.
.
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EXHIBIT 99.2
THIRD QUARTER 2005
Supplemental Financial Data
TABLE OF CONTENTS
<Table>
<Caption>
Page
Consolidated Statements of Operations ............................................... 3
Calculation of Funds from Operations and Adjusted Funds From Operations ............ 6
Same Store Results .................................................................. 8
Consolidated Balance Sheets ......................................................... 11
Consolidated Debt Summary ........................................................... 12
Summary of Communities Under Construction ........................................... 15
Summary of Condominium Conversion Projects .......................................... 16
Community Acquisition and Disposition Summary ....................................... 17
Capitalized Costs Summary ........................................................... 19
Investments in Unconsolidated Real Estate Entities .................................. 20
Net Asset Value Supplemental Information ............................................ 22
Non-GAAP Financial Measures and Other Defined Terms ................................. 24
</Table>
The projections and estimates given in this document and other written or oral
statements made by or on behalf of the Company may constitute "forward-looking
statements" within the meaning of the federal securities laws. All
forward-looking statements are subject to certain risks and uncertainties that
could cause actual events to differ materially from those projected. Management
believes that these forward-looking statements are reasonable; however, you
should not place undue reliance on such statements. These statements are based
on current expectations and speak only as of the date of such statements. The
Company undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of future events, new information
or otherwise. The following are some of the factors that could cause the
Company's actual results to differ materially from the expected results
described in the Company's forward-looking statements: future local and national
economic conditions, including changes in job growth, interest rates, the
availability of financing and other factors; demand for apartments in the
Company's markets and the effect on occupancy and rental rates; the impact of
competition on the Company's business, including competition for tenants and
development locations for its apartment communities and competing for-sale
housing in the markets where the Company is completing condominium conversions
or developing new condominiums; the Company's ability to obtain financing or
self-fund the development or acquisition of additional multifamily rental and
for-sale housing; the uncertainties associated with the Company's current and
planned future real estate development, including actual costs exceeding the
Company's budgets or development periods exceeding expectations; uncertainties
associated with the timing and amount of asset sales and the resulting
gains/losses associated with such asset sales; uncertainties associated with the
Company's expansion into the condominium conversion and for-sale housing
business; conditions affecting ownership of residential real estate and general
conditions in the multi-family residential real estate market; the effects of
changes in accounting policies and other regulatory matters detailed in the
Company's filings with the Securities and Exchange Commission and uncertainties
of litigation; and the Company's ability to continue to qualify as a real estate
investment trust under the Internal Revenue Code. Other important risk factors
regarding the Company are included under the caption "Risk Factors" in the
company's annual report on Form 10-K dated December 31, 2004 and may be
discussed in subsequent filings with the SEC. The risk factors discussed in Form
10-K under the caption "Risk Factors" are specifically incorporated by reference
into this document.
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 2
POST PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share or unit data)
(Unaudited)
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- -----------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
REVENUES
Rental ....................................................... $ 71,242 $ 68,003 $ 207,714 $ 198,782
Other property revenues ...................................... 4,765 4,095 12,863 11,741
Other (1) .................................................... 64 814 196 936
------------ ------------ ------------ ------------
Total revenues .............................................. 76,071 72,912 220,773 211,459
------------ ------------ ------------ ------------
EXPENSES
Property operating and maintenance (exclusive of
items shown separately below) (2) ........................... 34,074 33,143 99,840 94,236
Depreciation ................................................. 18,950 20,371 57,896 59,683
General and administrative (3) ............................... 5,421 6,018 16,150 16,137
Development costs and other (4) .............................. 1,042 284 2,879 1,200
------------ ------------ ------------ ------------
Total expenses .............................................. 59,487 59,816 176,765 171,256
------------ ------------ ------------ ------------
OPERATING INCOME ............................................... 16,584 13,096 44,008 40,203
Interest income .............................................. 230 246 583 639
Interest expense ............................................. (14,455) (16,316) (45,340) (47,678)
Amortization of deferred financing costs ..................... (991) (1,065) (3,707) (3,273)
Equity in income of unconsolidated real estate
entities .................................................... 593 420 1,294 843
Gain on sale of technology investment (5) .................... -- -- 5,267 --
Minority interest in consolidated property
partnerships ................................................ 34 106 212 538
Minority interest of preferred unitholders ................... -- (980) -- (3,780)
Minority interest of common unitholders ...................... (12) 499 188 1,463
------------ ------------ ------------ ------------
INCOME (LOSS) FROM CONTINUING OPERATIONS .................... 1,983 (3,994) 2,505 (11,045)
------------ ------------ ------------ ------------
DISCONTINUED OPERATIONS (6)
Income from discontinued operations,
net of minority interest .................................... 272 2,201 4,909 11,582
Gains on sales of real estate assets, net of
minority interest and provision for income taxes ............ 72,734 -- 131,991 106,039
Loss in early extinguishment of indebtedness
associated with property sales, net of minority
interest (7) ................................................ (1,748) -- (3,043) (3,849)
------------ ------------ ------------ ------------
INCOME FROM DISCONTINUED OPERATIONS ......................... 71,258 2,201 133,857 113,772
------------ ------------ ------------ ------------
NET INCOME (LOSS) .............................................. 73,241 (1,793) 136,362 102,727
Dividends to preferred shareholders .......................... (1,909) (1,909) (5,728) (6,416)
Redemption costs on preferred stock and units ................ -- (1,810) -- (3,526)
------------ ------------ ------------ ------------
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS ............. $ 71,332 $ (5,512) $ 130,634 $ 92,785
============ ============ ============ ============
PER COMMON SHARE DATA - BASIC (8)
Income (loss) from continuing operations (net of
preferred dividends and redemption costs) ................... $ -- $ (0.19) $ (0.08) $ (0.53)
Income from discontinued operations .......................... 1.77 0.06 3.33 2.87
------------ ------------ ------------ ------------
Net income (loss) available to common shareholders ........... $ 1.77 $ (0.14) $ 3.25 $ 2.34
============ ============ ============ ============
Weighted average common shares outstanding -- basic .......... 40,372 39,892 40,157 39,694
============ ============ ============ ============
PER COMMON SHARE DATA - DILUTED (8)
Income (loss) from continuing operations (net of
preferred dividends and redemption costs) ................... $ -- $ (0.19) $ (0.08) $ (0.53)
Income from discontinued operations .......................... 1.75 0.06 3.33 2.87
------------ ------------ ------------ ------------
Net income (loss) available to common shareholders ........... $ 1.75 $ (0.14) $ 3.25 $ 2.34
============ ============ ============ ============
Weighted average common shares outstanding --
diluted ..................................................... 40,813 39,892 40,157 39,694
============ ============ ============ ============
Dividends declared ........................................... $ 0.45 $ 0.45 $ 1.35 $ 1.35
============ ============ ============ ============
</Table>
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 3
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per share or unit data)
(1) For the three and nine months ended September 30, 2004, other revenue
included forfeited earnest money deposits from terminated property and land
sale contracts totaling $684.
(2) For the three and nine months ended September 30, 2004, property operating
and maintenance expenses included a charge of $703 relating to estimated
hurricane damage at the Company's Florida properties and a severance charge
of $569 for the elimination of certain property management positions.
(3) General and administrative expenses for the three and nine months ended
September 30, 2005 included legal and other professional fees totaling $169
and $706, respectively, related to shareholder litigation. For the three
and nine months ended September 30, 2004, general and administrative
expense included legal and professional fees totaling $499 and $1,386,
respectively, related to shareholder litigation, certain shareholder proxy
proposals, the settlement with the company's former chairman and CEO and
other matters. General and administrative expenses for the three and nine
months ended September 30, 2004 also included consulting and other
professional expenses of $620 relating to portfolio valuation and software
selection services.
(4) Development costs and other expenses for the three and nine months ended
September 30, 2005 and 2004 include development personnel and associated
costs not allocable to development projects and, in 2005, certain costs
associated with for-sale developments which are not capitalized.
(5) In the three months ended March 31, 2005, the Company sold its investment
in Rent.com, a privately-held internet leasing company, and recognized a
gain of $5,267.
(6) Under SFAS No. 144, the operating results of real estate assets designated
as held for sale are included in discontinued operations for all periods
presented. Additionally, all subsequent gains or additional losses on the
sale of these assets are included in discontinued operations.
For the three and nine months ended September 30, 2005, income from
discontinued operations included the results of operations of one
condominium conversion community classified as held for sale at September
30, 2005, as well as the operations of six communities sold in 2005 through
their sale dates and one condominium conversion community through its
sell-out date. For the three and nine months ended September 30, 2004,
income from discontinued operations included the results of operations of
the community classified as held for sale at September 30, 2005, six
communities sold in 2005, one condominium conversion community through its
sell-out date in 2005 and eight communities sold in 2004 through their sale
dates.
The operating revenues and expenses of these communities for the three and
nine months ended September 30, 2005 and 2004 were as follows:
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- -----------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
REVENUES
Rental ......................................................... $ 1,381 $ 7,200 $ 13,220 $ 34,704
Other property revenues ........................................ 185 668 1,242 3,070
------------ ------------ ------------ ------------
Total revenues ................................................. 1,566 7,868 14,462 37,774
------------ ------------ ------------ ------------
EXPENSES
Property operating and maintenance
(exclusive of items shown separately below) .................. 1,042 3,360 7,130 16,332
Depreciation ................................................... -- 1,491 -- 4,544
Interest ....................................................... 247 1,057 2,123 4,394
Minority interest in consolidated property
partnerships ................................................. -- (61) 14 (205)
Asset impairment charge ........................................ -- -- -- 626
------------ ------------ ------------ ------------
Total expenses ................................................. 1,289 5,847 9,267 25,691
------------ ------------ ------------ ------------
INCOME FROM DISCONTINUED OPERATIONS
BEFORE MINORITY INTEREST ..................................... 277 2,021 5,195 12,083
Minority interest .............................................. (5) 180 (286) (501)
------------ ------------ ------------ ------------
INCOME FROM DISCONTINUED OPERATIONS ............................ $ 272 $ 2,201 $ 4,909 $ 11,582
============ ============ ============ ============
</Table>
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 4
For the three months ended September 30, 2005, the Company recognized net
gains in discontinued operations of $74,715 ($70,718 net of minority
interest) from the sale of one community, containing 1,738 units. The sale
generated net proceeds of approximately $131,349, including $47,500 of
tax-exempt secured indebtedness assumed by the purchaser. For the nine
months ended September 30, 2005, the Company recognized net gains in
discontinued operations of $124,425 ($117,594 net of minority interest)
from the sale of six communities, containing 3,047 units. The sales
generated net proceeds of approximately $229,249, including $81,560 of
tax-exempt secured indebtedness assumed by the purchasers.
In addition, for the three and nine months ended September 30, 2005, gains
on sales of real estate assets includes the net gains of $2,374 ($2,016 net
of minority interest and provision for income taxes) and $15,886 ($14,397
net of minority interest and provision for income taxes), respectively,
from condominium sales at the Company's condominium conversion communities.
A summary of revenues and costs and expenses of condominium activities for
the three and nine months ended September 30, 2005 was as follows:
<Table>
<Caption>
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2005 2005
------------ ------------
Condominium revenues, net ............................. $ 10,900 $ 46,270
Condominium costs and expenses ........................ 8,526 30,384
------------ ------------
Gains on condominium sales, before minority
interest and income taxes ........................... 2,374 15,886
Minority interest ..................................... (88) (836)
Provision for income taxes ............................ (270) (653)
------------ ------------
Gains on condominium sales, net of minority
interest and provision for income taxes ............. $ 2,016 $ 14,397
============ ============
</Table>
For the nine months ended September 30, 2004, the Company recognized net
gains from discontinued operations of $113,739 ($106,039 net of minority
interest) from the sale of eight communities containing 3,880 units and
certain land parcels. Theses sales generated net proceeds of approximately
$242,962, including debt assumed by the purchasers of $104,325.
(7) For the three months ended September 30, 2005, the loss on early
extinguishment of indebtedness included the write-off of unamortized
deferred costs of $1,299 ($1,230, net of minority interest) relating to
tax-exempt indebtedness assumed in connection with the sale of one
community in August 2005, plus a loss of $547 ($518, net of minority
interest) in connection with the termination of related interest rate cap
agreements that were used as cash flow hedges of the assumed debt. For the
nine months ended September 30, 2005, the loss on early extinguishment of
indebtedness included the write-off of unamortized deferred costs of $2,265
($2,141, net of minority interest) relating to tax-exempt indebtedness
assumed in connection with the sale of two communities in May 2005 and one
community in August 2005, plus a loss of $955 ($902, net of minority
interest) in connection with the termination of related interest rate cap
agreements that were used as cash flow hedges of the assumed debt. For the
nine months ended September 30, 2004, the loss on early extinguishment of
indebtedness includes the write-off of unamortized deferred costs of $3,187
($2,972, net of minority interest) relating to tax-exempt indebtedness
assumed in connection with the sale of five properties in September 2004,
plus a loss of $941 ($877, net of minority interest) in connection with the
termination of related interest rate cap agreements that were used as cash
flow hedges of the assumed debt.
(8) Post Properties, Inc. is structured as an UPREIT, or Umbrella Partnership
Real Estate Investment Trust. Post GP Holdings, Inc., a wholly owned
subsidiary of the Company, is the sole general partner and, together with
Post LP Holdings, Inc., owns the controlling interest in Post Apartment
Homes, L.P., the Operating Partnership, through which the Company conducts
its operations. As of September 30, 2005, there were 42,644 units of the
Operating Partnership outstanding, of which 40,780, or 95.6%, were owned by
the Company. For the nine months ended September 30, 2005, the potential
dilution from the Company's outstanding stock options of 293 was
antidilutive to the continuing operations per share calculation. For the
three and nine months ended September 30, 2004, the potential dilution from
the Company's outstanding stock options of 98 and 67, respectively, was
antidilutive to the continuing operations per share calculation. As such,
these amounts were excluded from weighted average shares and units and the
income (loss) per share calculations for the nine months ended September
30, 2005 and 2004 and for the three months ended September 30, 2004.
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 5
POST PROPERTIES, INC.
CALCULATION OF FUNDS FROM OPERATIONS
AND ADJUSTED FUNDS FROM OPERATIONS AVAILABLE
TO COMMON SHAREHOLDERS AND UNITHOLDERS
(In thousands, except per share or unit data)
(Unaudited)
A reconciliation of net income available to common shareholders to funds from
operations available to common shareholders and unitholders and adjusted funds
from operations available to common shareholders and unitholders is provided
below.
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- -----------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS ............. $ 71,332 $ (5,512) $ 130,634 $ 92,785
Minority interest of common unitholders --
continuing operations ....................................... 12 (499) (188) (1,463)
Minority interest in discontinued operations (1) ............. 3,992 (180) 7,775 7,922
Depreciation on wholly-owned real estate assets, net (2) ..... 18,199 21,035 55,584 61,180
Depreciation on real estate assets held in
unconsolidated entities ..................................... 224 332 745 993
Gains on sales of real estate assets, net of
provision for income taxes -- discontinued operations ....... (76,819) -- (139,658) (113,739)
Incremental gains on condominium sales, net of
provision for income taxes (3) .............................. 1,497 -- 7,827 --
Gains on sales of real estate assets --
unconsolidated entities ..................................... (246) -- (445) --
Incremental gains on condominium sales --
unconsolidated entities (3) ................................. 258 -- 291 --
------------ ------------ ------------ ------------
FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS
AND UNITHOLDERS, AS DEFINED (A) .............................. 18,449 15,176 62,565 47,678
Gain on sale of technology investment ........................ -- -- (5,267) --
Loss on early extinguishment of indebtedness
associated with property sales .............................. 1,846 -- 3,220 4,128
Redemption costs on preferred stock and units ................ -- 1,810 -- 3,526
Asset impairment charge ...................................... -- -- -- 626
------------ ------------ ------------ ------------
FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS
AND UNITHOLDERS, EXCLUDING CERTAIN ITEMS AND CHARGES (B) ..... $ 20,295 $ 16,986 $ 60,518 $ 55,958
============ ============ ============ ============
FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS
AND UNITHOLDERS, AS DEFINED .................................. $ 18,449 $ 15,176 $ 62,565 $ 47,678
Recurring capital expenditures ............................... (2,350) (2,420) (7,172) (7,613)
Non-recurring capital expenditures ........................... (607) (1,058) (2,636) (3,604)
Straight-line adjustment for ground lease expenses ........... 310 -- 941 --
------------ ------------ ------------ ------------
ADJUSTED FUNDS FROM OPERATIONS AVAILABLE TO COMMON ............. 15,802 11,698 53,698 36,461
SHAREHOLDERS AND UNITHOLDERS (4) (C)
Gain on sale of technology investment ........................ -- -- (5,267) --
Loss on early extinguishment of indebtedness
associated with property sales .............................. 1,846 -- 3,220 4,128
Redemption costs on preferred stock and units ................ -- 1,810 -- 3,526
Asset impairment charge ...................................... -- -- -- 626
------------ ------------ ------------ ------------
ADJUSTED FUNDS FROM OPERATIONS AVAILABLE TO COMMON
SHAREHOLDERS AND UNITHOLDERS, EXCLUDING CERTAIN
ITEMS AND CHARGES (4) (D) .................................... $ 17,648 $ 13,508 $ 51,651 $ 44,741
============ ============ ============ ============
PER COMMON SHARE DATA -- BASIC
Funds from operations per share or unit, as defined (A/F) ...... $ 0.43 $ 0.36 $ 1.47 $ 1.12
Adjusted funds from operations per share or unit (4) (C/F) ..... $ 0.37 $ 0.28 $ 1.26 $ 0.86
Funds from operations per share or unit, excluding
certain items and charges (B/F) .............................. $ 0.48 $ 0.40 $ 1.42 $ 1.32
Adjusted funds from operations per share or unit,
excluding certain items and charges (4) (D/F) ................ $ 0.41 $ 0.32 $ 1.22 $ 1.05
Dividends declared (E) ......................................... $ 0.45 $ 0.45 $ 1.35 $ 1.35
Weighted average shares outstanding ............................ 40,372 39,892 40,157 39,694
Weighted average shares and units outstanding (F) .............. 42,536 42,433 42,492 42,457
</Table>
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 6
<Table>
PER COMMON SHARE DATA - DILUTED
Funds from operations per share or unit, as defined (A/G) ...... $ 0.43 $ 0.36 $ 1.46 $ 1.12
Adjusted funds from operations per share or unit (4) (C/G) ..... $ 0.37 $ 0.28 $ 1.26 $ 0.86
Funds from operations per share or unit, excluding certain
items and charges (B/G) ...................................... $ 0.47 $ 0.40 $ 1.41 $ 1.32
Adjusted funds from operations per share or unit, excluding
certain items and charges (4) (D/G) .......................... $ 0.41 $ 0.32 $ 1.21 $ 1.05
Dividends declared (E) ......................................... $ 0.45 $ 0.45 $ 1.35 $ 1.35
Weighted average shares outstanding (5) ........................ 40,813 39,990 40,451 39,761
Weighted average shares and units outstanding (5) (G) .......... 42,977 42,531 42,785 42,524
</Table>
(1) Represents the minority interest in earnings and gains on sales of real
estate assets reported as discontinued operations for the periods
presented.
(2) Depreciation on wholly-owned real estate assets is net of the minority
interest portion of depreciation in consolidated entities.
(3) The Company recognizes 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 the Company's taxable REIT subsidiary. See page 16 for further detail.
(4) Since the Company does not add back the depreciation of non-real estate
assets in its calculation of funds from operations, non-real estate related
capital expenditures of $177 and $265 for the three months and $1,155 and
$553 for the nine months ended September 30, 2005 and 2004, respectively,
are excluded from the calculation of adjusted funds from operations
available to common shareholders and unitholders.
(5) Diluted weighted average shares and units include 98 shares and units, for
the three months ended September 30, 2004 and 293 and 67 shares and units,
respectively, for the nine months ended September 30, 2005 and 2004, that
were antidilutive to the income (loss) per share computations under
generally accepted accounting principles.
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 7
POST PROPERTIES, INC.
SAME STORE RESULTS
(In thousands, except per share or unit data)
(Unaudited)
SAME STORE RESULTS
The Company defines fully stabilized or same store communities as those which
have reached stabilization prior to the beginning of the previous calendar year,
adjusted by communities sold and classified as held for sale. Same store net
operating income is a supplemental non-GAAP financial measure. See Table 1 on
page 26 for a reconciliation of same store net operating income to GAAP net
income. The operating performance and capital expenditures of the 52 communities
containing 20,024 apartment units which were fully stabilized as of January 1,
2004, is summarized as follows:
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- -----------------------
2005 2004 % CHANGE 2005 2004 % CHANGE
---------- ---------- ---------- ---------- ---------- ----------
Rental and other revenues ........ $ 65,255 $ 62,839 3.8% $ 191,183 $ 187,021 2.2%
Property operating and
maintenance expenses
(excluding depreciation and
amortization) .................. 25,557 24,653 3.7%(3) 75,128 72,831 3.2%(3)
---------- ---------- ---------- ----------
Same store net operating income .. $ 39,698 $ 38,186 4.0%(3) $ 116,055 $ 114,190 1.6%(3)
========== ========== ========== ==========
Capital expenditures (1)
Recurring
Carpet ......................... $ 836 $ 721 16.0% $ 2,095 $ 1,884 11.2%
Other .......................... 1,232 1,195 3.1% 3,870 3,981 (2.8)%
---------- ---------- ---------- ----------
Total recurring ............... 2,068 1,916 7.9% 5,965 5,865 1.7%
Non-recurring .................. 532 655 (18.8)% 1,865 2,616 (28.7)%
---------- ---------- ---------- ----------
Total capital expenditures (A) . $ 2,600 $ 2,571 1.1% $ 7,830 $ 8,481 (7.7)%
========== ========== ========== ==========
Total capital expenditures
per unit (A/20,024 UNITS) ..... $ 130 $ 128 1.6% $ 391 $ 424 (7.8)%
========== ========== ========== ==========
Average monthly rental rate
per unit (2) ................... $ 1,059 $ 1,035 2.3% $ 1,051 $ 1,034 1.6%
========== ========== ========== ==========
</Table>
(1) See Table 3 on page 29 for a reconciliation of these segment components
of property capital expenditures to total recurring capital expenditures
and total non-recurring capital expenditures as presented on the
consolidated cash flow statements prepared under GAAP.
(2) Average monthly rental rate is defined as the average of the gross actual
rates for occupied units and the anticipated rental rates for unoccupied
units divided by total units.
(3) Excluding the impact of straight-lining long-term ground lease expense of
approximately $310 and $941 for the three and nine months ended September
30, 2005, property operating and maintenance expense (excluding
depreciation and amortization) expenses would have been $25,247 and
$74,187, respectively, and would have increased 2.4% and 1.9%,
respectively, between periods and NOI would have been $40,008 and
$116,996, respectively, and would have increased 4.8% and 2.5%,
respectively, between periods.
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 8
SAME STORE OPERATING RESULTS BY MARKET --
COMPARISON OF 2005 TO 2004
(Increase (decrease) from same period in prior year)
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 2005 SEPTEMBER 30, 2005
---------------------------------------------------- ------------------------------------------------------
AVERAGE AVERAGE
ECONOMIC ECONOMIC
MARKET REVENUES(1) EXPENSES(1) NOI(1) OCCUPANCY REVENUES(1) EXPENSES(1) NOI(1) OCCUPANCY
----------- ----------- -------- --------- ----------- ----------- -------- ---------
Atlanta 1.6% 0.8%(2) 2.0%(2) (0.3)% 0.5% 1.6%(3) (0.1)%(3) (0.5)%
Dallas 6.2% 0.3% 11.5% 1.3% 3.2% 1.5% 4.6% 1.2%
Tampa 6.2% 3.8% 7.9% 1.3% 5.6% 2.5% 7.8% 2.2%
Washington, DC 5.3% 14.7%(2) 1.1%(2) (0.3)% 5.1% 14.5%(3) 0.5%(3) 0.4%
Charlotte 5.6% 2.4% 7.3% 2.3% 2.8% 2.0% 3.3% 0.3%
Houston 4.8% 28.1% (18.5)% 5.2% 0.6% 15.3% (12.5)% 1.3%
Denver 2.8% 2.8% 2.8% 2.9% 1.1% (6.5)% 5.4% 0.5%
New York 8.0% (7.3)% 14.9% 4.3% 3.1% (0.6)% 4.8% 2.4%
Orlando 5.2% (6.0)% 13.7% (1.9)% 4.8% (1.2)% 9.7% (0.3)%
-------- -------- -------- -------- -------- -------- -------- --------
Total 3.8% 3.7%(2) 4.0%(2) 0.7% 2.2% 3.2%(3) 1.6%(3) 0.5%
======== ======== ======== ======== ======== ======== ======== ========
</Table>
(1) See Table 2 on page 27 for a reconciliation of these components of same
store net operating income and Table 1 on page 26 for a reconciliation of
same store net operating income to GAAP net income.
(2) Excluding the impact of straight-lining long-term ground lease expense of
approximately $142 in Atlanta, GA and $168 in Washington, D.C. for the
three months ended September 30, 2005, expenses and NOI would have
(decreased) increased (0.5)% and 2.8% for Atlanta, GA and 4.9% and 5.5% for
Washington, D.C., respectively. Excluding the impact of straight-lining
long-term ground lease expense of approximately $310 for the three months
ended September 30, 2005, aggregate expenses would have increased 2.4% and
NOI would have increased 4.8% between periods. See Table 2 on page 27 for a
reconciliation of these components of same store net operating income.
(3) Excluding the impact of straight-lining long-term ground lease expense of
approximately $429 in Atlanta, GA and $512 in Washington, D.C. for the nine
months ended September 30, 2005, expenses and NOI would have increased 0.2%
and 0.7% for Atlanta, GA and 4.9% and 5.2% for Washington, D.C.,
respectively. Excluding the impact of straight-lining long-term ground
lease expense of approximately $941 for the nine months ended September 30,
2005, aggregate expenses would have increased 1.9% and NOI would have
increased 2.5% between periods. See Table 2 on page 27 for a reconciliation
of these components of same store net operating income.
SAME STORE OCCUPANCY BY MARKET
<Table>
<Caption>
AVERAGE ECONOMIC AVERAGE ECONOMIC
OCCUPANCY (1) OCCUPANCY (1)
% OF NOI ------------------------- -------------------------
------------------ THREE MONTHS ENDED NINE MONTHS ENDED PHYSICAL
THREE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, OCCUPANCY
APARTMENT SEPTEMBER 30, ------------------------- ------------------------- AT SEPTEMBER 30,
MARKET UNITS 2005 2005 2004 2005 2004 2005(2)
- --------------- ---------- ------------------ ---------- ---------- ---------- ---------- ----------------
Atlanta 9,668 46.2% 94.0% 94.3% 93.1% 93.6% 94.6%
Dallas 3,939 16.7% 94.5% 93.2% 93.7% 92.5% 93.8%
Tampa 2,089 11.2% 97.7% 96.4% 97.1% 94.9% 96.5%
Washington, DC 1,204 9.7% 97.8% 98.1% 98.0% 97.6% 95.3%
Charlotte 1,065 5.7% 98.1% 95.8% 95.7% 95.4% 95.5%
Houston 980 3.2% 93.4% 88.2% 90.0% 88.7% 96.3%
Denver 696 3.4% 93.6% 90.7% 91.0% 90.5% 94.0%
New York 138 2.5% 98.7% 94.4% 96.4% 94.0% 96.4%
Orlando 245 1.4% 97.2% 99.1% 98.0% 98.3% 95.1%
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total 20,024 100.0% 95.1% 94.4% 94.1% 93.6% 94.8%
========== ========== ========== ========== ========== ========== ==========
</Table>
(1) Average economic occupancy is defined as gross potential rent less vacancy
losses, model expenses and bad debt expenses divided by gross potential
rent for the period, expressed as a percentage. The calculation of average
economic occupancy does not include a deduction for net concessions and
employee discounts. Average economic occupancy, including these amounts
would have been 94.6% and 93.8% for the three months ended September 30,
2005 and 2004, respectively, and 93.5% and 93.2% for the nine months ended
September 20, 2005 and 2004, respectively. For the three months ended
September 30, 2005 and 2004, net concessions were $236 and $243,
respectively, and employee discounts were $108 and $111, respectively. For
the nine months ended September 30, 2005 and 2004, net concessions were
$848 and $442, respectively, and employee discounts were $325 and $341,
respectively.
(2) Physical occupancy is defined as the number of units occupied divided by
total apartment units, expressed as a percentage.
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 9
SAME STORE SEQUENTIAL COMPARISON
<Table>
<Caption>
THREE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, 2005 JUNE 30, 2005 % CHANGE
------------------ ------------------ ---------
Rental and other revenues ..................... $ 65,255 $ 63,515 2.7%
Property operating and maintenance expenses
(excluding depreciation and amortization) ... 25,557 24,727 3.4%
------------------ ------------------
Same store net operating income (1) ........... $ 39,698 $ 38,788 2.3%
================== ==================
Average economic occupancy .................... 95.1% 93.7% 1.4%
================== ==================
Average monthly rental rate per unit .......... $ 1,059 $ 1,051 0.8%
================== ==================
</Table>
(1) See Table 2 on page 27 for a reconciliation of these components of same
store net operating income and Table 1 on page 26 for a reconciliation of
same store net operating income to GAAP net income (loss).
- --------------------------------------------------------------------------------
SEQUENTIAL SAME STORE OPERATING RESULTS BY MARKET --
COMPARISON OF THIRD QUARTER OF 2005 TO SECOND QUARTER 2005
(Increase (decrease) between periods)
<Table>
<Caption>
AVERAGE
ECONOMIC
MARKET REVENUES (1) EXPENSES (1) NOI (1) OCCUPANCY
- ------------------- ---------------- -------------- -------------- --------------
Atlanta 1.7% 0.6% 2.4% 1.2%
Dallas 3.4% 4.3% 2.7% 0.9%
Tampa 3.1% 2.5% 3.5% 1.5%
Washington, DC 1.4% (5.2)% 5.2% (0.6)%
Charlotte 3.2% 9.4% 0.3% 1.6%
Houston 7.3% 27.7% (14.2)% 6.4%
Denver 6.3% 9.2% 4.8% 4.4%
New York 4.7% 0.3% 6.4% 1.6%
Orlando 4.6% (2.7)% 9.8% (2.4)%
---------------- -------------- -------------- --------------
Total 2.7% 3.4% 2.3% 1.4%
================ ============== ============== ==============
</Table>
(1) See Table 2 on page 27 for a reconciliation of these components of same
store net operating income and Table 1 on page 26 for a reconciliation of
same store net operating income to GAAP net income.
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 10
POST PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share or unit data)
<Table>
<Caption>
SEPTEMBER 30, DECEMBER 31,
2005 2004
--------------- ---------------
(UNAUDITED)
ASSETS .........................................................................
Real estate assets
Land ....................................................................... $ 270,166 $ 266,520
Building and improvements .................................................. 1,825,584 1,887,514
Furniture, fixtures and equipment .......................................... 210,179 214,954
Construction in progress ................................................... 38,550 19,527
Land held for future development ........................................... 56,512 18,910
--------------- ---------------
2,400,991 2,407,425
Less: accumulated depreciation ............................................. (508,386) (498,367)
Assets held for sale, net of accumulated depreciation of $0 and
$26,332 at September 30, 2005 and December 31, 2004, respectively (1) .... 9,221 68,661
--------------- ---------------
Total real estate assets ................................................. 1,901,826 1,977,719
Investments in and advances to unconsolidated real estate entities ........... 31,047 21,320
Cash and cash equivalents .................................................... 3,335 123
Restricted cash .............................................................. 4,277 1,844
Deferred charges, net ........................................................ 11,572 15,574
Other assets ................................................................. 33,215 37,262
--------------- ---------------
Total assets ............................................................. $ 1,985,272 $ 2,053,842
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable, including $0 and $34,060 of debt secured by assets held for
sale at September 30, 2005 and December 31, 2004, respectively ............. $ 957,985 $ 1,129,478
Accrued interest payable ..................................................... 11,780 7,677
Dividend and distribution payable ............................................ 19,190 19,203
Accounts payable and accrued expenses ........................................ 69,184 58,837
Security deposits and prepaid rents .......................................... 9,701 7,236
--------------- ---------------
Total liabilities .......................................................... 1,067,840 1,222,431
--------------- ---------------
Minority interest of common unitholders in Operating Partnership ............. 36,080 43,341
--------------- ---------------
Shareholders' equity
Preferred stock, $.01 par value, 20,000 authorized:
8 1/2 % Series A Cumulative Redeemable Shares, liquidation preference
$50 per share, 900 shares issued and outstanding ....................... 9 9
7 5/8 % Series B Cumulative Redeemable Shares, liquidation preference
$25 per share, 2,000 shares issued and outstanding ..................... 20 20
Common stock, $.01 par value, 100,000 authorized:
40,831 and 40,164 shares issued, 40,780 and 40,164 shares outstanding
at September 30, 2005 and December 31, 2004, respectively .................... 408 401
Additional paid-in capital ..................................................... 791,101 775,221
Accumulated earnings ........................................................... 101,265 25,075
Accumulated other comprehensive income (loss) .................................. (4,160) (8,668)
Deferred compensation .......................................................... (3,876) (3,988)
--------------- ---------------
884,767 788,070
Less common stock in treasury, at cost, 92 and 0 shares
at September 30, 2005 and December 31, 2004, respectively .................... (3,415) --
--------------- ---------------
Total shareholders' equity ..................................................... 881,352 788,070
--------------- ---------------
Total liabilities and shareholders' equity ..................................... $ 1,985,272 $ 2,053,842
=============== ===============
</Table>
(1) One community, originally containing 127 units, included in assets held for
sale at September 30, 2005 is being converted to condominiums through the
Company's taxable REIT subsidiaries.
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 11
POST PROPERTIES, INC.
CONSOLIDATED DEBT SUMMARY
(Dollars in thousands, except per share or unit data)
(Unaudited)
- --------------------------------------------------------------------------------
SUMMARY OF OUTSTANDING DEBT AT SEPTEMBER 30, 2005
<Table>
<Caption>
WEIGHTED AVERAGE RATE (1)
THREE MONTHS ENDED SEPTEMBER 30,
PERCENTAGE --------------------------------
TYPE OF INDEBTEDNESS BALANCE OF TOTAL 2005 2004
- ------------------------------------------ ------------ ------------- ------------- -------------
Unsecured fixed rate senior notes ........ $ 485,000 50.63% 6.51% 7.44%
Secured tax exempt variable rate notes (2) 28,495 2.97% 3.05% 1.85%
Secured conventional fixed rate notes .... 366,896 38.30% 6.25% 6.52%
Lines of credit .......................... 77,594 8.10% 4.02% 2.35%
------------ ------------- ------------- -------------
$ 957,985 100.00% 6.11% 6.42%
============ ============= ============= =============
</Table>
<Table>
<Caption>
PERCENTAGE
BALANCE OF TOTAL DEBT
------------ -------------
Total fixed rate debt .................... $ 851,896 88.93%
Total variable rate debt ................. 106,089 11.07%
------------ -------------
Total debt ............................. $ 957,985 100.00%
============ =============
</Table>
- --------------------------------------------------------------------------------
DEBT MATURITIES
<Table>
<Caption>
WEIGHTED AVERAGE RATE
AGGREGATE DEBT MATURITIES BY YEAR AMOUNT ON DEBT MATURITIES (1)
- ------------------------------------------ ------------ ----------------------
Remainder of 2005 ........................ $ 1,155 6.28%
2006 ..................................... 81,269 6.93%
2007 ..................................... 235,787(3) 5.64%
2008 ..................................... 4,557 6.22%
2009 ..................................... 75,901 5.50%
2010 and thereafter ...................... 559,316 6.27%
------------
$ 957,985
============
</Table>
- --------------------------------------------------------------------------------
DEBT STATISTICS
<Table>
<Caption>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------------------------
2005 2004
------------------ ------------------
Interest coverage ratio (4)(5)................................... 2.3x 2.1x
Fixed charge coverage ratio (4)(6)............................... 2.0x 1.8x
Total debt as a % of undepreciated real estate assets (adjusted
for joint venture partner's share of debt) (7)................. 39.7% 44.4%
Total debt and preferred equity as % of undepreciated real
estate assets (adjusted for joint venture partner's share of
debt) (7) .................................................... 43.6% 48.1%
</Table>
(1) Weighted average rate includes credit enhancements and other fees, where
applicable. The weighted average rates for the three months ended September
30, 2004 are based on the debt outstanding for that period.
(2) The Company has an interest rate cap arrangement that limits the Company's
exposure to increases in the base rate to 5.00 percent.
(3) Includes outstanding balances on line of credit of $77,594 maturing in
2007.
(4) Calculated for the nine months ended September 30, 2005 and 2004.
(5) Interest coverage ratio is defined as net income available for debt service
divided by interest expense. For purposes of this calculation, net income
available for debt service represents income from continuing operations,
before preferred or common minority interest, gains on sales of real estate
and investment sales, interest expense, depreciation and amortization. Net
income available for debt service was also adjusted for the Company's share
of depreciation and interest expense from unconsolidated entities and
interest expense used in the calculation was adjusted to include the
Company's share of interest expense from unconsolidated entities. The
calculation of the interest coverage ratio is a non-GAAP financial measure.
A reconciliation of net income available for debt service to income from
continuing operations and interest expense to consolidated interest expense
is included in Table 4 on page 30.
(6) Fixed charge coverage ratio is defined as net income available for debt
service divided by interest expense plus dividends to preferred
shareholders and distributions to preferred unitholders. For purposes of
this calculation, net income available for debt service represents earnings
from continuing operations, before preferred or common minority interest,
gains on sales of real estate and investment sales, interest expense,
depreciation and amortization. Net income available for debt service was
also adjusted for the Company's share of depreciation and interest expense
from unconsolidated entities and interest expense used in the calculation
was adjusted to include the Company's share of interest expense from
unconsolidated entities. The calculation of the fixed coverage ratio is a
non-GAAP financial measure. A reconciliation of net income available for
debt service to income from continuing operations and fixed charges to
consolidated interest expense plus preferred dividends to shareholders and
preferred distributions to unitholders is included in Table 4 on page 30.
(7) A computation of the debt ratios is included in Table 5 on page 31.
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 12
POST PROPERTIES, INC.
CONSOLIDATED DEBT SUMMARY (CONT.)
(Dollars in thousands, except per share or unit data)
(Unaudited)
- --------------------------------------------------------------------------------
FINANCIAL DEBT COVENANTS - SENIOR UNSECURED PUBLIC NOTES
<Table>
<Caption>
AS OF
COVENANT REQUIREMENT (1) SEPTEMBER 30, 2005
- ---------------------------------------------------------------------- ----------------------
Consolidated Debt to Total Assets cannot exceed 60% ................. 39%
Secured Debt to Total Assets cannot exceed 40% ...................... 16%
Total Unencumbered Assets to Unsecured Debt must be
at least 1.50/1 ................................................... 3.29x
Consolidated Income Available for Debt Service Charge
must be at least 1.50/1 ........................................... 2.33x
</Table>
(1) A summary of the public debt covenant calculations and reconciliations of
the financial components used in the public debt covenant calculations to
the most comparable GAAP financial measures are detailed below.
<Table>
<Caption>
RATIO OF CONSOLIDATED DEBT TO TOTAL ASSETS
- --------------------------------------------------------------------------------
AS OF
SEPTEMBER 30, 2005
--------------------
Consolidated debt, per balance sheet (A) .............. $ 957,985
===================
Total assets, as defined (B) (Table A) ................ $ 2,482,086
===================
Computed ratio (A/B) .................................. 39%
===================
Required ratio (cannot exceed) ........................ 60%
===================
RATIO OF SECURED DEBT TO TOTAL ASSETS
- --------------------------------------------------------------------------------
Secured conventional fixed rate notes ................. $ 366,896
Secured tax exempt variable rate notes ................ 28,495
-------------------
Total secured debt (C) ............................ $ 395,391
===================
Computed ratio (C/B) ................................. 16%
===================
Required ratio (cannot exceed) ....................... 40%
===================
RATIO OF TOTAL UNENCUMBERED ASSETS TO UNSECURED DEBT
- --------------------------------------------------------------------------------
Consolidated debt, per balance sheet (A) .............. $ 957,985
Total secured debt (C) ................................ (395,391)
-------------------
Total unsecured debt (D) .......................... $ 562,594
===================
Total unencumbered assets, as defined (E) (Table A) .. $ 1,850,866
===================
Computed ratio (E/D) ................................. 3.29x
===================
Required minimum ratio ............................... 1.50x
===================
RATIO OF CONSOLIDATED INCOME AVAILABLE FOR DEBT SERVICE TO ANNUAL DEBT
SERVICE CHARGE
- --------------------------------------------------------------------------------
Consolidated Income Available for Debt Service, as
defined (F) (Table B) ................................ $ 150,008
===================
Annual Debt Service Charge, as defined (G) (Table B) .. $ 64,477
===================
Computed ratio (F/G) (2) .............................. 2.33x
===================
Required minimum ratio ................................ 1.50x
===================
</Table>
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 13
POST PROPERTIES, INC.
CONSOLIDATED DEBT SUMMARY (CONT.)
(Dollars in thousands, except per share or unit data)
(Unaudited)
TABLE A
<Table>
<Caption>
CALCULATION OF TOTAL ASSETS AND TOTAL UNENCUMBERED ASSETS FOR PUBLIC
DEBT COVENANT COMPUTATIONS
- -----------------------------------------------------------------------------------------------
AS OF
SEPTEMBER 30, 2005
--------------------
Total real estate assets ............................................. $ 1,901,826
Add:
Investments in unconsolidated real estate entities ................. 31,047
Accumulated depreciation .......................................... 508,386
Other tangible assets (cash, restricted cash,
other assets, exclusive of receivables) ......................... 40,827
--------------------
Total assets for public debt covenant computations ................... 2,482,086
Less:
Encumbered real estate assets ..................................... 631,220
--------------------
Total unencumbered assets for public debt covenant computations ...... $ 1,850,866
====================
</Table>
TABLE B
<Table>
<Caption>
CALCULATION OF CONSOLIDATED INCOME AVAILABLE FOR DEBT SERVICE AND
ANNUAL DEBT SERVICE CHARGE FOR PUBLIC DEBT COVENANT COMPUTATIONS(1)
- -----------------------------------------------------------------------------------------------
NINE MONTHS ENDED
CONSOLIDATED INCOME AVAILABLE FOR DEBT SERVICE SEPTEMBER 30, 2005
- ---------------------------------------------------------------------- --------------------
Net income ........................................................... $ 136,362
Add:
Minority interests ................................................ 7,588
Provision for income taxes ........................................ 653
--------------------
Income before minority interest and provision for income taxes ....... 144,603
Add:
Depreciation ...................................................... 57,896
Depreciation (company share) of assets held in unconsolidated
entities ......................................................... 745
Amortization of deferred financing costs .......................... 3,707
Interest expense .................................................. 45,340
Interest expense (company share) of assets held in unconsolidated
entities ......................................................... 895
Interest expense of discontinued operations ....................... 2,123
Loss on early extinguishment of indebtedness associated with
property sales ................................................... 3,220
Less:
Gains on sales of real estate assets -- discontinued operations ... (140,311)
Gains on sales of real estate assets -- unconsolidated entities ... (445)
Gain on sale of technology investment ............................. (5,267)
--------------------
Consolidated income available for debt service ....................... $ 112,506
====================
Consolidated income available for debt service (annualized) .......... $ 150,008
====================
ANNUAL DEBT SERVICE CHARGE
- -----------------------------------------------------------------------------------------------
Consolidated interest expense ........................................ $ 45,340
Interest expense (company share) of assets held in unconsolidated
entities ............................................................. 895
Interest expense of discontinued operations .......................... 2,123
--------------------
$ 48,358
====================
Annual debt service charge (interest expense annualized) ............. $ 64,477
====================
</Table>
(1) The actual calculation of these ratios requires the use of annual trailing
financial data. These computations reflect annualized 2005 results for
comparison and presentation purposes. The computations using annual
trailing financial data also reflect compliance with the debt covenants.
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 14
POST PROPERTIES, INC.
SUMMARY OF COMMUNITIES UNDER CONSTRUCTION
<Table>
<Caption>
ESTIMATED
ESTIMATED AMOUNT SPENT QUARTER OF QUARTER OF QUARTER OF
NUMBER CONSTRUCTION AS OF CONSTRUCTION FIRST UNITS STABILIZED
METROPOLITAN AREA OF UNITS COST 09/30/2005 START AVAILABLE OCCUPANCY (1)
- ------------------------------------------ -------- --------------- -------------- ------------ ----------- -------------
CONSTRUCTION/LEASE-UP ($ IN MILLIONS) ($ IN MILLIONS)
COMMUNITIES
WASHINGTON D.C.
Post Carlyle(TM) -- Apartment and
Condominiums (2)........................ 350 $ 98 $ 39 4Q 2004 2Q 2006 2Q 2007
-------- --------------- --------------
CONSTRUCTION/LEASE-UP COMMUNITIES ..... 350 $ 98 $ 39
WEIGHTED AVERAGE PROJECTED PROPERTY NET
OPERATING INCOME AS A % OF TOTAL ESTIMATED
CONSTRUCTION COST -- APARTMENTS (3) 6.75% - 7.0%
---------------
</Table>
(1) The Company defines stabilized occupancy as the earlier to occur of (i) the
attainment of 95% physical occupancy on the first day of any month or (ii)
one year after completion of construction.
(2) The condominium component of the project, consisting of 145 units, is being
developed in a majority owned joint venture with a Washington D.C. based
developer. As of October 25, 2005, the Company has 71 units under contract
for sale upon completion and delivery of the units. The first condominium
units at this project are expected to be delivered in late 2006. There can
be no assurance that condominium units under contract will close.
(3) The calculation represents the aggregate projected unlevered property net
operating income to be earned by the apartment component of the community
in its first year of stabilized operations (after deducting a 3% management
fee and a $300 per unit capital reserve) divided by aggregate estimated
construction costs of the apartment community. The Company uses property
net operating income as a management tool to measure the operating
performance of its apartment communities.
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 15
POST PROPERTIES, INC.
SUMMARY OF CONDOMINIUM CONVERSION PROJECTS
(Dollars in thousands)
<Table>
<Caption>
AVERAGE
YEAR SALE TOTAL UNIT PROJECT TRANSFER
PROJECT LOCATION COMPLETED START DATE UNITS SQ. FT. (1) PRICE (2)
- ---------------- ------------ --------- ---------- ---------- ----------- ----------------
588(TM) Dallas, TX 2000 Q1 2005 127 1,470 $ 20,274
Hyde Park Walk(TM) Tampa, FL 1997 Q2 2005 134 890 16,755
The Peachtree
Residences(TM) (4) Atlanta, GA 2001 Q2 2005 121 1,340 30,190
---------- ----------------
382 $ 67,219
========== ================
</Table>
<Table>
<Caption>
UNITS (3)
----------------------------------
AVAILABLE THREE MONTHS ENDED NINE MONTHS ENDED
FOR SALE SEPTEMBER 30, 2005 SEPTEMBER 30, 2005
------------------- ------------------------------------ -----------------------------------
GROSS FFO GROSS FFO
UNITS UNDER UNITS SALES INCREMENTAL UNITS SALES INCREMENTAL
PROJECT TOTAL CLOSED CONTRACT AVAILABLE CLOSED PRICE GAIN ON SALE(5)(6) CLOSED PRICE GAIN ON SALE(5)(6)
----- ------ -------- --------- ------ ------- ------------------ ------ ------- ------------------
588(TM) 127 88 14 25 29 $ 9,239 $ 1,121 82 $20,679 $ 2,303
Hyde Park Walk(TM) 134 134 -- -- 6 2,672 646 134 29,338 6,177
The Peachtree
Residences(TM) (4) 121 31 17 73 13 4,759 258 25 9,181 291
----- ------ -------- --------- ------ ------- -------------- ------ ------- ------------
382 253 31 98 48 $16,670 $ 2,025 241 $59,198 $ 8,771
===== ====== ======== ========= ====== ======= ============== ====== ======= ============
</Table>
(1) Average square footage information is based on approximate amounts and
individual unit sizes may vary.
(2) Transfer price for purposes of computing incremental gains on condominium
sales included in FFO reflects the greater of (1) the estimated fair value
on the date the project was acquired by the Company's taxable REIT
subsidiary (as supported by independently-prepared, third-party appraisals)
or (2) its net book value at that time.
(3) Unit status is as of October 25, 2005. There can be no assurance that
condominium units under contract will close.
(4) The Peachtree Residences(TM) is owned in an unconsolidated entity, where
the Company's equity ownership is 35%. Amounts shown, except for
incremental gains on condominium sales included in FFO, represents gross
amounts at the unconsolidated entity level.
(5) The Company recognizes 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 "transfer
price" as described in Note 2 above.
(6) Excludes the impact of income tax expense attributable to gains on
condominium sales of $270 and $653 for the three and nine months ended
September 30, 2005, respectively.
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 16
POST PROPERTIES, INC.
COMMUNITY ACQUISITION AND DISPOSITION SUMMARY
<Table>
<Caption>
GROSS AMOUNT GROSS
PROPERTY NAME/PERIOD LOCATION YEAR BUILT PER UNIT AMOUNT
- ------------------------------ -------------------- ---------------- ------------------------- -------------------
ACQUISITIONS
Q1 2004
None
Q2 2004
Post Tysons Corner(TM) Washington, D.C. 1990 $ 171,972 $ 85,814,000
Q3 2004
None
Q4 2004
None
-------------------
2004 YTD Total $ 85,814,000
===================
Weighted Average Cap Rate --
Acquisitions - 2004 5.5%(1)
===================
Q1 2005
None
Q2 2005
Post Ballantyne Charlotte, NC 2004 $ 116,771 $ 37,250,000
Q3 2005
None
-------------------
2005 YTD Total $ 37,250,000
===================
Weighted Average Cap Rate --
Acquisitions -- 2005 5.6%(2)
===================
DISPOSITIONS
Q1 2004
Post Townlake(R) Dallas, TX 1986-1987 $ 56,212 $ 22,372,000(3)
Q2 2004
Post Windhaven(TM) Dallas, TX 1991 $ 52,743
Post Mill(R) (5) Atlanta, GA 1985-1986
Post Canyon(R) (5) Atlanta, GA 1986
Post Chase(R) (5) Atlanta, GA 1987
Post Court(R) (5) Atlanta, GA 1988
Post Lane(R) (5) Atlanta, GA 1988
Post Lake(R) (5) Orlando, FL 1988 $ 65,409(5) $ 221,750,000
Q3 2004
None
Q4 2004
None
-------------------
2004 YTD Total $ 244,122,000
===================
Weighted Average Cap Rate --
Dispositions -- 2004 6.6%(4)
===================
Q1 2005
None
Q2 2005
Post American Beauty Mill(TM) Dallas, TX 1998 $ 63,125
Post Bennie Dillon(TM) Nashville, TN 1999 $ 119,767
Post Corners(R) Atlanta, GA 1986 $ 63,696
Post Walk(R) Atlanta, GA 1984-1987 $ 88,445
Post White Rock(R) Dallas, TX 1988 $ 59,420 $ 99,050,000
Q3 2005
Post Village(R) Atlanta, GA 1983-1988 $ 76,237 $ 132,500,000
2005 YTD Total
-------------------
$ 231,550,000
===================
Weighted Average Cap Rate --
Dispositions -- 2005 5.9%(4)
===================
</Table>
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 17
(1) Based on projected first twelve-month net operating income after adjustment
for management fee (3.0)% and capital reserves ($300/unit). Also assumes
that the Company will initially spend up to $2 million to improve the
community for total capitalized costs of approximately $88 million.
(2) Based on projected first twelve-month net operating income after adjustment
for management fee (3.0)% and capital reserves ($300/unit). Also assumes
that the Company will initially spend up to $2 million relating to closing
costs, reimbursement of a fee to terminate a loan commitment that a seller
had previously entered into in connection with the community and other
amounts it plans to spend to improve the community for total capitalized
costs of approximately $39.3 million.
(3) Excludes approximately $2.1 million in gross proceeds from the sale of land
in Dallas, TX and Tampa, FL.
(4) Based on trailing twelve-month net operating income after adjustments for
management fee (3.0)% and capital reserves ($300/unit).
(5) The gross average amount per unit for these properties is $65,409.
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 18
POST PROPERTIES, INC.
CAPITALIZED COSTS SUMMARY
(Dollars in thousands, except per share or unit data)
(Unaudited)
The Company has a policy of capitalizing those expenditures relating to the
acquisition of new assets and the development and construction of new apartment
communities. In addition, the Company capitalizes expenditures that enhance the
value of existing assets and expenditures that substantially extend the life of
existing assets. All other expenditures necessary to maintain a community in
ordinary operating condition are expensed as incurred. Additionally, for new
development communities, carpet, vinyl and blind replacements are expensed as
incurred during the first five years (which corresponds to the estimated
depreciable life of these assets) after construction completion. Thereafter,
these replacements are capitalized. Further, the Company expenses as incurred
all interior and exterior painting of communities.
The Company capitalizes interest, real estate taxes, and certain internal
personnel and associated costs related to apartment communities under
development and construction. The internal personnel and associated costs are
capitalized to the projects under development based upon the effort identifiable
with such projects. The Company treats each unit in an apartment community
separately for cost accumulation, capitalization and expense recognition
purposes. Prior to the commencement of leasing activities, interest and other
construction costs are capitalized and are reflected on the balance sheet as
construction in progress. The Company ceases the capitalization of such costs as
the residential units in a community become substantially complete and available
for occupancy. This results in a proration of these costs between amounts that
are capitalized and expensed as the residential units in a development community
become available for occupancy. In addition, prior to the completion of units,
the Company expenses as incurred substantially all operating expenses (including
pre-opening marketing and property management and leasing personnel expenses) of
such communities.
A summary of community development improvements and other capitalized
expenditures for the three and nine months ended September 30, 2005 and 2004 is
detailed below.
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------- ---------------------
2005 2004 2005 2004
-------- -------- -------- --------
DEVELOPMENT AND ACQUISITION EXPENDITURES ........ $ 11,477 $ 37,249 $104,874 $ 37,542
NON-RECURRING CAPITAL EXPENDITURES
Revenue generating additions and improvements (1) -- -- -- 26
Other community additions and improvements (2) .. 607 1,058 2,636 3,604
RECURRING CAPITAL EXPENDITURES
Carpet replacements and other community additions
and improvements (3) .......................... 2,350 2,420 7,172 7,613
Corporate additions and improvements ........... 177 265 1,155 553
-------- -------- -------- --------
$ 14,611 $ 40,992 $115,837 $ 49,338
======== ======== ======== ========
OTHER DATA
Capitalized interest ........................... $ 770 $ 287 $ 1,553 $ 787
======== ======== ======== ========
Capitalized development costs and fees (4) ..... $ 316 $ 249 $ 882 $ 748
======== ======== ======== ========
</Table>
(1) Represents expenditures for major renovations of communities, water
sub-metering equipment and other unit upgrade costs that enhance the rental
value of such units.
(2) Represents property improvement expenditures that generally occur less
frequently than on an annual basis.
(3) Represents property improvement expenditures of a type that are expected to
be incurred on an annual basis.
(4) Reflects personnel and associated costs capitalized to construction and
development activities.
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 19
POST PROPERTIES, INC.
INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES
(Dollars in thousands, except per share or unit data)
(Unaudited)
The Company holds investments in three individual limited liability companies
(the "Property LLCs") with an institutional investor. Two of the Property LLCs
own single apartment communities. The third Property LLC is converting its
apartment community, containing 121 units, into for-sale condominiums. The
Company holds a 35% equity interest in the Property LLCs.
The Company accounts for its investments in these Property LLCs using the equity
method of accounting. The excess of the Company's investment over its equity in
the underlying net assets of the Property LLCs was approximately $6,266 at
September 30, 2005. The excess investment related to Property LLCs holding
apartment communities is being amortized as a reduction to earnings on a
straight-line basis over the lives of the related assets. The excess investment
of approximately $742 at September 30, 2005 related to the Property LLC holding
the condominium conversion community will be recognized as additional cost of
sales as the underlying condominiums are sold. The Company provides real estate
services (development, construction and property management) to the Property
LLCs for which it earns fees.
The operating results of the Company include its proportionate share of net
income (loss) from the investments in the Property LLCs. A summary of financial
information for the Property LLCs in the aggregate was as follows:
<Table>
<Caption>
SEPTEMBER 30, DECEMBER 31,
Balance Sheet Data 2005 2004
- ------------------------------------------------------- ------------- ------------
Real estate assets, net of accumulated depreciation of
$7,708 and $9,712, respectively ..................... $ 96,613 $ 124,072
Assets held for sale, net (1) ......................... 21,205 --
Cash and other ........................................ 1,686 2,797
------------ ------------
Total assets .......................................... $ 119,504 $ 126,869
============ ============
Mortgage notes payable ................................ $ 66,999 $ 83,468
Mortgage notes payable to Company ..................... 10,275 --
Other liabilities ..................................... 830 1,296
------------ ------------
Total liabilities ..................................... 78,104 84,764
Members' equity ...................................... 41,400 42,105
------------ ------------
Total liabilities and members' equity ................. $ 119,504 $ 126,869
============ ============
Company's equity investment ........................... $ 20,772 $ 21,320
============ ============
</Table>
(1) Includes one community, originally containing 121 units, being converted
into condominiums through a taxable REIT subsidiary.
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- ------------------------------
Income Statement Data 2005 2004 2005 2004
- ------------------------------------------------------- ------------ ------------ ------------ ------------
Revenue
Rental ............................................. $ 2,720 $ 2,690 $ 8,081 $ 7,868
Other property revenues ............................ 230 213 645 600
------------ ------------ ------------ ------------
Total revenues ..................................... 2,950 2,903 8,726 8,468
------------ ------------ ------------ ------------
Expenses
Property operating and maintenance ................. 877 806 2,676 2,643
Depreciation and amortization ...................... 656 650 1,964 1,927
Interest ........................................... 688 688 2,064 1,970
------------ ------------ ------------ ------------
Total expenses ..................................... 2,221 2,144 6,704 6,540
------------ ------------ ------------ ------------
Income from continuing operations ..................... 729 759 2,022 1,928
------------ ------------ ------------ ------------
Discontinued Operations
Loss from discontinued operations .................. (23) (75) (119) (239)
Gains on sales of real estate assets ............... 994 -- 1,849 --
Loss on early extinguishment of debt ............... -- -- (273) --
------------ ------------ ------------ ------------
Income (loss) from discontinued operations ............ 971 (75) 1,457 (239)
------------ ------------ ------------ ------------
Net income ............................................ $ 1,700 $ 684 $ 3,479 $ 1,689
============ ============ ============ ============
Company's share of net income ......................... $ 593 $ 420 $ 1,294 $ 843
============ ============ ============ ============
</Table>
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 20
For the three and nine months ended September 30, 2005, gains on sales of real
estate assets represents net gains of $994 and $1,849, respectively, from
condominium sales at the condominium conversion community held by one of the
Property LLCs. A summary of revenues and costs and expenses of condominium
activities for the three and nine months ended September 30, 2005 was as
follows:
<Table>
<Caption>
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2005 2005
------------- -------------
Condominium revenues, net .... $ 4,383 $ 8,566
Condominium costs and expenses (3,389) (6,717)
------------- -------------
Gains on condominium sales ... $ 994 $ 1,849
============= =============
</Table>
At September 30, 2005, mortgage notes payable include a $49,999 mortgage note
that bears interest at 4.13%, requires monthly interest payments and annual
principal payments of $1 through 2009. Thereafter, the note requires monthly
principal and interest payments based on a 25-year amortization schedule and
matures in April 2034. The note is callable by the lender in May 2009 and on
each successive fifth year anniversary of the note thereafter. The note is
prepayable without penalty in May 2008. The additional mortgage note payable
totaling $17,000 bears interest at a rate of 4.04% and matures in 2008.
In March 2005, one of the Property LLCs elected to convert its apartment
community into for-sale condominiums. As a result of its decision to sell the
community through the condominium conversion process, the Property LLC prepaid
its third party mortgage note payable of $16,392 through secured borrowings from
the Company. The Property LLC incurred debt prepayment costs and expenses
associated with the write-off of unamortized deferred financing costs totaling
$273 in March 2005. The mortgage note payable to the Company has a fixed rate
component ($16,392) bearing interest at 4.28% and a variable rate component
bearing interest at LIBOR at 1.90%. This note is repayable from the proceeds of
condominium sales and matures in February 2008.
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 21
POST PROPERTIES, INC.
NET ASSET VALUE SUPPLEMENTAL INFORMATION
(Dollars in thousands, except per share or unit data)
(Unaudited)
This supplemental financial and other data provides adjustments to certain GAAP
financial measures and Net Operating Income, which is a supplemental non-GAAP
financial measure that the Company makes internally to calculate Net Asset Value
("NAV"). In addition, the Company believes that investors and analysts use
similar measures in estimating the Company's NAV. These measures, as adjusted,
are supplemental non-GAAP financial measures. With the exception of Net
Operating Income, the most comparable GAAP measure for each of the non-GAAP
measures presented below in the "As Adjusted" column is the corresponding number
presented in the first column listed below. In the information below, the
Company presents Net Operating Income for the quarter ended September 30, 2005
for properties stabilized by the beginning of the quarter ended September 30,
2005 so that a capitalization rate may be applied and an approximate value for
the assets determined. Properties not stabilized by the beginning of the quarter
ended September 30, 2005 are presented at full undepreciated cost. Other
tangible assets are also presented, as well as total liabilities and the
liquidation value of preferred shares. The Company believes it is important to
provide these measures to allow investors to easily develop their own
calculations of NAV. The Company also believes that internal and external NAV
estimates are a useful benchmark of the value of the Company's assets over time
and provide a useful measure for analyzing the Company's trading price on the
New York Stock Exchange.
FINANCIAL DATA
(In thousands)
<Table>
<Caption>
THREE MONTHS ENDED AS
INCOME STATEMENT DATA SEPTEMBER 30, 2005 ADJUSTMENTS ADJUSTED
- ------------------------------------------------------- ------------------ --------------- ---------------
Rental revenues ....................................... $ 71,242 $ (1,410)(1) $ 69,832
Other property revenues ............................... 4,765 (36)(1) 4,729
--------------- --------------- ---------------
Total rental and other revenues (A) .............. 76,007 (1,446) 74,561
Property operating & maintenance expenses
(excluding depreciation and amortization) (B) ...... 34,074 (5,792)(1) 28,282
--------------- --------------- ---------------
Property net operating income (Table 1) (A-B) ......... $ 41,933 $ 4,346 $ 46,279
=============== =============== ===============
Apartment units represented ........................... 21,791 (559)(2) 21,232
</Table>
<Table>
<Caption>
AS OF AS
OTHER ASSET DATA SEPTEMBER 30, 2005 ADJUSTMENTS ADJUSTED
- ------------------------------------------------------- ------------------ --------------- ---------------
Cash & equivalents .................................... $ 3,335 $ -- $ 3,335
Construction in progress .............................. 38,550 -- 38,550
Land held for development or sale ..................... 56,512 1,540(3) 58,052
Assets held for sale .................................. 9,221 5,882(4) 15,103
Investments in and advances to unconsolidated real
estate entities (including mortgage loans
receivable) ........................................ 31,047 (20,772)(5) 10,275
Other assets (6) ...................................... 37,492 -- 37,492
Cash and other assets of unconsolidated real estate
entities ........................................... 1,686 (1,096)(7) 590
--------------- --------------- ---------------
$ 177,843 $ (14,446) $ 163,397
=============== =============== ===============
OTHER LIABILITY DATA
- -------------------------------------------------------
Tax-exempt debt ....................................... $ 28,495 $ -- $ 28,495
Other notes payable ................................... 929,490 -- 929,490
Other liabilities (8) ................................. 109,855 (941)(8) 108,914
Total liabilities of unconsolidated
real estate entities (9) ........................... 78,104 (50,768)(9) 27,336
--------------- --------------- ---------------
$ 1,145,944 $ (51,709) $ 1,094,235
=============== =============== ===============
OTHER DATA
- -------------------------------------------------------
Liquidation value of preferred shares ................. $ 95,000 $ -- $ 95,000
Common shares outstanding ............................. 40,780 -- 40,780
Common units outstanding .............................. 1,865 -- 1,865
</Table>
(1) The adjustments include additions for the Company's 35% share of rental
revenues ($952) and other property revenues ($80) and property operating
and maintenance expenses (excluding depreciation and amortization) ($307)
from Post Biltmore and Post Massachusetts Avenue (properties accounted for
on the equity method of accounting). In addition, the adjustments reflect a
reduction of rental revenues ($2,362) and other revenues ($116) and
property operating and maintenance expenses (excluding depreciation and
amortization) ($2,152) relating to the Company's corporate apartment
business. Lastly, the adjustment to operating and maintenance expenses
(excluding depreciation and amortization) also includes a reduction for
corporate property management expenses ($3,637) and the impact of
straight-lining long-term ground lease expense ($310).
(2) The adjustment reflects a reduction for 205 units currently under
construction at Post Carlyle and a reduction for 65% of the 545 units held
in Post Biltmore and Post Massachusetts Avenue (two unconsolidated
entities) (a 354 unit reduction) to adjust the units held in unconsolidated
entities to the Company's 35% share of the units.
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 22
(3) The adjustment reflects land parcels included on the balance sheet as a
component of assets held for sale.
(4) The "As Adjusted" amount represents the book value of the Company's
wholly-owned condo conversion asset (Post Block 588) and its 35% share of
the book value of the unconsolidated condominium conversion asset (Post
Peachtree).
(5) The "As of September 30, 2005" amount represents the Company's investment
in and advances to unconsolidated entities. The adjustment reflects the
Company's equity investments in unconsolidated entities. The "As Adjusted"
amount represents a mortgage loan receivable from an unconsolidated entity.
(6) These amounts consist of restricted cash and other assets, per the
Company's balance sheet.
(7) The "As of September 30, 2005" amount represents cash and other assets of
unconsolidated entities. The adjustment includes a reduction for the
venture partners' 65% share of cash and other assets ($1,096) of the
Company's projects held in unconsolidated entities. The "As Adjusted"
amount represents the Company's 35% share of the cash and other assets of
all of the unconsolidated entities.
(8) The "As of September 30, 2005" amount consists of the sum of accrued
interest payable, dividends and distributions payable, accounts payable and
accrued expenses and security deposits and prepaid rents as reflected on
the Company's balance sheet. The adjustment represents a reduction for the
non-cash liability associated with straight-line, long-term ground lease
expense.
(9) The "As of September 30, 2005" amount represents total liabilities of
unconsolidated entities. The adjustment represents a reduction for the
venture partner's 65% share of liabilities of unconsolidated entities. The
"As Adjusted" amount represents the Company's 35% share of liabilities of
unconsolidated entities.
COMPUTATION OF IMPLIED PORTFOLIO CAPITALIZATION RATE
(In thousands)
<Table>
<Caption>
THREE MONTHS ENDED
CALCULATION OF ADJUSTED PROPERTY NET OPERATING INCOME SEPTEMBER 30, 2005
- ------------------------------------------------------------------------ -----------------------
Total rental and other revenues ...................................... $ 74,561(a)
Property operating & maintenance expenses
(excluding depreciation and amortization) ......................... (28,282)(a)
--------------------
Property net operating income ........................................ 46,279
Adjustments to property net operating income
Assumed property management fee (calculated at 3% of revenues) ..... (2,237)
Assumed property capital expenditure reserve ($300 per unit per year
based on 21,232 units) ........................................... (1,592)
--------------------
Property net operating income, adjusted for assumed management fee and
assumed capital expenditures ...................................... $ 42,450
====================
Property net operating income, adjusted for assumed management fee and
assumed capital expenditures (annualized) (A) ..................... $ 169,800
====================
</Table>
<Table>
<Caption>
AS OF
CALCULATION OF IMPLIED MARKET VALUE OF COMPANY GROSS ASSETS SEPTEMBER 30, 2005
- ------------------------------------------------------------------------ --------------------
Implied market value of common shares and units ...................... $ 1,588,526(b)
Other assets, as adjusted ............................................ (163,397)(a)
Other liabilities, as adjusted ....................................... 1,094,235(a)
Preferred stock, at liquidation value ................................ 95,000(a)
--------------------
Implied market value of Company gross assets (B) ..................... $ 2,614,364
====================
IMPLIED PORTFOLIO CAPITALIZATION RATE, BASED ON COMPANY'S STOCK PRICE
AS OF SEPTEMBER 30, 2005 (A/B) ....................................... 6.5%
====================
</Table>
(a) Represents amounts in the "as adjusted" column from the Financial Data
table reflected above.
(b) Calculated as follows:
<Table>
Common shares and units outstanding
at September 30, 2005 ............... 42,645
Per share market value of common stock
at September 30, 2005 ............... $ 37.25
------------
Implied market value of common shares
and units at September 30, 2005 ..... $ 1,588,526
============
</Table>
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 23
POST PROPERTIES, INC.
NON-GAAP FINANCIAL MEASURES AND OTHER DEFINED TERMS
(Dollars in thousands, except per share or unit data)
(Unaudited)
DEFINITIONS OF SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES AND OTHER DEFINED TERMS
The Company uses certain non-GAAP financial measures and other defined terms in
this accompanying Supplemental Financial Data. These non-GAAP financial measures
include FFO, AFFO, net operating income, same store capital expenditures, FFO
and AFFO excluding certain accounting charges, certain debt statistics and
ratios and economic gains (losses) on property sales. The definitions of these
non-GAAP financial measures are summarized below. The Company believes that
these measures are helpful to investors in measuring financial performance
and/or liquidity and comparing such performance and/or liquidity to other REITs.
FUNDS FROM OPERATIONS - The Company uses FFO as an operating measure. The
Company uses the NAREIT definition of FFO. FFO is defined by NAREIT to mean
net income (loss) available to common shareholders determined in accordance
with GAAP, excluding gains (losses) from extraordinary items and sales of
depreciable property, plus depreciation and amortization of real estate
assets, and after adjustment for unconsolidated partnerships and joint
ventures all determined on a consistent basis in accordance with GAAP. FFO
presented in the Company's press release and Supplemental Financial Data is
not necessarily comparable to FFO presented by other real estate companies
because not all real estate companies use the same definition. The
Company's FFO is comparable to the FFO of real estate companies that use
the current NAREIT definition.
Accounting for real estate assets using historical cost accounting under
GAAP assumes that the value of real estate assets diminishes predictably
over time. NAREIT stated in its April 2002 White Paper on Funds from
Operations that "since real estate asset values have historically risen or
fallen with market conditions, many industry investors have considered
presentations of operating results for real estate companies that use
historical cost accounting to be insufficient by themselves." As a result,
the concept of FFO was created by NAREIT for the REIT industry to provide
an alternate measure. Since the Company agrees with the concept of FFO and
appreciates the reasons surrounding its creation, the Company believes that
FFO is an important supplemental measure of operating performance. In
addition, since most equity REITs provide FFO information to the investment
community, the Company believes that FFO is a useful supplemental measure
for comparing the Company's results to those of other equity REITs. The
Company believes that the line on its consolidated statement of operations
entitled "net income (loss) available to common shareholders" is the most
directly comparable GAAP measure to FFO.
ADJUSTED FUNDS FROM OPERATIONS - The Company also uses adjusted funds from
operations ("AFFO") as an operating measure. AFFO is defined as FFO less
operating capital expenditures and after adjusting for the impact of
straight-line, long-term ground lease expense. The Company believes that
AFFO is an important supplemental measure of operating performance for an
equity REIT because it provides investors with an indication of the REIT's
ability to fund operating capital expenditures through earnings. In
addition, since most equity REITs provide AFFO information to the
investment community, the Company believes that AFFO is a useful
supplemental measure for comparing the Company to other equity REITs. The
Company believes that the line on its consolidated statement of operations
entitled "net income (loss) available to common shareholders" is the most
directly comparable GAAP measure to AFFO.
PROPERTY NET OPERATING INCOME - The Company uses property NOI, including
same store NOI and same store NOI by market, as an operating measure. NOI
is defined as rental and other revenues from real estate operations less
total property and maintenance expenses from real estate operations
(exclusive of depreciation and amortization). The Company believes that NOI
is an important supplemental measure of operating performance for a REIT's
operating real estate because it provides a measure of the core operations,
rather than factoring in depreciation and amortization, financing costs and
general and administrative expenses generally incurred at the corporate
level. This measure is particularly useful, in the opinion of the Company,
in evaluating the performance of geographic operations, same store
groupings and individual properties. Additionally, the Company believes
that NOI, as defined, is a widely accepted measure of comparative operating
performance in the real estate investment community. The Company believes
that the line on its consolidated statement of operations entitled "net
income" is the most directly comparable GAAP measure to NOI. The Company
also uses property NOI, excluding the impact of straight-line, long-term
ground lease expense, as an operating measure. This measure is particularly
useful, in the opinion of the Company, in evaluating the comparative
performance of NOI between periods, since the Company began straight-lining
ground lease expense in 2005.
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 24
SAME STORE CAPITAL EXPENDITURES - The Company uses same store recurring and
non-recurring capital expenditures as cash flow measures. Same store
recurring and non-recurring capital expenditures are supplemental non-GAAP
financial measures. The Company believes that same store recurring and
non-recurring capital expenditures are important indicators of the costs
incurred by the Company in maintaining its same store communities on an
ongoing basis. The corresponding GAAP measures include information with
respect to the Company's other operating segments consisting of communities
stabilized in the prior year, lease-up communities, sold properties and
commercial properties in addition to same store information. Therefore, the
Company believes that the Company's presentation of same store recurring
and non-recurring capital expenditures is necessary to demonstrate same
store replacement costs over time. The Company believes that the most
directly comparable GAAP measure to same store recurring and non-recurring
capital expenditures are the lines on the Company's consolidated statements
of cash flows entitled "recurring capital expenditures" and "non-recurring
capital expenditures."
FFO AND AFFO EXCLUDING CERTAIN CHARGES - The Company uses FFO and AFFO
excluding certain items and charges, such as preferred stock and unit
redemption costs, losses on early extinguishment of debt associated with
asset sales, gain on the sale of technology investment and asset impairment
charges as operating measures. The Company reports FFO and AFFO excluding
certain items and charges as alternative financial measures of core
operating performance. The Company believes FFO and AFFO before certain
items and charges are informative measures for comparing operating
performance between periods and for comparing operating performance to
other companies that have not incurred such items and charges. The Company
further believes that items and charges of the nature incurred in 2005 and
2004 are not necessarily repetitive in nature and that it is therefore
meaningful to compare operating performance using alternative, non-GAAP
measures. The Company adjusts FFO and AFFO for losses on early
extinguishment of debt associated with asset sales and preferred stock and
unit redemption costs, because these items result from financing
transactions that are not related to core business performance. The Company
further adjusts FFO and AFFO for gains on sales of technology investments
and asset impairment charges because these items are not expected to be
repetitive over the long-term and it is therefore meaningful to compute
operating performance using adjusted, non-GAAP measures. In addition to the
foregoing, the Company believes the investment and analyst communities
desire to understand the meaningful components of the Company's performance
and that these non-GAAP measures assist in providing such supplemental
measures. The Company believes that the most directly comparable GAAP
financial measures to each of FFO and AFFO, excluding certain items and
charges, is the line on the Company's consolidated statements of operations
entitled "net income (loss) available to common shareholders."
DEBT STATISTICS AND DEBT RATIOS - The Company uses a number of debt
statistics and ratios as supplemental measures of liquidity. The numerator
and/or the denominator of certain of these statistics and/or ratios include
non-GAAP financial measures that have been reconciled to the most directly
comparable GAAP financial measure. These debt statistics and ratios
include: (1) an interest coverage ratio; (2) a fixed charge coverage ratio;
(3) total debt as a percentage of undepreciated real estate (adjusted for
joint venture partner's share of debt); (4) total debt plus preferred
equity as a percentage of undepreciated real estate (adjusted for joint
venture partner's share of debt); (5) a ratio of consolidated debt to total
assets; (6) a ratio of secured debt to total assets; (7) a ratio of total
unencumbered assets to unsecured debt; and (8) a ratio of consolidated
income available to debt service to annual debt service charge. A number of
these debt statistics and ratios are derived from covenants found in the
Company's debt agreements, including, among others, the Company's senior
unsecured notes. In addition, the Company presents these measures because
the degree of leverage could affect the Company's ability to obtain
additional financing for working capital, capital expenditures,
acquisitions, development or other general corporate purposes. The Company
uses these measures internally as an indicator of liquidity and the Company
believes that these measures are also utilized by the investment and
analyst communities to better understand the Company's liquidity.
AVERAGE ECONOMIC OCCUPANCY - The Company uses average economic occupancy as
a statistical measure of operating performance. The Company defines average
economic occupancy as gross potential rent less vacancy losses, model
expenses and bad debt expenses divided by gross potential rent for the
period, expressed as a percentage.
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 25
RECONCILIATIONS OF SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
TABLE 1
RECONCILIATION OF SAME STORE NET OPERATING INCOME (NOI) TO GAAP NET INCOME
(Dollars in thousands)
(Unaudited)
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------------------ ---------------------------
SEPTEMBER 30, SEPTEMBER 30, JUNE 30, SEPTEMBER 30, SEPTEMBER 30,
2005 2004 2005 2005 2004
------------- ------------- ------------ ------------- -------------
Total same store NOI .................................... $ 39,698 $ 38,186 $ 38,788 $ 116,055 $ 114,190
Property NOI from other operating segments .............. 2,235 769 1,299 4,682 2,097
------------ ------------ ------------ ------------ ------------
Consolidated property NOI ............................... 41,933 38,955 40,087 120,737 116,287
Add (subtract):
Other revenues ....................................... 64 814 61 196 936
Interest income ...................................... 230 246 189 583 639
Minority interest in consolidated property
partnerships ........................................ 34 106 64 212 538
Depreciation ......................................... (18,950) (20,371) (19,414) (57,896) (59,683)
Interest expense ..................................... (14,455) (16,316) (15,206) (45,340) (47,678)
Amortization of deferred financing costs ............. (991) (1,065) (1,029) (3,707) (3,273)
General and administrative ........................... (5,421) (6,018) (5,433) (16,150) (16,137)
Development costs and other expenses ................. (1,042) (284) (740) (2,879) (1,200)
Equity in income of unconsolidated entities .......... 593 420 553 1,294 843
Gain on sale of technology investment ................ - - - 5,267 -
Minority interest of preferred unitholders ........... - (980) - - (3,780)
Minority interest of common unitholders .............. (12) 499 159 188 1,463
------------ ------------ ------------ ------------ ------------
Income (loss) from continuing operations ............. 1,983 (3,994) (709) 2,505 (11,045)
Income from discontinued operations .................. 71,258 2,201 59,152 133,857 113,772
------------ ------------ ------------ ------------ ------------
Net income (loss) ....................................... $ 73,241 $ (1,793) $ 58,443 $ 136,362 $ 102,727
============ ============ ============ ============ ============
</Table>
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 26
TABLE 2
SAME STORE NET OPERATING INCOME (NOI) SUMMARY BY MARKET
(Dollars in thousands)
<Table>
<Caption>
THREE MONTHS ENDED,
----------------------------------------------- 3Q '05 VS. 3Q '05 VS. 3Q '05
SEPTEMBER 30, SEPTEMBER 30, JUNE 30, 3Q '04 2Q '05 % SAME
2005 2004 2005 % CHANGE % CHANGE STORE NOI
------------- ------------- ------------- ---------- ---------- ---------
Rental and other revenues
Atlanta ......................... $ 28,987 $ 28,532 $ 28,501 1.6% 1.7%
Dallas .......................... 12,029 11,327 11,633 6.2% 3.4%
Tampa ........................... 7,342 6,911 7,120 6.2% 3.1%
Washington, DC .................. 5,831 5,536 5,751 5.3% 1.4%
Charlotte ....................... 3,419 3,238 3,313 5.6% 3.2%
Houston ......................... 3,292 3,142 3,067 4.8% 7.3%
Denver .......................... 2,094 2,037 1,970 2.8% 6.3%
New York ........................ 1,330 1,231 1,270 8.0% 4.7%
Orlando ......................... 931 885 890 5.2% 4.6%
------------- ------------- -------------
Total rental and other revenues 65,255 62,839 63,515 3.8% 2.7%
------------- ------------- -------------
Property operating and maintenance
expenses (exclusive of depreciation
and amortization)
Atlanta (1) ..................... 10,684 10,594 10,625 0.8% 0.6%
Dallas .......................... 5,411 5,393 5,189 0.3% 4.3%
Tampa ........................... 2,894 2,788 2,824 3.8% 2.5%
Washington, DC (1) .............. 1,974 1,721 2,083 14.7% (5.2)%
Charlotte ....................... 1,141 1,114 1,042 2.4% 9.5%
Houston ......................... 2,013 1,572 1,577 28.1% 27.6%
Denver .......................... 729 709 667 2.8% 9.3%
New York ........................ 353 381 352 (7.3)% 0.3%
Orlando ......................... 358 381 368 (6.0)% (2.7)%
------------- ------------- -------------
Total (1) ..................... 25,557 24,653 24,727 3.7% 3.4%
------------- ------------- -------------
Net operating income
Atlanta (1) ..................... 18,303 17,938 17,876 2.0% 2.4% 46.2%
Dallas .......................... 6,618 5,934 6,444 11.5% 2.7% 16.7%
Tampa ........................... 4,448 4,123 4,296 7.9% 3.5% 11.2%
Washington, DC (1) .............. 3,857 3,815 3,668 1.1% 5.2% 9.7%
Charlotte ....................... 2,278 2,124 2,271 7.3% 0.3% 5.7%
Houston ......................... 1,279 1,570 1,490 (18.5)% (14.2)% 3.2%
Denver .......................... 1,365 1,328 1,303 2.8% 4.8% 3.4%
New York ........................ 977 850 918 14.9% 6.4% 2.5%
Orlando ......................... 573 504 522 13.7% 9.8% 1.4%
------------- ------------- ------------- --------
Total same store NOI (1) ...... $ 39,698 $ 38,186 $ 38,788 4.0% 2.3% 100.0%
============= ============= ============= ========
</Table>
See footnotes on page 28.
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 27
<Table>
<Caption>
NINE MONTHS ENDED,
----------------------------------------------
SEPTEMBER 30, SEPTEMBER 30, % CHANGE
2005 2004
------------------------------------------
Rental and other revenues
Atlanta ........................ $ 85,456 $ 84,990 0.5%
Dallas ......................... 34,962 33,886 3.2%
Tampa .......................... 21,582 20,432 5.6%
Washington, DC ................. 17,200 16,369 5.1%
Charlotte ...................... 9,900 9,626 2.8%
Houston ........................ 9,488 9,427 0.6%
Denver ......................... 6,068 6,004 1.1%
New York ....................... 3,804 3,689 3.1%
Orlando ........................ 2,723 2,598 4.8%
------------ ------------
Total rental and other
revenues..................... 191,183 187,021 2.2%
------------ ------------
Property operating and maintenance
expenses (exclusive of
depreciation and amortization)
Atlanta (2) .................... 32,001 31,504 1.6%
Dallas ......................... 15,798 15,561 1.5%
Tampa .......................... 8,538 8,330 2.5%
Washington, DC (2) ............. 6,084 5,312 14.5%
Charlotte ...................... 3,246 3,182 2.0%
Houston ........................ 5,149 4,467 15.3%
Denver ......................... 2,045 2,187 (6.5)%
New York ....................... 1,118 1,125 (0.6)%
Orlando ........................ 1,149 1,163 (1.2)%
------------ ------------
Total (2) .................... 75,128 72,831 3.2%
------------ ------------
Net operating income
Atlanta (2) .................... 53,455 53,486 (0.1)%
Dallas ......................... 19,164 18,325 4.6%
Tampa .......................... 13,044 12,102 7.8%
Washington, DC (2) ............. 11,116 11,057 0.5%
Charlotte ...................... 6,654 6,444 3.3%
Houston ........................ 4,339 4,960 (12.5)%
Denver ......................... 4,023 3,817 5.4%
New York ....................... 2,686 2,564 4.8%
Orlando ........................ 1,574 1,435 9.7%
------------ ------------
Total same store NOI (2) ..... $ 116,055 $ 114,190 1.6%
============ ============
</Table>
(1) Excluding the impact of straight-lining long-term ground lease expense of
$142 in Atlanta and $168 in Washington, D.C. property operating and
maintenance expenses (exclusive of depreciation and amortization) would
have been $10,542, $1,806 and $25,247, in Atlanta, Washington, D.C. and in
total, respectively, and would have (decreased) increased (0.5)%, 4.9% and
2.4% in Atlanta, Washington, D.C. and in total, respectively, for the third
quarter of 2005, compared to the third quarter of 2004. Excluding the
impact of straight-lining long-term ground lease expense, NOI would have
been $18,445, $4,025 and $40,008, in Atlanta, Washington, D.C. and in
total, respectively, and would have increased 2.8%, 5.5% and 4.8% in
Atlanta, Washington, D.C. and in total, respectively, for the third quarter
of 2005, compared the third quarter of 2004.
(2) Excluding the impact of straight-lining long-term ground lease expense of
$429 in Atlanta and $512 in Washington, D.C. property operating and
maintenance expenses (exclusive of depreciation and amortization) would
have been $31,572, $5,572 and $74,187, in Atlanta, Washington, D.C. and in
total, respectively, and would have increased 0.2%, 4.9% and 1.9% in
Atlanta, Washington, D.C. and in total, respectively, for the nine months
ended September 30, 2005, compared to the same period in the prior year.
Excluding the impact of straight-lining long-term ground lease expense, NOI
would have been $53,884, $11,628 and $116,996, in Atlanta, Washington, D.C.
and in total, respectively, and would have increased 0.7%, 5.2% and 2.5% in
Atlanta, Washington, D.C. and in total, respectively, for the nine months
ended September 30, 2005, compared the same period in the prior year.
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 28
TABLE 3
RECONCILIATION OF SEGMENT CASH FLOW DATA TO STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- -----------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Recurring capital expenditures by operating segment
Same store ............................................ $ 2,068 $ 1,916 $ 5,965 $ 5,865
Partially stabilized .................................. 4 3 10 15
Construction and lease-up ............................. -- -- -- --
Other segments ........................................ 278 501 1,197 1,733
------------ ------------ ------------ ------------
Total recurring capital expenditures per statements of
cash flows........................................... $ 2,350 $ 2,420 $ 7,172 $ 7,613
============ ============ ============ ============
Non-recurring capital expenditures by operating
segment
Same store ............................................ $ 532 $ 655 $ 1,865 $ 2,616
Partially stabilized .................................. -- -- -- --
Construction and lease-up ............................. -- -- -- --
Other segments ........................................ 75 403 771 988
------------ ------------ ------------ ------------
Total non-recurring capital expenditures per
statements of cash flows............................. $ 607 $ 1,058 $ 2,636 $ 3,604
============ ============ ============ ============
</Table>
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 29
TABLE 4
COMPUTATION OF INTEREST AND FIXED CHARGE COVERAGE RATIOS
(Dollars in thousands)
<Table>
<Caption>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------------
2005 2004
------------ ------------
Income (loss) from continuing operations .................................. $ 2,505 $ (11,045)
Minority interest of common unitholders ................................... (188) (1,463)
Minority interest of preferred unitholders ................................ -- 3,780
Gain on sale of technology investment ..................................... (5,267) --
Depreciation expense ...................................................... 57,896 59,683
Depreciation (company share) of assets held in unconsolidated entities .... 745 993
Interest expense .......................................................... 45,340 47,678
Interest expense (company share) of assets held in
unconsolidated entities ................................................. 895 877
Amortization of deferred financing costs .................................. 3,707 3,273
------------ ------------
Income available for debt service (A) ..................................... $ 105,633 $ 103,776
============ ============
Interest expense .......................................................... $ 45,340 $ 47,678
Interest expense (company share) of assets held in unconsolidated entities 895 877
------------ ------------
Interest expense for purposes of computation (B) .......................... 46,235 48,555
Dividends and distributions to preferred shareholders and unitholders ..... 5,728 10,196
------------ ------------
Fixed charges for purposes of computation (C) ............................. $ 51,963 $ 58,751
============ ============
Interest coverage ratio (A/B) (1) ......................................... 2.3x 2.1x
============ ============
Fixed charge coverage ratio (A/C) (1) ..................................... 2.0x 1.8x
============ ============
</Table>
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 30
TABLE 5
COMPUTATION OF DEBT RATIOS
(In thousands)
<Table>
<Caption>
AS OF SEPTEMBER 30,
-------------------------------------
2005 2004
--------------- ---------------
Total real estate assets per balance sheet ..................................... $ 1,901,826 $ 1,996,269
Plus:
Company share of real estate assets held in unconsolidated entities ............ 41,236 43,715
Company share of accumulated depreciation -- assets held in unconsolidated
entities ..................................................................... 2,698 3,065
Accumulated depreciation per balance sheet ..................................... 508,386 495,048
Accumulated depreciation on assets held for sale ............................... -- 7,836
--------------- ---------------
Total undepreciated real estate assets (A) ..................................... $ 2,454,146 $ 2,545,933
=============== ===============
Total debt per balance sheet ................................................... $ 957,985 $ 1,099,980
Plus:
Company share of third party debt held in unconsolidated entities .............. 23,450 29,240
Less:
Joint venture partners' share of mortgage debt of the company .................. (6,679) --
--------------- ---------------
Total debt (adjusted for joint venture partners' share of debt) (B) ............ $ 974,756 $ 1,129,220
=============== ===============
Total debt as a % of undepreciated real estate assets (adjusted for joint
venture partners' share of debt) (B/A) ....................................... 39.7% 44.4%
=============== ===============
Total debt per balance sheet ................................................... $ 957,985 $ 1,099,980
Plus:
Company share of third party debt held in unconsolidated entities .............. 23,450 29,240
Preferred shares at liquidation value .......................................... 95,000 95,000
Less:
Joint venture partners' share of mortgage debt of the company .................. (6,679) --
--------------- ---------------
Total debt and preferred equity (adjusted for joint venture partner's
share of debt) (C) ........................................................... $ 1,069,756 $ 1,224,220
=============== ===============
Total debt and preferred equity as a % of undepreciated assets (adjusted for
joint venture partners' share of debt) (C/A) ................................. 43.6% 48.1%
=============== ===============
</Table>
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 31
TABLE 6
CALCULATION OF COMPANY UNDEPRECIATED BOOK VALUE PER SHARE
(In thousands)
<Table>
<Caption>
SEPTEMBER 30,
2005
--------------------
Total shareholders' equity, per balance sheet ................... $ 881,352
Plus:
Accumulated depreciation, per balance sheet ..................... 508,386
Minority interest of common unitholders in Operating Partnership,
per balance sheet ............................................. 36,080
Less:
Deferred charges, net, per balance sheet ........................ (11,572)
Preferred shares at liquidation value ........................... (95,000)
--------------------
Total undepreciated book value (A) .............................. $ 1,319,246
====================
Total common shares and units (B) ............................... 42,645
====================
Company undepreciated book value per share (A/B) ................ $ 30.94
====================
</Table>
Copyright(C) 2005 Post Apartment Homes, LP All Rights Reserved 32