UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2008

or

o 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: 1-12358

COLONIAL PROPERTIES TRUST

(Exact name of registrant as specified in its charter)

Alabama
(State or other jurisdiction
of incorporation or organization) 59-7007599
(IRS Employer
Identification Number)

2101 Sixth Avenue North, Suite 750, Birmingham, Alabama 35203
(Address of principal executive offices) (Zip code)

(205) 250-8700
(Registrant’s telephone number, including area code)

Not applicable
(Former name, former address and former fiscal year, if changed since last report)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

YES þ       NO o

      Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ	Accelerated filer o
Non-accelerated filer o (Do not check if smaller reporting company)	Smaller reporting company o

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

YES o       NO þ

As of August 4, 2008, Colonial Properties Trust had 47,881,560 Common Shares of Beneficial Interest outstanding.

COLONIAL PROPERTIES TRUST
INDEX TO FORM 10-Q

			Page
PART I: FINANCIAL INFORMATION
	Item 1.	Consolidated Condensed Financial Statements (Unaudited):
		Consolidated Condensed Balance Sheets as of June 30, 2008 and December 31, 2007		3
		Consolidated Condensed Statements of Income and Comprehensive Income for the Three and Six Months ended June 30, 2008 and 2007		4
		Consolidated Condensed Statements of Cash Flows for the Six Months ended June 30, 2008 and 2007		5
		Notes to Consolidated Condensed Financial Statements		6
		Report of Independent Registered Public Accounting Firm *		26
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		27
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk		45
	Item 4.	Controls and Procedures		45
PART II: OTHER INFORMATION
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		45
	Item 4.	Submission of Matters to a Vote of Security Holders		46
	Item 6.	Exhibits		47
SIGNATURES				48
EXHIBIT INDEX				49
EX-12.1 RATIO TO FIXED EARNINGS
EX-15.1 LETTER RE: UNAUDITED INTERIM FINANCIAL INFORMATION
EX-31.1 SECTION 302 CERTIFICATION OF CEO
EX-31.2 SECTION 302 CERTIFICATION OF CFO
EX-32.1 SECTION 906 CERTIFICATION OF CEO
EX-32.2 SECTION 906 CERTIFICATION OF CFO

* Review by Independent Registered Public Accounting Firm

Review of the interim consolidated condensed financial information included in this Quarterly Report on Form 10-Q for the three and six months ended June 30, 2008 and 2007 has been performed by PricewaterhouseCoopers LLP, the Company’s independent registered public accounting firm. The independent accountants’ report on the Company’s interim consolidated condensed financial information is included on page 26. This report is not considered a report within the meaning of Sections 7 and 11 of the Securities Act of 1933, as amended, and therefore, the independent accountants’ liability under Section 11 does not extend to it.

2

COLONIAL PROPERTIES TRUST
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share data)

	June 30, 2008			December 31, 2007
ASSETS
Land, buildings & equipment	$	2,547,648		$	2,431,082
Undeveloped land and construction in progress		515,356			531,410
Less: Accumulated depreciation		(326,995	)		(290,134	)
Real estate assets held for sale, net		278,145			253,641
Net real estate assets		3,014,154			2,925,999
Cash and cash equivalents		33,825			93,033
Restricted cash		34,771			10,005
Accounts receivable, net		14,003			25,534
Notes receivable		61,879			30,756
Prepaid expenses		8,766			8,845
Deferred debt and lease costs		15,552			15,636
Investment in partially-owned entities		49,203			69,682
Deferred tax asset		18,204			19,897
Other assets		34,437			30,443
Total assets	$	3,284,794		$	3,229,830
LIABILITIES AND SHAREHOLDERS’ EQUITY
Notes and mortgages payable	$	1,564,285		$	1,575,921
Unsecured credit facility		184,707			39,316
Mortgages payable related to real estate assets held for sale		—			26,602
Total debt		1,748,992			1,641,839
Accounts payable		37,121			69,051
Accrued interest		22,087			23,064
Accrued expenses		24,620			16,425
Other liabilities		41,623			19,123
Total liabilities		1,874,443			1,769,502
Minority interest:
Preferred units		100,000			100,000
Common units		201,131			217,104
Limited partners’ interest in consolidated partnerships		2,115			2,439
Total minority interest		303,246			319,543
Preferred shares of beneficial interest, $.01 par value, 20,000,000 shares authorized:
8 1/8% Series D Cumulative Redeemable Preferred Shares of Beneficial Interest, liquidation preference $25 per depositary share, 4,116,250 and 5,000,000 depositary shares issued and outstanding at June 30, 2008 and December 31, 2007, respectively		4			5
Common shares of beneficial interest, $.01 par value, 125,000,000 shares authorized; 53,497,984 and 52,839,699 shares issued and outstanding at June 30, 2008 and December 31, 2007, respectively		535			528
Additional paid-in capital		1,567,102			1,577,030
Cumulative earnings		1,352,586			1,320,710
Cumulative distributions		(1,657,199	)		(1,601,267	)
Treasury shares, at cost; 5,623,150 shares at June 30, 2008 and December 31, 2007		(150,163	)		(150,163	)
Accumulated other comprehensive loss		(5,760	)		(6,058	)
Total shareholders’ equity		1,107,105			1,140,785
Total liabilities and shareholders’ equity	$	3,284,794		$	3,229,830

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

3

COLONIAL PROPERTIES TRUST
CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
(in thousands, except share and per share data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2008			2007			2008			2007
Revenues:
Minimum rent	$	63,974		$	87,826		$	126,545		$	179,180
Tenant recoveries		1,374			4,431			2,241			9,664
Other property related revenue		8,294			8,641			15,747			16,076
Construction revenues		569			8,068			8,449			20,853
Other non-property related revenue		5,151			5,312			10,449			8,554
Total revenue		79,362			114,278			163,431			234,327
Expenses:
Property operating expenses		18,688			24,839			37,048			49,549
Taxes, licenses and insurance		9,103			11,859			18,470			24,463
Construction expenses		564			7,495			7,830			19,866
Property management expenses		2,072			3,598			4,313			7,085
General and administrative expenses		5,789			8,040			11,570			14,018
Management fee and other expense		4,346			4,034			8,031			6,977
Restructuring charges		—			1,528			—			1,528
Investment and development		108			315			877			454
Depreciation		23,038			28,941			44,956			60,105
Amortization		972			3,182			1,743			8,907
Total operating expenses		64,680			93,831			134,838			192,952
Income from operations		14,682			20,447			28,593			41,375
Other income (expense):
Interest expense and debt cost amortization		(18,280	)		(27,073	)		(36,947	)		(54,205	)
Gains (losses) on retirement of debt		2,730			(9,370	)		8,201			(9,433	)
Interest income		1,184			2,092			1,976			4,223
Income from partially-owned unconsolidated entities		2,037			(2,090	)		12,307			4,723
Gains from sales of property, net of income taxes of $1,297 (Q2) and $1,690 (YTD) in 2008 and $100 (Q2) and $847 (YTD) in 2007		3,334			289,565			5,277			290,889
Income taxes and other		(192	)		59			595			(174	)
Total other income (expense)		(9,187	)		253,183			(8,591	)		236,023
Income before minority interest and discontinued operations		5,495			273,630			20,002			277,398
Minority interest of limited partners		5			82			9			225
Minority interest in CRLP — common unitholders		(247	)		3,915			(1,991	)		4,369
Minority interest in CRLP — preferred unitholders		(1,813	)		(1,813	)		(3,639	)		(3,624	)
Income from continuing operations		3,440			275,814			14,381			278,368
Income from discontinued operations		5,436			1,501			9,752			8,267
Gain on disposal of discontinued operations, net of income taxes (benefit) of $0 (Q2) and ($1) (YTD) in 2008 and $156 (Q2) and $1,684 (YTD) in 2007		4,116			39,335			7,017			74,136
Minority interest in CRLP from discontinued operations		(1,655	)		(7,484	)		(2,922	)		(15,205	)
Minority interest of limited partners		—			(32	)		13			(73	)
Income from discontinued operations		7,897			33,320			13,860			67,125
Net income		11,337			309,134			28,241			345,493
Dividends to preferred shareholders		(2,180	)		(3,870	)		(4,668	)		(8,361	)
Preferred share issuance costs write-off, net of discount		(83	)		(330	)		(267	)		(330	)
Net income available to common shareholders	$	9,074		$	304,934		$	23,306		$	336,802
Net income per common share — Basic:
Income from continuing operations	$	0.02		$	5.88		$	0.20		$	5.85
Income from discontinued operations		0.17			0.72			0.30			1.46
Net income per common share — Basic	$	0.19		$	6.60		$	0.50		$	7.31
Net income per common share — Diluted:
Income from continuing operations	$	0.02		$	5.80		$	0.20		$	5.77
Income from discontinued operations		0.17			0.71			0.30			1.44
Net income per common share — Diluted	$	0.19		$	6.51		$	0.50		$	7.21
Weighted average common shares outstanding:
Basic		46,927			46,222			46,892			46,094
Diluted		47,095			46,875			47,061			46,734
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$	11,337		$	309,134		$	28,241		$	345,493
Other comprehensive income
Unrealized gain (loss) on cash flow hedging activities		—			47			—			(138	)
Change in additional minimum pension liability		—			1,600			—			1,600
Comprehensive income	$	11,337		$	310,781		$	28,241		$	346,955

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

4

COLONIAL PROPERTIES TRUST
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)

	Six Months Ended
	June 30,
	2008			2007
Cash flows from operating activities:
Net income	$	28,241		$	345,493
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		49,589			74,807
Income from unconsolidated entities		(12,306	)		(4,225	)
Distribution to preferred unitholders of CRLP		3,640			3,626
Minority interest in CRLP		4,917			10,836
Gains from sales of property		(13,983	)		(367,813	)
Impairment		—			2,500
(Gain) loss on retirement of debt		(8,201	)		12,556
Prepayment penalties		—			(29,207	)
Distributions of income from unconsolidated entities		7,034			5,253
Change in:
Restricted cash		(766	)		5,389
Accounts receivable		11,531			(4,703	)
Prepaid expenses		79			5,414
Other assets		5,096			(5,489	)
Change in:
Accounts payable		(19,977	)		(2,099	)
Accrued interest		(977	)		(3,919	)
Accrued expenses and other		10,675			13,677
Net cash provided by operating activities		64,592			62,096
Cash flows from investing activities:
Acquisition of properties		(7,369	)		(125,400	)
Development expenditures		(193,670	)		(172,056	)
Tenant improvements and leasing commissions		(2,581	)		(10,860	)
Capital expenditures		(10,876	)		(13,352	)
Proceeds from sales of property, net of selling costs		68,636			813,254
Issuance of notes receivable		(7,896	)		(15,153	)
Repayments of notes receivable		4,573			40,066
Distributions from unconsolidated entities		29,002			15,474
Capital contributions to unconsolidated entities		(5,286	)		(9,587	)
Sale of securities		3,636			—
Net cash provided by (used in) investing activities		(121,831	)		522,386
Cash flows from financing activities:
Proceeds from additional borrowings		57,600			818,813
Proceeds from dividend reinvestment plan and exercise of stock options		840			11,804
Principal reductions of debt		(102,924	)		(432,984	)
Payment of debt issuance costs		(1,566	)		—
Net change in revolving credit balances and overdrafts		131,317			(182,802	)
Dividends paid to common and preferred shareholders		(55,932	)		(73,228	)
Special distributions		—			(506,515	)
Distributions to minority partners in CRLP		(9,992	)		(16,534	)
Redemption of Preferred Series E Shares		—			(104,768	)
Repurchase of Preferred Series D Shares		(21,312	)		—
Other financing activities, net		—			331
Net cash used in financing activities		(1,969	)		(485,883	)
(Decrease) increase in cash and cash equivalents		(59,208	)		98,599
Cash and cash equivalents, beginning of period		93,033			87,647
Cash and cash equivalents, end of period	$	33,825		$	186,246
Supplemental disclosure of cash flow information:
Cash paid during the period for interest, including amounts capitalized	$	48,816		$	76,154
Cash paid during the period for income taxes	$	4,881		$	4,463
Supplemental disclosure of non-cash transactions:
Cash flow hedging activities	$	—		$	(138	)

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

5

COLONIAL PROPERTIES TRUST NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
June 30, 2008
(Unaudited)

     The consolidated condensed financial statements of Colonial Properties Trust have been prepared pursuant to the Securities and Exchange Commission (“SEC”) rules and regulations. The following notes, which represent interim disclosures as required by the SEC, highlight significant changes to the notes included in the December 31, 2007 audited consolidated financial statements of Colonial Properties Trust and should be read together with the consolidated financial statements and notes thereto included in the Colonial Properties Trust 2007 Annual Report on Form 10-K.

Note 1 — Organization and Business

     As used herein, “the Company” means Colonial Properties Trust, an Alabama real estate investment trust (“REIT”) and one or more of its subsidiaries and other affiliates, including Colonial Realty Limited Partnership, a Delaware limited partnership (“CRLP”), Colonial Properties Services, Inc. (“CPSI”), Colonial Properties Services Limited Partnership (“CPSLP”) and CLNL Acquisition Sub, LLC (“CLNL”). The Company was originally formed as a Maryland REIT on July 9, 1993 and reorganized as an Alabama REIT under a new Alabama REIT statute on August 21, 1995. The Company is a fully integrated, self-administered and self-managed REIT, which means that it is engaged in the acquisition, development, ownership, management and leasing of commercial and residential real estate property and for-sale residential property. The Company’s activities include full or partial ownership and operation of a portfolio of 191 properties as of June 30, 2008, consisting of multifamily, office and retail properties located in Alabama, Arizona, Florida, Georgia, Nevada, North Carolina, South Carolina, Tennessee, Texas and Virginia. As of June 30, 2008, including properties in lease-up, the Company owns interests in 119 multifamily apartment communities (including 104 wholly-owned consolidated properties and 15 properties partially-owned through unconsolidated joint venture entities), 47 office properties (including two wholly-owned consolidated properties and 45 properties partially-owned through unconsolidated joint venture entities) and 25 retail properties (including four wholly-owned consolidated properties and 21 properties partially-owned through unconsolidated joint venture entities).

Note 2 — Strategic Initiative

As more fully described in the Company’s 2007 Annual Report on Form 10-K, to facilitate the Company’s plan to become a multifamily focused REIT by reducing its ownership interests in its office and retail portfolios, the Company completed two joint venture transactions in June 2007. In addition, in 2007, the Company completed the outright sale of an additional 12 retail properties. Each of these transactions is discussed in more detail below.

     In June 2007, the Company sold to DRA G&I Fund VI Real Estate Investment Trust, an entity advised by DRA Advisors LLC (“DRA”) its 69.8% interest in a newly formed joint venture (the “DRA/CLP JV”) that became the owner of 24 office properties and two retail properties that were previously wholly-owned by CRLP. The Company, through a subsidiary of CRLP, retained a 15% minority interest in the DRA/CLP JV (see Note 9), as well as management and leasing responsibilities for the 26 properties. DRA also purchased an aggregate of 2.6% of the interests in the DRA/CLP JV from limited partners of CRLP. As a result, interests in the DRA/CLP JV are currently held by DRA, a subsidiary of CRLP and certain limited partners of CRLP that did not elect to sell their interests in the DRA/CLP JV. Total sales proceeds from the sale of the Company’s 69.8% interest were approximately $379.0 million. The Company recorded a net gain of approximately $211.8 million on the sale of its 69.8% interest. The Company also deferred a gain of approximately $7.2 million as a result of certain obligations it assumed in the transaction. During 2007, the Company recognized approximately $3.0 million of this deferred gain as a result of a reduction of the related obligation. The Company has not recognized any of this deferred gain during 2008. In May 2008, certain members in the DRA/CLP JV exercised an option to sell membership interests totaling approximately $1.7 million. DRA purchased selling members’ units with cash increasing its ownership interest in the joint venture from 72.4% to 73.3%. The Company’s ownership interest in the DRA/CLP JV remains at 15.0%.

     In June 2007, the Company sold to OZRE Retail, LLC (“OZRE”) its 69.8% interest in a newly formed joint venture (the “OZRE JV”) that became the owner of 11 retail properties that were previously wholly-owned by CRLP. The Company, through a subsidiary of CRLP, retained a 15% minority interest in the OZRE JV (see Note 9), as well as management and leasing responsibilities for the 11 properties. OZRE also purchased interests in the OZRE JV from limited partners of CRLP. As a result, interests in the OZRE JV are held by OZRE, a subsidiary of CRLP, and certain limited partners of CRLP that did not elect to sell their interests in the OZRE JV to OZRE. Total sales proceeds from the sale of this 69.8% interest were approximately $115.0 million. The Company recorded a net gain of approximately $64.7 million on the sale of its 69.8%

6

interest. The Company also deferred a gain of approximately $8.5 million as a result of certain obligations it assumed in the transaction. During 2007, the Company recognized approximately $5.5 million of this deferred gain as a result of a reduction of the related obligation. The Company has not recognized any of this deferred gain during 2008. In June 2008, certain members in the OZRE JV exercised an option to sell membership interests totaling approximately $9.1 million to OZRE JV. The redeemed units were cancelled by the OZRE JV increasing OZRE’s ownership interest from 72.5% to 82.7% and the Company’s ownership interest from 15.0% to 17.1%.

     In connection with the office and retail joint venture transactions, 85% of the DRA/CLP JV and the OZRE JV membership units were distributed to the Company and all limited partners of CRLP on a pro rata basis. The Company recorded these distributions at book value.

     Also, during 2007, the Company completed the outright sale of an additional 11 retail assets for an aggregate sales price of $129.0 million. In addition, during 2007, the Company sold a 90% owned retail property for a sales price of $74.4 million.

     As a result of the above joint venture transactions, the Company paid a special distribution of $10.75 per share during the second quarter of 2007. The remaining proceeds from these transactions were used to pay down the Company’s outstanding indebtedness.

Note 3 — Summary of Significant Accounting Policies

     Basis of Presentation

     The Company owns substantially all of its assets and conducts all of its operations through CRLP. The Company is the sole general partner of CRLP and owned an approximate 83.4% interest in CRLP at June 30, 2008. Due to the Company’s ability as general partner to control CRLP and various other subsidiaries, each such entity has been consolidated for financial reporting purposes. CRLP, an SEC registrant, files separate financial statements under the Securities and Exchange Act of 1934, as amended. The Company allocates income to the minority interest in CRLP based on the weighted average minority ownership percentage for the periods presented in the Consolidated Condensed Statements of Income and Comprehensive Income. At the end of each period, the Company adjusts the Consolidated Condensed Balance Sheet for CRLP’s minority interest balance based on the minority ownership percentage at the end of the period.

     The Company also consolidates other entities in which it has a controlling interest or entities where it is determined to be the primary beneficiary under FASB 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 the VIE for financial reporting purposes. Additionally, Emerging Issues Task Force (“EITF”) Issue No. 04-5, “Determining Whether a General Partner, or the General Partner as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights” provides guidance in determining whether a general partner controls and, therefore, should consolidate a limited partnership. The application of FIN 46R and EITF No. 04-5 requires management to make significant estimates and judgments about the Company’s and its other partners’ rights, obligations and economic interests in such entities. Where the Company has less than a controlling financial interest in an entity or the Company is not the primary beneficiary of the entity under FIN 46R, the entity is accounted for on the equity method of accounting. Accordingly, the Company’s share of the net earnings or losses of these entities is included in consolidated net income. A description of the Company’s investments accounted for using the equity method of accounting is included in Note 9. All significant intercompany accounts and transactions have been eliminated in consolidation.

     The Company recognizes minority interest in its Consolidated Condensed Balance Sheets for partially-owned entities that the Company consolidates. The minority partners’ share of current operations is reflected in minority interest of limited partners in the Consolidated Condensed Statements of Income.

     Federal Income Tax Status

     The Company, which is considered a corporation for federal income tax purposes, qualifies as a REIT and generally will not be subject to federal income tax to the extent it distributes all of its REIT level taxable income to its shareholders. REITs are subject to a number of organizational and operational requirements. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to federal income tax on its taxable income at regular corporate rates. The Company may also be subject to certain federal, state and local taxes on its income and property and to federal income and

7

excise taxes on its undistributed income even if it does qualify as a REIT. For example, the Company will be subject to income tax to the extent it distributes less than 100% of its REIT taxable income (including capital gains) and the Company has certain gains that, if recognized, will be subject to corporate tax because it acquired the assets in tax-free acquisitions of non-REIT corporations.

     The Company’s consolidated financial statements include the operations of a taxable REIT subsidiary, CPSI, which is not entitled to a dividends paid deduction and is subject to federal, state and local income taxes. CPSI uses the liability method of accounting for income taxes. Deferred income tax assets and liabilities result from temporary differences. Temporary differences are differences between tax bases of assets and liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future periods. CPSI provides property development, construction services, leasing and management services for joint-venture and third-party owned properties and administrative services to the Company and engages in for-sale development and condominium conversion activity. The Company generally reimburses CPSI for payroll and other costs incurred in providing services to the Company. All inter-company transactions are eliminated in the accompanying consolidated condensed financial statements. CPSI’s consolidated provision for income taxes was $1.1 million and $0.7 million for the three months ended June 30, 2008 and 2007, respectively. CPSI’s effective income tax rate was 39.5% for the three months ended June 30, 2008 and 2007. CPSI’s consolidated provision for income taxes was $1.7 million and $3.2 million for the six months ended June 30, 2008 and 2007, respectively. CPSI’s effective income tax rate was 39.0% and 38.6% for the six months ended June 30, 2008 and 2007, respectively. As of June 30, 2008 and December 31, 2007, the Company had a net deferred tax asset of approximately $18.2 million and $19.9 million, respectively, which resulted primarily from the impairment charge recorded during 2007 related to the Company’s for-sale residential properties (see Note 5 for additional discussion). The Company has assessed the recoverability of this asset and believes that, as of June 30, 2008, recovery is more likely than not based upon future taxable income and the ability to carry back taxable losses to 2006 and 2007.

     Tax years 2004 through 2007 are subject to examination by the federal and state taxing authorities. There are no income tax examinations currently in process.

     The Company may from time to time be assessed interest or penalties by major tax jurisdictions, although any such assessments historically have been minimal and immaterial to the Company’s financial results. When the Company has received an assessment for interest and/or penalties, it has been classified in the financial statements as income tax expense.

     Use of Estimates

     The preparation of consolidated condensed financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and 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 periods. Actual results could differ from those estimates.

     Unaudited Interim Statements

     The consolidated condensed financial statements as of and for the three and six months ended June 30, 2008 and 2007 and related footnote disclosures are unaudited. In the opinion of management, such financial statements reflect all adjustments necessary for a fair statement of the results of the interim periods. All such adjustments are of a normal, recurring nature, except for the items discussed in Note 2 above.

     Revenue Recognition

     Sales and the associated gains or losses on real estate assets, condominium conversion projects and for-sale residential projects are recognized in accordance with the provisions of Statement of Financial Accounting Standard (“SFAS”) No. 66, Accounting for Sales of Real Estate. For condominium conversion projects, sales and the associated gains for individual condominium units are recognized upon the closing of the sale transactions, as all conditions for full profit recognition have been met (“Completed Contract Method”). Under SFAS No. 66, the Company uses the relative sales value method to allocate costs and recognize profits from condominium conversion sales.

     For newly developed for-sale residential projects, 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. 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

8

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. 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 unit under a binding real estate contract. For all periods presented herein, no for-sale residential projects are accounted for under the percentage-of-completion method.

     Estimated future warranty costs on condominium conversion and for-sale residential sales are charged to cost of sales in the period when the revenues from such sales are recognized. Such estimated warranty costs are approximately 0.5% of total revenue from condominium sales. As necessary, additional warranty costs are charged to costs of sales based on management’s estimate of the costs to remediate existing claims.

     Revenue from construction contracts is recognized on the percentage-of-completion method, measured by the percentage of costs incurred to date to estimated total costs. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Adjustments to estimated profits on contracts are recognized in the period in which such adjustments become known.

     Other income from long-term contracts signed in the normal course of business, including property management and development fee income, is recognized when earned for services provided to third parties.

     Impairment

     In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, land inventory and related for-sale residential projects under development are reviewed for potential write-downs when impairment indicators are present. SFAS No. 144 requires that in the event the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts, impairment charges are required to be recorded to the extent that the fair value of such assets is less than their carrying amounts. These estimates of cash flows are significantly impacted by estimates of sales price, selling velocity, sales incentives, construction costs, and other factors. Due to uncertainties in the estimation process, actual results could differ from such estimates. For those assets deemed to be impaired, the impairment to be recognized is to be measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. The Company’s determination of fair value is primarily based on a probability weighted discounted future cash flow analysis, which incorporates available market information as well as other assumptions made by management.

     Investment and Development

     Investment and development expenses consist primarily of costs related to abandoned pursuits. The Company incurs costs prior to land acquisition including contract deposits, as well as legal, engineering and other external professional fees related to evaluating the feasibility of such developments. If the Company determines that it is not probable that it will develop a particular project, any related pre-development costs previously incurred are immediately expensed.

     Notes Receivable

     The Company records notes receivable at cost. Notes receivable consist primarily of the following:

(1)	a promissory note of approximately $28.9 million that relates to a for-sale residential project in which the Company has a 40% interest (see Note 9 for additional discussion). The note is secured by a first mortgage interest with an original maturity date of July 1, 2008 and a rate of 8.25%. There are two six-month extension options available, the first of which has been exercised.
(2)	short-term seller financing related to the sale of Colonial Grand at Shelby Farms I & II for approximately $27.8 million with an original maturity date of July 27, 2008 and a rate of 6.50%. There are two 30-day extension options available at a rate of 8.0% and 12.0%, respectively. As of July 27, 2008, the buyer had exercised the first extension option.

The Company evaluates the collectability of both interest and principal for each of its notes to determine whether it is impaired. A note is considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the existing contractual terms. When a note is considered to be impaired, the amount of the allowance is calculated by comparing the recorded investment to either the value determined by discounting the

9

expected future cash flows at the note’s effective interest rate or to the value of the collateral if the note is collateral dependent. The Company had recorded accrued interest related to its outstanding notes receivable of $1.5 million as of June 30, 2008 and December 31, 2007. As of June 30, 2008, the Company had a reserve recorded against its outstanding notes receivable and accrued interest of approximately $1.3 million. The weighted average interest rate on the notes receivable is approximately 5.7% and 8.1% per annum as of June 30, 2008 and December 31, 2007, respectively. Interest income is recognized on an accrual basis.

     Performance Awards

     On April 26, 2006, the Executive Compensation Committee of the Board of Trustees of the Company adopted a new incentive program in which seven executive officers of the Company participate. Part of the program provides for an opportunity to earn a performance bonus, based on absolute and relative total shareholder return over a three-year period beginning January 1, 2006 and ending December 31, 2008 (the “Performance Period”).

     Performance payments, if earned, will be paid in cash, common shares, or a combination of the two. Each performance award has specified threshold, target and maximum payout amounts. The payout amounts range from $500,000 to $6,000,000 per participant. Amounts earned related to performance awards are based on absolute and relative Total Shareholder Return over the three year period from January 1, 2006 to December 31, 2008. Total Shareholder Return is equal to the change in the price per common share of the Company plus dividends paid on the Company’s common shares. Awards to be earned are equal to the greater of the Company’s Total Shareholder Return as compared to certain percentage thresholds (absolute Total Shareholder Return) or the Company’s Total Shareholder Return as compared to a peer group of companies (relative Total Shareholder Return). The Company determined that the performance awards contained a market condition.

     The Company used a third party valuation firm to assist in valuing these awards using a binomial model. The significant assumptions used to measure the fair value of the performance awards are as follows:

• risk-free rate,

• expected standard deviation of returns (i.e., volatility),

• expected dividend yield, and

• correlation in stock price movement.

The risk-free rate was set equal to the yield, for the term of the remaining duration of the performance period, on treasury securities as of April 26, 2006 (the grant date). The data was obtained from the Federal Reserve for constant maturity treasuries for 2-year and 3-year bonds. Standard deviations of stock price movement for the Company and its peer companies (as defined by the Board of Trustees of the Company) were set equal to the annualized daily volatility measured over the 3-year period ending on April 26, 2006. Annual stock price correlations over the ten-year period from January 1, 1996 through December 31, 2005, for a total of 595 correlation measurements, were examined. The average correlation was 0.54.

     To calculate Total Shareholder Return for each company that was defined by the Company’s Board of Trustees as a peer, the Company compared the projected December 31, 2008 stock price plus the expected cumulative dividends paid during the performance measurement period to the actual closing price on December 31, 2005. The last (normalized) dividend payment made for each such company in 2005 was annualized and this annual dividend amount was assumed to be paid in each year of the performance measurement period.

     Due to the fact that the form of payout (cash, common shares, or a combination of the two) is determined solely by the Company’s Board of Trustees, and not the employee, the grant was valued as an equity award. Additionally, it is the Company’s intention to pay all awards in the Company’s common shares.

     Assets and Liabilities Measured at Fair Value

     On January 1, 2008, the Company adopted Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS No. 157”) for financial assets and liabilities. SFAS No. 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS No. 157 applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances.

     SFAS No. 157 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in

10

pricing an asset or liability. As a basis for considering market participant assumptions in fair value measurements, SFAS No. 157 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

     Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

     New Accounting Pronouncements

     In September 2006, the FASB issued SFAS No. 157, Fair Value Measurement. As discussed above, SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS No. 157 is effective for the Company’s financial assets and liabilities on January 1, 2008. In February 2008, the FASB reached a conclusion to defer the implementation of the SFAS No. 157 provisions relating to non-financial assets and liabilities until January 1, 2009. The FASB also reached a conclusion to amend SFAS No. 157 to exclude SFAS No. 13 Accounting for Leases and its related interpretive accounting pronouncements. SFAS No. 157 is not expected to materially affect how the Company determines fair value, and has resulted in certain additional disclosures (see Note 3). The Company adopted SFAS No. 157 effective January 1, 2008 for financial assets and financial liabilities and does not expect this adoption to have a material effect on its consolidated results of operations or financial position but will enhance the level of disclosure for assets and liabilities recorded at fair value.

     In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — including an amendment of FASB Statement No. 115. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. Unrealized gains and losses on items for which the fair value option has been elected will be recognized in earnings at each subsequent reporting date. The provisions of SFAS No. 159 are effective for fiscal years beginning after November 15, 2007. The adoption of SFAS No. 159 did not have a material impact on the Company’s consolidated financial statements.

     In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51. SFAS No. 160 amends Accounting Research Bulletin 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS No. 160 requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest. SFAS No. 160 also requires disclosure, on the face of the consolidated statement of income, of the amounts of consolidated net income attributable to the parent and to the noncontrolling interest. The provisions of SFAS No. 160 are effective for fiscal years beginning after November 15, 2008. The Company is currently evaluating the impact of SFAS No. 160 on its consolidated financial statements.

     In December 2007, the FASB issued SFAS No. 141(R), Business Combinations, which changes how business acquisitions are accounted for and will impact financial statements both on the acquisition date and in subsequent periods. SFAS No. 141(R) requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction and establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed in a business combination. Certain provisions of this standard will, among other things, impact the determination of acquisition-date fair value of consideration paid in a business combination (including contingent consideration); exclude transaction costs from acquisition accounting; and change accounting practices for acquired contingencies, acquisition-related restructuring costs, and tax benefits. This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or

11

after December 15, 2008. The Company is currently evaluating the impact of SFAS No. 141(R) on its consolidated financial statements.

     In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133. SFAS No. 161 is intended to help investors better understand how derivative instruments and hedging activities affect an entity’s financial position, financial performance and cash flows through enhanced disclosure requirements. The enhanced disclosures primarily surround disclosing the objectives and strategies for using derivative instruments by their underlying risk as well as a tabular format of the fair values of the derivative instruments and their gains and losses. SFAS No.161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company is currently evaluating how this standard will impact its disclosures regarding derivative instruments and hedging activities.

Note 4 — Acquisition and Disposition Activity

     Property Acquisitions

     During the first quarter of 2008, the Company acquired the remaining interest in one multifamily apartment community containing 270 units that was previously unconsolidated by the Company. The Company acquired this interest for approximately $18.4 million, consisting of the assumption of $14.7 million of existing mortgage debt ($3.7 million of which was previously unconsolidated by the Company as a 25% partner) and $7.4 million of cash funded through proceeds from asset sales.

     On April 17, 2008, the Company acquired 139 acres of land for $22.0 million to be used for the development of Colonial Pinnacle Nor du Lac, a 743,000 square feet retail shopping center, 531,000 square feet excluding anchor-owned square footage, located in Covington, Louisiana. This acquisition of land was funded from borrowings under the Company’s unsecured line of credit. This project, if developed as anticipated, is expected to cost approximately $146.7 million, which excludes $24.0 million of community development district special assessment bonds that were issued in April 2008 and will be utilized to fund certain infrastructure costs (see Note 12 for additional discussion).

     Property Dispositions

     During the first quarter of 2008, the Company disposed of its 10%-15% ownership interest in four multifamily apartment communities consisting of 884 units for an aggregate sales price of $11.2 million. In addition, the Company disposed of one wholly-owned office property totaling 37,000 square feet for a sales price of $3.1 million. The Company also disposed of its 10% interest in a retail joint venture containing six retail malls totaling 3.9 million square feet for approximately $38.3 million. The proceeds from the sale of these assets were used to fund future investment activities and for general corporate purposes.

     During the first and second quarter of 2008, the Company disposed of a portion of its interest in the Bluerock tenancy in common (“TIC”) investment through a series of eight transactions. Effectively, the Company’s interest was reduced from 40.0% to 13.8% as part of the overall plan to reduce its interest down to 10% (see Note 9 for additional discussion).

     On May 15, 2008, the DRA/CRT joint venture distributed Decoverly, a 156,000 square foot office asset located in Rockville, Maryland, to its equity partners (85% to DRA and 15% to the Company). Subsequently, DRA purchased the Company’s 15% interest in the asset (see Note 9 for additional discussion).

     On June 16, 2008, the Company disposed of its 10% interest in Stone Ridge, a 191-unit multifamily apartment community located in Columbia, South Carolina (see Note 9 for additional discussion).

     During June 2008, the Company disposed of five wholly-owned apartment communities in two separate transactions for gross proceeds of $81.8 million. The Company recognized a gain of approximately $7.8 million ($6.9 million net of income taxes) in aggregate on the sale of these five assets.

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• On June 25, 2008, the Company sold the following properties:

			Sale
Property Name	Location	Units	Proceeds
Colonial Village at Bear Creek	Fort Worth, TX	120	$	6.0
Colonial Village at Pear Ridge	Dallas, TX	242	$	15.5
Colonial Village at Bedford	Fort Worth, TX	238	$	12.0
Cottonwood Crossing	Fort Worth, TX	200	$	7.3

• On June 27, 2008, the Company disposed of Colonial Grand at Shelby Farms I & II, a 450-unit multifamily apartment community located in Memphis, Tennessee. The Company sold this asset for approximately $41.0 million. Colonial Grand at Shelby Farms II, a newly completed expansion phase that was developed by the Company’s taxable REIT subsidiary, represented $2.8 million ($1.7 million net of income taxes), of the total gain. The sale of this asset included short-term seller financing of $27.8 million (see Note 3 for additional discussion), therefore, the Company maintained a continuing interest in this property. The seller-financing provided in this transaction has been treated as a non-cash investing activity in the Company’s Consolidated Condensed Statement of Cash Flows for the six months ended June 30, 2008.

The proceeds from these transactions will be used to fund future investment activities and for general corporate purposes.

     In accordance with SFAS No. 144, net income and gain on disposition of real estate for properties sold in which the Company does not maintain continuing involvement are reflected in the consolidated condensed statements of income as “discontinued operations” for all periods presented. During the three and six months ended June 30, 2008 and 2007, all of the operating properties sold with no continuing interest were classified as discontinued operations. The following is a listing of the properties the Company disposed of in 2008 and 2007 that are classified as discontinued operations:

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			Units/ Square
Property	Location	Date Sold	Feet
Multifamily
Colonial Village at Bear Creek	Fort Worth, TX	June 2008		120
Colonial Village at Pear Ridge	Dallas, TX	June 2008		242
Colonial Village at Bedford	Fort Worth, TX	June 2008		238
Cottonwood Crossing	Fort Worth, TX	June 2008		200
Mayflower Seaside	Virginia Beach, VA	June 2007		265
Cape Landing	Myrtle Beach, SC	June 2007		288
Colonial Grand at Natchez Trace	Jackson, MS	June 2007		328
Colonial Grand at The Reservoir	Jackson, MS	June 2007		170
Colonial Grand at Promenade	Montgomery, AL	February 2007		384
Beacon Hill	Charlotte, NC	January 2007		349
Clarion Crossing	Raleigh, NC	January 2007		260
Colonial Grand at Enclave	Atlanta, GA	January 2007		200
Colonial Village at Poplar Place	Atlanta, GA	January 2007		324
Colonial Village at Regency Place	Raleigh, NC	January 2007		180
Colonial Village at Spring Lake	Atlanta, GA	January 2007		188
Colonial Village at Timothy Woods	Athens, GA	January 2007		204
Office
250 Commerce Center	Montgomery, AL	February 2008		37,000
Retail
Village on the Parkway	Dallas, TX	July 2007		380,500
Britt David Shopping Center	Columbus, GA	July 2007		102,600
Colonial Mall Decatur	Huntsville, AL	July 2007		576,100
Colonial Mall Lakeshore	Gainesville, GA	July 2007		518,300
Colonial Mall Staunton	Staunton, VA	July 2007		424,000
Colonial Mayberry Mall	Mount Airy, NC	July 2007		206,900
Colonial Promenade Montgomery	Montgomery, AL	July 2007		209,100
Colonial Promenade Montgomery North	Montgomery, AL	July 2007		209,900
Colonial Shoppes Bellwood	Montgomery, AL	July 2007		87,500
Colonial Shoppes McGehee Place	Montgomery, AL	July 2007		98,300
Colonial Shoppes Quaker Village	Greensboro, NC	July 2007		101,900
Olde Town Shopping Center	Montgomery, AL	July 2007		38,700
Colonial Shoppes Wekiva	Orlando, FL	May 2007		208,600
Colonial Shoppes Bear Lake	Orlando, FL	April 2007		131,300
Colonial Shoppes Yadkinville	Yadkinville, NC	March 2007		90,917
Rivermont Shopping Center	Chattanooga, TN	February 2007		73,481

     Additionally, the Company classifies real estate assets as held for sale only after the Company has received approval by its internal investment committee, the Company has commenced an active program to sell the assets, the Company does not intend to retain a continuing interest in the property, and in the opinion of the Company’s management, it is probable the assets will sell within the next 12 months. As of June 30, 2008, the Company had classified 13 multifamily assets containing 3,597 units as held for sale. These real estate assets are reflected in the accompanying consolidated balance sheet at $216.4 million as of June 30, 2008, which represents the lower of depreciated cost or fair value less costs to sell. There is no mortgage debt associated with these properties as of June 30, 2008. The operations of these held for sale properties have been reclassified to discontinued operations for all periods presented in accordance with SFAS No. 144. Depreciation expense and amortization expense suspended as a result of assets being classified as held for sale for the three and six months ended June 30, 2008 was approximately $1.9 million and $2.8 million, respectively. There is no depreciation expense or amortization expense suspended as a result of these assets being classified as held for sale during the three and six months ended June 30, 2007.

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     In some cases, the Company uses disposition proceeds to fund investment activities through tax-deferred exchanges under Section 1031 of the Internal Revenue Code. Certain of the proceeds described above were received into temporary cash accounts pending the fulfillment of Section 1031 exchange requirements. Subsequently, the funds were utilized for financing of other investment activities.

     In accordance with SFAS No. 144, the operating results of properties (excluding condominium conversion properties not previously operated) designated as held for sale, are included in discontinued operations in the Consolidated Condensed Statements of Income and Comprehensive Income for all periods presented. Also under the provisions of SFAS No. 144, the reserves, if any, to write down the carrying value of the real estate assets designated and classified as held for sale are also included in discontinued operations (excluding condominium conversion properties not previously operated). Additionally, under SFAS No. 144, any impairment losses on assets held for continuing use are included in continuing operations.

     Below is a summary of the operations of the properties sold or classified as held for sale during the three and six months ended June 30, 2008 and 2007 that are classified as discontinued operations:

	Three Months Ended						Six Months Ended
(amounts in thousands)	June 30,						June 30,
	2008			2007			2008			2007
Property revenues:
Base rent	$	8,727		$	17,000		$	17,617		$	35,504
Tenant recoveries		(3	)		1,399			2			3,058
Other revenue		1,105			1,755			2,234			3,318
Total revenues		9,829			20,154			19,853			41,880
Property operating and administrative expenses		3,864			7,826			7,799			16,613
Impairment		—			2,500			—			2,500
Depreciation and amortization		529			3,201			2,302			6,938
Total expenses		4,393			13,527			10,101			26,051
Interest expense, net		—			(2,007	)		—			(4,433	)
Other expenses		—			(3,119	)		—			(3,129	)
Income from discontinued operations before net gain on disposition of discontinued operations		5,436			1,501			9,752			8,267
Net gain on disposition of discontinued operations		4,116			39,335			7,017			74,136
Minority interest in CRLP from discontinued operations		(1,655	)		(7,484	)		(2,922	)		(15,205	)
Minority interest of limited partners		—			(32	)		13			(73	)
Income from discontinued operations	$	7,897		$	33,320		$	13,860		$	67,125

Note 5 — For-Sale Activities and Impairment

     For-Sale Residential Activities

     During the three months ended June 30, 2008 and 2007, the Company, through CPSI, disposed of two and 49 condominium units, respectively, at the Company’s condominium conversion properties. During the three months ended June 30, 2008 and 2007, the Company, through CPSI, sold 22 and 24 units at its for-sale residential development properties, respectively. During the three months ended June 30, 2008 and 2007, gains from sales of property on the Company’s Consolidated Condensed Statements of Income and Comprehensive Income included $0.6 million ($0.4 million net of income taxes) and $1.9 million ($1.7 million net of income taxes), respectively, from these condominium and for-sale residential sales. During the six months ended June 30, 2008 and 2007, gains from sales of property on the Company’s Consolidated Condensed Statements of Income and Comprehensive Income included $0.7 million ($0.5 million net of income taxes) and $12.0 million ($9.6 million net of income taxes), respectively, from these condominium and for-sale residential sales. The following is a summary of revenues and costs of condominium conversion and for-sale residential activities for the three and six months ended June 30, 2008 and 2007:

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(amounts in thousands)	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2008			2007			2008			2007
Condominium revenues, net	$	303		$	9,675		$	303		$	43,754
Condominium costs		(249	)		(8,152	)		(249	)		(34,285	)
Gains on condominium sales, before minority interest and income taxes		54			1,523			54			9,469
For-sale residential revenues, net		6,341			6,701			9,117			15,960
For-sale residential costs		(5,767	)		(6,353	)		(8,510	)		(13,370	)
Gains on for-sale residential sales, before minority interest and income taxes		574			348			607			2,590
Minority interest		—			82			—			224
Provision for income taxes		(186	)		(149	)		(154	)		(2,424	)
Gains on condominium conversions, for-sale residential sales and developments, net of minority interest and income taxes	$	442		$	1,804		$	507		$	9,859

     For-sale residential projects under development of $63.5 million and $96.0 million as of June 30, 2008 and December 31, 2007, respectively, are reflected as construction in progress in the accompanying Consolidated Condensed Balance Sheets. This decrease can be attributed to for-sale residential projects that are now classified as held for sale. For-sale residential projects of approximately $58.9 million and $22.2 million are reflected in real estate assets held for sale as of June 30, 2008 and December 31, 2007, respectively. During 2007, a $42.1 million non-cash impairment charge was recorded on the Company’s wholly-owned for-sale residential properties. All for-sale residential amounts above are net of this impairment charge.

     The net gains on condominium unit sales are classified in discontinued operations if the related condominium property was previously operated by the Company as an apartment community. For the three months ended June 30, 2008 and 2007, gains on condominium unit sales, net of income taxes, of $0.1 million and $1.6 million, respectively, are included in discontinued operations. For the six months ended June 30, 2008 and 2007, gains on condominium unit sales, net of income taxes, of $0.1 million and $8.3 million, respectively, are included in discontinued operations. Condominium conversion properties are reflected in the accompanying Consolidated Condensed Balance Sheets as part of real estate assets held for sale, and totaled $2.8 and $2.9 million as of June 30, 2008 and December 31, 2007, respectively.

     For cash flow statement purposes, the Company classifies capital expenditures for newly developed for-sale residential communities and for other condominium conversion communities in investing activities. Likewise, the proceeds from the sales of condominium units and other residential sales are also included in investing activities.

     Impairment

     During the three months ended June 30, 2008, the condominium and single family housing markets remained soft due to increasing mortgage financing rates, the limited availability of sub-prime lending and other types of mortgages, and an oversupply of such assets, resulting in lower sales prices and reduced sales velocity. In addition, pricing in the single family housing market declined primarily due to lack of demand. During 2007, the Company recorded a non-cash impairment charge of $43.3 million ($26.8 million net of income tax) to reduce the carrying value of certain of its for-sale residential developments to their estimated fair market value. An increase in construction costs (partially related to the dispute and litigation with a general contractor — See Note 12 for additional discussion) during development was also factored into the impairment charge recorded during 2007. The Company utilized a probability weighted discounted future cash flow analysis, which incorporates available market information and other assumptions made by management. The impairment charge recorded during 2007 was primarily related to the for-sale residential projects located in Gulf Shores, Alabama (the Cypress Village project and the Grander condominium development), one condominium project in Charlotte, North Carolina (The Enclave) and one unconsolidated townhouse project in Atlanta, Georgia (Regents Park), in which the Company is a 40% owner. The Enclave condominium project and a portion of the Cypress Village project are now being developed / leased as multifamily apartment communities.

     The Company calculates the fair values of its for-sale residential projects evaluated for impairment under SFAS No. 144 based on current market conditions and assumptions made by management, which may differ materially from actual results if market conditions continue to deteriorate or improve. If market conditions do not improve or if there is further market

16

deterioration, it may impact the number of projects the Company can sell, the timing of the sales and/or the prices at which the Company can sell them. If the Company is unable to sell projects, it may incur additional impairment charges on projects previously impaired as well as on projects not currently impaired but for which indicators of impairment may exist, which would decrease the value of the Company’s assets as reflected on its balance sheet and adversely affect shareholders’ equity. There can be no assurances of the amount or pace of future for-sale residential sales and closings, particularly given current market conditions.

     Developments

     During the first quarter of 2008, the Company recorded gains on sales of commercial developments totaling $1.5 million, net of income taxes. These amounts relate to changes in development cost estimates, including stock-based compensation costs that were capitalized into certain of the Company’s commercial developments that were sold in previous periods.

     On June 27, 2008, the Company recorded a gain on sale of $2.8 million ($1.7 million net of income taxes), from the Colonial Grand at Shelby Farms II multifamily expansion phase development (see Note 4 for additional discussion).

Note 6 — Net Income Per Share

     For the three and six months ended June 30, 2008 and 2007, a reconciliation of the numerator and denominator used in the basic and diluted income from continuing operations per common share is as follows:

	Three Months			Three Months			Six Months			Six Months
	Ended			Ended			Ended			Ended
(amounts in thousands)	June 30,			June 30,			June 30,			June 30,
	2008			2007			2008			2007
Numerator:
Income from continuing operations	$	3,440		$	275,814		$	14,381		$	278,368
Less:
Preferred stock dividends		(2,180	)		(3,870	)		(4,668	)		(8,361	)
Preferred share issuance costs write-off, net of discount		(83	)		(330	)		(267	)		(330	)
Income from continuing operations available to common shareholders	$	1,177		$	271,614		$	9,446		$	269,677
Denominator:
Denominator for basic net income per share — weighted average common shares		46,927			46,222			46,892			46,094
Effect of dilutive securities		168			653			169			640
Denominator for diluted net income per share — adjusted weighted average common shares		47,095			46,875			47,061			46,734

     For the three months ended June 30, 2008 and 2007, options to purchase 546,353 and 116,242 shares at a weighted average exercise price of $31.69 and $39.33, respectively, were outstanding but were excluded from the computation of diluted net income per share because the options’ exercise prices were greater than the average market price of the common shares and, therefore, the effect would be antidilutive. For the six months ended June 30, 2008 and 2007, options to purchase 546,353 and 226,208 shares at a weighted average exercise price of $31.69 and $38.33, respectively, were outstanding but were excluded from the computation of diluted net income per share because the options’ exercise prices were greater than the average market price of the common shares and, therefore, the effect would be antidilutive. In connection with the special distribution paid by the Company during 2007 (See Note 2), the exercise price of all of the Company’s then outstanding options was reduced by $10.63 per share for all periods presented as required under the terms of the Company’s option plans.

17

Note 7 — Shareholders’ Equity

     The following table presents the changes in the issued common shares of beneficial interest since December 31, 2007 (excluding 9,554,446 and 10,052,778 units of CRLP at June 30, 2008 and December 31, 2007, respectively, which are convertible into common shares of beneficial interest on a one-for-one basis, or the cash equivalent thereof, subject to certain restrictions):

Issued at December 31, 2007	52,839,699
Share options exercised	33,075
Restricted shares issued (cancelled), net	116,338
Conversion of CRLP units to common shares	498,332
Issuances under other employee and nonemployee share plans	10,540
Issued at June 30, 2008	53,497,984

     For the six months ended June 30, 2008, the Company adjusted CRLP’s minority interest balance to reflect CRLP’s minority ownership percentage of 16.6%. This adjustment, primarily related to the conversion of units to shares, resulted in a decrease in CRLP’s minority interest balance and an increase in common shareholder equity of approximately $9.7 million for the six months ended June 30, 2008.

     On January 31, 2008, the Board of Trustees authorized the repurchase of up to $25.0 million of the Company’s 8 1/8% Series D preferred depositary shares in a limited number of separate, privately negotiated transactions. Each Series D preferred depositary share represents 1/10 of a share of the Company’s 8 1/8% Series D Cumulative Redeemable Preferred Shares of Beneficial Interest, par value $0.01 per share. As of April 30, 2008, the remaining depositary shares are redeemable by the Company at any time and have a liquidation preference of $25.00 per depositary share. The depositary shares have no stated maturity, sinking fund or mandatory redemption and are not convertible into any other securities of the Company.

• During the first quarter of 2008, the Company repurchased 306,750 shares of its outstanding 8 1/8% Series D preferred depositary shares in privately negotiated transactions for an aggregate purchase price of $7.7 million, at an average price of $24.86 per depositary share. The Company received a discount to the liquidation preference price of $25.00 per depositary share, of approximately $0.1 million, on the repurchase and wrote off approximately $0.3 million of issuance costs.

• On June 24, 2008, the Company repurchased 577,000 shares of its outstanding 8 1/8% Series D preferred depositary shares in a privately negotiated transaction for a purchase price of $14.0 million, or $24.24 per depositary share. The Company received a discount to the liquidation preference price of $25.00 per depositary share, of approximately $0.4 million, on the repurchase and wrote off approximately $0.5 million of issuance costs.

Note 8 — Segment Information

     The Company manages its business based on the performance of four operating portfolios: multifamily, office, retail and for-sale residential. As a result of the impairment charge recorded during 2007 related to the Company’s for-sale residential projects, the Company’s for-sale residential operating portfolio met the quantitative threshold to be considered a reportable segment. The results of operations and assets of the for-sale residential portfolio were previously included in other income (expense) and in unallocated corporate assets, respectively, due to the insignificance of this operating portfolio in prior periods. The multifamily, office and retail portfolios have a separate management team that is responsible for acquiring, developing, managing and leasing properties within such portfolio. The multifamily portfolio management team is responsible for all aspects of the for-sale residential development and disposition activities. The pro-rata portion of the revenues, net operating income (“NOI”), and assets of the partially-owned unconsolidated entities that the Company has entered into are included in the applicable portfolio information. Additionally, the revenues and NOI of properties sold that are classified as discontinued operations are also included in the applicable portfolio information. In reconciling the portfolio information presented below to total revenues, income from continuing operations, and total assets, investments in partially-owned unconsolidated entities are eliminated as equity investments and their related activity are reflected in the consolidated financial statements as investments accounted for under the equity method, and discontinued operations are reported separately. Management evaluates the performance of its multifamily, office and retail portfolios and allocates resources to them based on

18

portfolio NOI. Portfolio NOI is defined as total property revenues, including unconsolidated partnerships and joint ventures, less total property operating expenses (such items as repairs and maintenance, payroll, utilities, property taxes, insurance and advertising). All of the Company’s condominium conversion properties and related sales are being managed by the multifamily portfolio. Management evaluates the performance of its for-sale residential business based on net gains / losses. Presented below is segment information, for the multifamily, office and retail portfolios, including the reconciliation of total portfolio revenues to total revenues and total portfolio NOI to income from continuing operations for the three and six months ended June 30, 2008 and 2007, and total portfolio assets to total assets as of June 30, 2008 and December 31, 2007. Additionally, the Company’s net gains on for-sale residential projects for the three and six months ended June 30, 2008 and 2007 are presented below:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in thousands)	2008			2007			2008			2007
Revenues:
Segment Revenues:
Multifamily	$	80,065		$	78,437		$	158,360		$	154,926
Office		14,873			33,356			29,481			71,381
Retail		8,313			24,204			17,023			49,504
Total Segment Revenues		103,251			135,997			204,864			275,811
Partially-owned unconsolidated entities — Mfam		(2,131	)		(2,659	)		(4,347	)		(5,230	)
Partially-owned unconsolidated entities — Off		(12,902	)		(8,346	)		(26,048	)		(16,172	)
Partially-owned unconsolidated entities — Rtl		(4,747	)		(3,940	)		(10,083	)		(7,609	)
Construction revenues		569			8,068			8,449			20,853
Other non-property related revenue		5,151			5,312			10,449			8,554
Discontinued operations property revenues		(9,829	)		(20,154	)		(19,853	)		(41,880	)
Total Consolidated Revenues		79,362			114,278			163,431			234,327
NOI:
Segment NOI:
Multifamily		49,147			46,908			96,412			92,054
Office		9,438			21,817			18,676			46,803
Retail		5,690			16,645			11,643			34,503
Total Segment NOI		64,275			85,370			126,731			173,360
Partially-owned unconsolidated entities — Mfam		(1,017	)		(1,295	)		(2,146	)		(2,361	)
Partially-owned unconsolidated entities — Off		(8,139	)		(4,871	)		(16,428	)		(9,621	)
Partially-owned unconsolidated entities — Rtl		(3,303	)		(2,676	)		(7,088	)		(5,203	)
Unallocated corporate revenues		5,151			5,312			10,449			8,554
Discontinued operations property NOI		(5,965	)		(12,328	)		(12,054	)		(25,267	)
Construction NOI		5			573			619			987
Property management expenses		(2,072	)		(3,598	)		(4,313	)		(7,085	)
General and administrative expenses		(5,789	)		(8,040	)		(11,570	)		(14,018	)
Management fee and other expenses		(4,346	)		(4,034	)		(8,031	)		(6,977	)
Restructuring charges		—			(1,528	)		—			(1,528	)
Investment and development (1)		(108	)		(315	)		(877	)		(454	)
Depreciation		(23,038	)		(28,941	)		(44,956	)		(60,105	)
Amortization		(972	)		(3,182	)		(1,743	)		(8,907	)
Income from operations		14,682			20,447			28,593			41,375
Total other income (expense), net (2)		(9,187	)		253,183			(8,591	)		236,023
Income before minority interest and discontinued operations	$	5,495		$	273,630		$	20,002		$	277,398

	June 30,		December 31,
(in thousands)	2008		2007
Assets		2008		2007
Segment Assets
Multifamily	$	2,467,689	$	2,449,558
Office		126,458		82,630
Retail		256,894		149,933
For-Sale Residential (3)		144,192		211,729
Total Segment Assets		2,995,233		2,893,850
Unallocated corporate assets (4)		289,561		335,980
	$	3,284,794	$	3,229,830

Footnotes on following page

19

(1)	Reflects costs incurred related to abandoned pursuits. Abandoned pursuits are volatile and, therefore, may vary between periods.
(2)	For-sale residential activities including net gain on sales and income tax expense (benefit) are included in other income (See table below for additional details on for-sale residential activities and also Note 5 related to for-sale activities).
(3)	Two projects, formerly for-sale residential developments, are now being developed / leased as multifamily apartment communities.
(4)	Includes the Company’s investment in partially-owned entities of $49,203 as of June 30, 2008 and $69,682 as of December 31, 2007, and notes receivable of $61,879 as of June 30, 2008 and $30,756 as of December 31, 2007.

     For-Sale Residential

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in thousands)	2008			2007			2008			2007
Gains on for-sale residential sales	$	574		$	348		$	607		$	2,590
Income tax expense		(186	)		(85	)		(168	)		(920	)
Income from for-sale residential sales	$	388		$	263		$	439		$	1,670

Note 9 — Investment in Partially-Owned Entities

     The Company accounts for the following investments in partially-owned entities using the equity method. The following table summarizes the investments in partially-owned entities as of June 30, 2008 and December 31, 2007:

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				(in thousands)
	Percent			June 30,			December 31,
	Owned			2008			2007
Multifamily:
Arbors at Windsor Lake, Columbia, SC		10.00	%(1)	$	—		$	569
Auberry at Twin Creeks, Dallas, TX		15.00	%(2)		—			702
Belterra, Ft. Worth, TX		10.00	%		669			708
Carter Regents Park, Atlanta, GA		40.00	%(3)		5,150			5,282
CG at Huntcliff, Atlanta, GA		20.00	%		2,010			2,138
CG at McKinney, Dallas, TX (Development)		25.00	%		1,274			1,003
CG at Research Park, Raleigh, NC		20.00	%		1,117			1,197
CG at Traditions, Gulf Shores, AL		35.00	%		1,543			1,591
CMS / Colonial Joint Venture I		15.00	%		418			435
CMS / Colonial Joint Venture II		15.00	%(4)		(427	)		(419	)
CMS Florida		25.00	%		(448	)		(338	)
CMS Tennessee		25.00	%		239			258
CMS V / CG at Canyon Creek, Austin, TX		25.00	%		771			1,226
CV at Matthews, Charlotte, NC		25.00	%(5)		—			1,004
DRA Alabama		10.00	%		2,248			2,260
DRA CV at Cary, Raleigh, NC		20.00	%		1,773			2,026
DRA Cunningham, Austin, TX		20.00	%		930			969
DRA The Grove at Riverchase, Birmingham, AL		20.00	%		1,389			1,409
Fairmont at Fossil Creek, Fort Worth, TX		15.00	%(6)		—			567
Park Crossing, Fairfield, CA		10.00	%(7)		—			797
Stone Ridge, Columbia, SC		10.00	%(8)		454			451
Total Multifamily					19,110			23,835
Office:
600 Building Partnership, Birmingham, AL		33.33	%		103			76
Colonial Center Mansell JV		15.00	%		1,049			1,377
DRA / CRT JV		15.00	%(9)		19,445			23,365
DRA / CLP JV		15.00	%(10)		(9,038	)		(6,603	)
Huntsville TIC, Huntsville , AL		13.80	%(11)		(3,587	)		7,922
Total Office					7,972			26,137
Retail:
Colonial Promenade Madison, Huntsville, AL		25.00	%		2,234			2,258
Colonial Promenade Smyrna, Smyrna, TN (Development)		50.00	%		2,148			2,297
GPT / Colonial Retail JV		10.00	%(12)		—			(5,021	)
Highway 150, LLC, Birmingham, AL		10.00	%		64			64
OZRE JV		17.10	%(13)		(7,094	)		(6,204	)
Parkway Place Limited Partnership, Huntsville, AL		45.00	%		10,218			10,342
Colonial Promenade Craft Farms, Gulf Shores, AL		15.00	%		990			1,300
Parkside Drive LLC I, Knoxville, TN		50.00	%		5,421			6,898
Parkside Drive LLC II, Knoxville, TN (Development)		50.00	%		6,431			6,270
Colonial Promenade Alabaster II/Tutwiler II, Birmingham, AL		5.00	%		(134	)		(107	)
					20,278			18,097
Other:
Heathrow, Orlando, FL		50.00	%		1,809			1,585
Colonial / Polar-BEK Management Company,		50.00	%		34			28
Birmingham, AL
					1,843			1,613
				$	49,203		$	69,682

Footnotes on following page

21

(1)	The Company sold its 10% interest in Arbors at Windsor Lake during January 2008.
(2)	The Company sold its 15% interest in Auberry at Twin Creeks during January 2008.
(3)	Carter at Regents Park includes a $1.2 million non-cash impairment charge that was recorded during the three months ended September 30, 2007. The Company also has a first mortgage on this property of $28.9 million at June 30, 2008 (see Note 3).
(4)	The CMS/Colonial Joint Venture II holds one property in which the Company has a 15% partnership interest.
(5)	The Company acquired the remaining 75% interest in Colonial Village at Matthews during January 2008 (see Note 4).
(6)	The Company sold its 15% interest in Fairmont at Fossil Creek during January 2008.
(7)	The Company sold its 10% interest in Park Crossing during February 2008.
(8)	The Company sold its 10% interest in Stone Ridge during June 2008. Final distribution from the sale of this asset is expected in the third quarter of 2008.
(9)	As of June 30, 2008, this joint venture included 17 properties located in Ft. Lauderdale, Jacksonville and Orlando, Florida; Atlanta, Georgia; Charlotte, North Carolina; Memphis, Tennessee and Houston, Texas. The Company sold its 15% interest in Decoverly, located in Rockville, Maryland, during May 2008.
(10)	As of June 30, 2008, this joint venture included 16 office properties and 2 retail properties located in Birmingham, Alabama; Orlando and Tampa, Florida; Atlanta, Georgia; Charlotte, North Carolina and Austin, Texas. Amount includes the value of the Company’s investment of approximately $26.0 million, offset by the excess basis difference on the June 2007 joint venture transaction (see Note 2) of approximately $35.1 million, which is being amortized over the life of the properties.
(11)	Amount includes the Company’s investment of approximately $5.3 million, offset by the excess basis difference on the transaction of approximately $8.9 million, which is being amortized over the life of the properties.
(12)	The Company sold its 10% interest in GPT/ Colonial Retail JV during February 2008.
(13)	As of June 30, 2008, this joint venture included 11 retail properties located in Birmingham, Alabama; Jacksonville, Orlando, Punta Gorda and Tampa, Florida; Athens, Georgia and Houston, Texas. Amount includes the value of the Company’s investment of approximately $9.9 million, offset by the excess basis difference on the June 2007 joint venture transaction (see Note 2) of approximately $17.0 million, which is being amortized over the life of the properties.

     During the first and second quarter of 2008, the Company disposed of a portion of its interest in the Bluerock TIC through a series of eight transactions. Effectively, the Company’s interest was reduced from 40.0% to 13.8% as part of the overall plan to reduce the Company’s interest down to 10%. Proceeds from the sales totaled $13.6 million. The Company recognized a total gain of approximately $4.0 million from these transactions, which primarily relates to the deferred gain from the original DRA/CLP joint venture transaction. The proceeds from the sale of these assets will be used to fund future investment activities and for general corporate purposes.

     On May 15, 2008, the DRA/CRT joint venture distributed Decoverly, a 156,000 square foot office asset located in Rockville, Maryland, to its equity partners (85% to DRA and 15% to the Company). Subsequently, DRA purchased the Company’s 15% interest in the asset for approximately $1.6 million. The Company recognized a gain of approximately $0.5 million on the sale. The proceeds from the sale of this asset will be used to fund future investment activities and for general corporate purposes.

     On June 16, 2008, the Company disposed of its 10% interest in Stone Ridge, a 191-unit multifamily apartment community located in Columbia, South Carolina. The Company’s 10% interest was sold for a total sales price of $0.8 million with a minimal gain recognized. The proceeds will be used to fund future investment activities and for general corporate purposes.

     The following table summarizes balance sheet financial data of significant unconsolidated joint ventures in which the Company had ownership interests as of June 30, 2008 and December 31, 2007 (dollar amounts in thousands):

	Total Assets				Total Debt				Total Equity
	2008		2007		2008		2007		2008		2007
DRA/CRT	$	1,177,949	$	1,248,807	$	968,114	$	993,264	$	174,142	$	202,162
DRA/CLP		930,781		973,861		741,907		741,907		172,864		194,210
OZRE		355,334		362,734		293,139		284,000		57,814		74,012
GPT (1)		—		374,498		—		322,776		—		43,982
Huntsville TIC (2)		228,591		160,478		107,540		107,540		40,571		49,980
	$	2,692,655	$	3,120,378	$	2,110,700	$	2,449,487	$	445,391	$	564,346

(1)	The Company sold its interest in this joint venture in February 2008.
(2)	During 2008, the Company has reduced its interest in this joint venture from 40.0% to 13.8% as part of the overall plan to reduce the Company’s interest down to 10%.

22

     The following table summarizes income statement financial data of significant unconsolidated joint ventures in which the Company had ownership interests for the three months ended June 30, 2008 and 2007 (dollar amounts in thousands):

	Total Revenues				Net Income						Share of Net Income
	2008		2007		2008			2007			2008			2007
DRA/CRT	$	43,363	$	45,085	$	(3,705	)	$	(8,767	)	$	173		$	(1,226	)
DRA/CLP		29,254		6,594		(4,505	)		(57	)		(103	)		83
OZRE		8,706		1,165		(3,590	)		192			(314	)		49
GPT(1)		—		11,855		—			(2,983	)		—			(199	)
Huntsville TIC(2)		6,166		—		(5,148	)		—			3,021			—
	$	87,489	$	64,699	$	(16,948	)	$	(11,615	)	$	2,777		$	(1,293	)

(1)	The Company sold its interest in this joint venture in February 2008 and recognized a gain of approximately $12.2 million.
(2)	The Company sold a portion of its interest in this joint venture in a series of five transactions during the second quarter of 2008 and recognized a gain of approximately $4.0 million.

     The following table summarizes income statement financial data of significant unconsolidated joint ventures in which the Company had ownership interests for the six months ended June 30, 2008 and 2007 (dollar amounts in thousands):

	Total Revenues				Net Income						Share of Net Income
	2008		2007		2008			2007			2008			2007
DRA/CRT	$	85,857	$	92,823	$	(8,373	)	$	(16,539	)	$	(358	)	$	(2,076	)
DRA/CLP		57,651		6,594		(8,865	)		(57	)		(199	)		83
OZRE		17,289		1,165		(6,083	)		192			(351	)		49
GPT(1)		8,191		23,759		(1,752	)		(5,607	)		11,977			(336	)
Huntsville TIC(2)		11,929		—		(7,766	)		—			2,229			—
	$	180,917	$	124,341	$	(32,839	)	$	(22,011	)	$	13,298		$	(2,280	)

(1)	The Company sold its interest in this joint venture in February 2008 and recognized a gain of approximately $12.2 million.
(2)	The Company sold a portion of its interest in this joint venture in a series of eight transactions during 2008 and recognized a gain of approximately $4.0 million.

Note 10 — Financing Activities

     On January 8, 2008, the Company, together with CRLP, added $175 million of additional borrowing capacity through the accordion feature of the unsecured revolving credit facility (“the Credit Facility”) with Wachovia Bank, National Association (“Wachovia”), as Agent for the lenders, Bank of America, N.A. as Syndication Agent, Wells Fargo Bank, National Association, Citicorp North America, Inc. and Regions Bank, as Co-Documentation Agents, and U.S. Bank National Association and PNC Bank, National Association, as Co-Senior Managing Agents and other lenders named therein. Therefore, as of June 30, 2008, CRLP, with the Company as guarantor, has a $675.0 million Credit Facility. The amended Credit Facility has a maturity date of June 21, 2012.

     In addition to the Credit Facility, the Company has a $35.0 million cash management line provided by Wachovia that will expire on June 21, 2012.

     Base rate loans and revolving loans are available under the Credit Facility. The Credit Facility also includes a competitive bid feature that allows the Company to convert up to $337.5 million under the Credit Facility to a fixed rate and for a fixed term not to exceed 90 days. Generally, base rate loans bear interest at Wachovia’s designated base rate, plus a base rate margin ranging up to 0.25% based on the Company’s unsecured debt ratings from time to time. Revolving loans bear interest at LIBOR plus a margin ranging from 0.325% to 1.05% based on the Company’s unsecured debt ratings. Competitive bid loans bear interest at LIBOR plus a margin, as specified by the participating lenders. Based on CRLP’s current unsecured debt rating, the revolving loans currently bear interest at a rate of LIBOR plus 75 basis points.

23

     The Credit Facility, which is primarily used by the Company to finance property acquisitions and developments, had an outstanding balance at June 30, 2008 of $172.0 million. The interest rate of the Credit Facility was 3.21% and 6.07% at June 30, 2008 and 2007, respectively. The cash management line had an outstanding balance of $12.7 million as of June 30, 2008.

     The Credit Facility contains various covenants and events of default that could trigger early repayment obligations, including, but not limited to the following: nonpayment; violation or breach of certain covenants; failure to perform certain covenants beyond a cure period; certain financial ratios; and generally not paying the Company’s debts as they become due. At June 30, 2008, the Company was in compliance with these covenants.

     During the first quarter of 2008, the Company refinanced mortgages associated with two of its multifamily apartment communities, Colonial Grand at Trinity Commons, a 462-unit apartment community located in Raleigh, North Carolina, and Colonial Grand at Wilmington, a 390-unit apartment community located in Wilmington, North Carolina. The Company financed an aggregate of $57.6 million, at a weighted average interest rate of 5.4%. The loan proceeds were used to repay the mortgages of $29.0 million and the balance was used to pay down the Company’s unsecured line of credit.

     During the first quarter of 2008, the Company repurchased $50.0 million of its outstanding unsecured senior notes in separate transactions at an average 12% discount to par value, which represents an 8.2% yield to maturity. As a result of the repurchases, the Company recognized an aggregate gain of $5.5 million, which is included in Gains (losses) on retirement of debt on the Company’s Consolidated Condensed Statements of Income and Comprehensive Income.

     On April 23, 2008, the Company’s Board of Trustees authorized a repurchase program which allows the Company to repurchase up to an additional $200 million of outstanding unsecured senior notes of CRLP through December 31, 2009. The senior notes may be repurchased from time to time in open market transactions or privately negotiated transactions, subject to applicable legal requirements, market conditions and other factors. The repurchase program does not obligate the Company to repurchase any specific amounts of senior notes, and repurchases pursuant to the program may be suspended or resumed at any time without further notice or announcement. The Company will continue to monitor the debt markets and repurchase certain senior notes that meet the Company’s required criteria, as funds are available.

     During the second quarter of 2008, the Company repurchased $31.8 million of its outstanding unsecured senior notes in separate transactions at an average 10% discount to par value, which represents a 7.8% yield to maturity. As a result of the repurchases, the Company recognized an aggregate gain of $2.7 million, which is included in Gains (losses) on retirement of debt on the Company’s Consolidated Condensed Statements of Income and Comprehensive Income.

Note 11 — Derivatives and Hedging

     The Company’s objective in using derivatives is to add stability to interest expense and to manage its exposure to interest rate movements or other identified risks. To accomplish this objective, the Company primarily uses interest rate swaps (including forward starting interest rate swaps) and caps as part of its cash flow hedging strategy. During the three months ended June 30, 2008, interest rate caps were used to hedge the variable cash flows associated with existing variable-rate debt.

     As of June 30, 2008, the Company had certain interest rate caps with a fair value of less than $1,000 included in other assets. There was no change in net unrealized income for derivatives designated as cash flow hedges for the three and six months ended June 30, 2008. The change in net unrealized income (loss) of $0.1 million and ($0.2) million for derivatives designated as cash flow hedges for the three and six months ended June 30, 2007, respectively, is recorded as a component of shareholders’ equity. All derivatives were designated as hedges for the three and six months ended June 30, 2008 and 2007.

     As of June 30, 2008, the Company had approximately $5.8 million in accumulated other comprehensive income related to settled or terminated derivatives that are being reclassified to interest expense as interest payments are made on the Company’s hedged debt.

Note 12 —Contingencies

     The Company is involved in a contract dispute with a general contractor in connection with construction costs and cost overruns with respect to certain of its for-sale projects, which are being developed in a joint venture in which the Company is a majority owner. The contractor is affiliated with the Company’s joint venture partner.

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• In connection with the dispute, in January 2008, the contractor filed a lawsuit against the Company alleging, among other things, breach of contract, enforcement of a lien against real property, misrepresentation, conversion, declaratory judgment and an accounting of costs, and is seeking $10.3 million in damages, plus consequential and punitive damages.

• Certain of the subcontractors, vendors and other parties, involved in the projects, including purchasers of units, have also made claims in the form of lien claims, general claims or lawsuits. The Company has been sued by purchasers of certain condominium units alleging breach of contract, fraud, construction deficiencies and misleading sales practices. Both compensatory and punitive damages are sought in these actions. Some of these claims may be resolved by mediation or arbitration.

     The Company is continuing to evaluate its options and investigate these claims, including possible claims against the contractor and other parties. The Company intends to vigorously defend itself against these claims. However, no prediction of the likelihood, or amount, of any resulting loss or recovery can be made at this time and no assurance can be given that the matter will be resolved favorably.

     In connection with certain retail developments, the Company has received funding from municipalities for infrastructure costs. In most cases, the municipalities issue bonds that are repaid primarily from sales tax revenues generated from the tenants at each respective development. The Company has guaranteed the shortfall, if any, of tax revenues to the debt service requirements on the bonds. The total amount outstanding on these bonds was approximately $13.5 million and $11.3 million at June 30, 2008 and December 31, 2007, respectively. At June 30, 2008 and December 31, 2007, no liability was recorded for these guarantees.

     In April 2008, the Nor du Lac community development district (the “CDD”), a third-party governmental entity, issued $24.0 million of special assessment bonds. The funds from this bond issuance will be used by the CDD to construct infrastructure for the benefit of the Colonial Pinnacle Nor du Lac development (see Note 4 for additional discussion). The repayment of these bonds will be funded by special assessments to the land owners within the CDD. In accordance with EITF 91-10, the Company has recorded restricted cash and other liabilities for the $24.0 million bond issuance. This transaction has been treated as a non-cash transaction in the Company’s Consolidated Condensed Statement of Cash Flows for the six months ended June 30, 2008.

     In connection with the office and retail joint venture transactions, as discussed in Note 2 above, the Company assumed certain contingent obligations for a total of $15.7 million, of which $6.9 million remains outstanding as of June 30, 2008.

     In January 2008, the Company has received notification related to an unclaimed property audit for the States of Alabama and Tennessee. As of June 30, 2008, the Company is unable to estimate the extent or potential impact, if any, that this audit may have on the Company’s financial position or results of operations or cash flows.

     The Company is a party to various other legal proceedings incidental to its business. In the opinion of management, the ultimate liability, if any, with respect to those proceedings is not presently expected to materially affect the financial position or results of operations or cash flows of the Company.

Note 13 — Subsequent Events

     Financing Activities

     During July 2008, the Company repurchased $18.3 million of its outstanding unsecured senior notes in separate transactions at an average 6% discount to par value, which represents a 7.5% yield to maturity. As a result of the repurchases, the Company expects to recognize an aggregate gain of $0.9 million.

     Distribution

     On July 23, 2008, a cash distribution was declared to shareholders of the Company and partners of CRLP in the amount of $0.50 per common share and per unit, totaling approximately $28.7 million. The distribution was declared to shareholders and partners of record as of August 4, 2008 and will be paid on August 11, 2008.

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Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of
Colonial Properties Trust:

We have reviewed the accompanying consolidated condensed balance sheet of Colonial Properties Trust and its subsidiaries (the “Company”) as of June 30, 2008, and the related consolidated condensed statements of income and comprehensive income for each of the three and six month periods ended June 30, 2008 and 2007 and the consolidated condensed statements of cash flows for the six month periods ended June 30, 2008 and 2007. These interim financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated condensed interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We previously audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, 2007, and the related consolidated statements of income and comprehensive income, shareholders’ equity, and of cash flows for the year then ended (not presented herein), and in our report dated February 29, 2008, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet information as of December 31, 2007, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

/s/ PricewaterhouseCoopers LLP
Birmingham, Alabama

August 8, 2008

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COLONIAL PROPERTIES TRUST

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     The following discussion and analysis of the consolidated condensed financial condition and consolidated results of operations should be read together with the consolidated financial statements of Colonial Properties Trust (the “Company”) and notes thereto contained in this Form 10-Q. This Quarterly Report on Form 10-Q contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “estimates,” “predicts,” “potential,” or the negative of these terms or comparable terminology. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our, and our affiliates, or the industry’s actual results, performance, achievements or transactions to be materially different from any future results, performance, achievements or transactions expressed or implied by such forward-looking statements including, but not limited to, the risks described under the caption “Risk Factors” in our 2007 Annual Report on Form 10-K Such factors include, among others, the following:

• national and local economic, business and real estate conditions, including, but not limited to, the effect of demand for multifamily units, office and retail rental space, the extent, strength and duration of any economic recovery, such as the effects on demand for units and rental space and the creation of new multifamily, office and retail developments, availability and creditworthiness of tenants, the level of lease rents, and the availability of financing for both tenants and us;

• adverse changes in real estate markets, including, but not limited to, the extent of tenant bankruptcies, financial difficulties and defaults, the extent of future demand for multifamily units and office and retail space in our core markets and barriers of entry into new markets which we may seek to enter in the future, the extent of decreases in rental rates, competition, our ability to identify and consummate attractive acquisitions on favorable terms, our ability to consummate any planned dispositions in a timely manner on acceptable terms, and our ability to reinvest sales proceeds in a manner that generates favorable terms;

• increased exposure, as a multifamily focused real estate investment trust (“REIT”), to risks inherent in investments in a single industry;

• actions, strategies and performance of affiliates that we may not control or companies, including joint ventures, in which we have made investments;

• changes in operating costs, including real estate taxes, utilities, and insurance;

• higher than expected construction costs;

• risks of development or conversion of for-sale projects including, but not limited to, delays in obtaining required governmental permits and authorizations, cost overruns, and operating deficits;

• uncertainties associated with the condominium and for-sale residential business, including the timing and volume of sales;

• uncertainties associated with the timing and amount of real estate dispositions and the resulting gains/losses associated with such dispositions;

• legislative or other regulatory decisions, including government approvals, actions and initiatives, including the need for compliance with environmental and safety requirements, and changes in laws and regulations or the interpretation thereof;

• effects of tax legislative action;

• our ability to continue to satisfy complex rules in order for us to maintain our status as a “REIT” for federal income tax purposes, the ability of our operating partnership to satisfy the rules to maintain its status as a partnership for federal income tax purposes, the ability of certain of our subsidiaries to maintain their status as taxable REIT subsidiaries for federal income tax purposes, and our ability and the ability of our subsidiaries to operate effectively within the limitations imposed by these rules;

• effect of any rating agency actions on the cost and availability of new debt financing;

• level and volatility of interest rates or capital market conditions;

• effect of any terrorist activity or other heightened geopolitical crisis;

• other factors affecting the real estate industry generally; and

• other risks identified in our 2007 Annual Report on Form 10-K and, from time to time, in other reports we file with the Securities and Exchange Commission (the “SEC”) or in other documents that we publicly disseminate.

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     The Company undertakes no obligation to publicly update or revise these forward-looking statements to reflect events, circumstances or changes in expectations after the date of this report.

Overview

     As used herein, the terms “Company”, “we”, “us”, and “our” refer to Colonial Properties Trust, an Alabama real estate investment trust, and one or more of its subsidiaries and other affiliates, including, Colonial Realty Limited Partnership, Colonial Properties Services Limited Partnership, Colonial Properties Services, Inc and CLNL Acquisition Sub, LLC or, as the context may require, Colonial Properties Trust only or Colonial Realty Limited Partnership only.

     We are a self-administered equity REIT that owns, develops and operates multifamily, office and retail properties primarily in the Sunbelt region of the United States. We are a fully-integrated real estate company, which means that we are engaged in the acquisition, development, ownership, management and leasing of commercial and residential real estate property and for-sale residential property. Including properties in lease-up, our activities include full or partial ownership of a diversified portfolio of 191 properties as of June 30, 2008, located in Alabama, Arizona, Florida, Georgia, Nevada, North Carolina, South Carolina, Tennessee, Texas, and Virginia, development of new properties, acquisition of existing properties, build-to-suit development, and the provision of management, leasing, and brokerage services for commercial real estate. As discussed below, we anticipate that, consistent with our strategic initiative to become a multifamily focused REIT, we expect to generate the majority of our net operating income from multifamily apartment communities.

     As of June 30, 2008, we owned or maintained a partial ownership in 119 multifamily apartment communities containing a total of 35,854 apartment units (consisting of 104 wholly-owned consolidated properties and 15 properties partially-owned through unconsolidated joint venture entities aggregating 30,932 and 4,922 units, respectively) (the “multifamily apartment communities”), 47 office properties containing a total of approximately 16.1 million square feet of office space (consisting of two wholly-owned consolidated properties and 45 properties partially-owned through unconsolidated joint-venture entities aggregating 0.4 million and 15.7 million square feet, respectively) (the “office properties”), 25 retail properties containing a total of approximately 7.0 million square feet of retail space, including anchor-owned square footage (consisting of four wholly-owned consolidated properties and 21 properties partially-owned through unconsolidated joint venture entities aggregating 6.0 million and 1.0 million square feet, respectively) (the “retail properties”), and certain parcels of land adjacent to or near certain of these properties (the “land”). The multifamily apartment communities, the office properties, the retail properties and the land are referred to collectively as the “properties”.

     We are the direct general partner of, and as of June 30, 2008, held approximately 83.4% of the interests in, Colonial Realty Limited Partnership, a Delaware limited partnership (“CRLP”). We conduct all of our business through CRLP, Colonial Properties Services Limited Partnership (“CPSLP”), which provides management services for our properties, and Colonial Properties Services, Inc. (“CPSI”), which provides management services for properties owned by third parties.

     As a lessor, the majority of our revenue is derived from residents and tenants under existing leases at our properties. Therefore, our operating cash flow is dependent upon the rents that we are able to charge to our residents and tenants, and the ability of these residents and tenants to make their rental payments. Additionally, our reliance on third-party management fees has increased significantly as a result of an increase in joint venture activities and the related third-party management agreements.

     The for-sale residential business has remained unstable throughout the first half of 2008 due to increasing mortgage financing rates, the limited availability of sub-prime lending and other types of mortgages and an oversupply of such assets resulting in lower sales prices and reduced sales velocity. In addition, pricing in the single family housing market declined primarily due to lack of demand. Because of the above mentioned factors, which were also affecting the housing market during 2007, we recorded a non-cash impairment charge of $43.3 million ($26.8 million, net of tax) to reduce the carrying value of certain of our for-sale residential developments to their estimated fair market value. This impairment charge was primarily related to the for-sale residential projects located in Gulf Shores, Alabama, one condominium project in Charlotte, North Carolina and one unconsolidated townhouse project located in Atlanta, Georgia, in which we have a 40% interest. Including the charge, as of June 30, 2008, we had approximately $122.4 million of capital cost (based on book value, including pre-development and land costs) invested in our consolidated for-sale residential projects ($63.5 million classified as construction in progress and $58.9 million classified as assets held for sale) and $31.1 million invested in an unconsolidated for-sale residential project, which includes a note receivable of $28.9 million. If market conditions do not improve or if there is further market deterioration, it may impact the number of projects we can sell, the timing of the sales and/or the prices at which we can sell them. If we are unable to sell projects, we may incur additional impairment charges on projects previously impaired as well as on projects for which an impairment charge has not been previously recorded, which would decrease the

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value of our assets as reflected on our balance sheet and adversely affect our shareholders’ equity. There can be no assurances of the amount or pace of future for-sale residential sales and closings, particularly given current market conditions.

Business Strategy

     As more fully described in our 2007 Annual Report on Form 10-K, to facilitate our plan to become a multifamily focused REIT by reducing our ownership interests in our office and retail portfolios, we completed two joint venture transactions in June 2007. In addition, in 2007, we completed the outright sale of an additional 12 retail properties. Each of these transactions is discussed in more detail below.

     In June 2007, we sold to DRA G&I Fund VI Real Estate Investment Trust, an entity advised by DRA Advisors LLC (“DRA”) its 69.8% interest in a newly formed joint venture (the “DRA/CLP JV”) that became the owner of 24 office properties and two retail properties that were previously wholly-owned by CRLP. We retained, through CRLP, a 15% minority interest in the DRA/CLP JV (see Note 9 to our Notes to Consolidated Condensed Financial Statements included in this Quarterly Report on Form 10-Q), as well as management and leasing responsibilities for the 26 properties. DRA also purchased an aggregate of 2.6% of the interests in the DRA/CLP JV from limited partners of CRLP. As a result, interests in the DRA/CLP JV are currently held by DRA, a subsidiary of CRLP and certain limited partners of CRLP that did not elect to sell their interests in the DRA/CLP JV. Total sales proceeds from the sale of our 69.8% interest were approximately $379.0 million. We recorded a net gain of approximately $211.8 million on the sale of our 69.8% interest. We also deferred a gain of approximately $7.2 million as a result of certain obligations we assumed in the transaction. We have recognized approximately $3.0 million of this deferred gain as a result of a reduction of the related obligation since June 30, 2007. We have not recognized any of this deferred gain during 2008. On May 30, 2008, certain members in the DRA/CLP JV exercised an option to sell membership interests, totaling approximately $1.7 million. DRA purchased the selling members’ units with cash increasing its ownership interest in the joint venture from 72.4% to 73.3%. Our ownership interest in the DRA/CLP JV remains at 15.0%.

     In June 2007, we sold to OZRE Retail, LLC (“OZRE”) its 69.8% interest in a newly formed joint venture (the “OZRE JV”) that became the owner of 11 retail properties that were previously wholly-owned by CRLP. We retained, through CRLP, a 15% minority interest in the OZRE JV (see Note 9 to our Notes to Consolidated Condensed Financial Statements included in this Quarterly Report on Form 10-Q), as well as management and leasing responsibilities for the 11 properties. OZRE also purchased interests in the OZRE JV from limited partners of CRLP. As a result, interests in the OZRE JV are held by OZRE, a subsidiary of CRLP, and certain limited partners of CRLP that did not elect to sell their interests in the OZRE JV to OZRE. Total sales proceeds from the sale of this 69.8% interest were approximately $115.0 million. We recorded a net gain of approximately $64.7 million on the sale of our 69.8% interest. We also deferred a gain of approximately $8.5 million as a result of certain obligations we assumed in the transaction. We have recognized approximately $5.5 million of this deferred gain as a result of a reduction of the related obligation since June 30, 2007. We have not recognized any of this deferred gain during 2008. On June 10, 2008, certain members in the OZRE JV exercised an option to sell membership interests, totaling approximately $9.1 million to OZRE JV. The redeemed units were cancelled by the OZRE JV increasing OZRE’s ownership interest from 72.5% to 82.7% and our ownership interest from 15.0% to 17.1%.

     In connection with the office and retail joint venture transactions, 85% of the DRA/CLP JV and the OZRE JV membership units were distributed to the Company and all limited partners of CRLP on a pro rata basis. The Company recorded these distributions at book value.

     Additionally, during 2007, we completed the outright sale of an additional 11 retail assets for an aggregate sales price of $129.0 million. In addition, during 2007, we sold a 90% owned retail property for a sales price of $74.4 million.

     As a result of the above joint venture transactions, we paid a special distribution of $10.75 per share during 2007. The remaining proceeds from these transactions were used to pay down our outstanding indebtedness.

Executive Summary of Results of Operations

     The following discussion of results of operations should be read in conjunction with the Consolidated Condensed Statements of Income and Comprehensive Income and the Operating Results Summary included below.

     The principal factors that influenced our operating results for the three months ended June 30, 2008 as compared to the three months ended June 30, 2007 were as follows:

• We sold five wholly-owned multifamily apartment communities and one partially-owned apartment community for an aggregate sales price of $82.6 million and gross proceeds of $54.8 million;

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• We sold one partially-owned office asset for gross proceeds of $1.6 million;

• We completed the development of one multifamily property consisting of 85 apartment homes;

• The multifamily portfolio experienced modest growth during the second quarter of 2008 compared to the second quarter of 2007 as a result of current economic conditions. Results were driven by growth in Dallas/Fort Worth, Texas; Raleigh, North Carolina and Atlanta, Georgia;

• Operating revenues and expenses associated with our office and retail assets decreased primarily due to:

• the office and retail joint venture transactions that were consummated during June 2007; and

• the outright sale of 16 retail assets during 2007;

• We repurchased $31.8 million of unsecured senior notes in separate transactions at an average discount of 10% to par value;

• We repurchased 577,000 of our outstanding 8 1/8% Series D Preferred depositary shares for an aggregate purchase price of $14.0 million at a 3% discount;

• We recognized net gains from repurchases of unsecured senior notes and Series D preferred depositary shares of $2.6 million; and

• We recognized an $8.8 million reduction in interest expense.

     The principal factors that influenced our operating results for the six months ended June 30, 2008 as compared to the six months ended June 30, 2007 were as follows:

• We sold five wholly-owned multifamily apartment communities and five partially-owned multifamily apartment communities for an aggregate sales price of $93.8 million and gross proceeds of $66.0 million;

• We sold one wholly-owned office asset and one partially-owned office asset for gross proceeds of $4.7 million;

• We completed the development of five multifamily properties consisting of 909 apartment homes;

• The multifamily portfolio experienced modest growth during the first six months of 2008 compared to the first six months of 2007 as a result of current economic conditions. Results were driven by growth in Austin and Dallas/Fort Worth, Texas; Raleigh, North Carolina; Richmond, Virginia; and Huntsville and Birmingham, Alabama;

• Operating revenues and expenses associated with our office and retail assets decreased primarily due to:

• the office and retail joint venture transactions that were consummated during June 2007; and

• the outright sale of 16 retail assets during 2007;

• We repurchased $81.8 million of unsecured senior notes in separate transactions at an average of discount of 11% to par value;

• We repurchased 883,750 of our outstanding 8 1/8% Series D Preferred depositary shares for an aggregate purchase price of $21.6 million at a 2% discount;

• We recognized net gains from repurchases of unsecured senior notes and Series D preferred depositary shares of $7.9 million; and

• We recognized a $17.3 million reduction in interest expense.

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Operating Results Summary

     The following operating results summary is provided for reference purposes and is intended to be read in conjunction with the narrative discussion. This information is presented to correspond with the manner in which we analyze our operating results.

(amounts in thousands)

	Three Months Ended June 30,									Six Months Ended June 30,
	2008			2007			Variance			2008			2007			Variance
Revenues:
Minimum rent	$	63,974		$	87,826		$	(23,852	)	$	126,545		$	179,180		$	(52,635	)
Tenant recoveries		1,374			4,431			(3,057	)		2,241			9,664			(7,423	)
Other property related revenue		8,294			8,641			(347	)		15,747			16,076			(329	)
Construction revenues		569			8,068			(7,499	)		8,449			20,853			(12,404	)
Other non-property related revenues		5,151			5,312			(161	)		10,449			8,554			1,895
Total revenue		79,362			114,278			(34,916	)		163,431			234,327			(70,896	)
Expenses:
Property operating expenses		18,688			24,839			(6,151	)		37,048			49,549			(12,501	)
Taxes, licenses and insurance		9,103			11,859			(2,756	)		18,470			24,463			(5,993	)
Construction expenses		564			7,495			(6,931	)		7,830			19,866			(12,036	)
Property management expenses		2,072			3,598			(1,526	)		4,313			7,085			(2,772	)
General and administrative expenses		5,789			8,040			(2,251	)		11,570			14,018			(2,448	)
Management fee and other expense		4,346			4,034			312			8,031			6,977			1,054
Restructuring charges		—			1,528			(1,528	)		—			1,528			(1,528	)
Investment and development		108			315			(207	)		877			454			423
Depreciation & amortization		24,010			32,123			(8,113	)		46,699			69,012			(22,313	)
Total operating expenses		64,680			93,831			(29,151	)		134,838			192,952			(58,114	)
Income from operations		14,682			20,447			(5,765	)		28,593			41,375			(12,782	)
Other income (expense):
Interest expense and debt cost amortization		(18,280	)		(27,073	)		8,793			(36,947	)		(54,205	)		17,258
Gains (losses) on retirement of debt		2,730			(9,370	)		12,100			8,201			(9,433	)		17,634
Interest income		1,184			2,092			(908	)		1,976			4,223			(2,247	)
Income from partially-owned unconsolidated entities		2,037			(2,090	)		4,127			12,307			4,723			7,584
Gains from sales of property, net of income taxes		3,334			289,565			(286,231	)		5,277			290,889			(285,612	)
Income taxes and other		(192	)		59			(251	)		595			(174	)		769
Total other income (expense)		(9,187	)		253,183			(262,370	)		(8,591	)		236,023			(244,614	)
Income before minority interest and discontinued operations		5,495			273,630			(268,135	)		20,002			277,398			(257,396	)
Minority interest of limited partners		5			82			(77	)		9			225			(216	)
Minority interest in CRLP — common unitholders		(247	)		3,915			(4,162	)		(1,991	)		4,369			(6,360	)
Minority interest in CRLP — preferred unitholders		(1,813	)		(1,813	)		—			(3,639	)		(3,624	)		(15	)
Income from continuing operations		3,440			275,814			(272,374	)		14,381			278,368			(263,987	)
Income from discontinued operations		7,897			33,320			(25,423	)		13,860			67,125			(53,265	)
Net income		11,337			309,134			(297,797	)		28,241			345,493			(317,252	)
Dividends to preferred shareholders		(2,180	)		(3,870	)		1,690			(4,668	)		(8,361	)		3,693
Preferred share issuance costs write-off, net of discount		(83	)		(330	)		247			(267	)		(330	)		63
Net income available to common shareholders	$	9,074		$	304,934		$	(295,860	)	$	23,306		$	336,802		$	(313,496	)

Results of Operations — Three Months Ended June 30, 2008 and 2007

Minimum rent

     Minimum rent decreased $23.9 million for the three months ended June 30, 2008 as compared to the same period in 2007 primarily as a result of the disposition of our office and retail assets during 2007, which was partially offset by rental growth in the multifamily portfolio. Minimum rent decreased approximately $27.4 million as a result of a decrease in the number of consolidated office and retail properties resulting from the office and retail joint venture transactions that closed during 2007. This decrease was partially offset by increased rental revenues of approximately $3.5 million related to

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condominium conversions placed back into the rental pool, development projects placed into service and rental rate growth in the multifamily portfolio.

Tenant recoveries

     Tenant recoveries decreased $3.1 million for the three months ended June 30, 2008 as compared to the same period in 2007 as a result of a decrease in the number of consolidated office and retail properties resulting from the office and retail joint venture transactions that closed during 2007.

Other property related revenue

     Other property related revenue decreased $0.3 million for the three months ended June 30, 2008 as compared to the same period in 2007 as a result of approximately $1.6 million in decreased revenue resulting from a decrease in the number of consolidated office and retail properties resulting from the office and retail joint venture transactions that closed during 2007. This decrease was partially offset by revenue of approximately $1.3 million from increased multifamily cable revenue and other ancillary income.

Construction activities

     Revenues and expenses from construction activities decreased approximately $7.5 million and $6.9 million, respectively, for the three months ended June 30, 2008 as compared to the same period in 2007 as a result of a decrease in construction activity year over year.

Other non-property related revenues

     Other non-property related revenues, which consist primarily of management fees and development fees, remained flat for the three months ended June 30, 2008 as compared to the same period in 2007. Management fees increased as a result of the office and retail joint venture transactions that closed during 2007 but the increase was offset by reduced management fees resulting from multifamily joint venture disposition activity during the first six months of 2008.

Property operating expenses

     Property operating expenses decreased $6.2 million for the three months ended June 30, 2008 as compared to the same period in 2007 resulting from the disposition of office and retail assets during 2007 as part of the joint venture transactions described above, which was partially offset by increased expenses in the multifamily portfolio. Property operating expenses decreased approximately $7.3 million as a result of the office and retail joint venture transactions. These decreases were partially offset by increased multifamily property operating expenses of approximately $1.1 million primarily related to condominium conversions placed back into the rental pool and development projects placed into service.

Taxes, licenses and insurance expenses

     Taxes, licenses and insurance expenses decreased $2.8 million for the three months ended June 30, 2008 as compared to the same period in 2007 primarily as a result of the disposition of office and retail assets during 2007 as part of the joint venture transactions described above, which was partially offset by increased expenses in the multifamily portfolio. Taxes, licenses and insurance expenses decreased approximately $3.0 million as a result of the office and retail joint venture transactions that closed during 2007. These decreases were partially offset by increased multifamily taxes, licenses and insurance expenses primarily related condominium conversions placed back into the rental pool and development projects placed into service.

Property management expenses

     Property management expenses consist of regional supervision and accounting costs related to property operations. These expenses decreased $1.5 million for the three months ended June 30, 2008 as compared to the same period in 2007 primarily due to an overall decrease in management salaries as a result of the restructuring that occurred as part of our strategic initiative to increase our multifamily focus.

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General and administrative expenses

     General and administrative expenses decreased $2.3 million for the three months ended June 30, 2008 as compared to the same period in 2007. The decrease is related to a $1.4 million charge associated with the termination of our pension plan recorded during 2007 and a reduction in salary expenses as a result of the structuring that occurred as part of our strategic initiative to increase our multifamily focus.

Management fee and other expenses

     Management fee and other expenses consist of property management and other services provided to third parties. These expenses increased $0.3 million for the three months ended June 30, 2008 as compared to the same period in 2007 primarily due to an increase in legal fees associated with various contingencies discussed in Note 12 to our Notes to Consolidated Condensed Financial Statements included in this Quarterly Report on Form 10-Q.

Restructuring charges

     The restructuring charges recorded during the three months ended June 30, 2007 were comprised of termination benefits and severance costs associated with our strategic initiative to increase our multifamily focus.

Investment and development expenses

     Investment and development expenses include costs incurred related to abandoned pursuits. These expenses decreased $0.2 million during the three months ended June 30, 2008 as compared to the same period in 2007 primarily as a result of the write-off of abandoned pursuits during 2007. Abandoned pursuits are volatile and, therefore, vary between periods.

Depreciation and amortization expenses

     Depreciation and amortization expense decreased $8.1 million for the three months ended June 30, 2008 as compared to the same period in 2007. The decrease is related to 2007 and 2008 disposition activity.

Interest expense and debt cost amortization

     Interest expense and debt cost amortization decreased $8.8 million for the three months ended June 30, 2008 as compared to the same period in 2007. The decrease is primarily a result of the pay down of debt associated with proceeds received from the joint venture transactions in June 2007 and outright retail asset sales in 2007.

Gains (losses) on retirement of debt

     Gains (losses) on retirement of debt increased $12.1 million during the three months ended June 30, 2008 as compared to the same period in 2007. In 2008, we recognized gains of approximately $2.7 million on the repurchase of $31.8 million of outstanding unsecured senior notes. In 2007, we had $29.2 million in prepayment penalties associated with the repayment of $409.0 million of collateralized mortgage loans, which were partially offset by the write-off of $16.7 million of mark-to-market debt intangibles during 2007.

Income from partially-owned unconsolidated entities

     Income from unconsolidated entities increased $4.1 million for the three months ended June 30, 2008 as compared to the same period in 2007 due primarily to an increase in gains on the sale of our joint venture ownership interest year over year. The majority of the increase is attributable to the $4.0 million gain recognized from the sale of a portion of our interest in the Huntsville TIC joint venture during the three months ended June 30, 2008.

Gains from sales of property

     Gains from sales of property decreased $286.2 million for the three months ended June 30, 2008 as compared to the same period in 2007 primarily as a result of net gains of approximately $276.5 million gain recognized in connection with the sale of our 69.8% interest in the DRA/CLP JV and our 69.8% interest in the OZRE JV during June 2007 as a part of our office and retail joint venture transactions.

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Income from discontinued operations

     Income from discontinued operations decreased $25.4 million for the three months ended June 30, 2008 as compared to the same period in 2007. At June 30, 2008, we had classified thirteen multifamily apartment communities containing approximately 3,597 units as held for sale. The operating property sales that occurred in the second quarter of 2008 and 2007, which resulted in gains on disposal of $4.1 million (there were no taxes associated with these dispositions) and $39.3 million (net of income taxes of $0.2 million), respectively, are classified as discontinued operations (see Note 4 to our Notes to Consolidated Condensed Financial Statements). Gains on dispositions in 2008 include the sale of four multifamily apartment communities. Gains on dispositions in 2007 primarily include the sale of four multifamily apartment communities and one retail asset.

Dividends to preferred shareholders

     Dividends to preferred shareholders decreased $1.7 million for the three months ended June 30, 2008 as compared to the same period in 2007 as a result of the redemption of the Series E Cumulative Redeemable Preferred Shares of Beneficial Interest on May 30, 2007.

Results of Operations — Six Months Ended June 30, 2008 and 2007

Minimum rent

     Minimum rent decreased $52.6 million for the six months ended June 30, 2008 as compared to the same period in 2007 as a result of the disposition of our office and retail assets during 2007, which was partially offset by growth in the multifamily portfolio. Minimum rent decreased approximately $60.5 million as a result of a decrease in the number of consolidated office and retail properties resulting from the office and retail joint venture transactions that closed during 2007. This decrease was partially offset by increases in multifamily rental revenues of approximately $7.9 million related to condominium conversions placed back into the rental pool, development projects placed into service and rental rate growth in the multifamily portfolio.

Tenant recoveries

     Tenant recoveries decreased $7.4 million for the six months ended June 30, 2008 as compared to the same period in 2007 as a result of a decrease in the number of consolidated office and retail properties resulting from the office and retail joint venture transactions that closed during 2007.

Other property related revenue

     Other property related revenue decreased $0.3 million for the six months ended June 30, 2008 as compared to the same period in 2007 as a result of approximately $3.1 million in decreased revenue resulting from the office and retail joint venture transactions that closed during 2007. This decrease was partially offset by revenue of approximately $2.7 million from increased multifamily cable revenue and other ancillary income.

Construction activities

     Revenues and expenses from construction activities decreased approximately $12.4 million and $12.0 million, respectively, for the six months ended June 30, 2008 as compared to the same period in 2007 as a result of a decrease in construction activity year over year.

Other non-property related revenues

     Other non-property related revenues, which consist primarily of management fees and development fees, increased $1.9 million for the six months ended June 30, 2008 as compared to the same period in 2007. This increase is a result of the management fees related to the office and retail joint venture transactions that closed in June 2007. In addition, we recorded $0.9 million in fees from our partner’s sale of its 75% interest in our Canyon Creek joint venture. This increase in fees was partially offset by reduced management fee revenues from the GPT/Colonial Retail Joint Venture, for which we ceased providing management services in June 2007. Our interest in this joint venture was sold in February 2008.

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Property operating expenses

     Property operating expenses decreased $12.5 million for the six months ended June 30, 2008 as compared to the same period in 2007 as a result of the disposition of our office and retail assets during 2007 as part of the joint venture transactions described above, which was partially offset by increased expenses in the multifamily portfolio. Property operating expenses decreased approximately $15.1 million as a result of the office and retail joint venture transactions. These decreases were partially offset by increased multifamily property operating expenses of approximately $2.6 million primarily related to condominium conversions placed back into the rental pool and development projects placed into service.

Taxes, licenses and insurance expenses

     Taxes, licenses and insurance expenses decreased $6.0 million for the six months ended June 30, 2008 as compared to the same period in 2007 as a result of the disposition of our office and retail assets during 2007 as part of the joint venture transactions described above, which was partially offset by increased expenses in the multifamily portfolio. Taxes, licenses and insurance expenses decreased approximately $7.0 million as a result of the office and retail joint venture transactions that closed during 2007. These decreases were partially offset by increased multifamily taxes, licenses and insurance expenses primarily related condominium conversions placed back into the rental pool and development projects placed into service.

Property management expenses

     Property management expenses consist of regional supervision and accounting costs related to property operations. These expenses decreased $2.8 million for the six months ended June 30, 2008 as compared to the same period in 2007 primarily due to an overall decrease in management salaries as a result of the restructuring that occurred as part of our strategic initiative to increase our multifamily focus.

General and administrative expenses

     General and administrative expenses decreased $2.4 million for the six months ended June 30, 2008 as compared to the same period in 2007. The decrease is related to a $1.4 million charge associated with the termination of our pension plan recorded during 2007 and a reduction in salary expenses as a result of the restructuring that occurred as part of our strategic initiative to increase our multifamily focus.

Management fee and other expenses

     Management fee and other expenses consist of property management and other services provided to third parties. These expenses increased $1.1 million for the six months ended June 30, 2008 as compared to the same period in 2007 primarily due to an increase in legal fees associated with various contingencies discussed in Note 12 to our Notes to Consolidated Condensed Financial Statements included in this Quarterly Report on Form 10-Q.

Restructuring charges

     The restructuring charges recorded during the six months ended June 30, 2007 were comprised of termination benefits and severance costs associated with our strategic initiative to increase our multifamily focus.

Investment and development expenses

     Investment and development expenses increased $0.4 million during the six months ended June 30, 2008 as compared to the same period in 2007 primarily as a result of us decreasing the size of our development pipeline in the Southwestern United States for multifamily apartment communities. Abandoned pursuits are volatile and, therefore, vary between periods.

Depreciation and amortization expenses

     Depreciation and amortization expense decreased $22.3 million for the six months ended June 30, 2008 as compared to the same period in 2007. The decrease is related to 2007 and 2008 disposition activity.

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Interest expense and debt cost amortization

     Interest expense and debt cost amortization decreased $17.3 million for the six months ended June 30, 2008 as compared to the same period in 2007. The decrease is primarily a result of the pay down of debt associated with proceeds received from the joint venture transactions in June 2007 and outright retail asset sales in 2007.

Gains (losses) on retirement of debt

     Gains (losses) on retirement of debt increased $17.6 million during the six months ended June 30, 2008 as compared to the same period in 2007. In 2008, we recognized gains of approximately $8.2 million on the repurchase of $81.8 million of outstanding unsecured senior notes. In 2007, we had $29.2 million in prepayment penalties associated with the repayment of $409.0 million of collateralized mortgage loans, which were partially offset by the write-off of $16.7 million of mark-to-market debt intangibles during 2007.

Income from partially-owned unconsolidated entities

     Income from unconsolidated entities increased $7.6 million for the six months ended June 30, 2008 as compared to the same period in 2007 due primarily to an increase in gains on the sale of our joint venture ownership interest year over year. We recognized an aggregate gain of $16.2 million from the sale of our interest in the GPT/Colonial Retail Joint Venture and the sale of a portion of our interest in the Huntsville TIC joint venture during 2008 compared to a gain of $9.2 million from the sale of our interest in Colonial Grand at Bayshore during the six months ended June 30, 2007. The remaining increase is attributable to the gains recognized from the sale of our interest in five multifamily apartment communities and one office asset during 2008.

Gains from sales of property

     Gains from sales of property decreased $285.6 million for the six months ended June 30, 2008 as compared to the same period in 2007 primarily as a result of net gains of approximately $276.5 million gain recognized in connection with the sale of our 69.8% interest in the DRA/CLP JV and our 69.8% interest in the OZRE JV during June 2007 as a part of our office and retail joint venture transactions.

Income from discontinued operations

     Income from discontinued operations decreased $53.3 million for the six months ended June 30, 2008 as compared to the same period in 2007. At June 30, 2008, we had classified thirteen multifamily apartment communities containing approximately 3,597 units as held for sale. The operating property sales that occurred in the six months ended June 30, 2008 and 2007, which resulted in gains on disposal of $7.0 million (there were no taxes associated with these dispositions) and $74.1 million (net of income taxes of $1.7 million), respectively, are classified as discontinued operations (see Note 4 to our Notes to Consolidated Condensed Financial Statements). Gains on dispositions in 2008 include the sale of four multifamily apartment communities and one office asset. Gains on dispositions in 2007 include the sale of twelve multifamily apartment communities and three retail assets.

Dividends to preferred shareholders

     Dividends to preferred shareholders decreased $3.7 million for the six months ended June 30, 2008 as compared to the same period in 2007 as a result of the repurchase of 306,750 shares of our outstanding 8 1/8% Series D preferred depositary shares during the three months ended March 31, 2008 and the redemption of the Series E Cumulative Redeemable Preferred Shares of Beneficial Interest on May 30, 2007.

Liquidity and Capital Resources

     Overview

     Our net cash provided by operating activities increased from $62.1 million for the six months ended June 30, 2007 to $64.6 million for the six months ended June 30, 2008, primarily as a result of cash flows from the operations of office and retail assets disposed of during 2007 as part of June 2007 joint venture transactions and outright property sales, which were offset by prepayment penalties of $29.2 million incurred during the six months ended June 30, 2007.

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     Net cash from investing activities decreased from net cash provided of $522.4 million for the six months ended June 30, 2007 to net cash used of $121.8 million for the six months ended June 30, 2008, primarily due to the disposition activity as a result of the office and retail joint venture transactions that occurred in June 2007.

     Net cash flows used in financing activities decreased from $485.9 million for the six months ended June 30, 2007 to $2.0 million for the six months ended June 30, 2008. The decrease was primarily due to $506.5 million to fund the special distribution and $104.8 million for the redemption of Series E preferred depositary shares, both of which occurred during 2007. The remaining change is attributable to the net change in the revolving credit facility balance, the repurchase of $81.8 million of unsecured senior notes in open market transactions and the issuance of $57.6 million of secured mortgages, which was offset by $21.3 million of cash used to repurchase 8 1/8% Series D preferred depositary shares in privately negotiated transactions during the first six months of 2008.

     Strategic Initiative

     As previously disclosed, our strategy to change our asset mix to generate approximately 75% to 80% of our net operating income from multifamily properties involved the contribution of a majority of our wholly-owned office assets and retail assets into a series of joint ventures (see Note 2 to our Notes to Consolidated Condensed Financial Statements included in this Quarterly Report on Form 10-Q), as well as the outright sale of other retail assets. Capital proceeds from these transactions were used to reduce mortgage debt and pay a special distribution to our shareholders. These transactions did not have a material impact on our debt to equity ratios. We also anticipate maintaining our investment grade rating, and as such, do not expect capital availability to be materially impacted as a result of these transactions.

     Credit Ratings

     As of June 30, 2008, our current credit ratings are as follows:

Rating Agency	Rating	Last update
Standard & Poor’s	BBB-(1)	January 18, 2008
Moody’s	Baa3(2)	September 27, 2007
Fitch	BBB-(1)	April 1, 2008

(1)	Ratings outlook is “stable”.
(2)	Ratings outlook is “negative”.

     During 2008, Standard and Poor’s and Fitch reaffirmed our ratings and provided a stable outlook noting our large diversified unencumbered multifamily portfolio and our adequate liquidity position. In September 2007, Moody’s announced that it changed its outlook from stable to negative on our credit rating. Their negative outlook was predicated on the size of our development pipeline as a percentage of our asset base and our higher leverage level for our credit rating.

     Our credit ratings are investment grade. If we experience a credit downgrade, we may be limited in our access to capital in the unsecured debt market, which we have historically utilized to fund our investment activities. In addition, as discussed below, our spread on our unsecured credit facility would increase.

     Short-Term Liquidity Needs

     Our short-term liquidity requirements consist primarily of funds necessary to pay for operating expenses directly associated with our portfolio of properties (including regular maintenance items), capital expenditures incurred to lease our space (e.g., tenant improvements and leasing commissions), interest expense and scheduled principal payments on our outstanding debt, and quarterly dividends and distributions that we pay to our common and preferred shareholders and holders of partnership units in CRLP. In the past, we have primarily satisfied these requirements through cash generated from operations and borrowings under our unsecured line of credit. We believe that cash generated from operations and dispositions of assets and borrowings under our unsecured line of credit will be sufficient to meet our short-term liquidity requirements. However, factors described below and elsewhere herein may have a material adverse effect on our future cash flow.

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     The majority of our revenue is derived from residents and tenants under existing leases at our properties. Therefore, our operating cash flow is dependent upon the rents that we are able to charge to our residents and tenants, and the ability of these residents and tenants to make their rental payments. Additionally, our reliance on third-party management fees has increased significantly as a result of an increase in joint venture activities and the related third-party management agreements.

     We have made an election to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with our taxable year ending December 31, 1993. If we qualify for taxation as a REIT, we generally will not be subject to Federal income tax to the extent we distribute all of our REIT level taxable income to our shareholders. Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and property and to federal income and excise taxes on our undistributed income.

     On January 31, 2008, our Board of Trustees authorized the repurchase of up to $25.0 million of our 8 1/8% Series D preferred depositary shares in a limited number of separate, privately negotiated transactions. Each Series D preferred depositary share represents 1/10 of a share of our 8 1/8% Series D Cumulative Redeemable Preferred Shares of Beneficial Interest, par value $0.01 per share.

     During the first quarter of 2008, we repurchased 306,750 shares of our outstanding 8 1/8% Series D preferred depositary shares in privately negotiated transactions for an aggregate purchase price of $7.7 million, at an average price of $24.86 per depositary share. We received a discount to the liquidation preference price of $25.00 per depositary share, of approximately $0.1 million, on the purchase and wrote off approximately $0.3 million of issuance costs associated with these repurchases.

     During the second quarter of 2008, we repurchased 577,000 shares of our outstanding 8 1/8% Series D preferred depositary shares in a privately negotiated transaction for an aggregate purchase price of $14.0 million, at a price of $24.24 per depositary share. We received a discount to the liquidation preference price of $25.00 per depositary share, of approximately $0.4 million, on the purchase and wrote off approximately $0.5 million of issuance costs associated with this repurchase.

     During the first quarter of 2008, we repurchased $50.0 million in unsecured senior notes of CRLP in separate transactions at a 12% discount to the par value of the senior notes, which represents an 8.2% yield to maturity. In order to continue to capitalize on the current spreads, on April 23, 2008, our Board authorized the repurchase of up to an additional $200.0 million of outstanding unsecured senior notes of CRLP as described further below.

     During the second quarter of 2008, we repurchased $31.8 million of outstanding unsecured senior notes of CRLP in separate transactions at an average 10% discount to par value, which represents a 7.8% yield to maturity. We expect to continue to monitor the debt markets and repurchase certain senior notes that meet our required criteria as funds are available.

     Long-Term Liquidity Needs

     Our long-term liquidity requirements consist primarily of funds necessary to pay the principal amount of our long-term debt as it matures, significant non-recurring capital expenditures that need to be made periodically at our properties, development projects that we undertake and costs associated with acquisitions of properties that we pursue. Historically, we have satisfied these requirements principally through the most advantageous source of capital at that time, which has included the incurrence of new debt through borrowings (through public offerings of unsecured debt and private incurrence of collateralized and unsecured debt), sales of common and preferred shares, capital raised through the disposition of assets, and joint venture capital transactions. We have filed registration statements to facilitate issuance of debt and equity securities on an as-needed basis subject to our ability to affect offerings on satisfactory terms based on prevailing conditions. We believe these sources of capital will be available in the future to fund our long-term capital needs. However, factors described below and elsewhere herein may have a material adverse effect on our continued access to these capital sources.

     Our ability to incur additional debt is dependent upon a number of factors, including our credit ratings, the value of our unencumbered assets, our degree of leverage and borrowing restrictions imposed by our current lenders. We currently have investment grade ratings for prospective unsecured debt offerings from three major rating agencies. If we experienced a credit downgrade, we may be limited in our access to capital in the unsecured debt market, which we have historically utilized to fund investment activities, and the interest rate we are paying under our existing credit facility would increase.

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     Our ability to raise funds through sales of common shares and preferred shares is dependent on, among other things, general market conditions for REITs, market perceptions about our company and the current trading price of our shares. We will continue to analyze the source of capital that is most advantageous to us at any particular point in time, but the equity markets may not be consistently available to us on terms that are attractive.

     Over the last few years, we have maintained our asset recycling program, which helps us to maximize our investment returns through the sale of assets that have reached their investment potential and reinvest the proceeds into opportunities with more growth potential. During the six months ended June 30, 2008, we sold five wholly-owned multifamily apartment communities consisting of 1,250 units. We also sold our 10%-15% ownership interests in five multifamily apartment communities consisting of 1,075 units. In addition to the sale of these multifamily apartment communities, during the six months ended June 30, 2008, we sold one office asset consisting of 37,000 square feet, our 15% interest in another office asset consisting of 156,000 square feet and our 10% ownership interest in the GPT/Colonial Retail Joint Venture representing approximately 3.9 million square feet (including anchor-owned square footage). Sales proceeds of approximately $97.6 million, including our pro-rata share of proceeds from partially-owned dispositions, were used to repay a portion of the borrowings under our unsecured line of credit, to repay mortgages associated with the properties, to fund general corporate purposes and to fund other investment opportunities. Our ability to generate cash from asset sales is limited by market conditions and certain rules applicable to REITs. Our ability to sell properties in the future to raise cash will be limited if market conditions make such sales unattractive. For-sale residential properties under development or acquired for development usually generate little or no cash flow until completion of development and sale of a significant number of homes or condominium units and may experience operating deficits after the date of completion and until such homes or condominium units are sold.

     At June 30, 2008, our total outstanding debt balance was $1.7 billion. The outstanding balance includes fixed-rate debt of $1.5 billion, or 88.6% of the total debt balance, and variable-rate debt of $0.2 million, or 11.4% of the total debt balance.

     Unsecured Revolving Credit Facility

     On January 8, 2008, we added $175 million of additional borrowing capacity through the accordion feature of our existing unsecured revolving credit facility (“the Credit Facility”) with Wachovia Bank, National Association (“Wachovia”), as Agent for the lenders, Bank of America, N.A. as Syndication Agent, Wells Fargo Bank, National Association, Citicorp North America, Inc. and Regions Bank, as Co-Documentation Agents, and U.S. Bank National Association and PNC Bank, National Association, as Co-Senior Managing Agents and other lenders named therein. Therefore, as of June 30, 2008, CRLP, with the Trust as guarantor, has a $675.0 million Credit Facility. The amended Credit Facility has a maturity date of June 21, 2012.

     In addition to the Credit Facility, we have a $35.0 million cash management line provided by Wachovia that will expire on June 21, 2012.

     Base rate loans and revolving loans are available under the Credit Facility. The Credit Facility also includes a competitive bid feature that will allow us to convert up to $337.5 million under the Credit Facility to a fixed rate and for a fixed term not to exceed 90 days. Generally, base rate loans bear interest at Wachovia’s designated base rate, plus a base rate margin ranging up to 0.25% based on our unsecured debt ratings from time to time. Revolving loans bear interest at LIBOR plus a margin ranging from 0.325% to 1.05% based on our unsecured debt ratings from time to time. Competitive bid loans bear interest at LIBOR plus a margin, as specified by the participating lenders. Based on CRLP’s current unsecured debt rating, the revolving loans currently bear interest at a rate of LIBOR plus 75 basis points.

     The Credit Facility, which is primarily used to finance property acquisitions and developments, had an outstanding balance at June 30, 2008 of $172.0 million. The interest rate of the Credit Facility was 3.21% and 6.07% at June 30, 2008 and 2007, respectively. The cash management line of credit had an outstanding balance of $12.7 million as of June 30, 2008.

     The Credit Facility contains various covenants and events of default which could trigger early repayment obligations, including, but not limited to the following: nonpayment; violation or breach of certain covenants; failure to perform certain covenants beyond a cure period; failure to satisfy certain financial ratios; and generally not paying our debts as they become due. In addition, we have certain loan agreements that contain restrictive covenants, which among other things require maintenance of various financial ratios. At June 30, 2008, we were in compliance with all of these covenants.

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     During the first quarter of 2008, we refinanced mortgages associated with two of our multifamily apartment communities, Colonial Grand at Trinity Commons, a 462-unit apartment community located in Raleigh, North Carolina, and Colonial Grand at Wilmington, a 390-unit apartment community located in Wilmington, North Carolina. We financed an aggregate of $57.6 million, at a weighted average interest rate of 5.4%. The loan proceeds were used to repay the mortgages of $29.0 million and the balance was used to pay down our unsecured line of credit.

     During the first quarter of 2008, we repurchased $50.0 million of outstanding unsecured senior notes in separate transactions at an average 12% discount to par value, which represents an 8.2% yield to maturity. As a result of the repurchases, we recognized an aggregate gain of $5.5 million, which is included in Gains (losses) on retirement of debt on our Consolidated Condensed Statements of Income and Comprehensive Income.

     On April 23, 2008, our Board of Trustees authorized a repurchase program which allows us to repurchase up to an additional $200 million of outstanding unsecured senior notes of CRLP. The senior notes may be repurchased from time to time in open market transactions or privately negotiated transactions, subject to applicable legal requirements, market conditions and other factors. The repurchase program does not obligate us to repurchase any specific amounts of senior notes, and repurchases pursuant to the program may be suspended or resumed at any time from time to time without further notice or announcement. We will continue to monitor the debt markets and repurchase certain senior notes that meet our required criteria, as funds are available.

     During the second quarter of 2008, we repurchased $31.8 million of outstanding unsecured senior notes of CRLP in separate transactions at an average 10% discount to par value, which represents a 7.8% yield to maturity. As a result of the repurchases, we recognized an aggregate gain of $2.7 million, which is included in Gains (losses) on retirement of debt on our Consolidated Condensed Statements of Income and Comprehensive Income.

     Investing Activities

     During the second quarter of 2008, we acquired 139 acres of land for $22.0 million to be used for the development of Colonial Pinnacle Nor du Lac, a 743,000 square feet retail shopping center, 531,000 square feet excluding anchor-owned square footage, located in Covington, Louisiana. This project, if developed as anticipated, is expected to cost approximately $146.7 million, which excludes $24.0 million of community development district special assessment bonds that were issued and will be utilized to fund certain infrastructure costs.

     During the second quarter of 2008, we completed the development of one wholly-owned multifamily apartment community, containing 85 units, located in Charlotte, North Carolina, and one office asset, containing 176,000 square feet, located in Orlando, Florida. In the aggregate, we invested approximately $58.2 million to complete these developments. We completed the development of one partially-owned unconsolidated for-sale residential development, containing 23 units, located in Atlanta, Georgia. We invested approximately $31.1 million in this project, which includes a note receivable of $28.9 million.

     During the second quarter of 2008, we continued with the development of six wholly-owned multifamily apartment communities, one office property and three retail properties. These projects, if developed as anticipated, are expected to contain approximately 1,914 units, 162,000 square feet and 775,000 square feet, respectively, and the total investment, including land acquisition costs, is projected to be approximately $360.6 million, of which $263.2 million has been invested to date as of June 30, 2008. We also continued with the development of one for-sale residential project including 101 units, and two residential lot developments, including an aggregate of 436 lots. If these communities are developed as anticipated, the total investment, including land acquisition costs, is projected to be approximately $82.3 million, of which $64.4 million has been invested through June 30, 2008.

     In addition to the above mentioned wholly-owned development projects, we continued with the development of one partially-owned unconsolidated multifamily apartment community and two partially-owned unconsolidated retail properties containing 541 units and 315,000 square feet, respectively. If these projects are developed as anticipated, our portion of the total investment is projected to be approximately $49.0 million, of which approximately $23.6 million has been invested through June 30, 2008. As of June 30, 2008, we have invested $219.4 million in future development projects and certain parcels of land that were acquired for development. We anticipate the commercial developments will generally be sold into joint ventures upon completion with the capital to be recycled into additional development opportunities.

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     We regularly incur expenditures in connection with the re-leasing of our office and retail space, principally in the form of tenant improvements and leasing commissions. The amounts of these expenditures can vary significantly depending on negotiations with tenants. We also incur expenditures for certain recurring capital expenses. During the three and six months ended June 30, 2008, we incurred approximately $1.0 million and $2.6 million, respectively, related to tenant improvements and leasing commissions, and approximately $6.3 million and $10.9 million, respectively, of recurring capital expenditures on consolidated properties. Since the closing of the office and retail joint venture transactions in the second quarter of 2007, expenses related to the office and retail joint venture properties have been incurred by the respective joint ventures and are being paid for out of cash from the joint ventures’ operations.

     Distributions

     The distribution on our common shares payable on August 11, 2008 to holders of record on August 4, 2008, is $0.50 per share. We also pay regular quarterly distributions on our preferred shares and on common and preferred units in CRLP. The maintenance of these dividends is subject to various factors, including the discretion of our Board of Trustees, our ability to pay dividends under Alabama law, the availability of cash to make the necessary distribution payments and the effect of REIT distribution requirements, which require at least 90% of our REIT level taxable income to be distributed to shareholders (excluding net capital gains).

Contingencies

     We are involved in a contract dispute with a general contractor in connection with construction costs and cost overruns with respect to certain of our for-sale projects, which are being developed in a joint venture in which we are a majority owner. The contractor is affiliated with our joint venture partner.

• In connection with the dispute, in January 2008, the contractor filed a lawsuit against us alleging, among other things, breach of contract, enforcement of a lien against real property, misrepresentation, conversion, declaratory judgment and an accounting of costs, and is seeking $10.3 million in damages, plus consequential and punitive damages.

• Certain of the subcontractors, vendors and other parties, involved in the projects, including purchasers of units, have also made claims in the form of lien claims, general claims or lawsuits. We have been sued by purchasers of certain condominium units alleging breach of contract, fraud, construction deficiencies and misleading sales practices. Both compensatory and punitive damages are sought in these actions. Some of these claims may be resolved by mediation or arbitration.

     We are continuing to evaluate our options, including possible claims against the contractor, and intend to vigorously defend ourselves against these claims. However, no prediction of the likelihood, or amount, of any resulting loss or recovery can be made at this time and no assurance can be given that the matter will be resolved favorably.

     In connection with certain retail developments, we have received funding from municipalities for infrastructure costs. In most cases, the municipalities issue bonds that are repaid primarily from sales tax revenues generated from the tenants at each respective development. We have guaranteed the shortfall, if any, of tax revenues to the debt service requirements on the bonds. The total amount outstanding on these bonds was approximately $13.5 million and $11.3 million at June 30, 2008 and December 31, 2007, respectively. At June 30, 2008 and December 31, 2007, no liability was recorded for these guarantees.

     In April 2008, the Nor du Lac community development district (the “CDD”), a third-party governmental entity, issued $24.0 million of special assessment bonds. The funds from this bond issuance will be used by the CDD to construct infrastructure for the benefit of the Colonial Pinnacle Nor du Lac development (see Note 4 to our Notes to Consolidated Condensed Financial Statements included in this Quarterly Report on Form 10-Q). The repayment of these bonds will be funded by special assessments to the land owners within the CDD. In accordance with EITF 91-10, we have recorded restricted cash and other liabilities for the $24.0 million bond issuance. This transaction has been treated as a non-cash transaction in our Consolidated Condensed Statement of Cash Flows for the six months ended June 30, 2008.

     In connection with the office and retail joint venture transactions, as previously discussed, we assumed certain contingent obligations for a total of $15.7 million, of which $6.9 million remains outstanding as of June 30, 2008.

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     In January 2008, we received notification related to an unclaimed property audit for the States of Alabama and Tennessee. As of June 30, 2008, we are unable to estimate the extent or potential impact, if any, that this audit may have on our financial position or results of operations or cash flows.

     We are a party to various legal proceedings incidental to our business. In the opinion of management, the ultimate liability, if any, with respect to those proceedings is not presently expected to materially affect our financial position or results of operations or cash flows.

Off-Balance Sheet Arrangements

     At June 30, 2008, our pro-rata share of mortgage debt of unconsolidated joint ventures is $479.2 million. Under these unconsolidated joint venture non-recourse mortgage loans, we could, under certain circumstances, be responsible for portions of the mortgage indebtedness in connection with certain customary non-recourse carve-out provisions, such as environmental conditions, misuse of funds, and material misrepresentations. In addition, as more fully described in our 2007 Annual Report on Form 10-K, we have made certain guarantees in connection with our investment in unconsolidated joint ventures. We do not have any other off-balance sheet arrangements with any unconsolidated investments or joint ventures that we believe have or are reasonably likely to have a material effect on our financial condition, results of operations, liquidity or capital resources.

Critical Accounting Policies and Estimates

     Refer to our 2007 Annual Report on Form 10-K for a discussion of our critical accounting policies, which include real estate development, principles of consolidation, revenue recognition, valuation of receivables, and accounting policies for derivatives. During the six months ended June 30, 2008, other than the following, there were no material changes to these policies.

     Investment and Development

     Investment and development expenses consist primarily of costs related to abandoned pursuits. We incur costs prior to land acquisition including contract deposits, as well as legal, engineering and other external professional fees related to evaluating the feasibility of such developments. If we determine that it is not probable that we will develop a particular project, any related pre-development costs previously incurred are immediately expensed.

     Assets and Liabilities Measured at Fair Value

     On January 1, 2008, we adopted Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS No. 157”) for financial assets and liabilities. SFAS No. 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS No. 157 applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances.

     SFAS No. 157 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, SFAS No. 157 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

     Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

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Derivatives and Hedging

     Our objective in using derivatives is to add stability to interest expense and to manage our exposure to interest rate movements or other identified risks. To accomplish this objective, we primarily use interest rate swaps (including forward starting interest rate swaps) and caps as part of our cash flow hedging strategy. During the three months ended June 30, 2008, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

     As of June 30, 2008, we had certain interest rate caps with a fair value of less than $1,000 included in other assets. There was no change in net unrealized income for derivatives designated as cash flows for the three and six months ended June 30, 2008. The change in net unrealized income (loss) of $0.1 million and ($0.2) million for derivatives designated as cash flow hedges for the three and six months ended June 30, 2007, respectively, is a component of shareholders’ equity. There were no derivatives not designated as hedges for the three and six months ended June 30, 2008 and 2007, respectively.

     As of June 30, 2008, we had approximately $5.8 million in accumulated other comprehensive income related to settled or terminated derivatives that will be reclassified to interest expense as interest payments are made on the our hedged debt.

Inflation

     Leases at our multifamily properties generally provide for an initial term of six months to one year and allow for rent adjustments at the time of renewal. Leases at the office and retail properties typically provide for rent adjustments and for the pass-through to tenants of certain operating costs, including real estate taxes, common area maintenance expenses and insurance, during the lease term. All of these provisions permit us to increase rental rates or other charges to tenants in response to rising prices and, therefore, serve to minimize our exposure to the adverse effects of inflation.

     An increase in general price levels may immediately precede, or accompany, an increase in interest rates. At June 30, 2008, our exposure to rising interest rates was mitigated by the existing debt level of 56.4% of our total market capitalization and the high percentage of fixed rate debt, 88.6%. As it relates to the short-term, we anticipate increases in interest expense resulting from increasing inflation to be less than future increases in income before interest.

Funds From Operations

     We believe that Funds From Operations (“FFO”) is useful to investors as a measure of performance for an equity REIT that provides a relevant basis for comparison among REITs. FFO, as defined by the National Association of Real Estate Investment Trusts (NAREIT), means income (loss) before minority interest (determined in accordance with GAAP), excluding gains (losses) from debt restructuring and sales of depreciated property, plus real estate depreciation and after adjustments for unconsolidated partnerships and joint ventures. FFO is presented to assist investors in analyzing our performance. We believe that FFO is useful to investors because it provides an additional indicator of our financial and operating performance. This is because, by excluding the effect of real estate depreciation and gains (or losses) from sales of properties (all of which are based on historical costs which may be of limited relevance in evaluating current performance), FFO can facilitate comparison of operating performance among equity REITs. Our method of calculating FFO may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. FFO (i) does not represent cash flows from operations as defined by GAAP, (ii) is not indicative of cash available to fund all cash flow needs and liquidity, including our ability to make distributions, and (iii) should not be considered as an alternative to net income (as determined in accordance with GAAP) for purposes of evaluating our operating performance.

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     The following information is provided to reconcile net income available to common shareholders, the most comparable GAAP measure, to FFO, and to show the items included in our FFO for the periods indicated.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in thousands, except per share and unit data)	2008			2007			2008			2007
Net income available to common shareholders	$	9,074		$	304,934		$	23,306		$	336,802
Minority interest in CRLP		1,902			3,569			4,913			10,836
Minority interest in gain/(loss) on sales of undepreciated property		—			(82	)		—			(224	)
Total	$	10,976		$	308,421		$	28,219		$	347,414
Adjustments (consolidated):
Real estate depreciation		23,088			31,591			46,306			65,991
Real estate amortization		336			2,979			702			8,678
Consolidated gains from sales of property, net of income tax and minority interest		(7,450	)		(329,156	)		(12,294	)		(365,282	)
Gains from sales of undepreciated property, net of income tax and minority interest (1)		2,205			1,144			4,130			5,397
Adjustments (unconsolidated subsidiaries):
Real estate depreciation		5,292			3,717			10,441			7,399
Real estate amortization		2,460			1,587			4,818			3,054
Gains from sales of property		(4,497	)		(73	)		(16,793	)		(8,554	)
Funds from operations (2)	$	32,410		$	20,210		$	65,529			64,097
FFO per Share
Basic	$	0.57		$	0.36		$	1.15			1.13
Diluted	$	0.57		$	0.35		$	1.15			1.12
Weighted average common shares outstanding — basic		46,927			46,222			46,892			46,094
Weighted average partnership units outstanding — basic (3)		9,949			10,484			9,980			10,531
Weighted average shares and units outstanding — basic		56,876			56,706			56,872			56,625
Effect of diluted securities		168			653			169			640
Weighted average shares and units outstanding — diluted		57,044			57,359			57,041			57,265

(1)	We recognize incremental gains on condominium sales in FFO, net of provision for income taxes, to the extent that net sales proceeds, less costs of sales, from the sale of condominium units exceeds the greater of their fair value or net book value as of the date the property is acquired by our taxable REIT subsidiary.
(2)	Includes an $18.2 million impact from items related to the strategic transactions that occurred in the second quarter of 2007. The transaction related and other charges are as follows: $12.8 million related to loss on retirement of debt (which includes $0.3 million related to debt cost write-off included in Interest Expense and Debt Cost Amortization on the Consolidated Condensed Statements of Income), $1.5 million of restructuring charges, $1.4 million related to the initiation of the pension plan termination and $2.5 million due to an asset impairment charge. Each of these charges relates to our change in strategy and were incurred during the three months ended June 30, 2007.
(3)	Represents the weighted average of outstanding units of minority interest in CRLP.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

     As of June 30, 2008, we had approximately $199.2 million of outstanding variable rate debt. We do not believe that the interest rate risk represented by our variable rate debt is material in relation to our $1.7 billion of outstanding total debt, our $3.3 billion of total assets and $3.1 billion total market capitalization as of June 30, 2008.

     If market rates of interest on our variable rate debt increase by 1%, the increase in annual interest expense on our variable rate debt would decrease annual future earnings and cash flows by approximately $2.0 million. If market rates of interest on our variable rate debt decrease by 1%, the decrease in interest expense on our variable rate debt would increase future earnings and cash flows by approximately $2.0 million. This assumes that the amount outstanding under our variable rate debt remains approximately $199.2 million, the balance as of June 30, 2008.

     As of June 30, 2008, we had no material exposure to market risk (including foreign currency exchange risk, commodity price risk or equity price risk).

Item 4. Controls and Procedures

(a) Disclosure controls and procedures.

     An evaluation was performed under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness as of June 30, 2008 of the design and operation of our disclosure controls and procedures as defined in Exchange Act Rule 13a-15. Based on that evaluation, the chief executive officer and chief financial officer concluded that the design and operation of these disclosure controls and procedures were effective as of the end of the period covered by this report.

(b) Changes in internal control over financial reporting.

     There were no changes in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15) that occurred during the quarter ended June 30, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

     On June 24, 2008, the Company issued 438,332 common shares of beneficial interest in exchange for common units of CRLP. The units were tendered for redemption by certain limited partners of CRLP in accordance with the terms of the agreement of limited partnership of CRLP. These common shares were issued in private placement transactions exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended, based on an exchange ratio of one common share for each common unit of CRLP.

     During the three months ended June 30, 2008, the Company repurchased 577,000 of the Company’s 8 1/8% Series D preferred depositary shares in a privately negotiated transaction for a total cost of approximately $14.0 million, at a price of $24.24 per depositary share as set forth in the table below. Each 8 1/8% Series D preferred depositary share represents 1/10 of a share of the Company’s 8 1/8% Series D Cumulative Redeemable Preferred Shares of Beneficial Interest, par value $0.01 per share. The Company wrote off approximately $0.5 million of issuance costs associated with these repurchases.

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Issuer Purchases of Equity Securities ⁽¹⁾

					Total Number of		Approximate
					Shares Purchased		Dollar Value of
					as Part of Publicly		Shares that May
	Total Number of		Average Price		Announced Plans		Yet Be Purchased
Period	Shares Purchased		Paid per Share		or Programs		Under the Program
June 1, 2008 - June 30, 2008		577,000	$	24.24		883,750	$	2,900,000

(1) On January 31, 2008, the Board of Trustees authorized the redemption of up to $25.0 million of the Company’s 8 1/8% Series D Preferred Depositary Shares in a limited number of separate, privately negotiated transactions. The shares set forth in the table above reflect the number of shares repurchased pursuant to such privately negotiated transactions during the three months ended June 30, 2008.

Item 4. Submission of Matters to a Vote of Security Holders

     The Annual Meeting of Shareholders of Colonial Properties Trust was held on April 23, 2008. The following is a tabulation of the voting on each proposal presented at the Annual Meeting:

Proposal 1 — Election of Trustees

Elected Trustees	Term Expires		Votes For		Votes Withheld
Weston M. Andress		2009		39,742,992		2,317,241
Carl F. Bailey		2009		41,108,378		951,855
M. Miller Gorrie		2009		39,728,634		2,331,599
William M. Johnson		2009		41,025,144		1,035,089
Glade M. Knight		2009		41,064,531		995,702
James K. Lowder		2009		39,741,213		2,319,020
Thomas H. Lowder		2009		39,746,175		2,314,058
Herbert A. Meisler		2009		41,005,257		1,054,976
Claude B. Nielsen		2009		41,033,167		1,027,066
Harold W. Ripps		2009		41,137,155		923,078
Donald T. Senterfitt		2009		41,102,350		957,883
John W. Spiegel		2009		41,014,484		1,045,749
C. Reynolds Thompson		2009		41,128,600		931,633

Proposal 2 — Approval of the Colonial Properties Trust 2008 Omnibus Incentive Plan

     The proposal to approve the Colonial Properties Trust 2008 Omnibus Incentive Plan was approved. The following votes were taken in connection with this proposal:

Votes For	25,872,217
Votes Against	4,168,451
Abstentions	214,081

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Proposal 3 — Ratification of Appointment of Independent Auditors

     The proposal to ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent auditor for the year ending December 31, 2008 was approved. The following votes were taken in connection with this proposal:

Votes For	41,187,432
Votes Against	298,821
Abstentions	573,979

Item 6. Exhibits

     The exhibits required by this Item are set forth on the Index of Exhibits attached hereto.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	COLONIAL PROPERTIES TRUST
Date: August 8, 2008	By:	/s/ Weston M. Andress
		Weston M. Andress President and Chief Financial Officer
Date: August 8, 2008	By:	/s/ John E. Tomlinson
		John E. Tomlinson Executive Vice President & Chief Accounting Officer (Principal Accounting Officer)

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Index of Exhibits

12.1	Ratio of Earnings to Fixed Charges	Filed herewith	Page 50
15.1	Letter re: Unaudited Interim Financial Information	Filed herewith	Page 51
31.1	CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith	Page 52
31.2	CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith	Page 53
32.1	CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith	Page 54
32.2	CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith	Page 55

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