8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 6, 2006

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

(Exact name of registrant as specified in its charter)

Georgia
Georgia
(State or other jurisdiction of incorporation)

1-12080
0-28226
(Commission File Number)

58-1550675
58-2053632
(IRS Employer Identification Number)

4401 Northside Parkway, Suite 800, Atlanta, Georgia 30327
(Address of principal executive offices)

Registrant’s telephone number, including area code (404) 846-5000

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On February 6, 2006, Post Properties, Inc. and Post Apartment Homes, L.P. (collectively referred to as the “Registrants”), issued an Earnings Release and Supplemental Financial Data announcing their financial results for the quarterly period ended December 31, 2005. The Earnings Release and Supplemental Financial Data contain information about the Registrants’ financial condition and results of operations for the quarterly period ended December 31, 2005. A copy of the Earnings Release is attached hereto as Exhibit 99.1. A copy of the Supplemental Financial Data is attached hereto as Exhibit 99.2.

Item 9.01. Financial Statements and Exhibits.

     (c) Exhibits

Exhibit
Number	Description
99.1	Earnings Release
99.2	Supplemental Financial Data

SIGNATURES

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

     Dated: February 6, 2006

POST PROPERTIES, INC.
By:	/s/ David P. Stockert
	David P. Stockert
	President and Chief Executive Officer

SIGNATURES

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

     Dated: February 6, 2006

POST APARTMENT HOMES, L.P.
By:	POST GP HOLDINGS, INC.,
	as General Partner
By:	/s/ David P. Stockert
	David P. Stockert
	President and Chief Executive Officer

EXHIBIT INDEX

Exhibit
Number	Description
99.1	Earnings Release
99.2	Supplemental Financial Data

EX-99.1

Exhibit 99.1

Contact:	Janie Maddox
	Post Properties, Inc.
	(404) 846-5056

Post Properties Announces Fourth Quarter 2005 Earnings
Announces Earnings Guidance for 2006
Investor/Analyst Conference Call Scheduled for February 7, 2006 at 10:00 a.m. EST

ATLANTA, February 6, 2006 – Post Properties, Inc. (NYSE: PPS) announced today net income available to common shareholders of $3.7 million for the fourth quarter of 2005, compared to a net loss of $16.4 million for the fourth quarter of 2004. On a diluted per share basis, net income available to common shareholders was $0.09 for the fourth quarter of 2005 compared to a net loss of $0.41 for the fourth quarter of 2004.

Net income available to common shareholders was $134.3 million for the year ended December 31, 2005, compared to $76.4 million for the year ended December 31, 2004. On a diluted per share basis, net income available to common shareholders was $3.34 for the year ended December 31, 2005, compared to $1.92 for the year ended December 31, 2004.

The Company uses the National Association of Real Estate Investment Trusts (“NAREIT”) definition of Funds from Operations (“FFO”) as an operating measure of the Company’s financial performance. A reconciliation of FFO to GAAP net income (loss) is included in the financial data (Table 1) accompanying this press release.

FFO for the fourth quarter of 2005 totaled $20.9 million, or $0.49 per diluted share, compared to $2.9 million, or $0.07 per diluted share, for the fourth quarter of 2004. The Company’s reported FFO for the fourth quarter of 2005 included a $0.8 million, or $0.02 per diluted share, charge relating to the estimated increased costs associated with long-term severance arrangements.

The Company’s reported FFO for the fourth quarter of 2004 included non-cash losses on early extinguishment of debt and asset impairment charges as well as a charge for the termination of a debt remarketing agreement. A reconciliation of FFO to FFO excluding certain items and charges is included in the financial data (Table 1) accompanying this press release.

FFO for the year ended December 31, 2005 totaled $83.5 million, or $1.95 per diluted share, compared to $50.6 million, or $1.19 per diluted share, for the year ended December 31, 2004. The Company’s reported FFO for the year ended December 31, 2005 included a gain of approximately $5.3 million, or $0.12 per diluted share, relating to the sale of its investment in privately-held Rent.com, a $3.2 million, or $0.08 per diluted share, non-cash loss on the early extinguishment of tax-exempt secured indebtedness assumed in connection with asset sales and the termination of related interest rate cap agreements and a $0.8 million, or $0.02 per diluted share, charge for severance costs recorded in the fourth quarter of 2005, as discussed above.

The Company’s reported FFO for the year ended December 31, 2004 included non-cash losses on early extinguishment of debt, asset impairment charges and non-cash redemption costs on preferred stock and units as well as a charge for the termination of a debt remarketing agreement. A reconciliation of FFO to FFO excluding certain items and accounting charges is included in the financial data (Table 1) accompanying this press release.

Said David Stockert, CEO and President of Post Properties, “Strong results in the fourth quarter capped a very solid year for Post, with our rental apartment and for-sale condominium businesses performing ahead of our expectations. Market conditions remain favorable and we expect to experience upward momentum in rents, due to ongoing job growth, in-migration, household formation and moderate levels of supply in our primary markets. During 2005, we continued to execute our business plan to shape the uniform high quality and cash flow diversity of our portfolio, and to strengthen our balance sheet. In addition to launching a new for-sale condominium

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business, we also acquired several parcels of land for development and increased the size and capability of our Investment Group, all in order to establish an ongoing pipeline of value creating opportunities in development, acquisitions, redevelopments and renovations. Finally, in 2005, we successfully deployed a new web-based operating software platform that is the foundation upon which we are building new internet leasing, customer contact, centralized procurement and revenue management capabilities.”

Mature (Same Store) Community Data

For the fourth quarter of 2005, average economic occupancy at the Company’s 52 mature (same store) communities, containing 19,675 apartment units, was 95.6%, compared to 93.2% for the fourth quarter of 2004.

Total revenues for the mature communities increased 5.2% during the fourth quarter of 2005, compared to the fourth quarter of 2004, and operating expenses increased 2.7%, producing a 6.7% increase in same store net operating income (NOI), or $2.5 million. Excluding the impact of straight-lining long-term ground lease expense, operating expenses for the mature communities increased 1.3% during the fourth quarter of 2005, compared to the fourth quarter of 2004, and same store NOI increased 7.5% between periods.

On a sequential basis, total revenues for the mature communities increased 0.1%, and operating expenses decreased 5.7%, producing a 3.9% increase in same store NOI for the fourth quarter of 2005, compared to the third quarter of 2005. Property operating expenses were impacted favorably in the fourth quarter of 2005 by adjustments to accruals for property taxes and insurance to reflect actual costs of these expenses which were less than previous estimates. For the fourth quarter of 2005, average economic occupancy at the mature communities was 95.6% compared to 95.1% for the third quarter of 2005.

Total revenue for the mature communities increased 2.9% during the year ended December 31, 2005, compared to the year ended December 31, 2004, and operating expenses increased 3.1%, producing a 2.9% increase in same store NOI, or $4.3 million. Excluding the impact of straight-lining long-term ground lease expense, operating expenses for the mature communities increased 1.7% during the year ended December 31, 2005, compared to the year ended December 31, 2004, and same store NOI increased 3.7% between periods.

Same store NOI and same store NOI, excluding straight-line long-term ground lease expense, are supplemental non-GAAP financial measures. A reconciliation of these measures to the comparable GAAP financial measures is included in the financial data (Table 2) accompanying this press release. Same store NOI by geographic market is also included in the financial data (Table 3) accompanying this press release.

Condominium Activity

Existing Condominium Activity

The Company is converting two apartment communities to condominiums through a taxable REIT subsidiary: 588™, comprised of 127 units located in the Uptown submarket of Dallas, TX, and The Peachtree Residences™, a 19-story, 121-unit high-rise located in the Buckhead submarket of Atlanta, GA. The Peachtree Residences™ is owned through an unconsolidated joint venture in which the Company’s interest is 35%.

During the three months and year ended December 31, 2005, the Company closed the sales of 21 units and 103 units, respectively, at 588™ for aggregate gross sales prices of approximately $6.0 million and $26.6 million, respectively; and closed the sales of 20 units and 45 units, respectively, at The Peachtree Residences™ for aggregate gross sales prices of approximately $5.9 million and $15.1 million, respectively. As of January 30, 2006, the Company in the aggregate had closed or had under contract 116 units at 588™ and 61 units at The Peachtree Residences™. In addition, to date the Company has entered into contracts to sell 77 units at the Condominiums at Carlyle Square^TM, a 145-unit for-sale condominium development located within the master-planned Carlyle submarket in the Washington, D.C. suburb of Alexandria, VA. The first condominium units at that development are expected to be delivered in late 2006 or early 2007. There can be no assurance that

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condominium units under contract will close.

During the three months and year ended December 31, 2005, the Company recognized approximately $1.1 million, or $0.02 per diluted share, and $9.2 million, or $0.21 per diluted share, respectively, of incremental gains on condominium sales in FFO, net of provision for income taxes. Such gains are reported as gains on sales of real estate assets in discontinued operations and in the equity in earnings of unconsolidated entities in the Company’s consolidated statements of operations. In addition, during the three months and year ended December 31, 2005, the Company recognized in continuing operations certain sales and marketing costs which are not capitalized totaling approximately $162,000 and $531,000, respectively, associated with The Condominiums at Carlyle Square™ development.

New Condominium Activity

Post also recently announced that it has begun the conversion into for-sale condominium homes, through a taxable REIT subsidiary, of 206 units at Post Harbour Place™ in Tampa, FL, which will be renamed, Harbour Place City Homes^TM, and 143 units at Post Midtown Square^® in Houston, TX, which will be renamed, RISE^TM. The Company expects to begin closing the sale of condominium homes at these projects in the second quarter of 2006.

Development and Other Investment Activity

Development Activity and Land Acquisition

As of year end 2005, the Company’s aggregate development pipeline was approximately $100 million. The Company also owns or has under contract land that will allow for the development of more than 4,000 multifamily units. This undeveloped land is located in Atlanta, GA, Dallas, TX, metropolitan Washington D.C., Houston, TX and Tampa FL. The Company expects to begin actual development of the land sites discussed above in 2006 and 2007. The Company anticipates that its aggregate development pipeline could exceed $300 million by year end 2006.

The Company today announced that, in January 2006, it entered into a joint venture with a consortium of developers comprised of an office and industrial REIT, a private office developer, and a private condominium developer. The venture acquired an approximately 4-acre parcel of land located in the Buckhead submarket of Atlanta, GA, and plans to develop two mixed-use, high-rise buildings on the site. One tower will include for-sale condominiums and the second tower will include for-sale condominiums, office space and retail amenities. The condominium portion of the project will be developed through a joint venture between Post and the private condominium developer.

Acquisition, Dispositions and Portfolio Balancing

During 2005, the Company sold six apartment communities, with an average age of 19 years, for gross proceeds of approximately $232 million, and acquired a two-year old community for a gross purchase price of approximately $37 million. The remaining proceeds from asset sales were used to fund development, acquire land, pay down debt and repurchase common stock.

During 2006, the Company intends to market for sale its Post Uptown Square™ apartment community in Denver, CO and exit that market. The Company expects to utilize sales proceeds to reinvest in the Company’s other core markets in an effort to continue building its presence in those markets. This is consistent with the Company’s strategy of rebalancing its portfolio around selected core markets in the Southeast, the Southwest and the Mid-Atlantic to leverage the Post^® brand and improve operating efficiencies.

In this regard, the Company today is announcing plans to re-orient its strategic investment activities in the Southwest around three primary Texas markets: Dallas, Houston, and Austin. The Company plans to re-establish

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its presence in the Austin, TX market and recently entered into a development agreement with Ardent Residential whose principals have over ten years experience in developing quality multifamily properties in Austin, TX. Together with Ardent, the Company plans to be opportunistic in seeking multifamily development and acquisition opportunities in the Austin market.

Community Renovation Program

The Company also announced today that it plans to commence a rehabilitation program which will focus on updating and repositioning several of its older properties located in strong in-fill submarkets, in order to better position those assets for future growth. During 2006, the Company plans to commence the renovations of two apartment communities which have an average age of approximately 14 years: Post Chastain^®, a 558-unit community located in the Buckhead submarket of Atlanta, GA, and Post Worthington™, a 332-unit community located in the Uptown submarket of Dallas, TX. The Company plans to invest approximately $25,000 to $30,000 per unit in these properties. Extensive renovations are expected to include upgrades in all unit interiors including granite kitchen and bath countertops, cabinets, flooring, appliances, painting and lighting; landscape and common areas, including leasing, business and fitness centers and pool areas; and exteriors, including painting. The Company expects that these rehabilitations will be moderately dilutive during the renovation period as units are taken off-line and staged for construction. The Company will not include these two communities in its same store portfolio in 2006.

Financing Activity

Total debt and preferred equity as a percentage of undepreciated real estate assets (adjusted for joint venture partners’ share of debt) was 44.5% at December 31, 2005. Variable rate debt as a percentage of total debt was 13.2% at December 31, 2005. As of December 31, 2005, the Company had outstanding borrowings of approximately $101.4 million on its combined $370 million unsecured lines of credit.

A computation of debt ratios and reconciliation of the ratios to the appropriate GAAP measures in the Company’s financial statements is included in the financial data (Table 4) accompanying this press release.

Stock Repurchase Program

During the fourth quarter of 2005, the Company repurchased 282,000 shares of its common stock totaling approximately $9.9 million under 10b5-1 stock purchase plans, the most recent of which will expire on February 28, 2006. These shares were repurchased at an average price of $35.23 per share.

During the year ended December 31, 2005, the Company repurchased 1,030,600 shares of its common stock totaling approximately $34.4 million under 10b5-1 stock purchase plans at an average price of $33.38 per share.

2006 Outlook

The estimates and assumptions presented below are forward-looking and are based on the Company’s current and future expected view of apartment market and general economic conditions as well as other risks outlined below. There can be no assurance that condominiums or assets being marketed for sale will close, that the Company will successfully reinvest sales proceeds in assets that demonstrate better growth potential, that future developments will commence as planned or that the Company’s actual results will not differ materially from the estimates set forth below. The Company assumes no obligation to update this guidance in the future.

Based on its initial financial outlook for 2006, the Company expects that net income per share for the full year 2006 will be in the range of $1.10 to $1.40 per diluted share and that FFO will be in the range of $1.85 to $2.01 per diluted share.

A reconciliation of forecasted net income per diluted share to forecasted FFO per diluted share for 2006 is included in the financial data (Table 5) accompanying this press release.

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The Company’s outlook is based on its expectation that apartment market fundamentals will continue to improve throughout 2006, as a result of increased demand stemming from ongoing job growth and continued strength in the overall U.S. economy, increased mortgage interest rates and single-family housing prices which have decreased the affordability of housing, and the expectation of a relatively moderate level of supply of new market-rate apartments in the primary markets and submarkets where the Company operates.

Same Store Communities

The Company’s 2006 same store portfolio is expected to consist of 51 communities, containing 18,787 apartment units. Same store operating assumptions included in the Company’s 2006 earnings guidance are as follows:

• Total revenue is expected to increase in a range of 4.5% to 5.0%, compared to 2005

• Total operating expenses are expected to increase in a range of 4.2% to 4.8%, compared to 2005

• NOI is expected to increase in a range of 4.3% to 5.3%, compared to 2005

The Company expects that the primary drivers of its increase in same store operating expenses will be personnel expenses, property taxes, utilities expenses, and the cost of new technology initiatives, including implementing new customer contact centers and rolling out yield management (pricing) software in 2006.

A 1% increase or decrease in same store NOI for 2006 would positively or negatively impact FFO by approximately $0.04 per diluted share.

The Company expects recurring capital expenditures relating to its same store portfolio will be approximately $460 per unit in 2006, compared to $446 per unit in 2005. The Company continues to invest capital in the remodeling and updating of leasing offices, amenity areas and model apartments.

Disposition and Acquisition Activity

The Company expects to generate net sales proceeds from the sale of its Post Uptown Square™ community in Denver, CO of at least $100 million. The timing and amount of this asset sale, and the related capital reinvestment activities, could significantly impact short-term operating results. There can be no assurance, however, that the sale of this asset will close.

The Company expects to reinvest asset sales proceeds to acquire operating apartment communities in other markets in which it operates, to fund its development pipeline, to repay a portion of its debt or to repurchase shares of its common stock.

As a result of the Company’s planned 2006 asset sale, the Company currently expects to realize net GAAP accounting gains in a range of $0.44 to $0.51 per diluted share.

Condominium Conversion Activity

The Company expects to substantially complete the sale of remaining homes in its two condominium conversion projects that commenced sales in 2005 through a taxable REIT subsidiary: 588™ in Dallas, TX and The Peachtree Residences™ in Atlanta, GA (owned through an unconsolidated joint venture in which the Company’s interest is 35%).

The Company expects to begin sales of condominium homes at its Harbour Place City Homes^TM project in Tampa, FL and its RISE^TM project in Houston, TX in the second quarter of 2006. The Company also expects to begin closings of condominium home sales at its Condominiums at Carlyle Square™ development in Alexandria, VA in late 2006 or early 2007.

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As a result of condominium home sales, the Company expects to realize net GAAP accounting gains, net of provision for income taxes, in 2006 in a range of $0.48 to $0.57 per diluted share and expects to realize incremental condominium profits in FFO, net of provision for income taxes, in a range of $0.11 to $0.17 per diluted share.

During 2005, the Company’s incremental condominium profits benefited from approximately $9 million of net operating loss carryforwards at its taxable REIT subsidiaries. The Company’s income tax provision was approximately $0.6 million, or $0.01 per diluted share, in 2005 resulting from federal alternative minimum tax and state income taxes. The Company expects that the majority of its condominium profit at its taxable REIT subsidiaries will be subject to federal and state income taxes in 2006.

On a pre-tax basis, the Company expects to realize incremental condominium profits in FFO in 2006 in a range of $0.14 to $0.23 per diluted share, compared to $0.22 per diluted share in 2005.

Development Activity

Based on the Company’s development pipeline discussed above, the Company expects to incur approximately $120 million to $170 million in development and construction costs during 2006.

Financing and Capital Activity

The Company expects to utilize asset sales proceeds and borrowings from its unsecured revolving line of credit to repay the approximately $121 million of debt that matures or becomes available for prepayment in 2006 ($50 million in March, $25 million in October and $46 million in December). The average effective interest rate on this $121 million of debt is approximately 6.10%. The Company expects to issue approximately $150 to $250 million of new debt in 2006, depending on the amount and timing of the Company’s capital needs and general credit market conditions.

The Company expects interest rates to increase in 2006, and its forecast assumes that LIBOR will increase to approximately 5.0% to 5.25% by the end of 2006.

Overhead Expenses

The Company expects that, in the aggregate, general and administrative expenses, development costs, net of costs directly capitalizable to development projects, and property management expenses will be flat to slightly down in 2006, as compared to 2005.

Dividend

For the full year of 2006, the Company expects to maintain its current quarterly dividend payment rate to common shareholders of $0.45 per share ($1.80 per share for the full year). At this dividend rate, the Company expects that net cash flows from operations, reduced by annual operating capital expenditures, will not be sufficient to fund the dividend payments to common and preferred shareholders by approximately $10 million to $15 million. The Company expects that its current dividend will be necessary to distribute the amount of its 2006 taxable income (including capital gains) necessary to maintain its REIT status under the Internal Revenue Code. The Company intends to use the proceeds from asset sales in part to fund the additional cash flow necessary to fully fund the dividend payments to common shareholders.

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First Quarter 2006 Outlook

For the first quarter of 2006, the Company expects that its net income (loss) per share will be in the range from a $0.01 net loss per diluted share to net income of $0.04 per diluted share and that FFO will be in the range of $0.40 to $0.44 per share.

The estimates of per share FFO for the first quarter of 2006 are also based on the following assumptions: an expected decline in same store NOI of 3.4% to 4.3% sequentially, compared to the fourth quarter 2005, based primarily on revenues that are expected to increase 0.1% to 0.5% sequentially and operating expenses that are expected to increase 7.2% to 7.8% sequentially; incremental profit from condominium sales that are expected to be $0.01 to $0.02 per diluted share; and general and administrative expenses, investment and development costs, and property management expenses that, in the aggregate, are expected to increase modestly compared to the fourth quarter of 2005. Same store property operating expenses are expected to increase at a higher rate sequentially in the first quarter, compared to the fourth quarter of 2005, due primarily to the resetting of annual accruals for property taxes and insurance. For the full year 2006, same store property operating expenses are expected to increase in a range of 4.2% to 4.8%.

A reconciliation of forecasted net income (loss) per diluted share to forecasted FFO per diluted share for the first quarter of 2006 is included in the financial data (Table 5) accompanying this press release.

Supplemental Financial Data

The Company also produces Supplemental Financial Data that includes detailed information regarding the Company’s operating results and balance sheet. This Supplemental Financial Data is considered an integral part of this earnings release and is available on the Company’s website. The Company’s Earnings Release and the Supplemental Financial Data are available through the investor relations section of the Company’s web site at www.postproperties.com.

The ability to access the attachments on the Company’s web site requires the Adobe Acrobat 4.0 Reader, which may be downloaded at http://www.adobe.com/products /acrobat/readstep.html.

Non-GAAP Financial Measures and Other Defined Terms

The Company uses certain non-GAAP financial measures and other defined terms in this press release and in its Supplemental Financial Data available on the Company’s website. The non-GAAP financial measures include FFO, Adjusted Funds from Operations (“AFFO”), net operating income, same store capital expenditures, FFO and AFFO excluding certain accounting charges, certain debt statistics and ratios and economic gains on property sales. The definitions of these non-GAAP financial measures are summarized below and on page 23 of the Supplemental Financial Data. 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 (or 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

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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 its 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.

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 severance charges, preferred stock and unit redemption costs, losses on early extinguishment of debt associated with asset sales, gains on the sale of technology investments, 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

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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 certain 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 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, asset impairment charges and severance 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 FFO and AFFO, excluding certain 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 assets (adjusted for joint venture partner’s share of debt); (4) total debt plus preferred equity as a percentage of undepreciated real estate assets (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.

Conference Call Information

The Company will hold its quarterly conference call on Tuesday, February 7, 2006, at 10 a.m. EST. The telephone numbers are 800-289-0572 for US and Canada callers and 913-981-5543 for international callers. The access code is 9691848. The conference call will be open to the public and can be listened to live on Post’s web site at www.postproperties.com under corporate information/investor information. The replay will begin at 1:00 p.m. EST on February 7, 2006, and will be available until Monday, February 13. 2006, at 11:59 p.m. EST. The telephone numbers for the replay are 888-203-1112 for US and Canada callers and 719-457-0820 for international callers. The access code for the replay is 9691848. A replay of the call also will be archived on Post’s web site under corporate information/investor information. The financial and statistical information that will be discussed on the call is contained in this press release and the Supplemental Financial Data. Both documents will be available through the investor relations section of the Company’s web site at www.postproperties.com.

Post Properties, founded more than 30 years ago, is one of the largest developers and operators of upscale multifamily communities in the United States. The Company’s mission is delivering superior satisfaction and value to its residents, associates, and investors, with a vision of being the first choice in quality multifamily living. Operating as a real estate investment trust (REIT), the Company focuses on developing and managing Post^®

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branded resort-style garden and high density urban apartments. In addition, the Company develops high-quality condominiums and converts existing apartments to for-sale multifamily communities. Post Properties is headquartered in Atlanta, Georgia, and has operations in nine markets across the country.

Post Properties owns 21,442 apartment homes in 58 communities, including 545 apartment units in two communities held in unconsolidated entities and 205 apartment units in one community currently under construction. The Company is also developing 145 for-sale condominium homes and is converting 597 apartment units in four communities (including 121 units in one community held in an unconsolidated entity) into for-sale condominium homes through a taxable REIT subsidiary.

Forward Looking Statement:

Certain statements made in this press release 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. Statements regarding future events and developments and the Company’s future performance, as well as management’s expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. Examples of such statements in this press release include the Company’s anticipated performance for the three months ended March 31, 2006 and the year ending December 31, 2006 (including the Company’s assumptions for such performance and expected levels of costs and expenses to be incurred in 2006), anticipated condominium conversion, development and sales activities, anticipated apartment community sales activity and the use of net proceeds expected therefrom, anticipated future acquisition and development activities, anticipated future benefits from rehabilitation activities, anticipated debt refinancing and the anticipated dividend level for 2006. 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 press release.

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Financial Highlights
(Unaudited; in thousands, except per share and unit amounts)

	Three months ended					Twelve months ended
	December 31,					December 31,
	2005		2004			2005		2004
OPERATING DATA
Revenues from continuing operations	$	76,033	$	71,326		$	296,803	$	282,784
Net income (loss) available to common shareholders	$	3,677	$	(16,416	)	$	134,311	$	76,368
Funds from operations available to common shareholders and unitholders (Table 1)	$	20,918	$	2,889		$	83,483	$	50,568
Funds from operations available to common shareholders and unitholders, excluding certain items and charges (Table 1)	$	21,714	$	19,122		$	82,232	$	75,081
Weighted average shares outstanding — diluted		41,513		40,025			40,217		39,777
Weighted average shares and units outstanding — diluted		43,060		42,524			42,353		42,474
PER COMMON SHARE DATA — DILUTED
Net income (loss) available to common shareholders	$	0.09	$	(0.41	)	$	3.34	$	1.92
Funds from operations available to common shareholders and unitholders (Table 1)(1)	$	0.49	$	0.07		$	1.95	$	1.19
Funds from operations available to common shareholders and unitholders, excluding certain items and charges (Table 1)(1)	$	0.50	$	0.45		$	1.92	$	1.76
Dividends declared	$	0.45	$	0.45		$	1.80	$	1.80

(1) Funds from operations per share were computed using weighted average shares and units outstanding, including the impact of dilutive securities totaling 604 and 286 shares and units for the three months ended December 31, 2005 and 2004, respectively, and 400 and 115 shares and units for the twelve months ended December 31, 2005 and 2004, respectively. Such dilutive securities were antidilutive to the income per share computations in the three months ended December 31, 2004 and the twelve months ended December 31, 2005 and 2004, since the Company reported a per share loss from continuing operations (after reduction for preferred dividends) under generally accepted accounting principles for such periods.

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Table 1

Reconciliation of Net Income (Loss) Available to Common Shareholders to
Funds From Operations Available to Common Shareholders and Unitholders
(Unaudited; in thousands, except per share amounts)

	Three months ended						Twelve months ended
	December 31,						December 31,
	2005			2004			2005			2004
Net income (loss) available to common shareholders	$	3,677		$	(16,416	)	$	134,311		$	76,368
Minority interest of common unitholders — continuing operations		135			(1,122	)		(53	)		(2,586	)
Minority interest in discontinued operations		(624	)		(159	)		7,152			7,764
Depreciation on wholly-owned real estate assets, net		17,605			20,253			73,189			81,433
Depreciation on real estate assets held in unconsolidated entities		224			333			969			1,328
Gains on sales of real estate assets, net of provision for income taxes — discontinued operations		(984	)		—			(140,643	)		(113,739	)
Incremental gains on condominium sales, net of provision for income taxes (1)		984			—			8,811			—
Gains on sales of real estate assets — unconsolidated entities		(167	)		—			(612	)		—
Incremental gains on condominium sales — unconsolidated entities (1)		68			—			359			—
Funds from operations available to common shareholders and unitholders, as defined		20,918			2,889			83,483			50,568
Severance charges (2)		796			—			796			—
Gain on sale of technology investment		—			—			(5,267	)		—
Loss on early extinguishment of indebtedness associated with property sales		—			4,011			3,220			8,139
Termination of debt remarketing agreement (interest expense)		—			10,615			—			10,615
Asset impairment charge		—			1,607			—			2,233
Redemption costs on preferred stock and units		—			—			—			3,526
Funds from operations available to common shareholders and unitholders, excluding certain items and charges	$	21,714		$	19,122		$	82,232		$	75,081
Weighted average shares and units outstanding — diluted (3)		43,060			42,811			42,752			42,589
Funds from operations — per share and unit — diluted (3)	$	0.49		$	0.07		$	1.95		$	1.19
Funds from operations, excluding certain items and charges — per share and unit (3)	$	0.50		$	0.45		$	1.92		$	1.76

(1)	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 and expenses, 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 of the Supplemental Financial Data for further detail.
(2)	In the fourth quarter of 2005, the Company recorded additional expenses of $796 relating to changes in the estimated future costs of certain benefits granted to former executive officers under prior employment or settlement agreements. The estimated future cost increases primarily relate to increased fuel and other operating costs and expenses associated with certain fractional aircraft benefits provided to such executives.
(3)	Funds from operations per share were computed using weighted average shares and units outstanding, including the impact of dilutive securities totaling 604 and 286 shares and units for the three months ended December 31, 2005 and 2004, respectively, and 400 and 115 shares and units for the twelve months ended December 31, 2005 and 2004, respectively. Such dilutive securities were antidilutive to the income per share computations in the three months ended December 31, 2004 and the twelve months ended December 31, 2005 and 2004, since the Company reported a per share loss from continuing operations (after reduction for preferred dividends) under generally accepted accounting principles.

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Table 2
Reconciliation of Same Store Net Operating Income (NOI) to GAAP Net Income
(Unaudited; In thousands)

	Three months ended										Twelve months ended
	December 31,			December 31,			September 30,			December 31,			December 31,
	2005			2004			2005			2005			2004
Total same store NOI	$	40,235		$	37,708		$	38,708		$	153,423		$	149,146
Property NOI from other operating segments		2,982			1,532			2,761			9,115			5,285
Consolidated property NOI		43,217			39,240			41,469			162,538			154,431
Add (subtract):
Other revenues		59			64			64			255			1,000
Interest income		78			177			230			661			817
Minority interest in consolidated property partnerships		28			133			34			239			671
Depreciation		(18,352	)		(19,790	)		(18,950	)		(76,248	)		(79,473	)
Interest expense		(13,558	)		(15,874	)		(14,455	)		(58,898	)		(63,552	)
Amortization of deferred financing costs		(954	)		(1,030	)		(991	)		(4,661	)		(4,304	)
General and administrative		(4,799	)		(4,291	)		(4,567	)		(18,307	)		(18,205	)
Investment, development and other expenses		(1,136	)		(603	)		(1,432	)		(5,242	)		(2,930	)
Termination of debt remarketing agreement (interest expense)		—			(10,615	)		—			—			(10,615	)
Loss in early extinguishment of indebtedness		—			(4,011	)		—			—			(4,011	)
Severance charges		(796	)		—			—			(796	)		—
Equity in income of unconsolidated entities		472			241			593			1,767			1,083
Gain on sale of technology investment		—			—			—			5,267			—
Minority interest of preferred unitholders		—			—			—			—			(3,780	)
Minority interest of common unitholders		(135	)		1,122			(12	)		53			2,586
Income (loss) from continuing operations		4,124			(15,237	)		1,983			6,628			(26,282	)
Income from discontinued operations		1,462			730			71,258			135,320			114,501
Net income (loss)	$	5,586		$	(14,507	)	$	73,241		$	141,948		$	88,219

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Table 3
Same Store Net Operating Income (NOI) Summary by Market
(In thousands)

	Three months ended,												4Q ’05
	December 31,		December 31,		September 30,		4Q ‘04			3Q ‘05			% Same
	2005		2004		2005		% change			% change			Store NOI
Rental and other revenues
Atlanta	$	29,017	$	28,167	$	28,988		3.0	%		0.1	%
Dallas		11,906		11,291		12,029		5.4	%		(1.0	)%
Tampa		6,659		6,204		6,555		7.3	%		1.6	%
Washington, DC		5,868		5,530		5,831		6.1	%		0.6	%
Charlotte		3,399		3,154		3,419		7.8	%		(0.6	)%
Houston		2,613		2,374		2,559		10.1	%		2.1	%
Denver		2,035		1,928		2,094		5.5	%		(2.8	)%
New York		1,354		1,168		1,330		15.9	%		1.8	%
Orlando		975		873		931		11.7	%		4.7	%
Total rental and other revenues		63,826		60,689		63,736		5.2	%		0.1	%
Property operating and maintenance expenses (exclusive of depreciation and amortization)
Atlanta (1)		10,235		9,652		10,684		6.0	%		(4.2	)%
Dallas		5,250		5,092		5,411		3.1	%		(3.0	)%
Tampa		2,560		2,862		2,655		(10.6	)%		(3.6	)%
Washington, DC (1)		1,877		1,646		1,974		14.0	%		(4.9	)%
Charlotte		995		1,048		1,141		(5.1	)%		(12.8	)%
Houston		1,158		1,164		1,723		(0.5	)%		(32.8	)%
Denver		703		701		729		0.3	%		(3.6	)%
New York		394		434		353		(9.2	)%		11.6	%
Orlando		419		382		358		9.7	%		17.0	%
Total (1)		23,591		22,981		25,028		2.7	%		(5.7	)%
Net operating income
Atlanta (1)		18,782		18,515		18,304		1.4	%		2.6	%		46.7	%
Dallas		6,656		6,199		6,618		7.4	%		0.6	%		16.5	%
Tampa		4,099		3,342		3,900		22.7	%		5.1	%		10.2	%
Washington, DC (1)		3,991		3,884		3,857		2.8	%		3.5	%		9.9	%
Charlotte		2,404		2,106		2,278		14.2	%		5.5	%		6.0	%
Houston		1,455		1,210		836		20.2	%		74.0	%		3.6	%
Denver		1,332		1,227		1,365		8.6	%		(2.4	)%		3.3	%
New York		960		734		977		30.8	%		(1.7	)%		2.4	%
Orlando		556		491		573		13.2	%		(3.0	)%		1.4	%
Total same store NOI (1)	$	40,235	$	37,708	$	38,708		6.7	%		3.9	%		100.0	%

See footnotes on page 15.

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Table 3 (con’t)
Same Store Net Operating Income (NOI) Summary by Market
(In thousands)

	Twelve months ended,
	December 31,		December 31,
	2005		2004		% change
Rental and other revenues
Atlanta	$	114,473	$	113,158		1.2	%
Dallas		46,868		45,177		3.7	%
Tampa		25,923		24,432		6.1	%
Washington, DC		23,068		21,899		5.3	%
Charlotte		13,299		12,779		4.1	%
Houston		9,992		9,725		2.7	%
Denver		8,103		7,932		2.2	%
New York		5,158		4,856		6.2	%
Orlando		3,699		3,472		6.5	%
Total rental and other revenues		250,583		243,430		2.9	%
Property operating and maintenance expenses (exclusive of depreciation and amortization)
Atlanta (2)		42,236		41,157		2.6	%
Dallas		21,048		20,653		1.9	%
Tampa		10,379		10,501		(1.2	)%
Washington, DC (2)		7,960		6,958		14.4	%
Charlotte		4,242		4,230		0.3	%
Houston		5,468		4,794		14.1	%
Denver		2,748		2,888		(4.8	)%
New York		1,511		1,559		(3.1	)%
Orlando		1,568		1,544		1.6	%
Total (2)		97,160		94,284		3.1	%
Net operating income
Atlanta (2)		72,237		72,001		0.3	%
Dallas		25,820		24,524		5.3	%
Tampa		15,544		13,931		11.6	%
Washington, DC (2)		15,108		14,941		1.1	%
Charlotte		9,057		8,549		5.9	%
Houston		4,524		4,931		(8.3	)%
Denver		5,355		5,044		6.2	%
New York		3,647		3,297		10.6	%
Orlando		2,131		1,928		10.5	%
Total same store NOI (2)	$	153,423	$	149,146		2.9	%

(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 $10,093, $1,709 and $23,281, in Atlanta, Washington, D.C. and in total, respectively, and would have increased 4.6%, 3.8% and 1.3% in Atlanta, Washington, D.C. and in total, respectively, for the fourth quarter of 2005, compared to the fourth quarter of 2004. Excluding the impact of straight-lining long-term ground lease expense, NOI would have been $18,924, $4,159 and $40,545, in Atlanta, Washington, D.C. and in total, respectively, and would have increased 2.2%, 7.1% and 7.5% in Atlanta, Washington, D.C. and in total, respectively, for the fourth quarter of 2005, compared the fourth quarter of 2004.

(2)

Excluding the impact of straight-lining long-term ground lease expense of $571 in Atlanta and $680 in Washington, D.C. property operating and maintenance expenses (exclusive of depreciation and amortization) would have been $41,665, $7,280 and $95,909, in Atlanta, Washington, D.C. and in total, respectively, and would have increased 1.2%, 4.6% and 1.7% in Atlanta, Washington, D.C. and in total, respectively, for the twelve months ended December 31, 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 $72,808, $15,788 and $154,674, in Atlanta, Washington, D.C. and in total, respectively, and would have increased 1.1%, 5.7% and 3.7% in Atlanta, Washington, D.C. and in total, respectively, for the twelve months ended December 31, 2005, compared the same period in the prior year.

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Table 4
Computation of Debt Ratios
(In thousands)

	As of December 31,
	2005			2004
Total real estate assets per balance sheet	$	1,899,381		$	1,977,719
Plus:
Company share of real estate assets held in unconsolidated entities		39,800			43,425
Company share of accumulated depreciation — assets held in unconsolidated entities		2,922			3,399
Accumulated depreciation per balance sheet		516,954			498,367
Accumulated depreciation on assets held for sale		—			26,332
Total undepreciated real estate assets (A)	$	2,459,057		$	2,549,242
Total debt per balance sheet	$	980,615		$	1,129,478
Plus:
Company share of third party debt held in unconsolidated entities		23,450			29,214
Less:
Joint venture partners’ share of mortgage debt of the company		(3,879	)		—
Total debt (adjusted for joint venture partners’ share of debt) (B)	$	1,000,186		$	1,158,692
Total debt as a % of undepreciated real estate assets (adjusted for joint venture partners’ share of debt) (B÷A)		40.7	%		45.5	%
Total debt per balance sheet	$	980,615		$	1,129,478
Plus:
Company share of third party debt held in unconsolidated entities		23,450			29,214
Preferred shares at liquidation value		95,000			95,000
Less:
Joint venture partners’ share of mortgage debt of the company		(3,879	)		—
Total debt and preferred equity (adjusted for joint venture partner’s share of debt) (C)	$	1,095,186		$	1,253,692
Total debt and preferred equity as a % of undepreciated assets (adjusted for joint venture partners’ share of debt) (C÷A)		44.5	%		49.2	%

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Table 5
Reconciliation of Forecasted Net Income (Loss) Per Common Share to
Forecasted Funds From Operations Per Common Share

	Three months ended						Twelve months ended
	March 31, 2006						December 31, 2006
	Low Range			High Range			Low Range			High Range
Forecasted net income (loss), per share	$	(0.01	)	$	0.04		$	1.10		$	1.40
Forecasted real estate depreciation, per share		0.41			0.40			1.56			1.52
Forecasted gains on property sales, per share		—			—			(0.44	)		(0.51	)
Forecasted gains on condominium sales, net of provision for income taxes, per share		(0.01	)		(0.02	)		(0.48	)		(0.57	)
Forecasted incremental gains on condominium sales included in funds from operations, net of provision for income taxes, per share		0.01			0.02			0.11			0.17
Forecasted funds from operations, per share	$	0.40		$	0.44		$	1.85		$	2.01

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EX-99.2

Exhibit 99.2

Fourth Quarter 2005

Supplemental Financial Data

Table of Contents

	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		18
Investments in Unconsolidated Real Estate Entities		19
Net Asset Value Supplemental Information		21
Non-GAAP Financial Measures and Other Defined Terms		23

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.

2

Post Properties, Inc.
Consolidated Statements of Operations
(In thousands, except per share or unit data)
(Unaudited)

	Three months ended						Twelve months ended
	December 31,						December 31,
	2005			2004			2005			2004
Revenues
Rental	$	71,797		$	67,409		$	279,508		$	266,191
Other property revenues		4,177			3,853			17,040			15,593
Other (1)		59			64			255			1,000
Total revenues		76,033			71,326			296,803			282,784
Expenses
Property operating and maintenance (exclusive of items shown separately below) (2)(3)		32,757			32,022			134,010			127,353
Depreciation		18,352			19,790			76,248			79,473
General and administrative (3)		4,799			4,291			18,307			18,205
Investment, development and other (3)(4)		1,136			603			5,242			2,930
Severance charges (5)		796			—			796			—
Total expenses		57,840			56,706			234,603			227,961
Operating Income		18,193			14,620			62,200			54,823
Interest income		78			177			661			817
Interest expense		(13,558	)		(15,874	)		(58,898	)		(63,552	)
Amortization of deferred financing costs		(954	)		(1,030	)		(4,661	)		(4,304	)
Equity in income of unconsolidated real estate entities		472			241			1,767			1,083
Gain on sale of technology investment (6)		—			—			5,267			—
Termination of debt remarketing agreement (interest expense) (7)		—			(10,615	)		—			(10,615	)
Loss on early extinguishment of indebtedness		—			(4,011	)		—			(4,011	)
Minority interest in consolidated property partnerships		28			133			239			671
Minority interest of preferred unitholders		—			—			—			(3,780	)
Minority interest of common unitholders		(135	)		1,122			53			2,586
Income (loss) from continuing operations		4,124			(15,237	)		6,628			(26,282	)
Discontinued operations (8)
Income from discontinued operations, net of minority interest		455			730			5,366			12,311
Gains on sales of real estate assets, net of minority interest and provision for income taxes		1,007			—			132,997			106,039
Loss in early extinguishment of indebtedness associated with property sales, net of minority interest (9)		—			—			(3,043	)		(3,849	)
Income from discontinued operations		1,462			730			135,320			114,501
Net income (loss)		5,586			(14,507	)		141,948			88,219
Dividends to preferred shareholders		(1,909	)		(1,909	)		(7,637	)		(8,325	)
Redemption costs on preferred stock and units		—			—			—			(3,526	)
Net income (loss) available to common shareholders	$	3,677		$	(16,416	)	$	134,311		$	76,368
Per common share data — Basic (10)
Income (loss) from continuing operations (net of preferred dividends and redemption costs)	$	0.05		$	(0.43	)	$	(0.03	)	$	(0.96	)
Income from discontinued operations		0.04			0.02			3.36			2.88
Net income (loss) available to common shareholders	$	0.09		$	(0.41	)	$	3.34		$	1.92
Weighted average common shares outstanding — basic		40,908			40,025			40,217			39,777
Per common share data — Diluted (10)
Income (loss) from continuing operations (net of preferred dividends and redemption costs)	$	0.05		$	(0.43	)	$	(0.03	)	$	(0.96	)
Income from discontinued operations		0.04			0.02			3.36			2.88
Net income (loss) available to common shareholders	$	0.09		$	(0.41	)	$	3.34		$	1.92
Weighted average common shares outstanding — diluted		41,513			40,025			40,217			39,777
Dividends declared	$	0.45		$	0.45		$	1.80		$	1.80

3

Post Properties, Inc.
Notes to Consolidated
Statements of Operations
(In thousands, except per share or unit data)

(1) For the twelve months ended December 31, 2004, other revenue included forfeited earnest money deposits from terminated property and land sale contracts totaling $684.

(2) For the three and twelve months ended December 31, 2004, property operating and maintenance expenses included charges of $618 and $1,321, respectively, relating to estimated hurricane damage at the Company’s Florida properties. For the twelve months ended December 31, 2004, property operating and maintenance expenses also included a severance charge of $569 for the elimination of certain property management positions.

(3)

General and administrative expenses for the three and twelve months ended December 31, 2005 included legal and other professional fees totaling $143 and $750, respectively, related to shareholder litigation. For the three and twelve months ended December 31, 2004, general and administrative expense included legal and professional fees totaling $198 and $1,584, 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 twelve months ended December 31, 2004 also included consulting and other professional expenses of $620 relating to portfolio valuation and software selection services.

During the fourth quarter of 2005, the Company reclassified certain expenses previously reported as general and administrative expenses to property operating and maintenance expenses and investment, development and other expenses on the accompanying statements of operations. Prior period amounts have been reclassified to conform to the 2005 presentation. The reclassified expenses primarily included certain investment group functions and long-term, stock-based compensation and benefits expenses associated with property management and investment and development group activities. As a result, the Company reclassified $3,735 and $3,070 from general and administrative expenses during the year ended December 31, 2005 and 2004, respectively, to property operating and maintenance expense ($1,997 and $1,476, respectively) and investment, development and other expense ($1,738 and $1,594, respectively).

(4) Investment, development and other expenses for the three and twelve months ended December 31, 2005 and 2004 include investment group expenses, development personnel and associated costs not allocable to development projects and, in 2005, certain sales and marketing costs associated with for-sale developments which are not capitalized.

(5) In the fourth quarter of 2005, the Company recorded additional expenses of $796 relating to changes in the estimated future costs of certain benefits granted to former executive officers under prior employment or settlement agreements. The estimated future cost increases primarily relate to increased fuel and other operating costs and expenses associated with certain fractional aircraft benefits provided to such executives.

(6) In the twelve months ended December 31, 2005, the Company sold its investment in Rent.com, a privately-held internet leasing company, and recognized a gain of $5,267.

(7) In December 2004, the Company terminated a remarketing agreement related to its $100,000, 6.85% Mandatory Par Put Remarketed Securities (“MOPPRS”) that were retired in March 2005. In connection with the termination of the remarketing agreement, the Company paid $10,615, including transaction expenses. Under the terms of the remarketing agreement, the remarketing agent had the right to remarket the $100,000 unsecured notes in March 2005 for a ten-year term at an interest rate calculated as 5.715% plus the Company’s then current credit spread to the ten-year treasury rate.

(8)	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 twelve months ended December 31, 2005, income from discontinued operations included the results of operations of one condominium conversion community classified as held for sale at December 31, 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 twelve months ended December 31, 2004, income from discontinued operations included the results of operations of the community classified as held for sale at December 31, 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 twelve months ended December 31, 2005 and 2004 were as follows:

4

	Three months ended						Twelve months ended
	December 31,						December 31,
	2005			2004			2005		2004
Revenues
Rental	$	—		$	7,177		$	13,222	$	41,881
Other property revenues		—			545			1,243		3,615
Total revenues		—			7,722			14,465		45,496
Expenses
Property operating and maintenance (exclusive of items shown separately below).		108			3,146			7,241		19,478
Depreciation		—			1,293			—		5,837
Interest		38			1,138			2,161		5,532
Minority interest in consolidated property partnerships		—			(33	)		14		(238	)
Asset impairment charges		—			1,607			—		2,233
Total expenses		146			7,151			9,416		32,842
Income (loss) from discontinued operations before minority interest		(146	)		571			5,049		12,654
Minority interest		601			159			317		(343	)
Income from discontinued operations	$	455		$	730		$	5,366	$	12,311

For the twelve months ended December 31, 2005, the Company recognized net gains in discontinued operations of $124,425 ($117,593 net of minority interest) from the sale of six communities, containing 3,047 units. 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 twelve months ended December 31, 2005, gains on sales of real estate assets includes the net gains of $925 ($1,007 net of minority interest and provision for income taxes) and $16,812 ($15,404 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 twelve months ended December 31, 2005 was as follows:

	Three months ended			Twelve months ended
	December 31, 2005			December 31, 2005
Condominium revenues, net	$	5,587		$	51,857
Condominium costs and expenses		(4,662	)		(35,045	)
Gains on condominium sales, before minority interest and income taxes		925			16,812
Minority interest		23			(814	)
Benefit (provision) for income taxes		59			(594	)
Gains on condominium sales, net of minority interest and provision for income taxes	$	1,007		$	15,404

For the twelve months ended December 31, 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.

(9)

For the twelve months ended December 31, 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 twelve months ended December 31, 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 June 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.

(10) 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 December 31, 2005, there were 42,796 units of the Operating Partnership outstanding, of which 41,394, or 96.7%, were owned by the Company. For the twelve months ended December 31, 2005, the potential dilution from the Company’s outstanding stock options and awards of 400 was antidilutive to the continuing operations per share calculation. For the three and twelve months ended December 31, 2004, the potential dilution from the Company’s outstanding stock options of 286 and 115, 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 twelve months ended December 31, 2005 and 2004 and for the three months ended December 31, 2004.

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 (loss) 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.

	Three months ended						Twelve months ended
	December 31,						December 31,
	2005			2004			2005			2004
Net income (loss) available to common shareholders	$	3,677		$	(16,416	)	$	134,311		$	76,368
Minority interest of common unitholders — continuing operations		135			(1,122	)		(53	)		(2,586	)
Minority interest in discontinued operations (1)		(624	)		(159	)		7,152			7,764
Depreciation on wholly-owned real estate assets, net (2)		17,605			20,253			73,189			81,433
Depreciation on real estate assets held in unconsolidated entities		224			333			969			1,328
Gains on sales of real estate assets, net of provision for income taxes — discontinued operations		(984	)		—			(140,643	)		(113,739	)
Incremental gains on condominium sales, net of provision for income taxes (3)		984			—			8,811			—
Gains on sales of real estate assets — unconsolidated entities		(167	)		—			(612	)		—
Incremental gains on condominium sales — unconsolidated entities (3)		68			—			359			—
Funds from operations available to common shareholders and unitholders, as defined (A)		20,918			2,889			83,483			50,568
Severance charges		796			—			796			—
Gain on sale of technology investment		—			—			(5,267	)		—
Loss on early extinguishment of indebtedness		—			4,011			3,220			8,139
Termination of debt remarketing agreement (interest expense)		—			10,615			—			10,615
Asset impairment charge		—			1,607			—			2,233
Redemption costs on preferred stock and units		—			—			—			3,526
Funds from operations available to common shareholders and unitholders, excluding certain items and charges (B)	$	21,714		$	19,122		$	82,232		$	75,081
Funds from operations available to common shareholders and unitholders, as defined	$	20,918		$	2,889		$	83,483		$	50,568
Recurring capital expenditures		(2,750	)		(2,271	)		(9,921	)		(9,884	)
Non-recurring capital expenditures		(1,871	)		(1,001	)		(4,508	)		(4,605	)
Straight-line adjustment for ground lease expenses		310			—			1,251			—
Adjusted funds from operations available to common shareholders and unitholders (4) (C)		16,607			(383	)		70,305			36,079
Severance charges		796			—			796			—
Gain on sale of technology investment		—			—			(5,267	)		—
Loss on early extinguishment of indebtedness		—			4,011			3,220			8,139
Termination of debt remarketing agreement (interest expense)		—			10,615			—			10,615
Asset impairment charge		—			1,607			—			2,233
Redemption costs on preferred stock and units		—			—			—			3,526
Adjusted funds from operations available to common shareholders and unitholders, excluding certain items and charges (4) (D)	$	17,403		$	15,850		$	69,054		$	60,592
Per Common Share Data — Basic
Funds from operations per share or unit, as defined (A÷F)	$	0.49		$	0.07		$	1.97		$	1.19
Adjusted funds from operations per share or unit (4) (C÷F)	$	0.39		$	(0.01	)	$	1.66		$	0.85
Funds from operations per share or unit, excluding certain items and charges (B÷F)	$	0.51		$	0.45		$	1.94		$	1.77
Adjusted funds from operations per share or unit, excluding certain items and charges (4) (D÷F)	$	0.41		$	0.37		$	1.63		$	1.43
Dividends declared (E)	$	0.45		$	0.45		$	1.80		$	1.80
Weighted average shares outstanding		40,908			40,025			40,217			39,777
Weighted average shares and units outstanding (F)		42,456			42,524			42,353			42,474

6

	Three months ended					Twelve months ended
	December 31,					December 31,
	2005		2004			2005		2004
Per Common Share Data — Diluted
Funds from operations per share or unit, as defined (A÷G)	$	0.49	$	0.07		$	1.95	$	1.19
Adjusted funds from operations per share or unit (4) (C÷G).	$	0.39	$	(0.01	)	$	1.64	$	0.85
Funds from operations per share or unit, excluding certain items and charges (B÷G)	$	0.50	$	0.45		$	1.92	$	1.76
Adjusted funds from operations per share or unit, excluding certain items and charges (4) (D÷G)	$	0.40	$	0.37		$	1.62	$	1.42
Dividends declared (E)	$	0.45	$	0.45		$	1.80	$	1.80
Weighted average shares outstanding (5)		41,513		40,311			40,616		39,892
Weighted average shares and units outstanding (5) (G)		43,060		42,811			42,752		42,589

(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 $615 and $128 for the three months and $1,771 and $681 for the twelve months ended December 31, 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 286 shares and units, for the three months ended December 31, 2004 and 400 and 115 shares and units, respectively, for the twelve months ended December 31, 2005 and 2004, that were antidilutive to the income (loss) per share computations under generally accepted accounting principles.

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 25 for a reconciliation of same store net operating income to GAAP net income. The operating performance and capital expenditures of the 52 communities containing 19,675⁽¹⁾ apartment units which were fully stabilized as of January 1, 2004, is summarized as follows:

	Three months ended							Twelve months ended
	December 31,							December 31,
	2005		2004		% Change			2005		2004		% Change
Rental and other revenues	$	63,826	$	60,689		5.2	%	$	250,583	$	243,430		2.9	%
Property operating and maintenance expenses (excluding depreciation and amortization)		23,591		22,981		2.7	%(4)		97,160		94,284		3.1	%(4)
Same store net operating income	$	40,235	$	37,708		6.7	%(4)	$	153,423	$	149,146		2.9	%(4)
Capital expenditures (2)
Recurring
Carpet	$	591	$	538		9.9	%	$	2,673	$	2,422		10.4	%
Other		1,940		1,233		57.3	%		5,809		5,214		11.4	%
Total recurring		2,531		1,771		42.9	%		8,482		7,636		11.1	%
Non-recurring		1,595		615		159.3	%		3,460		3,231		7.1	%
Total capital expenditures (A)	$	4,126	$	2,386		72.9	%	$	11,942	$	10,867		9.9	%
Total capital expenditures per unit (A÷19,675 units)	$	210	$	121		73.6	%	$	607	$	552		10.0	%
Average monthly rental rate per unit (3)	$	1,057	$	1,034		2.2	%	$	1,048	$	1,029		1.8	%

(1)	In the fourth quarter of 2005, the Company began the conversion of 349 units, representing components of two existing same store apartment communities, into for-sale condominium homes. As a result, the operating results of these components of the communities were removed from same store results for all periods presented.
(2)	See Table 3 on page 28 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.
(3)	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. In the fourth quarter of 2005, the Company adjusted its stated market rents at the majority of its communities to be more reflective of current market conditions. The impact of this change is estimated to have reduced the average monthly rental rate per unit by less than 1% for the three and twelve months ended December 31, 2005.
(4)	Excluding the impact of straight-lining long-term ground lease expense of approximately $310 and $1,251 for the three and twelve months ended December 31, 2005, property operating and maintenance expense (excluding depreciation and amortization) expenses would have been $23,281 and $95,909, respectively, and would have increased 1.3% and 1.7%, respectively, between periods and NOI would have been $40,545 and $154,674, respectively, and would have increased 7.5% and 3.7%, respectively, between periods.

8

Same Store Operating Results by Market —
Comparison of 2005 to 2004
(Increase (decrease) from same period in prior year)

	Three months ended												Twelve months ended
	December 31, 2005												December 31, 2005
										Average												Average
										Economic												Economic
Market	Revenues(1)			Expenses(1)			NOI(1)			Occupancy			Revenues(1)			Expenses(1)			NOI(1)			Occupancy
Atlanta		3.0	%		6.0	%(2)		1.4	%(2)		1.9	%		1.2	%		2.6	%(3)		0.3	%(3)		0.2	%
Dallas		5.4	%		3.1	%		7.4	%		0.7	%		3.7	%		1.9	%		5.3	%		1.1	%
Tampa		7.3	%		(10.6	)%		22.7	%		1.9	%		6.1	%		(1.2	)%		11.6	%		2.2	%
Washington, DC		6.1	%		14.0	%(2)		2.8	%(2)		(0.2	)%		5.3	%		14.4	%(3)		1.1	%(3)		0.3	%
Charlotte		7.8	%		(5.1	)%		14.2	%		3.2	%		4.1	%		0.3	%		5.9	%		1.0	%
Houston		10.1	%		(0.5	)%		20.2	%		12.1	%		2.7	%		14.1	%		(8.3	)%		3.9	%
Denver		5.5	%		0.3	%		8.6	%		8.5	%		2.2	%		(4.8	)%		6.2	%		2.5	%
New York		15.9	%		(9.2	)%		30.8	%		6.4	%		6.2	%		(3.1	)%		10.6	%		3.5	%
Orlando		11.7	%		9.7	%		13.2	%		0.5	%		6.5	%		1.6	%		10.5	%		(0.1	)%
Total		5.2	%		2.7	%(2)		6.7	%(2)		2.4	%		2.9	%		3.1	%(3)		2.9	%(3)		0.9	%

(1)	See Table 2 on page 26 for a reconciliation of these components of same store net operating income and Table 1 on page 25 for a reconciliation of same store net operating income to GAAP net income (loss).
(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 December 31, 2005, expenses and NOI would have increased 4.6% and 2.2% for Atlanta, GA and 3.8% and 7.1% for Washington, D.C., respectively. Excluding the impact of straight-lining long-term ground lease expense of approximately $310 for the three months ended December 31, 2005, aggregate expenses would have increased 1.3% and NOI would have increased 7.5% between periods. See Table 2 on page 26 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 $571 in Atlanta, GA and $680 in Washington, D.C. for the twelve months ended December 31, 2005, expenses and NOI would have increased 1.2% and 1.1% for Atlanta, GA and 4.6% and 5.7% for Washington, D.C., respectively. Excluding the impact of straight-lining long-term ground lease expense of approximately $1,251 for the twelve months ended December 31, 2005, aggregate expenses would have increased 1.7% and NOI would have increased 3.7% between periods. See Table 2 on page 26 for a reconciliation of these components of same store net operating income.

Same Store Occupancy by Market

						Average Economic						Average Economic
			% of NOI			Occupancy (1)						Occupancy (1)						Physical
			Three months ended			Three months ended						Twelve months ended						Occupancy
	Apartment		December 31,			December 31,						December 31,						at December 31,
Market	Units		2005			2005			2004			2005			2004			2005 (2)
Atlanta		9,668		46.7	%		94.9	%		93.0	%		93.6	%		93.4	%		94.8	%
Dallas		3,939		16.5	%		93.8	%		93.1	%		93.7	%		92.6	%		94.3	%
Tampa		1,883		10.2	%		98.4	%		96.5	%		97.5	%		95.3	%		97.6	%
Washington, DC		1,204		9.9	%		97.5	%		97.7	%		97.9	%		97.6	%		97.4	%
Charlotte		1,065		6.0	%		96.1	%		92.9	%		95.8	%		94.8	%		95.2	%
Houston		837		3.6	%		96.9	%		84.8	%		91.4	%		87.5	%		95.2	%
Denver		696		3.3	%		95.2	%		86.7	%		92.0	%		89.5	%		94.0	%
New York		138		2.4	%		97.7	%		91.3	%		96.8	%		93.3	%		95.7	%
Orlando		245		1.4	%		98.3	%		97.8	%		98.1	%		98.2	%		97.6	%
Total		19,675		100.0	%		95.6	%		93.2	%		94.5	%		93.6	%		95.2	%

(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. In the fourth quarter of 2005, the Company adjusted its stated market rents at the majority of its communities to be more reflective of current market conditions. The impact of this change is estimated to have increased the computed average economic occupancy amounts by less than 1% for the three and twelve months ended December 31, 2005. 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 95.1% and 92.5% for the three months ended December 31, 2005 and 2004, respectively, and 93.9% and 93.1% for the twelve months ended December 31, 2005 and 2004, respectively. For the three months ended December 31, 2005 and 2004, net concessions were $197 and $319, respectively, and employee discounts were $98 and $117, respectively. For the twelve months ended December 31, 2005 and 2004, net concessions were $1,019 and $746, respectively, and employee discounts were $420 and $456, respectively.

(2)

Physical occupancy is defined as the number of units occupied divided by total apartment units, expressed as a percentage.

9

Same Store Sequential Comparison

	Three months ended			Three months ended
	December 31, 2005			September 30, 2005			% Change
Rental and other revenues	$	63,826		$	63,736			0.1	%
Property operating and maintenance expenses (excluding depreciation and amortization)		23,591			25,028			(5.7	)%
Same store net operating income (1)	$	40,235		$	38,708			3.9	%
Average economic occupancy		95.6	%		95.1	%		0.5	%
Average monthly rental rate per unit	$	1,057		$	1,053			0.4	%

(1) See Table 2 on page 26 for a reconciliation of these components of same store net operating income and Table 1 on page 25 for a reconciliation of same store net operating income to GAAP net income (loss).

Sequential Same Store Operating Results by Market —
Comparison of Fourth Quarter of 2005 to Third Quarter 2005
(Increase (decrease) between periods)

										Average
										Economic
Market	Revenues(1)			Expenses(1)			NOI(1)			Occupancy
Atlanta		0.1	%		(4.2	)%		2.6	%		1.0	%
Dallas		(1.0	)%		(3.0	)%		0.6	%		(0.7	)%
Tampa		1.6	%		(3.6	)%		5.1	%		0.6	%
Washington, DC		0.6	%		(4.9	)%		3.5	%		(0.4	)%
Charlotte		(0.6	)%		(12.8	)%		5.5	%		(2.0	)%
Houston		2.1	%		(32.8	)%		74.0	%		3.9	%
Denver		(2.8	)%		(3.6	)%		(2.4	)%		1.6	%
New York		1.8	%		11.6	%		(1.7	)%		(1.0	)%
Orlando		4.7	%		17.0	%		(3.0	)%		1.1	%
Total		0.1	%		(5.7	)%		3.9	%		0.5	%

(1) See Table 2 on page 26 for a reconciliation of these components of same store net operating income and Table 1 on page 25 for a reconciliation of same store net operating income to GAAP net income (loss).

10

Post Properties, Inc.
Consolidated Balance Sheets
(In thousands, except per share or unit data)

	December 31,			December 31,
	2005			2004
	(Unaudited)
Assets
Real estate assets
Land	$	266,914		$	266,520
Building and improvements		1,789,479			1,887,514
Furniture, fixtures and equipment		207,497			214,954
Construction in progress		47,005			19,527
Land held for future development		62,511			18,910
		2,373,406			2,407,425
Less: accumulated depreciation		(516,954	)		(498,367	)
For-sale condominiums (1)		38,338			—
Assets held for sale, net of accumulated depreciation of $0 and $26,332 at December 31, 2005 and 2004, respectively (2)		4,591			68,661
Total real estate assets		1,899,381			1,977,719
Investments in and advances to unconsolidated real estate entities		26,614			21,320
Cash and cash equivalents		6,410			123
Restricted cash		4,599			1,844
Deferred charges, net		11,624			15,574
Other assets		32,826			37,262
Total assets	$	1,981,454		$	2,053,842
Liabilities and shareholders’ equity
Notes payable, including $0 and $34,060 of debt secured by assets held for sale at December 31, 2005 and 2004, respectively	$	980,615		$	1,129,478
Accrued interest payable		5,478			7,677
Dividend and distribution payable		19,257			19,203
Accounts payable and accrued expenses		58,474			58,837
Security deposits and prepaid rents		9,857			7,236
Total liabilities		1,073,681			1,222,431
Minority interest of common unitholders in Operating Partnership		26,764			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:
41,394 and 40,164 shares issued, 41,394 and 40,164 shares outstanding at December 31, 2005 and 2004, respectively		414			401
Additional paid-in capital		802,666			775,221
Accumulated earnings		86,315			25,075
Accumulated other comprehensive income (loss)		(3,109	)		(8,668	)
Deferred compensation		(3,625	)		(3,988	)
		882,690			788,070
Less common stock in treasury, at cost, 44 and 0 shares at December 31, 2005 and 2004, respectively		(1,681	)		—
Total shareholders’ equity		881,009			788,070
Total liabilities and shareholders’ equity	$	1,981,454		$	2,053,842

(1)	Consists of 349 units at two communities being converted into for-sale condominiums through the Company’s taxable REIT subsidiaries.
(2)	Consists of one community, originally containing 127 units, reflected in discontinued operations, which is being converted into for-sale condominiums through the Company’s taxable REIT subsidiaries.

11

Post Properties, Inc.
Consolidated Debt Summary
(Dollars in thousands, except per share or unit data)
(Unaudited)

Summary of Outstanding Debt at December 31, 2005

						Weighted Average Rate (1)
			Percentage			Three months ended December 31,
Type of Indebtedness	Balance		of Total			2005			2004
Unsecured fixed rate senior notes	$	485,000		49.45	%		6.51	%		6.96	%
Secured tax exempt variable rate notes (2)		28,495		2.91	%		3.53	%		2.29	%
Secured conventional fixed rate notes		365,741		37.30	%		6.25	%		6.26	%
Lines of credit		101,379		10.34	%		4.46	%		2.60	%
	$	980,615		100.00	%		6.12	%		6.08	%

			Percentage
	Balance		of Total Debt
Total fixed rate debt	$	850,741		86.76	%
Total variable rate debt		129,874		13.24	%
Total debt	$	980,615		100.00	%

Debt Maturities

				Weighted Average Rate
Aggregate debt maturities by year	Amount			on Debt Maturities (1)
2006	$	81,269			6.93	%
2007		259,572	(3)		5.66	%
2008		4,557			6.22	%
2009		75,901			5.50	%
2010		188,267			7.67	%
2011 and thereafter		371,049			5.55	%
	$	980,615

Debt Statistics

	Twelve months ended
	December 31,
	2005			2004
Interest coverage ratio (4)(5)		2.4	x		2.2	x
Fixed charge coverage ratio (4)(6)		2.1	x		1.8	x
Total debt as a % of undepreciated real estate assets (adjusted for joint venture partner’s share of debt) (7)		40.7	%		45.5	%
Total debt and preferred equity as % of undepreciated real estate assets (adjusted for joint venture partner’s share of debt) (7)		44.5	%		49.2	%

(1)	Weighted average rate includes credit enhancements and other fees, where applicable. The weighted average rates for the three months ended December 31, 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 lines of credit of $101,379 maturing in 2007.
(4)	Calculated for the twelve months ended December 31, 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 29.
(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 29.
(7)	A computation of the debt ratios is included in Table 5 on page 30.

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

	As of
Covenant requirement (1)	December 31, 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		3.16	x
Consolidated Income Available for Debt Service Charge must be at least 1.50/1		2.41	x

(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.

	As of
	December 31, 2005
Ratio of Consolidated Debt to Total Assets
Consolidated debt, per balance sheet (A)	$	980,615
Total assets, as defined (B) (Table A)	$	2,486,784
Computed ratio (A÷B)		39	%
Required ratio (cannot exceed)		60	%
Ratio of Secured Debt to Total Assets
Secured conventional fixed rate notes	$	365,741
Secured tax exempt variable rate notes		28,495
Total secured debt (C)	$	394,236
Computed ratio (C÷B)		16	%
Required ratio (cannot exceed)		40	%
Ratio of Total Unencumbered Assets to Unsecured Debt
Consolidated debt, per balance sheet (A)	$	980,615
Total secured debt (C)		(394,236	)
Total unsecured debt (D)	$	586,379
Total unencumbered assets, as defined (E) (Table A)	$	1,853,483
Computed ratio (E÷D)		3.16	x
Required minimum ratio		1.50	x
Ratio of Consolidated Income Available for Debt Service to Annual Debt Service Charge
Consolidated Income Available for Debt Service, as defined (F) (Table B)	$	149,846
Annual Debt Service Charge, as defined (G) (Table B)	$	62,223
Computed ratio (F÷G) (2)		2.41	x
Required minimum ratio		1.50	x

13

Post Properties, Inc.
Consolidated Debt Summary (cont.)
(Dollars in thousands, except per share or unit data)
(Unaudited)

Table A

Calculation of Total Assets and Total Unencumbered Assets for Public Debt Covenant Computations

	As of
	December 31, 2005
Total real estate assets	$	1,899,381
Add:
Investments in unconsolidated real estate entities		26,614
Accumulated depreciation		516,954
Other tangible assets (cash, restricted cash, other assets, exclusive of receivables)		43,835
Total assets for public debt covenant computations		2,486,784
Less:
Encumbered real estate assets		(633,301	)
Total unencumbered assets for public debt covenant computations	$	1,853,483

Table B

Calculation of Consolidated Income Available for Debt Service and Annual Debt Service Charge for Public Debt Covenant Computations

	Twelve months ended
Consolidated income available for debt service	December 31, 2005
Net income	$	141,948
Add:
Minority interests		7,099
Provision for income taxes		594
Income before minority interest and provision for income taxes		149,641
Add:
Depreciation		76,248
Depreciation (company share) of assets held in unconsolidated entities		969
Amortization of deferred financing costs		4,661
Interest expense		58,898
Interest expense (company share) of assets held in unconsolidated entities		1,164
Interest expense of discontinued operations		2,161
Loss on early extinguishment of indebtedness associated with property sales		3,220
Less:
Gains on sales of real estate assets — discontinued operations		(141,237	)
Gains on sales of real estate assets — unconsolidated entities		(612	)
Gain on sale of technology investment		(5,267	)
Consolidated income available for debt service	$	149,846
Annual debt service charge
Consolidated interest expense	$	58,898
Interest expense (company share) of assets held in unconsolidated entities		1,164
Interest expense of discontinued operations		2,161
	$	62,223

14

Post Properties, Inc.
Summary Of Communities Under Construction

Amount

Estimated

Estimated

Spent

Quarter of

Quarter of

Quarter of

Number

Construction

as of

Construction

First Units

Stabilized

Metropolitan Area

of Units

Cost

12/31/2005

Start

Available

Occupancy (1)

($ in millions)

($ in millions)

Construction/Lease-up Communities

Washington D.C.

Post CarlyleTM — Apartment and Condominiums (2)

350

$

99

$

47

4Q 2004

3Q 2006

3Q 2007

Construction/Lease-Up Communities

350

$

99

$

47

Weighted average projected property net operating income as a % of total estimated construction cost — Apartments (3)

6.75% - 7.0

%

(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 January 30, 2006, the Company has 77 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 or early 2007. 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.

15

Post Properties, Inc.
Summary Of Condominium Conversion Projects
(Dollars in thousands)

								Average
		Year		Sale		Total		Unit		Project Transfer
Project	Location	Completed		Start Date		Units		Sq. Ft. (1)		Price (2)
588TM	Dallas, TX		2000		Q1 2005		127		1,470	$	20,274
Hyde Park WalkTM	Tampa, FL		1997		Q2 2005		134		890		16,755
The Peachtree ResidencesTM (4)	Atlanta, GA		2001		Q2 2005		121		1,340		30,190
Harbour Place City HomesTM	Tampa, FL		1999		Q2 2006		206		1,036		37,000
RISETM	Houston, TX		2000		Q2 2006		143		1,407		26,250
										$	130,469

	Units (3)
					Available				Three months ended						Twelve months ended
					For Sale				December 31, 2005						December 31, 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)
588TM		127		111		5		11		21	$	5,986	$	925		103	$	26,647	$	3,228
Hyde Park WalkTM		134		134		—		—		—		—		—		134		29,338		6,177
The Peachtree ResidencesTM (4)		121		47		14		60		20		5,901		68		45		15,082		359
		382		292		19		71		41	$	11,887	$	993		282	$	71,067	$	9,764

(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 January 30, 2006. There can be no assurance that condominium units under contract will close.
(4)	The Peachtree ResidencesTM 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 (benefit) attributable to gains on condominium sales of $(59) and $594 for the three and twelve months ended December 31, 2005, respectively.

16

Post Properties, Inc.
Community Acquisition and Disposition Summary

				Gross Amount			Gross
Property Name/Period	Location	Year Built		Per Unit			Amount
Acquisitions
Q2 2004
Post Tysons CornerTM	Washington, D.C.		1990	$	171,972		$	85,814,000
2004 YTD Total							$	85,814,000
Weighted Average Cap Rate — Acquisitions — 2004								5.5	%(1)
Q2 2005
Post Ballantyne	Charlotte, NC		2004	$	116,771		$	37,250,000
2005 YTD Total							$	37,250,000
Weighted Average Cap Rate — Acquisitions — 2005								5.6	%(2)
Dispositions
Q1 2004
Post Townlake®	Dallas, TX		1986-1987	$	56,212		$	22,372,000	(3)
Q2 2004
Post Windhaven TM	Dallas, TX		1991	$	52,743
Post Mill® (5)	Atlanta, GA		1985-1986
Post Canyon® (5)	Atlanta, GA		1986
Post Chase® (5)	Atlanta, GA		1987
Post Court® (5)	Atlanta, GA		1988
Post Lane® (5)	Atlanta, GA		1988
Post Lake® (5)	Orlando, FL		1988	$	65,409	(5)	$	221,750,000
2004 YTD Total							$	244,122,000
Weighted Average Cap Rate — Dispositions — 2004								6.6	%(4)
Q2 2005
Post American Beauty MillTM	Dallas, TX		1998	$	63,125
Post Bennie DillonTM	Nashville, TN		1999	$	119,767
Post Corners®	Atlanta, GA		1986	$	63,696
Post Walk®	Atlanta, GA		1984-1987	$	88,445
Post White Rock®	Dallas, TX		1988	$	59,420		$	99,050,000
Q3 2005
Post Village®	Atlanta, GA		1983-1988	$	76,237		$	132,500,000
2005 YTD Total
							$	231,550,000
Weighted Average Cap Rate — Dispositions — 2005								5.9	%(4)

(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.

17

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 twelve months ended December 31, 2005 and 2004 is detailed below.

	Three months ended				Twelve months ended
	December 31,				December 31,
	2005		2004		2005		2004
Development and acquisition expenditures	$	11,836	$	5,127	$	116,710	$	43,708
Non-recurring capital expenditures
Revenue generating additions and improvements (1)		—		—		—		26
Other community additions and improvements (2)		1,871		1,001		4,508		4,605
Recurring capital expenditures
Carpet replacements and other community additions and improvements (3)		2,750		2,271		9,921		9,884
Corporate additions and improvements		615		128		1,771		681
	$	17,072	$	8,527	$	132,910	$	58,904
Other Data
Capitalized interest	$	1,354	$	291	$	2,907	$	1,078
Capitalized development costs and fees (4)	$	337	$	250	$	1,219	$	998

(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.

18

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 $6,099 at December 31, 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 $611 at December 31, 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:

	December 31,		December 31,
Balance Sheet Data	2005		2004
Real estate assets, net of accumulated depreciation of $8,349 and $9,712, respectively	$	96,000	$	124,072
Assets held for sale, net (1)		17,715		—
Cash and other		1,770		2,797
Total assets	$	115,485	$	126,869
Mortgage notes payable	$	66,999	$	83,468
Mortgage notes payable to Company		5,967		—
Other liabilities		996		1,296
Total liabilities		73,962		84,764
Members’ equity		41,523		42,105
Total liabilities and members’ equity	$	115,485	$	126,869
Company’s equity investment	$	20,647	$	21,320

(1) Includes one community, originally containing 121 units, being converted into condominiums through a taxable REIT subsidiary.

	Three months ended						Twelve months ended
	December 31						December 31,
Income Statement Data	2005			2004			2005			2004
Revenue
Rental	$	2,708		$	2,583		$	10,789		$	10,451
Other property revenues		195			176			840			776
Total revenues		2,903			2,759			11,629			11,227
Expenses
Property operating and maintenance		1,013			912			3,689			3,555
Depreciation and amortization		657			652			2,621			2,579
Interest		688			688			2,752			2,658
Total expenses		2,358			2,252			9,062			8,792
Income from continuing operations		545			507			2,567			2,435
Discontinued Operations
Loss from discontinued operations		(57	)		(116	)		(176	)		(355	)
Gains on sales of real estate assets		984			—			2,834			—
Loss on early extinguishment of debt		—			—			(273	)		—
Income (loss) from discontinued operations		927			(116	)		2,385			(355	)
Net income	$	1,472		$	391		$	4,952		$	2,080
Company’s share of net income	$	472		$	241		$	1,767		$	1,083

19

For the three and twelve months ended December 31, 2005, gains on sales of real estate assets represents net gains of $984 and $2,834, 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 twelve months ended December 31, 2005 was as follows:

	Three months ended			Twelve months ended
	December 31, 2005			December 31, 2005
Condominium revenues, net	$	5,447		$	14,014
Condominium costs and expenses		(4,463	)		(11,180	)
Gains on condominium sales	$	984		$	2,834

At December 31, 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.

20

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 December 31, 2005 for properties stabilized by the beginning of the quarter ended December 31, 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 December 31, 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)

	Three months ended					As
Income Statement Data	December 31, 2005		Adjustments			Adjusted
Rental revenues	$	71,797	$	(2,657	)(1)	$	69,140
Other property revenues		4,177		(96	)(1)		4,081
Total rental and other revenues (A)		75,974		(2,753	)		73,221
Property operating & maintenance expenses (excluding depreciation and amortization) (B)		32,757		(6,245	)(1)		26,512
Property net operating income (Table 1) (A-B)	$	43,217	$	3,492		$	46,709
Apartment units represented		21,442		(559	)(2)		20,883

	As of					As
	December 31, 2005		Adjustments			Adjusted
Other Asset Data
Cash & equivalents	$	6,410	$	—		$	6,410
Construction in progress		47,005		—			47,005
Land held for development or sale		62,511		—			62,511
For-sale condominiums		38,338		—	(3)		38,338
Assets held for sale		4,591		6,200	(3)		10,791
Investments in and advances to unconsolidated real estate entities (including mortgage loans receivable)		26,614		(20,647	)(4)		5,967
Other assets (5)		37,425		—			37,425
Cash and other assets of unconsolidated real estate entities		1,770		(1,151	)(6)		619
	$	224,664	$	(15,598	)	$	209,066
Other Liability Data
Tax-exempt debt	$	28,495	$	—		$	28,495
Other notes payable		952,120		—			952,120
Other liabilities (8)		93,066		(1,251	)(7)		91,815
Total liabilities of unconsolidated real estate entities (9)		73,962		(48,075	)(8)		25,887
	$	1,147,643	$	(49,326	)	$	1,098,317
Other Data
Liquidation value of preferred shares	$	95,000	$	—		$	95,000
Common shares outstanding		41,394		—			41,394
Common units outstanding		1,402		—			1,402

(1)

The adjustments include additions for the Company’s 35% share of rental revenues ($948) and other property revenues ($68) and property operating and maintenance expenses (excluding depreciation and amortization) ($355) 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 ($1,395) and other revenues ($68) and property and operating maintenance expenses (excluding depreciation and amortization) ($453) generated by the Post Harbour Place and Post Midtown Square units being converted to condominiums. Also, the adjustments reflect a reduction of rental revenues ($2,210) and other revenues ($96) and property operating and maintenance expenses (excluding depreciation and amortization) ($2,089) 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 ($3,748) 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, 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.

21

(3)	The “As Adjusted” amount represents the book value of the Company’s wholly-owned condo conversion assets (Post Block 588, Post Harbour Place and Post Midtown Square) and its 35% share of the book value of the unconsolidated condominium conversion asset (Post Peachtree).
(4)	The “As of December 31, 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.
(5)	These amounts consist of restricted cash and other assets, per the Company’s balance sheet.
(6)	The “As of December 31, 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 ($1,151) 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.
(7)	The “As of December 31, 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.
(8)	The “As of December 31, 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)

	Three months ended
Calculation of Adjusted Property Net Operating Income	December 31, 2005
Total rental and other revenues	$	73,221	(a)
Property operating & maintenance expenses (excluding depreciation and amortization)		(26,512	)(a)
Property net operating income		46,709
Adjustments to property net operating income
Assumed property management fee (calculated at 3% of revenues)		(2,197	)
Assumed property capital expenditure reserve ($300 per unit per year based on 20,883 units)		(1,566	)
Property net operating income, adjusted for assumed management fee and assumed capital expenditures	$	42,946
Property net operating income, adjusted for assumed management fee and assumed capital expenditures (annualized) (A)	$	171,784

	As of
Calculation of Implied Market Value of Company Gross Assets	December 31, 2005
Implied market value of common shares and units	$	1,709,700	(b)
Other assets, as adjusted		(209,066	)(a)
Other liabilities, as adjusted		1,098,317	(a)
Preferred stock, at liquidation value		95,000	(a)
Implied market value of Company gross assets (B)	$	2,693,951
Implied Portfolio Capitalization Rate, based on company’s stock price as of December 31, 2005 (A÷B)		6.4	%

(a)	Represents amounts in the “as adjusted” column from the Financial Data table reflected above.
(b)	Calculated as follows:

Common shares and units outstanding at December 31, 2005		42,796
Per share market value of common stock at December 31, 2005	$	39.95
Implied market value of common shares and units at December 31, 2005	$	1,709,700

22

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.

23

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 severance charges, preferred stock and unit redemption costs, losses on early extinguishment of debt, 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 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, asset impairment charges and severance 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.

24

Reconciliations of Supplemental Non-GAAP Financial Measures

Table 1
Reconciliation of Same Store Net Operating Income (NOI) to GAAP Net Income (Loss)
(Dollars in thousands)
(Unaudited)

	Three months ended									Twelve months ended
	December 31,			December 31,			September 30,			December 31,			December 31,
	2005			2004			2005			2005			2004
Total same store NOI	$	40,235		$	37,708		$	38,708		$	153,423		$	149,146
Property NOI from other operating segments		2,982			1,532			2,761			9,115			5,285
Consolidated property NOI		43,217			39,240			41,469			162,538			154,431
Add (subtract):
Other revenues		59			64			64			255			1,000
Interest income		78			177			230			661			817
Minority interest in consolidated property partnerships		28			133			34			239			671
Depreciation		(18,352	)		(19,790	)		(18,950	)		(76,248	)		(79,473	)
Interest expense		(13,558	)		(15,874	)		(14,455	)		(58,898	)		(63,552	)
Amortization of deferred financing costs		(954	)		(1,030	)		(991	)		(4,661	)		(4,304	)
General and administrative		(4,799	)		(4,291	)		(4,567	)		(18,307	)		(18,205	)
Investment, development and other expenses		(1,136	)		(603	)		(1,432	)		(5,242	)		(2,930	)
Termination of debt remarketing agreement (interest expense)		—			(10,615	)		—			—			(10,615	)
Loss in early extinguishment of indebtedness		—			(4,011	)		—			—			(4,011	)
Severance charges		(796	)		—			—			(796	)		—
Equity in income of unconsolidated entities		472			241			593			1,767			1,083
Gain on sale of technology investment		—			—			—			5,267			—
Minority interest of preferred unitholders		—			—			—			—			(3,780	)
Minority interest of common unitholders		(135	)		1,122			(12	)		53			2,586
Income (loss) from continuing operations		4,124			(15,237	)		1,983			6,628			(26,282	)
Income from discontinued operations		1,462			730			71,258			135,320			114,501
Net income (loss)	$	5,586		$	(14,507	)	$	73,241		$	141,948		$	88,219

25

Table 2
Same Store Net Operating Income (NOI) Summary by Market
(Dollars in thousands)

	Three months ended,												4Q ’05
	December 31,		December 31,		September 30,		4Q ‘04			3Q ‘05			% Same
	2005		2004		2005		% change			% change			Store NOI
Rental and other revenues
Atlanta	$	29,017	$	28,167	$	28,988		3.0	%		0.1	%
Dallas		11,906		11,291		12,029		5.4	%		(1.0	)%
Tampa		6,659		6,204		6,555		7.3	%		1.6	%
Washington, DC		5,868		5,530		5,831		6.1	%		0.6	%
Charlotte		3,399		3,154		3,419		7.8	%		(0.6	)%
Houston		2,613		2,374		2,559		10.1	%		2.1	%
Denver		2,035		1,928		2,094		5.5	%		(2.8	)%
New York		1,354		1,168		1,330		15.9	%		1.8	%
Orlando		975		873		931		11.7	%		4.7	%
Total rental and other revenues		63,826		60,689		63,736		5.2	%		0.1	%
Property operating and maintenance expenses (exclusive of depreciation and amortization)
Atlanta (1)		10,235		9,652		10,684		6.0	%		(4.2	)%
Dallas		5,250		5,092		5,411		3.1	%		(3.0	)%
Tampa		2,560		2,862		2,655		(10.6	)%		(3.6	)%
Washington, DC (1)		1,877		1,646		1,974		14.0	%		(4.9	)%
Charlotte		995		1,048		1,141		(5.1	)%		(12.8	)%
Houston		1,158		1,164		1,723		(0.5	)%		(32.8	)%
Denver		703		701		729		0.3	%		(3.6	)%
New York		394		434		353		(9.2	)%		11.6	%
Orlando		419		382		358		9.7	%		17.0	%
Total (1)		23,591		22,981		25,028		2.7	%		(5.7	)%
Net operating income
Atlanta (1)		18,782		18,515		18,304		1.4	%		2.6	%		46.7	%
Dallas		6,656		6,199		6,618		7.4	%		0.6	%		16.5	%
Tampa		4,099		3,342		3,900		22.7	%		5.1	%		10.2	%
Washington, DC (1)		3,991		3,884		3,857		2.8	%		3.5	%		9.9	%
Charlotte		2,404		2,106		2,278		14.2	%		5.5	%		6.0	%
Houston		1,455		1,210		836		20.2	%		74.0	%		3.6	%
Denver		1,332		1,227		1,365		8.6	%		(2.4	)%		3.3	%
New York		960		734		977		30.8	%		(1.7	)%		2.4	%
Orlando		556		491		573		13.2	%		(3.0	)%		1.4	%
Total same store NOI (1)	$	40,235	$	37,708	$	38,708		6.7	%		3.9	%		100.0	%

See footnotes on page 27.

26

Table 2 (con’t)
Same Store Net Operating Income (NOI) Summary by Market
(Dollars in thousands)

	Twelve months ended,
	December 31,		December 31,
	2005		2004		% change
Rental and other revenues
Atlanta	$	114,473	$	113,158		1.2	%
Dallas		46,868		45,177		3.7	%
Tampa		25,923		24,432		6.1	%
Washington, DC		23,068		21,899		5.3	%
Charlotte		13,299		12,779		4.1	%
Houston		9,992		9,725		2.7	%
Denver		8,103		7,932		2.2	%
New York		5,158		4,856		6.2	%
Orlando		3,699		3,472		6.5	%
Total rental and other revenues		250,583		243,430		2.9	%
Property operating and maintenance expenses (exclusive of depreciation and amortization)
Atlanta (2)		42,236		41,157		2.6	%
Dallas		21,048		20,653		1.9	%
Tampa		10,379		10,501		(1.2	)%
Washington, DC (2)		7,960		6,958		14.4	%
Charlotte		4,242		4,230		0.3	%
Houston		5,468		4,794		14.1	%
Denver		2,748		2,888		(4.8	)%
New York		1,511		1,559		(3.1	)%
Orlando		1,568		1,544		1.6	%
Total (2)		97,160		94,284		3.1	%
Net operating income
Atlanta (2)		72,237		72,001		0.3	%
Dallas		25,820		24,524		5.3	%
Tampa		15,544		13,931		11.6	%
Washington, DC (2)		15,108		14,941		1.1	%
Charlotte		9,057		8,549		5.9	%
Houston		4,524		4,931		(8.3	)%
Denver		5,355		5,044		6.2	%
New York		3,647		3,297		10.6	%
Orlando		2,131		1,928		10.5	%
Total same store NOI (2)	$	153,423	$	149,146		2.9	%

(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 $10,093, $1,709 and $23,281, in Atlanta, Washington, D.C. and in total, respectively, and would have increased 4.6%, 3.8% and 1.3% in Atlanta, Washington, D.C. and in total, respectively, for the fourth quarter of 2005, compared to the fourth quarter of 2004. Excluding the impact of straight-lining long-term ground lease expense, NOI would have been $18,924, $4,159 and $40,545, in Atlanta, Washington, D.C. and in total, respectively, and would have increased 2.2%, 7.1% and 7.5% in Atlanta, Washington, D.C. and in total, respectively, for the fourth quarter of 2005, compared the fourth quarter of 2004.

(2)

Excluding the impact of straight-lining long-term ground lease expense of $571 in Atlanta and $680 in Washington, D.C. property operating and maintenance expenses (exclusive of depreciation and amortization) would have been $41,665, $7,280 and $95,909, in Atlanta, Washington, D.C. and in total, respectively, and would have increased 1.2%, 4.6% and 1.7% in Atlanta, Washington, D.C. and in total, respectively, for the twelve months ended December 31, 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 $72,808, $15,788 and $154,674, in Atlanta, Washington, D.C. and in total, respectively, and would have increased 1.1%, 5.7% and 3.7% in Atlanta, Washington, D.C. and in total, respectively, for the twelve months ended December 31, 2005, compared the same period in the prior year.

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Table 3
Reconciliation of Segment Cash Flow Data to Statements of Cash Flows
(Dollars in thousands)

	Three months ended				Twelve months ended
	December 31,				December 31,
	2005		2004		2005		2004
Recurring capital expenditures by operating segment
Same store	$	2,531	$	1,771	$	8,482	$	7,636
Partially stabilized		3		10		13		25
Construction and lease-up		—		—		—		—
Other segments		216		490		1,426		2,223
Total recurring capital expenditures per statements of cash flows	$	2,750	$	2,271	$	9,921	$	9,884
Non-recurring capital expenditures by operating segment
Same store	$	1,595	$	615	$	3,460	$	3,231
Partially stabilized		—		—		—		—
Construction and lease-up		—		—		—		—
Other segments		276		386		1,048		1,374
Total non-recurring capital expenditures per statements of cash flows	$	1,871	$	1,001	$	4,508	$	4,605

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Table 4
Computation of Interest and Fixed Charge Coverage Ratios
(Dollars in thousands)

	Twelve months ended
	December 31,
	2005			2004
Income (loss) from continuing operations	$	6,628		$	(26,282	)
Minority interest of common unitholders		(53	)		(2,586	)
Minority interest of preferred unitholders		—			3,780
Gain on sale of technology investment		(5,267	)		—
Gains on sales of real estate assets — unconsolidated entities		(612	)		—
Depreciation expense		76,248			79,473
Depreciation (company share) of assets held in unconsolidated entities		969			1,328
Interest expense		58,898			63,552
Interest expense (company share) of assets held in unconsolidated entities		1,164			1,179
Amortization of deferred financing costs		4,661			4,304
Termination of debt remarketing agreement (interest expense)		—			10,615
Loss on early extinguishment of indebtedness		—			4,011
Income available for debt service (A)	$	142,636		$	139,374
Interest expense	$	58,898			63,552
Interest expense (company share) of assets held in unconsolidated entities		1,164			1,179
Interest expense for purposes of computation (B)		60,062			64,731
Dividends and distributions to preferred shareholders and unitholders		7,637			12,105
Fixed charges for purposes of computation (C)	$	67,699		$	76,836
Interest coverage ratio (A÷B) (1)		2.4	x		2.2	x
Fixed charge coverage ratio (A÷C) (1)		2.1	x		1.8	x

(1) The interest coverage and fixed ratios, including charges associated with the termination of a debt remarketing agreement ($10,615) as interest expense, for the twelve months ended December 31, 2004, would be 1.8x and 1.6x, respectively.

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Table 5
Computation of Debt Ratios
(In thousands)

	As of December 31,
	2005			2004
Total real estate assets per balance sheet	$	1,899,381		$	1,977,719
Plus:
Company share of real estate assets held in unconsolidated entities		39,800			43,425
Company share of accumulated depreciation — assets held in unconsolidated entities		2,922			3,399
Accumulated depreciation per balance sheet		516,954			498,367
Accumulated depreciation on assets held for sale		—			26,332
Total undepreciated real estate assets (A)	$	2,459,057		$	2,549,242
Total debt per balance sheet	$	980,615		$	1,129,478
Plus:
Company share of third party debt held in unconsolidated entities		23,450			29,214
Less:
Joint venture partners’ share of mortgage debt of the company		(3,879	)		—
Total debt (adjusted for joint venture partners’ share of debt) (B)	$	1,000,186		$	1,158,692
Total debt as a % of undepreciated real estate assets (adjusted for joint venture partners’ share of debt) (B÷A)		40.7	%		45.5	%
Total debt per balance sheet	$	980,615		$	1,129,478
Plus:
Company share of third party debt held in unconsolidated entities		23,450			29,214
Preferred shares at liquidation value		95,000			95,000
Less:
Joint venture partners’ share of mortgage debt of the company		(3,879	)		—
Total debt and preferred equity (adjusted for joint venture partner’s share of debt) (C)	$	1,095,186		$	1,253,692
Total debt and preferred equity as a % of undepreciated assets (adjusted for joint venture partners’ share of debt) (C÷A)		44.5	%		49.2	%

30

Table 6
Calculation of Company Undepreciated Book Value Per Share
(In thousands)

	December 31,
	2005
Total shareholders’ equity, per balance sheet	$	881,009
Plus:
Accumulated depreciation, per balance sheet		516,954
Minority interest of common unitholders in Operating Partnership, per balance sheet		26,764
Less:
Deferred charges, net, per balance sheet		(11,624	)
Preferred shares at liquidation value		(95,000	)
Total undepreciated book value (A)	$	1,318,103
Total common shares and units (B)		42,796
Company undepreciated book value per share (A÷B)	$	30.80

31