.6% from 2007 to 2006. This increase was primarily due to increased property tax expenses of $1,494 or 5.2%, increased maintenance expenses of $1,026 or 7.7%, increased other property expenses of $414 or 12.3%, increased insurance expenses of $1,239 or 30.7% offset by decreased utility expenses of $191 or 1.8%. Property tax expenses increased due to increased property valuations in 2007 and the phase-out of property tax exemptions at the Company’s two New York City assets. Maintenance expenses increased primarily due to higher costs associated with resident turnover expenses, higher equipment repairs and higher exterior painting costs between years. Other property expenses increased primarily due to costs associated with the implementation of automated revenue pricing software and third party call centers in the second half of 2006 and into 2007. Insurance expenses increased due to significantly higher insurance rates on the renewal of the Company’s insurance program in the fourth quarter of 2006 and second quarter of 2007. The insurance rate increases primarily related to market increases in catastrophic coverage in coastal areas. The decrease in utility expense in 2007 primarily reflects the timing of expenses between years. See the “Outlook” section below for an additional discussion of trends in 2008.

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Comparison of Year Ended December 31, 2006 to Year Ended December 31, 2005

For the purposes of comparative operating performance, the Company categorizes its operating communities based on the period each community reaches stabilized occupancy, as defined above. For the 2006 to 2005 comparison, the operating community categories were based on the status of each community as of December 31, 2006. As a result, these categories are different from the operating community categories used in the 2007 to 2006 comparison discussed earlier in this section. Further, the amounts reported in the table below have been adjusted from the amounts reported in the Company’s December 31, 2006 financial statements due to the restatement impact of reclassifying the operating results of assets designated as held for sale in 2007 to discontinued operations under SFAS No. 144 (see the related discussion under the caption, “Discontinued Operations”). The operating performance from continuing operations for all of the Company’s apartment communities combined for the years ended December 31, 2006 and 2005 is summarized as follows:

	Year Ended December 31,
	2006		2005		% Change
Rental and other property revenues
Fully stabilized communities(1)	$	244,434	$	231,774		5.5	%
Development, rehabilitation and lease-up communities		9,545		10,438		(8.6	)%
Condominium conversion and other communities(2)		2,626		5,890		(55.4	)%
Acquired communities(3)		10,886		2,298		373.7	%
Other property segments(4)		23,652		21,616		9.4	%
		291,143		272,016		7.0	%
Property operating and maintenance expenses (excluding depreciation and amortization)
Fully stabilized communities(1)		92,251		88,438		4.3	%
Development, rehabilitation and lease-up communities		5,291		4,361		21.3	%
Condominium conversion and other communities(2)		1,901		2,013		(5.6	)%
Acquired communities(3)		4,706		856		449.8	%
Other property segments, including corporate management expenses(5)		29,341		29,086		0.9	%
		133,490		124,754		7.0	%
Property net operating income(6)	$	157,653	$	147,262		7.1	%
Capital expenditures(7)(8)
Annually recurring:
Carpet	$	3,718	$	2,775		34.0	%
Other		6,307		5,475		15.2	%
Total	$	10,025	$	8,250		21.5	%
Periodically recurring	$	5,698	$	4,174		36.5	%
Average apartment units in service		18,839		18,563		1.5	%

(1)	Communities which reached stabilization prior to January 1, 2005.
(2)	Portions of existing apartment communities being converted into condominiums that are reflected in continuing operations under SFAS No. 144.
(3)	Operating communities acquired subsequent to January 1, 2005.
(4)	Other property segment revenues include revenues from commercial properties, revenues from furnished apartment rentals above the unfurnished rental rates and any property revenue not directly related to property operations. Other property segment revenues exclude other corporate revenues of $402 and $255 for the years ended December 31, 2006 and 2005, respectively.
(5)	Other expenses include expenses associated with commercial properties, furnished apartment rentals and certain indirect central office operating expenses related to management and grounds maintenance.

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(6) A reconciliation of property net operating income to GAAP net income is detailed below.

	Year Ended December 31,
	2006			2005
Total same store NOI	$	152,183		$	143,336
Property NOI from other operating segments		5,470			3,926
Consolidated property NOI		157,653			147,262
Add (subtract):
Interest income		1,261			661
Other revenues		402			255
Minority interest in consolidated property partnerships		(257	)		(110	)
Depreciation		(65,687	)		(68,795	)
Interest expense		(52,533	)		(54,197	)
Amortization of deferred financing costs		(3,526	)		(4,661	)
General and administrative		(18,502	)		(18,307	)
Investment and development		(6,424	)		(4,711	)
Severance charges		—			(796	)
Gains (losses) on sales of real estate assets, net		12,881			(531	)
Equity in income of unconsolidated real estate entities		1,813			1,767
Other income		2,592			5,267
Minority interest of common unitholders		(418	)		226
Income from continuing operations		29,255			3,330
Income from discontinued operations		72,214			138,618
Net income	$	101,469		$	141,948

(7)

In addition to those expenses which relate to property operations, the Company incurs annually recurring and periodically 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. Recurring capital expenditures are those that are generally expected to be incurred on an annual basis. Periodically recurring capital expenditures are those that generally occur less frequently than on an annual basis.

(8)

A reconciliation of property capital expenditures from continuing operations to total annually recurring and periodically recurring capital expenditures as presented in the consolidated statements of cash flows under GAAP is detailed below.

	Year Ended December 31,
	2006		2005
Annually recurring capital expenditures
Continuing operations	$	10,025	$	8,250
Discontinued operations		1,120		1,671
Total annually recurring capital expenditures per statements of cash flows	$	11,145	$	9,921
Periodically recurring capital expenditures
Continuing operations	$	5,698	$	4,174
Discontinued operations		266		334
Total periodically recurring capital expenditures per statements of cash flows	$	5,964	$	4,508

The Operating Partnership reported net income available to common unitholders of $95,649 and $141,410 for the years ended December 31, 2006 and 2005, respectively, and the Company reported net income available to common shareholders of $93,832 and $134,311 for the years ended December 31, 2006 and 2005, respectively. The decline in net income in 2006, compared to 2005, primarily reflected reduced gains on operating community sales of approximately $56,101 and reduced gains on condominium sales of $3,084, offset somewhat by the improved performance of the Company’s fully stabilized communities and increased interest capitalization due to a growing development pipeline. These items are discussed in more detail in the sections below.

Rental and other property revenues increased $19,127 or 7.0% from 2005 to 2006 primarily due to increased revenues from the Company’s fully stabilized communities of $12,660 or 5.5% and acquired communities of $8,588. The revenue increase from fully stabilized communities is discussed below. The revenue increase from acquired communities reflects the acquisition of one community in June 2005, two communities in March 2006 and one community in July 2006. Property operating and maintenance expenses (exclusive of depreciation and amortization) increased $8,736 or 7.0% primarily due to increased expenses from fully stabilized communities and acquisition communities. The expense increase from fully stabilized communities is discussed below. The expense increase from acquisition communities reflects the full year of expenses from one operating community acquired in June 2005 and a partial year of expenses for the three operating communities acquired during 2006.

In 2006, gains on sales of real estate assets in discontinued operations represented the net gains of $225 from condominium sales at the Company’s condominium conversion communities and gains of $68,324 on the sale of three

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communities containing 1,340 apartment units. The sales of the three communities generated net proceeds of approximately $173,007, including $40,000 of secured indebtedness assumed by the purchasers. In 2005, gains on sales of real estate assets in discontinued operations represented the net gains of $16,218 from condominium sales at the Company’s condominium conversion communities and gains of $124,425 on the sale of six communities containing 3,047 apartment units. The sales of the six communities generated net proceeds of approximately $229,249, including $81,560 of tax-exempt secured indebtedness assumed by the purchasers.

Depreciation expense decreased $3,108, or 4.5% from 2005 to 2006 primarily due to reduced depreciation resulting from certain furniture and fixtures (with a five year life) at certain properties becoming fully depreciated in 2005 and the cessation of depreciation expense in late 2005 on portions of two communities being converted into condominiums that continue to be reported in continuing operations under SFAS No. 144. These decreases in depreciation expense between periods were offset by increased depreciation in 2006 on communities acquired in June 2005, March 2006 and July 2006.

Interest expense included in continuing operations decreased $1,664 or 3.1% from 2005 to 2006. The decreased expense amounts between periods reflects the impact of increased interest capitalization on its development projects of $7,035 between years, offset by higher interest costs on higher debt levels due to apartment community acquisitions and land acquisitions in 2005 and the first half 2006. Interest expense included in discontinued operations decreased from $6,862 in 2005 to $4,189 in 2006 primarily due to interest expense associated with six communities sold in 2005 and one community sold in the third quarter of 2006.

General and administrative expenses increased $195, or 1.1%, from 2005 to 2006 primarily due to higher compensation costs offset by reduced legal, professional fees and the cumulative effect of the adoption of SFAS 123R for recognizing stock-based compensation. Higher compensation costs of approximately $644 reflected annual compensation increases, increased personnel costs associated with internalizing compliance activities and annual incentive awards to management. Legal fees decreased by approximately $55 due to a legal expense recovery of approximately $179 related to prior year shareholder litigation. Professional fees decreased approximately $382 in 2006 primarily due to savings in annual audit and Sarbanes/Oxley compliance costs as the Company internalized more of such efforts in 2006. In the first quarter of 2006, the Company implemented SFAS 123R. As the Company had recorded stock-based compensation expense under SFAS 123 since 2003 using the actual forfeiture method for early terminations of awards, the implementation of SFAS 123 using the estimated forfeiture method required by SFAS 123R resulted in a one-time reduction of general and administrative expenses of approximately $100 in the first quarter of 2006. The aggregate one-time reduction of expenses resulting from the adoption of SFAS 123R totaled $172, with $72 recorded as reductions of investment and development expenses and property operating expenses. The one-time effect of implementing SFAS 123R will not recur in future periods.

Investment, development and other expenses increased $1,713 or 36.4% from 2005 to 2006 primarily due to the continued increase in development personnel and other costs to establish and grow the Company’s development capabilities in three regional markets in 2005 and 2006 and the write-off of approximately $484 of pursuit costs related to abandoned investment activities. Increased gross costs were somewhat offset by $665 of increased capitalization of development personnel to an increasing development pipeline in 2006.

Equity in income of unconsolidated real estate entities increased $46 or 2.6% from 2005 to 2006. Equity in income increased approximately $153 due to the improved operating performance of the two fully stabilized communities held in two entities offset by reduced net gains from condominium sales and reduced net operating income in 2006 at the unconsolidated entity that was converting its apartment community into condominiums in 2005 and 2006. The reduced net operating income reflects the reduction in rental units throughout the conversion process and the reduced net gains from condominium sales reflects reduced sale prices and margins in 2006 in order to maintain a modest sales pace. See note 3 to the consolidated financial statements for a summary of the operating results of the Company’s unconsolidated entities.

Annually recurring and periodically recurring capital expenditures from continuing operations increased $3,299 or 26.6% from 2005 to 2006. The increase in annually recurring capital expenditures of $1,775 primarily reflects the impact of several properties beginning to capitalize the replacement of carpet, vinyl and blinds in mid-2005 and into 2006 under the Company’s accounting policies (during the first five years of a community, the Company expenses the replacements of these items) as well as leasing office upgrades at several communities in 2006. The increase in periodically recurring capital expenditures of $1,524 primarily reflects increased tenant improvements at the Company’s office and retail properties as well as the timing of large structural expenditures between periods.

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Fully Stabilized (Same Store) Communities

The Company defines fully stabilized communities as those which have reached stabilization prior to the beginning of the previous year, adjusted by communities sold and held for sale and two communities under rehabilitation. For the 2006 to 2005 comparison, fully stabilized communities are defined as those communities which reached stabilization prior to January 1, 2005. This portfolio consisted of 45 communities with 17,187 units, including 19 communities with 7,659 units (44.6%) located in Atlanta, Georgia, 11 communities with 3,464 units (20.1%) located in Dallas, Texas, 3 communities with 1,877 units (10.9%) located in Tampa, Florida, 4 communities with 1,703 units (9.9%) located in the greater Washington D.C. metropolitan area, 3 communities with 1,065 units (6.2%) located in Charlotte, North Carolina and 5 communities with 1,419 units (8.3%) located in other markets. The operating performance of these communities is summarized as follows:

	Year Ended December 31,
	2006			2005			% Change
Rental and other revenues	$	244,434		$	231,774			5.5	%
Property operating and maintenance expenses (excluding depreciation and amortization)		92,251			88,438			4.3	%
Same store net operating income(1)	$	152,183		$	143,336			6.2	%
Capital expenditures(2)
Annually recurring:
Carpet	$	3,532		$	2,489			41.9	%
Other		5,531			4,936			12.1	%
Total annually recurring		9,063			7,425			22.1	%
Periodically recurring		2,760			3,021			(8.6	)%
Total capital expenditures (A)	$	11,823		$	10,446			13.2	%
Total capital expenditures per unit (A ¸ 17,187 units)	$	688		$	608			13.2	%
Average economic occupancy(3)		94.8	%		94.8	%		0.0	%
Average monthly rental rate per unit(4)	$	1,176		$	1,117			5.3	%

(1)	Net operating income of stabilized communities is a supplemental non-GAAP financial measure. See page 38 for a reconciliation of net operating income for stabilized communities to GAAP net income.
(2)	A reconciliation of these segment components of property capital expenditures to total annually recurring and periodically recurring capital expenditures as presented in the consolidated statements of cash flows prepared under GAAP is detailed below.

	Year Ended
	December 31,
	2006		2005
Annually recurring capital expenditures by operating segment
Same store	$	9,063	$	7,425
Development, rehabilitation and lease-up		503		433
Condominium conversion and other		2		133
Acquired		271		92
Other segments		1,306		1,838
Total annually recurring capital expenditures per statements of cash flows	$	11,145	$	9,921
Periodically recurring capital expenditures by operating segment
Same store	$	2,760	$	3,021
Development, rehabilitation and lease-up		702		296
Condominium conversion and other		—		75
Acquired		25		5
Other segments		2,477		1,111
Total periodically recurring capital expenditures per statements of cash flows	$	5,964	$	4,508

The Company uses same store annually recurring and periodically recurring capital expenditures as cash flow measures. Same store annually recurring and periodically recurring capital expenditures are supplemental non-GAAP financial measures. The Company believes that same store annually recurring and periodically recurring capital expenditures are important indicators of the costs incurred by the Company in maintaining same store communities. The corresponding GAAP measures include information with respect to the Company’s other operating segments consisting of communities stabilized in the prior year, condominium conversion communities, lease-up communities, and sold communities in addition to same store information. Therefore, the Company believes that it’s presentation of same store annually recurring and periodically recurring capital expenditures is necessary to demonstrate same store replacement costs over time. The Company believes that the most directly comparable GAAP measure to same store annually recurring and periodically recurring capital expenditures are the lines on the Company’s consolidated statements of cash flows entitled “annually recurring capital expenditures” and “periodically recurring capital expenditures.”

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(3)

Average economic occupancy is defined as gross potential rent less vacancy losses, model expenses and bad debt expenses divided by gross potential rent for the period, expressed as a percentage. Gross potential rent is defined as the sum of the gross actual rental rates for leased units and the anticipated rental rates for unoccupied units. The calculation of average economic occupancy does not include a deduction for net concessions and employee discounts. Average economic occupancy including these amounts would have been 94.0% and 93.9% for the years ended December 31, 2006 and 2005, respectively. For the years ended December 31, 2006 and 2005, net concessions were $1,200 and $1,588, respectively, and employee discounts were $754 and $561, respectively.

(4)

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, divided by total units.

Rental and other property revenues increased $12,660 or 5.5% from 2005 to 2006. This increase resulted primarily from a 5.3% increase in the average monthly rental rate per apartment unit as the average economic occupancy of the portfolio was consistent between years at 94.8%. This increase in average rental rates resulted in a revenue increase of approximately $12,038 between years. This increase in revenue related to rental rates was offset somewhat by increased vacancy losses of $1,005 primarily due to vacancy losses being measured at higher rental rates in 2006. Additionally, other property revenues increased $1,239 as a result of higher up-front leasing fees and higher utility reimbursements from residents due to increased utility expenses, and to lower net concessions of $388 due to the favorable impact of straight-lining net rentals due to generally reduced concessions in a stronger rental market in 2006. Overall, the improving performance of the operating portfolio reflects improved market conditions (strong job growth in most of the Company’s markets, a strong and steady U.S. economy and a weakening for-sale housing market due to higher interest rates and excess inventories in some markets), with the Company’s operations in all of its markets reporting increased revenues in excess of 3.5%. In addition in 2006, the Company completed the installation of automated revenue pricing software at the majority of its operating communities. The Company believes this automated pricing software implementation partially contributed to the increased revenues in 2006.

Property operating and maintenance expenses (exclusive of depreciation and amortization) increased $3,813 or 4.3% from 2005 to 2006. This increase was primarily due to increased property tax expenses of $1,760 or 6.3%, increased utility expenses of $676 or 5.6%, increased personnel expenses of $647 or 3.0%, increased other property expenses of $851 or 32.2%, increased insurance expenses of $477 or 12.9% offset by decreased advertising and promotion expenses of $811 or 19.8%. Property tax expenses increased due to increased property valuations in 2006 and more favorable tax settlements recorded in 2005. Utility expenses increased primarily due to generally higher electric and gas rates. Personnel costs increased primarily due to annual salary increases. Other property expenses increased primarily due to costs associated with the automated revenue pricing software and use of third party call centers that were phased into the portfolio generally in the second half of 2006. Insurance expenses increased due to an approximate 29% increase in property insurance rates on renewal in the fourth quarter of 2006 primarily related to market increases in catastrophic coverage in coastal regions. The decrease in advertising and promotions expense in 2006 primarily reflects reduced payments to apartment locator services resulting from more favorable market conditions and lower resident turnover between periods.

Discontinued Operations

In accordance with SFAS No. 144, the operating results and gains and losses on sales of real estate assets designated as held for sale are included in discontinued operations in the consolidated statements of operations. Under SFAS No. 144, the operating results of assets designated as held for sale are included in discontinued operations in the consolidated statements of operations for all periods presented. Additionally, all gains and losses on the sale of these assets are included in discontinued operations.

For the year ended December 31, 2007, income from discontinued operations included the results of operations of one apartment community classified as held for sale at December 31, 2007, the operations of three communities sold in 2007 through their sale dates and the results of operations of one condominium conversion community through its sell-out date in 2007. For the years ended December 31, 2006 and 2005, income from discontinued operations included the results of operations of operations of the apartment community classified as held for sale at December 31, 2007, the three communities sold in 2007, two condominium conversion communities through their respective sell-out dates in 2007 and 2005 and the results of operations of nine apartment communities designated as held for sale and sold in 2006 and 2005 through their respective sale dates.

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The revenues and expenses of these communities for the years ended December 31, 2007, 2006 and 2005 were as follows:

	Year Ended December 31,
	2007			2006			2005
Revenues
Rental	$	8,572		$	20,065		$	35,587
Other property revenues		676			1,914			3,408
Total revenues		9,248			21,979			38,995
Expenses
Property operating and maintenance (exclusive of items shown separately below)		3,890			8,951			16,496
Depreciation		1,069			3,280			7,452
Interest		1,517			4,189			6,862
Minority interest in consolidated property partnerships		—			—			(335	)
Total expenses		6,476			16,420			30,475
Income from discontinued property operations before minority interest		2,772			5,559			8,520
Minority interest		(39	)		(106	)		144
Income from discontinued property operations	$	2,733		$	5,453		$	8,664

The decrease in revenues and expenses between years results from the Company’s continuing asset sales program and the impact of the continued reclassification of the operating results relating to the aggregate number of communities held for sale and sold during the periods presented. Likewise, the gains on sales of apartment communities and for-sale condominiums included in discontinued operations for each year fluctuate with the timing and size of apartment communities and condominium homes sold. A discussion of the gains on operating communities and for-sale condominium sales for the years presented is included under the caption “Results of Operations.”

As discussed under “Liquidity and Capital Resources,” the Company expects to continue to sell real estate assets and possibly convert certain apartment communities into for-sale condominiums in future periods as part of its overall investment, disposition and acquisition strategy depending upon market conditions. As such, the Company may continue to have additional assets classified as held for sale; however, the timing and amount of such asset sales and their impact on the aggregate revenues and expenses included in discontinued operations will vary from year to year.

Outlook for 2008

The Company’s outlook for 2008 is based on the expectation that apartment market fundamentals will be moderate compared to 2007 as a result of moderating job growth expectations and a slowing overall U.S. economy. Additionally, the Company foresees an increased supply of rental competition from the rental of excess for-sale condominiums and single family inventories in some of its markets. However, the supply of new apartment deliveries is projected to remain in balance with rental demand and tighter credit markets may reduce turnover driven by residents purchasing their own homes.

Rental and other revenues from fully stabilized communities are expected to increase compared to 2007, driven by modest rental rate increases and stable occupancies. Operating expenses of fully stabilized communities are also expected to increase in 2008. Other than general inflationary increases, the Company expects property taxes and insurance expenses to increase at slightly higher rates. Insurance expenses are expected to increase primarily as a result of the increased costs of catastrophic insurance coverage in coastal regions through the Company’s May 2008 renewal date. Management expects fully stabilized community net operating income to increase at a modest pace in 2008 absent a recession in the U.S., which could adversely impact the Company’s results of operations.

Management expects interest expense in 2008 to be lower than in 2007 due generally to increased interest capitalization in 2008 resulting from increased project development volume, lower debt levels as well as lower interest rates on variable rate, unsecured debt. Management also expects modest increases in general and administrative and property management expenses due in large part to increased costs of personnel and related costs. In addition, the Company expects that it will incur additional costs associated with its commencement of a formal process to pursue a possible combination or other sale transaction which is continuing.

In 2008, management expects to sell two additional apartment communities located in Atlanta, Georgia. These sales are expected to generate gross proceeds of approximately $100,000. The expected proceeds from these sales are intended to be used for various corporate purposes, including funding of the Company’s development pipeline. Additionally, the

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Company closed the sale of an apartment community located in Dallas, Texas in January 2008 for a gross sales price of $19,850. Finally, the Company, through a taxable REIT subsidiary, expects to continue the sale of condominium homes in its condominium conversion projects that commenced in 2006 and at the two newly developed condominium communities that commenced sales in 2007. The Company expects to realize net accounting gains in 2008 from these apartment and condominium sales.

The Company has six apartment projects, one expansion and two condominium communities under construction with a total expected cost to the Company of approximately $540,000 and expects to begin additional development projects in 2008. Management expects a decrease in expensed investment, development and other expenses in 2008 primarily resulting from the increased capitalization of development personnel to the increased volume of construction activity in 2008.

Liquidity and Capital Resources

The discussion in this Liquidity and Capital Resources section is the same for the Company and the Operating Partnership, except that all indebtedness described herein has been incurred by the Operating Partnership.

The Company’s net cash flows from operating activities increased from $94,326 in 2006 to $97,644 in 2007 primarily due to the improved operating performance of the Company’s fully stabilized communities, offset by increased overhead expenses as well as from favorable changes in the working capital components (primarily increased accrued expenses and prepaid rents between periods) included in operating activities. The Company’s net cash provided by operating activities increased from $86,761 in 2005 to $94,326 in 2006 primarily due to the improved operating performance of the Company’s fully stabilized communities and reduced interest expense resulting from increased capitalization to development communities in 2006. The Company expects cash flows from operating activities to be consistent with or improve somewhat in 2008 primarily driven by the expected modest improvement in the operating performance of the Company’s fully stabilized properties offset somewhat by the continued dilutive cash flow impact from asset sales and modest increases in overhead expenses.

Net cash flows used in investing activities decreased from $104,464 in 2006 to $27,876 in 2007 primarily due to increased net proceeds from sales of real estate assets offset somewhat in 2007 by increased spending on development and rehabilitation activities. Proceeds from sales of real estate assets increased in 2007 primarily due to the sales of three apartment communities, a 75% interest in three apartment communities and land sites for aggregate net proceeds of approximately $167,572. The Company began renovations of two of its apartment communities in mid-2006 and construction and development expenditures increased in 2007 as the Company initiated new development starts in 2006 and 2007. Net cash flows from investing activities changed from $70,293 provided by investing activities in 2005 to $104,464 used in investing activities in 2006 primarily due to increased development, apartment acquisition and land acquisition costs in 2006. The Company acquired four apartment communities in 2006 for aggregate net purchase prices of approximately $113,324, and also acquired additional development land of approximately $50,000 in 2006. In addition, the Company incurred approximately $11,313 of capital improvements relating to the renovations of two of its apartment communities and construction and development expenditures have increased in 2006 as the Company initiated new development starts. In 2008, the Company expects to increase development activities (additional starts in 2008 and higher expenditures at existing developments) in all of its regional geographic areas primarily financed through debt borrowings or depending on the outcome of its ongoing sales process, leveraged joint venture arrangements. In 2008, the Company sold one community in January and expects to sell two communities and additional condominium homes and plans to principally reinvest the proceeds in its development communities and to repay debt.

Net cash flows from financing activities changed from net cash provided by financing activities of $7,391 in 2006 to net cash used in financing activities of $61,874 in 2007, primarily due to decreased proceeds from stock option exercises in 2007 and slightly lower net borrowings between years. Net cash flows from financing activities changed from net cash used of $150,767 in 2005 to net cash provided by financing activities of $7,391 in 2006 primarily due to higher net borrowings to fund increasing development and acquisition activities and increased equity proceeds from stock option exercises in 2006 resulting from the Company’s increased stock price between periods. In 2008, the Company expects that its outstanding debt may increase modestly, depending on the level of potential asset sales principally to fund the expected increase in development activity discussed above.

Since 1993, the Company has elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended. Management currently intends to continue operating the Company as a REIT in 2007. As a REIT, the Company is subject to a number of organizational and operating requirements, including a requirement to distribute 90% of its adjusted taxable income to its shareholders. As a REIT, the Company generally will not be subject to federal income taxes on its taxable income it distributes to its shareholders.

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Generally, the Company’s objective is to meet its short-term liquidity requirement of funding the payment of its current level of quarterly preferred and common stock dividends to shareholders through its net cash flows provided by operating activities, less its annual recurring and periodically recurring property and corporate capital expenditures. These operating capital expenditures are the capital expenditures necessary to maintain the earnings capacity of the Company’s operating assets over time.

For the year ended December 31, 2007, the Company’s net cash flow from operations, reduced by annual operating capital expenditures, was not sufficient to fully fund the Company’s current level of dividend payments to common and preferred shareholders by approximately $12,000. The Company used a combination of proceeds from apartment community and condominium sales and line of credit borrowings to fund the additional cash flow necessary to fully fund the Company’s annual dividend to common shareholders of $1.80 per share. The Company’s net cash flow from operations continues to be sufficient to meet the dividend requirements necessary to maintain its REIT status under the Code.

For 2008, management of the Company expects to maintain its current quarterly dividend payment rate to common shareholders of $0.45 per share. At this dividend rate, the Company expects that net cash flows from operations reduced by annual operating capital expenditures will not be sufficient to fund the dividend payments to common and preferred shareholders by approximately $10,000 to $15,000 (excluding any costs associated with a possible business combination or other sale transaction). The Company intends to use primarily the proceeds from 2008 apartment community and condominium sales to fund the additional cash flow necessary to fully fund the dividend payments to common shareholders. The primary factors leading to the shortfall are the negative cash flow impact of sales of operating communities (discussed below) and the short-term negative impact of apartment rehabilitation and lease-up activities. The Company’s board of directors reviews the dividend quarterly, and there can be no assurance that the current dividend level will be maintained.

The Company generally expects to utilize net cash flow from operations, available cash and cash equivalents and available capacity under its revolving lines of credit to fund its short-term liquidity requirements, including capital expenditures, development and construction expenditures, land and apartment community acquisitions, dividends and distributions on its common and preferred equity and its debt service requirements. Available borrowing capacity under the Company’s revolving lines of credit as of December 31, 2007 was created primarily through the Company’s asset sales program. The Company generally expects to fund its long-term liquidity requirements, including maturities of long-term debt and acquisition and development activities, through long-term unsecured and secured borrowings, through additional sales of selected operating communities, and possibly through equity or leveraged joint venture arrangements. The Company may also continue to use joint venture arrangements in future periods to reduce its market concentrations in certain markets, build critical mass in other markets and to reduce its exposure to certain risks of its future development activities.

As previously discussed, the Company intends to use the proceeds from the sale of operating communities and condominium homes, availability under its unsecured revolving lines of credit, debt financing and joint venture arrangements as the primary source of capital to fund its current and future development and acquisition expenditures. The Company had instituted an active asset sale and capital recycling program as the primary means to fund its on-going community development and acquisition program. Total net sales proceeds from operating community, condominium and land sales, including in 2007 the sale of a 75% interest in three apartment communities to an unconsolidated entity in which the Company retained a 25% interest, in 2007, 2006 and 2005 were $312,674 (including approximately $67,000 of tax deferred exchange proceeds held in escrow at December 31, 2007), $216,419 (including $40,000 debt assumed) and $281,106 (including $81,560 of debt assumed), respectively.

In 2007, the Company sold three apartment communities, containing 807 units, and converted three apartment communities, containing 1,202 units, into joint venture ownership as part of its asset sales program designed to maintain the low average age and high quality of the portfolio and to reduce the Company’s market concentration in Atlanta, Georgia. These sales generated significant capital gains for tax purposes in 2007. The Company was able to use its regular quarterly dividend of $0.45 per share to distribute these capital gains to shareholders. In January 2008, the Company sold its apartment community classified as held for sale at December 31, 2007 for net proceeds of $19,433. The Company also expects to generate additional sales proceeds from the sale of two other communities that it currently plans to market for sale in 2008 as well as from the sales of converted and newly developed condominium homes. Management has continued to recycle capital through selling assets and reinvesting the proceeds as a strategy to diversify the cash flows of the Company across its markets and focus on building critical mass in fewer markets.

The Company used borrowings under its lines of credit and net proceeds from sales to retire approximately $25,000 of maturing unsecured notes and to repay and retire approximately $98,075 of secured debt in 2007. In 2008, the Company has no scheduled maturities of consolidated unsecured or secured indebtedness. Aggregate maturities of secured indebtedness in unconsolidated entities totals $17,000 in 2008.

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Post Properties, Inc.
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In November 2007, the Company increased the borrowing capacity under its line of facilities from $480,000 to $630,000. The terms, conditions and restrictive covenants associated with the lines of credit were slightly modified under the amended facilities. At December 31, 2007, the Company had approximately $257,275 borrowed under its $630,000 combined line of credit facilities. The credit facilities mature in April 2010. The terms, conditions and restrictive covenants associated with the Company’s lines of credit facilities are summarized in note 4 to the consolidated financial statements. At December 31, 2007, management believed the Company was in compliance with the covenants of the Company’s credit facility arrangements. Management believes it will have adequate capacity under its facilities to execute its 2008 business plan and meet its short-term liquidity requirements.

Contractual Obligations

A summary of the Company’s future contractual obligations related to long-term debt, non-cancelable operating leases and other obligations at December 31, 2007, were as follows:

	Obligation Due Date
			1 Year or		2-3		4-5		After 5
Contractual Obligations	Total		Less		Years		Years		Years
Long-term debt(1)	$	1,072,204	$	54,809	$	356,539	$	294,646	$	366,210
Lines of credit(1)(2)		290,411		14,485		275,926		—		—
Operating leases(3)		159,689		1,863		3,484		3,605		150,737
Other long-term obligations(4)		18,581		4,968		6,393		4,549		2,671
Development and construction obligations(5)		389,015		208,241		180,774		—		—
	$	1,929,900	$	284,366	$	823,116	$	302,801	$	519,617

(1)	Amounts include principal and interest payments.
(2)	At December 31, 2007, the Company had issued letters of credit to third parties totaling $1,350 under its credit facility arrangements.
(3)	Primarily includes ground leases underlying apartment communities owned by the Company.
(4)	Represents amounts committed to current and former executive officers under the terms of employment and severance agreements.
(5)	Represents estimated remaining amounts necessary to complete projects under development at December 31, 2007, including amounts due under general construction contracts.

In addition to these contractual obligations, the Company incurs annual capital expenditures to maintain and enhance its existing portfolio of operating properties. Aggregate capital expenditures for the Company’s operating properties totaled $19,561, $17,109 and $14,429 for the years ended December 31, 2007, 2006 and 2005, respectively. Based on the size of the Company’s operating property portfolio at December 31, 2007, the Company expects that its capital expenditures in 2008 will be modestly higher than the amount incurred in 2007 as the Company seeks to maintain the operating performance of its assets.

At December 31, 2007, the Company had an outstanding interest rate swap derivative financial instrument with a notional value of approximately $93,890 with a maturity date in 2009. The contractual payment terms of this arrangement are summarized in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in this Form 10-K. Additional information regarding the accounting and disclosure of this arrangement is included in note 13 to the Company’s consolidated financial statements.

Off-Balance Sheet Arrangements

At December 31, 2007, the Company holds investments in five unconsolidated entities. Three of these entities own apartment communities with ownership interests ranging from 25% to 35%. A fourth unconsolidated entity, with a 35% ownership interest, completed the sell-out of a condominium conversion community during 2007. The fifth unconsolidated entity commenced construction during 2007 of a mixed-use development with the Company holding a 50% interest in the condominium portion of the project. These unconsolidated entities have third party mortgage and construction indebtedness, and the aggregate indebtedness totaled $214,549 at December 31, 2007. The Company’s share of this indebtedness totaled $60,959 at December 31, 2007.

Under the terms of the construction loan facility, the Company and its 50% equity partner have jointly and severally guaranteed approximately $25,313 of the construction loan attributable to the condominium portion of the project. Additionally, the Company and its 50% equity partner have jointly and severally guaranteed certain debt service payments of the condominium portion of the loan not to exceed approximately $6,153 and all of the equity owners of the project, including the Company, have guaranteed the completion of the first building at the project.

45

Post Properties, Inc.
Post Apartment Homes, L.P.

Long-term Debt Issuances and Retirements

A summary of the Company’s outstanding debt and debt maturities at December 31, 2007 is included in note 4 to the consolidated financial statements. A summary of changes in secured and unsecured debt in 2006 is discussed below.

In June 2007, the Company repaid $25,000 of 6.11% senior unsecured notes from available borrowings under its unsecured line of credit. In July 2007, the Company repaid $83,132 of secured mortgage notes, with interest rates ranging from 6.29% to 7.69%, from borrowings under its unsecured line of credit. These mortgage notes were scheduled to mature in October 2007. In December 2007, the Company retired a $9,895 variable rate tax-exempt bond prior to its scheduled maturity date in 2025 in conjunction with the sale of the underlying apartment community.

In January 2008, the Company closed a $120,000 secured, fixed rate mortgage note payable. The note bears interest at 4.88%, requires interest only payments and matures in 2015. The note contains an automatic one year extension under which the interest rate converts to a variable rate, as defined.

Stock Repurchase Program

In late 2006, the Company’s board of directors adopted a new stock repurchase program under which the Company may repurchase up to $200,000 of common or preferred stock at market prices from time to time until December 31, 2008. During 2007, the Company repurchased 83 shares of common stock totaling approximately $3,694 under this program.

Capitalization of Fixed Assets and Community Improvements

The Company has a policy of capitalizing those expenditures relating to the acquisition of new assets and the development and construction of new apartment communities. In addition, the Company capitalizes expenditures that enhance the value of existing assets and expenditures that substantially extend the life of existing assets. All other expenditures necessary to maintain a community in ordinary operating condition are expensed as incurred. Additionally, for new development communities, carpet, vinyl and blind replacements are expensed as incurred during the first five years (which corresponds to the estimated depreciable life of these assets) after construction completion. Thereafter, these replacements are capitalized. Further, the Company expenses as incurred interior and exterior painting of operating communities, unless those communities are under rehabilitation.

The Company capitalizes interest, real estate taxes, and certain internal personnel and associated costs related to apartment communities under development, construction and rehabilitation. The incremental personnel and associated costs are capitalized to the projects under development and rehabilitation based upon the effort associated with such projects. 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 included in construction in progress. The Company ceases the capitalization of such costs as the residential units in a community become substantially complete and available for occupancy. This practice results in a proration of these costs between amounts that are capitalized and expensed as the residential units in a development community become available for occupancy. In addition, prior to the completion of units, the Company expenses, as incurred, substantially all operating expenses (including pre-opening marketing expenses) of such communities.

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Post Properties, Inc.
Post Apartment Homes, L.P.

Acquisition of assets and community development and other capitalized expenditures for the years ended December 31, 2007, 2006 and 2005 are summarized as follows:

	Year Ended December 31,
	2007		2006		2005
New community development and acquisition activity(1)	$	284,239	$	295,979	$	116,710
Periodically recurring capital expenditures
Community rehabilitation and other revenue generating improvements(2)		13,074		10,641		—
Other community additions and improvements(3)		8,451		5,964		4,508
Annually recurring capital expenditures
Carpet replacements and other community additions and improvements(4)		11,110		11,145		9,921
Corporate additions and improvements		2,903		3,480		1,771
	$	319,777	$	327,209	$	132,910
Other Data
Capitalized interest	$	11,801	$	9,942	$	2,907
Capitalized development and associated costs(5)	$	4,053	$	1,884	$	1,219

(1)	Reflects aggregate land and community development and acquisition costs, exclusive of assumed debt and the change in construction payables between years.
(2)	Represents expenditures for major renovations of communities, water sub-metering equipment and other upgrade costs that enhance the rental value of such units.
(3)	Represents property improvement expenditures that generally occur less frequently than on an annual basis.
(4)	Represents property improvement expenditures of a type that are expected to be incurred on an annual basis.
(5)	Reflects development personnel and associated costs capitalized to construction and development activities.

Current Development Activity

At December 31, 2007, the Company had six communities (and the expansion of one community) containing 2,116 apartment units and 305 for-sale condominiums under development in two communities (including 137 units in one community held in an unconsolidated entity). These communities are summarized in the table below.

														Costs
												Company		Incurred
		Number		Retail		Company			Estimated			Share of		as of
Community	Location	of Units		Sq. Ft.		Ownership			Cost			Est. Cost		12/31/07
														(Company Share)
Apartments:
Post Alexandertm	Atlanta, GA		307		—		100	%	$	62.4		$	62.4	$	39.8
Post Walk® at Citrus Park Village	Tampa, FL		296		—		100	%		41.6			41.6		8.6
Post Eastsidetm	Dallas, TX		435		37,900		100	%		56.7			56.7		21.8
Post Hyde Park® (expansion)	Tampa, FL		84		—		100	%		18.8	(4)		18.8		14.9
Post Frisco Bridgestm	Dallas, TX		269		29,000		100	%		41.3			41.3		7.8
Post Park®	Wash. DC		396		1,700		100	%		84.7			84.7		14.1
Post West Austintm	Austin, TX		329		—		100	%		53.2			53.2		13.8
Total Apartments			2,116		68,600				$	358.7		$	358.7	$	120.8
Condominiums:
The Residences at 3630 Peachtreetm(5)	Atlanta, GA		137		—		50	%	$	93.4		$	47.6	$	11.1
Four Seasons Residences	Austin, TX		168		8,000		100	%		133.5			133.5		18.9
Total Condominiums			305		8,000				$	226.9		$	181.1	$	30.0

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Post Properties, Inc.
Post Apartment Homes, L.P.

Estimated

Quarter

Quarter of

Quarter of

Estimated

Units

of Const.

First Units

Stabilized

Units

Quarter

Under

Units

Community

Start

Available

Occupancy(1)

Leased(2)

Sell-out

Contract(3)

Closed(2)

Apartments:

Post Alexandertm

2Q 2006

1Q 2008

2Q 2009

—

N/A

N/A

N/A

Post Walk® at Citrus Park Village

1Q 2008

1Q 2009

1Q 2010

—

N/A

N/A

N/A

Post Eastsidetm

4Q 2006

2Q 2008

4Q 2009

—

N/A

N/A

N/A

Post Hyde Park® (expansion)

4Q 2006

4Q 2007

3Q 2008

21

N/A

N/A

N/A

Post Frisco Bridgestm

3Q 2007

4Q 2008

2Q 2010

—

N/A

N/A

N/A

Post Park®

4Q 2007

1Q 2009

2Q 2010

—

N/A

N/A

N/A

Post West Austintm

4Q 2007

1Q 2009

3Q 2009

—

N/A

N/A

N/A

Total Apartments

21

Condominiums:

The Residences at 3630 Peachtreetm(5)

3Q 2007

3Q 2009

N/A

N/A

4Q 2010

—

—

Four Seasons Residences

1Q 2008

4Q 2009

N/A

N/A

4Q 2010

54

—

Total Condominiums

54

—

(1)	The Company defines stabilized occupancy as the earlier to occur of (i) the attainment of 95% physical occupancy on the first day of any month or (ii) one year after completion of construction.
(2)	As of January 28, 2008.
(3)	As of January 28, 2008, represents the total number of units under contract for sale upon completion and delivery of the units. There can be no assurance that condominium homes under contract will close.
(4)	Total estimated construction costs for the Post Hyde Park® expansion include the estimated replacement costs of six apartment units at the Company’s existing Hyde Park community that are being demolished to accommodate the expansion.
(5)	The amounts reflected for this project represent the condominium portion of a mixed-use development currently being developed in an entity owned with other third-party developers. This condominium portion of the project is co-owned with an Atlanta-based condominium development partner.

Inflation

For each of the last three years and as of December 31, 2007, substantially all of the leases at the communities allow, at the time of renewal, for adjustments in the rent payable thereunder, and thus may enable the Company to seek increases in rents. The substantial majority of these leases are for one year or less and the remaining leases are for up to two years. At the expiration of a lease term, the Company’s lease agreements generally provide that the term will be extended unless either the Company or the lessee gives at least sixty (60) days written notice of termination. In addition, the Company’s policy generally permits the earlier termination of a lease by a lessee upon thirty (30) days written notice to the Company and the payment of an amount equal to two month’s rent as compensation for early termination. The short-term nature of these leases generally serves to offset the risk to the Company that the adverse effect of inflation may have on the Company’s general, administrative and operating expenses.

Funds from Operations

The Company uses the National Association of Real Estate Investment Trusts (“NAREIT”) definition of funds from operations (“FFO”). FFO is defined by NAREIT as net income available to common shareholders determined in accordance with GAAP, excluding gains (or losses) from extraordinary items and sales of depreciable 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 GAAP. FFO is a supplemental non-GAAP financial measure. FFO presented herein is not necessarily comparable to FFO presented by other real estate companies because not all real estate companies use the same definition. The Company’s FFO is comparable to the FFO of real estate companies that use the current NAREIT definition.

The Company also uses FFO as an operating measure. Accounting for real estate assets using historical cost accounting under GAAP assumes that the value of real estate assets diminishes predictably over time. NAREIT stated in its April 2002 White Paper on Funds from Operations “since real estate asset values have historically risen or fallen with market conditions, many industry investors have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves.” As a result, the concept of FFO was created by NAREIT for the REIT industry to provide an alternate measure. Since the Company agrees with the concept of FFO and appreciates the reasons surrounding its creation, management believes that FFO is an important supplemental measure of operating

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performance. In addition, since most equity REITs provide FFO information to the investment community, the Company believes FFO is a useful supplemental measure for comparing the Company’s results to those of other equity REITs. The Company believes that the line on the Company’s consolidated statement of operations entitled “net income available to common shareholders” is the most directly comparable GAAP measure to FFO.

FFO should not be considered as an alternative to net income available to common shareholders (determined in accordance with GAAP) as an indicator of the Company’s financial performance. While management believes that FFO is an important supplemental non-GAAP financial measure, management believes it is also important to stress that FFO should not be considered as an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company’s liquidity. Further, FFO is not necessarily indicative of sufficient cash flow to fund all of the Company’s needs or ability to service indebtedness or make distributions.

A reconciliation of net income available to common shareholders to FFO available to common shareholders and unitholders is provided below.

	Year Ended December 31,
	2007			2006			2005
Net income available to common shareholders	$	171,062		$	93,832		$	134,311
Minority interest of common unitholders — continuing operations		1,491			418			(226	)
Minority interest in discontinued operations(1)		903			1,399			7,325
Depreciation on consolidated real estate assets		65,560			66,574			73,189
Depreciation on real estate assets held in unconsolidated entities		1,143			906			969
Gains on sales of real estate assets		(157,620	)		(80,927	)		(140,112	)
Incremental gains on condominium sales(2)		6,922			1,406			8,280
Gains on sales of real estate assets — unconsolidated entities		(186	)		(482	)		(612	)
Incremental gains on condominium sales — unconsolidated entities(2)		107			96			359
Funds from operations available to common shareholders and unitholders(3)	$	89,382		$	83,222		$	83,483
Weighted average shares outstanding — basic		43,491			42,812			40,217
Weighted average shares and units outstanding — basic		44,101			43,645			42,353
Weighted average shares outstanding — diluted(4)		44,129			43,594			40,616
Weighted average shares and units outstanding — diluted(4)		44,738			44,427			42,752

(1)	Represents the minority interest in earnings and gains (losses) on properties held for sale and sold reported as discontinued operations for the periods presented.
(2)	The Company recognizes incremental gains on condominium sales in FFO, net of provision for income taxes, to the extent that net sales proceeds from the sale of condominium homes exceeds the greater of their fair value or net book value as of the date the property is acquired by its taxable REIT subsidiary.
(3)	FFO for the year ended December 31, 2007, included gains on the sale of land parcels of $5,186. FFO for the year ended December 31, 2006, included a gain related to the final proceeds of $325 related to the sale of a technology investment, non-cash income of $1,655 relating to the mark-to-market of an interest rate swap arrangement, a gain on the sale of marketable securities of $573 and a gain on the sale of a land parcel of $503. FFO for the year ended December 31, 2005 included a loss of $3,220 from the early extinguishment of debt associated with asset sales, a severance charge of $796 and a gain of $5,267 on the sale of a technology investment.
(4)	Diluted weighted average shares and units for the years ended December 31, 2005 include 400 of common stock equivalent shares and units that were antidilutive to all income (loss) per share computations under generally accepted accounting principles.

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Post Properties, Inc.
Post Apartment Homes, L.P.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
(In thousands)

Interest Rate Sensitivity

The Company’s primary market risk exposure is interest rate risk. At December 31, 2007, the Company had $351,275 of variable rate debt tied to LIBOR. In addition, the Company has interest rate risk associated with fixed rate debt at maturity. The discussion in this Interest Rate Sensitivity section is the same for the Company and the Operating Partnership, except that all indebtedness described herein has been incurred by the Operating Partnership.

Management has and will continue to manage interest rate risk as follows:

•  maintain a conservative ratio of fixed rate, long-term debt to total debt such that variable rate exposure is kept at an acceptable level;

•  fix certain long-term variable rate debt through the use of interest rate swaps or interest rate caps with appropriate matching maturities;

•  use treasury locks where appropriate to fix rates on anticipated debt transactions; and

•  take advantage of favorable market conditions for long-term debt and/or equity.

Management uses various financial models and advisors to achieve these objectives.

The tables below provide information about the Company’s fixed and floating rate debt and derivative financial instruments that are sensitive to changes in interest rates. For debt obligations, the table presents principal cash flows and related weighted average interest rates by expected maturity dates. For interest rate swap and cap arrangements, the table presents notional amounts and weighted average interest rates by (expected) contractual maturity dates. Notional amounts are used to calculate the contractual payments to be exchanged under the contract. Weighted average variable rates are based upon actual rates at the reporting date. The information is presented in U.S. dollar equivalents, which is the Company’s reporting currency.

	Expected Maturity Date
																There-						Fair
	2008			2009			2010			2011			2012			after			Total			Value
	(In thousands)
Debt obligations
Long-term debt:
Fixed rate	$	3,495		$	74,753		$	186,618		$	139,266		$	100,956		$	202,703		$	707,791		$	726,614
Average interest rate		5.82	%		5.47	%		7.68	%		5.40	%		5.45	%		6.09	%		6.22	%
Floating rate
Cash management line(1)(2)		—			—			12,275			—			—			—			12,275			12,275
Syndicated line of credit(1)(2)		—			—			245,000			—			—			—			245,000			245,000
FNMA(3)		1,735			1,865			2,010			2,165			2,340			83,885			94,000			94,000
Total floating rate debt		1,735			1,865			259,285			2,165			2,340			83,885			351,275			351,275
Total debt	$	5,230		$	76,618		$	445,903		$	141,431		$	103,296		$	286,588		$	1,059,066		$	1,077,889

(1)	Interest on these debt instruments is based on LIBOR plus 0.575% at December 31, 2007. At December 31, 2007, the one-month LIBOR rate was 4.6%.
(2)	Assumes the Company’s Syndicated and Cash management lines of credit are repaid at their maturity dates.
(3)	In April 2006, the Company entered into a swap transaction that fixed the rate on the note at 6.145%, inclusive of credit enhancement and other fees through July 31, 2009.

		Average				Expected		Fair Value
		Pay Rate/			Average	Settlement		Asset
Interest Rate Derivatives	Notional Amount	Cap Rate			Receive Rate	Date		(Liab.)
Interest Rate Swaps Variable to fixed	$97,010 amortizing to $90,270		5.21	%	1 month LIBOR		7/31/09	$	(2,224	)
Interest rate caps	$28,495		5.00	%	—		2/01/08		—
								$	(2,224	)

As more fully described in note 1 to the consolidated financial statements, the interest rate swap and cap arrangements are carried on the consolidated balance sheet at the fair value shown above in accordance with SFAS No. 133, as amended. If interest rates under the Company’s floating rate LIBOR-based borrowings, in excess of the $94,000 FNMA borrowings

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Post Properties, Inc.
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effectively converted to fixed rates discussed above, fluctuated by 1.0%, interest costs to the Company, based on outstanding borrowings at December 31, 2007, would increase or decrease by approximately $2,573 on an annualized basis.

In December 2007, the Company repaid $9,895 of tax-exempt indebtedness associated with the sale of an apartment community. The portion of the interest rate cap arrangement with a notional amount of $9,895 was not terminated and as a result became ineffective for accounting purposes. The loss recognized as a result of such ineffectiveness was not material to the consolidated financial statements. In 2006, the remaining portion of this interest rate cap arrangement with a notional amount of $18,600 was deemed ineffective for accounting purposes. In 2007, the change in value of the interest rate cap arrangement was not material to the Company’s results of operations or financial position. The interest rate cap arrangement expired on February 1, 2008 with no change in value from December 31, 2007.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements are listed under Item 15(a) and are filed as part of this report on the pages indicated. The supplementary data are included in note 18 of the Notes to Consolidated Financial Statements.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.  CONTROLS AND PROCEDURES

As required by Securities and Exchange Commission rules, the Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. Pursuant to Rules 13a-15(b) and 15d-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), this evaluation was carried out under the supervision and with the participation of the Company’s management, including its principal executive officer and principal financial officer. Based on this evaluation, these officers have concluded that the design and operation of the Company’s disclosure controls and procedures were effective as of the end of the period covered by this annual report on Form 10-K. Disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) are the Company’s controls and other procedures that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There were no changes to the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the registrants’ fourth quarter of 2007 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management’s report on internal control over financial reporting and the report of the Company’s independent registered public accounting firm are included in Part IV, Item 15 of this annual report on Form 10-K and are incorporated herein by reference.

ITEM 9B.   OTHER INFORMATION

None.

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Post Properties, Inc.
Post Apartment Homes, L.P.

PART III

ITEM 10.   DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Code of Ethics

The Company has adopted a Code of Ethics for Senior Executive and Financial Officers (the “Code of Ethics”) that applies to our chief executive officer, chief financial officer and chief accounting officer and persons performing similar functions. The Code of Ethics is available on the Company’s website at www.postproperties.com under the “Investor Relations” section and “Corporate Governance” caption. Any amendments to, or waivers of, the Code of Ethics will be disclosed on our website promptly following the date of such amendment or waiver.

Additional information regarding this item will either appear in our proxy statement, in which case it is hereby incorporated by reference in this Annual Report on Form 10-K, or in an amendment to this Form 10-K.

ITEM 11.   EXECUTIVE COMPENSATION

Information regarding this item will either appear in our proxy statement, in which case it is hereby incorporated by reference in this Annual Report on Form 10-K, or in an amendment to this Form 10-K.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS

Information regarding this item will either appear in our proxy statement, in which case it is hereby incorporated by reference in this Annual Report on Form 10-K, or in an amendment to this Form 10-K.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information regarding this item will either appear in our proxy statement, in which case it is hereby incorporated by reference in this Annual Report on Form 10-K, or in an amendment to this Form 10-K.

ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information regarding this item will either appear in our proxy statement, in which case it is hereby incorporated by reference in this Annual Report on Form 10-K, or in an amendment to this Form 10-K.

52

Post Properties, Inc.
Post Apartment Homes, L.P.

PART IV

ITEM 15.   EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES

(a) 1. and 2. Financial Statements and Schedules

The financial statements and schedule listed below are filed as part of this annual report on the pages indicated.

INDEX TO FINANCIAL STATEMENTS

	Page
POST PROPERTIES, INC.
Consolidated Financial Statements:
Management’s Report on Internal Control over Financial Reporting		55
Reports of Independent Registered Public Accounting Firms		56
Consolidated Balance Sheets as of December 31, 2007 and 2006		58
Consolidated Statements of Operations for the Years Ended December 31, 2007, 2006 and 2005		59
Consolidated Statements of Shareholders’ Equity and Accumulated Earnings for the Years Ended December 31, 2007, 2006 and 2005		60
Consolidated Statements of Cash Flows for the Years Ended December 31, 2007, 2006 and 2005		62
Notes to the Consolidated Financial Statements		63
POST APARTMENT HOMES, L.P.
Consolidated Financial Statements:
Management’s Report on Internal Control over Financial Reporting		90
Reports of Independent Registered Public Accounting Firms		91
Consolidated Balance Sheets as of December 31, 2007 and 2006		93
Consolidated Statements of Operations for the Years Ended December 31, 2007, 2006 and 2005		94
Consolidated Statements of Partners’ Equity for the Years Ended December 31, 2007, 2006 and 2005		95
Consolidated Statements of Cash Flows for the Years Ended December 31, 2007, 2006 and 2005		96
Notes to the Consolidated Financial Statements		97
FINANCIAL STATEMENT SCHEDULE
Schedule III — Real Estate Investments and Accumulated Depreciation		122
All other financial statement schedules are omitted because they are either not applicable or not required.
(b) Exhibit Index		125
(c) Financial Statements of Fifty Percent or Less Owned Persons

The audited consolidated financial statements of PCH Atlanta Venture, LLC as of December 31, 2007 will be filed as an amendment to this annual report on Form 10-K on or before March 31, 2008.

53

Post Properties, Inc.
Post Apartment Homes, L.P.

Post Properties, Inc.

Consolidated Financial Statements

December 31, 2007 and 2006

54

Post Properties, Inc.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of Post Properties, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Securities Exchange Act of 1934 (the “Exchange Act”) Rule 13a-15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Under the supervision and with the participation of the management of Post Properties, Inc., including the Company’s principal executive officer and principal financial officer, Company management conducted an evaluation of the effectiveness of its internal control over financial reporting as of December 31, 2007 based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its evaluation under the framework in Internal Control — Integrated Framework, the management of Post Properties, Inc. concluded that its internal control over financial reporting was effective as of December 31, 2007. The effectiveness of the Company’s internal control over financial reporting as of December 31, 2007 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which is included herein.

55

Post Properties, Inc.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Post Properties, Inc.:

We have audited the accompanying consolidated balance sheets of Post Properties, Inc. and subsidiaries (the “Company”) as of December 31, 2007 and 2006, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the two years in the period ended December 31, 2007. Our audits also included the financial statement schedule listed in the Index at Item 15. We also have audited the Company’s internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and financial statement schedule and an opinion on the Company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Post Properties, Inc. and subsidiaries as of December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2007, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

As described in Note 1 to the consolidated financial statements, the Company adopted SEC Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, effective December 31, 2006.

/s/ Deloitte & Touche LLP

Atlanta, Georgia

February 28, 2008

56

Post Properties, Inc.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Post Properties, Inc.:

In our opinion, the consolidated statements of operations, shareholders’ equity and accumulated earnings and cash flows for the year ended December 31, 2005 present fairly, in all material respects, the results of operations and cash flows of Post Properties, Inc. and its subsidiaries for the year ended December 31, 2005, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the summary of activity for real estate investments and accumulated depreciation included in the financial statement schedule for the year ended December 31, 2005 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and the summary of activity for real estate investments and accumulated depreciation included in the financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audit. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Atlanta, Georgia

March 15, 2006, except with respect to our opinion on the consolidated financial statements insofar as it relates to the effects of discontinued operations discussed in Note 2 and as it relates to the effects of changes in segment reporting categories discussed in Note 15, as to which the date is February 28, 2008

57

Post Properties, Inc.

POST PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

	December 31,
	2007			2006
Assets
Real estate assets
Land	$	276,680		$	278,448
Building and improvements		1,840,563			1,821,123
Furniture, fixtures and equipment		204,433			204,318
Construction in progress		134,125			135,428
Land held for future development		154,617			92,800
		2,610,418			2,532,117
Less: accumulated depreciation		(562,226	)		(547,477	)
For-sale condominiums		38,844			28,295
Assets held for sale, net of accumulated depreciation of $4,031 and
$4,035 at December 31, 2007 and 2006, respectively		24,576			15,645
Total real estate assets		2,111,612			2,028,580
Investments in and advances to unconsolidated real estate entities		23,036			32,794
Cash and cash equivalents		11,557			3,663
Restricted cash		5,642			5,203
Deferred charges, net		10,538			12,400
Other assets		105,756			34,007
Total assets	$	2,268,141		$	2,116,647
Liabilities and shareholders’ equity
Indebtedness	$	1,059,066		$	1,033,779
Accounts payable and accrued expenses		100,215			75,403
Dividend and distribution payable		19,933			19,886
Accrued interest payable		4,388			4,885
Security deposits and prepaid rents		11,708			9,915
Total liabilities		1,195,310			1,143,868
Minority interest of common unitholders in Operating Partnership		10,354			14,057
Minority interests in consolidated real estate entities		3,972			2,268
Total minority interests		14,326			16,325
Commitments and contingencies
Shareholders’ equity
Preferred stock, $.01 par value, 20,000 authorized:
81/2% Series A Cumulative Redeemable Shares, liquidation preference $50 per share, 900 shares issued and outstanding		9			9
75/8% Series B Cumulative Redeemable Shares, liquidation preference $25 per share, 2,000 shares issued and outstanding		20			20
Common stock, $.01 par value, 100,000 authorized:
43,825 and 43,603 shares issued, 43,825 and 43,486 shares outstanding at December 31, 2007 and 2006, respectively		438			436
Additional paid-in-capital		874,928			869,587
Accumulated earnings		189,985			97,567
Accumulated other comprehensive income (loss)		(3,962	)		(3,490	)
		1,061,418			964,129
Less common stock in treasury, at cost, 72 and 175 shares
at December 31, 2007 and 2006, respectively		(2,913	)		(7,675	)
Total shareholders’ equity		1,058,505			956,454
Total liabilities and shareholders’ equity	$	2,268,141		$	2,116,647

The accompanying notes are an integral part of these consolidated financial statements.

58

Post Properties, Inc.

POST PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Year Ended December 31,
	2007			2006			2005
Revenues
Rental	$	290,975		$	274,731		$	257,141
Other property revenues		15,965			16,412			14,875
Other		602			402			255
Total revenues		307,542			291,545			272,271
Expenses
Property operating and maintenance (exclusive of items shown separately below)		141,142			133,490			124,754
Depreciation		66,371			65,687			68,795
General and administrative		21,337			18,502			18,307
Investment, development and other		7,063			6,424			4,711
Severance charges		—			—			796
Total expenses		235,913			224,103			217,363
Operating income		71,629			67,442			54,908
Interest income		822			1,261			661
Interest expense		(52,116	)		(52,533	)		(54,197	)
Amortization of deferred financing costs		(3,297	)		(3,526	)		(4,661	)
Gains (losses) on sales of real estate assets, net		100,015			12,881			(531	)
Equity in income of unconsolidated real estate entities		1,556			1,813			1,767
Other income (expense)		(1,098	)		2,592			5,267
Minority interest in consolidated property partnerships		(1,857	)		(257	)		(110	)
Minority interest of common unitholders		(1,491	)		(418	)		226
Income from continuing operations		114,163			29,255			3,330
Discontinued operations
Income from discontinued property operations, net of minority interest		2,733			5,453			8,664
Gains on sales of real estate assets, net of minority interest		61,925			67,247			132,997
Loss on early extinguishment of indebtedness, net of minority interest		(122	)		(486	)		(3,043	)
Income from discontinued operations		64,536			72,214			138,618
Net income		178,699			101,469			141,948
Dividends to preferred shareholders		(7,637	)		(7,637	)		(7,637	)
Net income available to common shareholders	$	171,062		$	93,832		$	134,311
Per common share data — Basic
Income (loss) from continuing operations (net of preferred dividends)	$	2.45		$	0.50		$	(0.11	)
Income from discontinued operations		1.48			1.69			3.45
Net income available to common shareholders	$	3.93		$	2.19		$	3.34
Weighted average common shares outstanding — basic		43,491			42,812			40,217
Per common share data — Diluted
Income (loss) from continuing operations (net of preferred dividends)	$	2.41		$	0.50		$	(0.11	)
Income from discontinued operations		1.46			1.66			3.45
Net income available to common shareholders	$	3.88		$	2.15		$	3.34
Weighted average common shares outstanding — diluted		44,129			43,594			40,217

The accompanying notes are an integral part of these consolidated financial statements.

59

Post Properties, Inc.

POST PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND

ACCUMULATED EARNINGS

FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005

(In thousands, except per share data)

																Accumulated
										Additional						Other
	Preferred		Common			Preferred		Common		Paid-in			Accumulated			Comprehensive			Deferred			Treasury
	Shares		Shares			Stock		Stock		Capital			Earnings			Income (Loss)			Compensation			Stock			Total
Shareholders’ Equity and Accumulated Earnings, December 31, 2004		2,900		40,164		$	29	$	401	$	775,221		$	25,075		$	(8,668	)	$	(3,988	)	$	—		$	788,070
Comprehensive income
Net income		—		—			—		—		—			141,948			—			—			—			141,948
Net change in derivatives, net of minority interest		—		—			—		—		—			—			5,559			—			—			5,559
Total comprehensive income																										147,507
Proceeds from employee stock purchase, stock option and other plans		—		1,138			—		8		16,181			—			—			—			21,652			37,841
Adjustment for minority interest of unitholders in Operating Partnership upon conversion of units into common shares and at dates of capital transactions		—		1,097			—		5		10,065			—			(1,099	)		—			11,473			20,444
Stock-based compensation, net of minority interest		—		—			—		—		888			—			—			—			—			888
Restricted stock issuances, net of forfeitures		—		26			—		—		1,410			—			—			(1,004	)		(406	)		—
Amortization of deferred compensation		—		—			—		—		—			—			—			1,367			—			1,367
Treasury stock acquisitions		—		(1,031	)		—		—		—			—			—			—			(34,400	)		(34,400	)
Dividends to preferred shareholders		—		—			—		—		—			(7,637	)		—			—			—			(7,637	)
Dividends to common shareholders ($1.80 per share)		—		—			—		—		—			(73,071	)		—			—			—			(73,071	)
Shareholders’ Equity and Accumulated
Earnings, December 31, 2005		2,900		41,394			29		414		803,765			86,315			(4,208	)		(3,625	)		(1,681	)		881,009
Cumulative effect of application of SAB 108		—		—			—		—		—			(4,725	)		—			—			—			(4,725	)
Shareholders’ Equity and Accumulated Earnings, January 1, 2006		2,900		41,394			29		414		803,765			81,590			(4,208	)		(3,625	)		(1,681	)		876,284
Comprehensive income
Net income		—		—			—		—		—			101,469			—			—			—			101,469
Net change in derivatives, net of minority interest		—		—			—		—		—			—			796			—			—			796
Total comprehensive income																										102,265
Transition effect of adoption of SFAS 123R		—		—			—		—		(3,625	)		—			—			3,625			—			—
Proceeds from employee stock purchase, stock option and other plans		—		1,462			—		15		53,458			—			—			—			(994	)		52,479
Adjustment for minority interest of unitholders in Operating Partnership upon conversion of units into common shares and at dates of capital transactions		—		697			—		7		13,133			—			(78	)		—			—			13,062
Stock-based compensation, net of minority interest		—		42			—		—		2,856			—			—			—			—			2,856
Treasury stock acquisitions		—		(109	)		—		—		—			—			—			—			(5,000	)		(5,000	)
Dividends to preferred shareholders		—		—			—		—		—			(7,637	)		—			—			—			(7,637	)
Dividends to common shareholders ($1.80 per share)		—		—			—		—		—			(77,855	)		—			—			—			(77,855	)
Shareholders’ Equity and Accumulated Earnings, December 31, 2006		2,900		43,486		$	29	$	436	$	869,587		$	97,567		$	(3,490	)	$	—		$	(7,675	)	$	956,454

60

Post Properties, Inc.

POST PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND

ACCUMULATED EARNINGS (cont’d)

FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005

(In thousands, except per share data)

																Accumulated
										Additional						Other
	Preferred		Common			Preferred		Common		Paid-in			Accumulated			Comprehensive			Deferred		Treasury
	Shares		Shares			Stock		Stock		Capital			Earnings			Income (Loss)			Compensation		Stock			Total
Shareholders’ Equity and Accumulated Earnings, December 31, 2006		2,900		43,486		$	29	$	436	$	869,587		$	97,567		$	(3,490	)	$	—	$	(7,675	)	$	956,454
Comprehensive income
Net income		—		—			—		—		—			178,699			—			—		—			178,699
Net change in derivatives, net of minority interest		—		—			—		—		—			—			(458	)		—		—			(458	)
Total comprehensive income																									178,241
Proceeds from employee stock purchase, stock option and other plans		—		187			—		1		(302	)		—			—			—		4,929			4,628
Adjustment for minority interest of unitholders in Operating Partnership upon conversion of units into common shares and at dates of capital transactions		—		235			—		1		1,581			—			(14	)		—		3,527			5,095
Stock-based compensation, net of minority interest		—		—			—		—		4,062			—			—			—		—			4,062
Treasury stock acquisitions		—		(83	)		—		—		—			—			—			—		(3,694	)		(3,694	)
Dividends to preferred shareholders		—		—			—		—		—			(7,637	)		—			—		—			(7,637	)
Dividends to common shareholders ($1.80 per share)		—		—			—		—		—			(78,644	)		—			—		—			(78,644	)
Shareholders’ Equity and Accumulated Earnings, December 31, 2007		2,900		43,825		$	29	$	438	$	874,928		$	189,985		$	(3,962	)	$	—	$	(2,913	)	$	1,058,505

The accompanying notes are an integral part of these consolidated financial statements.

61

Post Properties, Inc.

POST PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, except per share data)

	Year Ended December 31,
	2007			2006			2005
Cash Flows From Operating Activities
Net income	$	178,699		$	101,469		$	141,948
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		67,440			68,967			76,248
Amortization of deferred financing costs		3,297			3,526			4,661
Minority interest of common unitholders in Operating Partnership		1,491			418			(226	)
Minority interest in discontinued operations		902			1,399			7,325
Minority interest in consolidated entities		1,857			257			(239	)
Gains on sales of real estate assets		(162,806	)		(81,430	)		(140,643	)
Other expense (income)		1,123			(1,433	)		(5,267	)
Equity in income of unconsolidated entities		(1,556	)		(1,813	)		(1,634	)
Distributions of earnings of unconsolidated entities		2,554			2,713			2,033
Deferred compensation		502			471			194
Stock-based compensation		4,118			2,910			2,293
Loss on early extinguishment of debt		124			495			2,264
Changes in assets, (increase) decrease in:
Other assets		(3,535	)		(3,009	)		(4,012	)
Deferred charges		(177	)		(129	)		(1,082	)
Changes in liabilities, increase (decrease) in:
Accrued interest payable		(497	)		(594	)		(2,199	)
Accounts payable and accrued expenses		2,754			655			2,476
Security deposits and prepaid rents		1,354			(546	)		2,621
Net cash provided by operating activities		97,644			94,326			86,761
Cash Flows From Investing Activities
Construction and acquisition of real estate assets, net of payables		(262,958	)		(239,428	)		(112,527	)
Net proceeds from sales of real estate assets		245,522			176,419			199,546
Proceeds from sale of other investments		—			898			5,267
Capitalized interest		(11,801	)		(9,942	)		(2,907	)
Annually recurring capital expenditures		(11,110	)		(11,145	)		(9,921	)
Periodically recurring capital expenditures		(8,451	)		(5,964	)		(4,508	)
Community rehabilitation and other revenue generating capital expenditures		(13,074	)		(10,641	)		—
Corporate additions and improvements		(2,903	)		(3,480	)		(1,771	)
Distributions from (investments in and advances to) unconsolidated entities		36,033			(2,125	)		(5,846	)
Note receivable collections and other investments		866			944			2,960
Net cash provided by (used in) investing activities		(27,876	)		(104,464	)		70,293
Cash Flows From Financing Activities
Lines of credit proceeds, net		148,362			7,534			50,631
Proceeds from indebtedness		—			190,000			100,000
Payments on indebtedness		(123,145	)		(145,763	)		(217,934	)
Payments of financing costs		(894	)		(3,971	)		(1,211	)
Treasury stock acquisitions		(3,694	)		(5,000	)		(34,400	)
Proceeds from employee stock purchase and stock options plans		4,126			52,008			36,084
Capital contributions (distributions) of minority interests		656			(1,183	)		283
Distributions to common unitholders		(1,156	)		(1,685	)		(4,060	)
Dividends paid to preferred shareholders		(7,637	)		(7,637	)		(7,637	)
Dividends paid to common shareholders		(78,492	)		(76,912	)		(72,523	)
Net cash provided by (used in) financing activities		(61,874	)		7,391			(150,767	)
Net increase (decrease) in cash and cash equivalents		7,894			(2,747	)		6,287
Cash and cash equivalents, beginning of period		3,663			6,410			123
Cash and cash equivalents, end of period	$	11,557		$	3,663		$	6,410

The accompanying notes are an integral part of these consolidated financial statements.

62

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POST PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)

­ ­

1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICES

Organization

Post Properties, Inc. and its subsidiaries develop, own and manage upscale multifamily apartment communities in selected markets in the United States. As used herein, the term “Company” includes Post Properties, Inc. and its subsidiaries, including Post Apartment Homes, L.P. (the “Operating Partnership”), unless the context indicates otherwise. The Company, through its wholly-owned subsidiaries is the general partner and owns a majority interest in the Operating Partnership which, through its subsidiaries, conducts substantially all of the on-going operations of the Company. At December 31, 2007, the Company owned 22,578 apartment units in 63 apartment communities, including 1,747 apartment units in five communities held in unconsolidated entities and 2,266 apartment units in seven communities (and the expansion of one community) currently under construction and/or in lease-up. The Company is also developing and selling 535 for-sale condominium homes (including 137 units in one community held in an unconsolidated entity) and is converting apartment homes in two communities, initially consisting of 349 units, into for-sale condominium homes through a taxable REIT subsidiary. At December 31, 2007, approximately 41.3%, 19.2%, 12.3% and 10.3% (on a unit basis) of the Company’s operating communities were located in the Atlanta, Dallas, the greater Washington D.C. and Tampa metropolitan areas, respectively.

The Company has elected to qualify and operate as a self-administrated and self-managed real estate investment trust (“REIT”) for federal income tax purposes. A REIT is a legal entity which holds real estate interests and is generally not subject to federal income tax on the income it distributes to its shareholders.

At December 31, 2007, the Company had outstanding 43,825 shares of common stock and owned the same number of units of common limited partnership interests (“Common Units”) in the Operating Partnership, representing a 98.9% ownership interest in the Operating Partnership. Common Units held by persons other than the Company totaled 470 at December 31, 2007 and represented a 1.1% common minority interest in the Operating Partnership. Each Common Unit may be redeemed by the holder thereof for either one share of Company common stock or cash equal to the fair market value thereof at the time of redemption, at the option of the Company. The Company’s weighted average common ownership interest in the Operating Partnership was 98.6%, 98.1% and 95.0% for the years ended December 31, 2007, 2006 and 2005, respectively.

Possible business combination

On January 23, 2008, the Company announced that its Board of Directors had authorized management, working with financial and legal advisors, to initiate a formal process to pursue a possible business combination or other sale transaction and to seek proposals from potentially interested parties. The process commenced immediately after the announcement and is continuing. There can be no assurance that the process will result in any transaction leading into a business combination or other sale transaction.

Basis of presentation

The accompanying consolidated financial statements include the consolidated accounts of the Company, the Operating Partnership and their wholly owned subsidiaries. The Company also consolidates other entities in which it has a controlling financial interest or entities where it is determined to be the primary beneficiary under Financial Accounting Standards Board Interpretation No. 46R (“FIN 46R”), “Consolidation of Variable Interest Entities.” Under FIN 46R, variable interest entities (“VIEs”) are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. The primary beneficiary is required to consolidate a VIE for financial reporting purposes. The application of FIN 46R requires management to make significant estimates and judgments about the Company’s and its other partners’ rights, obligations and economic interests in such entities. For entities in which the Company has less than a controlling financial interest or entities where it is not deemed to be the primary beneficiary under FIN 46R, the entities are accounted for using the equity method of accounting (under the provisions of EITF No. 04-5). Accordingly, the Company’s share of the net earnings or losses of these entities is included in consolidated net income. All significant inter-company accounts and transactions have been eliminated in consolidation. The minority interest of unitholders in the operations of the Operating Partnership is calculated based on the weighted average unit ownership during the period.

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(In thousands, except per share data)

Cost capitalization

The Company capitalizes those expenditures relating to the acquisition of new assets, the development and construction of new apartment and condominium communities, the enhancement of the value of existing assets and those expenditures that substantially extend the life of existing assets. Annually recurring capital expenditures are expenditures of a type that are expected to be incurred on an annual basis during the life of an apartment community, such as carpet, appliances and flooring. Periodically recurring capital expenditures are expenditures that generally occur less frequently than on an annual basis, such as major exterior projects relating to landscaping and structural improvements. Revenue generating capital expenditures are expenditures for the renovation of communities, the new installation of water sub-metering equipment and other property upgrade costs that enhance the rental value of such communities. All other expenditures necessary to maintain a community in ordinary operating condition are expensed as incurred. Additionally, for new development communities, carpet, vinyl, and blind replacements are expensed as incurred during the first five years (which corresponds to their estimated depreciable life). Thereafter, these replacements are capitalized and depreciated. The Company expenses as incurred interior and exterior painting of its operating communities, unless those communities are under rehabilitation.

For communities under development or rehabilitation, the Company capitalizes interest, real estate taxes, and certain internal personnel and associated costs associated with apartment and condominium communities under development and construction. Interest is capitalized to projects under development or construction based upon the weighted average cumulative project costs for each month multiplied by the Company’s weighted average borrowing costs, expressed as a percentage. Weighted average borrowing costs include the costs of the Company’s fixed rate secured and unsecured borrowings and the variable rate unsecured borrowings under its line of credit facilities. The weighted average borrowing costs, expressed as a percentage, for the years ended December 31, 2007, 2006 and 2005 were approximately 6.6%, 6.6% and 6.5%, respectively. Internal personnel and associated costs are capitalized to projects under development or construction based upon the effort associated with such projects. The Company treats each unit in an apartment community separately for cost accumulation, capitalization and expense recognition purposes. Prior to the completion of rental and condominium units, interest and other construction costs are capitalized and reflected on the balance sheet as construction in progress. The Company ceases the capitalization of such costs as the residential units in a community become substantially complete and available for occupancy or sale. This results in a proration of costs between amounts that are capitalized and expensed as the residential units in apartment and condominium development communities become available for occupancy or sale. In addition, prior to the completion of rental units, the Company expenses as incurred substantially all operating expenses (including pre-opening marketing as well as property management and leasing personnel expenses) of such rental communities. Prior to the completion and closing of condominium units, the Company expenses all sales and marketing costs related to such units.

For cash flow statement purposes, the Company classifies capital expenditures for newly developed condominium communities and for condominium conversion communities in investing activities in the caption titled, “Construction and acquisition of real estate assets.” Likewise, the proceeds from the sales of such condominiums are included in investing activities in the caption titled, “Net proceeds from sales of real estate assets.”

Real estate assets, depreciation and impairment

Real estate assets are stated at the lower of depreciated cost or fair value, if deemed impaired. Major replacements and betterments are capitalized and depreciated over their estimated useful lives. Depreciation is computed on a straight-line basis over the useful lives of the properties (buildings and components and related land improvements — 20-40 years; furniture, fixtures and equipment — 5-10 years).

The Company continually evaluates the recoverability of the carrying value of its real estate assets using the methodology prescribed in Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” Factors considered by management in evaluating impairment of its existing real estate assets held for investment include significant declines in property operating profits, annually recurring property operating losses and other significant adverse changes in general market conditions that are considered permanent in nature. Under SFAS No. 144, a real estate asset held for investment is not considered impaired if the undiscounted, estimated future cash flows of an asset (both the annual estimated cash flow from future operations and the estimated cash flow from the theoretical sale of the asset) over its estimated holding period are in excess of the asset’s net book value at the balance sheet date. If any real estate asset held for investment is considered impaired, a loss is provided to reduce the carrying

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands, except per share data)

value of the asset to its estimated fair value. The Company periodically classifies real estate assets as held for sale. An asset is classified as held for sale after the approval of the Company’s board of directors and after an active program to sell the asset has commenced. Upon the classification of a real estate asset as held for sale, the carrying value of the asset is reduced to the lower of its net book value or its estimated fair value, less costs to sell the asset. Subsequent to the classification of assets as held for sale, no further depreciation expense is recorded. Real estate assets held for sale are stated separately on the accompanying consolidated balance sheets. The operating results of real estate assets held for sale and sold are reported as discontinued operations in the accompanying statements of operations. Income from discontinued operations includes the revenues and expenses, including depreciation and allocated interest expense, associated with the assets. Interest expense is allocated to assets held for sale based on actual interest costs for assets with secured mortgage debt. Interest expense is allocated to unencumbered assets based on the ratio of unsecured debt to unencumbered assets multiplied by the weighted average interest rate on the Company’s unsecured debt for the period and further multiplied by the book value of the assets held for sale and/or sold. This classification of operating results as discontinued operations applies retroactively for all periods presented. Additionally, gains and losses on assets designated as held for sale are classified as part of discontinued operations.

For condominium conversion projects, a complete community conversion is treated as discontinued operations in the same manner as discussed above for apartment community sales. For partial conversions of communities, the operating results, condominium revenues and associated gains are reflected in continuing operations (see discussion under “revenue recognition” below) and the net book value of the assets being converted into condominiums are reflected separately from held for sale assets on the consolidated balance sheet in the caption titled, “For-sale condominiums.” In either case, subsequent to the classification of the assets as held for sale, no further depreciation expense is recorded.

Revenue recognition

Residential properties are leased under operating leases with terms of generally one year or less. Rental revenues from residential leases are recognized on the straight-line method over the approximate life of the leases, which is generally one year. The recognition of rental revenues from residential leases when earned has historically not been materially different from rental revenues recognized on a straight-line basis.

Under the terms of residential leases, the residents of the Company’s residential communities are obligated to reimburse the Company for certain utility usage, water and electricity (at selected properties), where the Company is the primary obligor to the public utility entity. These utility reimbursements from residents are reflected as other property revenues in the consolidated statements of operations.

Sales and the associated gains or losses of real estate assets and for-sale condominiums are recognized in accordance with the provisions of SFAS No. 66, “Accounting for Sales of Real Estate.” For condominium conversion projects, revenues from individual condominium unit sales are recognized upon the closing of the sale transactions (the “Completed Contract Method”), as all conditions for full profit recognition have been met at that time and the conversion construction periods are typically very short. Under SFAS No. 66, the Company uses the relative sales value method to allocate costs and recognize profits from condominium conversion sales. In accordance with SFAS No. 144, gains on sales of condominium units at complete community condominium conversion projects are included in discontinued operations. For condominium conversion projects relating to a portion of an existing apartment community, the Company also recognizes revenues and the associated gains under the Completed Contract Method, as discussed herein. Since a portion of an operating community does not meet the requirements of a component of an entity under SFAS No. 144, the revenues and gains on sales of condominium units at partial condominium communities are included in continuing operations.

For newly developed condominiums, the Company accounts for each project under either the Completed Contract Method or the “Percentage of Completion Method,” based on a specific evaluation of the factors specified in SFAS No. 66 and the guidance provided by EITF 06-8. The factors used to determine the appropriate accounting method are the legal commitment of the purchaser in the real estate contract, whether the construction of the project is beyond a preliminary phase, sufficient units have been contracted to ensure the project will not revert to a rental project, the aggregate project sale proceeds and costs can be reasonably estimated and the buyer has made an adequate initial and continuing cash investment under the contract in accordance with SFAS No. 66 and the guidance provided by EITF 06-8. Under the Percentage of Completion Method, revenues and the associated gains are recognized over the project construction period generally based on the percentage of total project costs incurred to estimated total project costs for each condominium unit

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands, except per share data)

under a binding real estate contract. As of December 31, 2007, all newly developed condominium projects are accounted for under the Completed Contract Method.

Long-term ground leases

The Company is party to six long-term ground leases associated with land underlying certain of the Company’s operating communities. The ground leases generally provide for future increases in minimum lease payments tied to an inflation index or contain stated rent increases that generally compensate for the impact of inflation. Beginning in 2005, the Company recognized ground lease expense on the straight-line method over the life of the ground lease for all ground leases with stated rent increases. The recognition of ground lease expense as incurred had historically not been materially different than the recognition of ground lease expense on a straight-line basis.

Apartment community acquisitions

In accordance with the provisions of SFAS No. 141, “Business Combinations,” the aggregate purchase price of apartment community acquisitions is allocated to the tangible assets and liabilities (including mortgage indebtedness) as well as the intangible assets acquired in each transaction based on their estimated fair values at the acquisition date. The acquired tangible assets, principally land, building and improvements and furniture, fixtures and equipment are reflected in real estate assets, and such assets, excluding land, are depreciated over their estimated useful lives. The acquired intangible assets, principally above/below market leases and in-place leases are reflected in other assets and amortized over the average remaining lease terms of the acquired leases and resident relationships (generally 5 months to 18 months).

Stock-based compensation

Effective January 1, 2006, the Company accounts for stock-based compensation under the fair value method prescribed by SFAS No. 123R, “Share-Based Payment.” SFAS No. 123R requires companies to expense the fair value of employee stock options and other forms of stock-based compensation.

In 2005, the Company accounted for stock-based compensation under the fair value method prescribed by SFAS No. 123, “Accounting for Stock-Based Compensation,” which was applied on a prospective basis. The effect on the Company’s net income and net income per share had the fair value method of accounting been applied to all stock-based compensation in 2005 was not significant to the Company’s financial position or results of operations.

Derivative financial instruments

The Company accounts for derivative financial instruments at fair value under the provisions of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended. The Company uses derivative financial instruments, interest rate swap and interest rate cap arrangements to manage or hedge its exposure to interest rate changes. The Company generally designates each derivative instrument as a hedge of specific interest expense cash flow exposure. Under SFAS No. 133, as amended, derivative instruments qualifying as hedges of specific cash flows are recorded on the balance sheet at fair value with an offsetting increase or decrease to accumulated other comprehensive income, a shareholders’ equity account, until the hedged transactions are recognized in earnings. Quarterly, the Company evaluates the effectiveness of its cash flow hedges. Any ineffective portion of cash flow hedges are recognized immediately in earnings.

Cash and cash equivalents

All investments purchased with an original maturity of three months or less are considered to be cash equivalents.

Restricted cash

Restricted cash is generally comprised of resident security deposits for apartment communities located in Florida, required maintenance reserves for certain communities located in Georgia and earnest money and escrow deposits associated with the Company’s for-sale condominium business.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands, except per share data)

Deferred financing costs

Deferred financing costs are amortized using the straight-line method, which approximates the interest method, over the terms of the related indebtedness.

Per share data

The Company reports both basic and diluted earnings per share. Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the year. Diluted earnings per common share is computed by dividing net income available to common shareholders by the weighted average number of common shares and common share equivalents outstanding during the year, which are computed using the treasury stock method for outstanding stock options and non-vested awards. Common share equivalents are excluded from the computations in years in which they have an anti-dilutive effect.

Conversion of common units in the Operating Partnership

In accordance with the conclusions summarized in Emerging Issue Task Force, Issue No. 95-7, “Implementation Issues Related to the Treatment of Minority Interests in Certain Real Estate Investment Trusts,” the Company accounts for the conversion of original sponsors’ common units in the Operating Partnership into shares of company common stock at the net book value of the minority interest acquired. These transactions result in a reduction in the minority interest of common unit holders in the Operating Partnership and a corresponding increase in shareholders’ equity in the accompanying consolidated balance sheet at the date of conversion. At December 31, 2007, the aggregate redemption value of the then outstanding common units of the Operating Partnership was not materially different than their net book value.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

New accounting pronouncements

In 2007 and 2006, several new accounting pronouncements were issued and the pronouncements with a potential impact on the Company in 2007 and in future periods and which are not discussed elsewhere in note 1 are discussed below.

FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement 109,” was issued in July 2006. FIN 48 clarifies guidance on the recognition and measurement of uncertain tax positions and establishes a more likely than not standard for the evaluation of whether such tax positions can be recognized in the Company’s financial statements. Previously recognized tax positions that do not meet the more likely than not criteria were required to be adjusted on the implementation date. Additionally, FIN 48 requires additional disclosure regarding the nature and amount of uncertain tax positions, if any. The Company implemented FIN 48 on January 1, 2007 and the adoption did not have a material impact on the Company’s financial position and results of operations (see note 8).

The Securities and Exchange Commission issued Staff Accounting Bulletin No. 108 (“SAB 108”), “Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements,” in September 2006. SAB 108 requires that companies analyze the effect of financial statement misstatements on both their balance sheet and their income statement and contains guidance on correcting errors under this approach. The Company applied the guidance in SAB 108 on December 31, 2006 and, in accordance with the initial application provisions of SAB 108, adjusted retained earnings as of January 1, 2006. The adjustment was considered to be immaterial individually and in the aggregate in prior years based on the Company’s historical method of determining materiality. The application of SAB 108 resulted in a cumulative effect adjustment to record the prior period impact of accounting for two ground leases with scheduled rent increases on a straight-line basis during periods prior to January 1, 2005, and resulted in

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands, except per share data)

an increase in consolidated real estate assets of approximately $3,900, an increase in consolidated liabilities of approximately $8,800 and a decrease in consolidated equity of approximately $4,900 ($4,700 net of minority interest).

SFAS No. 157, “Fair Value Measurements,” was issued in September 2006. SFAS No. 157 provides a definition of fair value and establishes a framework for measuring fair value. SFAS No. 157 clarified the definition of fair value in an effort to eliminate inconsistencies in the application of fair value under generally accepted accounting principles. Additional disclosure focusing on the methods used to determine fair value are also required. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and should be applied prospectively. The Company does not expect that the adoption of SFAS No. 157 will have a material impact on the Company’s financial position and results of operations.

SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — including an amendment of FASB Statement No. 115,” was issued in February 2007. SFAS No. 159 gives the Company the irrevocable option to carry most financial assets and liabilities at fair value, with changes in fair value recognized in earnings. SFAS No. 159 is effective for the Company on January 1, 2008. The Company does not expect that the adoption of SFAS No. 159 will have a material impact on the Company’s financial position and results of operations.

SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements,” was issued in December 2007. SFAS No. 160 requires all entities to report noncontrolling (minority) interests in subsidiaries as equity in the consolidated financial statements. SFAS No. 160 is effective for the Operating Partnership on January 1, 2009. The Operating Partnership is currently evaluating the potential impact of SFAS No. 160 on the Operating Partnership’s financial position and results of operations.

SFAS No. 141R, “Business Combinations,” was issued in December 2007. SFAS No. 141R will replace SFAS No. 141 on the date it becomes effective. SFAS No. 141R will require 1) acquirers to recognize all of the assets acquired and liabilities assumed in a business combination, 2) that the acquisition date be used to determine fair value for all assets acquired and all liabilities assumed, and 3) enhanced disclosures for the acquirer surrounding the financial effects of the business combination. The provisions of SFAS 141R will lead to the expensing of acquisition related transaction costs and the potential recognition of acquisition related contingencies. SFAS No. 141R is effective for the Company on January 1, 2009. The Company is currently evaluating the potential impact of SFAS No. 141R on the Company’s financial position and results of operations.

2.   REAL ESTATE ACQUISITIONS AND DISPOSITIONS

Acquisitions

In July 2007, the Company acquired a 350-unit apartment community located in Orlando, Florida for approximately $75,200, including closing costs. Additionally, the Company plans to spend up to approximately $1,250 to improve the community (of which approximately $73 was incurred as of December 31, 2007). Aggregate acquisition costs were allocated to land ($17,500), building, improvements and equipment ($56,702) and identified lease related intangible assets ($998).

In March 2006, the Company acquired two apartment communities, containing 308 units, in Austin, Texas for approximately $46,400, including closing costs. Additionally, the Company incurred approximately $1,300 to improve the communities. The purchase price of these communities was allocated to the assets acquired based on their estimated fair values.

In July 2006, the Company acquired a 361-unit apartment community in suburban Washington D.C. for approximately $84,600, including the assumption of approximately $41,394 mortgage indebtedness and closing costs. The assumed mortgage note payable bears interest at a coupon rate of 6.1% (which approximated fair value), requires monthly principal and interest payments and matures in 2011. The Company may be required to pay additional purchase consideration of up to approximately $6,563 based on a share of the appreciation in the value of the property, if any, over approximately the next four years. The purchase price of this community was allocated to the assets and liabilities acquired based on their estimated fair values.

In October 2006, the Company acquired a 150-unit apartment community in Tampa, Florida for approximately $23,700, including closing costs. At the time of acquisition, the community was undergoing an extensive renovation program and was predominantly vacant. The Company incurred approximately $2,255 to complete the renovation of the community.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands, except per share data)

Lease-up of renovated units began in the fourth quarter of 2006. At December 31, 2007, the community was 80% occupied. The purchase price of this community was allocated to the assets acquired based on their estimated fair values.

In 2006, aggregate acquisition costs were allocated to land ($18,201), building improvements and equipment ($111,523), construction in progress ($23,723) and identified lease related intangible assets ($1,296). Aggregate liabilities assumed related to mortgage indebtedness, other payables and deposits totaled approximately $41,419. In June 2005, the Company acquired a 319-unit apartment community located in suburban Charlotte, NC for approximately $38,240, including closing costs and the reimbursement of a fee to terminate a loan commitment paid for by the seller. Additionally, the Company incurred additional costs of approximately $1,100 to improve the community. The purchase price of this community was allocated to the assets acquired based on their estimated fair values.

Dispositions

The Company classifies real estate assets as held for sale after the approval of its board of directors and after the Company has commenced an active program to sell the assets. At December 31, 2007, the Company had one community, containing 143 units, and certain parcels of land classified as held for sale. These real estate assets are reflected in the accompanying consolidated balance sheet at $24,576, which represents the lower of their depreciated cost or fair value less costs to sell. At December 31, 2007, the Company also had portions of two communities that are being converted to condominiums, originally containing 349 units, and certain completed condominium units at newly developed condominium communities totaling $38,844 that are classified as for-sale condominiums on the accompanying consolidated balance sheet.

In 2007, the Company transferred three operating apartment communities to a newly formed unconsolidated entity in which the Company retained a 25% non-controlling interest, for aggregate proceeds of approximately $134,922. This transaction resulted in a gain on sale of real estate in continuing operations totaling approximately $81,268 for the year ended December 31, 2007. Additionally, the unconsolidated entity obtained mortgage financing secured by the apartment communities totaling approximately $126,724, of which approximately $31,681 was distributed to the Company. For the year ended December 31, 2007, gains on sales of real estate assets in continuing operations also included gains of $5,186 on the sale of land sites. For the year ended December 31, 2006, gains on sales of real estate assets in continuing operations included a gain of $503 on the sale of a land site.

In 2007, 2006 and 2005, income from continuing operations also included net gains from condominium sales activity at newly developed condominium projects and condominium conversion projects representing portions of existing communities. In addition to the condominium gains included in continuing operations, the Company expensed certain sales and marketing costs associated with pre-sale condominium communities and condominium communities under development and such costs are included in condominium expenses in the table below. A summary of revenues and costs and expenses of condominium activities included in continuing operations for the years ended December 31, 2007, 2006 and 2005 was as follows:

	Year Ended December 31,
	2007			2006			2005
Condominium revenues	$	77,458		$	33,364		$	—
Condominium costs and expenses		(63,897	)		(20,986	)		(531	)
Gains (losses) on sales of condominiums, net	$	13,561		$	12,378		$	(531	)

In 2007, the Company retrospectively adjusted its consolidated financial statements for the years ended December 31, 2006 and 2005, to reflect three apartment communities classified as held for sale (two of which were sold in 2007) in 2007 under SFAS No. 144. The effect of the retrospective adjustment represented a $1,679 and $2,026 decrease in the Company’s previously reported income (loss) from continuing operations and a corresponding increase in income from discontinued operations for the years ended December 31, 2006 and 2005, respectively.

Under SFAS No. 144, the operating results of real estate assets designated as held for sale are included in discontinued operations in the consolidated statement of operations for all periods presented. Additionally, all gains and losses on the sale of these assets are included in discontinued operations. For the year ended December 31, 2007, income from discontinued operations included the results of operations of one apartment community classified as held for sale at December 31, 2007, three communities sold in 2007 through their sale dates and one condominium conversion

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands, except per share data)

community through its sell out date in 2007. For the years ended December 31, 2006 and 2005, income from discontinued operations included the results of operations of the apartment community classified as held for sale at December 31, 2007, three apartment communities sold in 2007, two condominium conversion communities through their respective sell-out dates in 2007 and 2005 and the results of operations of nine apartment communities sold in 2006 and 2005 through their respective sale dates.

The revenues and expenses of these communities for the years ended December 31, 2007, 2006 and 2005 were as follows:

	Year Ended December 31,
	2007			2006			2005
Revenues
Rental	$	8,572		$	20,065		$	35,587
Other property revenues		676			1,914			3,408
Total revenues		9,248			21,979			38,995
Expenses
Property operating and maintenance (exclusive of items shown separately below)		3,890			8,951			16,496
Depreciation		1,069			3,280			7,452
Interest		1,517			4,189			6,862
Minority interest in consolidated property partnerships		—			—			(335	)
Total expenses		6,476			16,420			30,475
Income from discontinued property operations before minority interest		2,772			5,559			8,520
Minority interest		(39	)		(106	)		144
Income from discontinued property operations	$	2,733		$	5,453		$	8,664

In 2007, the Company recognized net gains in discontinued operations of $62,406 ($61,546, net of minority interest) from the sale of three communities containing 807 units. These sales generated net proceeds of approximately $90,893, of which a portion ($66,938) was held by an exchange intermediary at December 31, 2007 (and classified as other assets on the consolidated balance sheet), pending the completion of a tax deferred exchange. In 2006, the Company recognized net gains in discontinued operations of $68,324 ($67,026 net of minority interest) from the sale of three communities containing 1,340 units. These sales generated net proceeds of approximately $173,007, including $40,000 of secured indebtedness assumed by the purchasers. In 2005, the Company recognized net gains in discontinued operations of $124,425 ($117,593 net of minority interest) from the sale of six communities containing 3,047 units. These sales generated net proceeds of approximately $229,249, including $81,560 of tax-exempt secured indebtedness assumed by the purchasers.

Gains on sales of real estate assets included in discontinued operations also includes net gains from condominium sales at two condominium conversion communities for the years ended December 31, 2007, 2006 and 2005. The Company commenced condominium conversion activities in 2005. A summary of revenues and costs and expenses of condominium activities included in discontinued operations for the years ended December 31, 2007, 2006 and 2005 was as follows:

	Year Ended December 31,
	2007			2006			2005
Condominium revenues	$	560		$	7,322		$	56,012
Condominium costs and expenses		(176	)		(7,097	)		(39,200	)
Gains on condominium sales, before minority interest and income taxes		384			225			16,812
Minority interest		(5	)		(4	)		(814	)
Provision for income taxes		—			—			(594	)
Gains on condominium sales, net of minority interest	$	379		$	221		$	15,404

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands, except per share data)

In January 2008, the Company closed the sale of an apartment community, containing 143 units, for a gross sales price of $19,850. The sale completed the tax-deferred exchange transaction discussed above.

3.   INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES

At December 31, 2007, the Company holds investments in five individual limited liability companies (the “Property LLCs”) with institutional investors and other entities. Three of the Property LLCs own apartment communities. A fourth Property LLC completed the sell out of a condominium conversion community in 2007 and the fifth Property LLC commenced construction in 2007 of a mixed-use development, consisting of for-sale condominiums and class A office space. The Company holds a 35% equity interest in two Property LLCs, each owning one apartment community, and the Property LLC that completed the condominium conversion and sale process. The Company holds a 25% interest in one Property LLC owning three apartment communities, and a 50% interest in the condominium portion of the Property LLC developing the mixed-use project.

In 2007, the Company’s investment in the 25% owned Property LLC resulted from the transfer of three previously owned apartment communities to the Property LLC co-owned with an institutional investor. The assets, liabilities and members’ equity of this Property LLC were recorded at fair value based on agreed-upon amounts contributed to the Property LLC. At December 31, 2007, the Company’s investment in the 25% owned Property LLC reflects a credit investment of $13,688 resulting primarily from distributions of financing proceeds in excess of the Company’s historical cost investment. The credit investment is reflected in consolidated liabilities on the Company’s consolidate balance sheet.

The Company accounts for its investments in these Property LLCs using the equity method of accounting. At December 31, 2007, the Company’s investment in these Property LLCs totaled $23,036, excluding the credit investment discussed above. The excess of the Company’s investment over its equity in the underlying net assets of certain Property LLCs was approximately $5,812 at December 31, 2007. The excess investment related to Property LLCs holding apartment communities is being amortized as a reduction to earnings on a straight-line basis over the lives of the related assets. The excess investment related to the Property LLC constructing condominiums will be recognized as additional costs as the condominiums are sold. The Company provides real estate services (development, construction and property management) to the Property LLCs for which it earns fees.

The operating results of the Company include its allocable share of net income from the investments in the Property LLCs. A summary of financial information for the Property LLCs in the aggregate was as follows:

	December 31,
Balance Sheet Data	2007		2006
Real estate assets, net of accumulated depreciation of $15,204 and $11,039, respectively	$	325,705	$	93,614
Assets held for sale, net		—		3,027
Cash and other		7,254		4,067
Total assets	$	332,959	$	100,708
Mortgage/construction notes payable	$	214,549	$	66,998
Other liabilities		5,541		1,107
Total liabilities		220,090		68,105
Members’ equity		112,869		32,603
Total liabilities and members’ equity	$	332,959	$	100,708
Company’s equity investment in Property LLCs(1)	$	9,348	$	16,883

(1)  At December 31, 2007, the Company’s equity investment is shown net of a credit investment of $13,688 discussed above.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands, except per share data)

	Year ended December 31,
Income Statement Data	2007			2006			2005
Revenues
Rental	$	17,998		$	11,447		$	10,789
Other property revenues		1,169			752			807
Other		121			47			33
Total revenues		19,288			12,246			11,629
Expenses
Property operating and maintenance		7,125			3,948			3,689
Depreciation and amortization		6,881			2,650			2,621
Interest		5,940			2,752			2,752
Total expenses		19,946			9,350			9,062
Income (loss) from continuing operations		(658	)		2,896			2,567
Discontinued operations
Income (loss) from discontinued operations		39			(343	)		(176	)
Gains on sales of real estate assets, net		861			2,947			2,834
Loss on early extinguishment of debt		—			—			(273	)
Income from discontinued operations		900			2,604			2,385
Net income	$	242		$	5,500		$	4,952
Company’s share of net income	$	1,556		$	1,813		$	1,767

Gains on real estate assets represent net gains from condominium sales at the condominium conversion community held by one of the Property LLCs. This Property LLC completed the sell out of the community in 2007. A summary of revenues and costs and expenses of condominium activities for the years ended December 31, 2007, 2006 and 2005 was as follows:

	Year ended December 31,
	2007			2006			2005
Condominium revenues	$	4,592		$	21,857		$	15,098
Condominium costs and expenses		(3,731	)		(18,910	)		(12,264	)
Gains on condominium sales, net	$	861		$	2,947		$	2,834

At December 31, 2007, mortgage/construction notes payable include a $49,997 mortgage note that bears interest at 4.13%, requires monthly interest payments and annual principal payments of $1 through 2009. Thereafter, the note requires monthly principal and interest payments based on a 25-year amortization schedule and matures in 2034. The note is callable by the lender in 2009 and on each successive fifth year anniversary of the note thereafter. The note is prepayable without penalty in 2008. Another mortgage note payable totaling $17,000 bears interest at a fixed rate of 4.04%, requires interest only payments and matures in 2008. Three additional mortgage notes were entered into in conjunction with the formation of the 25% owned Property LLC in 2007. Two notes total $85,724, bear interest at 5.63%, require interest only payments and mature in 2017. The third mortgage note totals $41,000, bears interest at 5.71%, requires interest only payments, and matures in 2017.

In July 2007, the Property LLC constructing the mixed-use development entered into a construction loan facility with an aggregate capacity of $187,128. At December 31, 2007, the construction loan had an outstanding balance of $20,829, bears interest at LIBOR plus 1.35% and matures in 2011. Under the terms of the construction loan facility, the Company and its 50% equity partner have jointly and severally guaranteed approximately $25,313 of the construction loan attributable to the condominium portion of the project. Additionally, the Company and its 50% equity partner have jointly and severally guaranteed certain debt service payments of the condominium portion of the loan not to exceed approximately $6,153 and all of the equity owners of the project, including the Company, have guaranteed the completion of the first building at the project.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands, except per share data)

In 2005, one of the Property LLCs elected to convert its apartment community into for-sale condominiums. As a result of its decision to sell the community through the condominium conversion process, the Property LLC prepaid its third party mortgage note payable of $16,392 through secured borrowings from the Company. The Property LLC incurred debt prepayment costs and expenses associated with the write-off of unamortized deferred financing costs totaling $273 in 2005. In 2006, the mortgage note payable to the Company was retired from the proceeds of condominium sales. The mortgage note payable to the Company had a fixed rate component bearing interest at 4.28% and a variable rate component bearing interest at LIBOR at 1.90%.

4.   INDEBTEDNESS

At December 31, 2007 and 2006, the Company’s indebtedness consisted of the following:

					Maturity	December 31,
Description	Payment Terms	Interest Rate			Date	2007		2006
Senior Unsecured Notes	Int.		5.13%-7.70%		2010-2013	$	535,000	$	560,000
Unsecured Lines of Credit
Syndicated Line of Credit	N/A		LIBOR + 0.575%	(1)	2010		245,000		95,000
Cash Management Line	N/A		LIBOR + 0.575%		2010		12,275		13,913
							257,275		108,913
Fixed Rate Secured Notes
FNMA	Prin. and Int.		6.15%	(2)	2029		94,000		95,600
Other	Prin. and Int.		4.27% - 6.50%		2009-2013		172,791		259,371
							266,791		354,971
Tax-Exempt Floating Rate
Secured Bonds	—		—		—		—		9,895
Total						$	1,059,066	$	1,033,779

(1)	Represents stated rate. At December 31, 2007, the weighted average interest rate was 5.63%.
(2)	Interest rate is fixed at 6.15%, inclusive of credit enhancement and other fees, to 2009 through an interest rate swap arrangement.

Debt maturities

The aggregate maturities of the Company’s indebtedness are as follows:

2008	$	5,230
2009		76,618
2010		445,903	(1)
2011		141,431
2012		103,296
Thereafter		286,588
	$	1,059,066

     (1)  Includes outstanding balance on lines of credit totaling $257,275.

Debt issuances, retirements and modifications

2007

Upon their maturity in June 2007, the Company repaid $25,000 of 6.11% senior unsecured notes from available borrowings under its unsecured line of credit. In July 2007, the Company repaid $83,132 of secured mortgage notes with interest rates from 6.29% to 7.69% from borrowing under its unsecured line of credit. These mortgage notes were scheduled to mature in October 2007.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands, except per share data)

In January 2008, the Company closed a $120,000 secured, fixed rate mortgage note payable. The note bears interest at 4.88%, requires interest only payments and matures in 2015. The note contains an automatic one year extension under which the interest rate converts to a variable rate, as defined.

2006

Upon their maturity in March 2006, the Company repaid $50,000 of 6.71% senior unsecured notes. In October 2006, the Company repaid $25,000 of 7.5% senior unsecured notes. Both notes were repaid from available borrowings under its unsecured lines of credit.

In April 2006, the Company closed a $40,000 mortgage note payable secured by an apartment community located in Denver, Colorado. The mortgage note accrued interest at LIBOR plus 1.0%, was scheduled to mature in April 2008 and was pre-payable without penalty. In August 2006, this mortgage note was assumed by the purchaser of this community. As a result of this debt assumption, the Company recorded a loss on early extinguishment of indebtedness of $123 ($122 net of minority interest) related to the write-off of unamortized deferred financing costs.

In June 2006, the Company issued $150,000 of senior unsecured notes. The notes bear interest at 6.30% and mature in September 2013. The net proceeds from the unsecured notes were used to reduce amounts outstanding under the Company’s unsecured lines of credit.

In July 2006, in conjunction with an apartment community acquisition (see note 2 to the consolidated financial statements), the Company assumed a secured, fixed rate mortgage note payable with an outstanding balance of $41,394. The mortgage note bears interest at a coupon rate of approximately 6.1% (which approximated fair value), requires monthly principal and interest payments and matures in November 2011.

In December 2006, the Company repaid a $45,718, 6.8% secured mortgage note prior to its schedule maturity date in 2007. Also in December 2006, the Company repaid $18,600 of tax-exempt indebtedness associated with the sale of an apartment community. As a result of this debt retirement, the Company recorded a loss on the early extinguishment of debt of $372 ($365 net of minority interest) related to the write-off of deferred loan costs of $230 ($226 net of minority interest) relating to such retired indebtedness and a loss of $142 ($139 net of minority interest) due to the ineffectiveness of a related interest rate cap agreement.

Unsecured lines of credit

At December 31, 2007, the Company utilizes a $600,000, increased from $450,000 in November 2007, syndicated unsecured revolving line of credit (the “Syndicated Line”) that matures in April 2010 for its short-term financing needs. The Syndicated Line currently has a stated interest rate of LIBOR plus 0.575% or the prime rate and was provided by a syndicate of 17 banks led by Wachovia Bank, N.A. and JP Morgan Securities, Inc. Additionally, the Syndicated Line requires the payment of annual facility fees currently equal to 0.15% of the aggregate loan commitment. The Syndicated Line provides for the interest rate and facility fee rate to be adjusted up or down based on changes in the credit ratings on the Company’s senior unsecured debt. The rates under the Syndicated Line are based on the higher of the Company’s unsecured debt ratings in instances where the Company has split unsecured debt ratings. The Syndicated Line also includes a competitive bid option for short-term funds up to 50% of the loan commitment at rates generally below the stated line rate. In addition to customary restrictions, representations, covenants and events of default, the Syndicated Line also restricts the amount of capital the Company can invest in specific categories of assets, such as improved land, properties under construction, condominium properties, non-multifamily properties, debt or equity securities, notes receivable and unconsolidated affiliates. At December 31, 2007, the Company had issued letters of credit to third parties totaling $1,350 under this facility.

Additionally, at December 31, 2007, the Company had a $30,000 unsecured line of credit with Wachovia Bank, N.A. (the “Cash Management Line”). The Cash Management Line matures in April 2010 and carries pricing and terms, including debt covenants, substantially consistent with the Syndicated Line.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands, except per share data)

Interest paid

Interest paid (including capitalized amounts of $11,801, $9,942 and $2,907 for the years ended December 31, 2007, 2006 and 2005, respectively), aggregated $65,931, $67,257 and $66,234 for the years ended December 31, 2007, 2006 and 2005, respectively.

Pledged assets and other

The aggregate net book value at December 31, 2007 of property pledged as collateral for indebtedness amounted to approximately $333,128. The Company’s senior unsecured notes, Syndicated Line and certain of its secured mortgage arrangements contain customary restrictions, representations, covenants, and events of default, including fixed charge coverage and maximum leverage ratios.

5.   DEFERRED CHARGES

Deferred charges consist of the following:

	December 31,
	2007			2006
Deferred financing costs	$	17,041		$	18,073
Other		5,677			5,501
		22,718			23,574
Less: accumulated amortization		(12,180	)		(11,174	)
	$	10,538		$	12,400

6.   SHAREHOLDERS’ EQUITY

Preferred Stock

At December 31, 2007, the Company had two outstanding series of cumulative redeemable preferred stock with the following characteristics:

													Approximate
			Liquidation		Optional			Redemption		Stated			Dividend
	Outstanding		Preference		Redemption			Price(1)		Dividend			Rate
Description	Shares		(per share)		Date(1)			(per share)		Yield			(per share)
Series A		900	$	50.00		10/01/26		$	50.00		8.5	%	$	4.25
Series B		2,000	$	25.00		(2	)	$	25.00		7.625	%	$	1.91

(1)	The preferred stock is redeemable, at the Company’s option, for cash.
(2)	The Series B preferred stock became redeemable at the Company’s option on October 28, 2007.

Common Stock Purchases

In 2007, the Company repurchased 83 shares of its common stock totaling approximately $3,694 pursuant to a stock purchase plan meeting the requirements of Rule 10b5-1 under the Exchange Act. These shares were purchased under a board of directors approved plan which allows the Company to repurchase up to $200,000 of common or preferred stock at market prices from time to time until December 31, 2008.

In 2006 and 2005, the Company repurchased approximately 109 and 1,031 shares, respectively, of its common stock at an aggregate cost of $5,000 and $34,400, respectively, pursuant to stock purchase plans meeting the requirements of Rule 10b5-1 under the Exchange Act. These shares were purchased under a previous board of directors approved plan.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands, except per share data)

Computation of Earnings Per Common Share

In 2007, 2006 and 2005, basic and diluted earnings per common share for income (loss) from continuing operations available to common shareholders has been computed as follows:

	Year Ended December 31, 2007
	Income			Shares		Per-Share
	(Numerator)			(Denominator)		Amount
Income from continuing operations	$	114,163
Less: Preferred stock dividends		(7,637	)
Basic EPS
Income from continuing operations available to common shareholders		106,526			43,491	$	2.45
Effect of dilutive securities
Stock options and awards		—			638
Diluted EPS
Income from continuing operations available to common shareholders	$	106,526			44,129	$	2.41

	Year Ended December 31,
	2006
	Income			Shares		Per-Share
	(Numerator)			(Denominator)		Amount
Income from continuing operations	$	29,255
Less: Preferred stock dividends		(7,637	)
Basic EPS
Income from continuing operations available to common shareholders		21,618			42,812	$	0.50
Effect of dilutive securities
Stock options and awards		—			782
Diluted EPS
Income from continuing operations available to common shareholders	$	21,618			43,594	$	0.50

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands, except per share data)

	Year Ended December 31,
	2005
	Income			Shares			Per-Share
	(Numerator)			(Denominator)			Amount
Income from continuing operations	$	3,330
Less: Preferred stock dividends		(7,637	)
Basic EPS
Loss from continuing operations available to common shareholders		(4,307	)		40,217		$	(0.11	)
Effect of dilutive securities
Stock options and awards		—			—	(1)
Diluted EPS
Loss from continuing operations available to common shareholders	$	(4,307	)		40,217		$	(0.11	)

(1)  For the year ended December 31, 2005, the potential dilution from the Company’s outstanding stock options and awards of 400 shares was antidilutive to the loss from continuing operations per share calculation. As such, this amount was excluded from weighted average shares.

In 2007, 2006 and 2005, stock options to purchase 200, 0 and 3,534 shares of common stock, respectively, were excluded from the computation of diluted earnings per share as these options were antidilutive.

7.   SEVERANCE COSTS

In prior years, the Company recorded severance charges associated with the departure of certain executive officers of the Company. Under certain of these arrangements, the Company is required to make certain payments and provide specified benefits through 2013 and 2016. In 2007 and 2005, the Company recorded additional expenses of $283 and $796, respectively, relating to changes in the estimated future costs of certain benefits granted to former executive officers under such agreements. These estimated future cost increases primarily related to increased fuel and other operating costs and expenses associated with certain fractional aircraft benefits provided to such executives.

The following table summarizes the activity relating to the accrued severance charges for the years ended December 31, 2007, 2006 and 2005:

	2007			2006			2005
Accrued severance charges, beginning of year	$	12,832		$	14,325		$	15,317
Severance charges		283			—			796
Payments for period		(2,640	)		(2,341	)		(2,694	)
Interest accretion		740			848			906
Accrued severance charges, end of year	$	11,215		$	12,832		$	14,325

Substantially all of these remaining amounts will be paid over the remaining terms of the former executives’ employment and settlement agreements (six to nine years).

8.   INCOME TAXES

The Company has elected to be taxed as a REIT under the Code. To qualify as a REIT, the Company must distribute annually at least 90% of its adjusted taxable income, as defined in the Code, to its shareholders and satisfy certain other organizational and operating requirements. It is management’s current intention to adhere to these requirements and maintain the Company’s REIT status. As a REIT, the Company generally will not be subject to federal income tax at the corporate level on the taxable income it distributes to its shareholders. Should the Company fail to qualify as a REIT in any tax year, it may be subject to federal income taxes at regular corporate rates (including any applicable alternative

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands, except per share data)

minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years. The Company may be subject to certain state and local taxes on its income and property, and to federal income taxes and excise taxes on its undistributed taxable income.

In 2007, other expenses on the consolidated statement of operations included income tax expense of approximately $560 relating to estimated alternative minimum tax. The alternative minimum tax results from the expected utilization of net operating loss carryforwards generated by the Company in prior years.

In the preparation of income tax returns in federal and state jurisdictions, the Company and its taxable REIT subsidiaries assert certain tax positions based on their understanding and interpretation of the income tax law. The taxing authorities may challenge such positions and the resolution of such matters could result in the payment and recognition of additional income tax expense. Management believes it has used reasonable judgments and conclusions in the preparation of its income tax returns.

The Company adopted the provisions of FIN 48 on January 1, 2007. As of January 1, 2007 and December 31, 2007, the Company’s taxable REIT subsidiaries (“TRSs”) had unrecognized tax benefits of approximately $797 which primarily related to uncertainty regarding the sustainability of certain deductions taken on prior year income tax returns of the TRS with respect to the amortization of certain intangible assets. The Company does not expect any significant change in this unrecognized tax benefit in 2008. To the extent these unrecognized tax benefits are ultimately recognized, they may affect the effective tax rate in a future period. The Company’s policy is to recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense. Accrued interest and penalties for the year ended December 31, 2007 and at December 31, 2007 were not material to the Company’s results of operations, cash flows or financial position.

The Company and its subsidiaries’ (including the TRSs) income tax returns are subject to examination by federal and state tax jurisdictions for years 2004 through 2006. Net income tax loss carryforwards and other tax attributes generated in years prior to 2004 are also subject to challenge in any examination of the 2004 to 2006 tax years.

Reconciliation of net income to taxable income

As discussed in note 1, the Company conducts substantially all of its operations through its majority-owned subsidiary, the Operating Partnership. For income tax reporting purposes, the Company receives an allocable share of the Operating Partnership’s ordinary income and capital gains based on its weighted average ownership, adjusted for certain specially allocated items. All adjustments to net income in the table below are net of amounts attributable to minority interests and taxable REIT subsidiaries. A reconciliation of net income to taxable income for the years ended December 31, 2007, 2006 and 2005 is detailed below.

	2007			2006			2005
	(Estimate)			(Actual)			(Actual)
Net income	$	178,699		$	101,469		$	141,948
Add (subtract) net loss (income) of taxable REIT subsidiaries		709			2,537			(6,882	)
Adjusted net income		179,408			104,006			135,066
Book/tax depreciation difference		(7,051	)		(4,325	)		(1,354	)
Book/tax difference on gains from real estate sales		(65,134	)		(41,909	)		(15,747	)
Book/tax difference on stock-based compensation		198			(13,304	)		(5,454	)
Other book/tax differences, net		(1,570	)		(7,563	)		1,990
Taxable income before allocation of taxable capital gains		105,852			36,905			114,501
Income taxable as capital gains		(87,907	)		(34,756	)		(116,760	)
Taxable ordinary income (loss)	$	17,945		$	2,149		$	(2,259	)

Estimated taxable ordinary income for 2007 is expected to be offset by a net operating loss carryforward, effectively eliminating the amount of 2007 dividend treated as ordinary income to the shareholders.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands, except per share data)

Income tax characterization of dividends

For income tax purposes, dividends to common shareholders are characterized as ordinary income, capital gains or as a return of a shareholder’s invested capital. A summary of the income tax characterization of the Company’s dividends paid per common share is as follows for the years ended December 31, 2007, 2006 and 2005:

	2007					2006					2005
	Amount		%			Amount		%			Amount		%
Capital gains	$	1.38		76.6	%	$	0.87		48.5	%	$	0.99		55.1	%
Unrecaptured Section 1250 gains		0.42		23.4	%		0.86		48.1	%		0.81		44.9	%
Ordinary income		—		—			0.06		3.2	%		—		—
Return of capital		—		—			0.01		0.3	%		—		—
	$	1.80		100.0	%	$	1.80		100.0	%	$	1.80		100.0	%

The income tax characterization of dividends to common shareholders is based on the calculation of Taxable Earnings and Profits, as defined in the Code. Taxable Earnings and Profits differ from regular taxable income due primarily to differences in the estimated useful lives and methods used to compute depreciation and in the recognition of gains and losses on the sale of real estate assets.

As of December 31, 2007, the net basis for federal income tax purposes, taking into account the special allocation of gain to the partners contributing property to the Operating Partnership and including minority interest in the Operating Partnership, was lower than the net assets as reported in the Company’s consolidated financial statements by $192,919.

Taxable REIT subsidiaries

The Company utilizes TRSs principally to perform such non-REIT activities as asset and property management, for-sale housing (condominiums) conversions and sales and other services. These TRSs are subject to federal and state income taxes. The components of income tax expense, significant deferred tax assets and liabilities and a reconciliation of the TRS income tax expense to the statutory federal rate are reflected in the tables below.

Income tax expense of the TRSs for the years ended December 31, 2007, 2006 and 2005 is comprised of the following:

	2007			2006		2005
Current tax expense
Federal	$	900		$	—	$	251
State		110			—		343
		1,010			—		594
Deferred tax expense
Federal		(900	)		—		—
State		(110	)		—		—
		(1,010	)		—		—
Total income tax expense		—			—		594
Income tax expense — discontinued operations		—			—		(594	)
Income tax expense — continuing operations	$	—		$	—	$	—

In 2007, the Company recognized a deferred tax benefit of $1,010 to offset estimated current income tax expense based on a determination that such deferred tax assets are realizable through the ability of such deferred assets to generate carryback claims to prior years or to offset future income taxes payable. In 2005, income tax expense was allocated to discontinued operations as the taxable income of the TRSs resulted from condominium sales activities which are reported in discontinued operations. Net valuation allowances increased approximately $214 and $1,309 in 2007 and 2006, respectively. Aggregate valuation allowances at December 31, 2007 and 2006 are reflected in the table below.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands, except per share data)

The components of the TRSs’ deferred income tax assets and liabilities at December 31, 2007 and 2006 were as follows:

	2007			2006
Deferred tax assets
Deferred interest	$	2,649		$	1,761
Accrued liabilities		1,154			512
Cost capitalization/recognition		864			260
Real estate asset basis differences		—			1,106
Other		297			101
		4,964			3,740
Deferred tax liabilities
Amortization		(797	)		(797	)
		(797	)		(797	)
Net deferred tax assets, before valuation allowances		4,167			2,943
Valuation allowances		(3,157	)		(2,943	)
Net deferred tax assets (liabilities)	$	1,010		$	—

At December 31, 2007, management had established valuation allowances against the above listed net deferred tax assets due primarily to historical losses at the TRSs’ in years prior to 2007 and the variability of the income of these subsidiaries. The tax benefits associated with such unused valuation allowances may be recognized in future periods, if the taxable REIT subsidiaries generate sufficient taxable income to utilize such amounts or if the Company determines that it is more likely than not that the related deferred tax assets are realizable.

A reconciliation of income tax expense for 2005 of the TRSs to the federal statutory rate is detailed below. As reflected above, 2005 income tax expense was allocated to discontinued operations.

	2005
Federal tax rate		35	%
State income tax, net of federal benefit		4
Federal alternative minimum taxes		3
Change in valuation allowance of deferred tax assets		(35	)
		7	%

9.   STOCK-BASED COMPENSATION PLANS

Stock Compensation Plans

Effective January 1, 2006, the Company accounts for stock-based compensation using the fair value method prescribed in SFAS No. 123R (see note 1). For stock-based compensation granted prior to 2006, the Company accounted for stock-based compensation under the fair value method prescribed by SFAS No. 123. Other than the required modification under SFAS No. 123R to use an estimated forfeiture rate for award terminations and forfeitures, the adoption of SFAS 123R did not have a material impact on the Company’s accounting for stock-based compensation. In years prior to 2006, the Company used a policy of recognizing the effect of award forfeitures as they occurred. Under SFAS No. 123R, such award forfeitures are recognized based on an estimate of the number of awards expected to be forfeited during the estimated service period. The cumulative impact of this modification on awards granted prior to 2006 was $172 and the amount was reflected as a reduction of compensation expense for the year ended December 31, 2006.

Incentive Stock Plans

Incentive stock awards are granted under the Company’s 2003 Incentive Stock Plan (the “2003 Stock Plan”). Under the 2003 Stock Plan, an aggregate of 4,000 shares of common stock were reserved for issuance. Of this amount, not more than 500 shares of common stock are available for grants of restricted stock. The exercise price of each option granted under the 2003 Stock Plan may not be less than the market price of the Company’s common stock on the date of the option grant

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands, except per share data)

and all options may have a maximum life of ten years. Participants receiving restricted stock grants are generally eligible to vote such shares and receive dividends on such shares. Substantially all stock option and restricted stock grants are subject to annual vesting provisions (generally three to five years) as determined by the compensation committee overseeing the 2003 Stock Plan. At December 31, 2007, stock options outstanding under the 2003 Stock Plan and the Company’s previous stock plan totaled 2,455.

Compensation costs for stock options have been estimated on the grant date using the Black-Scholes option-pricing method. The weighted average assumptions used in the Black-Scholes option-pricing model were as follows:

	2007			2006			2005
Dividend yield		3.8	%		4.4	%		5.5	%
Expected volatility		18.1	%		17.5	%		17.1	%
Risk-free interest rate		4.8	%		4.3	%		3.1	%
Expected option life		5 years			5 years			5 years

The Company’s assumptions were derived from the methodologies discussed herein. The expected dividend yield reflects the Company’s current historical yield, which is expected to approximate the future yield. Expected volatility was based on the historical volatility of the Company’s common stock. The risk-free interest rate for the expected life of the options was based on the implied yields on the U.S. Treasury yield curve. The weighted average expected option term was based on the Company’s historical data for prior period stock option exercise and forfeiture activity.

In 2007, 2006 and 2005, the Company granted stock options to purchase 199, 311 and 277 shares, respectively, of Company common stock to Company officers and directors, of which 28, 50 and 50 shares, respectively, were granted to the Company’s non-executive chairman of the board. In 2007, 2006 and 2005, the Company recorded compensation expense related to stock options of $1,523 ($1,502 net of minority interest), $1,100 ($1,079 net of minority interest) and $761 ($723 net of minority interest), respectively, recognized under the fair value method. In 2006, such expense was net of the cumulative impact of the adoption of SFAS No. 123R of $60, as discussed above. Upon the exercise of stock options, the Company issues shares of common stock from treasury shares or, to the extent treasury shares are not available, from authorized common shares.

A summary of stock option activity under all plans in 2007, 2006 and 2005, is presented below.

	2007					2006					2005
				Weighted					Weighted					Weighted
				Average					Average					Average
	Shares			Exercise Price		Shares			Exercise Price		Shares			Exercise Price
Outstanding at beginning of year		2,375		$	33		3,534		$	34		4,491		$	33
Granted		199			48		311			41		277			33
Exercised		(108	)		36		(1,462	)		36		(1,105	)		33
Forfeited		(11	)		41		(8	)		35		(129	)		30
Outstanding at end of year		2,455			34		2,375			33		3,534			34
Options exercisable at year-end		1,797			33		1,447			33		2,437			36
Weighted-average fair value of options granted during the year	$	7.22				$	4.91				$	2.73

At December 31, 2007, there was $1,627 of unrecognized compensation cost related to unvested stock options. This cost is expected to be recognized over a weighted-average period of 1.1 years. The total intrinsic value of stock options exercised in 2007, 2006 and 2005 was $1,397, $13,775 and $6,111, respectively. The aggregate intrinsic values of stock options outstanding, exercisable and expected to vest at December 31, 2007 were $8,453, $6,728 and $8,295, respectively. The weighted average remaining contractual lives of stock options outstanding, exercisable and excepted to vest at December 31, 2007, were 5.3 years, 4.4 years and 5.3 years, respectively. Stock options expected to vest at December 31, 2007 totaled 2,416 at a weighted average exercise price of approximately $34.01.

At December 31, 2007, the Company had separated its outstanding options into two ranges based on exercise prices. There were 1,387 options outstanding with exercise prices ranging from $23.90 to $36.13. These options have a weighted average exercise price of $29.17 and a weighted average remaining contractual life of 5.2 years. Of these outstanding

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands, except per share data)

options, 1,132 were exercisable at December 31, 2007 at a weighted average exercise price of $29.36. In addition, there were 1,068 options outstanding with exercise prices ranging from $36.47 to $48.00. These options had a weighted average exercise price of $40.32 and a weighted average remaining contractual life of 5.4 years. Of these outstanding options, 665 were exercisable at December 31, 2007 at a weighted average exercise price of $38.04.

In 2007, 2006 and 2005, the Company granted 61, 42 and 35 shares of restricted stock, respectively, to Company officers and directors, of which 4, 5 and 6 shares in 2007, 2006 and 2005, respectively, were granted to the Company’s non-executive chairman of the board. The restricted share grants generally vest ratably over three to five year periods. The weighted average grant date fair value for the restricted shares granted in 2007, 2006 and 2005 was $45.61, $40.61 and $33.74 per share, respectively. The total value of the restricted share grants in 2007, 2006 and 2005 were $2,791, $1,701 and $1,173, respectively. The compensation cost is amortized ratably into compensation expense over the applicable vesting periods. Total compensation expense relating to the restricted stock was $2,434 ($2,402 net of minority interest), $1,651 ($1,620 net of minority interest) and $1,367 ($1,298 net of minority interest) in 2007, 2006 and 2005, respectively. In 2006, such expense was net of the cumulative impact of the adoption of SFAS No. 123R of $112, as discussed above.

A summary of the activity related to the Company’s restricted stock in 2007 and 2006 is presented below:

	2007					2006
				Weighted					Weighted
				Average					Average
				Grant-Date					Grant-Date
	Shares			Fair Value		Shares			Fair Value
Unvested shares, beginning or period		125		$	31		140		$	28
Granted		61			46		42			41
Vested		(66	)		36		(57	)		32
Forfeited		(1	)		42		—			—
Unvested shares, end of period		119			35		125		$	31

At December 31, 2007, there was $3,597 of unrecognized compensation cost related to restricted stock. This cost is expected to be recognized over a weighted average period of 2.6 years. The total intrinsic value of restricted shares vested in 2007, 2006 and 2005 was $2,680, $2,606 and $1,845, respectively. In years prior to 2006, the annual value of the restricted share grants was initially reflected in shareholders’ equity as additional paid-in capital and as deferred compensation, a contra-shareholders’ equity account. In conjunction with the adoption of SFAS No. 123R, the unamortized deferred compensation balance of $3,625 was reclassified to additional paid-in-capital.

Employee Stock Purchase Plan

The Company maintains an Employee Stock Purchase Plan (the “ESPP”) under a plan approved by Company shareholders in 2005. The maximum number of shares issuable under the ESPP is 300. The purchase price of shares of common stock under the ESPP is equal to 85% of the lesser of the closing price per share of common stock on the first or last day of the trading period, as defined. The Company records the aggregate cost of the ESPP (generally the 15% discount on the share purchases) as a period expense. Total compensation expense relating to the ESPP was $160, $159 and $171 in 2007, 2006 and 2005, respectively.

10.   EMPLOYEE BENEFIT PLAN

The Company maintains a defined contribution plan pursuant to Section 401 of the Code (the “401K Plan”) that allows eligible employees to contribute a percentage of their compensation to the 401K Plan. The Company matches 50% of the employee’s pre-tax contribution up to a maximum employee contribution of 6% of salary in 2007 and 2006 (5% in 2005). Company contributions of $896, $911 and $691 were made to the 401K Plan in 2007, 2006 and 2005, respectively.

11.   COMMITMENTS AND CONTINGENCIES

Land, office and equipment leases

The Company is party to two ground leases with terms expiring in years 2040 and 2043 relating to a single operating community, four ground leases expiring in 2012, 2038, 2066 and 2074 for four separate operating communities and to

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands, except per share data)

other facility, office, equipment and other operating leases with terms expiring through 2057. The ground leases generally provide for future increases in minimum lease payments tied to an inflation index or contain stated rent increases that generally compensate for the impact of inflation. Future minimum lease payments for non-cancelable land, office, equipment and other leases at December 31, 2007, are as follows:

2008	$	1,863
2009		1,729
2010		1,755
2011		1,785
2012		1,820
2013 and thereafter	$	150,737

The Company incurred $6,948, $6,421 and $6,309 of rent expense, including rent expense under short-term rental and lease arrangements, in 2007, 2006 and 2005, respectively.

Legal proceedings

In November 2006, the Equal Rights Center (“ERC”) filed a lawsuit against the Company and the Operating Partnership in the United States District Court for the District of Columbia. This suit alleges various violations of the Fair Housing Act (“FHA”) and the Americans with Disabilities Act (“ADA”) at properties designed, constructed or operated by the Company and the Operating Partnership in the District of Columbia, Virginia, Colorado, Florida, Georgia, New York, North Carolina and Texas. The plaintiff seeks compensatory and punitive damages in unspecified amounts, an award of attorneys’ fees and costs of suit, as well as preliminary and permanent injunctive relief that includes retrofitting multi-family units and public use areas to comply with the FHA and the ADA and prohibiting construction or sale of noncompliant units or complexes. On April 18, 2007, ERC filed a motion for a preliminary injunction to prohibit the Company and the Operating Partnership from selling any alleged noncompliant apartment communities or condominium units while the litigation is ongoing. On July 25, 2007 the court entered an order denying ERC’s motion for the preliminary injunction. Discovery is being conducted by both parties. On October 29, 2007, the court granted, in part, ERC’s motion to amend the scheduling order and expand the time permitted for discovery and filing of dispositive motions. As a result, the cutoff for fact discovery was extended to February 29, 2008 with the end of all briefing on dispositive motions set for August 11, 2008. On January 29, 2008, the Operating Partnership and ERC agreed to an extension of discovery dates to accommodate further depositions and inspections. Under the agreement, which must be approved by the court, fact discovery will be completed by April 30, 2008, expert discovery will be completed by August 29, 2008, and summary judgment briefing will be completed by November 10, 2008. No trial date has been set. At this stage in the proceeding, it is not possible to predict or determine the outcome of the lawsuit, nor is it possible to estimate the amount of loss that would be associated with an adverse decision.

The Company is involved in various other legal proceedings incidental to its business from time to time, most of which are expected to be covered by liability or other insurance. Management of the Company believes that any resolution of pending proceedings or liability to the Company which may arise as a result of these various other legal proceedings will not have a material adverse effect on the Company’s results of operations or financial position.

12.   RELATED PARTY TRANSACTIONS

In 2007, 2006 and 2005, the Company held investments in Property LLC’s accounted for under the equity method of accounting (see note 3). In 2007, 2006 and 2005, the Company recorded, before elimination of the Company’s equity interests, project management fees, property management fees and expense reimbursements (primarily personnel costs) of approximately $2,591, $1,537 and $1,781, respectively, from these related companies. Additionally in 2007, 2006 and 2005, the Company earned interest under loans to unconsolidated entities totaling $449, $860 and $437, respectively. The Company portion of all significant intercompany transactions was eliminated in the accompanying consolidated financial statements.

At December 31, 2007 and 2006, the Company had outstanding loan balances to certain current and former company executives totaling $1,120 and $1,268, respectively. These loans mature ten years from their issue date and bear interest at a rate of 6.32% per annum. Proceeds from these loans were used by these executives to acquire the Company’s common shares. Additionally, at December 31, 2007 and 2006, the Company had outstanding an additional loan to a company

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands, except per share data)

executive totaling $400 and $500, respectively. This loan bears interest at 6.32% per annum. If the executive continues to be employed by the Company, the loan will be forgiven annually over a ten year period, as defined in the agreement. The annual loan forgiveness under this loan and other similar loans outstanding in prior years of $100, $100 and $140 was recorded as compensation expense in 2007, 2006 and 2005, respectively.

13.   DERIVATIVE FINANCIAL INSTRUMENTS

At December 31, 2007, the Company had an outstanding interest rate swap agreement with a notional value of approximately $93,890 with a maturity date in 2009. The swap arrangement is a variable to fixed rate swap at a fixed rate of 5.21% and the swap was designated as a cash flow hedge of the Company’s Federal National Mortgage Association variable rate debt. This swap was entered into in 2006 following the termination of a prior swap arrangement discussed below. The interest rate swap agreement is included on the accompanying consolidated balance sheet at fair value. At December 31, 2007 and 2006, the fair value of the interest rate swap agreement represented a liability of $2,224 and $564, respectively, and the liabilities were included in consolidated liabilities in the accompanying consolidated balance sheets. The changes in the fair value of this cash flow hedge was recorded as a change in accumulated other comprehensive income (loss), a shareholders’ equity account, in the accompanying consolidated balance sheet.

In the early 2006, a previous interest rate swap arrangement, accounted for as a cash flow hedge, became ineffective under generally accepted accounting principles (SFAS No. 133, as amended). As a result, the gross increase in the market value of the interest rate swap arrangement of $1,655 through its termination date in 2006 was recognized in other income in the consolidated statement of operations. In addition, under SFAS No. 133, as amended, the Company is required to amortize into interest expense the cumulative unrecognized loss on the terminated interest rate swap arrangement of $4,021, included in shareholders’ equity, over the remaining life of the swap through 2009. Total amortization expense related to this swap was $1,123 and $1,116 for the years ended December 31, 2007 and 2006. The swap arrangement was terminated in 2006 through a $2,448 termination payment to the swap counterparty.

At December 31, 2007 and 2006, the Company had outstanding an interest rate cap agreement with a financial institution with a notional value of $28,495. Through mid-December 2006, this interest rate cap agreement was a cash flow hedge that provided a fixed interest ceiling at 5% for the Company’s variable rate, tax-exempt borrowings aggregating $28,495. As a result of the repayment of tax-exempt indebtedness in December 2006 and December 2007, portions of this interest rate cap arrangement with notional amounts of $18,600 and $9,895, respectively, associated with this indebtedness became ineffective for accounting purposes. In 2006, the Company recognized a loss of approximately $142 ($139 net of minority interest) due to such ineffectiveness. In 2007, no loss was recognized due to such ineffectiveness as the cost of the interest rate cap arrangement was fully amortized though December 31, 2007. The interest rate cap arrangement expired in February 2008 with no change in its $0 fair value from December 31, 2007.

In 2005, in connection with the sale of three communities discussed in note 2 above, the Company sold its interest in interest rate cap agreements with notional values of $81,560 for aggregate proceeds of $17 and realized losses of $955 ($901 net of minority interest) that were included in the loss on early extinguishment of indebtedness associated with asset sales on the accompanying statement of operations.

The impact of the change in the value of the derivatives on comprehensive income (loss) is included in the statement of shareholders’ equity. Amounts reported in accumulated other comprehensive income related to these derivatives will be reclassified to interest expense as schedule interest payments are made on the Company’s hedged indebtedness. At December 31, 2007, the Company estimates that $2,345 will be reclassified from accumulated other comprehensive income as an increase in interest expense during the next twelve months.

14.   FAIR VALUE OF FINANCIAL INSTRUMENTS

The disclosures of estimated fair value of financial instruments were determined by management using available market information and appropriate valuation methodologies available to management at December 31, 2007. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands, except per share data)

Cash equivalents, rents and accounts receivables, accounts payable, accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair values because of the short-term nature of these instruments. At December 31, 2007, the fair value of fixed rate debt was approximately $726,614 (carrying value of $707,791) and the fair value of floating rate debt approximated its carrying value due to the adjustable nature of the arrangements. At December 31, 2006, the fair value of fixed rate debt was approximately $828,983 (carrying value of $819,371) and the fair value of floating rate debt approximated its carrying value due to the adjustable nature of the arrangements.

In order to manage the impact of interest rate changes on earnings and cash flow, the Company entered into and has outstanding interest rate swap and interest rate cap arrangements. As more fully described in note 1, these interest rate cap and interest rate swap agreements are carried on the consolidated balance sheet at fair market value in accordance with SFAS No. 133, as amended. At December 31, 2007, the carrying amounts of the interest rate swap arrangement represented a net liability totaling $2,224 and the interest rate cap arrangement had no value. At December 31, 2006, the carrying amounts of the interest rate swap arrangement represented a net liability totaling $564 and the interest rate cap arrangement had no value.

Disclosure about fair value of financial instruments is based on pertinent information available to management as of December 31, 2007. Although management is not aware of any factors that would significantly affect the reasonable fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and current estimates of fair value may differ significantly from the amounts presented herein.

15.   SEGMENT INFORMATION

Segment Description

In accordance with SFAS No. 131, “Disclosure About the Segments of an Enterprise and Related Information,” the Company presents segment information based on the way that management organizes the segments within the enterprise for making operating decisions and assessing performance. The segment information is prepared on the same basis as the internally reported information used by the Company’s chief operating decision makers to manage the business.

The Company’s chief operating decision makers focus on the Company’s primary sources of income from apartment community rental operations. Apartment community rental operations are generally broken down into four segments based on the various stages in the apartment community ownership lifecycle. These segments are described below. All commercial properties and other ancillary service and support operations are combined in the line item “other property segments” in the accompanying segment information. The segment information presented below reflects the segment categories based on the lifecycle status of each community as of January 1, 2006. The segment information for the years ended December 31, 2006 and 2005 have been adjusted due to the restatement impact of reclassifying the operating results of the assets designated as held for sale in 2007 to discontinued operations under SFAS No. 144 (see note 2).

•  Fully stabilized communities — those apartment communities which have been stabilized (the earlier of the point at which a property reaches 95% occupancy or one year after completion of construction) for both the current and prior year.

•  Development, rehabilitation and lease-up communities — those apartment communities that are under development, rehabilitation and lease-up but were not stabilized by the beginning of the current year, including communities that stabilized during the current year.

•  Condominium conversion and other communities — those portions of existing apartment communities being converted into condominiums and other communities converted to joint venture ownership that are reflected in continuing operations under SFAS No. 144 (see note 1).

•  Acquired communities — those communities acquired in the current or prior year.

Segment Performance Measure

Management uses contribution to consolidated property net operating income (“NOI”) as the performance measure for its operating segments. The Company uses net operating income, including net operating income of stabilized communities, as an operating measure. Net operating income is defined as rental and other property revenue from real estate operations less total property and maintenance expenses from real estate operations (excluding depreciation and amortization). The

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands, except per share data)

Company believes that net operating income is an important supplemental measure of operating performance for a REIT’s operating real estate because it provides a measure of the core operations, rather than factoring in depreciation and amortization, financing costs and general and administrative expenses generally incurred at the corporate level. This measure is particularly useful, in the opinion of the Company, in evaluating the performance of operating segment groupings and individual properties. Additionally, the Company believes that net operating income, as defined, is a widely accepted measure of comparative operating performance in the real estate investment community. The Company believes that the line on the Company’s consolidated statement of operations entitled “net income” is the most directly comparable GAAP measure to net operating income.

Segment Information

The following table reflects each segment’s contribution to consolidated revenues and NOI together with a reconciliation of segment contribution to property NOI to consolidated net income in 2007, 2006 and 2005. Additionally, substantially all of the Company’s assets relate to the Company’s property rental operations. Asset cost, depreciation and amortization by segment are not presented because such information at the segment level is not reported internally.

	Year Ended December 31,
	2007			2006			2005
Revenues
Fully stabilized communities	$	244,537		$	233,637		$	219,973
Development, rehabilitation and lease-up communities		14,972			9,545			10,438
Condominium conversion and other communities		9,810			17,281			19,989
Acquired communities		13,760			7,027			—
Other property segments		23,861			23,653			21,616
Other		602			402			255
Consolidated revenues	$	307,542		$	291,545		$	272,271
Contribution to Property Net Operating Income
Fully stabilized communities	$	152,200		$	145,346		$	135,511
Development, rehabilitation and lease-up communities		6,908			4,254			6,077
Condominium conversion and other communities		5,457			9,811			13,144
Acquired communities		8,256			3,929			—
Other property segments, including corporate management expenses		(7,023	)		(5,687	)		(7,470	)
Consolidated property net operating income		165,798			157,653			147,262
Interest income		822			1,261			661
Other revenues		602			402			255
Minority interest in consolidated property partnerships		(1,857	)		(257	)		(110	)
Depreciation		(66,371	)		(65,687	)		(68,795	)
Interest expense		(52,116	)		(52,533	)		(54,197	)
Amortization of deferred financing costs		(3,297	)		(3,526	)		(4,661	)
General and administrative		(21,337	)		(18,502	)		(18,307	)
Investment and development		(7,063	)		(6,424	)		(4,711	)
Severance charges		—			—			(796	)
Gains (losses) on sales of real estate assets, net		100,015			12,881			(531	)
Equity in income of unconsolidated real estate entities		1,556			1,813			1,767
Other income (expense)		(1,098	)		2,592			5,267
Minority interest of common unitholders		(1,491	)		(418	)		226
Income from continuing operations		114,163			29,255			3,330
Income from discontinued operations		64,536			72,214			138,618
Net income	$	178,699		$	101,469		$	141,948

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands, except per share data)

16.   SUPPLEMENTAL CASH FLOW INFORMATION

Non-cash investing and financing activities for the years ended December 31, 2007, 2006 and 2005 were as follows:

In 2007, the Company sold two apartment communities and the net proceeds totaling $66,938 were held by an exchange intermediary at December 31, 2007, pending the completion of a tax deferred exchange. In 2006, the Company sold an apartment community subject to $40,000 of secured mortgage indebtedness assumed by the purchaser. In 2005, the Company sold three apartment communities subject to $81,560 of tax-exempt mortgage indebtedness assumed by the purchasers. Additionally in 2006, the Company acquired an apartment community for cash and the assumption of secured mortgage indebtedness totaling $41,394. These transactions were excluded from the cash flow statement as non-cash transactions.

In 2007, the Company amortized approximately $1,123 ($1,108 net of minority interest) of accumulated other comprehensive non-cash losses into earnings related to an interest rate swap derivative financial instrument (see note 13). Other than the amortization discussed herein, in 2007, the Company’s derivative financial instruments, accounted for as cash flow hedges, decreased in value causing an increase in accounts payable and accrued expenses and a corresponding decrease in shareholder’s equity of $1,637, net of minority interest. In 2006, the Company amortized approximately $1,116 ($1,095 net of minority interest) of accumulated other comprehensive non-cash losses into earnings related to an interest rate swap derivative financial instrument (see note 13). In addition in 2006, the Company recognized a non-cash loss of $142 ($139 net of minority interest) through a reduction of accumulated other comprehensive losses as a result of the ineffectiveness of an interest rate cap arrangement (see note 13). Other than the amortization and loss discussed herein, in 2006, the Company’s derivative financial instruments, accounted for as cash flow hedges, decreased in value causing an increase in accounts payable and accrued expenses and a corresponding decrease in shareholder’s equity of $299, net of minority interest. In 2005, the Company’s derivative financial instruments increased in value causing a decrease in accounts payable and accrued expenses and a corresponding increase in shareholders’ equity of $5,559, net of minority interest.

In 2007, 2006 and 2005 Common Units in the Operating Partnership totaling 235, 697 and 1,097, respectively, were converted into Company common shares on a one-for-one basis. The net effect of the conversion of Common Units of the Operating Partnership to common shares of the Company and the adjustments to minority interest for the impact of the Company’s employee stock purchase and stock options plans, decreased minority interest and increased shareholders’ equity in the amounts of $5,095, $13,062 and $20,444 for the years ended December 31, 2007, 2006 and 2005, respectively.

The Operating Partnership committed to distribute $19,933, $19,886 and $19,257 for the quarters ended December 31, 2007, 2006 and 2005, respectively. As a result, the Company declared dividends of $19,721, $19,569 and $18,626 for the quarters ended December 31, 2007, 2006 and 2005, respectively. The remaining distributions from the Operating Partnership in the amount of $212, $317 and $631 for the quarters ended December 31, 2007, 2006 and 2005, respectively, are distributed to minority interest unitholders in the Operating Partnership.

In 2007, 2006 and 2005, the Company issued common shares for director compensation, totaling $502, $471 and $194, respectively. In 2005, under an amended and restated deferred compensation plan for directors and officers, Company common shares were issued to the plan in settlement of the Company’s variable obligation relating to changes in the value of its common shares due the directors under the prior deferred compensation plan. This 2005 common share issuance totaling $1,568 and the additional stock issuances in 2005, 2006 and 2007 were non-cash transactions.

In 2007, 2006 and 2005, the Company and the Company’s taxable REIT subsidiaries made income tax payments to federal and state taxing authorities totaling $1,411, $339 and $760, respectively.

17.   OTHER INCOME (EXPENSE)

In 2007, other expense primarily included estimated state franchise and other taxes. Franchise taxes of approximately $694 are associated with new margin-based taxes in Texas that were effective in 2007. Income tax expense recorded by the Company of approximately $560 in 2007 is discussed in note 8. In 2006, other income primarily included a gain on the sale of marketable securities of $573, an additional gain on sale of a technology investment of $325 resulting from the receipt of previously escrowed proceeds under the prior year sale (see below) and additional income totaling $1,655

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands, except per share data)

resulting from the net increase in the market value of an ineffective cash flow hedge prior to its termination. In 2005, the Company sold its investment in a technology company, and recognized a gain of $5,267.

18.   QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Under SFAS No. 144, as further discussed in note 2, the operating results of apartment communities classified as held for sale were included in discontinued operations in the accompanying statements of operations for all periods presented. To conform with this presentation, the quarterly financial information presented below reflects the reclassification of the operating results of these assets to discontinued operations, which in the first and second quarters of 2007 differ from the presentation of discontinued operations included in the Company’s previously issued financial statements included in its quarterly reports on Form 10-Q filed in 2007. Quarterly financial information for the years ended December 31, 2007 and 2006, as revised to reflect the change discussed above, was as follows:

	Year Ended December 31, 2007
	First			Second			Third			Fourth
Revenues	$	75,360		$	76,065		$	78,011		$	78,106
Income (loss) from continuing operations		6,890			63,397			9,947			33,929
Income from discontinued operations		17,581			540			1,102			45,313
Net income		24,471			63,937			11,049			79,242
Dividends to preferred shareholders		(1,909	)		(1,910	)		(1,909	)		(1,909	)
Net income available to common shareholders	$	22,562		$	62,027		$	9,140		$	77,333
Earnings per common share:
Net income available to common shareholders — basic	$	0.52		$	1.43		$	0.21		$	1.77
Net income available to common shareholders — diluted	$	0.51		$	1.40		$	0.21		$	1.76

	Year Ended December 31, 2006
	First			Second			Third			Fourth
Revenues	$	70,146		$	72,160		$	74,709		$	74,530
Income from continuing operations		3,417			12,106			7,019			6,713
Income from discontinued operations		1,384			1,878			28,782			40,170
Net income		4,801			13,984			35,801			46,883
Dividends to preferred shareholders		(1,909	)		(1,910	)		(1,909	)		(1,909	)
Net income available to common shareholders	$	2,892		$	12,074		$	33,892		$	44,974
Earnings per common share:
Net income available to common shareholders — basic	$	0.07		$	0.28		$	0.79		$	1.04
Net income available to common shareholders — diluted	$	0.07		$	0.28		$	0.77		$	1.02

In the first, second and fourth quarters of 2007, net income increased primarily due to gains on sales of apartment communities and gains on the sales of 75% interests in certain apartment communities to an unconsolidated entity (see note 2) during those periods. In the third and fourth quarters of 2006, net income increased primarily due to gains on sales of apartment communities during those periods.

88

Post Properties, Inc.

Post Apartment Homes, L.P.

Consolidated Financial Statements

December 31, 2007 and 2006

Post Apartment Homes, L.P.

89

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of Post Apartment Homes, L.P. is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Securities Exchange Act of 1934 (the “Exchange Act”) Rule 13a-15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Under the supervision and with the participation of the management of Post Apartment Homes, L.P., including the Partnership’s principal executive officer and principal financial officer, Partnership management conducted an evaluation of the effectiveness of its internal control over financial reporting as of December 31, 2007 based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its evaluation under the framework in Internal Control — Integrated Framework, the management of Post Apartment Homes, L.P. concluded that its internal control over financial reporting was effective as of December 31, 2007. The effectiveness of the Partnership’s internal control over financial reporting as of December 31, 2007 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which is included herein.

Post Apartment Homes, L.P.

90

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Unitholders of Post Apartment Homes, L.P.:

We have audited the accompanying consolidated balance sheets of Post Apartment Homes, L.P. and subsidiaries (the “Operating Partnership”) as of December 31, 2007 and 2006, and the related consolidated statements of operations, partners’ equity, and cash flows for each of the two years in the period ended December 31, 2007. Our audits also included the financial statement schedule listed in the Index at Item 15. We also have audited the Operating Partnership’s internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Operating Partnership’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and financial statement schedule and an opinion on the Operating Partnership’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Post Apartment Homes, L.P. and subsidiaries as of December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2007, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. Also, in our opinion, the Operating Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

As described in Note 1 to the consolidated financial statements, the Operating Partnership adopted SEC Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, effective December 31, 2006.

/s/ DELOITTE & TOUCHE LLP

Atlanta, Georgia

February 28, 2008

Post Apartment Homes, L.P.

91

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Unitholders of Post Apartment Homes, L.P.:

In our opinion, the consolidated statements of operations, partners’ equity and cash flows for the year ended December 31, 2005 present fairly, in all material respects, the results of operations and cash flows of Post Apartment Homes, L.P. and its subsidiaries for the year ended December 31, 2005, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the summary of activity for real estate investments and accumulated depreciation included in the financial statement schedule for the year ended December 31, 2005 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and the summary of activity for real estate investments and accumulated depreciation included in the financial statement schedule are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audit. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Atlanta, Georgia

March 15, 2006, except with respect to our opinion on the consolidated financial statements insofar as it relates to the effects of discontinued operations discussed in Note 2 and as it relates to the effects of changes in segment reporting categories discussed in Note 15, as to which the date is February 28, 2008

Post Apartment Homes, L.P.

92

POST APARTMENT HOMES, L.P.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per unit data)

	December 31,
	2007			2006
Assets
Real estate assets
Land	$	276,680		$	278,448
Building and improvements		1,840,563			1,821,123
Furniture, fixtures and equipment		204,433			204,318
Construction in progress		134,125			135,428
Land held for future development		154,617			92,800
		2,610,418			2,532,117
Less: accumulated depreciation		(562,226	)		(547,477	)
For-sale condominiums		38,844			28,295
Assets held for sale, net of accumulated depreciation of $4,031 and $4,035 at December 31, 2007 and 2006, respectively		24,576			15,645
Total real estate assets		2,111,612			2,028,580
Investments in and advances to unconsolidated real estate entities		23,036			32,794
Cash and cash equivalents		11,557			3,663
Restricted cash		5,642			5,203
Deferred charges, net		10,538			12,400
Other assets		105,756			34,007
Total assets	$	2,268,141		$	2,116,647
Liabilities and partners’ equity
Indebtedness	$	1,059,066		$	1,033,779
Accounts payable and accrued expenses		100,215			75,403
Distribution payable		19,933			19,886
Accrued interest payable		4,388			4,885
Security deposits and prepaid rents		11,708			9,915
Total liabilities		1,195,310			1,143,868
Minority interests in consolidated real estate entities		3,972			2,268
Commitments and contingencies
Partners’ equity Preferred units		95,000			95,000
Common units General partner		11,329			10,341
Limited partner		966,535			868,711
Accumulated other comprehensive income (loss)		(4,005	)		(3,541	)
Total partners’ equity		1,068,859			970,511
Total liabilities and partners’ equity	$	2,268,141		$	2,116,647

The accompanying notes are an integral part of these consolidated financial statements.

Post Apartment Homes, L.P.

93

POST APARTMENT HOMES, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit data)

	Year Ended December 31,
	2007			2006			2005
Revenues
Rental	$	290,975		$	274,731		$	257,141
Other property revenues		15,965			16,412			14,875
Other		602			402			255
Total revenues		307,542			291,545			272,271
Expenses
Property operating and maintenance (exclusive of items shown separately below)		141,142			133,490			124,754
Depreciation		66,371			65,687			68,795
General and administrative		21,337			18,502			18,307
Investment, development and other		7,063			6,424			4,711
Severance charges		—			—			796
Total expenses		235,913			224,103			217,363
Operating income		71,629			67,442			54,908
Interest income		822			1,261			661
Interest expense		(52,116	)		(52,533	)		(54,197	)
Amortization of deferred financing costs		(3,297	)		(3,526	)		(4,661	)
Gains (losses) on sales of real estate assets, net		100,015			12,881			(531	)
Equity in income of unconsolidated real estate entities		1,556			1,813			1,767
Other income (expense)		(1,098	)		2,592			5,267
Minority interest in consolidated property partnerships		(1,857	)		(257	)		(110	)
Income from continuing operations		115,654			29,673			3,104
Discontinued operations
Income from discontinued property operations		2,772			5,559			8,520
Gains on sales of real estate assets		62,790			68,549			140,643
Loss on early extinguishment of indebtedness		(124	)		(495	)		(3,220	)
Income from discontinued operations		65,438			73,613			145,943
Net income		181,092			103,286			149,047
Distributions to preferred unitholders		(7,637	)		(7,637	)		(7,637	)
Net income available to common unitholders	$	173,455		$	95,649		$	141,410
Per common unit data — Basic
Income (loss) from continuing operations (net of preferred distributions)	$	2.45		$	0.50		$	(0.11	)
Income from discontinued operations		1.48			1.69			3.45
Net income available to common unitholders	$	3.93		$	2.19		$	3.34
Weighted average common units outstanding — basic		44,101			43,645			42,353
Per common unit data — Diluted
Income (loss) from continuing operations (net of preferred distributions)	$	2.41		$	0.50		$	(0.11	)
Income from discontinued operations		1.46			1.66			3.45
Net income available to common unitholders	$	3.88		$	2.15		$	3.34
Weighted average common units outstanding — diluted		44,738			44,427			42,353

The accompanying notes are an integral part of these consolidated financial statements.

Post Apartment Homes, L.P.

94

POST APARTMENT HOMES, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
(In thousands, except per unit data)

															Accumulated
									Common Units						Other
	Preferred		Common			Preferred			General			Limited			Comprehensive
	Units		Units			Units			Partner			Partners			Income (Loss)			Total
	(No. of Units)		(No. of Units)
Partners’ Equity, December 31, 2004		2,900		42,663		$	95,000		$	8,673		$	737,940		$	(10,202	)	$	831,411
Comprehensive income
Net income		—		—			7,637			1,414			139,996			—			149,047
Net change in derivative value		—		—			—			—			—			5,850			5,850
Total comprehensive income		—		—															154,897
Contributions from the Company related to employee stock purchase, stock option and other plans		—		1,138			—			378			37,463			—			37,841
Contributions from the Company related to shares issued for restricted stock, net of deferred compensation		—		26			—			14			1,353			—			1,367
Equity-based compensation		—		—			—			9			917			—			926
Purchase of common units		—		(1,031	)		—			—			(34,400	)		—			(34,400	)
Distributions to preferred unitholders		—		—			(7,637	)		—			—			—			(7,637	)
Distributions to common unitholders ($1.80 per unit)		—		—			—			(766	)		(75,866	)		—			(76,632	)
Partners’ Equity, December 31, 2005		2,900		42,796			95,000			9,722			807,403			(4,352	)		907,773
Cumulative effect of application of SAB 108		—		—			—			(49	)		(4,836	)		—			(4,885	)
Partners’ Equity, January 1, 2006		2,900		42,796			95,000			9,673			802,567			(4,352	)		902,888
Comprehensive income
Net income		—		—			7,637			956			94,693			—			103,286
Net change in derivative value		—		—			—			—			—			811			811
Total comprehensive income		—																	104,097
Contributions from the Company related to employee stock purchase, stock option and other plans		—		1,462			—			525			51,954			—			52,479
Equity-based compensation		—		42			—			29			2,881			—			2,910
Purchase of common units		—		(109	)		—			(50	)		(4,950	)					(5,000	)
Distributions to preferred unitholders		—		—			(7,637	)		—			—			—			(7,637	)
Distributions to common unitholders ($1.80 per unit)		—		—			—			(792	)		(78,434	)		—			(79,226	)
Partners’ Equity, December 31, 2006		2,900		44,191			95,000			10,341			868,711			(3,541	)		970,511
Comprehensive income
Net income		—		—			7,637			1,735			171,720			—			181,092
Net change in derivative value		—		—			—			—			—			(464	)		(464	)
Total comprehensive income		—																	180,628
Contributions from the Company related to employee stock purchase, stock option and other plans		—		—			—			46			4,582			—			4,628
Equity-based compensation		—		187			—			41			4,077			—			4,118
Purchase of common units		—		(83	)		—			(37	)		(3,657	)					(3,694	)
Distributions to preferred unitholders		—		—			(7,637	)		—			—			—			(7,637	)
Distributions to common unitholders ($1.80 per unit)		—		—			—			(797	)		(78,898	)		—			(79,695	)
Partners’ Equity, December 31, 2007		2,900		44,295		$	95,000		$	11,329		$	966,535		$	(4,005	)	$	1,068,859

The accompanying notes are an integral part of these consolidated financial statements.

Post Apartment Homes, L.P.

95

POST APARTMENT HOMES, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, except per unit data)

	Year Ended December 31,
	2007			2006			2005
Cash Flows From Operating Activities
Net income	$	181,092		$	103,286		$	149,047
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		67,440			68,967			76,248
Amortization of deferred financing costs		3,297			3,526			4,661
Minority interest in consolidated entities		1,857			257			(239	)
Gains on sales of real estate assets		(162,806	)		(81,430	)		(140,643	)
Other expense (income)		1,123			(1,433	)		(5,267	)
Equity in income of unconsolidated entities		(1,556	)		(1,813	)		(1,634	)
Distributions of earnings of unconsolidated entities		2,554			2,713			2,033
Deferred compensation		502			471			194
Equity-based compensation		4,118			2,910			2,293
Loss on early extinguishment of debt		124			495			2,264
Changes in assets, (increase) decrease in:
Other assets		(3,535	)		(3,009	)		(4,012	)
Deferred charges		(177	)		(129	)		(1,082	)
Changes in liabilities, increase (decrease) in:
Accrued interest payable		(497	)		(594	)		(2,199	)
Accounts payable and accrued expenses		2,754			655			2,476
Security deposits and prepaid rents		1,354			(546	)		2,621
Net cash provided by operating activities		97,644			94,326			86,761
Cash Flows From Investing Activities
Construction and acquisition of real estate assets, net of payables		(262,958	)		(239,428	)		(112,527	)
Net proceeds from sales of real estate assets		245,522			176,419			199,546
Proceeds from sale of other investments		—			898			5,267
Capitalized interest		(11,801	)		(9,942	)		(2,907	)
Annually recurring capital expenditures		(11,110	)		(11,145	)		(9,921	)
Periodically recurring capital expenditures		(8,451	)		(5,964	)		(4,508	)
Community rehabilitation and other revenue generating capital expenditures		(13,074	)		(10,641	)		—
Corporate additions and improvements		(2,903	)		(3,480	)		(1,771	)
Distributions from (investments in and advances to) unconsolidated entities		36,033			(2,125	)		(5,846	)
Note receivable collections and other investments		866			944			2,960
Net cash provided by (used in) investing activities		(27,876	)		(104,464	)		70,293
Cash Flows From Financing Activities
Lines of credit proceeds, net		148,362			7,534			50,631
Proceeds from indebtedness		—			190,000			100,000
Payments on indebtedness		(123,145	)		(145,763	)		(217,934	)
Payments of financing costs		(894	)		(3,971	)		(1,211	)
Redemption of common units		(3,694	)		(5,000	)		(34,400	)
Contributions from the Company related to employee stock purchase and stock option plans		4,126			52,008			36,084
Capital contributions (distributions) of minority interests		656			(1,183	)		283
Distributions to common unitholders		(79,648	)		(78,597	)		(76,583	)
Distributions to preferred unitholders		(7,637	)		(7,637	)		(7,637	)
Net cash provided by (used in) financing activities		(61,874	)		7,391			(150,767	)
Net increase (decrease) in cash and cash equivalents		7,894			(2,747	)		6,287
Cash and cash equivalents, beginning of period		3,663			6,410			123
Cash and cash equivalents, end of period	$	11,557		$	3,663		$	6,410

The accompanying notes are an integral part of these consolidated financial statements.

Post Apartment Homes, L.P.

96

POST APARTMENT HOMES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per unit data)

1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICES

Organization

Post Apartment Homes, L.P. (the “Operating Partnership”), a Georgia limited partnership, and its subsidiaries develop, own and manage upscale multi-family apartment communities in selected markets in the United States. Post Properties, Inc. (the “Company”) through its wholly-owned subsidiaries is the sole general partner, a limited partner and owns a majority interest in the Operating Partnership. The Operating Partnership, through its operating divisions and subsidiaries conducts substantially all of the on-going operations of Post Properties, Inc., a publicly traded company which operates as a self-administered and self-managed real estate investment trust.

At December 31, 2007, the Company owned 98.9% of the common limited partnership interests (“Common Units”) in the Operating Partnership and 100% of the preferred limited partnership interests (“Preferred Units”). The Company’s weighted average common ownership interest in the Operating Partnership was 98.6%, 98.1% and 95.0% for the years ended December 31, 2007, 2006 and 2005 respectively. Common Units held by persons other than the Company represented a 1.1% ownership interest in the Operating Partnership. Each Common Unit may be redeemed by the holder thereof for either one share of Company common stock or cash equal to the fair market value thereof at the time of such redemptions, 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 Common Units for Company common stock, the Company’s percentage ownership interest in the Operating Partnership will increase. In addition, whenever the Company issues shares of common stock, the Company will contribute any net proceeds therefrom to the Operating Partnership and the Operating Partnership will issue an equivalent number of Common Units to the Company.

At December 31, 2007, the Company owned 22,578 apartment units in 63 apartment communities, including 1,747 apartment units in five communities held in unconsolidated entities and 2,266 apartment units in seven communities (and the expansion of one community) currently under construction and/or lease-up. The Company is also developing and selling 535 for-sale condominium homes in four communities (including 137 units in one community held in an unconsolidated entity) and is converting apartment homes in two communities, initially consisting of 349 units, into for-sale condominium homes through a taxable REIT subsidiary. At December 31, 2007, approximately 41.3%, 19.2%, 12.3%and 10.3% (on a unit basis) of the Operating Partnership’s operating communities were located in the Atlanta, Dallas, the greater Washington D.C. and Tampa metropolitan areas, respectively.

Under the provisions of the limited partnership agreement, as amended, Operating Partnership net profits, net losses and cash flow (after allocations to preferred ownership interests) are allocated to the partners in proportion to their common ownership interests. Cash distributions from the Operating Partnership shall be, at a minimum, sufficient to enable the Company to satisfy its annual dividend requirements to maintain its REIT status under the Code.

Possible business combination

On January 23, 2008, the Company announced that its Board of Directors had authorized management, working with financial and legal advisors, to initiate a formal process to pursue a possible business combination or other sale transaction and to seek proposals from potentially interested parties. The process commenced immediately after the announcement and is continuing. There can be no assurance that the process will result in any transaction leading into a business combination or other sale transaction.

Basis of presentation

The accompanying consolidated financial statements include the consolidated accounts of the Operating Partnership and its wholly owned subsidiaries. The Operating Partnership also consolidates other entities in which it has a controlling financial interest or entities where it is determined to be the primary beneficiary under Financial Accounting Standards Board Interpretation No. 46R (“FIN 46R”), “Consolidation of Variable Interest Entities.” Under FIN 46R, variable interest entities (“VIEs”) are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. The primary beneficiary is required to consolidate a VIE for financial reporting purposes. The application of FIN 46R requires management to make significant estimates and judgments about the Operating Partnership’s and its other partners’ rights, obligations and economic interests in such entities. For entities in which the Operating Partnership has less than a

Post Apartment Homes, L.P.

97

POST APARTMENT HOMES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in thousands, except per unit data)

controlling financial interest or entities where it is not deemed to be the primary beneficiary under FIN 46R, the entities are accounted for using the equity method of accounting (under the provisions of EITF No. 04-5). Accordingly, the Operating Partnership’s share of the net earnings or losses of these entities is included in consolidated net income. All significant inter-company accounts and transactions have been eliminated in consolidation. The minority interest of unitholders in the operations of the Operating Partnership is calculated based on the weighted average unit ownership during the period.

Cost capitalization

The Operating Partnership capitalizes those expenditures relating to the acquisition of new assets, the development and construction of new apartment and condominium communities, the enhancement of the value of existing assets and those expenditures that substantially extend the life of existing assets. Annually recurring capital expenditures are expenditures of a type that are expected to be incurred on an annual basis during the life of an apartment community, such as carpet, appliances and flooring. Periodically recurring capital expenditures are expenditures that generally occur less frequently than on an annual basis, such as major exterior projects relating to landscaping and structural improvements. Revenue generating capital expenditures are expenditures for the renovation of communities, the new installation of water sub-metering equipment and other property upgrade costs that enhance the rental value of such communities. All other expenditures necessary to maintain a community in ordinary operating condition are expensed as incurred. Additionally, for new development communities, carpet, vinyl, and blind replacements are expensed as incurred during the first five years (which corresponds to their estimated depreciable life). Thereafter, these replacements are capitalized and depreciated. The Operating Partnership expenses as incurred interior and exterior painting of its operating communities, unless those communities are under rehabilitation.

For communities under development or rehabilitation, the Operating Partnership capitalizes interest, real estate taxes, and certain internal personnel and associated costs associated with apartment and condominium communities under development and construction. Interest is capitalized to projects under development or construction based upon the weighted average cumulative project costs for each month multiplied by the Operating Partnership’s weighted average borrowing costs, expressed as a percentage. Weighted average borrowing costs include the costs of the Operating Partnership’s fixed rate secured and unsecured borrowings and the variable rate unsecured borrowings under its line of credit facilities. The weighted average borrowing costs, expressed as a percentage, for the years ended December 31, 2007, 2006 and 2005 were approximately 6.6%, 6.6% and 6.5%, respectively. Internal personnel and associated costs are capitalized to projects under development or construction based upon the effort associated with such projects. The Operating Partnership treats each unit in an apartment community separately for cost accumulation, capitalization and expense recognition purposes. Prior to the completion of rental and condominium units, interest and other construction costs are capitalized and reflected on the balance sheet as construction in progress. The Operating Partnership ceases the capitalization of such costs as the residential units in a community become substantially complete and available for occupancy or sale. This results in a proration of costs between amounts that are capitalized and expensed as the residential units in apartment and condominium development communities become available for occupancy or sale. In addition, prior to the completion of rental units, the Operating Partnership expenses as incurred substantially all operating expenses (including pre-opening marketing as well as property management and leasing personnel expenses) of such rental communities. Prior to the completion and closing of condominium units, the Operating Partnership expenses all sales and marketing costs related to such units.

For cash flow statement purposes, the Operating Partnership classifies capital expenditures for newly developed condominium communities and for condominium conversion communities in investing activities in the caption titled, “Construction and acquisition of real estate assets.” Likewise, the proceeds from the sales of such condominiums are included in investing activities in the caption titled, “Net proceeds from sales of real estate assets.”

Real estate assets, depreciation and impairment

Real estate assets are stated at the lower of depreciated cost or fair value, if deemed impaired. Major replacements and betterments are capitalized and depreciated over their estimated useful lives. Depreciation is computed on a straight-line basis over the useful lives of the properties (buildings and components and related land improvements — 20-40 years; furniture, fixtures and equipment — 5-10 years).

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(Dollars in thousands, except per unit data)

The Operating Partnership continually evaluates the recoverability of the carrying value of its real estate assets using the methodology prescribed in Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” Factors considered by management in evaluating impairment of its existing real estate assets held for investment include significant declines in property operating profits, annually recurring property operating losses and other significant adverse changes in general market conditions that are considered permanent in nature. Under SFAS No. 144, a real estate asset held for investment is not considered impaired if the undiscounted, estimated future cash flows of an asset (both the annual estimated cash flow from future operations and the estimated cash flow from the theoretical sale of the asset) over its estimated holding period are in excess of the asset’s net book value at the balance sheet date. If any real estate asset held for investment is considered impaired, a loss is provided to reduce the carrying value of the asset to its estimated fair value.

The Operating Partnership periodically classifies real estate assets as held for sale. An asset is classified as held for sale after the approval of the Company’s board of directors and after an active program to sell the asset has commenced. Upon the classification of a real estate asset as held for sale, the carrying value of the asset is reduced to the lower of its net book value or its estimated fair value, less costs to sell the asset. Subsequent to the classification of assets as held for sale, no further depreciation expense is recorded. Real estate assets held for sale are stated separately on the accompanying consolidated balance sheets. The operating results of real estate assets held for sale and sold are reported as discontinued operations in the accompanying statements of operations. Income from discontinued operations includes the revenues and expenses, including depreciation and allocated interest expense, associated with the assets. Interest expense is allocated to assets held for sale based on actual interest costs for assets with secured mortgage debt. Interest expense is allocated to unencumbered assets based on the ratio of unsecured debt to unencumbered assets multiplied by the weighted average interest rate on the Operating Partnership’s unsecured debt for the period and further multiplied by the book value of the assets held for sale and/or sold. This classification of operating results as discontinued operations applies retroactively for all periods presented. Additionally, gains and losses on assets designated as held for sale are classified as part of discontinued operations.

For condominium conversion projects, a complete community conversion is treated as discontinued operations in the same manner as discussed above for apartment community sales. For partial conversions of communities, the operating results, condominium revenues and associated gains are reflected in continuing operations (see discussion under “revenue recognition” below) and the net book value of the assets being converted into condominiums are reflected separately from held for sale assets on the consolidated balance sheet in the caption titled, “For-sale condominiums.” In either case, subsequent to the classification of the assets as held for sale, no further depreciation expense is recorded.

Revenue recognition

Residential properties are leased under operating leases with terms of generally one year or less. Rental revenues from residential leases are recognized on the straight-line method over the approximate life of the leases, which is generally one year. The recognition of rental revenues from residential leases when earned has historically not been materially different from rental revenues recognized on a straight-line basis.

Under the terms of residential leases, the residents of the Operating Partnership’s residential communities are obligated to reimburse the Operating Partnership for certain utility usage, water and electricity (at selected properties), where the Operating Partnership is the primary obligor to the public utility entity. These utility reimbursements from residents are reflected as other property revenues in the consolidated statements of operations.

Sales and the associated gains or losses of real estate assets and for-sale condominiums are recognized in accordance with the provisions of SFAS No. 66, “Accounting for Sales of Real Estate.” For condominium conversion projects, revenues from individual condominium unit sales are recognized upon the closing of the sale transactions (the “Completed Contract Method”), as all conditions for full profit recognition have been met at that time and the conversion construction periods are typically very short. Under SFAS No. 66, the Operating Partnership uses the relative sales value method to allocate costs and recognize profits from condominium conversion sales. In accordance with SFAS No. 144 gains on sales of condominium units at complete community condominium conversion projects are included in discontinued operations. For condominium conversion projects relating to a portion of an existing apartment community, the Operating Partnership also recognizes revenues and the associated gains under the Completed Contract Method, as discussed herein. Since a portion of an operating community does not meet the requirements of a component of an entity under SFAS No. 144, the

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(Dollars in thousands, except per unit data)

revenues and gains on sales of condominium units at partial condominium communities are included in continuing operations.

For newly developed condominiums, the Operating Partnership accounts for each project under either the Completed Contract Method or the “Percentage of Completion Method,” based on a specific evaluation of the factors specified in SFAS No. 66 and the guidance provided by EITF 06-8. The factors used to determine the appropriate accounting method are the legal commitment of the purchaser in the real estate contract, whether the construction of the project is beyond a preliminary phase, sufficient units have been contracted to ensure the project will not revert to a rental project, the aggregate project sale proceeds and costs can be reasonably estimated and the buyer has made an adequate initial and continuing cash investment under the contract in accordance with SFAS No. 66 and the guidance provided by EITF 06-8. Under the Percentage of Completion Method, revenues and the associated gains are recognized over the project construction period generally based on the percentage of total project costs incurred to estimated total project costs for each condominium unit under a binding real estate contract. As of December 31, 2007, all newly developed condominium projects are accounted for under the Completed Contract Method.

Long-term ground leases

The Operating Partnership is party to six long-term ground leases associated with land underlying certain of the Operating Partnership’s operating communities. The ground leases generally provide for future increases in minimum lease payments tied to an inflation index or contain stated rent increases that generally compensate for the impact of inflation. Beginning in 2005, the Operating Partnership recognized ground lease expense on the straight-line method over the life of the ground lease for all ground leases with stated rent increases. The recognition of ground lease expense as incurred had historically not been materially different than the recognition of ground lease expense on a straight-line basis.

Apartment community acquisitions

In accordance with the provisions of SFAS No. 141, “Business Combinations,” the aggregate purchase price of apartment community acquisitions is allocated to the tangible assets and liabilities (including mortgage indebtedness) as well as the intangible assets acquired in each transaction based on their estimated fair values at the acquisition date. The acquired tangible assets, principally land, building and improvements and furniture, fixtures and equipment are reflected in real estate assets, and such assets, excluding land, are depreciated over their estimated useful lives. The acquired intangible assets, principally above/below market leases and in-place leases are reflected in other assets and amortized over the average remaining lease terms of the acquired leases and resident relationships (generally 5 months to 18 months).

Equity-based compensation

Effective January 1, 2006, the Operating Partnership accounts for equity-based compensation under the fair value method prescribed by SFAS No. 123R, “Share-Based Payment.” SFAS No. 123R requires companies to expense the fair value of employee stock options and other forms of stock-based compensation.

In 2005, the Operating Partnership accounted for equity-based compensation under the fair value method prescribed by SFAS No. 123, “Accounting for Stock-Based Compensation,” which was applied on a prospective basis. The effect on the Operating Partnership’s net income and net income per unit had the fair value method of accounting been applied to all equity-based compensation in 2005 was not significant to the Operating Partnership’s financial position or results of operations.

Derivative financial instruments

The Operating Partnership accounts for derivative financial instruments at fair value under the provisions of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended. The Operating Partnership uses derivative financial instruments, interest rate swap and interest rate cap arrangements to manage or hedge its exposure to interest rate changes. The Operating Partnership generally designates each derivative instrument as a hedge of specific interest expense cash flow exposure. Under SFAS No. 133, as amended, derivative instruments qualifying as hedges of specific cash flows are recorded on the balance sheet at fair value with an offsetting increase or decrease to accumulated other comprehensive income, a partners’ equity account, until the hedged transactions are recognized in earnings. Quarterly, the Operating Partnership evaluates the effectiveness of its cash flow hedges. Any ineffective portion of cash flow hedges are recognized immediately in earnings.

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(Dollars in thousands, except per unit data)

Cash and cash equivalents

All investments purchased with an original maturity of three months or less are considered to be cash equivalents.

Restricted cash

Restricted cash is generally comprised of resident security deposits for apartment communities located in Florida, required maintenance reserves for certain communities located in Georgia and earnest money and escrow deposits associated with the Operating Partnership’s for-sale condominium business.

Deferred financing costs

Deferred financing costs are amortized using the straight-line method, which approximates the interest method, over the terms of the related indebtedness.

Per unit data

The Operating Partnership reports both basic and diluted earnings per unit. Basic earnings per common unit is computed by dividing net income available to common unitholders by the weighted average number of common units outstanding during the year. Diluted earnings per common unit is computed by dividing net income available to common unitholders by the weighted average number of common units and common unit equivalents outstanding during the year, which are computed using the treasury stock method for outstanding stock options and non-vested awards. Common unit equivalents are excluded from the computations in years in which they have an anti-dilutive effect.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

New accounting pronouncements

In 2007 and 2006, several new accounting pronouncements were issued and the pronouncements with a potential impact on the Operating Partnership in 2007 and in future periods and which are not discussed elsewhere in note 1 are discussed below.

FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement 109,” was issued in July 2006. FIN 48 clarifies guidance on the recognition and measurement of uncertain tax positions and establishes a more likely than not standard for the evaluation of whether such tax positions can be recognized in the Operating Partnership’s financial statements. Previously recognized tax positions that do not meet the more likely than not criteria were required to be adjusted on the implementation date. Additionally, FIN 48 requires additional disclosure regarding the nature and amount of uncertain tax positions, if any. The Operating Partnership implemented FIN 48 on January 1, 2007 and the adoption did not have a material impact on the Operating Partnership’s financial position and results of operations (see note 8).

The Securities and Exchange Commission issued Staff Accounting Bulletin No. 108 (“SAB 108”), “Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements,” in September 2006. SAB 108 requires that companies analyze the effect of financial statement misstatements on both their balance sheet and their income statement and contains guidance on correcting errors under this approach. The Operating Partnership applied the guidance in SAB 108 on December 31, 2006 and, in accordance with the initial application provisions of SAB 108, adjusted retained earnings as of January 1, 2006. The adjustment was considered to be immaterial individually and in the aggregate in prior years based on the Operating Partnership’s historical method of determining materiality. The application of SAB 108 resulted in a cumulative effect adjustment to record the prior period impact of accounting for two ground leases with scheduled rent increases on a straight-line basis during periods prior to January 1, 2005, and resulted in an increase in consolidated real estate assets of approximately $3,900, an increase in consolidated liabilities of approximately $8,800 and a decrease in consolidated equity of approximately $4,900.

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(Dollars in thousands, except per unit data)

SFAS No. 157, “Fair Value Measurements,” was issued in September 2006. SFAS No. 157 provides a definition of fair value and establishes a framework for measuring fair value. SFAS No. 157 clarified the definition of fair value in an effort to eliminate inconsistencies in the application of fair value under generally accepted accounting principles. Additional disclosure focusing on the methods used to determine fair value are also required. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and should be applied prospectively. The Operating Partnership does not expect that the adoption of SFAS No. 157 will have a material impact on the Operating Partnership’s financial position and results of operations.

SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — including an amendment of FASB Statement No. 115,” was issued in February 2007. SFAS No. 159 gives the Company the irrevocable option to carry most financial assets and liabilities at fair value, with changes in fair value recognized in earnings. SFAS No. 159 is effective for the Company on January 1, 2008. The Company does not expect that the adoption of SFAS No. 159 will have a notional impact on the Company’s financial position and results of operations.

SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements,” was issued in December 2007. SFAS No. 160 requires all entities to report noncontrolling (minority) interests in subsidiaries as equity in the consolidated financial statements. SFAS No. 160 is effective for the Operating Partnership on January 1, 2009. The Operating Partnership is currently evaluating the potential impact of SFAS No. 160 on the Operating Partnership’s financial position and results of operations.

SFAS No. 141R, “Business Combinations,” was issued in December 2007. SFAS No. 141R will replace SFAS No. 141 on the date it becomes effective. SFAS No. 141R will require 1) acquirers to recognize all of the assets acquired and liabilities assumed in a business combination, 2) that the acquisition date be used to determine fair value for all assets acquired and all liabilities assumed, and 3) enhanced disclosures for the acquirer surrounding the financial effects of the business combination. The provisions of SFAS 141R will lead to the expensing of acquisition related transaction costs and the potential recognition of acquisition related contingencies. SFAS No. 141R is effective for the Operating Partnership on January 1, 2009. The Operating Partnership is currently evaluating the potential impact of SFAS No. 141R on the Operating Partnership’s financial position and results of operations.

2.   REAL ESTATE ACQUISITIONS AND DISPOSITIONS

Acquisitions

In July 2007, the Operating Partnership acquired a 350-unit apartment community located in Orlando, Florida for approximately $75,200, including closing costs. Additionally, the Operating Partnership plans to spend up to approximately $1,250 to improve the community (of which approximately $73 was incurred as of December 31, 2007). Aggregate acquisition costs were allocated to land ($17,500), building, improvements and equipment ($56,702) and identified lease related intangible assets ($998).

In March 2006, the Operating Partnership acquired two apartment communities, containing 308 units, in Austin, Texas for approximately $46,400, including closing costs. Additionally, the Operating Partnership incurred approximately $1,300 to improve the communities. The purchase price of these communities was allocated to the assets acquired based on their estimated fair values.

In July 2006, the Operating Partnership acquired a 361-unit apartment community in suburban Washington D.C. for approximately $84,600, including the assumption of approximately $41,394 mortgage indebtedness and closing costs. The assumed mortgage note payable bears interest at a coupon rate of 6.1% (which approximated fair value), requires monthly principal and interest payments and matures in 2011. The Operating Partnership may be required to pay additional purchase consideration of up to approximately $6,563 based on a share of the appreciation in the value of the property, if any, over approximately the next four years. The purchase price of this community was allocated to the assets and liabilities acquired based on their estimated fair values.

In October 2006, the Operating Partnership acquired a 150-unit apartment community in Tampa, Florida for approximately $23,700, including closing costs. At the time of acquisition, the community was undergoing an extensive renovation program and was predominantly vacant. The Operating Partnership incurred approximately $2,255 to complete the renovation of the community. Lease-up of renovated units began in the fourth quarter of 2006. At December 31, 2007, the community was 80% occupied. The purchase price of this community was allocated to the assets acquired based on their estimated fair values.

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(Dollars in thousands, except per unit data)

In 2006, aggregate acquisition costs were allocated to land ($18,201), building improvements and equipment ($111,523), construction in progress ($23,723) and identified lease related intangible assets ($1,296). Aggregate liabilities assumed related to mortgage indebtedness, other payables and deposits totaled approximately $41,419.

In June 2005, the Operating Partnership acquired a 319-unit apartment community located in suburban Charlotte, NC for approximately $38,240, including closing costs and the reimbursement of a fee to terminate a loan commitment paid for by the seller. Additionally, the Operating Partnership incurred additional costs of approximately $1,100 to improve the community. The purchase price of this community was allocated to the assets acquired based on their estimated fair values.

Dispositions

The Operating Partnership classifies real estate assets as held for sale after the approval of its board of directors and after the Operating Partnership has commenced an active program to sell the assets. At December 31, 2007, the Operating Partnership had one community, containing 143 units, and certain parcels of land classified as held for sale. These real estate assets are reflected in the accompanying consolidated balance sheet at $24,576, which represents the lower of their depreciated cost or fair value less costs to sell. At December 31, 2007, the Operating Partnership also had portions of two communities that are being converted to condominiums, originally containing 349 units, and certain completed condominium units at newly developed condominium communities totaling $38,844 that are classified as for-sale condominiums on the accompanying consolidated balance sheet.

In 2007, the Operating Partnership transferred three operating apartment communities to a newly formed unconsolidated entity in which the Operating Partnership retained a 25% non-controlling interest, for aggregate proceeds of approximately $134,922. This transaction resulted in a gain on sale of real estate in continuing operations totaling approximately $81,268 for the year ended December 31, 2007. Additionally, the unconsolidated entity obtained mortgage financing secured by the apartment communities totaling approximately $126,724, of which approximately $31,681 was distributed to the Operating Partnership. For the year ended December 31, 2007, gains on sales of real estate assets in continuing operations also included gains of $5,186 on the sale of land sites. For the year ended December 31, 2006, gains on sales of real estate assets in continuing operations included a gain of $503 on the sale of a land site.

In 2007, 2006 and 2005, income from continuing operations also included net gains from condominium sales activity at newly developed condominium projects and condominium conversion projects representing portions of existing communities. In addition to the condominium gains included in continuing operations, the Operating Partnership expensed certain sales and marketing costs associated with pre-sale condominium communities and condominium communities under development and such costs are included in condominium expenses in the table below. A summary of revenues and costs and expenses of condominium activities included in continuing operations for the years ended December 31, 2007, 2006 and 2005 was as follows:

	Year Ended December 31,
	2007			2006			2005
Condominium revenues	$	77,458		$	33,364		$	—
Condominium costs and expenses		(63,897	)		(20,986	)		(531	)
Gains (losses) on sales of condominiums, net	$	13,561		$	12,378		$	(531	)

In 2007, the Operating Partnership retrospectively adjusted its consolidated financial statements for the years ended December 31, 2006 and 2005, to reflect three apartment communities classified as held for sale (two of which were sold in 2007) in 2007 under SFAS No. 144. The effect of the retrospective adjustment represented a $1,712 and $2,132 decrease in the Operating Partnership’s previously reported income (loss) from continuing operations and a corresponding increase in income from discontinued operations for the years ended December 31, 2006 and 2005, respectively.

Under SFAS No. 144, the operating results of real estate assets designated as held for sale are included in discontinued operations in the consolidated statement of operations for all periods presented. Additionally, all gains and losses on the sale of these assets are included in discontinued operations. For the year ended December 31, 2007, income from discontinued operations included the results of operations of one apartment community classified as held for sale at December 31, 2007, three communities sold in 2007 through their sale dates and one condominium conversion community through its sell out date in 2007. For the years ended December 31, 2006 and 2005, income from discontinued operations included the results of operations of the apartment community classified as held for sale at December 31, 2007,

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(Dollars in thousands, except per unit data)

three apartment communities sold in 2007, two condominium conversion communities through their respective sell-out dates in 2007 and 2005 and the results of operations of nine apartment communities sold in 2006 and 2005 through their respective sale dates.

The revenues and expenses of these communities for the years ended December 31, 2007, 2006 and 2005 were as follows:

	Year Ended December 31,
	2007		2006		2005
Revenues
Rental	$	8,572	$	20,065	$	35,587
Other property revenues		676		1,914		3,408
Total revenues		9,248		21,979		38,995
Expenses
Property operating and maintenance (exclusive of items shown separately below)		3,890		8,951		16,496
Depreciation		1,069		3,280		7,452
Interest		1,517		4,189		6,862
Minority interest in consolidated property partnerships		—		—		(335	)
Total expenses		6,476		16,420		30,475
Income from discontinued property operations	$	2,772	$	5,559	$	8,520

In 2007, the Operating Partnership recognized net gains in discontinued operations of $62,406 from the sale of three communities containing 807 units. These sales generated net proceeds of approximately $90,893, of which a portion ($66,938) was held by an exchange intermediary at December 31, 2007 (and classified as other assets on the consolidated balance sheet), pending the completion of a tax deferred exchange. In 2006, the Operating Partnership recognized net gains in discontinued operations of $68,324 from the sale of three communities containing 1,340 units. These sales generated net proceeds of approximately $173,007, including $40,000 of secured indebtedness assumed by the purchasers. In 2005, the Operating Partnership recognized net gains in discontinued operations of $124,425 from the sale of six communities containing 3,047 units. These sales generated net proceeds of approximately $229,249, including $81,560 of tax-exempt secured indebtedness assumed by the purchasers.

Gains on sales of real estate assets included in discontinued operations also includes net gains from condominium sales at two condominium conversion communities for the years ended December 31, 2007, 2006 and 2005. The Operating Partnership commenced condominium conversion activities in 2005. A summary of revenues and costs and expenses of condominium activities included in discontinued operations for the years ended December 31, 2007, 2006 and 2005 was as follows:

	Year Ended December 31,
	2007			2006			2005
Condominium revenues	$	560		$	7,322		$	56,012
Condominium costs and expenses		(176	)		(7,097	)		(39,200	)
Gains on condominium sales, before income taxes		384			225			16,812
Provision for income taxes		—			—			(594	)
Gains on condominium sales	$	384		$	225		$	16,218

In January 2008, the Operating Partnership closed the sale of an apartment community, containing 143 units, for a gross sales price of $19,850. The sale completed the tax-deferred exchange transaction discussed above.

3.   INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES

At December 31, 2007, the Operating Partnership holds investments in five individual limited liability companies (the “Property LLCs”) with institutional investors and other entities. Three of the Property LLCs own apartment communities. A fourth Property LLC completed the sell out of a condominium conversion community in 2007 and the fifth Property

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(Dollars in thousands, except per unit data)

LLC commenced construction in 2007 of a mixed-use development, consisting of for-sale condominiums and class A office space. The Operating Partnership holds a 35% equity interest in two Property LLCs, each owning one apartment community, and the Property LLC that completed the condominium conversion and sale process. The Operating Partnership holds a 25% interest in one Property LLC owning three apartment communities, and a 50% interest in the condominium portion of the Property LLC developing the mixed-use project.

In 2007, the Operating Partnership’s investment in the 25% owned Property LLC resulted from the transfer of three previously owned apartment communities to the Property LLC co-owned with an institutional investor. The assets, liabilities and members’ equity of this Property LLC were recorded at fair value based on agreed-upon amounts contributed to the Property LLC. At December 31, 2007, the Operating Partnership’s investment in the 25% owned Property LLC reflects a credit investment of $13,688 resulting primarily from distributions of financing proceeds in excess of the Operating Partnership’s historical cost investment. The credit investment is reflected in consolidated liabilities on the Operating Partnership’s consolidate balance sheet.

The Operating Partnership accounts for its investments in these Property LLCs using the equity method of accounting. At December 31, 2007, the Operating Partnership’s investment in these Property LLCs totaled $23,036, excluding the credit investment discussed above. The excess of the Operating Partnership’s investment over its equity in the underlying net assets of certain Property LLCs was approximately $5,812 at December 31, 2007. The excess investment related to Property LLCs holding apartment communities is being amortized as a reduction to earnings on a straight-line basis over the lives of the related assets. The excess investment related to the Property LLC constructing condominiums will be recognized as additional costs as the condominiums are sold. The Operating Partnership provides real estate services (development, construction and property management) to the Property LLCs for which it earns fees.

The operating results of the Operating Partnership include its allocable share of net income from the investments in the Property LLCs. A summary of financial information for the Property LLCs in the aggregate was as follows:

	December 31,
Balance Sheet Data	2007		2006
Real estate assets, net of accumulated depreciation of $15,204 and $11,039, respectively	$	325,705	$	93,614
Assets held for sale, net		—		3,027
Cash and other		7,254		4,067
Total assets	$	332,959	$	100,708
Mortgage/construction notes payable	$	214,549	$	66,998
Other liabilities		5,541		1,107
Total liabilities		220,090		68,105
Members’ equity		112,869		32,603
Total liabilities and members’ equity	$	332,959	$	100,708
Operating Partnership’s equity investment in Property LLCs(1)	$	9,348	$	16,883

(1) At December 31, 2007, the Operating Partnership’s equity investment is shown net of a credit investment of $13,688 discussed above.

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(Dollars in thousands, except per unit data)

	Year Ended December 31,
Income Statement Data	2007			2006			2005
Revenues
Rental	$	17,998		$	11,447		$	10,789
Other property revenues		1,169			752			807
Other		121			47			33
Total revenues		19,288			12,246			11,629
Expenses
Property operating and maintenance		7,125			3,948			3,689
Depreciation and amortization		6,881			2,650			2,621
Interest		5,940			2,752			2,752
Total expenses		19,946			9,350			9,062
Income (loss) from continuing operations		(658	)		2,896			2,567
Discontinued operations
Income (loss) from discontinued operations		39			(343	)		(176	)
Gains on sales of real estate assets, net		861			2,947			2,834
Loss on early extinguishment of debt		—			—			(273	)
Income from discontinued operations		900			2,604			2,385
Net income	$	242		$	5,500		$	4,952
Operating Partnership’s share of net income	$	1,556		$	1,813		$	1,767

Gains on real estate assets represent net gains from condominium sales at the condominium conversion community held by one of the Property LLCs. This Property LLC completed the sell out of the community in 2007. A summary of revenues and costs and expenses of condominium activities for the years ended December 31, 2007, 2006 and 2005 was as follows:

	Year Ended December 31,
	2007			2006			2005
Condominium revenues	$	4,592		$	21,857		$	15,098
Condominium costs and expenses		(3,731	)		(18,910	)		(12,264	)
Gains on condominium sales, net	$	861		$	2,947		$	2,834

At December 31, 2007, mortgage/construction notes payable include a $49,997 mortgage note that bears interest at 4.13%, requires monthly interest payments and annual principal payments of $1 through 2009. Thereafter, the note requires monthly principal and interest payments based on a 25-year amortization schedule and matures in 2034. The note is callable by the lender in 2009 and on each successive fifth year anniversary of the note thereafter. The note is prepayable without penalty in 2008. Another mortgage note payable totaling $17,000 bears interest at a fixed rate of 4.04%, requires interest only payments and matures in 2008. Three additional mortgage notes were entered into in conjunction with the formation of the 25% owned Property LLC in 2007. Two notes total $85,724, bear interest at 5.63%, require interest only payments and mature in 2017. The third mortgage note totals $41,000, bears interest at 5.71%, requires interest only payments, and matures in 2017.

In July 2007, the Property LLC constructing the mixed-use development entered into a construction loan facility with an aggregate capacity of $187,128. At December 31, 2007, the construction loan had an outstanding balance of $20,829, bears interest at LIBOR plus 1.35% and matures in 2011. Under the terms of the construction loan facility, the Company and its 50% equity partner have jointly and severally guaranteed approximately $25,313 of the construction loan attributable to the condominium portion of the project. Additionally, the Company and its 50% equity partner have jointly and severally guaranteed certain debt service payments of the condominium portion of the loan not to exceed approximately $6,153 and all of the equity owners of the project, including the Company, have guaranteed the completion of the first building at the project.

In 2005, one of the Property LLCs elected to convert its apartment community into for-sale condominiums. As a result of its decision to sell the community through the condominium conversion process, the Property LLC prepaid its third party

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(Dollars in thousands, except per unit data)

mortgage note payable of $16,392 through secured borrowings from the Operating Partnership. The Property LLC incurred debt prepayment costs and expenses associated with the write-off of unamortized deferred financing costs totaling $273 in 2005. In 2006, the mortgage note payable to the Operating Partnership was retired from the proceeds of condominium sales. The mortgage note payable to the Operating Partnership had a fixed rate component bearing interest at 4.28% and a variable rate component bearing interest at LIBOR at 1.90%.

4.   INDEBTEDNESS

At December 31, 2007 and 2006, the Operating Partnership’s indebtedness consisted of the following:

	Payment				Maturity	December 31,		December 31,
Description	Terms	Interest Rate			Date	2007		2006
Senior Unsecured Notes	Int.		5.13% - 7.70%		2010-2013	$	535,000	$	560,000
Unsecured Lines of Credit
Syndicated Line of Credit	N/A		LIBOR + 0.575%	(1)	2010		245,000		95,000
Cash Management Line	N/A		LIBOR + 0.575%		2010		12,275		13,913
							257,275		108,913
Fixed Rate Secured Notes
FNMA	Prin. and Int.		6.15%	(2)	2029		94,000		95,600
Other	Prin. and Int.		4.27% - 6.50%		2009-2013		172,791		259,371
							266,791		354,971
Tax-Exempt Floating Rate Secured Bonds	—		—		—		—		9,895
Total						$	1,059,066	$	1,033,779

(1)	Represents stated rate. At December 31, 2007, the weighted average interest rate was 5.63%.
(2)	Interest rate is fixed at 6.15%, inclusive of credit enhancement and other fees, to 2009 through an interest rate swap arrangement.

Debt maturities

The aggregate maturities of the Operating Partnership’s indebtedness are as follows:

2008	$	5,230
2009		76,618
2010		445,903	(1)
2011		141,431
2012		103,296
Thereafter		286,588
	$	1,059,066

(1) Includes outstanding balance on lines of credit totaling $257,275.

Debt issuances, retirements and modifications

2007

Upon their maturity in June 2007, the Operating Partnership repaid $25,000 of 6.11% senior unsecured notes from available borrowings under its unsecured line of credit. In July 2007, the Operating Partnership repaid $83,132 of secured mortgage notes with interest rates from 6.29% to 7.69% from borrowing under its unsecured line of credit. These mortgage notes were scheduled to mature in October 2007.

In January 2008, the Company closed a $120,000 secured, fixed rate mortgage note payable. The note bears interest at 4.88%, requires interest only payments and matures in 2015. The note contains an automatic one year extension under which the interest rate converts to a variable rate, as defined.

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(Dollars in thousands, except per unit data)

2006

Upon their maturity in March 2006, the Operating Partnership repaid $50,000 of 6.71% senior unsecured notes. In October 2006, the Operating Partnership repaid $25,000 of 7.5% senior unsecured notes. Both notes were repaid from available borrowings under its unsecured lines of credit.

In April 2006, the Operating Partnership closed a $40,000 mortgage note payable secured by an apartment community located in Denver, Colorado. The mortgage note accrued interest at LIBOR plus 1.0%, was scheduled to mature in April 2008 and was pre-payable without penalty. In August 2006, this mortgage note was assumed by the purchaser of this community. As a result of this debt assumption, the Operating Partnership recorded a loss on early extinguishment of indebtedness of $123 related to the write-off of unamortized deferred financing costs.

In June 2006, the Operating Partnership issued $150,000 of senior unsecured notes. The notes bear interest at 6.30% and mature in September 2013. The net proceeds from the unsecured notes were used to reduce amounts outstanding under the Operating Partnership’s unsecured lines of credit.

In July 2006, in conjunction with an apartment community acquisition (see note 2 to the consolidated financial statements), the Operating Partnership assumed a secured, fixed rate mortgage note payable with an outstanding balance of $41,394. The mortgage note bears interest at a coupon rate of approximately 6.1% (which approximated fair value), requires monthly principal and interest payments and matures in November 2011.

In December 2006, the Operating Partnership repaid a $45,718, 6.8% secured mortgage note prior to its schedule maturity date in 2007. Also in December 2006, the Operating Partnership repaid $18,600 of tax-exempt indebtedness associated with the sale of an apartment community. As a result of this debt retirement, the Operating Partnership recorded a loss on the early extinguishment of debt of $372 related to the write-off of deferred loan costs of $230 relating to such retired indebtedness and a loss of $142 due to the ineffectiveness of a related interest rate cap agreement.

Unsecured lines of credit

At December 31, 2007, the Operating Partnership utilizes a $600,000, increased from $450,000 in November 2007, syndicated unsecured revolving line of credit (the “Syndicated Line”) that matures in April 2010 for its short-term financing needs. The Syndicated Line currently has a stated interest rate of LIBOR plus 0.575% or the prime rate and was provided by a syndicate of 17 banks led by Wachovia Bank, N.A. and JP Morgan Securities, Inc. Additionally, the Syndicated Line requires the payment of annual facility fees currently equal to 0.15% of the aggregate loan commitment. The Syndicated Line provides for the interest rate and facility fee rate to be adjusted up or down based on changes in the credit ratings on the Operating Partnership’s senior unsecured debt. The rates under the Syndicated Line are based on the higher of the Operating Partnership’s unsecured debt ratings in instances where the Operating Partnership has split unsecured debt ratings. The Syndicated Line also includes a competitive bid option for short-term funds up to 50% of the loan commitment at rates generally below the stated line rate. In addition to customary restrictions, representations, covenants and events of default, the Syndicated Line also restricts the amount of capital the Operating Partnership can invest in specific categories of assets, such as improved land, properties under construction, condominium properties, non-multifamily properties, debt or equity securities, notes receivable and unconsolidated affiliates. At December 31, 2007, the Operating Partnership had issued letters of credit to third parties totaling $1,350 under this facility.

Additionally, at December 31, 2007, the Operating Partnership had a $30,000 unsecured line of credit with Wachovia Bank, N.A. (the “Cash Management Line”). The Cash Management Line matures in April 2010 and carries pricing and terms, including debt covenants, substantially consistent with the Syndicated Line.

Interest paid

Interest paid (including capitalized amounts of $11,801, $9,942 and $2,907 for the years ended December 31, 2007, 2006 and 2005, respectively), aggregated $65,931, $67,257 and $66,234 for the years ended December 31, 2007, 2006 and 2005, respectively.

Pledged assets and other

The aggregate net book value at December 31, 2007 of property pledged as collateral for indebtedness amounted to approximately $333,128. The Company’s senior unsecured notes, Syndicated Line and certain of its secured mortgage

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(Dollars in thousands, except per unit data)

arrangements contain customary restrictions, representations, covenants and events of default, including fixed charge coverage and maximum leverage ratios.

5.   DEFERRED CHARGES

Deferred charges consist of the following:

	December 31,
	2007			2006
Deferred financing costs	$	17,041		$	18,073
Other		5,677			5,501
		22,718			23,574
Less: accumulated amortization		(12,180	)		(11,174	)
	$	10,538		$	12,400

6.   PARTNERS’ EQUITY

Common and Preferred Units

At December 31, 2007 and 2006, the Operating Partnership had outstanding Common Units totaling 44,295 and 44,191, respectively. At December 31, 2007, the Operating Partnership had outstanding two separate series of cumulative redeemable preferred partnership units as more fully described below. The preferred partnership units are reflected in the accompanying financial statements at their liquidation value.

The Operating Partnership has outstanding 900,000, 8.5% Series A cumulative redeemable preferred partnership units (the “Series A Preferred Units”). The Series A Preferred Units have a liquidation preference of $50.00 per unit and are currently redeemable at the option of the Operating Partnership, at a redemption price of $50.00 per unit. The Series A Preferred Units are owned by the Company.

The Operating Partnership also has outstanding 2,000,000, 7.625% Series B cumulative redeemable preferred partnership units (the “Series B Preferred Units”). The Series B Preferred Units have a liquidation preference of $25.00 per unit and are redeemable at the option of the Operating Partnership on or after October 28, 2007, at a redemption price of $25.00 per unit. The Series B Preferred Units are owned by the Company.

Common Unit Purchases

In 2007, the Company repurchased 83 shares of its common stock totaling approximately $3,694 pursuant to a 10b5-1 stock purchase plan meeting the requirements of Rule 10b5-1 under the Exchange Act. These shares were purchased under a board of directors approved plan which allows the Company to repurchase up to $200,000 of common or preferred stock at market prices from time to time until December 31, 2008. In 2006 and 2005, the Company repurchased approximately 109 and 1,031 shares, respectively, of its common stock at an aggregate cost of $5,000 and $34,400, respectively, pursuant to stock purchase plans meeting the requirements of Rule 10b5-1 under the Exchange Act. These shares were purchased under a previous board of directors approved plan. Correspondingly, the Operating Partnership repurchased the same number and amount of common units from the Company.

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(Dollars in thousands, except per unit data)

Computation of Earnings per Common Unit

In 2007, 2006 and 2005, basic and diluted earnings per common unit for income (loss) from continuing operations available to common unitholders has been computed as follows:

	Year Ended December 31, 2007
	Income			Units		Per-Unit
	(Numerator)			(Denominator)		Amount
Income from continuing operations	$	115,654
Less: Preferred unit distributions		(7,637	)
Basic EPU
Income from continuing operations available to common unitholders		108,017			44,104	$	2.45
Effect of dilutive securities
Stock options and awards		—			634
Diluted EPU
Income from continuing operations available to common unitholders	$	108,017		$	44,738	$	2.41

	Year Ended December 31, 2006
	Income			Units		Per-Unit
	(Numerator)			(Denominator)		Amount
Income from continuing operations	$	29,673
Less: Preferred unit distributions		(7,637	)
Basic EPU
Income from continuing operations available to common unitholders		22,036			43,645	$	0.50
Effect of dilutive securities
Stock options and awards		—			782
Diluted EPU
Income from continuing operations available to common unitholders	$	22,036			44,427	$	0.50

	Year Ended December 31, R2005
	Income			Units			Per-Unit
	(Numerator)			(Denominator)			Amount
Income from continuing operations	$	3,104
Less: Preferred unit distributions		(7,637	)
Basic EPU
Loss from continuing operations available to common unitholders		(4,533	)		42,353		$	(0.11	)
Effect of dilutive securities
Stock options and awards		—			—	(1)
Diluted EPU
Loss from continuing operations available to common unitholders	$	(4,533	)		42,353		$	(0.11	)

(1) For the year ended December 31, 2005, the potential dilution from the Company’s outstanding stock options and awards of 400 was antidilutive to the loss from continuing operations per unit calculation. As such, this amount was excluded from weighted average units in these years.

In 2007, 2006 and 2005, stock options to purchase 200, 0 and 3,534 shares of common stock, respectively, were excluded from the computation of diluted earnings per share as these options were antidilutive.

7.   SEVERANCE CHARGES

In prior years, the Operating Partnership recorded severance charges associated with the departure of certain executive officers of the Operating Partnership. Under certain of these arrangements, the Operating Partnership is required to make

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(Dollars in thousands, except per unit data)

certain payments and provide specified benefits through 2013 and 2016. In 2007 and 2005, the Operating Partnership recorded additional expenses of $283 and $796, respectively, relating to changes in the estimated future costs of certain benefits granted to former executive officers under such agreements. These estimated future cost increases primarily related to increased fuel and other operating costs and expenses associated with certain fractional aircraft benefits provided to such executives.

The following table summarizes the activity relating to the accrued severance charges for the years ended December 31, 2007, 2006 and 2005:

	2007			2006			2005
Accrued severance charges, beginning of year	$	12,832		$	14,325		$	15,317
Severance charges		283			—			796
Payments for period		(2,640	)		(2,341	)		(2,694	)
Interest accretion		740			848			906
Accrued severance charges, end of year	$	11,215		$	12,832		$	14,325

Substantially all of these remaining amounts will be paid over the remaining terms of the former executives’ employment and settlement agreements (six to nine years).

8.   INCOME TAXES

Income or losses of the Operating Partnership are allocated to the partners of the Operating Partnership for inclusion in their respective income tax returns. Accordingly, no provisions or benefit for income taxes has been made in the accompanying financial statements. The Company elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”) commencing with the taxable year ended December 31, 1993. In order for the Company to qualify as a REIT, it must distribute 90% of its REIT taxable income, as defined in the Code, to its unitholders and satisfy certain other organizational and operating requirements. The Operating Partnership intends to make sufficient cash distributions to the Company to enable it to meet its annual REIT distribution requirements.

In 2007, other expenses on the consolidated statement of operations included income tax expense of approximately $560 relating to estimated alternative minimum tax of the Company. The alternative minimum tax results from the expected utilization of net operating loss carryforwards generated by the Company in prior years. The Operating Partnership reimburses the Company for the actual tax expense.

In the preparation of income tax returns in federal and state jurisdictions, the Operating Partnership and its taxable REIT subsidiaries assert certain tax positions based on their understanding and interpretation of the income tax law. The taxing authorities may challenge such positions and the resolution of such matters could result in the payment and recognition of additional income tax expense. Management believes it has used reasonable judgments and conclusions in the preparation of its income tax returns.

As of December 31, 2007, the net basis for federal income tax purposes, taking into account the special allocation of gain to the partners contributing property to the Operating Partnership and including minority interest in the Operating Partnership, was lower than the net assets as reported in the Operating Partnership’s consolidated financial statements by $192,919.

The Operating Partnership adopted the provisions of FIN 48 on January 1, 2007. As of January 1, 2007 and December 31, 2007, the Operating Partnership’s taxable REIT subsidiaries (“TRSs”) had unrecognized tax benefits of approximately $797 which primarily related to uncertainty regarding the sustainability of certain deductions taken on prior year income tax returns of the TRS with respect to the amortization of certain intangible assets. The Operating Partnership does not expect any significant change in this unrecognized tax benefit in 2008. To the extent these unrecognized tax benefits are ultimately recognized, they may affect the effective tax rate in a future period. The Operating Partnership’s policy is to recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense. Accrued interest and penalties for the year ended December 31, 2007 and at December 31, 2007 were not material to the Operating Partnership’s results of operations, cash flows or financial position.

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(Dollars in thousands, except per unit data)

The Operating Partnership and its subsidiaries’ (including the TRSs) income tax returns are subject to examination by federal and state tax jurisdictions for years 2004 through 2006. Net income tax loss carryforwards and other tax attributes generated in years prior to 2004 are also subject to challenge in any examination of the 2004 to 2006 tax years.

Taxable REIT subsidiaries

The Operating Partnership utilizes TRSs principally to perform such non-REIT activities as asset and property management, for-sale housing (condominiums) conversions and sales and other services. These TRSs are subject to federal and state income taxes. The components of income tax expense, significant deferred tax assets and liabilities and a reconciliation of the TRS income tax expense to the statutory federal rate are reflected in the tables below.

Income tax expense of the TRSs for the years ended December 31, 2007, 2006 and 2005 is comprised of the following:

	2007			2006		2005
Current tax expense
Federal	$	900		$	—	$	251
State		110			—		343
		1,010			—		594
Deferred tax expense
Federal		(900	)		—		—
State		(110	)		—		—
		(1,010	)		—		—
Total income tax expense		—			—		594
Income tax expense — discontinued operations		—			—		(594	)
Income tax expense — continuing operations	$	—		$	—	$	—

In 2007, the Operating Partnership recognized a deferred tax benefit of $1,010 to offset estimated current income tax expense based on a determination that such deferred tax assets are realizable through the ability of such deferred assets to generate carryback claims to prior years or to offset future income taxes payable. In 2005, income tax expense was allocated to discontinued operations as the taxable income of the TRSs resulted from condominium sales activities which are reported in discontinued operations. Net valuation allowances increased approximately $214 and $1,309 in 2007 and 2006, respectively. Aggregate valuation allowances at December 31, 2007 and 2006 are reflected in the table below.

The components of the TRSs’ deferred income tax assets and liabilities at December 31, 2007 and 2006 were as follows:

	2007			2006
Deferred tax assets
Deferred interest	$	2,649		$	1,761
Accrued liabilities		1,154			512
Cost capitalization/recognition		864			260
Real estate asset basis differences		—			1,106
Other		297			101
		4,964			3,740
Deferred tax liabilities
Amortization		(797	)		(797	)
		(797	)		(797	)
Net deferred tax assets, before valuation allowances		4,167			2,943
Valuation allowances		(3,157	)		(2,943	)
Net deferred tax assets (liabilities)	$	1,010		$	—

At December 31, 2007, management had established valuation allowances against the above listed net deferred tax assets due primarily to historical losses at the TRSs’ in years prior to 2007 and the variability of the income of these subsidiaries. The tax benefits associated with such unused valuation allowances may be recognized in future periods, if the taxable

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(Dollars in thousands, except per unit data)

REIT subsidiaries generate sufficient taxable income to utilize such amounts or if the Company determines that it is more likely than not that the related deferred tax assets are realizable.

A reconciliation of income tax expense for 2005 of the TRSs to the federal statutory rate is detailed below. As reflected above, 2005 income tax expense was allocated to discontinued operations.

	2005
Federal tax rate		35	%
State income tax, net of federal benefit		4
Federal alternative minimum taxes		3
Change in valuation allowance of deferred tax assets		(35	)
		7	%

9.   EQUITY-BASED COMPENSATION PLANS

Equity Compensation Plans

As the primary operating subsidiary of the Company, the Operating Partnership participates in and bears the compensation expenses associated with the Company’s equity-based compensation plans. The information discussed below relating to the Company’s stock-based compensation plans is also applicable for the Operating Partnership. Effective January 1, 2006, the Company accounts for stock-based compensation using the fair value method prescribed in SFAS No. 123R (see note 1). For stock-based compensation granted prior to 2006, the Company accounted for stock-based compensation under the fair value method prescribed by SFAS No. 123. Other than the required modification under SFAS No. 123R to use an estimated forfeiture rate for award terminations and forfeitures, the adoption of SFAS 123R did not have a material impact on the Company’s accounting for stock-based compensation. In years prior to 2006, the Company used a policy of recognizing the effect of award forfeitures as they occurred. Under SFAS No. 123R, such award forfeitures are recognized based on an estimate of the number of awards expected to be forfeited during the estimated service period. The cumulative impact of this modification on awards granted prior to 2006 was $172 and the amount was reflected as a reduction of compensation expense for the year ended December 31, 2006.

Incentive Stock Plans

Incentive stock awards are granted under the Company’s 2003 Incentive Stock Plan (the “2003 Stock Plan”). Under the 2003 Stock Plan, an aggregate of 4,000 shares of common stock were reserved for issuance. Of this amount, not more than 500 shares of common stock are available for grants of restricted stock. The exercise price of each option granted under the 2003 Stock Plan may not be less than the market price of the Company’s common stock on the date of the option grant and all options may have a maximum life of ten years. Participants receiving restricted stock grants are generally eligible to vote such shares and receive dividends on such shares. Substantially all stock option and restricted stock grants are subject to annual vesting provisions (generally three to five years) as determined by the compensation committee overseeing the 2003 Stock Plan. At December 31, 2007, stock options outstanding under the 2003 Stock Plan and the Company’s previous stock plan totaled 2,455.

Compensation costs for stock options have been estimated on the grant date using the Black-Scholes option-pricing method. The weighted average assumptions used in the Black-Scholes option-pricing model were as follows:

	2007		2006		2005
Dividend yield		3.8%		4.4%		5.5%
Expected volatility		18.1%		17.5%		17.1%
Risk-free interest rate		4.8%		4.3%		3.1%
Expected option life		5 years		5 years		5 years

The Company’s assumptions were derived from the methodologies discussed herein. The expected dividend yield reflects the Company’s current historical yield, which is expected to approximate the future yield. Expected volatility was based on the historical volatility of the Company’s common stock. The risk-free interest rate for the expected life of the options

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(Dollars in thousands, except per unit data)

was based on the implied yields on the U.S. Treasury yield curve. The weighted average expected option term was based on the Company’s historical data for prior period stock option exercise and forfeiture activity.

In 2007, 2006 and 2005, the Company granted stock options to purchase 199, 311 and 277 shares, respectively, of Company common stock to Company officers and directors, of which 28, 50 and 50 shares, respectively, were granted to the Company’s non-executive chairman of the board. In 2007, 2006 and 2005, the Company recorded compensation expense related to stock options of $1,523, $1,100 and $761, respectively, recognized under the fair value method. In 2006, such expense was net of the cumulative impact of the adoption of SFAS No. 123R of $60, as discussed above. Upon the exercise of stock options, the Company issues shares of common stock from treasury shares or, to the extent treasury shares are not available, from authorized common shares.

A summary of stock option activity under all plans in 2007, 2006 and 2005, is presented below.

	2007					2006					2005
				Weighted					Weighted					Weighted
				Average					Average					Average
	Shares			Exercise Price		Shares			Exercise Price		Shares			Exercise Price
Outstanding at beginning of year		2,375		$	33		3,534		$	34		4,491		$	33
Granted		199			48		311			41		277			33
Exercised		(108	)		36		(1,462	)		36		(1,105	)		33
Forfeited		(11	)		41		(8	)		35		(129	)		30
Outstanding at end of year		2,455			34		2,375			33		3,534			34
Options exercisable at year-end		1,797			33		1,447			33		2,437			36
Weighted-average fair value of options granted during the year	$	7.22				$	4.91				$	2.73

At December 31, 2007, there was $1,627 of unrecognized compensation cost related to unvested stock options. This cost is expected to be recognized over a weighted-average period of 1.1 years. The total intrinsic value of stock options exercised in 2007, 2006 and 2005 was $1,397, $13,775 and $6,111, respectively. The aggregate intrinsic values of stock options outstanding, exercisable and expected to vest at December 31, 2007 were $8,453, $6,728 and $8,295, respectively. The weighted average remaining contractual lives of stock options outstanding, exercisable and excepted to vest at December 31, 2007, were 5.3 years, 4.4 years and 5.3 years, respectively. Stock options expected to vest at December 31, 2007 totaled 2,416 at a weighted average exercise price of approximately $34.01.

At December 31, 2007, the Company had separated its outstanding options into two ranges based on exercise prices. There were 1,387 options outstanding with exercise prices ranging from $23.90 to $36.13. These options have a weighted average exercise price of $29.17 and a weighted average remaining contractual life of 5.2 years. Of these outstanding options, 1,132 were exercisable at December 31, 2007 at a weighted average exercise price of $29.36. In addition, there were 1,068 options outstanding with exercise prices ranging from $36.47 to $48.00. These options had a weighted average exercise price of $40.32 and a weighted average remaining contractual life of 5.4 years. Of these outstanding options, 665 were exercisable at December 31, 2007 at a weighted average exercise price of $38.04.

In 2007, 2006 and 2005, the Company granted 61, 42 and 35 shares of restricted stock, respectively, to Company officers and directors, of which 4, 5 and 6 shares in 2007, 2006 and 2005, respectively, were granted to the Company’s non-executive chairman of the board. The restricted share grants generally vest ratably over three to five year periods. The weighted average grant date fair value for the restricted shares granted in 2007, 2006 and 2005 was $45.61, $40.61 and $33.74 per share, respectively. The total value of the restricted share grants in 2007, 2006 and 2005 were $2,791, $1,701 and $1,173, respectively. The compensation cost is amortized ratably into compensation expense over the applicable vesting periods. Total compensation expense relating to the restricted stock was $2,434, $1,651 and $1,367 in 2007, 2006 and 2005, respectively. In 2006, such expense was net of the cumulative impact of the adoption of SFAS No. 123R of $112, as discussed above.

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(Dollars in thousands, except per unit data)

A summary of the activity related to the Company’s restricted stock in 2007 and 2006 is presented below:

	2007					2006
				Weighted					Weighted
				Average					Average
				Grant-Date					Grant-Date
	Shares			Fair Value		Shares			Fair Value
Unvested shares, beginning or period		125		$	31		140		$	28
Granted		61			46		42			41
Vested		(66	)		36		(57	)		32
Forfeited		(1	)		42		—			—
Unvested shares, end of period		119			35		125		$	31

At December 31, 2007, there was $3,597 of unrecognized compensation cost related to restricted stock. This cost is expected to be recognized over a weighted average period of 2.6 years. The total intrinsic value of restricted shares vested in 2007, 2006 and 2005 was $2,680, $2,606 and $1,845, respectively.

Employee Stock Purchase Plan

The Company maintains an Employee Stock Purchase Plan (the “ESPP”) under a plan approved by Company shareholders in 2005. The maximum number of shares issuable under the ESPP is 300. The purchase price of shares of common stock under the ESPP is equal to 85% of the lesser of the closing price per share of common stock on the first or last day of the trading period, as defined. The Company records the aggregate cost of the ESPP (generally the 15% discount on the share purchases) as a period expense. Total compensation expense relating to the ESPP was $160, $159 and $171 in 2007, 2006 and 2005, respectively.

10.   EMPLOYEE BENEFIT PLAN

The Company maintains a defined contribution plan pursuant to Section 401 of the Internal Revenue Code (the “401K Plan”) that allows eligible employees to contribute a percentage of their compensation to the 401K Plan. The Company matches 50% of the employee’s pre-tax contribution up to a maximum employee contribution of 6% of salary in 2007 and 2006 (5% in 2005). Company contributions of $896, $911 and $691 were made to the 401K Plan in 2007, 2006 and 2005, respectively.

11.   COMMITMENTS AND CONTINGENCIES

Land, office and equipment leases

The Operating Partnership is party to two ground leases with terms expiring in years 2040 and 2043 relating to a single operating community, four ground leases expiring in 2012, 2038, 2066 and 2074 for four separate operating communities and to other facility, office, equipment and other operating leases with terms expiring through 2057. The ground leases generally provide for future increases in minimum lease payments tied to an inflation index or contain stated rent increases that generally compensate for the impact of inflation. Future minimum lease payments for non-cancelable land, office, equipment and other leases at December 31, 2007, are as follows:

2008	$	1,863
2009		1,729
2010		1,755
2011		1,785
2012		1,820
2013 and thereafter	$	150,737

The Operating Partnership incurred $6,948, $6,421 and $6,309 of rent expense, including rent expense under short-term rental and lease arrangements, in 2007, 2006 and 2005, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in thousands, except per unit data)

Legal proceedings

In November 2006, the Equal Rights Center (“ERC”) filed a lawsuit against the Company and the Operating Partnership in the United States District Court for the District of Columbia. This suit alleges various violations of the Fair Housing Act (“FHA”) and the Americans with Disabilities Act (“ADA”) at properties designed, constructed or operated by the Company and the Operating Partnership in the District of Columbia, Virginia, Colorado, Florida, Georgia, New York, North Carolina and Texas. The plaintiff seeks compensatory and punitive damages in unspecified amounts, an award of attorneys’ fees and costs of suit, as well as preliminary and permanent injunctive relief that includes retrofitting multi-family units and public use areas to comply with the FHA and the ADA and prohibiting construction or sale of noncompliant units or complexes. On April 18, 2007, ERC filed a motion for a preliminary injunction to prohibit the Company and the Operating Partnership from selling any alleged noncompliant apartment communities or condominium units while the litigation is ongoing. On July 25, 2007 the court entered an order denying ERC’s motion for the preliminary injunction. Discovery is being conducted by both parties. On October 29, 2007, the court granted, in part, ERC’s motion to amend the scheduling order and expand the time permitted for discovery and filing of dispositive motions. As a result, the cutoff for fact discovery was extended to February 29, 2008 with the end of all briefing on dispositive motions set for August 11, 2008. On January 29, 2008, the Operating Partnership and ERC agreed to an extension of discovery dates to accommodate further depositions and inspections. Under the agreement, which must be approved by the court, fact discovery will be completed by April 30, 2008, expert discovery will be completed by August 29, 2008, and summary judgment briefing will be completed by November 10, 2008. No trial date has been set. At this stage in the proceeding, it is not possible to predict or determine the outcome of the lawsuit, nor is it possible to estimate the amount of loss that would be associated with an adverse decision.

The Company and Operating Partnership are involved in various other legal proceedings incidental to its business from time to time, most of which are expected to be covered by liability or other insurance. Management of the Company and Operating Partnership believes that any resolution of pending proceedings or liability to the Company and Operating Partnership which may arise as a result of these various other legal proceedings will not have a material adverse effect on the Operating Partnership’s results of operations or financial position.

12.   RELATED PARTY TRANSACTIONS

In 2007, 2006 and 2005, the Operating Partnership held investments in Property LLC’s accounted for under the equity method of accounting (see note 3). In 2007, 2006 and 2005, the Operating Partnership recorded, before elimination of the Operating Partnership’s equity interests, project management fees, property management fees and expense reimbursements (primarily personnel costs) of approximately $2,591, $1,537 and $1,781, respectively, from these related companies. Additionally in 2007, 2006 and 2005, the Operating Partnership earned interest under loans to unconsolidated entities totaling $449, $860 and $437, respectively. The Operating Partnership portion of all significant intercompany transactions was eliminated in the accompanying consolidated financial statements.

At December 31, 2007 and 2006, the Operating Partnership had outstanding loan balances to certain current and former Operating Partnership executives totaling $1,120 and $1,268, respectively. These loans mature ten years from their issue date and bear interest at a rate of 6.32% per annum. Proceeds from these loans were used by these executives to acquire the Company’s common shares. Additionally, at December 31, 2007 and 2006, the Operating Partnership had outstanding an additional loan to an Operating Partnership executive totaling $400 and $500, respectively. This loan bears interest at 6.32% per annum. If the executive continues to be employed by the Operating Partnership, the loan will be forgiven annually over a ten year period, as defined in the agreement. The annual loan forgiveness under this loan and other similar loans outstanding in prior years of $100, $100 and $140 was recorded as compensation expense in 2007, 2006 and 2005, respectively.

13.   DERIVATIVE FINANCIAL INSTRUMENTS

At December 31, 2007, the Operating Partnership had an outstanding interest rate swap agreement with a notional value of approximately $93,890 with a maturity date in 2009. The swap arrangement is a variable to fixed rate swap at a fixed rate of 5.21% and the swap was designated as a cash flow hedge of the Operating Partnership’s Federal National Mortgage Association variable rate debt. This swap was entered into in 2006 following the termination of a prior swap arrangement discussed below. The interest rate swap agreement is included on the accompanying consolidated balance sheet at fair value. At December 31, 2007 and 2006, the fair value of the interest rate swap agreement represented a liability of $2,224

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in thousands, except per unit data)

and $564, respectively, and the liabilities were included in consolidated liabilities in the accompanying consolidated balance sheets. The changes in the fair value of this cash flow hedge was recorded as a change in accumulated other comprehensive income (loss), a partners’ equity account, in the accompanying consolidated balance sheet.

In the early 2006, a previous interest rate swap arrangement, accounted for as a cash flow hedge, became ineffective under generally accepted accounting principles (SFAS No. 133, as amended). As a result, the gross increase in the market value of the interest rate swap arrangement of $1,655 through its termination date in 2006 was recognized in other income in the consolidated statement of operations. In addition, under SFAS No. 133, as amended, the Operating Partnership is required to amortize into interest expense the cumulative unrecognized loss on the terminated interest rate swap arrangement of $4,021, included in partners’ equity, over the remaining life of the swap through 2009. Total amortization expense related to this swap was $1,123 and $1,116 for the years ended December 31, 2007 and 2006. The swap arrangement was terminated in 2006 through a $2,448 termination payment to the swap counterparty.

At December 31, 2007 and 2006, the Operating Partnership had outstanding an interest rate cap agreement with a financial institution with a notional value of $28,495. Through mid-December 2006, this interest rate cap agreement was a cash flow hedge that provided a fixed interest ceiling at 5% for the Operating Partnership’s variable rate, tax-exempt borrowings aggregating $28,495. As a result of the repayment of tax-exempt indebtedness in December 2006 and December 2007, portions of this interest rate cap arrangement with notional amounts of $18,600 and $9,895, respectively, associated with this indebtedness became ineffective for accounting purposes. In 2006, the Operating Partnership recognized a loss of approximately $142 due to such ineffectiveness. In 2007, no loss was recognized due to such ineffectiveness as the cost of the interest rate cap arrangement was fully amortized though December 31, 2007. The interest rate cap arrangement expired in February 2008 with no change in its $0 fair value from December 31, 2007.

In 2005, in connection with the sale of three communities discussed in note 2 above, the Operating Partnership sold its interest in interest rate cap agreements with notional values of $81,560 for aggregate proceeds of $17 and realized losses of $955 that were included in the loss on early extinguishment of indebtedness associated with asset sales on the accompanying statement of operations.

The impact of the change in the value of the derivatives on comprehensive income (loss) is included in the statement of partners’ equity. Amounts reported in accumulated other comprehensive income related to these derivatives will be reclassified to interest expense as schedule interest payments are made on the Operating Partnership’s hedged indebtedness. At December 31, 2007, the Operating Partnership estimates that $2,345 will be reclassified from accumulated other comprehensive income as an increase in interest expense during the next twelve months.

14.   FAIR VALUE OF FINANCIAL INSTRUMENTS

The disclosures of estimated fair value of financial instruments were determined by management using available market information and appropriate valuation methodologies available to management at December 31, 2007. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Operating Partnership could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Cash equivalents, rents and accounts receivables, accounts payable, accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair values because of the short-term nature of these instruments. At December 31, 2007, the fair value of fixed rate debt was approximately $726,614 (carrying value of $707,791) and the fair value of floating rate debt approximated its carrying value due to the adjustable nature of the arrangements. At December 31, 2006, the fair value of fixed rate debt was approximately $828,983 (carrying value of $819,371) and the fair value of floating rate debt approximated its carrying value due to the adjustable nature of the arrangements.

In order to manage the impact of interest rate changes on earnings and cash flow, the Operating Partnership entered into and has outstanding interest rate swap and interest rate cap arrangements. As more fully described in note 1, these interest rate cap and interest rate swap agreements are carried on the consolidated balance sheet at fair market value in accordance with SFAS No. 133, as amended. At December 31, 2007, the carrying amounts of the interest rate swap arrangement represented a net liability totaling $2,224 and the interest rate cap arrangement had no value. At December 31, 2006, the carrying amounts of the interest rate swap arrangement represented a net liability totaling $564 and the interest rate cap arrangement had no value.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in thousands, except per unit data)

Disclosure about fair value of financial instruments is based on pertinent information available to management as of December 31, 2007. Although management is not aware of any factors that would significantly affect the reasonable fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and current estimates of fair value may differ significantly from the amounts presented herein.

15.   SEGMENT INFORMATION

Segment Description

In accordance with SFAS No. 131, “Disclosure About the Segments of an Enterprise and Related Information,” the Operating Partnership presents segment information based on the way that management organizes the segments within the enterprise for making operating decisions and assessing performance. The segment information is prepared on the same basis as the internally reported information used by the Operating Partnership’s chief operating decision makers to manage the business.

The Operating Partnership’s chief operating decision makers focus on the Operating Partnership’s primary sources of income from apartment community rental operations. Apartment community rental operations are generally broken down into four segments based on the various stages in the apartment community ownership lifecycle. These segments are described below. All commercial properties and other ancillary service and support operations are combined in the line item “other property segments” in the accompanying segment information. The segment information presented below reflects the segment categories based on the lifecycle status of each community as of January 1, 2006. The segment information for the years ended December 31, 2006 and 2005 have been adjusted due to the restatement impact of reclassifying the operating results of the assets designated as held for sale in 2007 to discontinued operations under SFAS No. 144 (see note 2).

•  Fully stabilized communities — those apartment communities which have been stabilized (the earlier of the point at which a property reaches 95% occupancy or one year after completion of construction) for both the current and prior year.

•  Development, rehabilitation and lease-up communities — those apartment communities that are under development, rehabilitation and lease-up but were not stabilized by the beginning of the current year, including communities that stabilized during the current year.

•  Condominium conversion and other communities — those portions of existing apartment communities being converted into condominiums and other communities converted to joint venture ownership that are reflected in continuing operations under SFAS No. 144 (see note 1).

•  Acquired communities — those communities acquired in the current or prior year.

Segment Performance Measure

Management uses contribution to consolidated property net operating income (“NOI”) as the performance measure for its operating segments. The Operating Partnership uses net operating income, including net operating income of stabilized communities, as an operating measure. Net operating income is defined as rental and other property revenue from real estate operations less total property and maintenance expenses from real estate operations (excluding depreciation and amortization). The Operating Partnership believes that net operating income is an important supplemental measure of operating performance for a REIT’s operating real estate because it provides a measure of the core operations, rather than factoring in depreciation and amortization, financing costs and general and administrative expenses generally incurred at the corporate level. This measure is particularly useful, in the opinion of the Operating Partnership, in evaluating the performance of operating segment groupings and individual properties. Additionally, the Operating Partnership believes that net operating income, as defined, is a widely accepted measure of comparative operating performance in the real estate investment community. The Operating Partnership believes that the line on the Operating Partnership’s consolidated statement of operations entitled “net income” is the most directly comparable GAAP measure to net operating income.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in thousands, except per unit data)

Segment Information

The following table reflects each segment’s contribution to consolidated revenues and NOI together with a reconciliation of segment contribution to property NOI to consolidated net income in 2007, 2006 and 2005. Additionally, substantially all of the Operating Partnership’s assets relate to the Operating Partnership’s property rental operations. Asset cost, depreciation and amortization by segment are not presented because such information at the segment level is not reported internally.

	Year Ended
	December 31,
	2007			2006			2005
Revenues
Fully stabilized communities	$	244,537		$	233,637		$	219,973
Development, rehabilitation and lease-up communities		14,972			9,545			10,438
Condominium conversion and other communities		9,810			17,281			19,989
Acquired communities		13,760			7,027			—
Other property segments		23,861			23,653			21,616
Other		602			402			255
Consolidated revenues	$	307,542		$	291,545		$	272,271
Contribution to Property Net Operating Income
Fully stabilized communities	$	152,200		$	145,346		$	135,511
Development, rehabilitation and lease-up communities		6,908			4,254			6,077
Condominium conversion and other communities		5,457			9,811			13,144
Acquired communities		8,256			3,929			—
Other property segments, including corporate management expenses		(7,023	)		(5,687	)		(7,470	)
Consolidated property net operating income		165,798			157,653			147,262
Interest income		822			1,261			661
Other revenues		602			402			255
Minority interest in consolidated property partnerships		(1,857	)		(257	)		(110	)
Depreciation		(66,371	)		(65,687	)		(68,795	)
Interest expense		(52,116	)		(52,533	)		(54,197	)
Amortization of deferred financing costs		(3,297	)		(3,526	)		(4,661	)
General and administrative		(21,337	)		(18,502	)		(18,307	)
Investment and development		(7,063	)		(6,424	)		(4,711	)
Severance charges		—			—			(796	)
Gains (losses) on sales of real estate assets, net		100,015			12,881			(531	)
Equity in income of unconsolidated real estate entities		1,556			1,813			1,767
Other income (expense)		(1,098	)		2,592			5,267
Income from continuing operations		115,654			29,673			3,104
Income from discontinued operations		65,438			73,613			145,943
Net income	$	181,092		$	103,286		$	149,047

16.   SUPPLEMENTAL CASH FLOW INFORMATION

Non-cash investing and financing activities for the years ended December 31, 2007, 2006 and 2005 were as follows:

In 2007, the Operating Partnership sold two apartment communities of the net proceeds totaling $66,938 were held by an exchange intermediary at December 31, 2007, pending the completion of a tax deferred exchange. In 2006, the Operating Partnership sold an apartment community subject to $40,000 of secured mortgage indebtedness assumed by the purchaser. In 2005, the Operating Partnership sold three apartment communities subject to $81,560 of tax-exempt mortgage indebtedness assumed by the purchasers. Additionally in 2006, the Operating Partnership acquired an apartment community for cash and the assumption of secured mortgage indebtedness totaling $41,394. These transactions were excluded from the cash flow statement as non-cash transactions.

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119

POST APARTMENT HOMES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in thousands, except per unit data)

In 2007, the Operating Partnership amortized approximately $1,123 of accumulated other comprehensive non-cash losses into earnings related to an interest rate swap derivative financial instrument (see note 13). Other than the amortization discussed herein, in 2007, the Operating Partnership’s derivative financial instruments, accounted for as cash flow hedges, decreased in value causing an increase in accounts payable and accrued expenses and a corresponding decrease in partners’ equity of $1,660. In 2006, the Operating Partnership amortized approximately $1,116 of accumulated other comprehensive non-cash losses into earnings related to an interest rate swap derivative financial instrument (see note 13). In addition in 2006, the Operating Partnership recognized a non-cash loss of $142 through a reduction of accumulated other comprehensive losses as a result of the ineffectiveness of an interest rate cap arrangement (see note 13). Other than the amortization and loss discussed herein, in 2006, the Operating Partnership’s derivative financial instruments, accounted for as cash flow hedges, decreased in value causing an increase in accounts payable and accrued expenses and a corresponding decrease in partners’ equity of $305. In 2005, the Operating Partnership’s derivative financial instruments increased in value causing a decrease in accounts payable and accrued expenses and a corresponding increase in partners’ equity of $5,850.

The Operating Partnership committed to distribute $19,933, $19,886 and $19,257 for the quarters ended December 31, 2007, 2006 and 2005, respectively.

In 2007, 2006 and 2005, the Company issued common shares for director compensation, totaling $502, $471 and $194, respectively. In 2005, under an amended and restated deferred compensation plan for directors and officers, Company common shares were issued to the plan in settlement of the Company’s variable obligation relating to changes in the value of its common shares due the directors under the prior deferred compensation plan. This 2005 common share issuance totaling $1,568 and the additional stock issuances in 2005, 2006 and 2007 were non-cash transactions.

In 2007, 2006 and 2005, the Operating Partnership and the Operating Partnership’s taxable REIT subsidiaries made income tax payments to federal and state taxing authorities totaling $1,411, $339 and $760, respectively.

17.   OTHER INCOME (EXPENSE)

In 2007, other expense primarily included estimated state franchise and other taxes. Franchise taxes of approximately $694 are associated with new margin-based taxes in Texas that were effective in 2007. Income tax expense recorded by the Operating Partnership of approximately $560 in 2007 is discussed in note 8. In 2006, other income primarily included a gain on the sale of marketable securities of $573, an additional gain on sale of a technology investment of $325 resulting from the receipt of previously escrowed proceeds under the prior year sale (see below) and additional income totaling $1,655 resulting from the net increase in the market value of an ineffective cash flow hedge prior to its termination. In 2005, the Operating Partnership sold its investment in a technology company, and recognized a gain of $5,267.

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120

18.   QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Under SFAS No. 144, as further discussed in note 2, the operating results of apartment communities classified as held for sale were included in discontinued operations in the accompanying statements of operations for all periods presented. To conform with this presentation, the quarterly financial information presented below reflects the reclassification of the operating results of these assets to discontinued operations, which in the first and second quarters of 2007 differ from the presentation of discontinued operations included in the Operating Partnership’s previously issued financial statements included in its quarterly reports on Form 10-Q filed in 2007. Quarterly financial information for the years ended December 31, 2007 and 2006, as revised to reflect the change discussed above, was as follows:

	Year Ended December 31, 2007
	First			Second			Third			Fourth
Revenues	$	75,360		$	76,065		$	78,011		$	78,106
Income (loss) from continuing operations		6,968			64,300			10,038			34,348
Income from discontinued operations		17,854			548			1,118			45,918
Net income		24,822			64,848			11,156			80,266
Distributions to preferred unitholders		(1,909	)		(1,910	)		(1,909	)		(1,909	)
Net income available to common unitholders	$	22,913		$	62,938		$	9,247		$	78,357
Earnings per common unit:
Net income available to common unitholders — basic	$	0.52		$	1.43		$	0.21		$	1.77
Net income available to common unitholders — diluted	$	0.51		$	1.40		$	0.21		$	1.76

	Year Ended December 31,
	2006
	First			Second			Third			Fourth
Revenues	$	70,146		$	72,160		$	74,709		$	74,530
Income from continuing operations		3,454			12,333			7,099			6,787
Income from discontinued operations		1,419			1,917			29,366			40,911
Net income		4,873			14,250			36,465			47,698
Distributions to preferred unitholders		(1,909	)		(1,910	)		(1,909	)		(1,909	)
Net income available to common unitholders	$	2,964		$	12,340		$	34,556		$	45,789
Earnings per common unit:
Net income available to common unitholders — basic	$	0.07		$	0.28		$	0.79		$	1.04
Net income available to common unitholders — diluted	$	0.07		$	0.28		$	0.77		$	1.02

In the first, second and fourth quarters of 2007, net income increased primarily due to gains on sales of apartment communities and gains on the sales of 75% interests in certain apartment communities to an unconsolidated entity (see note 2) during those periods. In the third and fourth quarters of 2006, net income increased primarily due to gains on sales of apartment communities during those periods.

121

Post Properties, Inc.
Post Apartment Homes, L.P.

Schedule III
POST PROPERTIES, INC.
POST APARTMENT HOMES, L.P.
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 2007
(Dollars in thousands)
									Costs		Gross Amount at Which
					Initial Costs				Capitalized		Carried at Close of Period
		Related					Building and		Subsequent				Building and				Accumulated		Date of	Date	Depreciable
	Description	Encumbrances			Land		Improvements		To Acquisition		Land		Improvements		Total(1)		Depreciation		Construction	Acquired	Lives Years
Georgia
Post Briarclifftm	Apartments		—			13,344		—		48,161		13,344		48,161		61,505		16,302	12/96	09/96		5-40 Years
Post Brookhaven®	Apartments		—			7,921		—		34,417		7,921		34,417		42,338		19,066	07/89 – 12/92	03/89		5-40 Years
Post Chastain®	Apartments		27,694	(2)		6,352		—		57,076		6,779		56,649		63,428		23,059	06/88 – 10/90	06/88		5-40 Years
Post Crossing®	Apartments		21,580			3,951		—		20,899		3,951		20,899		24,850		8,067	04/94 – 08/95	11/93		5-40 Years
Post Dunwoody®	Apartments		—			4,917		—		30,680		4,961		30,636		35,597		13,409	11/88	12/84 & 8/94		5-40 Years
Post Gardens®	Apartments		—			5,859		—		35,455		5,931		35,383		41,314		12,177	07/96	05/96		5-40 Years
Post Glen®	Apartments		19,137			5,591		—		22,972		5,784		22,779		28,563		8,280	07/96	05/96		5-40 Years
Post Lenox Park®	Apartments		10,224	(2)		3,132		—		11,918		3,132		11,918		15,050		4,621	03/94 – 05/95	03/94		5-40 Years
Post Oglethorpe®	Apartments		—			3,662		—		18,140		3,662		18,140		21,802		7,309	03/93 – 10/94	03/93		5-40 Years
Post Parksidetm	Mixed Use		—			3,402		—		20,708		3,465		20,645		24,110		6,259	02/99	12/97		5-40 Years
Post Peachtree Hills®	Apartments		—			4,215		—		15,324		4,857		14,682		19,539		6,575	02/92 – 09/94	02/92 & 9/92		5-40 Years
Post Renaissance®(3)	Apartments		—			—		—		21,726		—		21,726		21,726		9,831	07/91 – 12/94	06/91 & 01/94		5-40 Years
Post Ridge®	Apartments		—			5,150		—		32,647		5,150		32,647		37,797		10,723	10/96	07/96		5-40 Years
Post Riverside®	Mixed Use		—			11,130		—		112,706		12,457		111,379		123,836		38,356	07/96	01/96		5-40 Years
Post Springtm	Apartments		—			2,105		—		38,736		2,105		38,736		40,841		11,190	09/99	09/99		5-40 Years
Post Stratfordtm(3)	Apartments		—			328		—		26,127		620		25,835		26,455		7,951	04/99	01/99		5-40 Years
Post Woods®	Apartments		24,517	(2)		1,378		—		29,905		3,070		28,213		31,283		16,797	03/76 – 09/83	06/76		5-40 Years

122

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Schedule III continued
POST PROPERTIES, INC.
POST APARTMENT HOMES, L.P.
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 2007
(Dollars in thousands)
									Costs		Gross Amount at Which
					Initial Costs				Capitalized		Carried at Close of Period
		Related					Building and		Subsequent				Building and				Accumulated		Date of	Date	Depreciable
	Description	Encumbrances			Land		Improvements		To Acquisition		Land		Improvements		Total(1)		Depreciation		Construction	Acquired	Lives Years
Texas
Post Abbeytm	Apartments	$	—		$	575	$	6,276	$	1,863	$	575	$	8,139	$	8,714	$	2,183	N/A	10/97		5-40 Years
Post Addison Circletm	Mixed Use		—			2,885		41,482		124,618		8,382		160,603		168,985		49,900	10/97	10/97		5-40 Years
Post Barton Creektm	Apartments		—			1,920		24,482		941		1,920		25,423		27,343		1,367	N/A	03/06		5-40 Years
Post Cole’s Cornertm	Mixed Use		—			1,886		18,006		2,529		2,086		20,335		22,421		6,943	N/A	10/97		5-40 Years
Post Heightstm/Gallery	Mixed Use		—			5,455		15,559		31,367		5,812		46,569		52,381		14,840	10/97	10/97		5-40 Years
Post Legacy	Mixed Use		—			684		—		33,868		811		33,741		34,552		8,969	03/99	03/99		5-40 Years
Post Meridiantm	Apartments		—			1,535		11,605		1,493		1,535		13,098		14,633		4,231	N/A	10/97		5-40 Years
Post Midtown Square®	Mixed Use		—			4,408		1,412		48,941		3,437		51,324		54,761		13,942	10/97	10/97		5-40 Years
Post Park Mesatm	Apartments		—			1,480		17,861		881		1,480		18,742		20,222		983	N/A	03/06		5-40 Years
Post Rice Loftstm(3)	Mixed Use		—			449		13,393		27,514		449		40,907		41,356		9,763	10/97	10/97		5-40 Years
Post Squaretm	Mixed Use		—			4,565		24,595		1,983		4,565		26,578		31,143		7,219	N/A	10/97		5-40 Years
Post Uptown Villagetm	Apartments		14,889	(2)		3,955		22,120		19,856		6,682		39,249		45,931		10,665	N/A	10/97		5-40 Years
Post Vineyardtm	Apartments		—			1,133		8,560		657		1,133		9,217		10,350		2,476	N/A	10/97		5-40 Years
Post Vintagetm	Apartments		—			2,614		12,188		953		2,614		13,141		15,755		3,943	N/A	10/97		5-40 Years
Post Worthingtontm	Mixed Use		—			3,744		34,700		15,971		3,744		50,671		54,415		11,868	N/A	10/97		5-40 Years
Florida
Post Bay at Rocky Pointtm(5)	Apartments		—			528		5,081		20,437		2,400		23,646		26,046		675	N/A	10/06		5-40 Years
Post Harbour Placetm	Mixed Use		—			3,854		—		66,137		8,312		61,679		69,991		17,842	03/97	01/97		5-40 Years
Post Hyde Park®	Apartments		—			3,498		—		41,667		9,011		36,154		45,165		9,165	09/94	07/94		5-40 Years
Post Lake at Baldwin Park®	Apartments		—			17,500		56,707		106		17,500		56,813		74,313		757	N/A	07/07		5-40 Years
Post Parksidetm	Mixed Use		—			2,493		—		32,240		2,493		32,240		34,733		8,618	03/99	03/99		5-40 Years
Post Rocky Point®	Apartments		57,000			10,510		—		64,126		10,567		64,069		74,636		21,519	04/94 – 11/96	02/94 & 09/96		5-40 Years
Virginia
Post Carlyle Squaretm(5)	Mixed Use		—			1,043		—		55,608		3,316		53,335		56,651		1,424	12/04	N/A		5-40 Years
Post Corners®	Apartments		16,676	(2)		4,404		—		25,192		4,493		25,103		29,596		8,835	06/94	06/94		5-40 Years
Post Fallsgrove	Apartments		40,513			14,801		69,179		692		14,801		69,871		84,672		3,046	N/A	7/06		5-40 Years
Post Forest®	Apartments		—			8,590		—		27,837		9,106		27,321		36,427		16,716	01/89 – 12/90	03/88		5-40 Years
Post Pentagon Rowtm(3)	Mixed Use		—			2,359		7,659		85,916		3,470		92,464		95,934		16,572	06/99	02/99		5-40 Years
Post Tysons Cornertm	Apartments		—			20,000		65,478		1,869		20,000		67,347		87,347		7,909	N/A	06/04		5-40 Years
New York
Post Luminariatm	Mixed Use		34,561			4,938		—		46,302		4,938		46,302		51,240		11,231	03/01	03/01		5-40 Years
Post Toscanatm	Mixed Use		—			15,976		—		76,881		17,156		75,701		92,857		9,414	01/02	01/02		5-40 Years

123

Post Properties, Inc.
Post Apartment Homes, L.P.

Schedule III continued
POST PROPERTIES, INC.
POST APARTMENT HOMES, L.P.
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 2007
(Dollars in thousands)
								Costs		Gross Amount at Which
				Initial Costs				Capitalized		Carried at Close of Period
		Related				Building and		Subsequent				Building and						Accumulated		Date of	Date	Depreciable
	Description	Encumbrances		Land		Improvements		To Acquisition		Land		Improvements			Total(1)			Depreciation		Construction	Acquired	Lives Years
North Carolina
Post Ballantyne	Apartments			$	6,400	$	30,850	$	2,470	$	6,400	$	33,320		$	39,720		$	3,270	11/04	05/05		5-40 Years
Post Gateway Placetm	Mixed Use	$	—		2,424		—		61,338		3,481		60,281			63,762			14,154	11/00	08/99		5-40 Years
Post Park at Phillips Place®	Mixed Use		—		4,305		—		38,317		4,307		38,315			42,622			13,608	01/96	11/95		5-40 Years
Post Uptown Placetm	Mixed Use		—		2,336		—		29,019		2,363		28,992			31,355			7,484	09/98	09/98		5-40 Years
Miscellaneous Investments(6)			—		13,212		5,496		291,647		154,769		155,586			310,355			20,723				5-40 Years
Total		$	266,791	$	258,896	$	492,689	$	1,858,833	$	431,297	$	2,179,121	(4)	$	2,610,418	(4)	$	562,226

(1)	The aggregate cost for Federal Income Tax purposes to the Company was approximately $2,226,130 at December 31, 2007, taking into account the special allocation of gain to the partners contributing property to the Operating Partnership.
(2)	These properties serve as collateral for the Federal National Mortgage Association credit enhancement.
(3)	The Company has a leasehold interest in the land underlying these communities.
(4)	This total excludes for-sale condominiums and assets held for sale of $38,844 and $24,576, respectively, at December 31, 2007. Assets held for sale include one apartment community with gross assets and gross accumulated depreciation of $21,034 and $4,031, respectively, at December 31, 2007.
(5)	For communities in lease-up, amounts represent cost associated with completed apartment units.
(6)	Miscellaneous investments include construction in progress, land held for development and certain other corporate assets.

A summary of activity for real estate investments and accumulated depreciation is as follows:

	2007			2006			2005
Real estate investments
Balance at beginning of year	$	2,532,117		$	2,373,406		$	2,407,425
Improvements		241,215			316,296			129,101
Disposition of property(a)		(162,914	)		(157,585	)		(163,120	)
Balance at end of year	$	2,610,418		$	2,532,117		$	2,373,406
Accumulated depreciation
Balance at beginning of year	$	547,477		$	516,954		$	498,367
Depreciation(b)		65,646			67,311			75,185
Accumulated depreciation on disposed property(a)		(50,897	)		(36,788	)		(56,598	)
Balance at end of year(c)	$	562,226		$	547,477		$	516,954

(a)	Represents reductions for assets classified as held for sale and converted into for-sale condominiums as well as assets contributes to an unconsolidated entity in 2007.
(b)	Represents depreciation expense of real estate assets. Amounts exclude depreciation and amortization of lease intangible assets, commercial leasing costs and excess joint venture investments.
(c)	Accumulated depreciation on the balance sheet excludes accumulated depreciation on assets held for sale in the amounts of $4,031, $4,035 and $0 at December 31, 2007, 2006 and 2005, respectively.

124

Post Properties, Inc.
Post Apartment Homes, L.P.

(b)   Exhibits

Certain exhibits required by Item 601 of Regulation S-K have been filed with previous reports by the registrants and are incorporated by reference herein.

The Registrants agree to furnish a copy of all agreements relating to long-term debt upon request of the SEC.

Exhibit
No.				Description
	3	.1(a)	—	Articles of Incorporation of the Company
	3	.2(b)	—	Articles of Amendment to the Articles of Incorporation of the Company
	3	.3(b)	—	Articles of Amendment to the Articles of Incorporation of the Company
	3	.4(b)	—	Articles of Amendment to the Articles of Incorporation of the Company
	3	.5(c)	—	Articles of Amendment to the Articles of Incorporation of the Company
	3	.6(d)	—	Bylaws of the Company (as Amended and Restated as of November 5, 2003)
	3	.7(e)	—	Amendment No. 1 to the Amended and Restated Bylaws of the Company
	3	.8(s)	—	Amendment No. 2 to the Amended and Restated Bylaws of the Company
	3	.9(q)	—	Amendment No. 3 to the Amended and Restated Bylaws of the Company
	4	.1(f)	—	Indenture between the Company and SunTrust Bank, as Trustee
	4	.2(f)	—	Form of First Supplemental Indenture to the Indenture between the Company and SunTrust Bank, as Trustee
	10	.1(b)	—	Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership
	10	.2(b)	—	First Amendment to Second Amended and Restated Partnership Agreement
	10	.3(b)	—	Second Amendment to Second Amended and Restated Partnership Agreement
	10	.4(g)	—	Third Amendment to Second Amended and Restated Partnership Agreement
	10	.5(g)	—	Fourth Amendment to Second Amended and Restated Partnership Agreement
	10	.6(c)	—	Fifth Amendment to Second Amended and Restated Partnership Agreement
	10	.7(h)	—	Sixth Amendment to Second Amended and Restated Partnership Agreement
	10	.8*	—	Amended and Restated Employee Stock Plan
	10	.9(j)*	—	2003 Incentive Stock Plan
	10	.10(b)	—	Form of Indemnification Agreement for officers and directors
	10	.11(k)*	—	Dividend Reinvestment Stock Purchase Plan
	10	.12*	—	Multi-Family Note, dated as of January 25, 2008 by and between Post Addison Circle, as the borrower, and Deutsche Bank Berkshire Mortgage, Inc., d/b/a DB Berkshire Mortgage, Inc., a Delaware corporation, as the lender.
	10	.13(m)*	—	Deferred Compensation Plan for Directors and Eligible Employees (as amended and restated effective as of January 1, 2005)
	10	.14*	—	Form of Change in Control Agreement (2.0X)
	10	.15*	—	Form of Change in Control Agreement (1.5X)
	10	.16*	—	Form of Change in Control Agreement (1.0X)
	10	.17(i)*	—	Amended and Restated Employment and Change in Control Agreement with David P. Stockert
	10	.18(i)*	—	Amended and Restated Employment and Change in Control Agreement with Christopher J. Papa
	10	.19(i)*	—	Amended and Restated Employment and Change in Control Agreement with Thomas D. Senkbeil
	10	.20(i)*	—	Amended and Restated Employment and Change in Control Agreement with Thomas L. Wilkes
	10	.21(i)*	—	Amended and Restated Employment and Change in Control Agreement with Sherry W. Cohen
	10	.22(n)*	—	Form of 2003 Incentive Stock Plan, Non-Incentive Stock Option and Stock Appreciation Right Certificate for Key Employees
	10	.23(n)*	—	Form of 2003 Incentive Stock Plan, Non-Incentive Stock Option and Stock Appreciation Right Certificate for Directors and Chairman
	10	.24(l)*	—	Form of 2003 Incentive Stock Plan Restricted Stock Grant Certificate for Key Employees
	10	.25(l)*	—	Form of 2003 Incentive Stock Plan Restricted Stock Grant Certificate for Directors and Chairman
	10	.26(o)	—	Amended and Restated Credit Agreement dated as of April 28, 2006 by and among Post Apartment Homes, L.P., Wachovia Capital Markets, LLC and J.P. Morgan Securities Inc., Wachovia Bank, National Association, SunTrust Bank and Sumitomo Mitsui Banking Corporation, and the financial institutions a party thereto and their assignees
	10	.27(r)	—	First Amendment, dated as of November 2, 2007, to Amended and Restated Credit Agreement by and among Post Apartment Homes, L.P., each of the Lenders party thereto and Wachovia Bank, National Association.
	11	.1(p)	—	Statement Regarding Computation of Per Share Earnings

125

Post Properties, Inc.
Post Apartment Homes, L.P.

Exhibit
No.				Description
	21	.1	—	List of Subsidiaries
	23	.1	—	Consent of Deloitte & Touche LLP — Post Properties, Inc.
	23	.2	—	Consent of Deloitte & Touche LLP — Post Apartment Homes, L.P. and Post Properties, Inc.
	23	.3	—	Consent of PricewaterhouseCoopers LLP — Post Properties, Inc.
	23	.4	—	Consent of PricewaterhouseCoopers LLP — Post Apartment Homes, L.P. and Post Properties, Inc.
	31	.1	—	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, and adopted under Section 302 of the Sarbanes-Oxley Act of 2002
	31	.2	—	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, and adopted under Section 302 of the Sarbanes-Oxley Act of 2002
	32	.1	—	Certification of the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted under Section 906 of the Sarbanes-Oxley Act of 2002
	32	.2	—	Certification of the Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted under Section 906 of the Sarbanes-Oxley Act of 2002

*	Identifies each management contract or compensatory plan required to be filed.
(a)	Filed as an exhibit to the Registration Statement on Form S-11 (SEC File No. 33-61936), as amended, of the Company and incorporated herein by reference.
(b)	Filed as an exhibit to the Annual Report on Form 10-K of the Registrants for the year ended December 31, 2002 and incorporated herein by reference.
(c)	Filed as an exhibit to the Quarterly Report on Form 10-Q of the Registrants for the quarter ended September 30, 1999 and incorporated herein by reference.
(d)	Filed as an exhibit to the Quarterly Report on Form 10-Q of the Registrants for the quarter ended September 30, 2003 and incorporated herein by reference.
(e)	Filed as Appendix A to the 2004 proxy statement and incorporated herein by reference.
(f)	Filed as an exhibit to the Registration Statement on Form S-3 (SEC File No. 333-42884), as amended, of the Company and incorporated herein by reference.
(g)	Filed as an exhibit to the Annual Report on Form 10-K of the Registrants for the year ended December 31, 1998 and incorporated herein by reference.
(h)	Filed as an exhibit to the Annual Report on Form 10-K of the Registrants for the year ended December 31, 2000 and incorporated herein by reference.
(i)	Filed as an exhibit to the Current Report on Form 8-K of the Registrants filed February 15, 2008.
(j)	Filed as Appendix A to the 2003 proxy statement and incorporated herein by reference.
(k)	Filed as part of the Registration Statement on Form S-3 (File No. 333-39461) of the Company and incorporated herein by reference.
(l)	Filed as an exhibit to the Annual Report on Form 10-K for the Registrants for the year ended December 31, 2006 and incorporated herein by reference.
(m)	Filed as an exhibit to the Current Report on Form 8-K of the Registrants filed August 15, 2005 and incorporated herein by reference.
(n)	Filed as an exhibit to the Current Report on Form 8-K of the Registrants filed January 24, 2006 and incorporated herein by reference.
(o)	Filed as an exhibit to the Current Report on Form 8-K of the Registrants filed May 2, 2006 and incorporated herein by reference.
(p)	The information required by this exhibit is included in note 6 to the consolidated financial statement and incorporated herein by reference.
(q)	Filed as an exhibit to the Current Report on Form 8-K of the Registrants filed on December 20, 2007 and incorporated herein by reference.
(r)	Filed as an exhibit to the Current Report on Form 8-K of the Registrants filed on November 2, 2007 and incorporated herein by reference.
(s)	Filed as an exhibit to the Current Report on Form 8-K of the Registrants filed on February 20, 2007 and incorporated herein by reference.

126

Post Properties, Inc.
Post Apartment Homes, L.P.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

POST PROPERTIES, INC.

(Registrant)

February 28, 2008

By:   /s/  David P. Stockert

David P. Stockert, President and Chief

Executive Officer

(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/  Robert C. Goddard, III /s/ Robert C. Goddard, III	Chairman of the Board and Director	February 28, 2008
/s/  David P. Stockert /s/ David P. Stockert	President, Chief Executive Officer and Director (Principal Executive Officer)	February 28, 2008
/s/  Christopher J. Papa /s/ Christopher J. Papa	Executive Vice President and Chief Financial Officer (Principal Financial Officer)	February 28, 2008
/s/  Arthur J. Quirk /s/ Arthur J. Quirk	Senior Vice President and Chief Accounting Officer (Principal Financial Officer)	February 28, 2008
/s/  Herschel M. Bloom /s/ Herschel M. Bloom	Director	February 28, 2008
/s/  Douglas Crocker II /s/ Douglas Crocker II	Director	February 28, 2008
/s/  Walter M. Deriso, Jr.  /s/ Walter M. Deriso, Jr.	Director	February 28, 2008
/s/  Russell R. French /s/ Russell R. French	Director	February 28, 2008
/s/  Charles E. Rice /s/ Charles E. Rice	Director	February 28, 2008
/s/  Stella F. Thayer /s/ Stella F. Thayer	Director	February 28, 2008
/s/  Ronald de Waal /s/ Ronald de Waal	Director	February 28, 2008

127

Post Properties, Inc.
Post Apartment Homes, L.P.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

POST APARTMENT HOMES, L.P.

Post G.P. Holdings, Inc., as General Partner

February 28, 2008

By:   /s/  David P. Stockert

David P. Stockert, President and Chief

Executive Officer

(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/  Robert C. Goddard, III /s/ Robert C. Goddard, III	Chairman of the Board and Director	February 28, 2008
/s/  David P. Stockert /s/ David P. Stockert	President, Chief Executive Officer and Director (Principal Executive Officer)	February 28, 2008
/s/  Christopher J. Papa /s/ Christopher J. Papa	Executive Vice President and Chief Financial Officer (Principal Financial Officer)	February 28, 2008
/s/  Arthur J. Quirk /s/ Arthur J. Quirk	Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)	February 28, 2008
/s/  Herschel M. Bloom /s/ Herschel M. Bloom	Director	February 28, 2008
/s/  Douglas Crocker II /s/ Douglas Crocker II	Director	February 28, 2008
/s/  Walter M. Deriso, Jr.  /s/ Walter M. Deriso, Jr.	Director	February 28, 2008
/s/  Russell R. French /s/ Russell R. French	Director	February 28, 2008
/s/  Charles E. Rice /s/ Charles E. Rice	Director	February 28, 2008
/s/  Stella F. Thayer /s/ Stella F. Thayer	Director	February 28, 2008
/s/  Ronald de Waal /s/ Ronald de Waal	Director	February 28, 2008

128

Post Properties, Inc.
Post Apartment Homes, L.P.

EXHIBIT INDEX

Exhibit
No.				Description
	3	.1(a)	—	Articles of Incorporation of the Company
	3	.2(b)	—	Articles of Amendment to the Articles of Incorporation of the Company
	3	.3(b)	—	Articles of Amendment to the Articles of Incorporation of the Company
	3	.4(b)	—	Articles of Amendment to the Articles of Incorporation of the Company
	3	.5(c)	—	Articles of Amendment to the Articles of Incorporation of the Company
	3	.6(d)	—	Bylaws of the Company (as Amended and Restated as of November 5, 2003)
	3	.7(e)	—	Amendment No. 1 to the Amended and Restated Bylaws of the Company
	3	.8(s)	—	Amendment No. 2 to the Amended and Restated Bylaws of the Company
	3	.9(q)	—	Amendment No. 3 to the Amended and Restated Bylaws of the Company
	4	.1(f)	—	Indenture between the Company and SunTrust Bank, as Trustee
	4	.2(f)	—	Form of First Supplemental Indenture to the Indenture between the Company and SunTrust Bank, as Trustee
	10	.1(b)	—	Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership
	10	.2(b)	—	First Amendment to Second Amended and Restated Partnership Agreement
	10	.3(b)	—	Second Amendment to Second Amended and Restated Partnership Agreement
	10	.4(g)	—	Third Amendment to Second Amended and Restated Partnership Agreement
	10	.5(g)	—	Fourth Amendment to Second Amended and Restated Partnership Agreement
	10	.6(c)	—	Fifth Amendment to Second Amended and Restated Partnership Agreement
	10	.7(h)	—	Sixth Amendment to Second Amended and Restated Partnership Agreement
	10	.8*	—	Amended and Restated Employee Stock Plan
	10	.9(j)*	—	2003 Incentive Stock Plan
	10	.10(b)	—	Form of Indemnification Agreement for officers and directors
	10	.11(k)*	—	Dividend Reinvestment Stock Purchase Plan
	10	.12*	—	Multi-Family Note, dated as of January 25, 2008 by and between Post Addison Circle, as the borrower, and Deutsche Bank Berkshire Mortgage, Inc., d/b/a DB Berkshire Mortgage, Inc., a Delaware corporation, as the lender.
	10	.13(m)*	—	Deferred Compensation Plan for Directors and Eligible Employees (as amended and restated effective as of January 1, 2005)
	10	.14*	—	Form of Change in Control Agreement (2.0X)
	10	.15*	—	Form of Change in Control Agreement (1.5X)
	10	.16*	—	Form of Change in Control Agreement (1.0X)
	10	.17(i)*	—	Amended and Restated Employment and Change in Control Agreement with David P. Stockert
	10	.18(i)*	—	Amended and Restated Employment and Change in Control Agreement with Christopher J. Papa
	10	.19(i)*	—	Amended and Restated Employment and Change in Control Agreement with Thomas D. Senkbeil
	10	.20(i)*	—	Amended and Restated Employment and Change in Control Agreement with Thomas L. Wilkes
	10	.21(i)*	—	Amended and Restated Employment and Change in Control Agreement with Sherry W. Cohen
	10	.22(n)*	—	Form of 2003 Incentive Stock Plan, Non-Incentive Stock Option and Stock Appreciation Right Certificate for Key Employees
	10	.23(n)*	—	Form of 2003 Incentive Stock Plan, Non-Incentive Stock Option and Stock Appreciation Right Certificate for Directors and Chairman
	10	.24(l)*	—	Form of 2003 Incentive Stock Plan Restricted Stock Grant Certificate for Key Employees
	10	.25(l)*	—	Form of 2003 Incentive Stock Plan Restricted Stock Grant Certificate for Directors and Chairman
	10	.26(o)	—	Amended and Restated Credit Agreement dated as of April 28, 2006 by and among Post Apartment Homes, L.P., Wachovia Capital Markets, LLC and J.P. Morgan Securities Inc., Wachovia Bank, National Association, SunTrust Bank and Sumitomo Mitsui Banking Corporation, and the financial institutions a party thereto and their assignees
	10	.27(r)	—	First Amendment, dated as of November 2, 2007, to Amended and Restated Credit Agreement by and among Post Apartment Homes, L.P., each of the Lenders party thereto and Wachovia Bank, National Association.
	11	.1(p)	—	Statement Regarding Computation of Per Share Earnings
	21	.1	—	List of Subsidiaries
	23	.1	—	Consent of Deloitte & Touche LLP -- Post Properties, Inc.
	23	.2	—	Consent of Deloitte & Touche LLP -- Post Apartment Homes, L.P. and Post Properties, Inc.
	23	.3	—	Consent of PricewaterhouseCoopers LLP -- Post Properties, Inc.

129

Post Properties, Inc.
Post Apartment Homes, L.P.

Exhibit
No.				Description
	23	.4	—	Consent of PricewaterhouseCoopers LLP -- Post Apartment Homes, L.P. and Post Properties, Inc.
	31	.1	—	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, and adopted under Section 302 of the Sarbanes-Oxley Act of 2002
	31	.2	—	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, and adopted under Section 302 of the Sarbanes-Oxley Act of 2002
	32	.1	—	Certification of the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted under Section 906 of the Sarbanes-Oxley Act of 2002
	32	.2	—	Certification of the Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted under Section 906 of the Sarbanes-Oxley Act of 2002

*	Identifies each management contract or compensatory plan required to be filed.
(a)	Filed as an exhibit to the Registration Statement on Form S-11 (SEC File No. 33-61936), as amended, of the Company and incorporated herein by reference.
(b)	Filed as an exhibit to the Annual Report on Form 10-K of the Registrants for the year ended December 31, 2002 and incorporated herein by reference.
(c)	Filed as an exhibit to the Quarterly Report on Form 10-Q of the Registrants for the quarter ended September 30, 1999 and incorporated herein by reference.
(d)	Filed as an exhibit to the Quarterly Report on Form 10-Q of the Registrants for the quarter ended September 30, 2003 and incorporated herein by reference.
(e)	Filed as Appendix A to the 2004 proxy statement and incorporated herein by reference.
(f)	Filed as an exhibit to the Registration Statement on Form S-3 (SEC File No. 333-42884), as amended, of the Company and incorporated herein by reference.
(g)	Filed as an exhibit to the Annual Report on Form 10-K of the Registrants for the year ended December 31, 1998 and incorporated herein by reference.
(h)	Filed as an exhibit to the Annual Report on Form 10-K of the Registrants for the year ended December 31, 2000 and incorporated herein by reference.
(i)	Filed as an exhibit to the Current Report on Form 8-K of the Registrants filed February 15, 2008.
(j)	Filed as Appendix A to the 2003 proxy statement and incorporated herein by reference.
(k)	Filed as part of the Registration Statement on Form S-3 (File No. 333-39461) of the Company and incorporated herein by reference.
(l)	Filed as an exhibit to the Annual Report on Form 10-K for the Registrants for the year ended December 31, 2006 and incorporated herein by reference.
(m)	Filed as an exhibit to the Current Report on Form 8-K of the Registrants filed August 15, 2005 and incorporated herein by reference.
(n)	Filed as an exhibit to the Current Report on Form 8-K of the Registrants filed January 24, 2006 and incorporated herein by reference.
(o)	Filed as an exhibit to the Current Report on Form 8-K of the Registrants filed May 2, 2006 and incorporated herein by reference.
(p)	The information required by this exhibit is included in note 6 to the consolidated financial statement and incorporated herein by reference.
(q)	Filed as an exhibit to the Current Report on Form 8-K of the Registrants filed on December 20, 2007 and incorporated herein by reference.
(r)	Filed as an exhibit to the Current Report on Form 8-K of the Registrants filed on November 2, 2007 and incorporated herein by reference.
(s)	Filed as an exhibit to the Current Report on Form 8-K of the Registrants filed on February 20, 2007 and incorporated herein by reference.

130

Post Properties, Inc.
Post Apartment Homes, L.P.

EX-10.8

Exhibit 10.8

POST PROPERTIES, INC.
EMPLOYEE STOCK PLAN
AS
AMENDED AND RESTATED
AS OF
FEBRUARY 19, 1998

TABLE OF CONTENTS

				Page
§ 1.	BACKGROUND AND PURPOSE				1
§ 2.	DEFINITIONS				1
		2.1.	Affiliate		1
		2.2.	Board		1
		2.3.	Change in Control		1
		2.4.	Code		2
		2.5.	Committee		2
		2.6.	Director		2
		2.7.	Executive Committee Member		2
		2.8.	Fair Market Value		2
		2.9.	Insider		3
		2.10.	ISO		3
		2.11.	Key Employee		3
		2.12.	NQO		3
		2.13.	Option		3
		2.14.	Option Certificate		3
		2.15.	Option Price		4
		2.16.	Original Plan		4
		2.17.	Parent Corporation		4
		2.18.	Plan		4
		2.19.	Post		4
		2.20.	Restricted Stock		4
		2.21.	Restricted Stock Certificate		4
		2.22.	Rule 16b-3		4
		2.23.	Stock		4
		2.24.	Subsidiary		4
		2.25.	Surrendered Shares		5
		2.26.	Ten Percent Shareholder		5
§ 3.	SHARES RESERVED UNDER PLAN				5
§ 4.	EFFECTIVE DATE				6
§ 5.	COMMITTEE				6
§ 6.	ELIGIBILITY				7
§ 7.	OPTIONS				7
		7.1.	Committee Action		7
		7.2.	$100,000 Limit		8
		7.3.	Grants to Directors		9
			(a)     Initial Grant		9
			(b)     Ongoing Grants		9
			(c)     Option Certificates		9
		7.4.	Option Price		10
		7.5.	Exercise Period		11
		7.6.	Nontransferability		11

				Page
		7.7.	Surrender of Options		12
			(a)     General Rule		12
			(b)     Procedure		12
			(c)     Payment		12
			(d)     Restrictions		13
§ 8.	RESTRICTED STOCK				14
		8.1.	Committee Action		14
		8.2.	Conditions		14
			(a)     Conditions to Issuance of Stock		14
			(b)     Conditions to Forfeit Stock		14
		8.3.	Dividends and Voting Rights		16
		8.4.	Satisfaction of Forfeiture Conditions; Provision for Income and Excise Taxes		17
		8.5.	Director Stock		17
§ 9.	SECURITIES REGISTRATION				19
§ 10.	LIFE OF PLAN				19
§ 11.	ADJUSTMENT				20
		11.1.	Capital Structure		20
		11.2.	Mergers		21
		11.3.	Fractional Shares		21
§ 12.	SALE OR MERGER OF POST; CHANGE IN CONTROL				22
		12.1.	Sale or Merger		22
		12.2.	Change in Control		23
§ 13.	AMENDMENT OR TERMINATION				23
§ 14.	MISCELLANEOUS				24
		14.1.	Shareholder Rights		24
		14.2.	No Contract of Employment		25
		14.3.	Withholding		25
		14.4.	Construction		25
		14.5.	Other Conditions		26

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1.§
BACKGROUND AND PURPOSE

     The primary purpose of this Plan is to promote the interest of Post through grants to Key Employees and Directors of Restricted Stock and Options to purchase Stock in order (1) to attract Key Employees and Directors, (2) to provide an additional incentive to each Key Employee or Director to work to increase the value of Stock and (3) to provide each Key Employee or Director with a stake in the future of Post which corresponds to the stake of each of Post’s shareholders.

2.§
DEFINITIONS

     2.1. Affiliate — means Post Apartment Homes, L.P., Post Asset Management, Inc., Post Landscape Services, Inc. and each other organization designated as such by the Committee, which designation shall be effective and shall terminate at the Committee’s discretion.

     2.2. Board — means the Board of Directors of Post Properties, Inc.

     2.3. Change in Control — means (1) the acquisition of the power to direct, or cause the direction of, the management and policies of Post by a person (not previously possessing such power), acting alone or in conjunction with others, whether through the ownership of Stock, by contract or otherwise, or (2) the acquisition, directly or indirectly, of the power to vote more than 20% of the outstanding Stock by any person or by two or more persons acting together, except an acquisition from Post or by Post, Post’s management or a Post sponsored employee benefit plan, where (3) the term “person” means a natural person, corporation, partnership, joint venture, trust,

government or instrumentality of a government, and (4) customary agreements with or between underwriters and selling group members with respect to a bona fide public offering of Stock shall be disregarded for purposes of this definition.

     2.4. Code — means the Internal Revenue Code of 1986, as amended.

     2.5. Committee — means the Compensation Committee of the Board or, if the Compensation Committee at any time has less than 2 members or has a member who fails to come within the definition of a “non-employee director” under Rule 16b-3 and an “outside director” for purposes of § 162(m) of the Code, a committee which shall be responsible for the operation and administration of this Plan and which shall have at least 2 members, where each member shall be appointed by and shall serve at the pleasure of the Board and shall come within the definition of a “non-employee director” under Rule 16b-3 and an “outside director” under § 162(m) of the Code.

     2.6. Director — means any member of the Board who is not an employee of Post or any Subsidiary or affiliate (as such term is defined in Rule 405 of the Securities Act of 1933, as amended) of Post.

     2.7. Executive Committee Member — means an officer of Post or any Subsidiary or Affiliate who is designated as such by the Chairman of the Board of Directors, which designation shall be effective and shall terminate at the discretion of the Chairman of the Board of Directors.

     2.8. Fair Market Value — means (1) the closing price on any date for a share of Stock as reported by The Wall Street Journal under the New York Stock Exchange Composite Transactions quotation system (or under any successor quotation system) or, if Stock is no longer traded on the New York Stock Exchange,

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under the quotation system under which such closing price is reported or, if The Wall Street Journal no longer reports such closing price, such closing price as reported by a newspaper or trade journal selected by the Committee or, if no such closing price is available on such date, (2) such closing price as so reported or so quoted in accordance with § 2.6(1) for the immediately preceding business day, or, if no newspaper or trade journal reports such closing price or if no such price quotation is available, (3) the price which the Committee acting in good faith determines through any reasonable valuation method that a share of Stock might change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of the relevant facts.

     2.9. Insider — means any individual who is subject to Section 16(a) of the Securities Exchange Act of 1934, as amended.

     2.10. ISO — means an option granted under this Plan to purchase Stock which is intended to satisfy the requirements of § 422 of the Code.

     2.11. Key Employee — means a full time, salaried employee of Post or any Subsidiary or any Affiliate who, in the judgment of the Committee acting in its absolute discretion, is key directly or indirectly to the success of Post.

     2.12. NQO — means an option granted under this Plan to purchase Stock which is intended to fail to satisfy the requirements of § 422 of the Code.

     2.13. Option — means an ISO or a NQO.

     2.14. Option Certificate — means the written certificate which sets forth the terms of an Option granted to a Key Employee or Director under § 7 of this Plan.

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     2.15. Option Price — means the price which shall be paid to purchase one share of Stock upon the exercise of an Option granted under this Plan.

     2.16. Original Plan — means the Post Properties, Inc. Employee Stock Plan as in effect on February 18, 1998.

     2.17. Parent Corporation — means any corporation which is a parent of Post within the meaning of § 424(e) of the Code.

     2.18. Plan — means this Post Properties, Inc. Employee Stock Plan, as amended and restated effective as of February 19, 1998 and as thereafter amended or, as for any Option or Restricted Stock granted before the effective date of this Plan, the Original Plan.

     2.19. Post — means Post Properties, Inc., a Georgia corporation, and any successor to such corporation.

     2.20. Restricted Stock — means Stock granted to a Key Employee or Director under § 8 of this Plan.

     2.21. Restricted Stock Certificate — means the certificate which sets forth the terms of a Restricted Stock grant to a Key Employee or Director under § 8 of this Plan.

     2.22. Rule 16b-3 — means Rule 16b-3 to Section 16(b) of the Securities Exchange Act of 1934, as amended, or any successor to such rule.

     2.23. Stock — means $.01 par value common stock of Post.

     2.24. Subsidiary — means a corporation which is a subsidiary corporation (within the meaning of § 424(f) of the Code) of Post.

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     2.25. Surrendered Shares — means the shares of Stock described in § 7 which (in lieu of being purchased) are surrendered for cash or Stock, or for a combination of cash and Stock, in accordance with § 7.

     2.26. Ten Percent Shareholder — means a person who owns (after taking into account the attribution rules of § 424(d) of the Code) more than ten percent of the total combined voting power of all classes of stock of either Post, a Subsidiary or a Parent Corporation.

3.§
SHARES RESERVED UNDER PLAN

     There shall be 6,000,000 shares of Stock reserved for use under this Plan (3,500,000 of which shall be carried forward from the Original Plan), but no more than 550,000 of such 6,000,000 shares shall be available for grants of Restricted Stock. All such shares of Stock shall be reserved to the extent that Post deems appropriate from authorized but unissued shares of Stock and from shares of Stock which have been reacquired by Post. Furthermore, any shares of Stock subject to an Option which remain unissued after the cancellation, expiration or exchange of such Option and any shares of Restricted Stock which are forfeited thereafter shall again become available for use under this Plan, but any Surrendered Shares which remain unissued after the surrender of an Option under § 7 and any shares of Stock used to satisfy a withholding obligation under § 14.3 shall not again become available for use under this Plan.

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4.§
EFFECTIVE DATE

     The effective date of this Plan shall be February 19, 1998, provided the shareholders of Post (acting at a duly called meeting of such shareholders) approve such adoption within twelve (12) months of such effective date. Any Options and Restricted Stock granted under this Plan on or after February 19, 1998 automatically shall be granted subject to such approval. If the shareholders of Post fail to so approve this Plan, the Original Plan shall remain in full force and effect.

5.§
COMMITTEE

     This Plan shall be administered by the Committee. The Committee acting in its absolute discretion shall exercise such powers and take such action as expressly called for under this Plan and, further, the Committee shall have the power to interpret this Plan and (subject to § 11, § 12 and § 13) to take such other action in the administration and operation of this Plan as the Committee deems equitable under the circumstances, which action shall be binding on Post, on each affected Key Employee or Director and on each other person directly or indirectly affected by such action. The Committee shall seek to grant Options (and any related surrender rights) and to grant Restricted Stock which will qualify as performance based compensation under § 162 of the Code except where the Committee deems that Post’s interests when viewed broadly will be better served by a grant which is free of the conditions required to qualify such grant as performanced based compensation under § 162(m) of the Code.

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6.§
ELIGIBILITY

     Only Key Employees who are employed by Post or a Subsidiary shall be eligible for the grant of ISOs. Key Employees and Directors shall be eligible for the grant of NQOs and Restricted Stock under this Plan, but Directors shall be eligible for grants of NQOs only under § 7.3 and Restricted Stock only under § 8.5.

7.§
OPTIONS

     7.1. Committee Action. The Committee acting in its absolute discretion shall have the right to grant Options to Key Employees under this Plan from time to time to purchase shares of Stock subject to the following conditions:

(a)	the Committee shall not grant a new Option in exchange for the cancellation of an outstanding Option unless the new Option has an Option Price which is equal to or higher than the Option Price of the outstanding Option,
(b)	the Committee shall only grant ISOs to Key Employees who are employed by Post or a Subsidiary, and

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(c) the Committee shall not grant an Option, or more than one Option, individually or collectively, to any Key Employee in any calendar year to purchase more than 100,000 shares of Stock or, if such Key Employee is an Executive Committee Member in such calendar year, more than 500,000 shares of Stock; provided, however, that the Committee in 1998 may grant an Option to a Key Employee to purchase up to 50,000 shares of Stock in addition to the number described in this § 7.1(c)(1) and § 7.1(c)(2), whichever is applicable, if the Committee deems such grant as appropriate in light of a reduction in such Key Employee’s cash compensation for 1998.

Each grant of an Option to a Key Employee shall be evidenced by an Option Certificate, and each Option Certificate shall set forth whether the Option is an ISO or a NQO and shall set forth such other terms and conditions of such grant as the Committee acting in its absolute discretion deems consistent with the terms of this Plan; however, if the Committee grants an ISO and a NQO to a Key Employee on the same date, the right of the Key Employee to exercise or surrender one such Option shall not be conditioned on his or her failure to exercise or surrender the other such Option. The Committee shall have the right to grant a NQO and Restricted Stock to a Key Employee at the same time and to condition the exercise of the NQO on the forfeiture of the Restricted Stock grant.

     7.2. $100,000 Limit. To the extent that the aggregate Fair Market Value of Stock (determined as of the date the ISO is granted) with respect to which ISOs first

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become exercisable in any calendar year exceeds $100,000, such Options shall be treated as NQOs. The Fair Market Value of Stock subject to any other option (determined as the date such option was granted) which (1) satisfies the requirements of § 422 of the Code and (2) is granted to a Key Employee under a plan maintained by Post, a Subsidiary or a Parent Corporation shall be treated (for purposes of this $100,000 limitation) as if granted under this Plan. The Committee shall interpret and administer the limitation set forth in this § 7.2 in accordance with § 422(d) of the Code.

     7.3. Grants to Directors.

     (a) Initial Grant. Each Director automatically shall be granted (without any further action on the part of the Committee) a NQO under this Plan as of the first day he serves as such to purchase the number of shares of Stock determined by dividing $10,000 by the Fair Market Value of a share of Stock on the date of grant and rounding down to the nearest whole number. Such grant shall be made at an Option Price equal to the Fair Market Value of a share of Stock on the date of such grant.

     (b) Ongoing Grants. Each Director who is serving as such on December 31 of each calendar year and who has served as such for more than one full year automatically shall be granted (without any further action on the part of the Committee) a NQO under this Plan as of December 31 of such calendar year to purchase 3,000 shares of Stock. Such grant shall be made at an Option Price equal to the Fair Market Value of a share of Stock on such date.

     (c) Option Certificates. Each NQO granted under this Plan to a Director shall be evidenced by an Option Certificate, shall be exercisable in full upon grant and shall expire 90 days after a Director ceases to serve as such or, if earlier, on

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the tenth anniversary of the date of the grant of the NQO. A NQO granted to a Director under this Plan shall conform in all other respects to the terms and conditions of a NQO under this Plan, and no Director shall be eligible to receive an Option under this Plan except as provided in this § 7.3. A grant of a NQO to a Director under this § 7.3 is intended to allow such Director to be a “non-employee director” under Rule 16b-3 and an “outside director” under Section 162(m) of the Code, and all NQOs granted to Directors as well as this § 7.3 shall be construed to effect such intent.

     7.4. Option Price. The Option Price for each share of Stock subject to an Option which is granted to a Key Employee shall be no less than the Fair Market Value of a share of Stock on the date the Option is granted; provided, however, if the Option is an ISO granted to a Key Employee who is a Ten Percent Shareholder, the Option Price for each share of Stock subject to such ISO shall be no less than 110% of the Fair Market Value of a share of Stock on the date such ISO is granted. The Option Price for each share of Stock subject to a NQO which is granted to a Director shall be determined under § 7.3. The Option Price shall be payable in full upon the exercise of any Option. At the discretion of the Committee an Option Certificate can provide for the payment of the Option Price either in cash, by check or in Stock which previously had been purchased by the Key Employee or Director and which is acceptable to the Committee or in any combination of cash, check and such Stock. Any payment made in Stock shall be treated as equal to the Fair Market Value of such Stock on the date the properly endorsed certificate for such Stock is delivered to the Committee or its delegate.

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     7.5. Exercise Period. Each Option granted under this Plan to a Key Employee shall be exercisable in whole or in part at such time or times as set forth in the related Option Certificate, but no Option Certificate shall make an Option granted to a Key Employee exercisable on or after the earlier of

     (a) the date such Option is exercised in full, or

     (b) the date which is the fifth anniversary of the date the Option is granted, if the Option is an ISO and the Key Employee is a Ten Percent Shareholder on the date the Option is granted, or

     (c) the date which is the tenth anniversary of the date the Option is granted, if the Option is (a) an NQO or (b) an ISO which is granted to a Key Employee who is not a Ten Percent Shareholder on the date the Option is granted.

An Option Certificate may provide for the exercise of an Option after the employment of a Key Employee has terminated for any reason whatsoever, including death or disability.

     7.6. Nontransferability. Neither an ISO granted under this Plan nor any related surrender rights under § 7.7 shall be transferable by a Key Employee other than by will or by the laws of descent and distribution, and any such ISO and any such surrender rights shall be exercisable during the lifetime of a Key Employee only by such Key Employee. However, the Committee may allow the transfer or assignment of an NQO or Restricted Stock if the Committee determines that such transfer or assignment is consistent with the purpose of this Plan and can be properly effected at no additional cost to (or burden on) Post to satisfy any securities law, tax law or other applicable requirements. The person or persons to whom an Option or any related surrender

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rights or any Restricted Stock is transferred under this § 7.6 thereafter shall be treated as the Key Employee or Director under this Plan.

     7.7. Surrender of Options.

     (a) General Rule. The Committee acting in its absolute discretion may as part of the grant of an Option in addition grant a Key Employee the right to surrender such Option in accordance with this § 7.7 in whole or in part in lieu of the exercise in whole or in part of that Option on any date that

(1)	the Fair Market Value of the Stock subject to such Option exceeds the Option Price for such Stock, and
(2)	the Option to purchase such Stock is otherwise exercisable.

Any surrender right under this § 7.7 shall be set forth in the Option Certificate for the related Option.

     (b) Procedure. The surrender of an Option in whole or in part shall be effected under this § 7.7 by the delivery of the Option Certificate to the Committee (or to its delegate) together with a statement signed by the Key Employee which specifies the number of shares of Stock as to which the Key Employee surrenders his or her Option and (at the Key Employee’s option) how he or she desires payment be made for such Surrendered Shares.

     (c) Payment. A Key Employee in exchange for his or her Surrendered Shares shall (to the extent consistent with the exemption under Rule 16b-3) receive a payment in cash or in Stock, or in a combination of cash and Stock, equal in amount on the date such surrender is effected to the excess of the Fair Market Value of the Surrendered Shares on such date over the Option Price for the Surrendered Shares.

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The Committee acting in its absolute discretion shall determine the form and timing of such payment, and the Committee shall have the right (1) to take into account whatever factors the Committee deems appropriate under the circumstances, including any written request made by the Key Employee and delivered to the Committee (or to its delegate) and (2) to forfeit a Key Employee’s right to payment of cash in lieu of a fractional share of stock if the Committee deems such forfeiture necessary in order for the surrender of his or her Option under this § 7 to come within the exemption under Rule 16b-3.

     (d) Restrictions. Any Option Certificate which incorporates a provision to allow a Key Employee to surrender his or her Option in whole or in part also shall incorporate such additional restrictions on the exercise or surrender of such Option as the Committee deems necessary to satisfy the conditions to the exemption under Rule 16b-3.

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8.§
RESTRICTED STOCK

     8.1. Committee Action. The Committee acting in its absolute discretion shall have the right to grant Restricted Stock to Key Employees under this Plan from time to time and, further, shall have the right to make new Restricted Stock grants in exchange for outstanding Restricted Stock grants. Each Restricted Stock grant shall be evidenced by a Restricted Stock Certificate, and each Restricted Stock Certificate shall set forth the conditions, if any, under which Stock will be issued in the name of the Key Employee and the conditions, if any, under which the Key Employee’s interest in such Stock will become nonforfeitable.

     8.2. Conditions.

     (a) Conditions to Issuance of Stock. The Committee acting in its absolute discretion may make the issuance of Restricted Stock in the name of a Key Employee subject to the satisfaction of one, or more than one, condition which the Committee deems appropriate under the circumstances and the related Restricted Stock Certificate shall set forth each such condition and the deadline for satisfying each such condition. Stock subject to a Restricted Stock grant shall be issued in the name of a Key Employee only after each such condition, if any, has been timely satisfied, and any Stock which is so issued shall be held by Post pending the satisfaction of the forfeiture conditions, if any, under § 8.2(b) for the related Restricted Stock grant.

     (b) Conditions to Forfeit Stock. The Committee acting in its absolute discretion may make Restricted Stock which has been issued in the name of Key Employee under § 8.2(a) subject to one, or more than one, forfeiture condition which the Committee acting in its absolute discretion deems appropriate under the circumstances, and the related Restricted Stock Certificate shall set forth each such forfeiture condition,

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if any, and the related deadline, if any, or satisfying each such forfeiture condition. Stock issued in the name of Key Employee shall be forfeited unless each such forfeiture condition, if any, has been timely satisfied.

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     8.3. Dividends and Voting Rights. If a cash dividend is declared on a share of Stock issued in the name of a Key Employee under § 8.2(a) before the date that a Key Employee’s interest in such Stock (1) is forfeited completely under § 8.2(b) or (2) becomes completely nonforfeitable, Post shall pay such cash dividend directly to such Key Employee. If a Stock dividend is declared on such a share of Stock during such period, such Stock dividend shall be treated as part of the grant of the related Restricted Stock, and a Key Employee’s interest in such Stock dividend shall be forfeited or shall become nonforfeitable at the same time as the Stock with respect to which the Stock dividend was paid is forfeited or becomes nonforfeitable. The disposition of each other form of dividend which is declared on such a share of Stock during such period shall be made in accordance with such rules as the Committee shall adopt with respect to each such dividend. A Key Employee also shall have the right to vote the Stock issued in his or her name during such period.

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     8.4. Satisfaction of Forfeiture Conditions; Provision for Income and Excise Taxes. A share of Stock shall cease to be Restricted Stock at such time as a Key Employee’s interest in such Stock becomes nonforfeitable under this Plan, and the certificate representing such share shall be transferred to the Key Employee as soon as practicable thereafter. The Committee acting in its absolute discretion shall have the power to authorize and direct the payment of a cash bonus (or to provide in the terms of the Restricted Stock Certificate for Post to make such payment) to a Key Employee to pay all, or any portion of, his or her federal, state and local income and excise tax liability which the Committee deems attributable to his or her interest in his or her Restricted Stock grant becoming nonforfeitable and, further, to pay any such tax liability attributable to such cash bonus.

     8.5. Director Stock. Each Director shall the right to elect to receive Stock in lieu of cash with respect to all or any part of his or her compensation services rendered as a Director, and any such election shall be made in writing and shall be effective as of the date the Director delivers such election to Post. A Director who has made an election under this § 8.5 may subsequently amend or revoke such election and any such amendment or revocation shall be made in writing and shall be effective as of the date the Director delivers such amendment or revocation to Post. There shall be no limit on the number of elections which a Director can make or amend or revoke under this § 8.5. The number of shares of Stock which a Director shall received in lieu of cash shall be determined by Post by dividing the cash payment which the Director has elected to receive in the form of Stock by the Fair Market Value of a share of Stock as of the date the cash compensation otherwise would be payable to the Director and by

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rounding down to the nearest whole share of Stock. The Director shall receive cash in lieu of any fractional share of Stock under this § 8.5. Post shall have the right to issue the shares of Stock which a Director receives in lieu of cash under this § 8.5 subject to a restriction that the Director have no right to transfer such Stock (except as permissible under Rule 16b-3) for the six month period which starts on the date the Stock is issued to the Director or to take such other action as Post deems necessary or appropriate in light of Rule 16b-3.

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9.§
SECURITIES REGISTRATION

     Each Option Certificate and Restricted Stock Certificate shall provide that, upon the receipt of shares of Stock as a result of the surrender or exercise of an Option or the satisfaction of the forfeiture conditions under a Restricted Stock Certificate, the Key Employee or Director shall, if so requested by Post, hold such shares of Stock for investment and not with a view of resale or distribution to the public and, if so requested by Post, shall deliver to Post a written statement satisfactory to Post to that effect. As for Stock issued pursuant to this Plan, Post at its expense shall take such action as it deems necessary or appropriate to register the original issuance of such Stock to a Key Employee or Director under the Securities Act of 1933, as amended, or under any other applicable securities laws or to qualify such Stock for an exemption under any such laws prior to the issuance of such Stock to a Key Employee or Director; however, Post shall have no obligation whatsoever to take any such action in connection with the transfer, assignment, resale or other disposition of such Stock by a Key Employee or Director.

10.§
LIFE OF PLAN

     No Option or Restricted Stock shall be granted under this Plan on or after the earlier of

(3) July 12, 2003, in which event this Plan otherwise thereafter shall continue in effect until all outstanding Options have been surrendered or exercised in full or no longer are exercisable and all Restricted Stock granted under this Plan

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	has been forfeited or the forfeiture conditions on such Stock have been satisfied in full, or
(4)	the date on which all of the Stock reserved under § 3 of this Plan has (as a result of the surrender or exercise of Options granted under this Plan or the satisfaction of the forfeiture conditions on Restricted Stock) been issued or no longer is available for use under this Plan, in which event this Plan also shall terminate on such date.

11.§
ADJUSTMENT

     11.1. Capital Structure. The number of shares of Stock reserved under § 3 of this Plan and the number of shares of Stock subject to Options granted under this Plan and the Option Price of such Options as well as the number of shares of Restricted Stock granted under this Plan shall be adjusted by the Committee in an equitable manner to reflect any change in the capitalization of Post, including, but not limited to, such changes as stock dividends or stock splits.

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     11.2. Mergers. The Committee as part of any corporate transaction described in § 424(a) of the Code shall have the right to adjust (in any manner which the Committee in its discretion deems consistent with § 424(a) of the Code) the number, kind or class (or any combination thereof) of shares of Stock reserved under § 3 of this Plan. Furthermore, the Committee as part of any corporate transaction described in § 424(a) of the Code shall have the right to adjust (in any manner which the Committee in its discretion deems consistent with § 424(a) of the Code) the number, kind or class (or any combination thereof) of shares of Stock underlying any Restricted Stock grants previously made under this Plan and any related grant conditions and forfeiture conditions, and the number, kind or class (or any combination thereof) of shares subject to Option grants previously made under this Plan and the related Option Price and for each such Option, and, further, shall have the right (in any manner which the Committee in its discretion deems consistent with § 424(a) of the Code) to make Restricted Stock and Option grants to effect the assumption of, or the substitution for, restricted stock and stock option grants previously made under this Plan or any predecessors to this Plan or by any other corporation to the extent that such corporate transaction calls for such substitution or assumption.

     11.3. Fractional Shares. If any adjustment under this § 11 would create a fractional share of Stock or a right to acquire a fractional share of Stock, such fractional share shall be disregarded and the number of shares of Stock reserved under this Plan and the number subject to any Option grants and Restricted Stock grants shall be the next lower number of shares of Stock, rounding all fractions downward. An adjustment

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made under this § 11 by the Committee shall be conclusive and binding on all affected persons.

12.§
SALE OR MERGER OF POST; CHANGE IN CONTROL

     12.1. Sale or Merger. If Post agrees to sell all or substantially all of its assets for cash or property or for a combination of cash and property or agrees to any merger, consolidation, reorganization, division or other corporate transaction in which Stock is converted into another security or into the right to receive securities or property and such agreement does not provide for the assumption or substitution of the Options and Restricted Stock granted under this Plan in accordance with § 11 on a basis that is fair and equitable to holders of such Options and Restricted Stock as determined by the Board, (1) each Option granted to a Key Employee at the direction and discretion of the Board (a) may (subject to such conditions, if any, as the Board deems appropriate under the circumstances) be canceled unilaterally by Post (i) in exchange for (A) a transfer to such Key Employee of the number of whole shares of Stock, if any, which he or she would have received if he or she had the right to surrender his or her outstanding Option in full under §7.7 of this Plan and he or she exercised that right on the date set by the Board exclusively for Stock or (B) the right to exercise his or her outstanding Option in full on any date before the date as of which the Board unilaterally cancels such Option in full or, if the exchange described in this § 12.1(a)(i) would result in a violation of Section 16 of the Securities Exchange Act of 1934, as amended, for a Key employee, (ii) may be canceled unilaterally by Post after advance written notice to such Key Employee or (b) may be canceled unilaterally by Post if the Option Price equals or

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exceeds the Fair Market Value of a share of Stock on a date set by the Board, (2) each Option granted to a Director shall be canceled unilaterally by Post on a date set by the Board to the extent unexercised on such date after advance written notice to each affected Director, and (3) the grant conditions, if any, and forfeiture conditions on all outstanding Restricted Stock grants may be deemed completely satisfied on the date set by the Board.

     12.2. Change in Control. If there is a Change in Control of Post or a tender or exchange offer is made for Stock other than by Post, the Board thereafter shall have the right (1) to take such action with respect to any unexercised Options granted to Key Employees and any grants of Restricted Stock which are forfeitable, or all such Options and all such grants of Restricted Stock, as the Board deems appropriate under the circumstances to protect the interest of Post in maintaining the integrity of such grants under this Plan, including following the procedure set forth in § 12.1 for a sale or merger of Post with respect to such Options and Restricted Stock, and (2) to follow the procedures for Directors set forth in § 12.1 with respect to any and all unexercised Options granted to Directors. The Board shall have the right to take different action under this § 12.2 with respect to different Key Employees or different groups of Key Employees, as the Board deems appropriate under the circumstances.

13.§
AMENDMENT OR TERMINATION

     This Plan may be amended by the Board from time to time to the extent that the Board deems necessary or appropriate; provided, however,

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(5)	no such amendment shall be made absent the approval of the shareholders of Post required under § 422 of the Code (a) to increase the number of shares of stock reserved under § 3, or (b) to change the class of employees eligible for Options or Restricted Stock grants under § 6, and
(6)	no amendment shall be made to change the terms and conditions of an Option which can be granted to a Director absent the approval of the shareholders of Post.

Any amendment which specifically applies to NQOs shall not require shareholder approval. The Board also may suspend the granting of Options and Restricted Stock under this Plan at any time and may terminate this Plan at any time; provided, however, the Board shall not have the right unilaterally to modify, amend or cancel any Restricted Stock grant or Option granted before such suspension or termination unless (1) the Key Employee or Director consents in writing to such modification, amendment or cancellation or (2) there is a dissolution or liquidation of Post or a transaction described in § 11 or § 12 of this Plan.

14.§
MISCELLANEOUS

     14.1. Shareholder Rights. No Key Employee or Director shall have any rights as a shareholder of Post as a result of the grant of an Option under this Plan or his or her exercise or surrender of such Option pending the actual delivery of the Stock subject to such Option to such Key Employee or Director. Subject to § 8.3, a Key

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Employee’s rights as a shareholder in the shares of Stock underlying a Restricted Stock grant which is effective shall be set forth in the related Restricted Stock Certificate.

     14.2. No Contract of Employment. The grant of an Option or Restricted Stock to a Key Employee or Director under this Plan shall not constitute a contract of employment or a right to continue to serve on the Board and shall not confer on a Key Employee or Director any rights upon his or her termination of employment or service in addition to those rights, if any, expressly set forth in the Option Certificate which evidences his or her Option or the Restricted Stock Certificate related to his or her Restricted Stock.

     14.3. Withholding. The exercise or surrender of any Option granted under this Plan and the acceptance of a Restricted Stock grant shall constitute a Key Employee’s full and complete consent to whatever action the Committee deems necessary to satisfy the federal and state tax withholding requirements, if any, which the Committee in its discretion deems applicable to such exercise or surrender or such Restricted Stock. The Committee also shall have the right to provide in an Option Certificate or Restricted Stock Certificate that a Key Employee may elect to satisfy federal and state tax withholding requirements through a reduction in the number of shares of Stock actually transferred to him or to her under this Plan and, if the Employee is subject to the reporting requirements under Section 16 of the Securities Exchange Act of 1934, as amended, any such election and any such reduction shall be effected so as to satisfy the conditions to the exemption under Rule 16b-3.

     14.4. Construction. This Plan shall be construed under the laws of the State of Georgia. Any reference to the singular shall include the plural, and any

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reference to the plural shall include the singular. Any reference to a term defined in § 2 shall include the definition of such term under § 2, and any reference to a section (§) shall be to a section (§) of this Plan unless otherwise set forth in such reference.

     14.5. Other Conditions. Each Option Certificate or Restricted Stock Certificate may require that a Key Employee or Director (as a condition to the exercise of an Option or a Restricted Stock grant) enter into any agreement or make such representations prepared by Post, including any agreement which restricts the transfer of Stock acquired pursuant to the exercise of an Option or Restricted Stock grant or provides for the repurchase of such Stock by Post under certain circumstances.

     IN WITNESS WHEREOF, Post Properties, Inc. has caused its duly authorized officer to execute this Plan to evidence its adoption of this Plan.

POST PROPERTIES, INC.
By:	/s/ John A. Williams
Title:	Chairman
Date:	February 19, 1998

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EX-10.12

Exhibit 10.12

FHLMC Loan No. 487782259
Post Addison Circle

MULTIFAMILY NOTE
MULTISTATE — FIXED TO FLOAT
(REVISION DATE 03-30-2006)

US $120,000,000.00 Effective Date: As of January 25, 2008

     FOR VALUE RECEIVED, the undersigned (together with such party’s or parties’ successors and assigns, “Borrower”), jointly and severally (if more than one) promises to pay to the order of DEUTSCHE BANK BERKSHIRE MORTGAGE, INC., d/b/a DB Berkshire Mortgage, Inc., a Delaware corporation, the principal sum of One Hundred Twenty Million and 00/100 Dollars (US $120,000,000.00), with interest on the unpaid principal balance, as hereinafter provided.

1.	Defined Terms.
(a)	As used in this Note:
	“Adjustable Interest Rate” means the variable annual interest rate calculated for each Interest Adjustment Period so as to equal the Index Rate for such Interest Adjustment Period (truncated at the fifth (5th) decimal place if necessary) plus the Margin.
	“Amortization Period” means a period of 0 full consecutive calendar months.
	“Base Recourse” means a portion of the Indebtedness equal to zero percent (0%) of the original principal balance of this Note.
	“Business Day” means any day other than a Saturday, a Sunday or any other day on which Lender or the national banking associations are not open for business.
	“Default Rate” means (i) during the Fixed Rate Period, an annual interest rate equal to four (4) percentage points above the Fixed Interest Rate; and (ii) during the Extension Period, a variable annual interest rate equal to four (4) percentage points above the Adjustable Interest Rate in effect from time to time. However, at no time will the Default Rate exceed the Maximum Interest Rate.
	“Extended Maturity Date” means, if the Extension Period becomes effective pursuant to this Note, the earlier of (i) February 1, 2016, and (ii) the date on which the unpaid principal balance of this Note becomes due and payable by acceleration or otherwise pursuant to the Loan Documents or the exercise by Lender of any right or remedy thereunder.
	“Extension Period” means the twelve (12) consecutive calendar months period commencing on the Scheduled Initial Maturity Date.
	“Fixed Interest Rate” means the annual interest rate of four and eighty-eight hundredths percent (4.88%).

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“Fixed Rate Period” means the period beginning on the date of this Note and continuing through January 31, 2015.

“Index Rate” means, for any Interest Adjustment Period, the Reference Billâ Index Rate for such Interest Adjustment Period.

“Initial Maturity Date” means the earlier of (i) February 1, 2015 (the “Scheduled Initial Maturity Date”), and (ii) the date on which the unpaid principal balance of this Note becomes due and payable by acceleration or otherwise pursuant to the Loan Documents or the exercise by Lender of any right or remedy thereunder.

“Installment Due Date” means, for any monthly installment of interest only or principal and interest, the date on which such monthly installment is due and payable pursuant to Section 3 of this Note. The “First Installment Due Date” under this Note is March 1, 2008.

“Interest Adjustment Period” means each successive one calendar month period during the Extension Period and until the entire Indebtedness is paid in full.

“Lender” means the holder from time to time of this Note.

“LIBOR Index” means the British Bankers Association’s (BBA) one (1) month LIBOR Rate for United States Dollar deposits, as displayed on the LIBOR Index Page used to establish the LIBOR Index Rate.

“LIBOR Index Rate” means, for any Interest Adjustment Period after the first Interest Adjustment Period, the BBA’s LIBOR Rate for the LIBOR Index released by the BBA most recently preceding the first day of such Interest Adjustment Period, as such LIBOR Rate is displayed on the LIBOR Index Page. The LIBOR Index Rate for the first Interest Adjustment Period means the British Bankers Association’s (BBA) LIBOR Rate for the LIBOR Index released by the BBA most recently preceding the first day of the month in which the first Interest Adjustment Period begins, as such LIBOR Rate is displayed on the LIBOR Index Page. “LIBOR Index Page” is the Bloomberg L.P., page “BBAM”, or such other page for the LIBOR Index as may replace page BBAM on that service, or at the option of Lender (i) the applicable page for the LIBOR Index on another service which electronically transmits or displays BBA LIBOR Rates, or (ii) any publication of LIBOR rates available from the BBA. In the event the BBA ceases to set or publish a LIBOR rate/interest settlement rate for the LIBOR Index, Lender will designate an alternative index, and such alternative index shall constitute the LIBOR Index Page.

“Loan” means the loan evidenced by this Note.

“Margin” means two and one-half (2.5) percentage points (250 basis points).

“Maturity Date” means the Extended Maturity Date unless pursuant to Section 3(e) of this Note the Extension Period does not or cannot become effective, in which case the Maturity Date means the Initial Maturity Date.

“Maximum Interest Rate” means the rate of interest that results in the maximum amount of interest allowed by applicable law.

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“Prepayment Premium Period” means the period during which, if a prepayment of principal occurs, a prepayment premium will be payable by Borrower to Lender. The Prepayment Premium Period is the period from and including the date of this Note until but not including the first day of the Window Period. For this Note, the Prepayment Premium Period equals the Yield Maintenance Period.

“Reference Billsâ” means the unsecured general obligations of the Federal Home Loan Mortgage Corporation (“Freddie Mac”) designated by Freddie Mac as “Reference Billsâ Securities” and having original durations to maturity most comparable to the term of the Reference Bill Index, and issued by Freddie Mac at regularly scheduled auctions. In the event Freddie Mac shall at any time cease to designate any unsecured general obligations of Freddie Mac as “Reference Bills Securities”, then at the option of Lender (i) Lender may select from time to time another unsecured general obligation of Freddie Mac having original durations to maturity most comparable to the term of the Reference Bill Index and issued by Freddie Mac at regularly scheduled auctions, and the term “Reference Bills” as used in this Note shall mean such other unsecured general obligations as selected by Lender; or (ii) for any one or more Interest Adjustment Periods, Lender may use the applicable LIBOR Index Rate as the Index Rate for such Interest Adjustment Period(s).

“Reference Bill Index” means the one-month Reference Bills. One-month reference bills have original durations to maturity of approximately 30 days.

“Reference Bill Index Rate” means, for any Interest Adjustment Period after the first Interest Adjustment Period, the Money Market Yield for the Reference Bills as established by the Reference Bill auction conducted by Freddie Mac most recently preceding the first day of such Interest Adjustment Period, as displayed on the Reference Bill Index Page. The Reference Bill Index Rate for the first Interest Adjustment Period means the Money Market Yield for the Reference Bills as established by the Reference Bill auction conducted by Freddie Mac most recently preceding the first day of the month in which the first Interest Adjustment Period begins, as displayed on the Reference Bill Index Page. The “Reference Bill Index Page” is the Freddie Mac Debt Securities Web Page (accessed via the Freddie Mac internet site at www.freddiemac.com), or at the option of Lender, any publication of Reference Bills auction results available from Freddie Mac. However, if Freddie Mac has not conducted a Reference Bill auction within the 60-calendar day period prior to the first day of an Interest Adjustment Period, the Reference Bill Index Rate for such Interest Adjustment Period will be the LIBOR Index Rate for such Interest Adjustment Period.

“Remaining Amortization Period” means, at any point in time, the number of consecutive calendar months equal to the number of months in the Amortization Period minus the number of scheduled monthly installments of principal and interest that have elapsed since the date of this Note.

“Security Instrument” means the multifamily mortgage, deed to secure debt or deed of trust effective as of the effective date of this Note, from Borrower to or for the benefit of Lender and securing this Note.

“Treasury Security” means the 4.125% U.S. Treasury Security due May 15, 2015.

“Window Period” means the Extension Period.

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“Yield Maintenance Period” means the period from and including the date of this Note until but not including the Scheduled Initial Maturity Date.

     (b) Other capitalized terms used but not defined in this Note shall have the meanings given to such terms in the Security Instrument.

     2. Address for Payment. All payments due under this Note shall be payable at One Beacon Street, 14th Floor, Boston, Massachusetts 02108, or such other place as may be designated by Notice to Borrower from or on behalf of Lender.

     3. Payments.

     (a) During the Fixed Rate Period, interest will accrue on the outstanding principal balance of this Note at the Fixed Interest Rate, subject to the provisions of Section 8 of this Note. During the Extension Period, interest will accrue on the outstanding principal balance of this Note at the Adjustable Interest Rate, subject to the provisions of Section 8 of this Note.

     (b) Interest under this Note shall be computed, payable and allocated on the basis of an actual/360 interest calculation schedule (interest is payable for the actual number of days in each month, and each month’s interest is calculated by multiplying the unpaid principal amount of this Note as of the first day of the month for which interest is being calculated by the Fixed Interest Rate (during the Fixed Rate Period) or the applicable Adjustable Interest Rate (during the Extension Period), dividing the product by 360, and multiplying the quotient by the number of days in the month for which interest is being calculated). For convenience in determining the amount of a monthly installment of principal and interest under this Note, Lender will use a 30/360 interest calculation payment schedule (each year is treated as consisting of twelve 30-day months). However, as provided above, the portion of the monthly installment actually payable as and allocated to interest will be based upon an actual/360 interest calculation schedule, and the amount of each installment attributable to principal and the amount attributable to interest will vary based upon the number of days in the month for which such installment is paid. Each monthly payment of principal and interest will first be applied to pay in full interest due, and the balance of the monthly payment paid by Borrower will be credited to principal.

     (c) Unless disbursement of principal is made by Lender to Borrower on the first day of a calendar month, interest for the period beginning on the date of disbursement and ending on and including the last day of such calendar month shall be payable by Borrower simultaneously with the execution of this Note. If disbursement of principal is made by Lender to Borrower on the first day of a calendar month, then no payment will be due from Borrower at the time of the execution of this Note. The Installment Due Date for the first monthly installment payment under Section 3(d) of interest only or principal and interest, as applicable, will be the First Installment Due Date set forth in Section 1(a) of this Note. Except as provided in this Section 3(c) and in Section 10, accrued interest will be payable in arrears.

     (d) Beginning on the First Installment Due Date, and continuing until and including the monthly installment due on the Initial Maturity Date, accrued interest only shall be payable by Borrower in consecutive monthly installments due and payable on the first day of each calendar month. The amount of each monthly installment of interest only payable pursuant to this Section 3(d) on an Installment Due Date shall vary, and shall equal $16,266.67 multiplied by the number of days in the month prior to the Installment Due Date.

     (e) Except as otherwise provided in this Section 3(e), all remaining Indebtedness, including all principal and interest, shall be due and payable by Borrower on the Initial Maturity Date. However, so long as (i) the Initial Maturity Date has not occurred prior to the Scheduled Initial Maturity Date, and (ii) no Event of Default or event or circumstance which, with the giving of notice or passage of time or both, could constitute an Event of Default exists on the

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Scheduled Initial Maturity Date, then the Extension Period automatically will become effective and the date for full payment of the Indebtedness automatically shall be extended until the Extended Maturity Date. If the Extension Period becomes effective, monthly installments of principal and interest or interest only will be payable during the Extension Period as provided in Section 3(f). Anything in Section 21 of the Security Instrument to the contrary notwithstanding, during the Extension Period, Borrower will not request that Lender consent to, and Lender will not consent to, a Transfer that, absent such consent, would constitute an Event of Default.

     (f) If the Extension Period becomes effective, beginning on March 1, 2015, and continuing until and including the monthly installment due on the Extended Maturity Date, accrued interest only shall be payable by Borrower in consecutive monthly installments due and payable on the first day of each calendar month. The amount of the monthly installment of interest only payable pursuant to this Section 3(f) on an Installment Due Date shall equal the product of (i) annual interest on the unpaid principal balance of this Note as of the first day of the Interest Adjustment Period immediately preceding the Installment Due Date (annual interest being such principal balance of this Note multiplied by the Adjustable Interest Rate in effect for such Interest Adjustment Period), divided by 360, multiplied by (ii) the number of days in such Interest Adjustment Period.

     (g) During the Extension Period, Lender shall provide Borrower with Notice, given in the manner specified in the Security Instrument, of the amount of each monthly installment due under this Note. However, if Lender has not provided Borrower with prior notice of the monthly payment due on any Installment Due Date, then Borrower shall pay on that Installment Due Date an amount equal to the monthly installment payment for which Borrower last received notice. If Lender at any time determines that Borrower has paid one or more monthly installments in an incorrect amount because of the operation of the preceding sentence, or because Lender has miscalculated the Adjustable Interest Rate or has otherwise miscalculated the amount of any monthly installment, then Lender shall give notice to Borrower of such determination. If such determination discloses that Borrower has paid less than the full amount due for the period for which the determination was made, Borrower, within 30 calendar days after receipt of the notice from Lender, shall pay to Lender the full amount of the deficiency. If such determination discloses that Borrower has paid more than the full amount due for the period for which the determination was made, then the amount of the overpayment shall be credited to the next installment(s) of interest only or principal and interest, as applicable, due under this Note (or, if an Event of Default has occurred and is continuing, such overpayment shall be credited against any amount owing by Borrower to Lender).

     (h) All payments under this Note shall be made in immediately available U.S. funds.

     (i) Any regularly scheduled monthly installment of interest only or principal and interest payable pursuant to this Section 3 that is received by Lender before the date it is due shall be deemed to have been received on the due date for the purpose of calculating interest due.

     (j) Any accrued interest remaining past due for 30 days or more, at Lender’s discretion, may be added to and become part of the unpaid principal balance of this Note and any reference to “accrued interest” shall refer to accrued interest which has not become part of the unpaid principal balance. Any amount added to principal pursuant to the Loan Documents shall bear interest at the applicable rate or rates specified in this Note and shall be payable with such interest upon demand by Lender and absent such demand, as provided in this Note for the payment of principal and interest.

     (k) In accordance with Section 14, interest charged under this Note cannot exceed the Maximum Interest Rate. If the Adjustable Interest Rate at any time exceeds the Maximum Interest Rate, resulting in the charging of interest hereunder to be limited to the Maximum Interest Rate, then any subsequent reduction in the Adjustable Interest Rate shall not reduce the rate at which interest under this Note accrues below the Maximum Interest Rate until the total

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amount of interest accrued hereunder equals the amount of interest which would have accrued had the Adjustable Interest Rate at all times been in effect.

     4. Application of Payments. If at any time Lender receives, from Borrower or otherwise, any amount applicable to the Indebtedness which is less than all amounts due and payable at such time, Lender may apply the amount received to amounts then due and payable in any manner and in any order determined by Lender, in Lender’s discretion. Borrower agrees that neither Lender’s acceptance of a payment from Borrower in an amount that is less than all amounts then due and payable nor Lender’s application of such payment shall constitute or be deemed to constitute either a waiver of the unpaid amounts or an accord and satisfaction.

     5. Security. The Indebtedness is secured by, among other things, the Security Instrument, and reference is made to the Security Instrument for other rights of Lender as to collateral for the Indebtedness.

     6. Acceleration. If an Event of Default has occurred and is continuing, the entire unpaid principal balance, any accrued interest, any prepayment premium payable under Section 10, and all other amounts payable under this Note and any other Loan Document, shall at once become due and payable, at the option of Lender, without any prior notice to Borrower (except if notice is required by applicable law, then after such notice). Lender may exercise this option to accelerate regardless of any prior forbearance. For purposes of exercising such option, Lender shall calculate the prepayment premium as if prepayment occurred on the date of acceleration. If prepayment occurs thereafter, Lender shall recalculate the prepayment premium as of the actual prepayment date.

     7. Late Charge.

     (a) If any monthly installment of interest or principal and interest or other amount payable under this Note or under the Security Instrument or any other Loan Document is not received in full by Lender (i) during the Fixed Rate Period, within ten (10) days after the installment or other amount is due, or (ii) during the Extension Period, within five (5) days after the installment or other amount is due, counting from and including the date such installment or other amount is due (unless applicable law requires a longer period of time before a late charge may be imposed, in which event such longer period shall be substituted), Borrower shall pay to Lender, immediately and without demand by Lender, a late charge equal to five percent (5%) of such installment or other amount due (unless applicable law requires a lesser amount be charged, in which event such lesser amount shall be substituted).

     (b) Borrower acknowledges that its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Loan and that it is extremely difficult and impractical to determine those additional expenses. Borrower agrees that the late charge payable pursuant to this Section represents a fair and reasonable estimate, taking into account all circumstances existing on the date of this Note, of the additional expenses Lender will incur by reason of such late payment. The late charge is payable in addition to, and not in lieu of, any interest payable at the Default Rate pursuant to Section 8.

     8. Default Rate.

     (a) So long as (i) any monthly installment under this Note remains past due for thirty (30) days or more or (ii) any other Event of Default has occurred and is continuing, then notwithstanding anything in Section 3 of this Note to the contrary, interest under this Note shall accrue on the unpaid principal balance from the Installment Due Date of the first such unpaid monthly installment or the occurrence of such other Event of Default, as applicable, at the Default Rate.

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     (b) From and after the Maturity Date, the unpaid principal balance shall continue to bear interest at the Default Rate until and including the date on which the entire principal balance is paid in full.

     (c) Borrower acknowledges that (i) its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Loan, (ii) during the time that any monthly installment under this Note is delinquent for thirty (30) days or more, Lender will incur additional costs and expenses arising from its loss of the use of the money due and from the adverse impact on Lender’s ability to meet its other obligations and to take advantage of other investment opportunities; and (iii) it is extremely difficult and impractical to determine those additional costs and expenses. Borrower also acknowledges that, during the time that any monthly installment under this Note is delinquent for thirty (30) days or more or any other Event of Default has occurred and is continuing, Lender’s risk of nonpayment of this Note will be materially increased and Lender is entitled to be compensated for such increased risk. Borrower agrees that the increase in the rate of interest payable under this Note to the Default Rate represents a fair and reasonable estimate, taking into account all circumstances existing on the date of this Note, of the additional costs and expenses Lender will incur by reason of the Borrower’s delinquent payment and the additional compensation Lender is entitled to receive for the increased risks of nonpayment associated with a delinquent loan.

     9. Limits on Personal Liability.

     (a) Except as otherwise provided in this Section 9, Borrower shall have no personal liability under this Note, the Security Instrument or any other Loan Document for the repayment of the Indebtedness or for the performance of any other obligations of Borrower under the Loan Documents and Lender’s only recourse for the satisfaction of the Indebtedness and the performance of such obligations shall be Lender’s exercise of its rights and remedies with respect to the Mortgaged Property and to any other collateral held by Lender as security for the Indebtedness. This limitation on Borrower’s liability shall not limit or impair Lender’s enforcement of its rights against any guarantor of the Indebtedness or any guarantor of any other obligations of Borrower.

     (b) Borrower shall be personally liable to Lender for the amount of the Base Recourse, plus any other amounts for which Borrower has personal liability under this Section 9.

     (c) In addition to the Base Recourse, Borrower shall be personally liable to Lender for the repayment of a further portion of the Indebtedness equal to any loss or damage suffered by Lender as a result of the occurrence of any of the following events:

(i)

Borrower fails to pay to Lender upon demand after an Event of Default all Rents to which Lender is entitled under Section 3(a) of the Security Instrument and the amount of all security deposits collected by Borrower from tenants then in residence. However, Borrower will not be personally liable for any failure described in this subsection (i) if Borrower is unable to pay to Lender all Rents and security deposits as required by the Security Instrument because of a valid order issued in a bankruptcy, receivership, or similar judicial proceeding.

(ii)

Borrower fails to apply all insurance proceeds and condemnation proceeds as required by the Security Instrument. However, Borrower will not be personally liable for any failure described in this subsection (ii) if Borrower is unable to apply insurance or condemnation proceeds as required by the Security Instrument because of a valid order issued in a bankruptcy, receivership, or similar judicial proceeding.

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(iii)	Borrower fails to comply with Section 14(g) or (h) of the Security Instrument relating to the delivery of books and records, statements, schedules and reports.
(iv)	Borrower fails to pay when due in accordance with the terms of the Security Instrument the amount of any item below marked “Deferred”; provided however, that if no item is marked “Deferred”, this Section 9(c)(iv) shall be of no force or effect.

[Deferred]	Hazard Insurance premiums or other insurance premiums,
[Deferred]	Taxes,
[Deferred]	water and sewer charges (that could become a lien on the Mortgaged Property),
[N/A]	ground rents,
[Deferred]	assessments or other charges (that could become a lien on the Mortgaged Property)

     (d) In addition to the Base Recourse, Borrower shall be personally liable to Lender for:

     (i) the performance of all of Borrower’s obligations under Section 18 of the Security Instrument (relating to environmental matters);

     (ii) the costs of any audit under Section 14(g) of the Security Instrument; and

     (iii) any costs and expenses incurred by Lender in connection with the collection of any amount for which Borrower is personally liable under this Section 9, including Attorneys’ Fees and Costs and the costs of conducting any independent audit of Borrower’s books and records to determine the amount for which Borrower has personal liability.

     (e) All payments made by Borrower with respect to the Indebtedness and all amounts received by Lender from the enforcement of its rights under the Security Instrument and the other Loan Documents shall be applied first to the portion of the Indebtedness for which Borrower has no personal liability.

     (f) Notwithstanding the Base Recourse, Borrower shall become personally liable to Lender for the repayment of all of the Indebtedness upon the occurrence of any of the following Events of Default:

     (i) Borrower’s ownership of any property or operation of any business not permitted by Section 33 of the Security Instrument;

     (ii) a Transfer (including, but not limited to, a lien or encumbrance) that is an Event of Default under Section 21 of the Security Instrument, other than a Transfer consisting solely of the involuntary removal or involuntary withdrawal of a general partner in a limited partnership or a manager in a limited liability company; or

     (iii) fraud or written material misrepresentation by Borrower or any officer, director, partner, member or employee of Borrower in connection with the application for or creation of the Indebtedness or any request for any action or consent by Lender.

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     (g) To the extent that Borrower has personal liability under this Section 9, Lender may exercise its rights against Borrower personally without regard to whether Lender has exercised any rights against the Mortgaged Property or any other security, or pursued any rights against any guarantor, or pursued any other rights available to Lender under this Note, the Security Instrument, any other Loan Document or applicable law. To the fullest extent permitted by applicable law, in any action to enforce Borrower’s personal liability under this Section 9, Borrower waives any right to set off the value of the Mortgaged Property against such personal liability.

     10. Voluntary and Involuntary Prepayments.

     (a) Any receipt by Lender of principal due under this Note prior to the Maturity Date, other than principal required to be paid in monthly installments pursuant to Section 3, constitutes a prepayment of principal under this Note. Without limiting the foregoing, any application by Lender, prior to the Maturity Date, of any proceeds of collateral or other security to the repayment of any portion of the unpaid principal balance of this Note constitutes a prepayment under this Note.

     (b) Borrower may voluntarily prepay all of the unpaid principal balance of this Note on an Installment Due Date so long as Borrower designates the date for such prepayment in a Notice from Borrower to Lender given at least 30 days prior to the date of such prepayment. If an Installment Due Date (as defined in Section 1(a)) falls on a day which is not a Business Day, then with respect to payments made under this Section 10 only, the term “Installment Due Date” shall mean the Business Day immediately preceding the scheduled Installment Due Date.

     (c) Notwithstanding subsection (b) above, Borrower may voluntarily prepay all of the unpaid principal balance of this Note on a Business Day other than an Installment Due Date if Borrower provides Lender with the Notice set forth in subsection (b) and meets the other requirements set forth in this subsection. Borrower acknowledges that Lender has agreed that Borrower may prepay principal on a Business Day other than an Installment Due Date only because Lender shall deem any prepayment received by Lender on any day other than an Installment Due Date to have been received on the Installment Due Date immediately following such prepayment and Borrower shall be responsible for all interest that would have been due if the prepayment had actually been made on the Installment Due Date immediately following such prepayment.

     (d) Unless otherwise expressly provided in the Loan Documents, Borrower may not voluntarily prepay less than all of the unpaid principal balance of this Note. In order to voluntarily prepay all or any part of the principal of this Note, Borrower must also pay to Lender, together with the amount of principal being prepaid, (i) all accrued and unpaid interest due under this Note, plus (ii) all other sums due to Lender at the time of such prepayment, plus (iii) any prepayment premium calculated pursuant to Section 10(e).

     (e) Except as provided in Section 10(f), a prepayment premium shall be due and payable by Borrower in connection with any prepayment of principal under this Note during the Prepayment Premium Period. The prepayment premium shall be whichever is the greater of subsections (A) and (B) below:

(A)	1.0% of the amount of principal being prepaid; or
(B)	the product obtained by multiplying:

(1)	the amount of principal being prepaid or accelerated,
	by

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(2)	the excess (if any) of the Monthly Note Rate over the Assumed Reinvestment Rate,
	by
(3)	the Present Value Factor.

For purposes of subsection (B), the following definitions shall apply:

     Monthly Note Rate: one-twelfth (1/12) of the Fixed Interest Rate, expressed as a decimal calculated to five digits.

     Prepayment Date: in the case of a voluntary prepayment, the date on which the prepayment is made; in the case of the application by Lender of collateral or security to a portion of the principal balance, the date of such application.

     Assumed Reinvestment Rate: one-twelfth (1/12) of the yield rate, as of the date 5 Business Days before the Prepayment Date, on the Treasury Security, as reported in The Wall Street Journal, expressed as a decimal calculated to five digits. In the event that no yield is published on the applicable date for the Treasury Security, Lender, in its discretion, shall select the non-callable Treasury Security maturing in the same year as the Treasury Security with the lowest yield published in The Wall Street Journal as of the applicable date. If the publication of such yield rates in The Wall Street Journal is discontinued for any reason, Lender shall select a security with a comparable rate and term to the Treasury Security. The selection of an alternate security pursuant to this Section shall be made in Lender’s discretion.

     Present Value Factor: the factor that discounts to present value the costs resulting to Lender from the difference in interest rates during the months remaining in the Yield Maintenance Period, using the Assumed Reinvestment Rate as the discount rate, with monthly compounding, expressed numerically as follows:

     n = the number of months remaining in Yield Maintenance Period; provided, however, if a prepayment occurs on an Installment Due Date, then the number of months remaining in the Yield Maintenance Period shall be calculated beginning with the month in which such prepayment occurs and if such prepayment occurs on a Business Day other than an Installment Due Date, then the number of months remaining in the Yield Maintenance Period shall be calculated beginning with the month immediately following the date of such prepayment.

     ARR = Assumed Reinvestment Rate

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     (f) Notwithstanding any other provision of this Section 10, no prepayment premium shall be payable with respect to (i) any prepayment made during the Window Period, or (ii) any prepayment occurring as a result of the application of any insurance proceeds or condemnation award under the Security Instrument.

     (g) Unless Lender agrees otherwise in writing, a permitted or required prepayment of less than the unpaid principal balance of this Note shall not extend or postpone the due date of any subsequent monthly installments or change the amount of such installments.

     (h) Borrower recognizes that any prepayment of any of the unpaid principal balance of this Note, whether voluntary or involuntary or resulting from an Event of Default by Borrower, will result in Lender’s incurring loss, including reinvestment loss, additional expense and frustration or impairment of Lender’s ability to meet its commitments to third parties. Borrower agrees to pay to Lender upon demand damages for the detriment caused by any prepayment, and agrees that it is extremely difficult and impractical to ascertain the extent of such damages. Borrower therefore acknowledges and agrees that the formula for calculating prepayment premiums set forth in this Note represents a reasonable estimate of the damages Lender will incur because of a prepayment. Borrower further acknowledges that any lockout and the prepayment premium provisions of this Note are a material part of the consideration for the Loan, and that the terms of this Note are in other respects more favorable to Borrower as a result of the Borrower’s voluntary agreement to the lockout and prepayment premium provisions.

     11. Costs and Expenses. To the fullest extent allowed by applicable law, Borrower shall pay all expenses and costs, including Attorneys’ Fees and Costs incurred by Lender as a result of any default under this Note or in connection with efforts to collect any amount due under this Note, or to enforce the provisions of any of the other Loan Documents, including those incurred in post-judgment collection efforts and in any bankruptcy proceeding (including any action for relief from the automatic stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure proceeding.

     12. Forbearance. Any forbearance by Lender in exercising any right or remedy under this Note, the Security Instrument, or any other Loan Document or otherwise afforded by applicable law, shall not be a waiver of or preclude the exercise of that or any other right or remedy. The acceptance by Lender of any payment after the due date of such payment, or in an amount which is less than the required payment, shall not be a waiver of Lender’s right to require prompt payment when due of all other payments or to exercise any right or remedy with respect to any failure to make prompt payment. Enforcement by Lender of any security for Borrower’s obligations under this Note shall not constitute an election by Lender of remedies so as to preclude the exercise of any other right or remedy available to Lender.

     13. Waivers. Borrower and all endorsers and guarantors of this Note and all other third party obligors waive presentment, demand, notice of dishonor, protest, notice of acceleration, notice of intent to demand or accelerate payment or maturity, presentment for payment, notice of nonpayment, grace, and diligence in collecting the Indebtedness.

     14. Loan Charges (Texas Only). Borrower and Lender intend at all times to comply with the law of the State of Texas governing the Maximum Interest Rate or maximum amount of interest payable on or in connection with this Note and the Indebtedness (or applicable United States federal law to the extent that it permits Lender to contract for, charge, take, reserve or receive a greater amount of interest than under Texas law). If the applicable law is ever judicially interpreted so as to render usurious any amount payable under this Note or under any other Loan Document, or contracted for, charged, taken, reserved or received with respect to the Indebtedness, or as a result of acceleration of the maturity of this Note, or if any prepayment by Borrower results in Borrower having paid any interest in excess of that permitted by any applicable law, then Borrower and Lender expressly intend that all excess amounts collected by Lender shall be applied to reduce the unpaid principal balance of this Note (or, if this Note has

PAGE 11

been or would thereby be paid in full, shall be refunded to Borrower), and the provisions of this Note, the Security Instrument and any other Loan Documents immediately shall be deemed reformed and the amounts thereafter collectible under this Note or any other Loan Document reduced, without the necessity of the execution of any new documents, so as to comply with any applicable law, but so as to permit the recovery of the fullest amount otherwise payable under this Note or any other Loan Document. The right to accelerate the Maturity Date of this Note does not include the right to accelerate any interest, which has not otherwise accrued on the date of such acceleration, and Lender does not intend to collect any unearned interest in the event of acceleration. All sums paid or agreed to be paid to Lender for the use, forbearance or detention of the Indebtedness shall, to the extent permitted by any applicable law, be amortized, prorated, allocated and spread throughout the full term of the Indebtedness until payment in full so that the rate or amount of interest on account of the Indebtedness does not exceed the applicable usury ceiling. Notwithstanding any provision contained in this Note, the Security Instrument or any other Loan Document that permits the compounding of interest, including any provision by which any accrued interest is added to the principal amount of this Note, the total amount of interest that Borrower is obligated to pay and Lender is entitled to receive with respect to the Indebtedness shall not exceed the amount calculated on a simple (i.e., non-compounded) interest basis at the maximum rate on principal amounts actually advanced to or for the account of Borrower, including all current and prior advances and any advances made pursuant to the Security Instrument or other Loan Documents (such as for the payment of taxes, insurance premiums and similar expenses or costs).

     15. Commercial Purpose. Borrower represents that Borrower is incurring the Indebtedness solely for the purpose of carrying on a business or commercial enterprise, and not for personal, family, household, or agricultural purposes.

     16. Counting of Days. Except where otherwise specifically provided, any reference in this Note to a period of “days” means calendar days, not Business Days.

     17. Governing Law. This Note shall be governed by the law of the Property Jurisdiction.

     18. Captions. The captions of the Sections of this Note are for convenience only and shall be disregarded in construing this Note.

     19. Notices; Written Modifications.

     (a) All Notices, demands and other communications required or permitted to be given pursuant to this Note shall be given in accordance with Section 31 of the Security Instrument.

     (b) Any modification or amendment to this Note shall be ineffective unless in writing signed by the party sought to be charged with such modification or amendment; provided, however, that in the event of a Transfer under the terms of the Security Instrument that requires Lender’s consent, any or some or all of the Modifications to Multifamily Note set forth in Exhibit A to this Note may be modified or rendered void by Lender at Lender’s option, by Notice to Borrower and the transferee, as a condition of Lender’s consent.

     20. Consent to Jurisdiction and Venue. Borrower agrees that any controversy arising under or in relation to this Note may be litigated in the Property Jurisdiction. The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall have jurisdiction over all controversies that shall arise under or in relation to this Note. Borrower irrevocably consents to service, jurisdiction, and venue of such courts for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise. However, nothing in this Note is intended to limit any right that Lender may have to bring any suit, action or proceeding relating to matters arising under this Note in any court of any other jurisdiction.

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     21. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

     22. State-Specific Provisions. N/A.

     ATTACHED EXHIBIT. The Exhibit noted below, if marked with an “X” in the space provided, is attached to this Note:

x Exhibit A Modifications to Multifamily Note

     IN WITNESS WHEREOF, and in consideration of the Lender’s agreement to lend Borrower the principal amount set forth above, Borrower has signed and delivered this Note under seal or has caused this Note to be signed and delivered under seal by its duly authorized representative. Borrower intends that this Note shall be deemed to be signed and delivered as a sealed instrument.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

PAGE 13

POST ADDISON CIRCLE LIMITED
PARTNERSHIP, a Georgia limited partnership
By:	Post Addison Circle GP, LLC, a Georgia limited
	liability company, its sole general partner
	By:	Post Apartment Homes, L.P., a Georgia
		limited partnership, its sole member
		By:	Post GP Holdings, Inc., a Georgia
			corporation, its sole general partner
			By:	/s/ Christopher J. Papa		(SEAL)
				Name:	Christopher J. Papa
				Title:	Executive Vice
					President and Chief
					Financial Officer
Borrower’s Social Security/Employer ID Number

PAGE 14

Endorsement page to that Multifamily Note dated as of January 25, 2008 in the amount of $120,000,000.00

PAY TO THE ORDER OF FEDERAL HOME LOAN
MORTGAGE CORPORATION, WITHOUT
RECOURSE.
DEUTSCHE BANK BERKSHIRE
	MORTGAGE, INC., d/b/a DB Berkshire
	Mortgage, Inc., a Delaware corporation
By:	/s/ Denis G. Leger		(SEAL)
	Name:	Denis G. Leger
	Title:	Officer
By:	/s/ Steven B. Wendel		(SEAL)
	Name:	Steven B. Wendel
	Title:	Officer

FHLMC Loan No. 487782259

PAGE 15

EXHIBIT A

MODIFICATIONS TO MULTIFAMILY NOTE

The following modifications are made to the text of the Note that precedes this Exhibit.

1. Section 9(c) is amended by the addition of the following new Section 9(c)(v):

“(v) Borrower fails to comply with the requirements of Section 10 of the Security Instrument with respect to the litigation pending in the United States Court for the District of Columbia captioned “Equal Rights Center vs. Post Properties, Inc., Post GP Holdings, Inc. and Post Apartment Homes, L.P. No. 1:06CV1991 (D.DC)” (“ERC Litigation”).”

2. Section 7(a) of the Note shall be amended as follows:

     (a) If any monthly installment of interest or principal and interest or other amount payable under this Note or under the Security Instrument or any other Loan Document is not received in full by Lender (i) during the Fixed Rate Period, within ten (10) days after the installment or other amount is due, or (ii) during the Extension Period, within five (5) days after the installment or other amount is due, counting from and including the date such installment or other amount is due (unless applicable law requires a longer period of time before a late charge may be imposed, in which event such longer period shall be substituted), Borrower shall pay to Lender, immediately and without demand by Lender, a late charge equal to five percent (5%) of such installment or other amount due, but excluding principal due upon maturity or upon acceleration of the Indebtedness (unless applicable law requires a lesser amount be charged, in which event such lesser amount shall be substituted). As the Amortization Period is zero months and the monthly payments required by Section 3 do not provide for payments of principal, late charges will be calculated only on the actual amount of any interest only payment not paid within the period specified in this Section 7(a).

3.	Section 1 is revised to insert the words “as identified on the Freddie Mac Debt Securities Web Page (accessed via the Freddie Mac internet site at www.freddiemac.com)” after the words “Money Market Yield” in the definition of “Reference Bill Index Rate”.
4.	Section 3(i) is revised to insert the word “solely” after the words “due date”.
5.	Section 3(e) is revised to delete the words “or event or circumstance which, with the giving of notice or passage of time or both, could constitute an Event of Default”.
6.	Section 13 is revised to insert the following at the beginning of the Section:

PAGE A-1

	“Except as otherwise expressly provided in the Loan Documents with respect to notices of defaults and cure periods where applicable,”
7.	Section 9(a) is amended by (i) deleting from the first line the phrase “Borrower shall have no” and inserting in its place the following:
	“neither Borrower, Borrower’s partners or members nor any of the foregoing parties’ shareholders, officers, directors, principals, agents or employees, other than under any guaranty or other agreement(s) with Lender to which any such party is bound, shall have any”
	and (ii) inserting in the last sentence thereof the following phrase immediately after “Borrower’s” and immediately prior to “liability”:
	“and such other aforementioned parties’”.
8.	Section 9(c)(i) is amended (i) by deleting from the end of the first sentence the phrase “then in residence” and inserting in its place the phrase “under Leases which remain refundable to such tenants as of the date of Lender’s demand, (ii) by inserting in the second sentence after “security deposits” the phrase “under Leases”, (iii) by deleting from the second sentence the words “a valid” and inserting in their place the word “an”, and (iv) by inserting the following at the end of the second sentence, immediately after “proceeding” and before the period (.):
	“or if Borrower is prevented from collecting the Rents by Lender’s revocation of Borrower’s license to collect the Rents”
9.	Section 9(c)(iv) is amended by inserting in the first sentence thereof the following phrase immediately after the word “Deferred” and immediately prior to the semi-colon (;):
	“at any time while Lender is not collecting Imposition Deposits for such amounts”.

PAGE A-2

EX-10.14

Exhibit 10.14

EXECUTION VERSION
2.0X

The Post Group, as defined below, has entered into this form of change in control agreement with Arthur J. Quirk, effective February 28, 2008. Mr. Quirk is an executive officer within the meaning of the Securities Exchange Act of 1934.

AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT

     THIS AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT (the “Agreement”) is made and entered into on this ___day of ___, 2008, by and among ___(the “Executive”), and POST PROPERTIES, INC., POST APARTMENT HOMES, L.P., and POST SERVICES, INC., and amends, restates and supersedes the Change in Control Agreement among Executive and Post Properties, Inc., dated July 25, 2003 (the “2003 Agreement”).

WITNESSETH

     WHEREAS, the Post Group and Executive desire collectively to amend and restate the 2003 Agreement in the form of this Agreement to (among other things) take into account § 409A of the Code;

     WHEREAS, Executive currently is individually and/or collectively employed by the Post Group as a senior executive; and

     WHEREAS, the Post Group desires to continue to retain Executive’s services, trust, confidence and complete and undivided attention if there is any speculation regarding a Change in Control of Post;

     NOW, THEREFORE, in consideration of the mutual promises and agreements set forth in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Post Group and Executive, intending to be legally bound, hereby agree as follows:

§ 1. Definitions.

     1.1 Affiliate. The term “Affiliate” for purposes of this Agreement shall mean (a) Post Apartment Homes, (b) Post Services, (c) Post GP Holdings (d) any other organization if Post, Post Apartment Homes, Post Services or Post GP Holdings (i) beneficially own more than twenty percent (20%) of the outstanding voting capital stock of such organization (if such organization is a corporation) or more than twenty percent (20%) of the beneficial interests of such organization (if such organization is not a corporation) as of the date of this Agreement and (ii) possess the power to direct or cause the direction of the day to day operations and affairs of such organization,

whether through ownership of voting securities, by contract, in the capacity of general partner, manager or managing member or otherwise as of the date of this Agreement.

     1.2. Board. The term “Board” for purposes of this Agreement shall mean the Board of Directors of Post.

     1.3 Cash Compensation. The term “Cash Compensation” for purposes of this Agreement shall mean the sum of

     (a) Executive’s annual base salary (as determined without regard to any salary deferral election) from the Post Group in effect on the day before Executive’s employment terminates under § 3(a)(1) or, if greater, Executive’s average annualized annual base salary (as determined without regard to any salary deferral election) from the Post Group over the three (3) consecutive year period (or, if less, Executive’s period of employment by the Post Group) which ends on the date that Executive’s employment so terminates, and

     (b) the average annual bonuses which have been paid by the Post Group (whether paid at the discretion of the Post Group or pursuant to the terms of any plan or program) or which would have been paid but for a bonus deferral election with respect to Executive’s performance over the three (3) consecutive calendar year period (or, if less, Executive’s period of employment by the Post Group) immediately preceding the calendar year during which Executive’s employment so terminates whether (i) such bonuses are paid (or would have been paid but for a bonus deferral election) in cash, in property, or in any combination of cash and property or (ii) such bonuses are paid during the calendar year for which performance is measured or are paid subsequent to the end of the calendar year for which performance is measured; provided, however,

     (c) neither the value of any stock option or restricted stock grants made to Executive in any calendar year nor any income which Executive realizes in any calendar year from the exercise of any such stock options or the lapse of any restrictions on such restricted stock grants shall be treated as part of Executive’s salary under § 1.3(a) or as part of Executive’s bonuses under § 1.3(b).

     1.4 Cause. The term “Cause” for purposes of this Agreement shall (subject to § 1.4(d)) mean:

     (a) Executive is convicted of, pleads guilty to, or confesses or otherwise admits to a member of the Post Group, a prosecutor, or otherwise publicly admits, any felony or any act of fraud, misappropriation, or embezzlement, or Executive otherwise engages in a fraudulent act or course of conduct;

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     (b) There is any material act or omission by Executive involving malfeasance or gross negligence in the performance of Executive’s duties to a member of the Post Group to the material detriment of the Post Group; or

     (c) Executive breaches in any material respect any of the covenants set forth in § 4, § 5, or § 6 of this Agreement; provided, however,

     (d) No such act or omission or event shall be treated as “Cause” under this Agreement unless (i) Executive has been provided a detailed, written statement of the basis for the Post Group’s belief such act or omission or event constitutes “Cause” and an opportunity to meet with the Compensation Committee (together with Executive’s counsel if Executive chooses to have Executive’s counsel present at such meeting) after Executive has had a reasonable period in which to review such statement and, if the allegation is under § 1.4(b) or § 1.4(c), has had at least a thirty (30) day period to take corrective action, and (ii) the Compensation Committee after such meeting (if Executive meets with the Compensation Committee) and after the end of such thirty (30) day correction period (if applicable) determines reasonably and in good faith and by the affirmative vote of at least two-thirds (2/3) of the members of the Compensation Committee then in office at a meeting called and held for such purpose that “Cause” does exist under this Agreement.

     1.5 Change in Control. The term “Change in Control” for purposes of this Agreement shall mean:

     (a) a “change in control” of Post of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A for a proxy statement filed under Section 14(a) of the Exchange Act as in effect on the date of this Agreement;

     (b) a “person” (as that term is used in 14(d)(2) of the Exchange Act) becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly of securities representing forty-five percent (45%) or more of the combined voting power for election of directors of the then outstanding securities of Post;

     (c) the individuals who at the beginning of any period of two (2) consecutive years or less (starting on or after the date of this Agreement) constitute the Board cease for any reason during such period to constitute at least a majority of the Board, unless the election or nomination for election of each new member of the Board was approved by vote of at least two-thirds (2/3) of the members of such Board then still in office who were members of such Board at the beginning of such period;

     (d) the shareholders of Post approve any reorganization, merger,

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consolidation, or share exchange as a result of which the common stock of Post shall be changed, converted, or exchanged into or for securities of another organization (other than a merger with an Affiliate identified in §1.1(a), (b) or (c) of this Agreement or a wholly-owned subsidiary of Post), or any dissolution or liquidation of Post, or any sale or the disposition of fifty percent (50%) or more of the assets or business of Post; or

     (e) the shareholders of Post approve any reorganization, merger, consolidation, or share exchange with another corporation unless (i) the persons who were the beneficial owners of the outstanding shares of the common stock of Post immediately before the consummation of such transaction beneficially own more than sixty percent (60%) of the outstanding shares of the common stock of the successor or survivor corporation in such transaction immediately following the consummation of such transaction and (ii) the number of shares of the common stock of such successor or survivor corporation beneficially owned by the persons described in § 1.5(e)(i) immediately following the consummation of such transaction is beneficially owned by each such person in substantially the same proportion that each such person had beneficially owned shares of Post common stock immediately before the consummation of such transaction, provided, however (iii) the percentage described in § 1.5(e)(i) of the beneficially owned shares of the successor or survivor corporation and the number described in § 1.5(e)(ii) of the beneficially owned shares of the successor or survivor corporation shall be determined exclusively by reference to the shares of the successor or survivor corporation which result from the beneficial ownership of shares of common stock of Post by the persons described in § 1.5(e)(i) immediately before the consummation of such transaction.

     1.6 Code. The term “Code” for purposes of this Agreement shall mean the Internal Revenue Code of 1986, as amended.

     1.7 Compensation Committee. The term “Compensation Committee” for purposes of this Agreement shall mean the Executive Compensation and Management Development Committee of the Board or any successor of such committee or, if there is no such successor, the Board.

     1.8 Confidential or Proprietary Information. The term “Confidential or Proprietary Information” for purposes of this Agreement shall mean any secret, confidential, or proprietary information of Post or any Affiliate (not otherwise included in the definition of Trade Secret in § 1.27 of this Agreement) that has not become generally available to the public by the act of one who has the right to disclose such information without violating any right of Post or any Affiliate.

     1.9 Delayed Payment Date. The term “Delayed Payment Date” for purposes of this Agreement shall mean the date which is six (6) months and one (1) day after the date that Executive has a Separation from Service.

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     1.10 Disability. The term “Disability” for purposes of this Agreement shall mean that Executive, as a result of a mental or physical condition or illness affecting a major life activity, is unable to perform the essential functions of Executive’s job at the Post Group for any consecutive 180-day period, even with reasonable accommodation, all as reasonably determined by the Compensation Committee.

     1.11 Effective Date. The term “Effective Date” for purposes of this Agreement shall mean either the date which includes the “closing” of the transaction which makes a Change in Control effective, if the Change in Control is made effective through a transaction which has a “closing”, or the date a Change in Control is reported in accordance with applicable law as effective to the Securities and Exchange Commission (or otherwise publicly announced as effective), if the Change in Control is made effective other than through a transaction which has a “closing”.

     1.12 Exchange Act. The term “Exchange Act” for purposes of this Agreement shall mean the Securities Exchange Act of 1934, as amended.

     1.13 Good Reason.

     (1) The term “Good Reason” for purposes of this Agreement shall (subject to § 1.13(1)(e)) mean:

     (a) there is a reduction after a Change in Control, but before the end of Executive’s Protection Period, in Executive’s base salary from the Post Group or there is a reduction after a Change in Control but before the end of Executive’s Protection Period in Executive’s eligibility to receive any incentive compensation or bonuses from the Post Group, all without Executive’s express written consent;

     (b) there is a reduction after a Change in Control, but before the end of Executive’s Protection Period, in the scope, importance, or prestige of Executive’s duties, responsibilities, or authority (other than a mere change in Executive’s title, if such change in title is consistent with the organizational structure of the Post Group following such Change in Control) without Executive’s express written consent;

     (c) at any time after a Change in Control, but before the end of Executive’s Protection Period (without Executive’s express written consent), there is a transfer of Executive’s primary work site from Executive’s primary work site on the date of such Change in Control or, if Executive subsequently consents in writing to such a transfer under this Agreement, from the primary work site that was the subject of such consent, to a new primary work site that is more than thirty-five (35) miles from Executive’s then current primary work site, unless such new primary work site is closer to Executive’s primary residence than Executive’s then current primary work site; or

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     (d) there is a failure (without Executive’s express written consent) after a Change in Control, but before the end of Executive’s Protection Period, to continue to provide to Executive health and welfare benefits, deferred compensation benefits, executive perquisites (other than the use of a company airplane for personal purposes), and stock option and restricted stock grants that are in the aggregate comparable in value to those provided to Executive immediately prior to the Change in Control Date; provided, however,

     (e) No such act or omission shall be treated as “Good Reason” under § 1.13(1) unless

     (i) (A) Executive delivers to the Compensation Committee a detailed, written statement of the basis for Executive’s belief that such act or omission constitutes Good Reason, (B) Executive delivers such statement before the later of (1) the end of the ninety (90) day period that starts on the date there is an act or omission which forms the basis for Executive’s belief that Good Reason exists, or (2) the end of the period mutually agreed upon for purposes of this § 1.13(1)(e)(i)(B) in writing by Executive and the Chairman of the Compensation Committee, (C) Executive gives the Compensation Committee a thirty (30) day period after the delivery of such statement to cure the basis for such belief, and (D) Executive actually submits Executive’s written resignation to the Compensation Committee during the sixty (60) day period that begins immediately after the end of such thirty (30) day period if Executive reasonably and in good faith determines that Good Reason continues to exist after the end of such thirty (30) day period, or

     (ii) the Post Group states in writing to Executive that Executive has the right to treat any such act or omission as Good Reason under this Agreement and Executive resigns during the sixty (60) day period that starts on the date such statement is actually delivered to Executive;

     (f) If (A) Executive gives the Compensation Committee the statement described in § 1.13(1)(e)(i) before the end of the thirty (30) day period that immediately follows the end of the Protection Period and Executive thereafter resigns within the period described in § 1.13(1)(e)(i), or (B) the Post Group provides the statement to Executive described in § 1.13(1)(e)(ii) before the end of the thirty (30) day period that immediately follows the end of the Protection Period and Executive thereafter resigns within the period described in § 1.13(1)(e)(ii), then (C) such resignation shall be treated under this Agreement as if made in Executive’s Protection Period; and

     (g) If Executive consents in writing to any reduction described in § 1.13(1)(a) or § 1.13(1)(b), to any transfer described in § 1.13(1)(c) or to any

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failure described in § 1.13(1)(d) in lieu of exercising Executive’s right to resign for Good Reason and delivers such consent to the Post Group, the date such consent is delivered to the Post Group thereafter shall be treated under this definition as the date of a Change in Control for purposes of determining whether Executive subsequently has Good Reason under this Agreement to resign under § 2.1 or § 2.3 as a result of any subsequent reduction described in § 1.13(1)(a) or § 1.13(1)(b), any subsequent transfer described in § 1.13(1)(c), or any subsequent failure described in § 1.13(1)(d).

     1.14 Gross Up Payment. The term “Gross Up Payment” for purposes of this Agreement shall mean a payment by the Post Group to or on behalf of Executive which shall be sufficient to pay in full (a) any excise tax described in § 9 in full, (b) all federal, state and local income taxes (other than a tax under § 409A of the Code) and social security and other employment taxes on the payment made to pay such excise tax plus any additional excise taxes, income taxes (other than a tax under § 409A of the Code) and social security and other employment taxes resulting from such payment and from all of the additional payments called for in this § 1.14(b) and in § 1.14(c) and (c) any interest or penalties assessed by the Internal Revenue Service on Executive which are related to the payment of such taxes unless such interest or penalties are attributable to Executive’s willful misconduct or gross negligence.

     1.15 Group Health Plan. The term “Group Health Plan” for purposes of this Agreement shall mean the group health plan maintained by any member of the Post Group for the purpose of providing medical, dental and vision benefits for the employees of the Post Group and any Affiliates.

     1.16 Interest. The term “Interest” for purposes of this Agreement shall mean interest for the period between Executive’s Separation from Service and Executive’s Delayed Payment Date at the three (3) month LIBOR rate (using the three (3) month LIBOR rate published in The Wall Street Journal on the date of Executive’s Separation from Service) plus 100 basis points, compounded monthly.

     1.17 Multifamily Property. The term “Multifamily Property” for purposes of this Agreement and any renewal of this Agreement shall mean any real property on which an upscale multifamily residential-use development has been constructed or is under construction as of the date of this or any renewal of this Agreement.

     1.18 Post. The term “Post” for purposes of this Agreement shall mean Post Properties, Inc., a Georgia corporation, and any successor to Post.

     1.19 Post Apartment Homes. The term “Post Apartment Homes” for purposes of this Agreement shall mean Post Apartment Homes, L.P., a Georgia limited partnership, and any successor to Post Apartment Homes.

     1.20 Post GP Holdings. The term “Post GP Holdings” for purposes of this

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Agreement shall mean Post GP Holdings, Inc., a Georgia, corporation, and any successor to Post GP Holdings.

     1.21. Post Group. The term “Post Group” for purposes of this Agreement shall mean, individually and collectively, Post, Post Apartment Homes and Post Services.

     1.22 Post Services. The term “Post Services” for purposes of this Agreement shall mean Post Services, Inc., a Georgia corporation, and any successor to Post Services.

     1.23 Protection Period. The term “Protection Period” for purposes of this Agreement shall (subject to § 1.13(1)(g)) mean the two (2) year period which begins on the Effective Date.

     1.24 Restricted Period. The term “Restricted Period” for purposes of this Agreement shall mean the period which starts on the date Executive’s employment by the Post Group terminates under circumstances which create an obligation for the Post Group under § 3 of this Agreement and which ends (a) on the first anniversary of such termination date or (b) on the first date following such a termination on which the Post Group breaches any obligation to Executive under § 3 of this Agreement, whichever period is shorter.

     1.25 Separation from Service. The term “Separation from Service” for purposes of this Agreement shall mean a “separation from service” within the meaning of § 409A of the Code and the related income tax regulations.

     1.26 Specified Employee. The term “Specified Employee” for purposes of this Agreement shall mean a “specified employee” within the meaning of § 409A of the Code and the related income tax regulations.

     1.27 Trade Secret. The term “Trade Secret” for purposes of this Agreement shall mean information, including, but not limited to, technical or nontechnical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, or a list of actual or potential customers or suppliers that:

     (a) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and

     (b) is the subject of reasonable efforts by Post or an Affiliate to maintain its secrecy.

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§ 2. Term.

     2.1 Initial Term. Subject to § 2.2, the term of this Agreement which began under the 2003 Agreement on July 25, 2003 (the “Start Date”) with a three (3) year term shall (subject to § 2.3 and § 3) continue under this Agreement up to, but not including, July 25, 2010.

     2.2 Automatic Renewals. Unless a member of the Post Group decides otherwise, and notifies the Executive of that decision in writing at least 180 days before an anniversary of the Start Date, the three (3) year term of this Agreement shall (subject to § 2.3 and § 3) renew on each successive anniversary of the Start Date so that the term of Executive’s employment under this Agreement shall never be less than two (2) years nor more than three (3) years.

     2.3 Special Rules. If Executive’s Protection Period begins before the term of this Agreement expires, this Agreement shall continue (notwithstanding § 2.2) in effect through the end of Executive’s Protection Period and, if Executive has a right to any compensation or benefits under § 3 before the term of this Agreement expires, the term of this Agreement shall continue until Executive agrees that all of the Post Group’s obligations to Executive under this Agreement have been satisfied in full or a court of competent jurisdiction makes a final determination that the Post Group has no further obligations to Executive under this Agreement, whichever comes first.

§ 3. Compensation and Benefits.

     3.1 General Rule. If there is a Change in Control and any member of the Post Group during Executive’s Protection Period terminates Executive’s employment without Cause or Executive during Executive’s Protection Period resigns for Good Reason, then:

     (a) The Post Group shall pay Executive two (2) times Executive’s then Cash Compensation in cash in a lump sum at his Separation from Service; provided, however, if Executive is a Specified Employee at Executive’s Separation from Service, such payment shall be delayed and paid with Interest on his Delayed Payment Date; and

     (b) (i) Each outstanding stock option granted to Executive by Post shall (notwithstanding the terms under which such option was granted) become fully vested and exercisable on the date of Executive’s Separation from Service and shall (notwithstanding the terms under which such option was granted) remain exercisable for the remaining term of each such option (as determined as if there had been no such Separation from Service), subject to the same terms and conditions as if Executive had remained employed by the Post Group for such term (other than any term or condition which gives Post the right to cancel any such option) and (ii) any restrictions on any outstanding restricted stock grants to Executive by Post immediately shall (notwithstanding the terms under which such grant was made) expire and Executive’s right to such stock shall be non-forfeitable; and

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     (c) The Post Group shall provide or make available health care coverage and shall provide reimbursement for life insurance and long-term disability premiums as follows:

     (i) During the period starting on the date of Executive’s Separation from Service and ending on the earlier of (A) the last day of the two (2) year period following Executive’s Separation from Service (the “2 Year Period”) or (B) the date when Executive is no longer entitled to continued coverage under § 4980B of the Code (the “COBRA Period”), the Post Group shall provide continued coverage under the Group Health plan pursuant to § 4980B of the Code (“COBRA Coverage”) and reimburse Executive for a portion of the monthly premiums paid by Executive for such COBRA Coverage,

     (ii) If the period described in § 3.1(c)(i) ends at the end of the COBRA Period, the Post Group for the remainder (if any) of the 2 Year Period shall provide Executive (1) continued coverage under the Group Health Plan or (2) if coverage for Executive is not available under the Group Health Plan, health insurance coverage from an insurance company selected by Executive and reimburse Executive for a portion of the monthly premiums paid by Executive for either form of coverage,

     (iii) If so requested by Executive in writing before the end of the coverage period described in either § 3.1(c)(i) or § 3.1(c)(ii), whichever is applicable, the Post Group will make available to Executive continued coverage under the Group Health Plan for up to an additional eighteen (18) months following the end of such coverage period to the extent Executive had such coverage under the Group Health Plan at the end of such coverage period and timely pays the monthly premium then paid by former employees for comparable COBRA Coverage,

     (iv) The reimbursable portion of the premiums paid by Executive each month under § 3.1(c)(i) and § 3.1(c)(ii) shall equal the dollar amount the Post Group would have paid on Executive’s behalf each month for the coverage which had been in effect immediately before Executive’s Separation from Service under the Group Health Plan had Executive remained employed by the Post Group for the remainder of the 2 Year Period. For the avoidance of doubt, the Post Group will not be responsible for any reimbursement during the period described in § 3.1(c)(iii),

     (v) The Post Group shall reimburse Executive during the 2 Year Period for a portion of Executive’s monthly premiums to purchase life

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insurance coverage and long-term disability coverage which is no less than the face amount of Executive’s life insurance coverage and long-term disability coverage in effect immediately before Executive’s Separation from Service, and the reimbursable portion each month shall equal the dollar amount the Post Group would have paid in premiums on Executive’s behalf each month for the life insurance coverage and long-term disability coverage under the policies which had been in effect immediately before Executive’s Separation from Service had Executive remained employed by the Post Group for the remainder of the 2 Year Period,

     (vi) The reimbursements called for under this § 3.1(c) shall be requested by Executive and processed and made by the Post Group in accordance with the policies and procedures in effect from time to time under the Post Group’s standard expense reimbursement policy for the Post Group’s senior executives as provided to Executive, but no cost or expense shall be reimbursable under this § 3.1(c) after the end of the calendar year immediately following the calendar year in which Executive incurs such cost or expense even if reimbursement was permissible at a later date under such policy, and

     (vii) The Post Group shall add to each reimbursement made pursuant to this § 3.1(c) an amount which the Post Group acting in good faith reasonably determines would be sufficient for Executive to pay his income and employment tax due on such reimbursement if Executive was subject to the maximum marginal tax rates; provided, however, if Executive is a Specified Employee at his Separation from Service, no such additional payments shall be made until the Delayed Payment Date, and the Post Group on the Delayed Payment Date shall make a lump sum payment in cash with Interest to Executive which the Post Group acting in good faith reasonably determines would be sufficient for Executive to pay his income and employment tax due on all of the reimbursements made before such date pursuant to this § 3.1(c) if Executive was subject to the maximum marginal tax rates.

     3.2 No Increase In Other Benefits.

     If Executive’s employment terminates under the circumstances described in § 3.1(a) or § 3.3, Executive expressly waives Executive’s right, if any, to have any payment made under § 3.1 taken into account to increase the benefits otherwise payable to, or on behalf of, Executive under any employee benefit plan, whether qualified or unqualified, maintained by the Post Group.

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     3.3 Termination In Anticipation Of A Change In Control.

     Executive shall be treated under § 3.1 as if Executive’s employment had been terminated without Cause or Executive had resigned for Good Reason during Executive’s Protection Period if:

     (a) Executive’s employment is terminated by a member of the Post Group without Cause or Executive resigns for Good Reason,

     (b) such termination is effected or such resignation is effective at any time in the sixty (60) day period which ends on the Effective Date of a Change In Control, and

     (c) there is an Effective Date for such Change In Control.

     3.4 Termination as a result of Death or Disability.

     Executive agrees that no member of the Post Group will have any obligation to Executive under this § 3 if Executive’s employment terminates exclusively as a result of Executive’s death or a Disability.

§ 4. No Solicitation Of Customers.

     Executive will not, during the Restricted Period, for purposes of competing with Post or any Affiliate, solicit on Executive’s own behalf or on behalf of any other person, firm, or corporation which engages, directly or indirectly, in the development, operation, management, leasing or landscaping of a Multifamily Property, any customer of Post or any Affiliate with whom Executive had a personal business interaction at any time during the two (2) years immediately prior to the termination of Executive’s employment by any member of the Post Group. This § 4 shall not prohibit a general solicitation not targeted at Post’s or an Affiliate’s customers and in which Executive has no participation or involvement.

§ 5. Antipirating Of Employees.

     Executive will not during the Restricted Period employ or seek to employ on Executive’s own behalf or on behalf of any other person, firm or corporation that engages, directly or indirectly, in the development, operation, management, leasing, or landscaping of a Multifamily Property, any person who was employed by a member of the Post Group in an executive, managerial, or supervisory capacity during the term of Executive’s employment by a member of the Post Group and with whom Executive had business dealings during the two (2) year period which ends on the date Executive’s employment by any member of the Post Group terminates (whether or not such employee would commit a breach of contract), and who has not ceased to be employed by a member of the Post Group for a period of at least one (1) year. This § 5 shall not

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prohibit a general solicitation not targeted at employees of Post or an Affiliate and in which Executive has no participation or involvement.

§ 6. Trade Secrets And Confidential Or Proprietary Information.

     Executive hereby agrees to hold in a fiduciary capacity for the benefit of Post and each Affiliate, and will not directly or indirectly use or disclose, any Trade Secret that Executive may have acquired during the term of Executive’s employment by any member of the Post Group for so long as such information remains a Trade Secret even if such information remains a Trade Secret after the expiration of the Restricted Period.

     In addition, Executive agrees during the Restricted Period to hold in a fiduciary capacity for the benefit of Post and each Affiliate, and not to directly or indirectly use or disclose, any Confidential or Proprietary Information that Executive may have acquired (whether or not developed or compiled by Executive and whether or not Executive was authorized to have access to such information) during the term of, in the course of, or as a result of Executive’s employment by any member of the Post Group.

§ 7. Reasonable and Necessary Restrictions.

     The Post Group has identified Executive as an individual with significant skills and experience critical to the business of the Post Group. In view of the significant and growing demand for executive talent, the potential impact on the Post Group’s executives of the transformational changes occurring within the industry and the Post Group, and the need to ensure continuity of the management team for the Post Group, the Post Group desires to provide Executive through this Agreement with certain incentives to remain in the Post Group’s employment. This Agreement is also designed to provide additional motivation for meeting the Post Group’s goals and objectives, to address potential long term employment concerns of Executive, and to impose certain reasonable restrictions on Executive’s activities designed to protect the Post Group’s interests should Executive’s employment terminate.

     Executive acknowledges that Post and its Affiliates shall disclose or make available Confidential Information and Trade Secrets to Executive that could be used by Executive to the detriment of Post and its Affiliates. In addition, in connection with his employment, Executive shall develop important relationships and contacts with employees valuable to Post and its Affiliates.

     Executive further acknowledges that § 4, § 5, and § 6 of this Agreement are fair and reasonable, enforcement of the provisions of this Agreement will not cause Executive undue hardship, and the provisions of this Agreement are reasonably necessary and commensurate with the need to protect the Post Group and their business interests and property from irreparable harm.

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     Executive acknowledges that the restrictions, prohibitions, and other provisions set forth in this Agreement, including without limitation the Restricted Period and those set forth in § 4, § 5, and § 6, are reasonable, fair and equitable in scope, terms, and duration; are necessary to protect the legitimate business interests of the Post Group; and are a material inducement to the Post Group to enter into this Agreement. Executive covenants that Executive will not challenge the enforceability of this Agreement nor will Executive raise any equitable defense to its enforcement.

§ 8. Specific Performance.

     Executive acknowledges that the obligations undertaken by him pursuant to this Agreement are unique and that the Post Group likely will have no adequate remedy at law if Executive shall fail to perform any of Executive’s obligations under this Agreement, and Executive therefore confirms that the Post Group’s right to specific performance of the terms of this Agreement is essential to protect the rights and interests of the Post Group. Accordingly, in addition to any other remedies that the Post Group may have at law or in equity, the Post Group will have the right to have all obligations, covenants, agreements, and other provisions of this Agreement specifically performed by Executive, and the Post Group will have the right to obtain preliminary and permanent injunctive relief to secure specific performance and to prevent a breach or contemplated breach of this Agreement by Executive, and Executive submits to the jurisdiction of the courts of the State of Georgia for this purpose.

§ 9. Tax Protection.

     9.1 General Rule. If Post or Post’s independent accountants (which shall consider such issue upon the reasonable request of the Executive) determine that any payments and benefits called for under this Agreement, together with any other payments and benefits made available to Executive by the Post Group, will result in Executive’s being subject to an excise tax under § 4999 of the Code or if such an excise tax is assessed against Executive as a result of any such payments and other benefits, the Post Group shall make a Gross Up Payment to or on behalf of Executive as and when any such determination or assessment is made, provided Executive takes such action (other than waiving Executive’s right to any payments or benefits in excess of the payments or benefits which Executive has expressly agreed to waive under this § 9) as the Post Group reasonably requests under the circumstances to mitigate or challenge such tax; provided, however, if the Post Group or the Post Group’s independent accountants make such a determination and, further, determine that Executive will not be subject to any such excise tax if Executive waives Executive’s right to receive a part of such payments or benefits and such part does not exceed $10,000, Executive shall irrevocably waive Executive’s right to receive such part if an independent accountant or lawyer retained by Executive and paid by the Post Group agrees with the determination made by the Post Group or the Post Group’s independent accountants with respect to the effect of such reduction in payments or benefits. Any determinations under this § 9 shall be made in accordance with § 280G of the Code and any applicable related regulations (whether proposed, temporary, or final) and any related Internal Revenue

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Service rulings and any related case law and, if the Post Group reasonably requests that Executive take action to mitigate or challenge, or to mitigate and challenge, any such tax or assessment (other than waiving Executive’s right to any payments or benefits in excess of the payments or benefits which Executive has expressly agreed to waive under this § 9) and Executive complies with such request, the Post Group shall provide Executive with such information and such expert advice and assistance from Post’s independent accountants, lawyers, and other advisors as Executive may reasonably request and shall pay for all expenses incurred in effecting such compliance and any related fines, penalties, interest, and other assessments.

     9.2 409A Rule. Any Gross Up Payment called for under § 9.1 to reimburse Executive for paying the related tax shall be paid to Executive as and when any such determination or assessment is made under § 9.1. The Post Group and Executive acknowledge and agree that solely to satisfy an express requirement in the regulations under § 409A of the Code, such payment shall be made no later than the end of the calendar year immediately following the calendar year in which Executive pays the related tax, and that this provision of § 9.2 shall not give the Post Group the right to delay making a Gross Up Payment to or on behalf of Executive under § 9.1.

§ 10. Executive’s Legal Fees and Expenses.

     If any action at law or in equity is necessary for Executive to enforce or interpret the terms of this Agreement, the Post Group shall pay Executive’s reasonable attorneys’ fees and other reasonable expenses incurred with respect to such action. If any other action is taken with respect to this Agreement, the Post Group shall bear its own attorneys’ fees and expenses and Executive shall bear Executive’s own attorneys’ fees and expenses. If a reimbursement is called for under this § 10, such reimbursement shall be made no later than the end of the calendar year immediately following the calendar year in which Executive pays the related legal fees or expenses. The Post Group and Executive acknowledge and agree that the deadline set forth in the immediately preceding sentence is only intended to satisfy an express requirement in the regulations under § 409A of the Code and that such sentence shall not give the Post Group the right to delay making a reimbursement in accordance with the first sentence in this § 10.

§ 11. Miscellaneous.

     11.1 Binding Effect. This Agreement shall inure to the benefit of and shall be binding upon Executive and his executor, administrator, heirs, personal representatives, and assigns; provided, however, that Executive shall not be entitled to assign or delegate any of his rights or obligations hereunder without the prior written consent of the Post Group. This Agreement shall inure to the benefit of and shall be binding upon the Post Group and their successors and assigns; provided, however, that this Agreement is assignable in whole or in part to any parent, subsidiaries, or affiliates of the Post Group only if such person or entity is financially capable of fulfilling the

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obligations of the Post Group under this Agreement, and the Post Group as part of any Change in Control which is made effective through a transaction for which there is a “closing” shall assign the Post Group’s obligations under this Agreement to such successor and such successor shall expressly agree to such assignment or the Post Group on or before the Effective Date for such Change in Control shall (without any further action on the part of Executive) take the action called for in § 3 of this Agreement as if Executive had been terminated without Cause on the Effective Date for such Change in Control without regard to whether Executive’s employment actually has terminated.

     11.2 Construction of Agreement. No provision of this Agreement or any related document shall be construed against or interpreted to the disadvantage of any party hereto by any court or other governmental or judicial authority, including an arbitrator, by reason of such party having or being deemed to have structured or drafted such provision.

     11.3 Governing Law. This Agreement shall be governed by and construed under the laws of the State of Georgia (without reference to the choice of law principles under the laws of the State of Georgia). Executive consents to jurisdiction and venue in the state and federal courts in the State of Georgia for any action arising from a dispute under this Agreement, and for any such action brought in such a court, expressly waives any defense Executive might otherwise have based on lack of personal jurisdiction or improper venue, or that the action has been brought in an inconvenient forum.

     11.4 Survival of Agreements. All covenants and agreements made in this Agreement shall survive the execution and delivery of this Agreement and the termination of Executive’s employment under this Agreement for any reason.

     11.5 Headings and References. The section and sub-section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. All references to sections (§) in this Agreement shall be to sections (§) of this Agreement unless otherwise expressly noted.

     11.6 Notices. All notices, requests, consents, and other communications called for under this Agreement shall be in writing and shall be deemed to be given when delivered personally or mailed first class, registered or certified mail, postage prepaid, in either case, addressed as follows:

(a) If to Executive, to Executive at his or her most recent home address as shown in the Post Group’s personnel files.

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(b)	If to the Post Group:
	Post Properties, Inc. One Riverside 4401 Northside Parkway Suite 800 Atlanta, GA 30327-3057 Attention: Corporate Secretary
	with a copy to:
	Keith M. Townsend King & Spalding LLP 1180 Peachtree Street Atlanta, GA 30309-3521

     11.7 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

     11.8 Entire Agreement. This Agreement constitutes the entire agreement of the Post Group and Executive with respect to the subject matter hereof and supersedes and replaces all prior agreements, written or oral, with respect to the subject matter hereof. This Agreement may be modified only by a written instrument signed by the member of the Post Group and Executive.

     11.9 Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

     11.10 No Waiver. No waiver by any party of any breach by the other party of any condition or provision contained in this Agreement to be performed by such other party shall be deemed a waiver of a similar or dissimilar condition or provision at the same or any prior or subsequent time. Any waiver must be in writing and signed by Executive or an authorized officer of a member of the Post Group, as the case may be.

     11.11 Not an Employment Contract. This Agreement is not an employment contract and shall not give Executive the right to continue in employment by the Post Group (or any member thereof) for any period of time or from time to time. Moreover, this Agreement shall not adversely affect the right of the Post Group (or any member thereof) to terminate Executive’s employment with or without cause at any time.

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     IN WITNESS WHEREOF, the members of the Post Group and Executive have executed this Agreement as of the date first written above.

POST PROPERTIES, INC.
 

By:  

Name: 

Title: 

POST APARTMENT HOMES, L.P.
 

By:  

Name: 

Title: 

POST SERVICES, INC.
 

By:  

Name: 

Title: 

EXECUTIVE  

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EX-10.15

Exhibit 10.15

EXECUTION VERSION
1.5X FORM

The Post Group, as defined below, intends to enter into this form of change in control agreement with eight employees, none of whom are executive officers within the meaning of the Securities Exchange Act of 1934.

AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT

     THIS AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT (the “Agreement”) is made and entered into on this ___day of ___, 2008, by and among ___(the “Executive”), and POST PROPERTIES, INC., POST APARTMENT HOMES, L.P., and POST SERVICES, INC., and amends, restates and supersedes the Change in Control Agreement among Executive and Post Properties, Inc., dated September 2001, as amended (the “2001 Agreement”).

WITNESSETH

     WHEREAS, the Post Group and Executive desire collectively to amend and restate the 2001 Agreement in the form of this Agreement to (among other things) take into account § 409A of the Code;

     WHEREAS, Executive currently is individually and/or collectively employed by the Post Group as a senior executive; and

     WHEREAS, the Post Group desires to continue to retain Executive’s services, trust, confidence and complete and undivided attention if there is any speculation regarding a Change in Control of Post;

     NOW, THEREFORE, in consideration of the mutual promises and agreements set forth in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Post Group and Executive, intending to be legally bound, hereby agree as follows:

§ 1. Definitions.

     1.1 Affiliate. The term “Affiliate” for purposes of this Agreement shall mean (a) Post Apartment Homes, (b) Post Services, (c) Post GP Holdings (d) any other organization if Post, Post Apartment Homes, Post Services or Post GP Holdings (i) beneficially own more than twenty percent (20%) of the outstanding voting capital stock of such organization (if such organization is a corporation) or more than twenty percent (20%) of the beneficial interests of such organization (if such organization is not a corporation) as of the date of this Agreement and (ii) possess the power to direct or cause the direction of the day to day operations and affairs of such organization,

     whether through ownership of voting securities, by contract, in the capacity of general partner, manager or managing member or otherwise as of the date of this Agreement.

     1.2. Board. The term “Board” for purposes of this Agreement shall mean the Board of Directors of Post.

     1.3 Cash Compensation. The term “Cash Compensation” for purposes of this Agreement shall mean the sum of

     (a) Executive’s annual base salary (as determined without regard to any salary deferral election) from the Post Group in effect on the day before Executive’s employment terminates under § 3(a)(1) or, if greater, Executive’s average annualized annual base salary (as determined without regard to any salary deferral election) from the Post Group over the two (2) consecutive year period (or, if less, Executive’s period of employment by the Post Group) which ends on the date that Executive’s employment so terminates, and

     (b) the average annual bonuses which have been paid by the Post Group (whether paid at the discretion of the Post Group or pursuant to the terms of any plan or program) or which would have been paid but for a bonus deferral election with respect to Executive’s performance over the two (2) consecutive year period (or, if less, Executive’s period of employment by the Post Group) which ends on the date that Executive’s employment so terminates whether (i) such bonuses are paid (or would have been paid but for a bonus deferral election) in cash, in property, or in any combination of cash and property or (ii) such bonuses are paid during the calendar year for which performance is measured or are paid subsequent to the end of the calendar year for which performance is measured; provided, however,

     (c) neither the value of any stock option or restricted stock grants made to Executive in any calendar year nor any income which Executive realizes in any calendar year from the exercise of any such stock options or the lapse of any restrictions on such restricted stock grants shall be treated as part of Executive’s salary under § 1.3(a) or as part of Executive’s bonuses under § 1.3(b).

     1.4 Cause. The term “Cause” for purposes of this Agreement shall (subject to § 1.4(d)) mean:

     (a) Executive is convicted of, pleads guilty to, or confesses or otherwise admits to a member of the Post Group, a prosecutor, or otherwise publicly admits, any felony or any act of fraud, misappropriation, or embezzlement, or Executive otherwise engages in a fraudulent act or course of conduct;

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     (b) There is any material act or omission by Executive involving malfeasance or gross negligence in the performance of Executive’s duties to a member of the Post Group to the material detriment of the Post Group; or

     (c) Executive breaches in any material respect any of the covenants set forth in § 4, § 5, or § 6 of this Agreement; provided, however,

     (d) No such act or omission or event shall be treated as “Cause” under this Agreement unless (i) Executive has been provided a detailed, written statement of the basis for the Post Group’s belief such act or omission or event constitutes “Cause” and an opportunity to meet with the Compensation Committee (together with Executive’s counsel if Executive chooses to have Executive’s counsel present at such meeting) after Executive has had a reasonable period in which to review such statement and, if the allegation is under § 1.4(b) or § 1.4(c), has had at least a thirty (30) day period to take corrective action, and (ii) the Compensation Committee after such meeting (if Executive meets with the Compensation Committee) and after the end of such thirty (30) day correction period (if applicable) determines reasonably and in good faith and by the affirmative vote of at least two-thirds (2/3) of the members of the Compensation Committee then in office at a meeting called and held for such purpose that “Cause” does exist under this Agreement.

     1.5 Change in Control. The term “Change in Control” for purposes of this Agreement shall mean:

     (a) a “change in control” of Post of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A for a proxy statement filed under Section 14(a) of the Exchange Act as in effect on the date of this Agreement;

     (b) a “person” (as that term is used in 14(d)(2) of the Exchange Act) becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly of securities representing forty-five percent (45%) or more of the combined voting power for election of directors of the then outstanding securities of Post;

     (c) the individuals who at the beginning of any period of two (2) consecutive years or less (starting on or after the date of this Agreement) constitute the Board cease for any reason during such period to constitute at least a majority of the Board, unless the election or nomination for election of each new member of the Board was approved by vote of at least two-thirds (2/3) of the members of such Board then still in office who were members of such Board at the beginning of such period;

     (d) the shareholders of Post approve any reorganization, merger,

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consolidation, or share exchange as a result of which the common stock of Post shall be changed, converted, or exchanged into or for securities of another organization (other than a merger with an Affiliate identified in §1.1(a), (b) or (c) of this Agreement or a wholly-owned subsidiary of Post), or any dissolution or liquidation of Post, or any sale or the disposition of fifty percent (50%) or more of the assets or business of Post; or

     (e) the shareholders of Post approve any reorganization, merger, consolidation, or share exchange with another corporation unless (i) the persons who were the beneficial owners of the outstanding shares of the common stock of Post immediately before the consummation of such transaction beneficially own more than sixty percent (60%) of the outstanding shares of the common stock of the successor or survivor corporation in such transaction immediately following the consummation of such transaction and (ii) the number of shares of the common stock of such successor or survivor corporation beneficially owned by the persons described in § 1.5(e)(i) immediately following the consummation of such transaction is beneficially owned by each such person in substantially the same proportion that each such person had beneficially owned shares of Post common stock immediately before the consummation of such transaction, provided, however (iii) the percentage described in § 1.5(e)(i) of the beneficially owned shares of the successor or survivor corporation and the number described in § 1.5(e)(ii) of the beneficially owned shares of the successor or survivor corporation shall be determined exclusively by reference to the shares of the successor or survivor corporation which result from the beneficial ownership of shares of common stock of Post by the persons described in § 1.5(e)(i) immediately before the consummation of such transaction.

     1.6 Code. The term “Code” for purposes of this Agreement shall mean the Internal Revenue Code of 1986, as amended.

     1.7 Compensation Committee. The term “Compensation Committee” for purposes of this Agreement shall mean the Executive Compensation and Management Development Committee of the Board or any successor of such committee or, if there is no such successor, the Board.

     1.8 Confidential or Proprietary Information. The term “Confidential or Proprietary Information” for purposes of this Agreement shall mean any secret, confidential, or proprietary information of Post or any Affiliate (not otherwise included in the definition of Trade Secret in § 1.27 of this Agreement) that has not become generally available to the public by the act of one who has the right to disclose such information without violating any right of Post or any Affiliate.

     1.9 Delayed Payment Date. The term “Delayed Payment Date” for purposes of this Agreement shall mean the date which is six (6) months and one (1) day after the date that Executive has a Separation from Service.

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     1.10 Disability. The term “Disability” for purposes of this Agreement shall mean that Executive, as a result of a mental or physical condition or illness affecting a major life activity, is unable to perform the essential functions of Executive’s job at the Post Group for any consecutive 180-day period, even with reasonable accommodation, all as reasonably determined by the Compensation Committee.

     1.11 Effective Date. The term “Effective Date” for purposes of this Agreement shall mean either the date which includes the “closing” of the transaction which makes a Change in Control effective, if the Change in Control is made effective through a transaction which has a “closing”, or the date a Change in Control is reported in accordance with applicable law as effective to the Securities and Exchange Commission (or otherwise publicly announced as effective), if the Change in Control is made effective other than through a transaction which has a “closing”.

     1.12 Exchange Act. The term “Exchange Act” for purposes of this Agreement shall mean the Securities Exchange Act of 1934, as amended.

     1.13 Good Reason.

     (1) The term “Good Reason” for purposes of this Agreement shall (subject to § 1.13(1)(e)) mean:

     (a) there is a reduction after a Change in Control, but before the end of Executive’s Protection Period, in Executive’s base salary from the Post Group or there is a reduction after a Change in Control but before the end of Executive’s Protection Period in Executive’s eligibility to receive any incentive compensation or bonuses from the Post Group, all without Executive’s express written consent;

     (b) there is a reduction after a Change in Control, but before the end of Executive’s Protection Period, in the scope, importance, or prestige of Executive’s duties, responsibilities, or authority (other than a mere change in Executive’s title, if such change in title is consistent with the organizational structure of the Post Group following such Change in Control) without Executive’s express written consent;

     (c) at any time after a Change in Control, but before the end of Executive’s Protection Period (without Executive’s express written consent), there is a transfer of Executive’s primary work site from Executive’s primary work site on the date of such Change in Control or, if Executive subsequently consents in writing to such a transfer under this Agreement, from the primary work site that was the subject of such consent, to a new primary work site that is more than thirty-five (35) miles from Executive’s then current primary work site, unless such new primary work site is closer to Executive’s primary residence than Executive’s then current primary work site; or

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     (d) there is a failure (without Executive’s express written consent) after a Change in Control, but before the end of Executive’s Protection Period, to continue to provide to Executive health and welfare benefits, deferred compensation benefits, executive perquisites (other than the use of a company airplane for personal purposes), and stock option and restricted stock grants that are in the aggregate comparable in value to those provided to Executive immediately prior to the Change in Control Date; provided, however,

     (e) No such act or omission shall be treated as “Good Reason” under § 1.13(1) unless

     (i) (A) Executive delivers to the Compensation Committee a detailed, written statement of the basis for Executive’s belief that such act or omission constitutes Good Reason, (B) Executive delivers such statement before the later of (1) the end of the ninety (90) day period that starts on the date there is an act or omission which forms the basis for Executive’s belief that Good Reason exists, or (2) the end of the period mutually agreed upon for purposes of this § 1.13(1)(e)(i)(B) in writing by Executive and the Chairman of the Compensation Committee, (C) Executive gives the Compensation Committee a thirty (30) day period after the delivery of such statement to cure the basis for such belief, and (D) Executive actually submits Executive’s written resignation to the Compensation Committee during the sixty (60) day period that begins immediately after the end of such thirty (30) day period if Executive reasonably and in good faith determines that Good Reason continues to exist after the end of such thirty (30) day period, or

     (ii) the Post Group states in writing to Executive that Executive has the right to treat any such act or omission as Good Reason under this Agreement and Executive resigns during the sixty (60) day period that starts on the date such statement is actually delivered to Executive;

     (f) If (A) Executive gives the Compensation Committee the statement described in § 1.13(1)(e)(i) before the end of the thirty (30) day period that immediately follows the end of the Protection Period and Executive thereafter resigns within the period described in § 1.13(1)(e)(i), or (B) the Post Group provides the statement to Executive described in § 1.13(1)(e)(ii) before the end of the thirty (30) day period that immediately follows the end of the Protection Period and Executive thereafter resigns within the period described in § 1.13(1)(e)(ii), then (C) such resignation shall be treated under this Agreement as if made in Executive’s Protection Period; and

     (g) If Executive consents in writing to any reduction described in § 1.13(1)(a) or § 1.13(1)(b), to any transfer described in § 1.13(1)(c) or to any

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failure described in § 1.13(1)(d) in lieu of exercising Executive’s right to resign for Good Reason and delivers such consent to the Post Group, the date such consent is delivered to the Post Group thereafter shall be treated under this definition as the date of a Change in Control for purposes of determining whether Executive subsequently has Good Reason under this Agreement to resign under § 2.1 or § 2.3 as a result of any subsequent reduction described in § 1.13(1)(a) or § 1.13(1)(b), any subsequent transfer described in § 1.13(1)(c), or any subsequent failure described in § 1.13(1)(d).

     1.14 Gross Up Payment. The term “Gross Up Payment” for purposes of this Agreement shall mean a payment by the Post Group to or on behalf of Executive which shall be sufficient to pay in full (a) any excise tax described in § 9 in full, (b) all federal, state and local income taxes (other than a tax under § 409A of the Code) and social security and other employment taxes on the payment made to pay such excise tax plus any additional excise taxes, income taxes (other than a tax under § 409A of the Code) and social security and other employment taxes resulting from such payment and from all of the additional payments called for in this § 1.14(b) and in § 1.14(c) and (c) any interest or penalties assessed by the Internal Revenue Service on Executive which are related to the payment of such taxes unless such interest or penalties are attributable to Executive’s willful misconduct or gross negligence.

     1.15 Group Health Plan. The term “Group Health Plan” for purposes of this Agreement shall mean the group health plan maintained by any member of the Post Group for the purpose of providing medical, dental and vision benefits for the employees of the Post Group and any Affiliates.

     1.16 Interest. The term “Interest” for purposes of this Agreement shall mean interest for the period between Executive’s Separation from Service and Executive’s Delayed Payment Date at the three (3) month LIBOR rate (using the three (3) month LIBOR rate published in The Wall Street Journal on the date of Executive’s Separation from Service) plus 100 basis points, compounded monthly.

     1.17 Multifamily Property. The term “Multifamily Property” for purposes of this Agreement and any renewal of this Agreement shall mean any real property on which an upscale multifamily residential-use development has been constructed or is under construction as of the date of this or any renewal of this Agreement.

     1.18 Post. The term “Post” for purposes of this Agreement shall mean Post Properties, Inc., a Georgia corporation, and any successor to Post.

     1.19 Post Apartment Homes. The term “Post Apartment Homes” for purposes of this Agreement shall mean Post Apartment Homes, L.P., a Georgia limited partnership, and any successor to Post Apartment Homes.

     1.20 Post GP Holdings. The term “Post GP Holdings” for purposes of this

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Agreement shall mean Post GP Holdings, Inc., a Georgia, corporation, and any successor to Post GP Holdings.

     1.21. Post Group. The term “Post Group” for purposes of this Agreement shall mean, individually and collectively, Post, Post Apartment Homes and Post Services.

     1.22 Post Services. The term “Post Services” for purposes of this Agreement shall mean Post Services, Inc., a Georgia corporation, and any successor to Post Services.

     1.23 Protection Period. The term “Protection Period” for purposes of this Agreement shall (subject to § 1.13(1)(g)) mean the two (2) year period which begins on the Effective Date.

     1.24 Restricted Period. The term “Restricted Period” for purposes of this Agreement shall mean the period which starts on the date Executive’s employment by the Post Group terminates under circumstances which create an obligation for the Post Group under § 3 of this Agreement and which ends (a) on the first anniversary of such termination date or (b) on the first date following such a termination on which the Post Group breaches any obligation to Executive under § 3 of this Agreement, whichever period is shorter.

     1.25 Separation from Service. The term “Separation from Service” for purposes of this Agreement shall mean a “separation from service” within the meaning of § 409A of the Code and the related income tax regulations.

     1.26 Specified Employee. The term “Specified Employee” for purposes of this Agreement shall mean a “specified employee” within the meaning of § 409A of the Code and the related income tax regulations.

     1.27 Trade Secret. The term “Trade Secret” for purposes of this Agreement shall mean information, including, but not limited to, technical or nontechnical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, or a list of actual or potential customers or suppliers that:

     (a) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and

     (b) is the subject of reasonable efforts by Post or an Affiliate to maintain its secrecy.

§ 2. Term.

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     2.1 Initial Term. Subject to § 2.2, the term of this Agreement which began under the 2001 Agreement in September 2001 with a three (3) year term shall (subject to § 2.3 and § 3) continue under this Agreement up to, but not including, September 1, 2010. The “Start Date” for purposes of this Agreement shall be September 1, 2001.

     2.2 Automatic Renewals. Unless a member of the Post Group decides otherwise, and notifies the Executive of that decision in writing at least 180 days before an anniversary of the Start Date, the three (3) year term of this Agreement shall (subject to § 2.3 and § 3) renew on each successive anniversary of the Start Date so that the term of Executive’s employment under this Agreement shall never be less than two (2) years nor more than three (3) years.

     2.3 Special Rules. If Executive’s Protection Period begins before the term of this Agreement expires, this Agreement shall continue (notwithstanding § 2.2) in effect through the end of Executive’s Protection Period and, if Executive has a right to any compensation or benefits under § 3 before the term of this Agreement expires, the term of this Agreement shall continue until Executive agrees that all of the Post Group’s obligations to Executive under this Agreement have been satisfied in full or a court of competent jurisdiction makes a final determination that the Post Group has no further obligations to Executive under this Agreement, whichever comes first.

§ 3. Compensation and Benefits.

     3.1 General Rule. If there is a Change in Control and any member of the Post Group during Executive’s Protection Period terminates Executive’s employment without Cause or Executive during Executive’s Protection Period resigns for Good Reason, then:

     (a) The Post Group shall pay Executive one point five (1.5) times Executive’s then Cash Compensation in cash in a lump sum at his Separation from Service; provided, however, if Executive is a Specified Employee at Executive’s Separation from Service, such payment shall be delayed and paid with Interest on his Delayed Payment Date; and

     (b) (i) Each outstanding stock option granted to Executive by Post shall (notwithstanding the terms under which such option was granted) become fully vested and exercisable on the date of Executive’s Separation from Service and shall (notwithstanding the terms under which such option was granted) remain exercisable for the remaining term of each such option (as determined as if there had been no such Separation from Service) subject to the same terms and conditions as if Executive had remained employed by the Post Group for such term (other than any term or condition which gives Post the right to cancel any such option) and (ii) any restrictions on any outstanding restricted stock grants to Executive by Post immediately shall (notwithstanding the terms under which such grant was made) expire and Executive’s right to such stock shall be

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non-forfeitable; and

     (c) The Post Group shall provide or make available health care coverage and shall provide reimbursement for life insurance and long-term disability premiums as follows:

     (i) During the period starting on the date of Executive’s Separation from Service and ending on the earlier of (A) the last day of the eighteen (18) month period following Executive’s Separation from Service (the “18 Month Period”) or (B) the date when Executive is no longer entitled to continued coverage under § 4980B of the Code (the “COBRA Period”), the Post Group shall provide continued coverage under the Group Health plan pursuant to § 4980B of the Code (“COBRA Coverage”) and reimburse Executive for a portion of the monthly premiums paid by Executive for such COBRA Coverage,

     (ii) If the period described in § 3.1(c)(i) ends at the end of the COBRA Period, the Post Group for the remainder (if any) of the 18 Month Period shall provide Executive (1) continued coverage under the Group Health Plan or (2) if coverage for Executive is not available under the Group Health Plan, health insurance coverage from an insurance company selected by Executive and reimburse Executive for a portion of the monthly premiums paid by Executive for either form of coverage,

     (iii) If so requested by Executive in writing before the end of the coverage period described in either § 3.1(c)(i) or § 3.1(c)(ii), whichever is applicable, the Post Group will make available to Executive continued coverage under the Group Health Plan for up to an additional eighteen (18) months following the end of such coverage period to the extent Executive had such coverage under the Group Health Plan at the end of such coverage period and timely pays the monthly premium then paid by former employees for comparable COBRA Coverage,

     (iv) The reimbursable portion of the premiums paid by Executive each month under § 3.1(c)(i) and § 3.1(c)(ii) shall equal the dollar amount the Post Group would have paid on Executive’s behalf each month for the coverage which had been in effect immediately before Executive’s Separation from Service under the Group Health Plan had Executive remained employed by the Post Group for the remainder of the 18 Month Period. For the avoidance of doubt, the Post Group will not be responsible for any reimbursement during the period described in § 3.1(c)(iii),

     (v) The Post Group shall reimburse Executive during the 18 Month Period for a portion of Executive’s monthly premiums to purchase

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life insurance coverage and long-term disability coverage which is no less than the face amount of Executive’s life insurance coverage and long-term disability coverage in effect immediately before Executive’s Separation from Service, and the reimbursable portion each month shall equal the dollar amount the Post Group would have paid in premiums on Executive’s behalf each month for the life insurance coverage and long-term disability coverage under the policies which had been in effect immediately before Executive’s Separation from Service had Executive remained employed by the Post Group for the remainder of the 18 Month Period,

     (vi) The reimbursements called for under this § 3.1(c) shall be requested by Executive and processed and made by the Post Group in accordance with the policies and procedures in effect from time to time under the Post Group’s standard expense reimbursement policy for the Post Group’s senior executives as provided to Executive, but no cost or expense shall be reimbursable under this § 3.1(c) after the end of the calendar year immediately following the calendar year in which Executive incurs such cost or expense even if reimbursement was permissible at a later date under such policy, and

     (vii) The Post Group shall add to each reimbursement made pursuant to this § 3.1(c) an amount which the Post Group acting in good faith reasonably determines would be sufficient for Executive to pay his income and employment tax due on such reimbursement if Executive was subject to the maximum marginal tax rates; provided, however, if Executive is a Specified Employee at his Separation from Service, no such additional payments shall be made until the Delayed Payment Date, and the Post Group on the Delayed Payment Date shall make a lump sum payment in cash with Interest to Executive which the Post Group acting in good faith reasonably determines would be sufficient for Executive to pay his income and employment tax due on all of the reimbursements made before such date pursuant to this § 3.1(c) if Executive was subject to the maximum marginal tax rates.

     3.2 No Increase In Other Benefits.

     If Executive’s employment terminates under the circumstances described in § 3.1(a) or § 3.3, Executive expressly waives Executive’s right, if any, to have any payment made under § 3.1 taken into account to increase the benefits otherwise payable to, or on behalf of, Executive under any employee benefit plan, whether qualified or unqualified, maintained by the Post Group.

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     3.3 Termination In Anticipation Of A Change In Control.

     Executive shall be treated under § 3.1 as if Executive’s employment had been terminated without Cause or Executive had resigned for Good Reason during Executive’s Protection Period if:

     (a) Executive’s employment is terminated by a member of the Post Group without Cause or Executive resigns for Good Reason,

     (b) such termination is effected or such resignation is effective at any time in the sixty (60) day period which ends on the Effective Date of a Change In Control, and

     (c) there is an Effective Date for such Change In Control.

     3.4 Termination as a result of Death or Disability.

     Executive agrees that no member of the Post Group will have any obligation to Executive under this § 3 if Executive’s employment terminates exclusively as a result of Executive’s death or a Disability.

§ 4. No Solicitation Of Customers.

     Executive will not, during the Restricted Period, for purposes of competing with Post or any Affiliate, solicit on Executive’s own behalf or on behalf of any other person, firm, or corporation which engages, directly or indirectly, in the development, operation, management, leasing or landscaping of a Multifamily Property, any customer of Post or any Affiliate with whom Executive had a personal business interaction at any time during the two (2) years immediately prior to the termination of Executive’s employment by any member of the Post Group. This § 4 shall not prohibit a general solicitation not targeted at Post’s or an Affiliate’s customers and in which Executive has no participation or involvement.

§ 5. Antipirating Of Employees.

     Executive will not during the Restricted Period employ or seek to employ on Executive’s own behalf or on behalf of any other person, firm or corporation that engages, directly or indirectly, in the development, operation, management, leasing, or landscaping of a Multifamily Property, any person who was employed by a member of the Post Group in an executive, managerial, or supervisory capacity during the term of Executive’s employment by a member of the Post Group and with whom Executive had business dealings during the two (2) year period which ends on the date Executive’s employment by any member of the Post Group terminates (whether or not such employee would commit a breach of contract), and who has not ceased to be employed by a member of the Post Group for a period of at least one (1) year. This § 5 shall not

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prohibit a general solicitation not targeted at employees of Post or an Affiliate and in which Executive has no participation or involvement.

§ 6. Trade Secrets And Confidential Or Proprietary Information.

     Executive hereby agrees to hold in a fiduciary capacity for the benefit of Post and each Affiliate, and will not directly or indirectly use or disclose, any Trade Secret that Executive may have acquired during the term of Executive’s employment by any member of the Post Group for so long as such information remains a Trade Secret even if such information remains a Trade Secret after the expiration of the Restricted Period.

     In addition, Executive agrees during the Restricted Period to hold in a fiduciary capacity for the benefit of Post and each Affiliate, and not to directly or indirectly use or disclose, any Confidential or Proprietary Information that Executive may have acquired (whether or not developed or compiled by Executive and whether or not Executive was authorized to have access to such information) during the term of, in the course of, or as a result of Executive’s employment by any member of the Post Group.

§ 7. Reasonable and Necessary Restrictions.

     The Post Group has identified Executive as an individual with significant skills and experience critical to the business of the Post Group. In view of the significant and growing demand for executive talent, the potential impact on the Post Group’s executives of the transformational changes occurring within the industry and the Post Group, and the need to ensure continuity of the management team for the Post Group, the Post Group desires to provide Executive through this Agreement with certain incentives to remain in the Post Group’s employment. This Agreement is also designed to provide additional motivation for meeting the Post Group’s goals and objectives, to address potential long term employment concerns of Executive, and to impose certain reasonable restrictions on Executive’s activities designed to protect the Post Group’s interests should Executive’s employment terminate.

     Executive acknowledges that Post and its Affiliates shall disclose or make available Confidential Information and Trade Secrets to Executive that could be used by Executive to the detriment of Post and its Affiliates. In addition, in connection with his employment, Executive shall develop important relationships and contacts with employees valuable to Post and its Affiliates.

     Executive further acknowledges that § 4, § 5, and § 6 of this Agreement are fair and reasonable, enforcement of the provisions of this Agreement will not cause Executive undue hardship, and the provisions of this Agreement are reasonably necessary and commensurate with the need to protect the Post Group and their business interests and property from irreparable harm.

     Executive acknowledges that the restrictions, prohibitions, and other provisions

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set forth in this Agreement, including without limitation the Restricted Period and those set forth in § 4, § 5, and § 6, are reasonable, fair and equitable in scope, terms, and duration; are necessary to protect the legitimate business interests of the Post Group; and are a material inducement to the Post Group to enter into this Agreement. Executive covenants that Executive will not challenge the enforceability of this Agreement nor will Executive raise any equitable defense to its enforcement.

§ 8. Specific Performance.

     Executive acknowledges that the obligations undertaken by him pursuant to this Agreement are unique and that the Post Group likely will have no adequate remedy at law if Executive shall fail to perform any of Executive’s obligations under this Agreement, and Executive therefore confirms that the Post Group’s right to specific performance of the terms of this Agreement is essential to protect the rights and interests of the Post Group. Accordingly, in addition to any other remedies that the Post Group may have at law or in equity, the Post Group will have the right to have all obligations, covenants, agreements, and other provisions of this Agreement specifically performed by Executive, and the Post Group will have the right to obtain preliminary and permanent injunctive relief to secure specific performance and to prevent a breach or contemplated breach of this Agreement by Executive, and Executive submits to the jurisdiction of the courts of the State of Georgia for this purpose.

§ 9. Tax Protection.

     9.1 General Rule. If Post or Post’s independent accountants (which shall consider such issue upon the reasonable request of the Executive) determine that any payments and benefits called for under this Agreement, together with any other payments and benefits made available to Executive by the Post Group, will result in Executive’s being subject to an excise tax under § 4999 of the Code or if such an excise tax is assessed against Executive as a result of any such payments and other benefits, the Post Group shall make a Gross Up Payment to or on behalf of Executive as and when any such determination or assessment is made, provided Executive takes such action (other than waiving Executive’s right to any payments or benefits in excess of the payments or benefits which Executive has expressly agreed to waive under this § 9) as the Post Group reasonably requests under the circumstances to mitigate or challenge such tax; provided, however, if the Post Group or the Post Group’s independent accountants make such a determination and, further, determine that Executive will not be subject to any such excise tax if Executive waives Executive’s right to receive a part of such payments or benefits and such part does not exceed $10,000, Executive shall irrevocably waive Executive’s right to receive such part if an independent accountant or lawyer retained by Executive and paid by the Post Group agrees with the determination made by the Post Group or the Post Group’s independent accountants with respect to the effect of such reduction in payments or benefits. Any determinations under this § 9 shall be made in accordance with § 280G of the Code and any applicable related regulations (whether proposed, temporary, or final) and any related Internal Revenue

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Service rulings and any related case law and, if the Post Group reasonably requests that Executive take action to mitigate or challenge, or to mitigate and challenge, any such tax or assessment (other than waiving Executive’s right to any payments or benefits in excess of the payments or benefits which Executive has expressly agreed to waive under this § 9) and Executive complies with such request, the Post Group shall provide Executive with such information and such expert advice and assistance from Post’s independent accountants, lawyers, and other advisors as Executive may reasonably request and shall pay for all expenses incurred in effecting such compliance and any related fines, penalties, interest, and other assessments.

     9.2 409A Rule. Any Gross Up Payment called for under § 9.1 to reimburse Executive for paying the related tax shall be paid to Executive as and when any such determination or assessment is made under § 9.1. The Post Group and Executive acknowledge and agree that solely to satisfy an express requirement in the regulations under § 409A of the Code, such payment shall be made no later than the end of the calendar year immediately following the calendar year in which Executive pays the related tax, and that this provision of § 9.2 shall not give the Post Group the right to delay making a Gross Up Payment to or on behalf of Executive under § 9.1.

§ 10. Executive’s Legal Fees and Expenses.

     If any action at law or in equity is necessary for Executive to enforce or interpret the terms of this Agreement, the Post Group shall pay Executive’s reasonable attorneys’ fees and other reasonable expenses incurred with respect to such action. If any other action is taken with respect to this Agreement, the Post Group shall bear its own attorneys’ fees and expenses and Executive shall bear Executive’s own attorneys’ fees and expenses. If a reimbursement is called for under this § 10, such reimbursement shall be made no later than the end of the calendar year immediately following the calendar year in which Executive pays the related legal fees or expenses. The Post Group and Executive acknowledge and agree that the deadline set forth in the immediately preceding sentence is only intended to satisfy an express requirement in the regulations under § 409A of the Code and that such sentence shall not give the Post Group the right to delay making a reimbursement in accordance with the first sentence in this § 10.

§ 11. Miscellaneous.

     11.1 Binding Effect. This Agreement shall inure to the benefit of and shall be binding upon Executive and his executor, administrator, heirs, personal representatives, and assigns; provided, however, that Executive shall not be entitled to assign or delegate any of his rights or obligations hereunder without the prior written consent of the Post Group. This Agreement shall inure to the benefit of and shall be binding upon the Post Group and their successors and assigns; provided, however, that this Agreement is assignable in whole or in part to any parent, subsidiaries, or affiliates of the Post Group only if such person or entity is financially capable of fulfilling the

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obligations of the Post Group under this Agreement, and the Post Group as part of any Change in Control which is made effective through a transaction for which there is a “closing” shall assign the Post Group’s obligations under this Agreement to such successor and such successor shall expressly agree to such assignment or the Post Group on or before the Effective Date for such Change in Control shall (without any further action on the part of Executive) take the action called for in § 3 of this Agreement as if Executive had been terminated without Cause on the Effective Date for such Change in Control without regard to whether Executive’s employment actually has terminated.

     11.2 Construction of Agreement. No provision of this Agreement or any related document shall be construed against or interpreted to the disadvantage of any party hereto by any court or other governmental or judicial authority, including an arbitrator, by reason of such party having or being deemed to have structured or drafted such provision.

     11.3 Governing Law. This Agreement shall be governed by and construed under the laws of the State of Georgia (without reference to the choice of law principles under the laws of the State of Georgia). Executive consents to jurisdiction and venue in the state and federal courts in the State of Georgia for any action arising from a dispute under this Agreement, and for any such action brought in such a court, expressly waives any defense Executive might otherwise have based on lack of personal jurisdiction or improper venue, or that the action has been brought in an inconvenient forum.

     11.4 Survival of Agreements. All covenants and agreements made in this Agreement shall survive the execution and delivery of this Agreement and the termination of Executive’s employment under this Agreement for any reason.

     11.5 Headings and References. The section and sub-section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. All references to sections (§) in this Agreement shall be to sections (§) of this Agreement unless otherwise expressly noted.

     11.6 Notices. All notices, requests, consents, and other communications called for under this Agreement shall be in writing and shall be deemed to be given when delivered personally or mailed first class, registered or certified mail, postage prepaid, in either case, addressed as follows:

(a) If to Executive, to Executive at his or her most recent home address as shown in the Post Group’s personnel files.

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(b) If to the Post Group:

Post Properties, Inc.
One Riverside
4401 Northside Parkway
Suite 800
Atlanta, GA 30327-3057
Attention: Corporate Secretary

with a copy to:

Keith M. Townsend
King & Spalding LLP
1180 Peachtree Street
Atlanta, GA 30309-3521

     11.7 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

     11.8 Entire Agreement. This Agreement constitutes the entire agreement of the Post Group and Executive with respect to the subject matter hereof and supersedes and replaces all prior agreements, written or oral, with respect to the subject matter hereof. This Agreement may be modified only by a written instrument signed by the member of the Post Group and Executive.

     11.9 Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

     11.10 No Waiver. No waiver by any party of any breach by the other party of any condition or provision contained in this Agreement to be performed by such other party shall be deemed a waiver of a similar or dissimilar condition or provision at the same or any prior or subsequent time. Any waiver must be in writing and signed by Executive or an authorized officer of a member of the Post Group, as the case may be.

     11.11 Not an Employment Contract. This Agreement is not an employment contract and shall not give Executive the right to continue in employment by the Post Group (or any member thereof) for any period of time or from time to time. Moreover, this Agreement shall not adversely affect the right of the Post Group (or any member thereof) to terminate Executive’s employment with or without cause at any time.

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     IN WITNESS WHEREOF, the members of the Post Group and Executive have executed this Agreement as of the date first written above.

POST PROPERTIES, INC.

By:

Name:

Title:

POST APARTMENT HOMES, L.P.

By:

Name:

Title:

POST SERVICES, INC.

By:

Name:

Title:

EXECUTIVE

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EX-10.16

Exhibit 10.16

EXECUTION VERSION
1X FORM

The Post Group, as defined below, intends to enter into this form of change in control agreement with four employees, none of whom are executive officers within the meaning of the Securities Exchange Act of 1934.

AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT

     THIS AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT (the “Agreement”) is made and entered into on this ___day of ___, 2008, by and among ___(the “Executive”), and POST PROPERTIES, INC., POST APARTMENT HOMES, L.P., and POST SERVICES, INC., and amends, restates and supersedes the Change in Control Agreement among Executive and Post Properties, Inc., dated March 19, 2004 (the “2004 Agreement”).

WITNESSETH

     WHEREAS, the Post Group and Executive desire collectively to amend and restate the 2004 Agreement in the form of this Agreement to (among other things) take into account § 409A of the Code;

     WHEREAS, Executive currently is individually and/or collectively employed by the Post Group as a senior executive; and

     WHEREAS, the Post Group desires to continue to retain Executive’s services, trust, confidence and complete and undivided attention if there is any speculation regarding a Change in Control of Post;

     NOW, THEREFORE, in consideration of the mutual promises and agreements set forth in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Post Group and Executive, intending to be legally bound, hereby agree as follows:

§ 1. Definitions.

     1.1 Affiliate. The term “Affiliate” for purposes of this Agreement shall mean (a) Post Apartment Homes, (b) Post Services, (c) Post GP Holdings (d) any other organization if Post, Post Apartment Homes, Post Services or Post GP Holdings (i) beneficially own more than twenty percent (20%) of the outstanding voting capital stock of such organization (if such organization is a corporation) or more than twenty percent (20%) of the beneficial interests of such organization (if such organization is not a corporation) as of the date of this Agreement and (ii) possess the power to direct or cause the direction of the day to day operations and affairs of such organization,

whether through ownership of voting securities, by contract, in the capacity of general partner, manager or managing member or otherwise as of the date of this Agreement.

     1.2. Board. The term “Board” for purposes of this Agreement shall mean the Board of Directors of Post.

     1.3 Cash Compensation. The term “Cash Compensation” for purposes of this Agreement shall mean the sum of

     (a) Executive’s annual base salary (as determined without regard to any salary deferral election) from the Post Group in effect on the day before Executive’s employment terminates under § 3(a)(1) or, if greater, Executive’s average annualized annual base salary (as determined without regard to any salary deferral election) from the Post Group over the two (2) consecutive year period (or, if less, Executive’s period of employment by the Post Group) which ends on the date that Executive’s employment so terminates, and

     (b) the average annual bonuses which have been paid by the Post Group (whether paid at the discretion of the Post Group or pursuant to the terms of any plan or program) or which would have been paid but for a bonus deferral election with respect to Executive’s performance over the two (2) consecutive year period (or, if less, Executive’s period of employment by the Post Group) which ends on the date that Executive’s employment so terminates whether (i) such bonuses are paid (or would have been paid but for a bonus deferral election) in cash, in property, or in any combination of cash and property or (ii) such bonuses are paid during the calendar year for which performance is measured or are paid subsequent to the end of the calendar year for which performance is measured; provided, however,

     (c) neither the value of any stock option or restricted stock grants made to Executive in any calendar year nor any income which Executive realizes in any calendar year from the exercise of any such stock options or the lapse of any restrictions on such restricted stock grants shall be treated as part of Executive’s salary under § 1.3(a) or as part of Executive’s bonuses under § 1.3(b).

     1.4 Cause. The term “Cause” for purposes of this Agreement shall (subject to § 1.4(d)) mean:

     (a) Executive is convicted of, pleads guilty to, or confesses or otherwise admits to a member of the Post Group, a prosecutor, or otherwise publicly admits, any felony or any act of fraud, misappropriation, or embezzlement, or Executive otherwise engages in a fraudulent act or course of conduct;

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     (b) There is any material act or omission by Executive involving malfeasance or gross negligence in the performance of Executive’s duties to a member of the Post Group to the material detriment of the Post Group; or

     (c) Executive breaches in any material respect any of the covenants set forth in § 4, § 5, or § 6 of this Agreement; provided, however,

     (d) No such act or omission or event shall be treated as “Cause” under this Agreement unless (i) Executive has been provided a detailed, written statement of the basis for the Post Group’s belief such act or omission or event constitutes “Cause” and an opportunity to meet with the Compensation Committee (together with Executive’s counsel if Executive chooses to have Executive’s counsel present at such meeting) after Executive has had a reasonable period in which to review such statement and, if the allegation is under § 1.4(b) or § 1.4(c), has had at least a thirty (30) day period to take corrective action, and (ii) the Compensation Committee after such meeting (if Executive meets with the Compensation Committee) and after the end of such thirty (30) day correction period (if applicable) determines reasonably and in good faith and by the affirmative vote of at least two-thirds (2/3) of the members of the Compensation Committee then in office at a meeting called and held for such purpose that “Cause” does exist under this Agreement.

     1.5 Change in Control. The term “Change in Control” for purposes of this Agreement shall mean:

     (a) a “change in control” of Post of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A for a proxy statement filed under Section 14(a) of the Exchange Act as in effect on the date of this Agreement;

     (b) a “person” (as that term is used in 14(d)(2) of the Exchange Act) becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly of securities representing forty-five percent (45%) or more of the combined voting power for election of directors of the then outstanding securities of Post;

     (c) the individuals who at the beginning of any period of two (2) consecutive years or less (starting on or after the date of this Agreement) constitute the Board cease for any reason during such period to constitute at least a majority of the Board, unless the election or nomination for election of each new member of the Board was approved by vote of at least two-thirds (2/3) of the members of such Board then still in office who were members of such Board at the beginning of such period;

     (d) the shareholders of Post approve any reorganization, merger,

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consolidation, or share exchange as a result of which the common stock of Post shall be changed, converted, or exchanged into or for securities of another organization (other than a merger with an Affiliate identified in §1.1(a), (b) or (c) of this Agreement or a wholly-owned subsidiary of Post), or any dissolution or liquidation of Post, or any sale or the disposition of fifty percent (50%) or more of the assets or business of Post; or

     (e) the shareholders of Post approve any reorganization, merger, consolidation, or share exchange with another corporation unless (i) the persons who were the beneficial owners of the outstanding shares of the common stock of Post immediately before the consummation of such transaction beneficially own more than sixty percent (60%) of the outstanding shares of the common stock of the successor or survivor corporation in such transaction immediately following the consummation of such transaction and (ii) the number of shares of the common stock of such successor or survivor corporation beneficially owned by the persons described in § 1.5(e)(i) immediately following the consummation of such transaction is beneficially owned by each such person in substantially the same proportion that each such person had beneficially owned shares of Post common stock immediately before the consummation of such transaction, provided, however (iii) the percentage described in § 1.5(e)(i) of the beneficially owned shares of the successor or survivor corporation and the number described in § 1.5(e)(ii) of the beneficially owned shares of the successor or survivor corporation shall be determined exclusively by reference to the shares of the successor or survivor corporation which result from the beneficial ownership of shares of common stock of Post by the persons described in § 1.5(e)(i) immediately before the consummation of such transaction.

     1.6 Code. The term “Code” for purposes of this Agreement shall mean the Internal Revenue Code of 1986, as amended.

     1.7 Compensation Committee. The term “Compensation Committee” for purposes of this Agreement shall mean the Executive Compensation and Management Development Committee of the Board or any successor of such committee or, if there is no such successor, the Board.

     1.8 Confidential or Proprietary Information. The term “Confidential or Proprietary Information” for purposes of this Agreement shall mean any secret, confidential, or proprietary information of Post or any Affiliate (not otherwise included in the definition of Trade Secret in § 1.27 of this Agreement) that has not become generally available to the public by the act of one who has the right to disclose such information without violating any right of Post or any Affiliate.

     1.9 Delayed Payment Date. The term “Delayed Payment Date” for purposes of this Agreement shall mean the date which is six (6) months and one (1) day after the date that Executive has a Separation from Service.

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     1.10 Disability. The term “Disability” for purposes of this Agreement shall mean that Executive, as a result of a mental or physical condition or illness affecting a major life activity, is unable to perform the essential functions of Executive’s job at the Post Group for any consecutive 180-day period, even with reasonable accommodation, all as reasonably determined by the Compensation Committee.

     1.11 Effective Date. The term “Effective Date” for purposes of this Agreement shall mean either the date which includes the “closing” of the transaction which makes a Change in Control effective, if the Change in Control is made effective through a transaction which has a “closing”, or the date a Change in Control is reported in accordance with applicable law as effective to the Securities and Exchange Commission (or otherwise publicly announced as effective), if the Change in Control is made effective other than through a transaction which has a “closing”.

     1.12 Exchange Act. The term “Exchange Act” for purposes of this Agreement shall mean the Securities Exchange Act of 1934, as amended.

     1.13 Good Reason.

     (1) The term “Good Reason” for purposes of this Agreement shall (subject to § 1.13(1)(e)) mean:

     (a) there is a reduction after a Change in Control, but before the end of Executive’s Protection Period, in Executive’s base salary from the Post Group or there is a reduction after a Change in Control but before the end of Executive’s Protection Period in Executive’s eligibility to receive any incentive compensation or bonuses from the Post Group, all without Executive’s express written consent;

     (b) there is a reduction after a Change in Control, but before the end of Executive’s Protection Period, in the scope, importance, or prestige of Executive’s duties, responsibilities, or authority (other than a mere change in Executive’s title, if such change in title is consistent with the organizational structure of the Post Group following such Change in Control) without Executive’s express written consent;

     (c) at any time after a Change in Control, but before the end of Executive’s Protection Period (without Executive’s express written consent), there is a transfer of Executive’s primary work site from Executive’s primary work site on the date of such Change in Control or, if Executive subsequently consents in writing to such a transfer under this Agreement, from the primary work site that was the subject of such consent, to a new primary work site that is more than thirty-five (35) miles from Executive’s then current primary work site, unless such new primary work site is closer to Executive’s primary residence than Executive’s then current primary work site; or

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     (d) there is a failure (without Executive’s express written consent) after a Change in Control, but before the end of Executive’s Protection Period, to continue to provide to Executive health and welfare benefits, deferred compensation benefits, executive perquisites (other than the use of a company airplane for personal purposes), and stock option and restricted stock grants that are in the aggregate comparable in value to those provided to Executive immediately prior to the Change in Control Date; provided, however,

     (e) No such act or omission shall be treated as “Good Reason” under § 1.13(1) unless

     (i) (A) Executive delivers to the Compensation Committee a detailed, written statement of the basis for Executive’s belief that such act or omission constitutes Good Reason, (B) Executive delivers such statement before the later of (1) the end of the ninety (90) day period that starts on the date there is an act or omission which forms the basis for Executive’s belief that Good Reason exists, or (2) the end of the period mutually agreed upon for purposes of this § 1.13(1)(e)(i)(B) in writing by Executive and the Chairman of the Compensation Committee, (C) Executive gives the Compensation Committee a thirty (30) day period after the delivery of such statement to cure the basis for such belief, and (D) Executive actually submits Executive’s written resignation to the Compensation Committee during the sixty (60) day period that begins immediately after the end of such thirty (30) day period if Executive reasonably and in good faith determines that Good Reason continues to exist after the end of such thirty (30) day period, or

     (ii) the Post Group states in writing to Executive that Executive has the right to treat any such act or omission as Good Reason under this Agreement and Executive resigns during the sixty (60) day period that starts on the date such statement is actually delivered to Executive;

     (f) If (A) Executive gives the Compensation Committee the statement described in § 1.13(1)(e)(i) before the end of the thirty (30) day period that immediately follows the end of the Protection Period and Executive thereafter resigns within the period described in § 1.13(1)(e)(i), or (B) the Post Group provides the statement to Executive described in § 1.13(1)(e)(ii) before the end of the thirty (30) day period that immediately follows the end of the Protection Period and Executive thereafter resigns within the period described in § 1.13(1)(e)(ii), then (C) such resignation shall be treated under this Agreement as if made in Executive’s Protection Period; and

     (g) If Executive consents in writing to any reduction described in § 1.13(1)(a) or § 1.13(1)(b), to any transfer described in § 1.13(1)(c) or to any

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failure described in § 1.13(1)(d) in lieu of exercising Executive’s right to resign for Good Reason and delivers such consent to the Post Group, the date such consent is delivered to the Post Group thereafter shall be treated under this definition as the date of a Change in Control for purposes of determining whether Executive subsequently has Good Reason under this Agreement to resign under § 2.1 or § 2.3 as a result of any subsequent reduction described in § 1.13(1)(a) or § 1.13(1)(b), any subsequent transfer described in § 1.13(1)(c), or any subsequent failure described in § 1.13(1)(d).

     1.14 Gross Up Payment. The term “Gross Up Payment” for purposes of this Agreement shall mean a payment by the Post Group to or on behalf of Executive which shall be sufficient to pay in full (a) any excise tax described in § 9 in full, (b) all federal, state and local income taxes (other than a tax under § 409A of the Code) and social security and other employment taxes on the payment made to pay such excise tax plus any additional excise taxes, income taxes (other than a tax under § 409A of the Code) and social security and other employment taxes resulting from such payment and from all of the additional payments called for in this § 1.14(b) and in § 1.14(c) and (c) any interest or penalties assessed by the Internal Revenue Service on Executive which are related to the payment of such taxes unless such interest or penalties are attributable to Executive’s willful misconduct or gross negligence.

     1.15 Group Health Plan. The term “Group Health Plan” for purposes of this Agreement shall mean the group health plan maintained by any member of the Post Group for the purpose of providing medical, dental and vision benefits for the employees of the Post Group and any Affiliates.

     1.16 Interest. The term “Interest” for purposes of this Agreement shall mean interest for the period between Executive’s Separation from Service and Executive’s Delayed Payment Date at the three (3) month LIBOR rate (using the three (3) month LIBOR rate published in The Wall Street Journal on the date of Executive’s Separation from Service) plus 100 basis points, compounded monthly.

     1.17 Multifamily Property. The term “Multifamily Property” for purposes of this Agreement and any renewal of this Agreement shall mean any real property on which an upscale multifamily residential-use development has been constructed or is under construction as of the date of this or any renewal of this Agreement.

     1.18 Post. The term “Post” for purposes of this Agreement shall mean Post Properties, Inc., a Georgia corporation, and any successor to Post.

     1.19 Post Apartment Homes. The term “Post Apartment Homes” for purposes of this Agreement shall mean Post Apartment Homes, L.P., a Georgia limited partnership, and any successor to Post Apartment Homes.

     1.20 Post GP Holdings. The term “Post GP Holdings” for purposes of this

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Agreement shall mean Post GP Holdings, Inc., a Georgia, corporation, and any successor to Post GP Holdings.

     1.21. Post Group. The term “Post Group” for purposes of this Agreement shall mean, individually and collectively, Post, Post Apartment Homes and Post Services.

     1.22 Post Services. The term “Post Services” for purposes of this Agreement shall mean Post Services, Inc., a Georgia corporation, and any successor to Post Services.

     1.23 Protection Period. The term “Protection Period” for purposes of this Agreement shall (subject to § 1.13(1)(g)) mean the two (2) year period which begins on the Effective Date.

     1.24 Restricted Period. The term “Restricted Period” for purposes of this Agreement shall mean the period which starts on the date Executive’s employment by the Post Group terminates under circumstances which create an obligation for the Post Group under § 3 of this Agreement and which ends (a) on the first anniversary of such termination date or (b) on the first date following such a termination on which the Post Group breaches any obligation to Executive under § 3 of this Agreement, whichever period is shorter.

     1.25 Separation from Service. The term “Separation from Service” for purposes of this Agreement shall mean a “separation from service” within the meaning of § 409A of the Code and the related income tax regulations.

     1.26 Specified Employee. The term “Specified Employee” for purposes of this Agreement shall mean a “specified employee” within the meaning of § 409A of the Code and the related income tax regulations.

     1.27 Trade Secret. The term “Trade Secret” for purposes of this Agreement shall mean information, including, but not limited to, technical or nontechnical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, or a list of actual or potential customers or suppliers that:

     (a) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and

     (b) is the subject of reasonable efforts by Post or an Affiliate to maintain its secrecy.

§ 2. Term.

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     2.1 Initial Term. Subject to § 2.2, the term of this Agreement which began under the 2004 Agreement on March 19, 2004 (the “Start Date”) with a three (3) year term shall (subject to § 2.3 and § 3) continue under this Agreement up to, but not including, March 19, 2010.

     2.2 Automatic Renewals. Unless a member of the Post Group decides otherwise, and notifies the Executive of that decision in writing at least 180 days before an anniversary of the Start Date, the three (3) year term of this Agreement shall (subject to § 2.3 and § 3) renew on each successive anniversary of the Start Date so that the term of Executive’s employment under this Agreement shall never be less than two (2) years nor more than three (3) years.

     2.3 Special Rules. If Executive’s Protection Period begins before the term of this Agreement expires, this Agreement shall continue (notwithstanding § 2.2) in effect through the end of Executive’s Protection Period and, if Executive has a right to any compensation or benefits under § 3 before the term of this Agreement expires, the term of this Agreement shall continue until Executive agrees that all of the Post Group’s obligations to Executive under this Agreement have been satisfied in full or a court of competent jurisdiction makes a final determination that the Post Group has no further obligations to Executive under this Agreement, whichever comes first.

§ 3. Compensation and Benefits.

     3.1 General Rule. If there is a Change in Control and any member of the Post Group during Executive’s Protection Period terminates Executive’s employment without Cause or Executive during Executive’s Protection Period resigns for Good Reason, then:

     (a) The Post Group shall pay Executive one (1) times Executive’s then Cash Compensation in cash in a lump sum at his Separation from Service; provided, however, if Executive is a Specified Employee at Executive’s Separation from Service, such payment shall be delayed and paid with Interest on his Delayed Payment Date; and

     (b) (i) Each outstanding stock option granted to Executive by Post shall (notwithstanding the terms under which such option was granted) become fully vested and exercisable on the date of Executive’s Separation from Service and shall (notwithstanding the terms under which such option was granted) remain exercisable for the remaining term of each such option (as determined as if there had been no such Separation from Service) subject to the same terms and conditions as if Executive had remained employed by the Post Group for such term (other than any term or condition which gives Post the right to cancel any such option) and (ii) any restrictions on any outstanding restricted stock grants to Executive by Post immediately shall (notwithstanding the terms under which such grant was made) expire and Executive’s right to such stock shall be

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non-forfeitable; and

     (c) The Post Group shall provide or make available health care coverage and shall provide reimbursement for life insurance and long-term disability premiums as follows:

     (i) During the period starting on the date of Executive’s Separation from Service and ending on the earlier of (A) the last day of the one (1) year period following Executive’s Separation from Service (the “1 Year Period”) or (B) the date when Executive is no longer entitled to continued coverage under § 4980B of the Code (the “COBRA Period”), the Post Group shall provide continued coverage under the Group Health plan pursuant to § 4980B of the Code (“COBRA Coverage”) and reimburse Executive for a portion of the monthly premiums paid by Executive for such COBRA Coverage,

     (ii) If the period described in § 3.1(c)(i) ends at the end of the COBRA Period, the Post Group for the remainder (if any) of the 1 Year Period shall provide Executive (1) continued coverage under the Group Health Plan or (2) if coverage for Executive is not available under the Group Health Plan, health insurance coverage from an insurance company selected by Executive and reimburse Executive for a portion of the monthly premiums paid by Executive for either form of coverage,

     (iii) If so requested by Executive in writing before the end of the coverage period described in either § 3.1(c)(i) or § 3.1(c)(ii), whichever is applicable, the Post Group will make available to Executive continued coverage under the Group Health Plan for up to an additional eighteen (18) months following the end of such coverage period to the extent Executive had such coverage under the Group Health Plan at the end of such coverage period and timely pays the monthly premium then paid by former employees for comparable COBRA Coverage,

     (iv) The reimbursable portion of the premiums paid by Executive each month under § 3.1(c)(i) and § 3.1(c)(ii) shall equal the dollar amount the Post Group would have paid on Executive’s behalf each month for the coverage which had been in effect immediately before Executive’s Separation from Service under the Group Health Plan had Executive remained employed by the Post Group for the remainder of the 1 Year Period. For the avoidance of doubt, the Post Group will not be responsible for any reimbursement during the period described in § 3.1(c)(iii),

     (v) The Post Group shall reimburse Executive during the 1 Year Period for a portion of Executive’s monthly premiums to purchase life

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insurance coverage and long-term disability coverage which is no less than the face amount of Executive’s life insurance coverage and long-term disability coverage in effect immediately before Executive’s Separation from Service, and the reimbursable portion each month shall equal the dollar amount the Post Group would have paid in premiums on Executive’s behalf each month for the life insurance coverage and long-term disability coverage under the policies which had been in effect immediately before Executive’s Separation from Service had Executive remained employed by the Post Group for the remainder of the 1 Year Period,

     (vi) The reimbursements called for under this § 3.1(c) shall be requested by Executive and processed and made by the Post Group in accordance with the policies and procedures in effect from time to time under the Post Group’s standard expense reimbursement policy for the Post Group’s senior executives as provided to Executive, but no cost or expense shall be reimbursable under this § 3.1(c) after the end of the calendar year immediately following the calendar year in which Executive incurs such cost or expense even if reimbursement was permissible at a later date under such policy, and

     (vii) The Post Group shall add to each reimbursement made pursuant to this § 3.1(c) an amount which the Post Group acting in good faith reasonably determines would be sufficient for Executive to pay his income and employment tax due on such reimbursement if Executive was subject to the maximum marginal tax rates; provided, however, if Executive is a Specified Employee at his Separation from Service, no such additional payments shall be made until the Delayed Payment Date, and the Post Group on the Delayed Payment Date shall make a lump sum payment in cash with Interest to Executive which the Post Group acting in good faith reasonably determines would be sufficient for Executive to pay his income and employment tax due on all of the reimbursements made before such date pursuant to this § 3.1(c) if Executive was subject to the maximum marginal tax rates.

     3.2 No Increase In Other Benefits.

     If Executive’s employment terminates under the circumstances described in § 3.1(a) or § 3.3, Executive expressly waives Executive’s right, if any, to have any payment made under § 3.1 taken into account to increase the benefits otherwise payable to, or on behalf of, Executive under any employee benefit plan, whether qualified or unqualified, maintained by the Post Group.

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     3.3 Termination In Anticipation Of A Change In Control.

     Executive shall be treated under § 3.1 as if Executive’s employment had been terminated without Cause or Executive had resigned for Good Reason during Executive’s Protection Period if:

     (a) Executive’s employment is terminated by a member of the Post Group without Cause or Executive resigns for Good Reason,

     (b) such termination is effected or such resignation is effective at any time in the sixty (60) day period which ends on the Effective Date of a Change In Control, and

     (c) there is an Effective Date for such Change In Control.

     3.4 Termination as a result of Death or Disability.

     Executive agrees that no member of the Post Group will have any obligation to Executive under this § 3 if Executive’s employment terminates exclusively as a result of Executive’s death or a Disability.

§ 4. No Solicitation Of Customers.

     Executive will not, during the Restricted Period, for purposes of competing with Post or any Affiliate, solicit on Executive’s own behalf or on behalf of any other person, firm, or corporation which engages, directly or indirectly, in the development, operation, management, leasing or landscaping of a Multifamily Property, any customer of Post or any Affiliate with whom Executive had a personal business interaction at any time during the two (2) years immediately prior to the termination of Executive’s employment by any member of the Post Group. This § 4 shall not prohibit a general solicitation not targeted at Post’s or an Affiliate’s customers and in which Executive has no participation or involvement.

§ 5. Antipirating Of Employees.

     Executive will not during the Restricted Period employ or seek to employ on Executive’s own behalf or on behalf of any other person, firm or corporation that engages, directly or indirectly, in the development, operation, management, leasing, or landscaping of a Multifamily Property, any person who was employed by a member of the Post Group in an executive, managerial, or supervisory capacity during the term of Executive’s employment by a member of the Post Group and with whom Executive had business dealings during the two (2) year period which ends on the date Executive’s employment by any member of the Post Group terminates (whether or not such employee would commit a breach of contract), and who has not ceased to be employed by a member of the Post Group for a period of at least one (1) year. This § 5 shall not

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prohibit a general solicitation not targeted at employees of Post or an Affiliate and in which Executive has no participation or involvement.

§ 6. Trade Secrets And Confidential Or Proprietary Information.

     Executive hereby agrees to hold in a fiduciary capacity for the benefit of Post and each Affiliate, and will not directly or indirectly use or disclose, any Trade Secret that Executive may have acquired during the term of Executive’s employment by any member of the Post Group for so long as such information remains a Trade Secret even if such information remains a Trade Secret after the expiration of the Restricted Period.

     In addition, Executive agrees during the Restricted Period to hold in a fiduciary capacity for the benefit of Post and each Affiliate, and not to directly or indirectly use or disclose, any Confidential or Proprietary Information that Executive may have acquired (whether or not developed or compiled by Executive and whether or not Executive was authorized to have access to such information) during the term of, in the course of, or as a result of Executive’s employment by any member of the Post Group.

§ 7. Reasonable and Necessary Restrictions.

     The Post Group has identified Executive as an individual with significant skills and experience critical to the business of the Post Group. In view of the significant and growing demand for executive talent, the potential impact on the Post Group’s executives of the transformational changes occurring within the industry and the Post Group, and the need to ensure continuity of the management team for the Post Group, the Post Group desires to provide Executive through this Agreement with certain incentives to remain in the Post Group’s employment. This Agreement is also designed to provide additional motivation for meeting the Post Group’s goals and objectives, to address potential long term employment concerns of Executive, and to impose certain reasonable restrictions on Executive’s activities designed to protect the Post Group’s interests should Executive’s employment terminate.

     Executive acknowledges that Post and its Affiliates shall disclose or make available Confidential Information and Trade Secrets to Executive that could be used by Executive to the detriment of Post and its Affiliates. In addition, in connection with his employment, Executive shall develop important relationships and contacts with employees valuable to Post and its Affiliates.

     Executive further acknowledges that § 4, § 5, and § 6 of this Agreement are fair and reasonable, enforcement of the provisions of this Agreement will not cause Executive undue hardship, and the provisions of this Agreement are reasonably necessary and commensurate with the need to protect the Post Group and their business interests and property from irreparable harm.

     Executive acknowledges that the restrictions, prohibitions, and other provisions

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set forth in this Agreement, including without limitation the Restricted Period and those set forth in § 4, § 5, and § 6, are reasonable, fair and equitable in scope, terms, and duration; are necessary to protect the legitimate business interests of the Post Group; and are a material inducement to the Post Group to enter into this Agreement. Executive covenants that Executive will not challenge the enforceability of this Agreement nor will Executive raise any equitable defense to its enforcement.

§ 8. Specific Performance.

     Executive acknowledges that the obligations undertaken by him pursuant to this Agreement are unique and that the Post Group likely will have no adequate remedy at law if Executive shall fail to perform any of Executive’s obligations under this Agreement, and Executive therefore confirms that the Post Group’s right to specific performance of the terms of this Agreement is essential to protect the rights and interests of the Post Group. Accordingly, in addition to any other remedies that the Post Group may have at law or in equity, the Post Group will have the right to have all obligations, covenants, agreements, and other provisions of this Agreement specifically performed by Executive, and the Post Group will have the right to obtain preliminary and permanent injunctive relief to secure specific performance and to prevent a breach or contemplated breach of this Agreement by Executive, and Executive submits to the jurisdiction of the courts of the State of Georgia for this purpose.

§ 9. Tax Protection.

     9.1 General Rule. If Post or Post’s independent accountants (which shall consider such issue upon the reasonable request of the Executive) determine that any payments and benefits called for under this Agreement, together with any other payments and benefits made available to Executive by the Post Group, will result in Executive’s being subject to an excise tax under § 4999 of the Code or if such an excise tax is assessed against Executive as a result of any such payments and other benefits, the Post Group shall make a Gross Up Payment to or on behalf of Executive as and when any such determination or assessment is made, provided Executive takes such action (other than waiving Executive’s right to any payments or benefits in excess of the payments or benefits which Executive has expressly agreed to waive under this § 9) as the Post Group reasonably requests under the circumstances to mitigate or challenge such tax; provided, however, if the Post Group or the Post Group’s independent accountants make such a determination and, further, determine that Executive will not be subject to any such excise tax if Executive waives Executive’s right to receive a part of such payments or benefits and such part does not exceed $10,000, Executive shall irrevocably waive Executive’s right to receive such part if an independent accountant or lawyer retained by Executive and paid by the Post Group agrees with the determination made by the Post Group or the Post Group’s independent accountants with respect to the effect of such reduction in payments or benefits. Any determinations under this § 9 shall be made in accordance with § 280G of the Code and any applicable related regulations (whether proposed, temporary, or final) and any related Internal Revenue

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Service rulings and any related case law and, if the Post Group reasonably requests that Executive take action to mitigate or challenge, or to mitigate and challenge, any such tax or assessment (other than waiving Executive’s right to any payments or benefits in excess of the payments or benefits which Executive has expressly agreed to waive under this § 9) and Executive complies with such request, the Post Group shall provide Executive with such information and such expert advice and assistance from Post’s independent accountants, lawyers, and other advisors as Executive may reasonably request and shall pay for all expenses incurred in effecting such compliance and any related fines, penalties, interest, and other assessments.

     9.2 409A Rule. Any Gross Up Payment called for under § 9.1 to reimburse Executive for paying the related tax shall be paid to Executive as and when any such determination or assessment is made under § 9.1. The Post Group and Executive acknowledge and agree that solely to satisfy an express requirement in the regulations under § 409A of the Code, such payment shall be made no later than the end of the calendar year immediately following the calendar year in which Executive pays the related tax, and that this provision of § 9.2 shall not give the Post Group the right to delay making a Gross Up Payment to or on behalf of Executive under § 9.1.

§ 10. Executive’s Legal Fees and Expenses.

     If any action at law or in equity is necessary for Executive to enforce or interpret the terms of this Agreement, the Post Group shall pay Executive’s reasonable attorneys’ fees and other reasonable expenses incurred with respect to such action. If any other action is taken with respect to this Agreement, the Post Group shall bear its own attorneys’ fees and expenses and Executive shall bear Executive’s own attorneys’ fees and expenses. If a reimbursement is called for under this § 10, such reimbursement shall be made no later than the end of the calendar year immediately following the calendar year in which Executive pays the related legal fees or expenses. The Post Group and Executive acknowledge and agree that the deadline set forth in the immediately preceding sentence is only intended to satisfy an express requirement in the regulations under § 409A of the Code and that such sentence shall not give the Post Group the right to delay making a reimbursement in accordance with the first sentence in this § 10.

§ 11. Miscellaneous.

     11.1 Binding Effect. This Agreement shall inure to the benefit of and shall be binding upon Executive and his executor, administrator, heirs, personal representatives, and assigns; provided, however, that Executive shall not be entitled to assign or delegate any of his rights or obligations hereunder without the prior written consent of the Post Group. This Agreement shall inure to the benefit of and shall be binding upon the Post Group and their successors and assigns; provided, however, that this Agreement is assignable in whole or in part to any parent, subsidiaries, or affiliates of the Post Group only if such person or entity is financially capable of fulfilling the

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obligations of the Post Group under this Agreement, and the Post Group as part of any Change in Control which is made effective through a transaction for which there is a “closing” shall assign the Post Group’s obligations under this Agreement to such successor and such successor shall expressly agree to such assignment or the Post Group on or before the Effective Date for such Change in Control shall (without any further action on the part of Executive) take the action called for in § 3 of this Agreement as if Executive had been terminated without Cause on the Effective Date for such Change in Control without regard to whether Executive’s employment actually has terminated.

     11.2 Construction of Agreement. No provision of this Agreement or any related document shall be construed against or interpreted to the disadvantage of any party hereto by any court or other governmental or judicial authority, including an arbitrator, by reason of such party having or being deemed to have structured or drafted such provision.

     11.3 Governing Law. This Agreement shall be governed by and construed under the laws of the State of Georgia (without reference to the choice of law principles under the laws of the State of Georgia). Executive consents to jurisdiction and venue in the state and federal courts in the State of Georgia for any action arising from a dispute under this Agreement, and for any such action brought in such a court, expressly waives any defense Executive might otherwise have based on lack of personal jurisdiction or improper venue, or that the action has been brought in an inconvenient forum.

     11.4 Survival of Agreements. All covenants and agreements made in this Agreement shall survive the execution and delivery of this Agreement and the termination of Executive’s employment under this Agreement for any reason.

     11.5 Headings and References. The section and sub-section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. All references to sections (§) in this Agreement shall be to sections (§) of this Agreement unless otherwise expressly noted.

     11.6 Notices. All notices, requests, consents, and other communications called for under this Agreement shall be in writing and shall be deemed to be given when delivered personally or mailed first class, registered or certified mail, postage prepaid, in either case, addressed as follows:

(a) If to Executive, to Executive at his or her most recent home address as shown in the Post Group’s personnel files.

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(b) If to the Post Group:

Post Properties, Inc.
One Riverside
4401 Northside Parkway
Suite 800
Atlanta, GA 30327-3057
Attention: Corporate Secretary

with a copy to:

Keith M. Townsend
King & Spalding LLP
1180 Peachtree Street
Atlanta, GA 30309-3521

     11.7 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

     11.8 Entire Agreement. This Agreement constitutes the entire agreement of the Post Group and Executive with respect to the subject matter hereof and supersedes and replaces all prior agreements, written or oral, with respect to the subject matter hereof. This Agreement may be modified only by a written instrument signed by the member of the Post Group and Executive.

     11.9 Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

     11.10 No Waiver. No waiver by any party of any breach by the other party of any condition or provision contained in this Agreement to be performed by such other party shall be deemed a waiver of a similar or dissimilar condition or provision at the same or any prior or subsequent time. Any waiver must be in writing and signed by Executive or an authorized officer of a member of the Post Group, as the case may be.

     11.11 Not an Employment Contract. This Agreement is not an employment contract and shall not give Executive the right to continue in employment by the Post Group (or any member thereof) for any period of time or from time to time. Moreover, this Agreement shall not adversely affect the right of the Post Group (or any member thereof) to terminate Executive’s employment with or without cause at any time.

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     IN WITNESS WHEREOF, the members of the Post Group and Executive have executed this Agreement as of the date first written above.

POST PROPERTIES, INC.

By:

Name:

Title:

POST APARTMENT HOMES, L.P.

By:

Name:

Title:

POST SERVICES, INC.

By:

Name:

Title:

EXECUTIVE

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EX-21.1

Exhibit 21.1

SUBSIDIARIES OF POST PROPERTIES, INC.
(as of December 31, 2007)

Name	State of Formation
1499 Massachusetts Avenue, Inc.	Delaware
1499 Massachusetts Holding, LLC	Delaware
3630 Condo Holdings, LLC	Georgia
3630 North Condo Holdings, LLC	Georgia
3630 North Tower Residential, LLC	Georgia
3630 Peachtree Road Holdings Limited Partnership	Georgia
3630 Residential GP, LLC	Georgia
3630 South Tower Residential, LLC	Georgia
98 San Jac Condo Investment, LLC	Georgia
98 San Jac Holdings Limited Partnership	Georgia
98 San Jac Holdings Management, LLC	Georgia
Addison Circle Access, Inc.	Delaware
Addison Circle Limited Partner, LLC	Georgia
Addison Townhomes One, Ltd.	Texas
Akard-McKinney Investment Company, LLC	Texas
Alexander Condominium Development I, LLC	Georgia
Alexander Condominium Development II, LLC	Georgia
Allen Plaza Mixed Use, LLC	Georgia
Armada Homes, Inc.	Delaware
Armada Phoenix Townhomes, LLC	Texas
Armada Residences, L.P.	Georgia
Austin BC, L.P.	Georgia
Austin BCPM Acquisition, LLC	Delaware
Austin SL Acquisition GP, LLC	Georgia
Austin SL, L.P.	Georgia
BC Austin GP, LLC	Georgia
BC Austin LP, LLC	Georgia
Block 588 Condominium Development, L.P.	Georgia
Block 588 GP, LLC	Georgia
Block 588 LP, LLC	Georgia
Briarcliff Commercial Property, LLC	Georgia
Carlyle Condominium Development II, LLC	Georgia
Carlyle Condominium Development, LLC	Georgia
Clyde Lane Condominium Development GP, LLC	Georgia
Clyde Lane Condominium Development Holding, LLC	Georgia
Clyde Lane Condominium Development, L.P.	Georgia
Cumberland Lake, Inc.	Georgia
Greenville Avenue LP, LLC	Georgia
Harbour I Condominium Development, LLC	Georgia
Hyde Park Walk Condominium Development, LLC	Georgia
Lakeside I LP, LLC	Georgia
Lakeside II LP, LLC	Georgia
P/C First Avenue LLC	Delaware
PAH Acquisitions, LLC	Georgia
Park Condominium Development, LLC	Georgia
Park Land Development, LLC	Georgia

PBC Apartments, LLC	Georgia
PBP Apartments, LLC	Georgia
PBP Blocks 206/207, LLC	Georgia
PBP Lake Susannah Apartment Land, LLC	Georgia
PBP Lake Susannah Condo Land, LLC	Georgia
PCH Atlanta Venture, LLC	Delaware
PCH CCL Holding, LLC	Delaware
PCH Collier Hills Venture, LLC	Delaware
PCH Crest Lake Venture, LLC	Delaware
PCH Crest Venture, LLC	Delaware
PCH Lindbergh Venture, LLC	Delaware
Peachtree Condominium Development, LLC	Georgia
PF Apartments, LLC	Georgia
PMBC Austin Limited Partnership	Georgia
Post 1499 Massachusetts, LLC	Georgia
Post Addison Circle GP, LLC	Georgia
Post Addison Circle Limited Partnership	Georgia
Post Alexander, LLC	Georgia
Post Apartment Homes, L.P.	Georgia
Post Asset Management, Inc.	Georgia
Post Atlanta Venture, LLC	Georgia
Post Austin Triangle, L.P.	Georgia
Post Biltmore, LLC	Delaware
Post Carlyle I, LLC	Georgia
Post Carlyle II, LLC	Delaware
Post Carlyle Services, LLC	Georgia
Post Construction Services, Inc.	Georgia
Post Development Services Limited Partnership	Georgia
Post Eastside Acquisition GP, LLC	Georgia
Post Eastside Limited Partnership	Georgia
Post FB Acquisition GP I, LLC	Georgia
Post FB Acquisition GP II, LLC	Georgia
Post FB I Limited Partnership	Georgia
Post FB II Limited Partnership	Georgia
Post GP Holdings, Inc.	Georgia
Post Landscape Group, Inc.	Georgia
Post LP Holdings, Inc.	Georgia
Post Midtown Square GP, LLC	Georgia
Post Midtown Square, L.P.	Georgia
Post Park, LLC	Georgia
Post Paseo Colorado, LLC	Delaware
Post Peachtree, LLC	Delaware
Post Rice Lofts, LLC	Texas
Post Richmond Acquisition GP, LLC	Georgia
Post Richmond Avenue Investor, LLC	Georgia
Post Richmond Limited Partnership	Georgia
Post Services, Inc.	Georgia
Post Triangle, LLC	Georgia
Post TRS Condo I, LLC	Georgia
Post TRS, Inc.	Georgia
Post Wade Tract M-1, LLC	Georgia
Post Wade Tract M-2, LLC	Georgia
Post Wade Tract R-1, LLC	Georgia

Post Walk at Citrus Park Village, LLC	Georgia
Post West Avenue Lofts, L.P.	Georgia
Post West Avenue, LLC	Georgia
Post Wilson Buildings, LLC	Georgia
Post-Amerus American Beauty Mill, L.P.	Georgia
Post-Amerus Bennie Dillon, L.P.	Georgia
Post-Amerus Rice Lofts, L.P.	Georgia
Post-Amerus Wilson Building II, L.P.	Georgia
Post-Amerus Wilson Building, L.P.	Georgia
Presidential Heights LLC	Delaware
PSI 3630 Peachtree North, LLC	Georgia
PSI 3630 Peachtree, LLC	Georgia
PSI Acquisitions, LLC	Georgia
RB Holdings, LLC	Georgia
Residential Ventures, Inc.	Georgia
Rice Lofts, LP	Texas
Rise Condominium Development GP, LLC	Georgia
Rise Condominium Development Holding, LLC	Georgia
Rise Condominium Development, L.P.	Georgia
Riverside Villas, LLC	Georgia
Rocky Point Management, Inc.	Georgia
Rose Hill Associates, LLC	Delaware
SL Austin LP, LLC	Georgia
Soho Condominium Development, LLC	Georgia
STS Loan & Management, Inc.	Georgia
STS Loan, L.P.	Georgia
The Potomac at Fallsgrove, LLC	Delaware
Uptown Denver, LLC	Colorado
Villas at Parkway Village, L.P.	Georgia
Villas GP, LLC	Georgia

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333-62243, 33-00020, 333-94121, 333-38725, 333-107092, 333-107093, 333-125390 and 333-127580 on Form S-8, Registration Statement Nos. 33-81772, 333-47399, 333-80427, and 333-44722 on Form S-3 and Registration Statement No. 333-139581 on Form S-3ASR of our report dated February 28, 2008, relating to the consolidated financial statements and financial statement schedule of Post Properties, Inc., and the effectiveness of Post Properties, Inc.’s internal control over financial reporting (which report expresses an unqualified opinion and includes an explanatory paragraph relating to the adoption of Staff Accounting Bulletin No.108, Quantifying Misstatements in Financial Statements), appearing in this Annual Report on Form 10-K of Post Properties, Inc. for the year ended December 31, 2007.

/s/Deloitte & Touche LLP

Atlanta, Georgia
February 28, 2008

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 333-127580 on Form S-8, Registration Statement Nos. 333-36595, 333-42884 and 333-55994 on Form S-3 and Registration Statement No. 333-139581 on Form S-3ASR of our report dated February 28, 2008, relating to the consolidated financial statements and financial statement schedule of Post Properties, Inc. and Post Apartment Homes, L.P. and the effectiveness of Post Properties, Inc.’s and Post Apartment Home, L.P.’s internal control over financial reporting (which reports express an unqualified opinion and include an explanatory paragraph relating to the adoption Staff Accounting Bulletin No.108, Quantifying Misstatements in Financial Statements), appearing in this Annual Report on Form 10-K of Post Properties, Inc. and Post Apartment Homes. L.P. for the year ended December 31, 2007.

/s/Deloitte & Touche LLP

Atlanta, Georgia
February 28, 2008

EX-23.3

Exhibit 23.3

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the following Registration Statements of Post Properties, Inc. of our report dated March 15, 2006, except with respect to our opinion on the consolidated financial statements insofar as it relates to the effects of the discontinued operations discussed in Note 2 and insofar as it relates to the effects of changes in segment reporting categories discussed in Note 15, as to which the date is February 28, 2008, relating to the financial statements and the summary of activity for real estate investments and accumulated depreciation included in the financial statement schedule, which appear in this Form 10-K.

Form S-3 (No. 33-81772)
Form S-3 (No. 333-47399)
Form S-3 (No. 333-80427)
Form S-3 (No. 333-44722)
Form S-3ASR (No. 333-139581)
Form S-8 (No. 333-62243)
Form S-8 (No. 33-00020)
Form S-8 (No. 333-94121)
Form S-8 (No. 333-38725)
Form S-8 (No. 333-107092)
Form S-8 (No. 333-107093)
Form S-8 (No. 333-125390)
Form S-8 (No. 333-127580)

/s/PricewaterhouseCoopers LLP

Atlanta, Georgia
February 28, 2008

EX-23.4

Exhibit 23.4

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the following Registration Statements of Post Properties, Inc. and Post Apartment Homes, L.P., of our report dated March 15, 2006, except with respect to our opinion on the consolidated financial statements insofar as it relates to the effects of the discontinued operations discussed in Note 2 and insofar as it relates to the effects of changes in segment reporting categories discussed in Note 15, as to which the date is February 28, 2008, relating to the financial statements and the summary of activity for real estate investments and accumulated depreciation included in the financial statement schedule, which appear in this Form 10-K.

Form S-3 (No. 333-36595)
Form S-3 (No. 333-42884)
Form S-3 (No. 333-55994)
Form S-3ASR (No. 333-139581)
Form S-8 (No. 333-127580)

/s/PricewaterhouseCoopers LLP

Atlanta, Georgia
February 28, 2008

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, David P. Stockert, certify that:

1. I have reviewed this report on Form 10-K of Post Properties, Inc. and Post Apartment Homes, L.P.;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrants as of, and for, the periods presented in this report;

4. The registrants’ other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrants and we have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including their consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrants’ disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrants’ internal control over financial reporting that occurred during the registrants’ most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants’ internal control over financial reporting; and

5. The registrants’ other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants’ auditors and the audit committee of the registrants’ board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants’ ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants’ internal control over financial reporting.

February 28, 2008

POST PROPERTIES, INC.	POST APARTMENT HOMES, L.P.
a Georgia corporation	a Georgia limited partnership
	By:	POST GP HOLDINGS, INC., a Georgia corporation, its
/s/ David P. Stockert		sole general partner
David P. Stockert
President and Chief Executive Officer		/s/ David P. Stockert
		David P. Stockert
		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Christopher J. Papa, certify that:

1. I have reviewed this report on Form 10-K of Post Properties, Inc. and Post Apartment Homes, L.P.;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrants as of, and for, the periods presented in this report;

4. The registrants’ other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrants and we have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including their consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrants’ disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrants’ internal control over financial reporting that occurred during the registrants’ most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants’ internal control over financial reporting; and

5. The registrants’ other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants’ auditors and the audit committee of the registrants’ board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants’ ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants’ internal control over financial reporting.

February 28, 2008

POST PROPERTIES, INC.	POST APARTMENT HOMES, L.P.
a Georgia corporation	a Georgia limited partnership
	By:	POST GP HOLDINGS, INC., a Georgia corporation, its
/s/ Christopher J. Papa		sole general partner
Christopher J. Papa
Executive Vice President and		/s/ Christopher J. Papa
Chief Financial Officer		Christopher J. Papa
		Executive Vice President and
		Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

          Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with the Annual Report on Form 10-K of Post Properties, Inc. (“Post”) and Post Apartment Homes, L.P. (“PAH”, and together with Post, the “Registrants”) for the year ended December 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, the President and Chief Executive Officer of Post and Post GP Holdings, Inc., PAH’s general partner, certifies that:

1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrants.

/s/ David P. Stockert  

David P. Stockert 

President and Chief Executive Officer 

February 28, 2008 

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

          Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with the Annual Report on Form 10-K of Post Properties, Inc. (“Post”) and Post Apartment Homes, L.P. (“PAH”, and together with Post, the “Registrants”) for the year ended December 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, the Executive Vice President and Chief Financial Officer of Post and Post GP Holdings, Inc., PAH’s general partner, certifies that:

1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrants.

/s/ Christopher J. Papa  

Christopher J. Papa 

Executive Vice President and Chief Financial Officer 

February 28, 2008