UNITED STATES ~~SECURITIES~~ ~~AND EXCHANGE COMMISSION~~

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

~~For~~SECURITIES ~~the~~EXCHANGE ~~quarterly~~ACT ~~period~~OF ~~ended~~1934 ~~June 30, 2008~~

For the quarterly period ended June 30, 2009

o[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE ~~SECURITIES EXCHANGE ACT OF 1934~~

SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

~~POST~~Commission ~~PROPERTIES,~~file ~~INC. POST~~numbers ~~APARTMENT~~1-12080 ~~HOMES,~~and ~~L.P.~~ 0-28226

POST PROPERTIES, INC.

POST APARTMENT HOMES, L.P.

(Exact name of registrant as specified in its charter)

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

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

(~~404) 846-5000 (Registrant’s~~Address ~~telephone~~of ~~number,~~principal ~~including~~executive ~~area~~offices -- zip code)

~~Indicate by check mark whether the registrants~~ (1404) ~~have~~ ~~filed~~846-5000 all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.

~~Post~~(Registrant’s ~~Properties,~~telephone ~~Inc. Yes þ No o Post Apartment Homes~~number, ~~L.P.~~including ~~Yes~~area þcode) ~~No o~~

Indicate by check mark whether the registrants ~~are~~(1) have ~~large~~filed ~~accelerated~~all ~~filers,~~reports ~~accelerated~~required ~~filers,~~to ~~non-accelerated~~be ~~filers~~filed orby ~~smaller~~Section 13 ~~reporting~~or ~~company.~~15(d) ~~See definition~~ of ~~accelerated filer, large accelerated filer and smaller reporting company in Rule 12b-2 of~~ the ~~Exchange Act.~~

~~Post~~Securities ~~Properties,~~Exchange ~~Inc.~~Act ~~Large~~of ~~Accelerated~~1934 ~~Filer~~during þthe ~~Accelerated~~preceding ~~Filer~~12 omonths ~~Non-Accelerated Filer o~~ (Door ~~not~~for ~~check~~such ifshorter aperiod ~~smaller~~that ~~reporting~~the ~~company)~~registrant ~~Smaller~~was ~~Reporting~~required ~~Company~~to ~~o Post Apartment Homes, L.P. Large Accelerated Filer o Accelerated Filer o Non-Accelerated Filer þ (Do not check if a smaller reporting company) Smaller Reporting Company o~~

file such reports), and (2) have been subject to such filing requirements for the past 90 days.


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

Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web site, if any,

every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12

months (or for such shorter period as the registrant was required to submit and post such files).


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

Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers or smaller

reporting company. See definition of accelerated filer, large accelerated filer and smaller reporting company in Rule 12b-2 of

the Exchange Act.


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

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’'s classes of common stock as of the latest practicable date:

44,~~125~~383,~~782~~068 shares of common stock outstanding as of ~~August~~July 131, ~~2008~~2009.

POSTTable PROPERTIES,of INC. POST APARTMENT HOMES, L.P. Contents

POST PROPERTIES, INC.

POST APARTMENT HOMES, L.P.

INDEX

	Page
Part I	FINANCIAL INFORMATION		Page
Part I FINANCIAL INFORMATION
	Item 1	Financial Statements
Item 1 Financial Statements
	POST PROPERTIES, INC.
POST PROPERTIES, INC.
	Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008		1
Consolidated Balance Sheets as of June 30, 2008 and December 31, 2007	1
	Consolidated Statements of Operations for the three and six months ended June 30, 2009 and 2008		2
Consolidated Statements of Operations for the three and six months ended June 30, 2008 and 2007	2
	Consolidated Statements of Equity and Accumulated Earnings for the six months ended June 30, 2009 and 2008		3
Consolidated Statement of Shareholders’ Equity and Accumulated Earnings for the six months ended June 30, 2008	3
	Consolidated Statements of Cash Flows for the six months ended June 30, 2009 and 2008		4
Consolidated Statements of Cash Flows for the six months ended June 30, 2008 and 2007	4
	Notes to Consolidated Financial Statements		5
Notes to Consolidated Financial Statements	5
	POST APARTMENT HOMES, L.P.
POST APARTMENT HOMES, L.P.
	Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008		22
Consolidated Balance Sheets as of June 30, 2008 and December 31, 2007	21
	Consolidated Statements of Operations for the three and six months ended June 30, 2009 and 2008		23
Consolidated Statements of Operations for the three and six months ended June 30, 2008 and 2007	22
	Consolidated Statements of Equity for the six months ended June 30, 2009 and 2008		24
Consolidated Statement of Partners’ Equity for the six months ended June 30, 2008	23
	Consolidated Statements of Cash Flows for the six months ended June 30, 2009 and 2008		25
Consolidated Statements of Cash Flows for the six months ended June 30, 2008 and 2007	24
	Notes to Consolidated Financial Statements		26
Notes to Consolidated Financial Statements	25
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	44
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
	Item 3	Quantitative and Qualitative Disclosures about Market Risk	67
Item 3 Quantitative and Qualitative Disclosures about Market Risk	60
	Item 4	Controls and Procedures	67
Item 4 Controls and Procedures	60
Part II	OTHER INFORMATION
Item 4T Controls and Procedures	60
	Item 1	Legal Proceedings	68
Part II OTHER INFORMATION
	Item 1A	Risk Factors	68
Item 1 Legal Proceedings	61
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 1A Risk Factors	61
	Item 3	Defaults Upon Senior Securities	68
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds	62
	Item 4	Submission of Matters to a Vote of Security Holders	69
Item 3 Defaults Upon Senior Securities	62
	Item 5	Other Information	69
Item 4 Submission of Matters to a Vote of Security Holders	62
	Item 6	Exhibits	70
Item 5 Other Information	62
	Signatures		71
Item 6 Exhibits	63
	Exhibit Index		73
Signatures	64
Exhibit Index	66
EX-31.1 SECTION 302, CERTIFICATION OF THE CEO
EX-31.2 SECTION 302, CERTIFICATION OF THE CFO
EX-32.1 SECTION 906, CERTIFICATION OF THE CEO
EX-32.2 SECTION 906, CERTIFICATION OF THE CFO

POST PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

	June 30,				December 31,
	June 30,2009			December 31,2008
	2008				2007
	(Unaudited)
	(Unaudited)
Assets
Assets
Real estate assets
Real estate assets
Land	$	268,541		$	258,593
Land	$	232,160			$	276,680
Building and improvements		1,874,469			1,802,496
Building and improvements		1,649,338				1,840,563
Furniture, fixtures and equipment		217,297			205,221
Furniture, fixtures and equipment		190,407				204,433
Construction in progress		123,072			138,496
Construction in progress		135,232				134,125
Land held for future investment		82,039			81,555
Land held for future development		123,167				154,617
		2,565,418			2,486,361
		2,330,304				2,610,418
Less: accumulated depreciation		(587,116)			(553,814)
Less: accumulated depreciation		(499,981	)			(562,226	)
Condominiums, for-sale and under construction		90,911			65,507
For-sale condominiums		26,314				38,844
Assets held for sale, net of accumulated depreciation of $28,441 and$42,379 at June 30, 2009 and December 31, 2008		63,364			85,097
Assets held for sale, net of accumulated depreciation of $93,844 and $4,031 at June 30, 2008 and December 31, 2007, respectively		258,610				24,576
Total real estate assets		2,132,577			2,083,151
Total real estate assets		2,115,247				2,111,612
Investments in and advances to unconsolidated real estate entities		8,706			39,300
Investments in and advances to unconsolidated real estate entities		22,815				23,036
Cash and cash equivalents		3,694			75,472
Cash and cash equivalents		17,988				11,557
Restricted cash		10,614			10,164
Restricted cash		9,956				5,642
Deferred charges, net		9,582			10,278
Deferred charges, net		10,159				10,538
Other assets		32,328			34,290
Other assets		37,141				105,756
Total assets	$	2,197,501		$	2,252,655
Total assets	$	2,213,306			$	2,268,141
Liabilities and shareholders' equity
Liabilities and shareholders’ equity
Indebtedness	$	1,086,790		$	1,112,913
Indebtedness, including $34,261 and $0 secured by assets held for sale as of June 30, 2008 and December 31, 2007, respectively	$	1,064,405			$	1,059,066
Accounts payable and accrued expenses		97,949			93,175
Accounts payable and accrued expenses		99,003				100,215
Investments in unconsolidated real estate entities		54,334			15,985
Dividend and distribution payable		198,~~982~~914			8,888	~~19,933~~
Accrued interest payable		45,~~790~~137			5,493	~~4,388~~
Security deposits and prepaid rents		15,~~892~~779			15,941	~~11,708~~
Total liabilities		1,~~204~~268,~~072~~903			1,252,395	~~1,195,310~~
Minority interest of common unitholders in Operating Partnership		6,034				10,354
Redeemable common units		4,094			4,410
Minority interests in consolidated real estate entities		2,921				3,972
Commitments and contingencies
Total minority interests		8,955				14,326
Equity
Commitments and contingencies
Company shareholders' equity
Shareholders’ equity
Preferred stock, $.01 par value, 20,000 authorized:
Preferred stock, $.01 par value, 20,000 authorized:
8 1/2% Series A Cumulative Redeemable Shares, liquidation preference		9			9
8 1/2% Series A Cumulative Redeemable Shares, liquidation preference $50 per share, 900 shares issued and outstanding		9				9
$50 per share, 900 shares issued and outstanding
7 5/8% Series B Cumulative Redeemable Shares, liquidation preference $25 per share, 2,000 shares issued and outstanding		20				20
7 5/8% Series B Cumulative Redeemable Shares, liquidation preference
Common stock, $.01 par value, 100,000 authorized:
$25 per share, 2,000 shares issued and outstanding		20			20
44,119 and 43,825 shares issued, 44,111 and 43,825 shares outstanding at June 30, 2008 and December 31, 2007, respectively		441				438
Common stock, $.01 par value, 100,000 authorized:
Additional paid-in-capital		882,438				874,928
44,353 and 44,222 shares issued and 44,353 and 44,222 sharesoutstanding at June 30, 2009 and December 31, 2008, respectively		443			442
Accumulated earnings		124,101				189,985
Additional paid-in-capital		888,639			886,643
Accumulated other comprehensive income (loss)		(3,385	)			(3,962	)
Accumulated earnings		37,269			105,300
		1,003,624				1,061,418
Accumulated other comprehensive income (loss)		-			(1,819)
Less common stock in treasury, at cost, 83 and 72 shares at June 30, 2008 and December 31, 2007, respectively		(3,345	)			(2,913	)
		926,380			990,595
Total shareholders’ equity		1,000,279				1,058,505
Less common stock in treasury, at cost, 85 and 80 sharesat June 30, 2009 and December 31, 2008, respectively		(3,010)			(2,965)
Total liabilities and shareholders’ equity	$	2,213,306			$	2,268,141
Total Company shareholders' equity		923,370			987,630
Noncontrolling interests - consolidated real estate entities		1,134			8,220
Total equity		924,504			995,850
Total liabilities and equity	$	2,197,501		$	2,252,655

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

- 1 -

POST PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data) ~~(Unaudited)~~

	Three months ended						Six months ended
	June 30,						June 30,
	2008			2007			2008			2007
Revenues
Rental	$	62,286		$	60,873		$	124,474		$	121,538
Other property revenues		4,084			3,651			7,381			7,050
Other		235			128			474			245
Total revenues		66,605			64,652			132,329			128,833
Expenses
Property operating and maintenance (exclusive of items shown separately below)		33,555			32,265			66,012			63,616
Depreciation		14,386			14,375			28,649			28,726
General and administrative		4,956			5,959			10,804			11,407
Investment, development and other		1,356			1,955			2,814			3,505
Strategic review costs		2,091			—			8,161			—
Impairment and severance costs		29,300			—			29,300			—
Total expenses		85,644			54,554			145,740			107,254
Operating income (loss)		(19,039	)		10,098			(13,411	)		21,579
Interest income		61			213			271			463
Interest expense		(10,112	)		(10,863	)		(20,268	)		(21,908	)
Amortization of deferred financing costs		(859	)		(829	)		(1,710	)		(1,641	)
Gains (losses) on sales of real estate assets, net		(368	)		62,738			1,751			66,444
Equity in income of unconsolidated real estate entities		420			310			821			814
Other income (expense)		66			(261	)		(108	)		(522	)
Minority interest in consolidated property partnerships		427			(716	)		61			(693	)
Minority interest of common unitholders		238			(852	)		284			(882	)
Income (loss) from continuing operations		(29,166	)		59,838			(32,309	)		63,654
Discontinued operations
Income from discontinued property operations, net of minority interest		4,103			4,099			7,642			7,864
Gains on sales of real estate assets, net of minority interest		—			—			2,290			16,890
Income from discontinued operations		4,103			4,099			9,932			24,754
Net income (loss)		(25,063	)		63,937			(22,377	)		88,408
Dividends to preferred shareholders		(1,910	)		(1,910	)		(3,819	)		(3,819	)
Net income (loss) available to common shareholders	$	(26,973	)	$	62,027		$	(26,196	)	$	84,589
Per common share data — Basic
Income (loss) from continuing operations (net of preferred dividends)	$	(0.71	)	$	1.33		$	(0.82	)	$	1.38
Income from discontinued operations		0.09			0.09			0.23			0.57
Net income (loss) available to common shareholders	$	(0.61	)	$	1.43		$	(0.60	)	$	1.95
Weighted average common shares outstanding — basic		44,011			43,463			43,939			43,416
Per common share data — Diluted
Income (loss) from continuing operations (net of preferred dividends)	$	(0.71	)	$	1.31		$	(0.82	)	$	1.35
Income from discontinued operations		0.09		$	0.09			0.23			0.56
Net income (loss) available to common shareholders	$	(0.61	)	$	1.40		$	(0.60	)	$	1.91
Weighted average common shares outstanding — diluted		44,011			44,278			43,939			44,192

(Unaudited)


	Three months ended June 30,				Six months ended June 30,
	2009		2008		2009		2008

Revenues
Rental	$	64,808	$	66,208	$	130,192	$	132,364
Other property revenues		4,033		4,108		7,601		7,425
Other		277		235		503		474

Total revenues		69,118		70,551		138,296		140,263


Expenses
Total property operating and maintenance (exclusive of items shown separately below)		32,658		35,195		65,356		69,591
Depreciation		18,009		15,213		35,601		30,310
General and administrative		3,964		4,351		8,373		9,485
Investment and development		793		1,274		1,790		2,664
Other investment costs		646		244		1,299		499
Strategic review costs		-		2,091		-		8,161
Impairment, severance and other costs		9,658		29,300		9,658		29,300

Total expenses		65,728		87,668		122,077		150,010


Operating income (loss)		3,390		(17,117)		16,219		(9,747)

Interest income		23		61		138		271
Interest expense		(12,241)		(11,004)		(26,419)		(22,035)
Amortization of deferred financing costs		(682)		(859)		(1,616)		(1,710)
Net gains (losses) on condominium sales activities		232		(368)		(28)		1,751
Equity in income (loss) of unconsolidated real estate entities		(74,656)		420		(74,546)		821
Other income (expense), net		50		66		1,109		(108)
Net gain (loss) on early extinguishment of indebtedness		(79)		-		819		-

Loss from continuing operations		(83,963)		(28,801)		(84,324)		(30,757)

Discontinued operations
Income from discontinued property operations		2,026		3,232		4,635		6,036
Gains on sales of real estate assets		24,742		-		24,742		2,311

Income from discontinued operations		26,768		3,232		29,377		8,347

Net loss		(57,195)		(25,569)		(54,947)		(22,410)
Noncontrolling interests - consolidated real estate entities		8,150		293		8,226		(173)
Noncontrolling interests - Operating Partnership		250		213		248		206

Net loss attributable to the Company		(48,795)		(25,063)		(46,473)		(22,377)
Dividends to preferred shareholders		(1,910)		(1,910)		(3,819)		(3,819)

Net loss attributable to common shareholders	$	(50,705)	$	(26,973)	$	(50,292)	$	(26,196)


Per common share data - Basic
Loss from continuing operations (net of preferred dividends)	$	(1.75)	$	(0.68)	$	(1.80)	$	(0.78)
Income from discontinued operations		0.61		0.07		0.66		0.19

Net loss attributable to common shareholders	$	(1.14)	$	(0.61)	$	(1.13)	$	(0.59)

Weighted average common shares outstanding - basic		44,118		44,011		44,116		43,939

Per common share data - Diluted
Loss from continuing operations (net of preferred dividends)	$	(1.75)	$	(0.68)	$	(1.80)	$	(0.78)
Income from discontinued operations		0.61		0.07		0.66		0.19

Net loss attributable to common shareholders	$	(1.14)	$	(0.61)	$	(1.13)	$	(0.59)

Weighted average common shares outstanding - diluted		44,118		44,011		44,116		43,939

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

- 2 -

POST PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF ~~SHAREHOLDERS’~~ EQUITY AND ~~ACCUMULATED~~ ~~EARNINGS~~

~~(In~~ACCUMULATED ~~thousands,~~EARNINGS ~~except per share data) (Unaudited)~~

										Accumulated
					Additional					Other
	Preferred		Common		Paid-in		Accumulated			Comprehensive			Treasury
	Stock		Stock		Capital		Earnings			Income (Loss)			Stock			Total
Shareholders’ Equity and Accumulated Earnings, December 31, 2007	$	29	$	438	$	874,928	$	189,985		$	(3,962	)	$	(2,913	)	$	1,058,505
Comprehensive income (loss)
Net income (loss)		—		—		—		(22,377	)		—			—			(22,377	)
Net change in derivatives, net of minority interest		—		—		—		—			593			—			593
Total comprehensive income (loss)																	(21,784	)
Proceeds from employee stock purchase, stock option and other plans		—		1		1,816		—			—			(914	)		903
Adjustment for minority interest of unitholders in Operating Partnership upon conversion of units into common shares and at dates of capital transactions		—		2		3,397		—			(16	)		482			3,865
Stock-based compensation, net of minority interest		—		—		2,297		—			—			—			2,297
Dividends to preferred shareholders		—		—		—		(3,819	)		—			—			(3,819	)
Dividends to common shareholders ($0.90 per share)		—		—		—		(39,688	)		—			—			(39,688	)
Shareholders’ Equity and Accumulated Earnings, June 30, 2008	$	29	$	441	$	882,438	$	124,101		$	(3,385	)	$	(3,345	)	$	1,000,279

(In thousands, except per share data)

(Unaudited)


2009	Preferred Stock		Common Stock		Additional Paid-in Capital		Accumulated Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Company Equity		Noncontrolling Interests - Consolidated Real Estate Entities		Total Equity		Redeemable Common Units
																			(see note 5)
Equity and Accumulated Earnings, December 31, 2008	$	29	$	442	$	886,643	$	105,300	$	(1,819)	$	(2,965)	$	987,630	$	8,220	$	995,850	$	4,410
Comprehensive income
Net income (loss)		-		-		-		(46,473)		-		-		(46,473)		(8,226)		(54,699)		(248)
Net change in derivative value		-		-		-		-		1,819		-		1,819		-		1,819		10

Total comprehensive income (loss)														(44,654)		(8,226)		(52,880)		(238)
Proceeds from employee stock purchase, stock option and other plans		-		1		369		-		-		(45)		325		-		325		-
Stock-based compensation		-		-		1,627		-		-		-		1,627		-		1,627		9
Dividends to preferred shareholders		-		-		-		(3,819)		-		-		(3,819)		-		(3,819)		-
Dividends to common shareholders and distributions to unitholders ($0.40 per share and unit)		-		-		-		(17,739)		-		-		(17,739)		-		(17,739)		(87)
Consolidation of equity method investment (see note 3)		-		-		-		-		-		-		-		1,560		1,560		-
Distributions to noncontrolling interests - consolidated real estate entities		-		-		-		-		-		-		-		(420)		(420)		-

Equity and Accumulated Earnings, June 30, 2009	$	29	$	443	$	888,639	$	37,269	$	-	$	(3,010)	$	923,370	$	1,134	$	924,504	$	4,094


2008
Equity and Accumulated Earnings, December 31, 2007	$	29	$	438	$	874,928	$	183,831	$	(3,962)	$	(2,913)	$	1,052,351	$	3,972	$	1,056,323	$	16,508
Comprehensive income
Net income (loss)		-		-		-		(22,377)		-		-		(22,377)		173		(22,204)		(206)
Net change in derivative value		-		-		-		-		593		-		593		-		593		4

Total comprehensive income														(21,784)		173		(21,611)		(202)
Proceeds from employee stock purchase, stock option and other plans		-		1		1,816		-		-		(914)		903		-		903		-
Adjustment for noncontrolling interest of unitholders in Operating Partnership upon conversion of units into common shares and at dates of capital transactions		-		2		3,397				(16)		482		3,865		-		3,865		(3,865)
Stock-based compensation		-		-		2,297		-		-		-		2,297		-		2,297		18
Dividends to preferred shareholders		-		-		-		(3,819)		-		-		(3,819)		-		(3,819)		-
Dividends to common shareholders and distributions to unitholders ($0.90 per share and unit)		-		-		-		(39,688)		-		-		(39,688)		-		(39,688)		(271)
Distributions to noncontrolling interests - consolidated real estate entities		-		-		-				-		-		-		(1,224)		(1,224)		-
Adjustment to redemption value of noncontrolling interests - Operating Partnership		-		-		-		3,474		-		-		3,474		-		3,474		(3,474)

Equity and Accumulated Earnings, June 30, 2008	$	29	$	441	$	882,438	$	121,421	$	(3,385)	$	(3,345)	$	997,599	$	2,921	$	1,000,520	$	8,714

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

- 3 -

POST PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, except per share data) ~~(Unaudited)~~

	Six months ended
	June 30,
	2008			2007
Cash Flows From Operating Activities
Net income (loss)	$	(22,377	)	$	88,408
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation		32,272			34,103
Amortization of deferred financing costs		1,710			1,641
Minority interest of common unitholders in Operating Partnership		(284	)		882
Minority interest in discontinued operations		78			380
Minority interest in consolidated entities		173			831
Gains on sales of real estate assets		(4,062	)		(83,597	)
Other expense		563			562
Asset impairment charges		28,947			—
Equity in income of unconsolidated entities		(821	)		(814	)
Distributions of earnings of unconsolidated entities		1,429			1,238
Deferred compensation		278			277
Stock-based compensation		2,315			1,985
Changes in assets, (increase) decrease in:
Other assets		(3,860	)		(3,597	)
Deferred charges		(178	)		(15	)
Changes in liabilities, increase (decrease) in:
Accrued interest payable		402			(57	)
Accounts payable and accrued expenses		(1,667	)		2,153
Security deposits and prepaid rents		(130	)		517
Net cash provided by operating activities		34,788			44,897
Cash Flows From Investing Activities
Construction and acquisition of real estate assets, net of payables		(69,689	)		(55,254	)
Net proceeds from sales of real estate assets		104,906			150,988
Capitalized interest		(6,671	)		(5,795	)
Annually recurring capital expenditures		(5,640	)		(6,080	)
Periodically recurring capital expenditures		(3,331	)		(3,867	)
Community rehabilitation and other revenue generating capital expenditures		(7,951	)		(7,206	)
Corporate additions and improvements		(421	)		(1,608	)
Distributions from (investments in and advances to) unconsolidated entities		(262	)		22,506
Note receivable collections and other investments		1,529			230
Net cash provided by investing activities		12,470			93,914
Cash Flows From Financing Activities
Lines of credit proceeds (repayments), net		(113,004	)		(27,969	)
Proceeds from indebtedness		120,000			—
Payments on indebtedness		(2,542	)		(67,632	)
Payments of financing costs		(952	)		(246	)
Treasury stock acquisitions		—			(3,694	)
Proceeds from employee stock purchase and stock options plans		624			3,806
Capital contributions (distributions) of minority interests		(1,224	)		430
Distributions to common unitholders		(351	)		(608	)
Dividends paid to preferred shareholders		(3,819	)		(1,909	)
Dividends paid to common shareholders		(39,559	)		(39,189	)
Net cash used in financing activities		(40,827	)		(137,011	)
Net increase in cash and cash equivalents		6,431			1,800
Cash and cash equivalents, beginning of period		11,557			3,663
Cash and cash equivalents, end of period	$	17,988		$	5,463

(Unaudited)


	Six months ended June 30,
	2009		2008
Cash Flows From Operating Activities
Net loss	$	(54,947)	$	(22,410)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		35,601		32,272
Amortization of deferred financing costs		1,616		1,710
Gains on sales of real estate assets, net		(24,714)		(4,062)
Other expense (income), net		(215)		563
Asset impairment charges		9,658		28,947
Equity in (income) loss of unconsolidated entities		74,546		(821)
Distributions of earnings of unconsolidated entities		896		1,429
Deferred compensation		44		278
Stock-based compensation		1,636		2,315
Net gain on early extinguishment of debt		(819)		-
Changes in assets, increase in:
Other assets		(59)		(3,860)
Deferred charges		(205)		(178)
Changes in liabilities, increase (decrease) in:
Accrued interest payable		(356)		402
Accounts payable and accrued expenses		(722)		(1,667)
Security deposits and prepaid rents		(612)		(130)

Net cash provided by operating activities		41,348		34,788

Cash Flows From Investing Activities
Construction and acquisition of real estate assets, net of payables		(75,460)		(69,689)
Net proceeds from sales of real estate assets		55,235		104,906
Capitalized interest		(6,597)		(6,671)
Annually recurring capital expenditures		(6,307)		(5,640)
Periodically recurring capital expenditures		(18,537)		(3,331)
Community rehabilitation and other revenue generating capital expenditures		(3,503)		(7,951)
Corporate additions and improvements		(126)		(421)
Investments in and advances to unconsolidated entities		(5,104)		(262)
Note receivable collections and other investments		1,017		1,529

Net cash provided by (used in) investing activities		(59,382)		12,470

Cash Flows From Financing Activities
Lines of credit repayments, net		(20,951)		(113,004)
Proceeds from indebtedness		288,517		120,000
Payments on indebtedness		(295,840)		(2,542)
Payments of financing costs and other		(3,709)		(952)
Proceeds from employee stock purchase and stock options plans		279		624
Distributions to noncontrolling interests - real estate entities		(420)		(1,224)
Distributions to noncontrolling interests - common unitholders		(87)		(351)
Dividends paid to preferred shareholders		(3,819)		(3,819)
Dividends paid to common shareholders		(17,714)		(39,559)

Net cash used in financing activities		(53,744)		(40,827)

Net increase (decrease) in cash and cash equivalents		(71,778)		6,431
Cash and cash equivalents, beginning of period		75,472		11,557

Cash and cash equivalents, end of period	$	3,694	$	17,988

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

- 4 -

POST PROPERTIES., INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited, in thousands, except per share or unit and apartment unit data)

1.		ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
		Organization
		Post Properties, Inc. and its subsidiaries develop, own and manage upscale multifamily communities in selected markets in the United States. As used in this report, the term “Company” includes Post Properties, Inc. and its subsidiaries, including Post Apartment Homes, L.P. (the “Operating Partnership”), unless the context indicates otherwise. The Company, through its wholly-owned subsidiaries is the general partner and owns a majority interest in the Operating Partnership which, through its subsidiaries, conducts substantially all of the on-going operations of the Company. At June 30, 2008, the Company owned 22,140 apartment units in 61 apartment communities, including 1,747 apartment units in five communities held in unconsolidated entities and 1,736 apartment units in five communities currently under construction and/or in lease-up. The Company is also developing and selling 514 for-sale condominium homes in four communities (including 137 units in one community held in an unconsolidated entity) and is converting apartment homes in two communities initially consisting of 349 units into for-sale condominium homes through a taxable REIT subsidiary. At June 30, 2008, approximately 41.6%, 20.0%, 12.0% and 10.0% (on a unit basis) of the Company’s operating communities were located in the Atlanta, Dallas, the greater Washington D.C. and Tampa metropolitan areas, respectively.
		The Company has elected to qualify and operate as a self-administrated and self-managed real estate investment trust (“REIT”) for federal income tax purposes. A REIT is a legal entity which holds real estate interests and is generally not subject to federal income tax on the income it distributes to its shareholders.
		At June 30, 2008, the Company had outstanding 44,111 shares of common stock and owned the same number of units of common limited partnership interests (“Common Units”) in the Operating Partnership, representing a 99.3% common ownership interest in the Operating Partnership. Common Units held by persons other than the Company totaled 293 at June 30, 2008 and represented a 0.7% common minority interest in the Operating Partnership. Each Common Unit may be redeemed by the holder thereof for either one share of Company common stock or cash equal to the fair market value thereof at the time of redemption, at the option of the Company. The Company’s weighted average common ownership interest in the Operating Partnership was 99.3% and 98.6% for the three months ended and 99.2% and 98.5% for the six months ended June 30, 2008 and 2007, respectively.
		Conclusion of Strategic Process
		On January 23, 2008, the Company announced that its Board of Directors had authorized management, working with financial and legal advisors, to initiate a formal process to pursue a possible business combination or other sale transaction and to seek proposals from potentially interested parties. The Board ended the process on June 25, 2008 due to the increasingly difficult market environment and a lack of definitive proposals. For the three and six months ended June 30, 2008, the Company incurred approximately $2,091 and $8,161, respectively, of strategic review costs related to this process.
		Basis of Presentation
		The accompanying unaudited financial statements have been prepared by the Company’s management in accordance with generally accepted accounting principles for interim financial information and applicable rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normally recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for the three and six months ended June 30, 2008 are not necessarily indicative of the results that may be expected for the full year. These financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in its Annual Report on Form 10-K, as amended, for the year ended December 31, 2007 (the “Form 10-K”).
		The accompanying consolidated financial statements include the consolidated accounts of the Company, the Operating Partnership and their wholly owned subsidiaries. The Company also consolidates other entities in which it has a controlling financial interest or entities where it is determined to be the primary beneficiary under Financial Accounting Standards Board Interpretation No. 46R (“FIN 46R”), “Consolidation of Variable Interest Entities.” Under FIN 46R, variable interest entities (“VIEs”) are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. The primary beneficiary is required to consolidate a VIE for financial reporting purposes. The application of FIN 46R requires management to make significant estimates and judgments about the Company’s and its other partners’ rights, obligations and economic interests in such entities. For entities in which the Company has less than a controlling financial interest or entities where it is not deemed to be the primary beneficiary under FIN

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

~~-5-~~ Organization

Post Properties, Inc. and its subsidiaries develop, own and manage upscale multifamily communities in selected markets in the United States. As used in this report, the term “Company” includes Post Properties, Inc. and its subsidiaries, including Post Apartment Homes, L.P. (the “Operating Partnership”), unless the context indicates otherwise. The Company, through its wholly-owned subsidiaries is the general partner and owns a majority interest in the Operating Partnership which, through its subsidiaries, conducts substantially all of the on-going operations of the Company. At June 30, 2009, the Company owned 20,662 apartment units in 57 apartment communities, including 1,747 apartment units in five communities held in unconsolidated entities and 1,736 apartment units in five communities currently under construction and/or in lease-up. The Company is also developing and selling 362 for-sale condominium homes in three communities (including 129 units in one community held in an unconsolidated entity) and is converting apartment homes in two communities initially consisting of 349 units into for-sale condominium homes through a taxable REIT subsidiary. At June 30, 2009, approximately 37.2%, 21.5%, 12.9% and 10.7% (on a unit basis) of the Company's operating communities were located in the Atlanta, Dallas, the greater Washington D.C. and Tampa metropolitan areas, respectively.

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

At June 30, 2009, the Company had outstanding 44,353 shares of common stock and owned the same number of units of common limited partnership interests (“Common Units”) in the Operating Partnership, representing a 99.5% common ownership interest in the Operating Partnership. Common Units held by persons other than the Company totaled 219 at June 30, 2009 and represented a 0.5% common noncontrolling interest in the Operating Partnership. Each Common Unit may be redeemed by the holder thereof for either one share of Company common stock or cash equal to the fair market value thereof at the time of redemption, at the option, but outside the control, of the Operating Partnership. The Company’s weighted average common ownership interest in the Operating Partnership was 99.5% and 99.3% for the three months ended and 99.5% and 99.2% for the six months ended June 30, 2009 and 2008, respectively.

Basis of Presentation

The accompanying unaudited financial statements have been prepared by the Company's management in accordance with generally accepted accounting principles for interim financial information and applicable rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normally recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for the three and six months ended June 30, 2009 are not necessarily indicative of the results that may be expected for the full year. These financial statements should be read in conjunction with the Company's audited financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2008 (the “Form 10-K”).

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

- 5 -

POST PROPERTIES., INC. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

~~46R,~~NOTES ~~the~~TO ~~entities~~CONSOLIDATED ~~are~~FINANCIAL ~~accounted~~STATEMENTS for using the equity method of accounting (under the provisions of Emerging Issues Task Force (“EITF”) No. 04-5). Accordingly, the Company’s share of the net earnings or losses of these entities is included in consolidated net income. All significant inter-company accounts and transactions have been eliminated in consolidation. The minority interest of unitholders in the operations of the Operating Partnership is calculated based on the weighted average unit ownership during the period. Revenue Recognition Residential properties are leased under operating leases with terms of generally one year or less. Rental revenues from residential leases are recognized on the straight-line method over the approximate life of the leases, which is generally one year. The recognition of rental revenues from residential leases when earned has historically not been materially different from rental revenues recognized on a straight-line basis. Under the terms of residential leases, the residents of the Company’s residential communities are obligated to reimburse the Company for certain utility usage, water and electricity (at selected properties), where the Company is the primary obligor to the public utility entity. These utility reimbursements from residents are reflected as other property revenues in the consolidated statements of operations. Sales and the associated gains or losses of real estate assets and for-sale condominiums are recognized in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 66, “Accounting for Sales of Real Estate.” For condominium conversion projects, revenues from individual condominium unit sales are recognized upon the closing of the sale transactions (the “Completed Contract Method”), as all conditions for full profit recognition have been met at that time and the conversion construction periods are typically very short. Under SFAS No. 66, the Company uses the relative sales value method to allocate costs and recognize profits from condominium conversion sales. In accordance with SFAS No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets,” gains on sales of condominium units at complete community condominium conversion projects are included in discontinued operations. For condominium conversion projects relating to a portion of an existing apartment community, the Company also recognizes revenues and the associated gains under the Completed Contract Method, as discussed herein. Since a portion of an operating community does not meet the requirements of a component of an entity under SFAS No. 144, the revenues and gains on sales of condominium units at partial condominium communities are included in continuing operations. For newly developed condominiums, the Company accounts for each project under either the Completed Contract Method or the “Percentage of Completion Method,” based on a specific evaluation of the factors specified in SFAS No. 66 and the guidance provided by EITF 06-8. The factors used to determine the appropriate accounting method are the legal commitment of the purchaser in the real estate contract, whether the construction of the project is beyond a preliminary phase, sufficient units have been contracted to ensure the project will not revert to a rental project, the aggregate project sale proceeds and costs can be reasonably estimated and the buyer has made an adequate initial and continuing cash investment under the contract in accordance with SFAS No. 66 and the guidance provided by EITF 06-8. Under the Percentage of Completion Method, revenues and the associated gains are recognized over the project construction period generally based on the percentage of total project costs incurred to estimated total project costs for each condominium unit under a binding real estate contract. As of June 30, 2008, all newly developed condominium projects are accounted for under the Completed Contract Method. Recently Issued and Adopted Accounting Pronouncements SFAS No. 157, “Fair Value Measurements,” was issued in September 2006. The Company adopted SFAS No. 157 on January 1, 2008. SFAS No. 157 provides a definition of fair value and establishes a framework for measuring fair value. SFAS No. 157 clarified the definition of fair value and defines it as the price that would be received to sell an asset or paid to transfer a liability in a transaction between willing market participants. Additional disclosures focusing on the methods used to determine fair value are also required using the following hierarchy:

•(Unaudited, ~~Level 1 – Quoted prices~~ in ~~active~~thousands, ~~markets~~except ~~for~~per ~~identical~~share ~~assets~~ or ~~liabilities~~unit ~~that~~and ~~are~~apartment ~~accessible~~unit at the measurement date. • Level 2 – Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. • Level 3 – Unobservable inputs for the assets or liability.data)

~~-6-~~ Revenue Recognition

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

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

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

For newly developed condominiums, the Company accounts for each project under either the Completed Contract Method or the “Percentage of Completion Method,” based on a specific evaluation of the factors specified in SFAS No. 66 and the guidance provided by EITF 06-8. The factors used to determine the appropriate accounting method are the legal commitment of the purchaser in the real estate contract, whether the construction of the project is beyond a preliminary phase, sufficient units have been contracted to ensure the project will not revert to a rental project, the aggregate project sale proceeds and costs can be reasonably estimated and the buyer has made an adequate initial and continuing cash investment under the contract in accordance with SFAS No. 66 and the guidance provided by EITF 06-8. Under the Percentage of Completion Method, revenues and the associated gains are recognized over the project construction period generally based on the percentage of total project costs incurred to estimated total project costs for each condominium unit under a binding real estate contract. As of March 31, 2009, all newly developed condominium projects are accounted for under the Completed Contract Method.

Real Estate Assets, Depreciation and Impairment

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

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

The Company periodically classifies real estate assets as held for sale. An asset is classified as held for sale after the approval of the Company’s board of directors and after an active program to sell the asset has commenced. Upon the classification of a real estate asset as held for sale, the carrying value of the asset is reduced to the lower of its net book value or its estimated fair value, less costs to sell the asset. Subsequent to the classification of assets as held for sale, no further depreciation expense is recorded. Real estate assets held for sale are stated separately on the accompanying consolidated balance sheets. Upon a

- 6 -

POST PROPERTIES., INC. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

~~The~~NOTES ~~Company~~TO ~~applies~~CONSOLIDATED ~~SFAS~~FINANCIAL ~~No.~~STATEMENTS 157 in relation to the valuation of its derivative instrument at fair value (see note 6) and the Company’s impairment valuation analysis related to real estate assets (see note 8). The following table presents the Company’s real estate assets and derivative liabilities reported at fair market value and the related level in the fair value hierarchy as defined by SFAS No. 157 used to measure those assets and liabilities at June 30, 2008:

	Fair value measurements as of June 30, 2008
Assets (Liabilities)	Total			Level 1		Level 2			Level 3
Real estate assets, land held for development and sale	$	44,773		$	—	$	—		$	44,773
Interest rate swap agreement		(2,189	)		—		(2,189	)		—

(Unaudited, in thousands, except per share or unit and apartment unit data)

		SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities – including an amendment of FASB Statement No. 115,” was issued in February 2007. SFAS No. 159 gives the Company the irrevocable option to carry most financial assets and liabilities at fair value, with changes in fair value recognized in earnings. The Company adopted SFAS No. 159 on January 1, 2008, and the adoption did not have a material impact on the Company’s financial position and results of operations. The Company did not elect to record any of its financial assets and liabilities at fair value in 2008 that were not recorded as such under existing accounting pronouncements.
		SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements,” was issued in December 2007. SFAS No. 160 requires all entities to report noncontrolling (minority) interests in subsidiaries as equity in the consolidated financial statements. SFAS No. 160 is effective for the Company on January 1, 2009. The Company is currently evaluating the potential impact of SFAS No. 160 on the Company’s financial position and results of operations.
		SFAS No. 141R, “Business Combinations,” was issued in December 2007. SFAS No. 141R will replace SFAS No. 141 on the date it becomes effective. SFAS No. 141R will require 1) acquirers to recognize all of the assets acquired and liabilities assumed in a business combination, 2) that the acquisition date be used to determine fair value for all assets acquired and all liabilities assumed, and 3) enhanced disclosures for the acquirer surrounding the financial effects of the business combination. The provisions of SFAS 141R will lead to the expensing of acquisition related transaction costs and the potential recognition of acquisition related contingencies. SFAS No. 141R is effective for the Company on January 1, 2009. The Company is currently evaluating the potential impact of SFAS No. 141R on the Company’s financial position and results of operations.
2.		REAL ESTATE ACTIVITY
		Dispositions
		The Company classifies real estate assets as held for sale after the approval of its board of directors and after the Company has commenced an active program to sell the assets. At June 30, 2008, the Company had eight apartment communities, containing 2,615 units, and certain parcels of land classified as held for sale. These real estate assets are reflected in the accompanying consolidated balance sheet at $258,610, which represents the lower of their depreciated cost or fair value less costs to sell. At June 30, 2008, the Company also had portions of two communities being converted to condominiums and certain completed condominium units at newly developed condominium communities totaling $26,314 classified as for-sale condominiums on the accompanying consolidated balance sheet.
		For the three and six months ended June 30, 2008 and 2007, income from continuing operations included net gains from condominium sales activities at newly developed and condominium conversion projects representing portions of existing communities. In addition to the condominium gains included in continuing operations, the Company expensed certain sales and marketing costs associated with pre-sale condominium communities and condominium communities under development and such costs are included in condominium expenses in the table below. A summary of revenues and costs and expenses of condominium activities included in continuing operations for the three and six months ended June 30, 2008 and 2007 was as follows:

decision to no longer market an asset for sale, the asset is classified as an operating asset and depreciation expense is reinstated. The operating results of real estate assets held for sale and sold are reported as discontinued operations in the accompanying statements of operations. Income from discontinued operations includes the revenues and expenses, including depreciation and allocated interest expense, associated with the assets. Interest expense is allocated to assets held for sale based on actual interest costs for assets with secured mortgage debt. Interest expense is allocated to unencumbered assets based on the ratio of unsecured debt to unencumbered assets multiplied by the weighted average interest rate on the Operating Partnership’s unsecured debt for the period and further multiplied by the book value of the assets held for sale and/or sold. This classification of operating results as discontinued operations applies retroactively for all periods presented. Additionally, gains and losses on assets designated as held for sale are classified as part of discontinued operations.

	Three months ended						Six months ended
	June 30,						June 30,
	2008			2007			2008			2007
Condominium revenues	$	10,051		$	25,222		$	18,348		$	31,091
Condominium costs and expenses		(10,419	)		(19,524	)		(16,597	)		(23,885	)
Gains (losses) on sales of condominiums, net	$	(368	)	$	5,698		$	1,751		$	7,206

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

In addition, for-7-sale condominium assets under development are evaluated for impairment using the methodology for assets held for future investment (using projected future undiscounted cash flows). However, once construction of these assets is completed and units are ready for their intended use, for-sale condominium assets are evaluated for impairment using the methodology for assets held for sale (using discounted projected future cash flows).

Recently Issued and Adopted Accounting Pronouncements

SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – An Amendment of ARB No. 51,” was issued in December 2007. SFAS No. 160 requires all entities to report noncontrolling interests (previously referred to as minority interests) in subsidiaries as equity in the consolidated financial statements. The Company adopted the accounting and disclosure requirements of SFAS No. 160 on January 1, 2009 and has amended the presentation for its noncontrolling interests in the Operating Partnership and in consolidated real estate entities retrospectively on its consolidated balance sheets, consolidated statements of operations and consolidated statements of equity and accumulated earnings.

FASB Staff Position EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities,” (“FSP EITF 03-6-1”) was issued in June 2008. FSP EITF 03-6-1 was effective January 1, 2009. FSP EITF 03-6-1 requires that unvested share based payment awards that contain non-forfeitable rights to dividends or dividend equivalents be treated as participating securities for purposes of the computation of net income available to common stockholders. The Company adopted FSP EITF 03-6-1 retrospectively, effective January 1, 2009. In accordance with FSP EITF 03-6-1, prior period earnings per share amounts have been adjusted accordingly. The adoption of FSP EITF 03-6-1 did not have a material impact on the Company’s financial position, results of operations or earnings per share.

SFAS No. 141R, “Business Combinations,” was issued in December 2007 and replaced SFAS No. 141. SFAS No. 141R requires (1) acquirers to recognize all of the assets acquired and liabilities assumed in a business combination at fair value, (2) that the acquisition date be used to determine fair value for all assets acquired and all liabilities assumed, and (3) enhanced disclosures for the acquirer surrounding the financial effects of the business combination. The provisions of SFAS 141R also requires the expensing of acquisition related transaction costs and the potential recognition of acquisition related contingencies. The Company adopted SFAS No. 141R on January 1, 2009, and it did not have an impact on the Company’s financial position or results of operations.

SFAS No. 165, “Subsequent Events,” was issued in June 2009. SFAS No. 165 further clarifies the period subsequent to the balance sheet date in which companies should disclose certain financial statement events or transactions. It also further clarifies the circumstances under which a company should consider recognition of those events or transactions occurring after the balance sheet date as well as provides guidance regarding the required disclosures. The Company adopted SFAS No. 165 as of June 30, 2009. The adoption of SFAS No. 165 did not have a material impact on the Company’s financial statements or results of operations (see note 13).

FASB Staff Position No. FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments,” (“FSP FAS 107-1”) was issued in April 2009. FSP FAS 107-1 requires that companies disclose information about the fair value of their financial instruments in both interim and annual periods. The Company adopted FSP FAS 107-1 and APB 28-1 as of

- 7 -

POST PROPERTIES., INC. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

~~For~~NOTES ~~the~~TO ~~three~~CONSOLIDATED ~~and~~FINANCIAL ~~six~~STATEMENTS months ended June 30, 2007, gains on sales of real estate assets in continuing operations also included a gain of $55,300 related to the Company’s transfer of two operating apartment communities to a newly formed unconsolidated entity in which the Company retained a 25% non-controlling interest for aggregate proceeds of approximately $89,351. The gain was calculated as the difference between the proceeds received from the independent third party for its 75% interest in the unconsolidated entity and the Company’s 75% proportionate share of the net book value of operating communities transferred to the unconsolidated entity. The unconsolidated entity obtained mortgage financing secured by the apartment communities totaling approximately $85,723, of which approximately $21,431 was distributed to the Company. Additionally, for the three and six months ended June 30, 2007, gains on sales of real estate assets in continuing operations included gains of $1,740 and $3,938, respectively, on the sales of land sites in Atlanta, Georgia and Dallas, Texas. Under SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets,” the operating results of real estate assets designated as held for sale are included in discontinued operations in the consolidated statement of operations for all periods presented. Additionally, all gains and losses on the sale of these assets are included in discontinued operations. For the six months ended June 30, 2008, income from discontinued operations included the results of operations of eight apartment communities classified as held for sale during the first and second quarters of 2008 and one apartment community through its sale date in January 2008. For the six months ended June 30, 2007, income from discontinued operations included the results of operations of the eight apartment communities classified as held for sale at June 30, 2008, the apartment community sold in 2008, a condominium conversion community through its sell out date in February 2007 and three apartment communities sold in 2007 through their respective sale dates. The revenues and expenses of these communities for the three and six months ended June 30, 2008 and 2007 were as follows:

	Three months ended						Six months ended
	June 30,						June 30,
	2008			2007			2008			2007
Revenues
Rental	$	11,196		$	13,013		$	22,502		$	26,272
Other property revenues		471			645			875			1,241
Total revenues		11,667			13,658			23,377			27,513
Expenses
Property operating and maintenance (exclusive of items shown separately below)		3,763			4,384			7,900			9,126
Depreciation		1,698			2,685			3,623			5,377
Interest		1,944			2,336			3,921			4,891
Minority interest in consolidated property partnerships		134			95			234			138
Total expenses		7,539			9,500			15,678			19,532
Income from discontinued property operations before minority interest		4,128			4,158			7,699			7,981
Minority interest		(25	)		(59	)		(57	)		(117	)
Income from discontinued property operations	$	4,103		$	4,099		$	7,642		$	7,864

(Unaudited, in thousands, except per share or unit and apartment unit data)

~~For the six months ended~~ June 30, ~~2008,~~2009 ~~the~~and ~~Company~~has ~~recognized~~included ~~net gains in discontinued operations of $2,311 ($2,290 net of minority interest) from~~ the ~~sale~~required offair ~~one~~value ~~community,~~disclosures ~~containing~~in ~~143~~its ~~units.~~notes ~~This~~to ~~sale generated net proceeds of approximately $19,433. For~~ the ~~six~~consolidated ~~months~~financial ~~ended~~statements ~~June 30, 2007, the Company recognized net gains in discontinued operations of $16,974~~ (~~$16,714~~see ~~net~~note ~~of minority interest~~6) ~~from the sale of one community, containing 182 units~~. ~~The sale generated net proceeds of $23,741.~~

~~-8-~~SFAS No. 167, “Amendments to FASB Interpretation No. 46(R),” was issued in June 2009. SFAS No. 167 addresses the impact that the elimination of the qualifying special purpose entity (“QSPE”) concept has on FIN 46(R) and will require companies to evaluate all entities, even those previously considered to be QSPEs, as potential variable interest entities (“VIEs”). SFAS No. 167 also addresses the timely accounting and disclosure requirements of companies’ variable interests by (1) requiring ongoing reassessments of whether or not the company is the primary beneficiary, (2) adding an additional reconsideration requirement, (3) eliminating the quantitative approach previously used to determine the primary beneficiary of a VIE and (4) amending certain guidance for determining which entities are VIEs. SFAS No. 167 is effective for the Company on January 1, 2010. The Company is currently evaluating the potential impact of SFAS No. 167 on the Company’s financial position and results of operations.

In June 2009, the Financial Accounting Standards Board (“FASB”) completed its codification project. The “FASB Accounting Standards Codification” (the “Codification”) is effective as of July 1, 2009 and will be the single source of authoritative generally accepted accounting principles in the United States. Upon adoption, companies will no longer refer to the authoritative guidance dictating its accounting methodologies under the previous hierarchy of FASB Statements, FASB Interpretations, etc. Instead, companies will cite the Codification references, which are organized by topic. The Codification is effective for periods beginning on or after July 1, 2009.

2. REAL ESTATE ACTIVITY

Dispositions

The Company classifies real estate assets as held for sale after the approval of its board of directors and after the Company has commenced an active program to sell the assets. At June 30, 2009, the Company had two apartment communities, containing 798 units, and certain parcels of land classified as held for sale. These real estate assets are reflected in the accompanying consolidated balance sheet at $63,364, which represents the lower of their depreciated cost or fair value less costs to sell. At June 30, 2009, the Company also had portions of two communities being converted to condominiums and certain completed condominium units at developed condominium communities totaling $8,796 classified as for-sale condominiums on the accompanying consolidated balance sheet.

For the three and six months ended June 30, 2009 and 2008, income from continuing operations included net gains from condominium sales activities at developed and condominium conversion projects representing portions of existing communities. In addition, the condominium gains are net of certain expensed sales and marketing costs associated with condominium communities under development and in pre-sale and such costs are included in condominium expenses in the table below. A summary of revenues and costs and expenses of condominium activities included in continuing operations for the three and six months ended June 30, 2009 and 2008 was as follows:


	Three months ended June 30,				Six months ended June 30,
	2009		2008		2009		2008
Condominium revenues	$	6,176	$	10,051	$	8,222	$	18,348
Condominium costs and expenses		(5,944)		(10,419)		(8,250)		(16,597)

Gains (losses) on sales of condominiums	$	232	$	(368)	$	(28)	$	1,751

Under SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets,” the operating results of real estate assets designated as held for sale are included in discontinued operations in the consolidated statement of operations for all periods presented. Additionally, all gains and losses on the sale of these assets are included in discontinued operations. For the three and six months ended June 30, 2009, income from discontinued operations included the results of operations of two apartment communities classified as held for sale at June 30, 2009 and one apartment community through its sale date in 2009. For the three and six months ended June 30, 2008, income from discontinued operations included the results of operations of the two apartment communities classified as held for sale at June 30, 2009, the apartment community sold in 2009 and four apartment communities sold in 2008 through their respective sale dates.

- 8 -

POST PROPERTIES., INC. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

~~For~~NOTES ~~the~~TO ~~six~~CONSOLIDATED ~~months~~FINANCIAL ~~ended~~STATEMENTS June 30, 2007, gains on sales of real estate assets included in discontinued operations also included net gains from condominium sales at one condominium conversion community that sold out in February 2007. A summary of revenues and costs and expenses of condominium activities included in discontinued operations was as follows:

	Six months ended
	June 30, 2007
Condominium revenues	$	560
Condominium costs and expenses		(381	)
Gains on condominium sales, before minority interest		179
Minority interest		(3	)
Gains on condominium sales, net of minority interest	$	176

(Unaudited, in thousands, except per share or unit and apartment unit data)

3.		INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES
		At June 30, 2008, the Company holds investments in four individual limited liability companies (the “Property LLCs”) with institutional investors. Three of the Property LLCs own apartment communities. The fourth Property LLC commenced construction in 2007 of a mixed-use development, consisting of for-sale condominiums and Class A office space. The Company holds a 35% equity interest in two Property LLCs, each owning one apartment community. The Company holds a 25% interest in one Property LLC owning three apartment communities, and a 50% interest in the condominium portion of the Property LLC developing the mixed-use project. In 2007, another Property LLC completed the sell-out of a condominium conversion community, initially consisting of 121 units.
		In 2007, the Company’s investment in the 25% owned Property LLC resulted from the transfer of three previously owned apartment communities to the Property LLC co-owned with an institutional investor. The assets, liabilities and members’ equity of this Property LLC were recorded at fair value based on agreed-upon amounts contributed to the Property LLC. At June 30, 2008, the Company’s investment in the 25% owned Property LLC reflects a credit investment of $13,885 resulting primarily from distributions of financing proceeds in excess of the Company’s historical cost investment. The credit investment is reflected in consolidated liabilities on the Company’s consolidated balance sheet.
		The Company accounts for its investments in these Property LLCs using the equity method of accounting. At June 30, 2008, the Company’s investment in these Property LLCs totaled $22,815, excluding the credit investment discussed above. The excess of the Company’s investment over its equity in the underlying net assets of certain Property LLCs was approximately $5,986 at June 30, 2008. The excess investment related to Property LLCs holding apartment communities is being amortized as a reduction to earnings on a straight-line basis over the lives of the related assets. The excess investment related to the Property LLC constructing condominiums will be recognized as additional costs as the condominiums are sold. The Company provides real estate services (development, construction and property management) to the Property LLCs for which it earns fees.
		The operating results of the Company include its allocable share of net income from the investments in the Property LLCs. A summary of financial information for the Property LLCs in the aggregate was as follows:

The revenues and expenses of these communities for the three and six months ended June 30, 2009 and 2008 were as follows:

	June 30,			December 31,
	Three months endedJune 30,					Six months endedJune 30,
Balance Sheet Data	2008			2007
	2009		2008			2009		2008
Real estate assets, net of accumulated depreciation of $18,361 and $15,204, respectively	$	362,036		$	325,705
Revenues
Cash and other		7,246			7,254
Rental	$	3,228	$	7,275		$	7,463	$	14,613
Total assets	$	369,282		$	332,959
Other property revenues		196		447			454		831
Mortgage/construction notes payable	$	250,270		$	214,549
Total revenues		3,424		7,722			7,917		15,444
Other liabilities		9,993			5,541
Expenses
Total liabilities		260,263			220,090
Total property operating and maintenance (exclusive of itemsshown separately below)		1,087		2,567			2,559		5,292
Members’ equity		109,019			112,869
Depreciation		-		871			-		1,962
Total liabilities and members’ equity	$	369,282		$	332,959
Interest		311		1,052			723		2,154
Company’s equity investment in Property LLCs	$	8,930		$	9,348
Total expenses		1,398		4,490			3,282		9,408
Income from discontinued property operations	$	2,026	$	3,232		$	4,635	$	6,036

~~-9-~~For the three and six months ended June 30, 2009, the Company recognized net gains in discontinued operations of $24,742 from the sale of one community, containing 530 units. This sale generated net proceeds of approximately $47,013. For the six months ended June 30, 2008, the Company recognized net gains in discontinued operations of $2,311 from the sale of one community, containing 143 units. This sale generated net proceeds of approximately $19,433.

3. INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES

At June 30, 2009, the Company holds investments in various individual limited liability companies (the “Apartment LLCs”) with institutional investors that own apartment communities. The Company holds a 25% to 35% equity interest in these Apartment LLCs. The Company and its joint venture partner also hold an approximate pro-rata 49% interest in a limited liability company (the “Mixed-Use LLC”) that is in the process of constructing a mixed-use development, consisting of 129 luxury condominium units, sponsored by the Company and its partner, and Class A office space, sponsored by two additional independent investors.

The Company’s investment in the 25% owned Apartment LLCs at June 30, 2009 and December 31, 2008 reflects a credit investment of $14,514 and $14,263, respectively. These credit balances resulted from distribution of financing proceeds in excess of the Company’s historical cost upon the formation of the Apartment LLC and are reflected in consolidated liabilities on the Company’s consolidated balance sheet.

At June 30, 2009, the Company holds a majority interest in a limited liability company (the “Condominium LLC”), which holds the approximate pro-rata 49% interest in the Mixed-Use LLC, which is constructing condominiums as part of a mixed-use development with other investors as discussed above. As such, the Company consolidated the Condominium LLC. At June 30, 2009, the Company’s consolidated investment in the Mixed-Use LLC reflects a credit investment of $39,820. The credit investment results from the recognition of a $74,733 non-cash impairment charge, or $68,219 net of the noncontrolling joint venture interest in the entity, recorded for the three and six months ended June 30, 2009 related to the condominium portion of the project. The impairment charge to write-down the asset to estimated fair value resulted from a determination that the estimated undiscounted cash flows related to the condominium asset under construction were not sufficient to recover the carrying value of the asset. The impairment charge was reflective of deteriorating market conditions for luxury condominiums in the Atlanta market, including weakening economic conditions, price discounting for competitive products and more restrictive mortgage lending conditions in 2009. Upon the completion of the condominium portion of the mixed-use development, the condominium asset will be distributed to the Condominium LLC. The Condominium LLC has entered into a licensing and branding arrangement with a third party. This arrangement provides for the payment of a guaranteed licensing fee upon the earlier of the sale of the condominium units as they occur or September 2012. The licensing fee will be paid from the proceeds of condominium sales at the Condominium LLC.

The Company accounts for its investments in the Apartment and Mixed-Use LLCs using the equity method of accounting. At June 30, 2009 and December 31, 2008, the Company’s investment in these Apartment and Mixed-Use LLCs totaled $8,706 and $39,300, respectively, excluding the credit investments discussed above. The excess of the Company's investment over its equity in the underlying net assets of certain Apartment LLCs was approximately $4,980 at June 30, 2009. The excess investment related to the Apartment LLCs is being amortized as a reduction to earnings on a straight-line basis over the lives of

- 9 -

POST PROPERTIES., INC. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

	Three months ended						Six months ended
	June 30,						June 30,
Income Statement Data	2008			2007			2008			2007
Revenues
Rental	$	6,794		$	4,142		$	13,487		$	6,955
Other property revenues		482			307			883			479
Other		13			19			36			37
Total revenues		7,289			4,468			14,406			7,471
Expenses
Property operating and maintenance		2,882			1,520			5,635			2,532
Depreciation and amortization		2,104			1,281			4,236			1,942
Interest		2,500			1,331			4,999			2,019
Total expenses		7,486			4,132			14,870			6,493
Income (loss) from continuing operations		(197	)		336			(464	)		978
Discontinued operations
Income (loss) from discontinued operations		—			10			(2	)		31
Gains (losses) on sales of real estate assets, net		—			(83	)		—			775
Income from discontinued operations		—			(73	)		(2	)		806
Net income (loss)	$	(197	)	$	263		$	(466	)	$	1,784
Company’s share of net income	$	420		$	310		$	821		$	814

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~For the three and six months ended June 30, 2007, gains~~ (~~losses) on real estate assets represent net gains (losses) from condominium sales at the condominium conversion community held by a Property LLC that completed its sell out in 2007. At June 30~~Unaudited, 2008, mortgage/construction notes payable include a $49,996 mortgage note that bears interest at 4.13%, requires monthly interest payments and annual principal payments of $1 through 2009. Thereafter, the note requires monthly principal and interest payments based on a 25-year amortization schedule and matures in ~~2034. The note is prepayable without penalty in May 2008. Another mortgage note payable totaling $17~~thousands,~~000~~ ~~bears~~except ~~interest~~per atshare aor ~~fixed~~unit ~~rate of 4.04% requires interest only payments~~ and ~~matures~~apartment inunit 2008. Subsequent to June 30, 2008, this mortgage note was refinanced by the Property LLC. The new mortgage note payable totaling $29,272 bears interest at 5.83%, requires monthly interest only payments and matures in 2013. The note is prepayable without penalty in August 2011. Three additional mortgage notes were entered into in conjunction with the formation of the 25% owned Property LLC in 2007. Two notes total $85,723, bear interest at 5.63%, require interest only payments and mature in 2017. The third mortgage note totals $41,000, bears interest at 5.71%, requires interest only payments, and matures in 2017. In 2007, the Property LLC constructing the mixed-use development entered into a construction loan facility with an aggregate capacity of $187,128. At June 30, 2008, the construction loan had an outstanding balance of $56,550, bears interest at LIBOR plus 1.35% and matures in 2011. Under the terms of the construction loan facility, the Company and its 50% equity partner have jointly and severally guaranteed approximately $25,313 of the construction loan attributable to the condominium portion of the project. Additionally, the Company and its 50% equity partner have jointly and severally guaranteed certain debt service payments of the condominium portion of the loan not to exceed approximately $6,153, and all of the equity owners of the project, including the Company, have guaranteed the completion of the first building at the project.data)

the related assets. The Company provides real estate services (development, construction and property management) to the Apartment and Mixed-~~10-~~Use LLCs for which it earns fees.

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


Balance Sheet Data	June 30, 2009		December 31, 2008
Real estate assets, net of accumulated depreciation of $24,726 and $21,528, respectively	$	351,420	$	398,167
Cash and other		7,421		6,768

Total assets	$	358,841	$	404,935

Mortgage/construction notes payable	$	301,785	$	289,013
Other liabilities		22,444		6,979

Total liabilities		324,229		295,992
Members’ equity		34,612		108,943

Total liabilities and members’ equity	$	358,841	$	404,935

Company’s equity investment in Property LLCs (1)	$	(45,628)	$	23,315


	Three months ended June 30,				Six months ended June 30,
Income Statement Data	2009		2008		2009		2008
Revenues
Rental	$	6,642	$	6,794	$	13,306	$	13,487
Other property revenues		496		482		961		883
Other		3		13		3		36

Total revenues		7,141		7,289		14,270		14,406

Expenses
Property operating and maintenance		2,976		2,882		5,829		5,635
Depreciation and amortization		1,651		2,104		3,292		4,236
Impairment charge (2)		71,679		-		71,679		-
Interest		2,986		2,500		5,939		4,999

Total expenses		79,292		7,486		86,739		14,870

Income (loss) from continuing operations		(72,151)		(197)		(72,469)		(464)

Discontinued operations
Income (loss) from discontinued operations		-		-		-		(2)

Income from discontinued operations		-		-		-		(2)

Net income (loss)	$	(72,151)	$	(197)	$	(72,469)	$	(466)

Company’s share of net income	$	(74,656)	$	420	$	(74,546)	$	821

(1) At June 30, 2009 and December 31, 2008, the Company’s equity investment is shown net of its credit investments of $54,334 and $15,985, respectively. At December 31, 2008, the credit investment included $1,722 related to the Land LLC discussed below. (2) The impairment charge recognized at the unconsolidated entity level excludes the write-off of the Company’s costs in excess of its invested capital.

At June 30, 2009, mortgage/construction notes payable includes five mortgage notes and a construction loan facility. The first $50,500 mortgage note bears interest at 5.82%, requires monthly interest only payments and matures in 2013. The note is prepayable without penalty in September 2011. The second mortgage note payable totals $29,272, bears interest at 5.83%, requires monthly interest only payments and matures in 2013. The note is prepayable without penalty in September 2011. The third and fourth mortgage notes total $85,723, bear interest at 5.63%, require interest only payments and mature in 2017. The fifth mortgage note totals $41,000, bears interest at 5.71%, requires interest only payments, and matures in 2017.

- 10 -

POST PROPERTIES., INC. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

4.NOTES ~~INDEBTEDNESS~~TO AtCONSOLIDATED ~~June~~FINANCIAL ~~30,~~STATEMENTS ~~2008 and December 31, 2007, the Company’s indebtedness consisted of the following:~~

	Payment		Maturity	June 30,		December 31,
Description	Terms	Interest Rate	Date	2008		2007
Senior Unsecured Notes	Int.	5.13% - 7.70%	2010-2013	$	535,000	$	535,000
Unsecured Lines of Credit
Syndicated Line of Credit	N/A	LIBOR + 0.575%(1)	2010		120,000		245,000
Cash Management Line	N/A	LIBOR + 0.575%	2010		24,271		12,275
					144,271		257,275
Fixed Rate Secured Notes
FNMA	Prin. and Int.	6.15%(2)	2029		94,000		94,000
Other	Prin. and Int.	4.27% - 6.50%	2009-2015		291,134		172,791
					385,134		266,791
Total				$	1,064,405	$	1,059,066

(Unaudited, in thousands, except per share or unit and apartment unit data)

(1)		Represents stated rate. At June 30, 2008, the weighted average interest rate was 3.06%.
(2)		Interest rate is fixed at 6.15%, inclusive of credit enhancement and other fees, to 2009 through an interest rate swap arrangement.

and its equity partner in the Condominium LLC have jointly and severally guaranteed approximately $25,313 of the construction loan held at the unconsolidated Mixed-Use LLC attributable to the condominium portion of the project as well as certain debt service payments of the condominium portion of the loan held at the Mixed-Use LLC not to exceed approximately $6,153. Finally, all of the equity owners of the project at the unconsolidated Mixed-Use LLC, including the Company, have jointly and severally guaranteed the completion of the first mixed-use building of the project.

~~Debt~~In ~~maturities~~April ~~The~~2009, the Company made aggregate ~~maturities~~additional investments and advances of $1,527 to the previously unconsolidated Land LLC that holds land adjacent to the condominium project discussed above for future investment, whereby the Company’s ~~indebtedness~~obtained ~~are~~a asmajority ~~follows:~~interest in the Land LLC. As a result, the Company consolidated the Land LLC in the second quarter of 2009. The consolidation of the Land LLC resulted in the consolidation of a portion of the construction loan discussed above totaling $8,153 at June 30, 2009 (see note 4). Subsequently, consistent with the impairment analysis performed for the adjacent condominium development discussed above, the Company determined that the land held for future development of a second phase condominium tower on this site was not economically viable due to limitations on the potential future use of this site and the continued worsening of conditions in the U.S. economy and the housing markets, specifically in the Atlanta upper-end single family and condominium markets. As a result, the Company concluded that the carrying value of the land held for future investment was not recoverable, and in the second quarter of 2009, the Company recorded a non-cash impairment charge of $9,658, or $8,098 net of the noncontrolling joint venture interest in the entity, to write-off the carrying value of the land held for investment.

Remainder of 2008	$	3,572
2009		76,618
2010		332,899	(1)
2011		141,431
2012		103,296
Thereafter		406,589
	$	1,064,405

4.	INDEBTEDNESS

~~(1)~~At June 30, ~~Includes~~2009 ~~outstanding~~and ~~balances~~December 31, on2008, ~~lines~~the Company's indebtedness consisted of ~~credit~~the ~~totaling~~following: ~~$144,271.~~

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


Description	Payment Terms	Interest Rate	Maturity Date	June 30, 2009		December 31, 2008

Senior Unsecured Notes	Int.	5.13% - 7.70% (1)	2010-2013	$	360,142	$	535,000


Unsecured Lines of Credit
Syndicated Line of Credit	N/A	LIBOR + 0.80% (2)	2010		15,000		40,000
Cash Management Line	N/A	LIBOR + 0.80%	2010		14,913		10,864

					29,913		50,864

Secured Notes
FNMA	Prin. and Int.	Remarketed rate	2029		-		92,275
Other	Prin. and Int.	4.88% - 6.11% (3)	2011-2019		688,582		434,774

					688,582		527,049


Secured Variable Rate Construction Note	Int.	LIBOR + 1.35%	2011		8,153		-


Total				$	1,086,790	$	1,112,913

~~-11-~~ (1) Of the Company’s senior unsecured notes, there are no scheduled maturities in 2009. Notes for approximately $100,505 bearing interest at 7.7% mature in 2010. The remaining notes mature between 2011 and 2013.

(2)	Represents stated rate. At June 30, 2009, the weighted average interest rate was 1.1%.

(3)	Of the Company’s secured notes, there are no scheduled maturities in 2009 or 2010. All of the notes mature between 2011 and 2019.

Debt Maturities

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


Remainder of 2009	$	770
2010		132,032	(1)
2011		59,637
2012		104,381
2013		206,515
Thereafter		583,455

	$	1,086,790

(1)	Includes outstanding balances on lines of credit totaling $29,913.

- 11 -

POST PROPERTIES., INC. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

		Unsecured Lines of Credit
		At June 30, 2008, the Company utilizes a $600,000 syndicated unsecured revolving line of credit (the “Syndicated Line”) that matures in April 2010 for its short-term financing needs. The Syndicated Line currently has a stated interest rate of LIBOR plus 0.575% or the prime rate and was provided by a syndicate of 17 banks led by Wachovia Bank, N.A. and JP Morgan Securities, Inc. Additionally, the Syndicated Line requires the payment of annual facility fees currently equal to 0.15% of the aggregate loan commitment. The Syndicated Line provides for the interest rate and facility fee rate to be adjusted up or down based on changes in the credit ratings on the Company’s senior unsecured debt. The rates under the Syndicated Line are based on the higher of the Company’s unsecured debt ratings in instances where the Company has split unsecured debt ratings. The Syndicated Line also includes a competitive bid option for short-term funds up to 50% of the loan commitment at rates generally below the stated line rate. The credit agreement for the Syndicated Line contains customary restrictions, representations, covenants and events of default, including fixed charge coverage and maximum leverage ratios. The Syndicated Line also restricts the amount of capital the Company can invest in specific categories of assets, such as improved land, properties under construction, condominium properties, non-multifamily properties, debt or equity securities, notes receivable and unconsolidated affiliates. At June 30, 2008, the Company had issued letters of credit to third parties totaling $2,100 under this facility.
		Additionally, at June 30, 2008, the Company had a $30,000 unsecured line of credit with Wachovia Bank, N.A. (the “Cash Management Line”). The Cash Management Line matures in April 2010 and carries pricing and terms, including debt covenants, substantially consistent with the Syndicated Line.
5.		SHAREHOLDERS’ EQUITY
		Computation of Earnings (Loss) Per Common Share
		For the three and six months ended June 30, 2008 and 2007, a reconciliation of the numerator and denominator used in the computation of basic and diluted income (loss) from continuing operations per common share is as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Three months ended						Six months ended
	June 30,						June 30,
	2008			2007			2008			2007
Income (loss) from continuing operations available to common shareholders (numerator):
Income (loss) from continuing operations	$	(29,166	)	$	59,838		$	(32,309	)	$	63,654
Less: Preferred stock dividends		(1,910	)		(1,910	)		(3,819	)		(3,819	)
Income (loss) from continuing operations available to common shareholders	$	(31,076	)	$	57,928		$	(36,128	)	$	59,835
Common shares (denominator):
Weighted average shares outstanding — basic		44,011			43,463			43,939			43,416
Dilutive shares from stock options and awards (1)		—			815			—			776
Weighted average shares outstanding — diluted (1)		44,011			44,278			43,939			44,192

(Unaudited, in thousands, except per share or unit and apartment unit data)

~~(1)~~Debt ~~For~~Issuances the three and six months ended June 30, 2008, the potential dilution from the Company’s outstanding stock options to purchase 307 and 358 shares, respectively, were antidilutive to the loss from continuing operations per share calculation. As such, the amounts were excluded from weighted average shares for the periods.

~~For~~In January 2009, the ~~three~~Company closed five, cross-collateralized secured mortgage loans. The mortgage loans have an aggregate principal amount of approximately $202,162, require interest-only payments for the first two years and ~~six~~then ~~months~~principal ~~ended~~and ~~June~~interest payments for the remaining term of the loans based on a 30,-year ~~2008~~amortization schedule. The loans bear interest at a fixed rate of 5.99% and ~~2007~~mature in 2019. In April 2009, ~~stock~~certain ~~options~~documents related to ~~purchase~~these ~~2,414~~loans were ~~and~~modified ~~213~~to ~~shares~~facilitate the securitization of ~~common~~such ~~stock,~~loans ~~respectively,~~under ~~and~~a ~~2,414~~Federal ~~and~~Home ~~183,~~Loan ~~respectively~~Mortgage Corporation multifamily loan securitization program. Such amendments did not change the basic economic terms of the loans; however, ~~were~~in ~~excluded~~connection ~~from~~with such amendments the ~~computation~~Company received modification fees in an aggregate amount of ~~diluted~~approximately ~~earnings~~$2,022 ~~(loss)~~plus ~~per~~reimbursement ~~common~~of ~~share~~certain ascosts ~~these~~incurred ~~stock~~in ~~options~~connection ~~and~~with ~~awards~~such ~~were~~modifications. ~~antidilutive~~The modification fees received will be amortized over the remaining term of the loans.

In March 2009, the Company refinanced a maturing $33,954 mortgage loan using the proceeds of a new $34,800 mortgage loan. The new mortgage loan requires monthly interest-12only payments for the first two years and then requires monthly principal and interest payments for the remaining term of the loan based on a 30-year amortization schedule. The loan bears interest at a fixed rate of 5.61% and matures in 2019.

In April 2009, the Company closed a $51,555 mortgage loan. The mortgage loan requires interest-only payments for the first two years and then principal and interest payments for the remaining term of the loan based on a 30-year amortization schedule. The loan bears interest at a fixed rate of 5.84% through its initial maturity in 2018, at which time the loan is automatically extended for one year to 2019 and bears a variable interest rate based on a 250 basis point spread over the Freddie Mac Reference Bills^® Securities rate.

Debt Retirements

In February 2009, the Company made a public tender offer for any and all of its $185,000, 7.7% senior unsecured notes due December 2010 and its $100,000, 5.125% senior unsecured notes due October 2011. Upon expiration of the tender offer, the Company repurchased $84,495 of its 7.7% senior notes due December 2010 at par and $90,363 face amount of its 5.125% senior notes due October 2011 at $85,845. This note repurchase resulted in a net gain on extinguishment of $3,445.

In March 2009, the Company fully redeemed its $92,275 weekly remarketed, variable rate taxable mortgage bonds. The Company also settled and terminated a related interest rate swap arrangement (see note 6) in conjunction with the debt extinguishment. The bond retirement and swap termination resulted in a net extinguishment loss of $2,626.

Unsecured Lines of Credit

At June 30, 2009, the Company utilizes a $600,000 syndicated unsecured revolving line of credit (the “Syndicated Line”) that matures in April 2010 for its short-term financing needs. The Syndicated Line may be extended for an additional year at the Company’s option through April 2011. The Syndicated Line currently has a stated interest rate of LIBOR plus 0.80% or the prime rate and was provided by a syndicate of 16 banks led by Wells Fargo Bank, N.A. and JPMorgan Chase Bank, N.A. Additionally, the Syndicated Line requires the payment of annual facility fees currently equal to 0.175% of the aggregate loan commitment. The Syndicated Line provides for the interest rate and facility fee rate to be adjusted up or down based on changes in the credit ratings on the Company’s senior unsecured debt (see below). The rates under the Syndicated Line are based on the higher of the Company’s unsecured debt ratings in instances where the Company has split unsecured debt ratings. The Syndicated Line also includes a competitive bid option for short-term funds up to 50% of the loan commitment at rates generally below the stated line rate. The credit agreement for the Syndicated Line contains customary restrictions, representations, covenants and events of default, including fixed charge coverage and maximum leverage ratios. The Syndicated Line also restricts the amount of capital the Company can invest in specific categories of assets, such as improved land, properties under construction, condominium properties, non-multifamily properties, debt or equity securities, notes receivable and unconsolidated affiliates. At June 30, 2009, the Company had issued letters of credit to third parties totaling $3,654 under this facility.

In March 2009, Standard & Poor’s rating service lowered the Company’s corporate credit rating to BBB- from BBB and at the same time revised its outlook to stable. This change resulted in the interest rate spread increase to 80.0 basis points over LIBOR from 57.5 basis points on the Company’s revolving lines of credit and the facility fee increased to 17.5 basis points from 15.0 basis points.

- 12 -

POST PROPERTIES., INC. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

6.		DERIVATIVE FINANCIAL INSTRUMENTS
		The Company adopted the provisions of SFAS No. 157 on January 1, 2008. To comply with the provisions of SFAS No. 157, the Company’s fair value measurement of its derivative instrument at June 30, 2008 uses Level 2 observable inputs that incorporate credit valuation adjustments to appropriately reflect both its risk of nonperformance and the counterparty’s risk of nonperformance.
		At June 30, 2008, the Company had an outstanding interest rate swap agreement with a notional value of approximately $93,890 with a maturity date in 2009. The swap arrangement is a variable to fixed rate swap at a fixed rate of 5.21% and the swap was designated as a cash flow hedge of the Company’s FNMA variable rate debt. The interest rate swap agreement is included on the accompanying consolidated balance sheet at fair value. At June 30, 2008, the fair value of the interest rate swap agreement represented a liability of $2,189, and the liability was included in consolidated liabilities in the accompanying consolidated balance sheet. The increase in the value of this cash flow hedge of $1,499 and $35 for the three and six months ended June 30, 2008, respectively, was recorded as a change in accumulated other comprehensive income (loss), a shareholders’ equity account, in the accompanying consolidated balance sheet.
		In prior years, a previous interest rate swap arrangement, accounted for as a cash flow hedge, became ineffective under generally accepted accounting principles (SFAS No. 133, as amended). Under SFAS No. 133, as amended, the Company is required to amortize into interest expense the cumulative unrecognized loss on the terminated interest rate swap arrangement of $4,021, included in shareholders’ equity, over the remaining life of the swap through 2009. Total amortization expense related to this swap was $281 for the three months ended and $562 for the six months ended June 30, 2008 and 2007.
		On February 1, 2008, a $28,495 interest rate cap arrangement expired on its maturity date with no change in value from December 31, 2007.
		A summary of comprehensive income (loss) for the three and six months ended June 30, 2008 and 2007 is as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Three months ended					Six months ended
	June 30,					June 30,
	2008			2007		2008			2007
Net income (loss)	$	(25,063	)	$	63,937	$	(22,377	)	$	88,408
Change in derivatives, net of minority interest (1)		1,765			1,044		593			1,111
Comprehensive income (loss)	$	(23,298	)	$	64,981	$	(21,784	)	$	89,519

(Unaudited, in thousands, except per share or unit and apartment unit data)

~~(1)~~Additionally, ~~For~~at ~~the three and six months ended~~ June 30, ~~2008 and 2007~~2009, the ~~change~~Company inhad ~~derivatives~~a ~~balance includes an adjustment of~~ $~~281~~30,000 ~~($279~~unsecured ~~net~~line of ~~minority~~credit ~~interest)~~with ~~and~~Wells Fargo ~~$281~~Bank, N.A. (~~$277~~the ~~net~~"Cash ofManagement ~~minority interest~~Line”),. ~~respectively,~~The ~~and~~Cash ~~$562~~Management ~~($558~~Line ~~net~~matures ofin ~~minority~~April ~~interest)~~2010 and ~~$562~~carries ~~($554~~pricing ~~net~~and ofterms, ~~minority~~including ~~interest),~~debt ~~respectively~~covenants, ~~for~~substantially ~~amortized~~consistent ~~swap~~with ~~costs~~the ~~included~~Syndicated ~~in net income~~Line.

7.		SEGMENT INFORMATION
		Segment Description
		In accordance with SFAS No. 131, “Disclosure About the Segments of an Enterprise and Related Information,” the Company presents segment information based on the way that management organizes the segments within the enterprise for making operating decisions and assessing performance. The segment information is prepared on the same basis as the internally reported information used by the Company’s chief operating decision makers to manage the business.
		The Company’s chief operating decision makers focus on the Company’s primary sources of income from apartment community rental operations. Apartment community rental operations are generally broken down into four segments based on the various stages in the apartment community ownership lifecycle. These segments are described below. All commercial properties and other ancillary service and support operations are combined in the line item “other” in the accompanying segment information. The segment information presented below reflects the segment categories based on the lifecycle status of each community as of January 1, 2007. The segment information for the three and six months ended June 30, 2007 has been adjusted due to the restatement impact of reclassifying the operating results of the assets designated as held for sale or sold subsequent to June 30, 2007 to discontinued operations under SFAS No. 144 (see note 2).

Debt Compliance

~~-13-~~The Company’s Syndicated Line and senior unsecured notes contain customary restrictions, representations and events of default and require the Company to meet certain financial covenants. Debt service and fixed charge coverage covenants require the Company to maintain coverages of a minimum of 1.5 to 1.0, as defined in applicable debt arrangements. Leverage covenants generally require the Company to maintain calculated covenants above/below minimum/maximum thresholds. The primary leverage ratios under these arrangements include total debt to total asset value (maximum of 60%), total secured debt to total asset value (maximum of 35% or 40%, respectively) and unencumbered assets to unsecured debt (minimum of 1.5 to 1.0 or 1.6 to 1.0, respectively), as defined in the applicable debt arrangements. Management believes the Company was in compliance with these financial covenants at June 30, 2009.

5.	EQUITY AND NONCONTROLLING INTERESTS

Computation of Earnings (Loss) Per Common Share

For the three and six months ended June 30, 2009 and 2008, a reconciliation of the numerator and denominator used in the computation of basic and diluted loss from continuing operations per common share is as follows:


	Three months ended June 30,				Six months ended June 30,
	2009		2008		2009		2008
Loss from continuing operations attributable to common shareholders (numerator):
Loss from continuing operations	$	(83,963)	$	(28,801)	$	(84,324)	$	(30,757)
Noncontrolling interests - consolidated real estate entities		8,150		293		8,226		(173)
Noncontrolling interests - Operating Partnership - continuing operations		381		232		392		271
Preferred stock dividends		(1,910)		(1,910)		(3,819)		(3,819)
Unvested restricted stock (allocation of earnings)		202		56		177		48

Loss from continuing operations attributable to common shareholders	$	(77,140)	$	(30,130)	$	(79,348)	$	(34,430)

Common shares (denominator):
Weighted average shares outstanding - basic		44,118		44,011		44,116		43,939
Dilutive shares from stock options (1)		-		-		-		-

Weighted average shares outstanding - diluted (1)		44,118		44,011		44,116		43,939

(1) The potential dilution from the Company’s outstanding stock options to purchase 0 and 268 shares, for the three months ended June 30, 2009 and 2008, respectively, and 0 and 322 shares, for the six months ended June 30, 2009 and 2008, respectively, were antidilutive to the loss from continuing operations per share calculation. As such, these amounts were excluded from weighted average shares for the periods.

Stock options to purchase 2,527 shares of common stock for the three months and six ended June 30, 2009 and 2,414 shares of common stock for the three and six months ended June 30, 2008 were excluded from the computation of diluted earnings (loss) per common share as these stock options were antidilutive.

Noncontrolling Interests

The Company adopted SFAS No. 160 on January 1, 2009. SFAS No. 160, in conjunction with other existing GAAP, established criterion used to evaluate the characteristics of noncontrolling interests in consolidated entities to determine whether noncontrolling interests are classified and accounted for as permanent equity or “temporary” equity (presented between liabilities and permanent equity on the consolidated balance sheet). In conjunction with the issuance of SFAS No. 160, EITF Topic No. D-98, “Classification and Measurement of Redeemable Securities,” (“EITF D-98”) was revised to clarify the treatment of noncontrolling interests with redemption provisions. If a noncontrolling interest has a redemption feature that permits the issuer to settle in either cash or common shares at the option of the issuer but the equity settlement feature is

- 13 -

POST PROPERTIES., INC. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

•NOTES ~~Fully~~TO ~~stabilized~~CONSOLIDATED ~~communities~~FINANCIAL –STATEMENTS those apartment communities which have been stabilized (the earlier of the point at which a property reaches 95% occupancy or one year after completion of construction) for both the current and prior year. • Communities stabilized during 2007 – communities which reached stabilized occupancy in the prior year. • Development, rehabilitation and lease-up communities – those apartment communities under development, rehabilitation and lease-up during the period. • Condominium conversion and other communities – those portions of existing apartment communities being converted into condominiums and other communities converted to joint venture ownership that are reflected in continuing operations. • Acquired communities – those communities acquired in the current or prior year.

~~Segment Performance Measure Management uses contribution to consolidated property net operating income~~ (~~“NOI”) as the performance measure for its operating segments. The Company uses net operating income~~Unaudited, including net operating income of stabilized communities, as an operating measure. Net operating income is defined as rental and other property revenue from real estate operations less total property and maintenance expenses from real estate operations (excluding depreciation and amortization). The Company believes that net operating income is an important supplemental measure of operating performance for a REIT’s operating real estate because it provides a measure of the core operations, rather than factoring in ~~depreciation and amortization~~thousands, ~~financing~~except ~~costs~~per ~~and~~share ~~general~~or ~~and~~unit ~~administrative expenses generally incurred at the corporate level. This measure is particularly useful, in the opinion of the Company, in evaluating the performance of operating segment groupings~~ and ~~individual~~apartment ~~properties.~~unit Additionally, the Company believes that net operating income, as defined, is a widely accepted measure of comparative operating performance in the real estate investment community. The Company believes that the line on the Company’s consolidated statement of operations entitled “net income” is the most directly comparable GAAP measure to net operating income. Segment Information The following table reflects each segment’s contribution to consolidated revenues and NOI together with a reconciliation of segment contribution to property NOI to consolidated net income (lossdata) for the three and six months ended June 30, 2008 and 2007. Additionally, substantially all of the Company’s assets relate to the Company’s property rental operations. Asset cost, depreciation and amortization by segment are not presented because such information at the segment level is not reported internally.

~~-14-~~ deemed to be outside of the control of the issuer, then those noncontrolling interests are classified as “temporary” equity. The Company currently has two types of noncontrolling interests, (1) noncontrolling interests related to the common unitholders of its Operating Partnership and (2) noncontrolling interests related to its consolidated real estate entities. The Company determined that the noncontrolling interests related to the common unitholders of the Operating Partnership met the criterion to be classified and accounted for as “temporary” equity (reflected outside of total equity as “Redeemable Common Units”). The Company further determined that the noncontrolling interests in its consolidated real estate entities met the criterion to be classified and accounted for as a component of permanent equity.

For the three and six months ended June 30, 2009 and 2008, income from continuing operations, income from discontinued operations and net income available to the Company were comprised of the following amounts, net of its noncontrolling interests:


	Three months ended June 30,				Six months ended June 30,
	2009		2008		2009		2008
Loss from continuing operations	$	(75,432)	$	(28,276)	$	(75,706)	$	(30,659)
Income from discontinued operations		26,637		3,213		29,233		8,282

Net loss attributable to the Company	$	(48,795)	$	(25,063)	$	(46,473)	$	(22,377)

6.	FAIR VALUE MEASURES AND OTHER FINANCIAL INSTRUMENTS

The Company applies SFAS No. 157, “Fair Value Measurements,” in relation to the valuation of real estate assets recorded at fair value, to its impairment valuation analysis of real estate assets (see note 8) and to its disclosure of the fair value of financial instruments, principally indebtedness (see note 4). The disclosure of estimated fair value of real estate assets and long-term indebtedness was determined by management using available market information and appropriate valuation methodologies available to management at June 30, 2009. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, there can be no assurance that the estimates presented below, using Level 2 and 3 inputs, are indicative of the amounts the Company could realize on disposition of the real estate assets or indebtedness. The use of different market assumptions and/or estimation methodologies could have a material effect on the estimated fair value amounts.

At June 30, 2009, certain parcels of land held for sale were carried at their estimated fair value of $14,850 on the Company’s consolidated balance sheet, using Level 3 inputs consisting primarily of comparable appraisals and land sale activity. There was no change in the estimated fair value of these land parcels measured under SFAS No. 157 for the three and six months ended June 30, 2009. In the three and six months ended June 30, 2009, the Company recognized impairment charges (see notes 3 and 8) to write-off a parcel of land held for future investment to its estimated fair value of zero and to write-down its investment in an unconsolidated entity constructing condominiums to its estimated fair value, resulting in a credit investment of $39,820. The estimated fair value of the land and condominiums was determined using Level 3 inputs, consisting primarily of independent appraisals and discounted cash flow models.

At June 30, 2009, the estimated fair value of fixed rate debt was approximately $1,039,672 (carrying value of $1,048,724) and the estimated fair value of the Company’s variable rate debt, including the Company’s lines of credit, was approximately $36,329 (carrying value of $38,066).

In March 2009, the Company early terminated its only interest rate swap through a terminating payment of $1,554 to the swap counter-party. The swap was terminated in conjunction with the early extinguishment of the indebtedness being hedged by the swap. In 2008, this interest rate swap became ineffective under generally accepted accounting principles. As a result, the gross change in the market value of the interest rate swap arrangement from January 1, 2009 through the swap termination date in March 2009 of $874 was recognized in other income in the consolidated statement of operations. Additionally, the Company was required to amortize into expense the cumulative unrecognized loss on the interest rate swap over the remaining life of the swap. Total amortization expense related to this swap was $658 from January 1, 2009 through the swap termination date in

- 14 -

POST PROPERTIES., INC. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

	Three months ended						Six months ended
	June 30,						June 30,
	2008			2007			2008			2007
Revenues
Fully stabilized communities	$	51,585		$	50,286		$	102,518		$	99,789
Communities stabilized during 2007		2,665			1,711			5,218			2,833
Development, rehabilitation and lease-up communities		4,543			3,974			8,838			7,799
Condominium conversion and other communities		188			2,760			389			6,784
Acquired communities		1,321			—			2,677			—
Other property segments		6,068			5,793			12,215			11,383
Other		235			128			474			245
Consolidated revenues	$	66,605		$	64,652		$	132,329		$	128,833
Contribution to Property Net Operating Income
Fully stabilized communities	$	30,190		$	30,223		$	60,914		$	60,257
Communities stabilized during 2007		1,621			618			3,051			795
Development, rehabilitation and lease-up communities		1,733			1,911			3,525			3,911
Condominium conversion and other communities		116			1,505			237			3,855
Acquired communities		720			—			1,385			—
Other property segments, including corporate management expenses		(1,565	)		(1,998	)		(3,269	)		(3,846	)
Consolidated property net operating income		32,815			32,259			65,843			64,972
Interest income		61			213			271			463
Other revenues		235			128			474			245
Minority interest in consolidated property partnerships		427			(716	)		61			(693	)
Depreciation		(14,386	)		(14,375	)		(28,649	)		(28,726	)
Interest expense		(10,112	)		(10,863	)		(20,268	)		(21,908	)
Amortization of deferred financing costs		(859	)		(829	)		(1,710	)		(1,641	)
General and administrative		(4,956	)		(5,959	)		(10,804	)		(11,407	)
Investment and development		(1,356	)		(1,955	)		(2,814	)		(3,505	)
Strategic review costs		(2,091	)		—			(8,161	)		—
Impairment and severance charges		(29,300	)		—			(29,300	)		—
Gains (losses) on sales of real estate assets, net		(368	)		62,738			1,751			66,444
Equity in income of unconsolidated real estate entities		420			310			821			814
Other income (expense)		66			(261	)		(108	)		(522	)
Minority interest of common unitholders		238			(852	)		284			(882	)
Income (loss) from continuing operations		(29,166	)		59,838			(32,309	)		63,654
Income from discontinued operations		4,103			4,099			9,932			24,754
Net income (loss)	$	(25,063	)	$	63,937		$	(22,377	)	$	88,408

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~-15-~~(Unaudited, in thousands, except per share or unit and apartment unit data)

March 2009. The remaining unamortized loss on the swap of $1,161 was recognized as a loss on the termination of the swap and was included in the net gain (loss) from early debt extinguishment on the consolidated statement of operations for the six months ended June 30, 2009.

A summary of comprehensive income for the three and six months ended June 30, 2009 and 2008 was as follows:


	Three months ended June 30,				Six months ended June 30,
	2009		2008		2009		2008
Net loss	$	(57,195)	$	(25,569)	$	(54,947)	$	(22,410)
Change in derivatives (1)		-		1,780		1,829		597

Total comprehensive income (loss)		(57,195)		(23,789)		(53,118)		(21,813)
Less:
Comprehensive income attributable to noncontrolling interests		8,400		491		8,464		29

Total Company comprehensive income	$	(48,795)	$	(23,298)	$	(44,654)	$	(21,784)

(1) For the six months ended June 30, 2009, the change in derivatives balance includes an adjustment of $658 for amortized swap costs as well as an adjustment for $1,161 to write-off the remaining unamortized balance in equity, both included in net income. For the three and six months ended June 30, 2008, the change in derivatives balance includes an adjustment of $281 and $562 for amortized swap costs included in net income.

7.	SEGMENT INFORMATION

Segment Description

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

The Company’s chief operating decision makers focus on the Company’s primary sources of income from apartment community rental operations. Apartment community rental operations are generally broken down into four segments based on the various stages in the apartment community ownership lifecycle. These segments are described below. All commercial properties and other ancillary service and support operations are combined in the line item “other” in the accompanying segment information. The segment information presented below reflects the segment categories based on the lifecycle status of each community as of January 1, 2008. The segment information for the three and six months ended June 30, 2008 has been adjusted due to the restatement impact of reclassifying the operating results of the assets designated as held for sale or sold subsequent to June 30, 2008 to discontinued operations under SFAS No. 144 (see note 2).

•

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

•

Communities stabilized during 2008 – communities which reached stabilized occupancy in the prior year.

•

Development, rehabilitation and lease-up communities – those apartment communities under development, rehabilitation and lease-up during the period.

•

Condominium conversion and other communities – those portions of existing apartment communities being converted into condominiums and other communities converted to joint venture ownership that are reflected in continuing operations.

Segment Performance Measure

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

- 15 -

POST PROPERTIES., INC. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

8.		IMPAIRMENT AND SEVERANCE COSTS
		After an evaluation of its development pipeline in light of difficult current market conditions, the Company recorded impairment charges of approximately $28,947 in the second quarter of 2008. The impairment charges relate to the substantial cessation of current development activities associated with four land parcels in pre-development which were written down to their estimated fair market values, as well as the write-off of capitalized pursuit costs associated with certain abandoned projects. Fair market value for the assets recorded at fair value in the second quarter of 2008 was determined using Level 3 unobservable inputs, such as estimated cash flows, market capitalization rates and market internal rates of return.
		Additionally, in the second quarter of 2008, the Company recorded severance charges of approximately $353 related to a management and staff workforce reduction that was initiated in the second quarter. The impairment and severance charges reflected management’s decision to reduce the size of its workforce and lower overhead expenses in response in part to its decision to reduce the number of markets in which the Company operates, to sell additional operating assets and to focus its development strategy on fewer projects in the near term. The Company expects to record additional severance charges in the third quarter of 2008 of approximately $1,600 relating to additional headcount reductions in July 2008. The Company may also record additional severance charges in the second half of 2008 or in future periods, depending on market conditions and the Company’s business plans.
		In prior years, the Company recorded severance charges associated with the departure of certain executive officers of the Company. Under certain of these arrangements, the Company is required to make certain payments and provide specified benefits through 2013 and 2016. The following table summarizes the activity relating to aggregate net severance charges for the six months ended June 30, 2008 and 2007:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Six months ended
	June 30,
	2008			2007
Accrued severance charges, beginning of period	$	11,215		$	12,832
Severance charges		353			283
Payments for period		(1,633	)		(1,518	)
Interest accretion		366			370
Accrued severance charges, end of period	$	10,301		$	11,967

(Unaudited, in thousands, except per share or unit and apartment unit data)

9.		SUPPLEMENTAL CASH FLOW INFORMATION
		Interest paid (including capitalized amounts of $6,671 and $5,795 for the six months ended June 30, 2008 and 2007, respectively), aggregated $30,458 and $32,651 for the six months ended June 30, 2008 and 2007, respectively.
		For the six months ended June 30, 2008 and 2007, the Company and the Company’s taxable REIT subsidiaries made income tax payments to federal and state taxing authorities totaling $1,700 and $1,062, respectively.
		Non-cash investing and financing activities for the six months ended June 30, 2008 and 2007 were as follows:
		For the six months ended June 30, 2008 and 2007, the Company amortized approximately $562 ($558 net of minority interest) and $562 ($554 net of minority interest), respectively, of accumulated other comprehensive non-cash losses into earnings related to an interest rate swap derivative financial instrument (see note 6). Other than the amortization discussed herein, for the six months ended June 30, 2008, the Company’s derivative financial instruments, accounted for as cash flow hedges, increased in value causing a decrease in accounts payable and accrued expenses and a corresponding decrease in shareholder’s equity of $35, net of minority interest. For the six months ended June 30, 2007, the Company’s derivative financial instruments accounted for as cash flow hedges decreased in value causing an increase in accounts payable and accrued expenses and a corresponding decrease in shareholder’s equity of $558, net of minority interest.
		For the six months ended June 30, 2008 and 2007, Common Units in the Operating Partnership totaling 177 and 73, respectively, were converted into Company common shares on a one-for-one basis. The net effect of the conversion of Common Units of the Operating Partnership to common shares of the Company and the adjustments to minority interest for the impact of the Company’s employee stock purchase and stock options plans, decreased minority interest and increased shareholders’ equity in the amounts of $3,865 and $1,991 for the six months ended June 30, 2008 and 2007, respectively.

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

~~-16-~~ Segment Information

The following table reflects each segment’s contribution to consolidated revenues and NOI together with a reconciliation of segment contribution to property NOI to consolidated net income for the three and six months ended June 30, 2009 and 2008. Additionally, substantially all of the Company’s assets relate to the Company’s property rental operations. Asset cost, depreciation and amortization by segment are not presented because such information at the segment level is not reported internally.


	Three months ended June 30,				Six months ended June 30,
	2009		2008		2009		2008
Revenues
Fully stabilized communities	$	57,292	$	59,297	$	114,985	$	117,907
Communities stabilized during 2008		2,698		2,384		5,352		4,504
Development, rehabilitation and lease-up communities		3,495		2,160		6,240		4,334
Condominium conversion and other communities		38		188		107		389
Other property segments		5,318		6,287		11,109		12,655
Other		277		235		503		474

Consolidated revenues	$	69,118	$	70,551	$	138,296	$	140,263


Contribution to Property Net Operating Income
Fully stabilized communities	$	34,590	$	34,519	$	69,214	$	69,139
Communities stabilized during 2008		1,531		1,191		2,967		1,998
Development, rehabilitation and lease-up communities		668		469		1,232		1,393
Condominium conversion and other communities		24		116		68		237
Other property segments, including corporate management expenses		(630)		(1,174)		(1,044)		(2,569)

Consolidated property net operating income		36,183		35,121		72,437		70,198


Interest income		23		61		138		271
Other revenues		277		235		503		474
Depreciation		(18,009)		(15,213)		(35,601)		(30,310)
Interest expense		(12,241)		(11,004)		(26,419)		(22,035)
Amortization of deferred financing costs		(682)		(859)		(1,616)		(1,710)
General and administrative		(3,964)		(4,351)		(8,373)		(9,485)
Investment and development		(793)		(1,274)		(1,790)		(2,664)
Other investment costs		(646)		(244)		(1,299)		(499)
Strategic review costs		-		(2,091)		-		(8,161)
Impairment, severance and other charges		(9,658)		(29,300)		(9,658)		(29,300)
Gains (losses) on sales of real estate assets, net		232		(368)		(28)		1,751
Equity in income (loss) of unconsolidated real estate entities		(74,656)		420		(74,546)		821
Other income (expense), net		50		66		1,109		(108)
Net gain (loss) on early extinguishment of indebtedness		(79)		-		819		-


Loss from continuing operations		(83,963)		(28,801)		(84,324)		(30,757)
Income from discontinued operations		26,768		3,232		29,377		8,347


Net loss	$	(57,195)	$	(25,569)	$	(54,947)	$	(22,410)

- 16 -

POST PROPERTIES., INC. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

		The Operating Partnership committed to distribute $19,982 and $21,831 for the three months ended June 30, 2008 and 2007, respectively. As a result, the Company declared dividends of $19,850 and $19,647 for the three months ended June 30, 2008 and 2007, respectively. The remaining distributions from the Operating Partnership in the amount of $132 and $274 for the three months ended June 30, 2008 and 2007, respectively, are distributed to minority interest unitholders in the Operating Partnership.
		For the six months ended June 30, 2008 and 2007, the Company issued common shares for director compensation, totaling $278 and $277, respectively. These stock issuances were non-cash transactions.
10.		STOCK-BASED COMPENSATION PLANS
		Incentive Stock Plans
		Incentive stock awards are granted under the Company’s 2003 Incentive Stock Plan (the “2003 Stock Plan”). Under the 2003 Stock Plan, an aggregate of 4,000 shares of common stock were reserved for issuance. Of this amount, not more than 500 shares of common stock are available for grants of restricted stock. The exercise price of each option granted under the 2003 Stock Plan may not be less than the market price of the Company’s common stock on the date of the option grant and all options may have a maximum life of ten years. Participants receiving restricted stock grants are generally eligible to vote such shares and receive dividends on such shares. Substantially all stock option and restricted stock grants are subject to annual vesting provisions (generally three to five years) as determined by the compensation committee overseeing the 2003 Stock Plan. At June 30, 2008, stock options outstanding under the 2003 Stock Plan and the Company’s previous stock plan totaled 2,414.
		Compensation costs for stock options have been estimated on the grant date using the Black-Scholes option-pricing method. The Company did not grant any stock options for the six months ended June 30, 2008. For options granted during the six months ended June 30, 2007, the weighted average assumptions used in the Black-Scholes option-pricing model were dividend yield of 3.8%, expected volatility of 18.1%, risk-free interest rate of 4.8% and expected option term of 5.0 years.
		The Company’s assumptions were derived from the methodologies discussed herein. The expected dividend yield reflects the Company’s current historical yield, which is expected to approximate the future yield. Expected volatility was based on the historical volatility of the Company’s common stock. The risk-free interest rate for the expected life of the options was based on the implied yields on the U.S. Treasury yield curve. The weighted average expected option term was based on the Company’s historical data for prior period stock option exercise and forfeiture activity.
		For the six months ended June 30, 2008 and 2007, the Company granted stock options to purchase zero and 199 shares of Company common stock, respectively, to Company officers and directors, of which zero and 28 shares, respectively, were granted to the Company’s non-executive chairman of the board. The Company recorded compensation expense related to stock options of $309 ($307 net of minority interest) and $379 ($374 net of minority interest) for the three months ended and $666 ($661 net of minority interest) and $758 ($747 net of minority interest) for the six months ended June 30, 2008 and 2007, respectively, under the fair value method. Upon the exercise of stock options, the Company issues shares of common stock from treasury shares or, to the extent treasury shares are not available, from authorized common shares.
		A summary of stock option activity under all plans for the six months ended June 30, 2008 and 2007 is presented below:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Six months ended
	June 30,
	2008					2007
				Weighted Average					Weighted Average
	Shares			Exercise Price		Shares			Exercise Price
Options outstanding, beginning of period		2,455		$	34		2,375		$	33
Granted		—			—		199			48
Exercised		(39	)		37		(94	)		36
Forfeited		(2	)		39		(7	)		41
Options outstanding, end of period		2,414			34		2,473			34
Options exercisable, end of period		2,037			33		1,648			33
Weighted-average fair value of options granted during the period	$	—				$	7.22

(Unaudited, in thousands, except per share or unit and apartment unit data)

~~At June 30, 2008, there was $1,007 of unrecognized compensation cost related to unvested stock options~~8. ~~This cost is expected to be recognized over a weighted-average period of 0.7 years. The total intrinsic value of stock options exercised during the six months ended June 30~~IMPAIRMENT, ~~2008~~SEVERANCE ~~and~~AND ~~2007~~OTHER was $194 and $1,148, respectively. The aggregate intrinsic values of stock options outstanding, exercisable and expected to vest at June 30, 2008 were $2,851, $2,376 and $2,805, respectively. The weightedCHARGES

For the three and six months ended June 30, 2009, the Company recorded aggregate impairment charges of $76,317 (net of $8,074 of noncontrolling interests) to write-~~17-~~down the carrying value of its investment in an unconsolidated condominium development and a parcel of adjacent land. These impairment charges are more fully discussed in note 3.

In prior years, the Company recorded severance charges associated with the departure of certain executive officers of the Company. Under certain of these arrangements, the Company is required to make certain payments and provide specified benefits through 2013 and 2016. The following table summarizes the activity relating to aggregate net severance charges for such executive officers for the six months ended June 30, 2009 and 2008:


	Six months ended June 30,
	2009		2008
Accrued severance charges, beginning of period	$	9,405	$	11,215
Severance charges		-		353
Payments for period		(1,184)		(1,633)
Interest accretion		279		366

Accrued severance charges, end of period	$	8,500	$	10,301

The Company recorded impairment charges of approximately $28,947 in the three and six months ended June 30, 2008. The impairment charges related to the substantial cessation of current development activities associated with four land parcels in pre-development which were written down to their estimated fair market values, as well as the write-off of capitalized pursuit costs associated with certain abandoned projects. Additionally, in the second quarter of 2008, the Company recorded severance charges of approximately $353 related to a management and staff workforce reduction that was initiated in the second quarter. The impairment and severance charges reflected management’s decision to reduce the size of its workforce and lower overhead expenses in response in part to its decision to reduce the number of markets in which the Company operates, to sell additional operating assets and to focus its development strategy on fewer projects in the near term.

In 2008, the Company announced that its Board of Directors had initiated a formal process to pursue a possible business combination or other sale transaction. The process ended in the second quarter of 2008 without a business combination or other sale transaction. For the three and six months ended June 30, 2008, the Company incurred approximately $2,091 and $8,161, respectively, of strategic review costs related to this process.

9.	SUPPLEMENTAL CASH FLOW INFORMATION

Interest paid (including capitalized amounts of $6,597 and $6,671 for the six months ended June 30, 2009 and 2008, respectively), aggregated $34,095 and $30,458 for the six months ended June 30, 2009 and 2008, respectively.

For the six months ended June 30, 2009 and 2008, the Company and the Company’s taxable REIT subsidiaries made income tax payments to federal and state taxing authorities totaling $1,028 and $1,700, respectively.

Non-cash investing and financing activities for the six months ended June 30, 2009 and 2008 were as follows:

In the three months ended June 30, 2009, the Company became the majority owner of and consolidated a previously unconsolidated entity (see note 3). This consolidation resulted in increases in land held for future investment and other assets of $9,658, cash of $248, indebtedness of $8,153, accounts payable and accrued expenses of $192 and noncontrolling interests of $1,560. This was a non-cash transaction.

For the six months ended June 30, 2009 and 2008, the Company amortized approximately $658 and $562, respectively, of accumulated other comprehensive non-cash losses into earnings related to an interest rate swap derivative financial instrument (see note 6). For the six months ended June 30, 2009, the Company recognized a loss equal to the remaining unamortized balance of accumulated other comprehensive income (an equity account) of $1,161 related to a terminated interest rate swap derivative financial instrument. The Company also recognized other income during the first quarter of $874 to record an increase in the value of the ineffective interest rate swap derivative financial instrument prior to its termination (see note 6). This increase in value also caused a decrease in accounts payable and accrued expenses during the first half of 2009. Other than the amortization discussed herein, for the six months ended June 30, 2008, the Company’s derivative financial instruments, accounted for as cash flow hedges, increased in value causing a decrease in accounts payable and accrued expenses and a corresponding decrease in equity of $35.

- 17 -

POST PROPERTIES., INC. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

~~average~~NOTES ~~remaining~~TO ~~contractual~~CONSOLIDATED ~~lives~~FINANCIAL ofSTATEMENTS stock options outstanding, exercisable and expected to vest at June 30, 2008 were 4.8, 4.4 and 4.8 years, respectively. Stock options expected to vest at June 30, 2008 totaled 2,389 at a weighted average exercise price of approximately $33.96. At June 30, 2008, the Company had separated its outstanding options into two ranges based on exercise prices. There were 1,380 options outstanding with exercise prices ranging from $23.90 to $36.13. These options have a weighted average exercise price of $29.17 and a weighted average remaining contractual life of 4.7 years. Of these outstanding options, 1,243 were exercisable at June 30, 2008 at a weighted average exercise price of $29.49. In addition, there were 1,034 options outstanding with exercise prices ranging from $36.47 to $48.00. These options had a weighted average exercise price of $40.37 and a weighted average remaining contractual life of 5.1 years. Of these outstanding options, 794 were exercisable at June 30, 2008 at a weighted average exercise price of $39.09. For the six months ended June 30, 2008 and 2007, the Company granted 78 and 49 shares of restricted stock, respectively, to Company officers and directors, of which 9 and 4 shares, respectively, were granted to the Company’s non-executive chairman of the board. The restricted share grants generally vest ratably over three to five year periods. The weighted average grant date fair value for the restricted shares for the six months ended June 30, 2008 and 2007 was $42.25 and $48.15, respectively, per share. The total value of the restricted share grants for the six months ended June 30, 2008 and 2007 was $3,308 and $2,371, respectively. The compensation cost is amortized ratably into compensation expense over the applicable vesting periods. Total compensation expense relating to the restricted stock was $822 ($816 net of minority interest) and $619 ($610 net of minority interest) for the three months ended and $1,574 ($1,562 net of minority interest) and $1,104 ($1,089 net of minority interest) for the six months ended June 30, 2008 and 2007, respectively. A summary of the activity related to the Company’s restricted stock for the six months ended June 30, 2008 and 2007 is presented below:

	Six months ended
	June 30,
	2008					2007
				Weighted Average					Weighted Average
				Grant-Date					Grant-Date
	Shares			Fair Value		Shares			Fair Value
Unvested shares, beginning or period		119		$	35		125		$	31
Granted		78			42		49			48
Vested		(8	)		36		(4	)		28
Forfeited		—			—		(1	)		41
Unvested shares, end of period		189			38		169			36

(Unaudited, in thousands, except per share or unit and apartment unit data)

		At June 30, 2008, there was $5,225 of unrecognized compensation cost related to restricted stock. This cost is expected to be recognized over a weighted average period of 2.2 years. The total intrinsic value of restricted shares vested for the six months ended June 30, 2008 and 2007 was $292 and $235, respectively.
		Employee Stock Purchase Plan
		The Company maintains an Employee Stock Purchase Plan (the “ESPP”) under a plan approved by Company shareholders in 2005, and the maximum number of shares issuable is 300. The purchase price of shares of common stock under the ESPP is equal to 85% of the lesser of the closing price per share of common stock on the first or last day of the trading period, as defined. The Company records the aggregate cost of the ESPP (generally the 15% discount on the share purchases) as a period expense. Total compensation expense relating to the ESPP was zero and $61 for the three months ended and $75 and $123 for the six months ended June 30, 2008 and 2007, respectively.
11.		INCOME TAXES
		The Company has elected to be taxed as a REIT under the Code. To qualify as a REIT, the Company must distribute annually at least 90% of its adjusted taxable income, as defined in the Code, to its shareholders and satisfy certain other organizational and operating requirements. It is management’s current intention to adhere to these requirements and maintain the Company’s REIT status. As a REIT, the Company generally will not be subject to federal income tax at the corporate level on the taxable income it distributes to its shareholders. Should the Company fail to qualify as a REIT in any tax year, it may be subject to federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for

For the six months ended June 30, 2009 and 2008, Common Units in the Operating Partnership totaling zero and 177, respectively, were converted into Company common shares on a one-for-one basis. The net effect of the conversion of Common Units of the Operating Partnership to common shares of the Company and the adjustments to noncontrolling interest for the impact of the Company’s employee stock purchase and stock options plans, decreased noncontrolling interest and increased Company shareholders’ equity in the amounts of $3,865 for the six months ended June 30, 2008.

~~-18-~~The Company and the Operating Partnership pay dividends and distributions a quarter in arrears. At June 30, 2009 and 2008, the Operating Partnership committed to distribute and had accrued $8,914 and $19,982, respectively. As a result, the Company declared and accrued dividends of $8,870 and $19,850 at June 30, 2009 and 2008, respectively. The remaining distributions from the Operating Partnership in the amount of $44 and $132 were accrued at June 30, 2009 and 2008, respectively, for the noncontrolling interests in the Operating Partnership.

For the six months ended June 30, 2009 and 2008, the Company issued common shares for director compensation, totaling $44 and $278, respectively. These were non-cash transactions.

10. STOCK-BASED COMPENSATION PLANS

Incentive Stock Plans

Incentive stock awards are granted under the Company’s 2003 Incentive Stock Plan, as amended and restated in October 2008 (the “2003 Stock Plan”). At June 30, 2009 stock options outstanding under the 2003 Stock Plan and the Company’s previous stock plan totaled 2,527.

Compensation costs for stock options have been estimated on the grant date using the Black-Scholes option-pricing method. For options granted during the six months ended June 30, 2009, the weighted average assumptions used in the Black-Scholes option-pricing model were dividend yield of 6.5%, expected volatility of 35.4%, risk-free interest rate of 2.2% and expected option term of 5.9 years. The Company did not grant any stock options for the six months ended June 30, 2008.

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

For the six months ended June 30, 2009 and 2008, the Company granted stock options to purchase 346 and zero shares of Company common stock, respectively, to Company officers and directors. The Company recorded compensation expense related to stock options of $160 and $309 for the three months ended and $365 and $666 for the six months ended June 30, 2009 and 2008, respectively, under the fair value method. Upon the exercise of stock options, the Company issues shares of common stock from treasury shares or, to the extent treasury shares are not available, from authorized common shares.

A summary of stock option activity under all plans for the six months ended June 30, 2009 and 2008 is presented below:


	Six months ended June 30,
	2009				2008
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Options outstanding, beginning of period		2,382	$	34		2,455	$	34
Granted		346		12		-		-
Exercised		-		-		(39)		37
Forfeited		(201)		36		(2)		39

Options outstanding, end of period		2,527		31		2,414		34

Options exercisable, end of period		2,121		33		2,037		33

Weighted-average fair value of options granted during the period	$	2.09			$	-

At June 30, 2009, there was $832 of unrecognized compensation cost related to unvested stock options. This cost is expected to be recognized over a weighted-average period of 2.3 years. The total intrinsic value of stock options exercised during the six months ended June 30, 2009 and 2008 was $0 and $194, respectively. The aggregate intrinsic values of stock options outstanding, exercisable and expected to vest at June 30, 2009 was $422, $0 and $405, respectively. The weighted average

- 18 -

POST PROPERTIES., INC. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

~~four~~NOTES ~~subsequent~~TO ~~taxable~~CONSOLIDATED ~~years.~~FINANCIAL ~~The~~STATEMENTS Company may be subject to certain state and local taxes on its income and property, and to federal income taxes and excise taxes on its undistributed taxable income. In the preparation of income tax returns in federal and state jurisdictions, the Company and its taxable REIT subsidiaries assert certain tax positions based on their understanding and interpretation of the income tax law. The taxing authorities may challenge such positions and the resolution of such matters could result in the payment and recognition of additional income tax expense. Management believes it has used reasonable judgments and conclusions in the preparation of its income tax returns. The Company and its subsidiaries’ (including the TRSs) income tax returns are subject to examination by federal and state tax jurisdictions for years 2004 through 2006. Net income tax loss carryforwards and other tax attributes generated in years prior to 2004 are also subject to challenge in any examination of the 2004 to 2006 tax years. As of June 30, 2008, the Company’s taxable REIT subsidiaries (“TRSs”) had unrecognized tax benefits of approximately $797 which primarily related to uncertainty regarding the sustainability of certain deductions taken on prior year income tax returns of the TRS with respect to the amortization of certain intangible assets. The Company does not expect any significant change in this unrecognized tax benefit in the remainder of 2008. To the extent these unrecognized tax benefits are ultimately recognized, they may affect the effective tax rate in a future period. The Company’s policy is to recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense. Accrued interest and penalties for the three and six months ended June 30, 2008 and at June 30, 2008 were not material to the Company’s results of operations, cash flows or financial position. The Company utilizes TRSs principally to perform such non-REIT activities as asset and property management, for-sale housing (condominiums) conversions and sales and other services. These TRSs are subject to federal and state income taxes. For the three and six months ended June 30, 2008, the TRS recorded no net income tax expense (benefit) as the provision for estimated income taxes payable is expected to be fully offset by deferred tax benefits resulting from current period temporary differences and reductions of valuation allowances recorded in prior years. At December 31, 2007, management had established valuation allowances of approximately $3,157 against net deferred tax assets due primarily to historical losses at the TRSs in years prior to 2007 and the variability of the income of these subsidiaries. The tax benefits associated with such unused valuation allowances may be recognized in future periods, if the taxable REIT subsidiaries generate sufficient taxable income to utilize such amounts or if the Company determines that it is more likely than not that the related deferred tax assets are realizable. A summary of the components of the TRS deferred tax assets and liabilities at December 31, 2007 are included in the footnotes to the Company’s audited financial statements included in the Form 10-K. Other than the activity discussed above relating to the three and six months ended June 30, 2008, there were no material changes to the components of deferred tax assets and liabilities at June 30, 2008.

~~-19-~~(Unaudited, in thousands, except per share or unit and apartment unit data)

remaining contractual lives of stock options outstanding, exercisable and expected to vest at June 30, 2009 were 4.7, 3.9 and 4.7 years, respectively. Stock options expected to vest at June 30, 2009 totaled 2,510 at a weighted average exercise price of approximately $30.84.

At June 30, 2009, the Company had separated its outstanding options into two ranges based on exercise prices. There were 1,269 options outstanding with exercise prices ranging from $12.22 to $28.99. These options have a weighted average exercise price of $22.73 and a weighted average remaining contractual life of 5.4 years. Of these outstanding options, 923 were exercisable at June 30, 2009 at a weighted average exercise price of $26.66. In addition, there were 1,258 options outstanding with exercise prices ranging from $31.00 to $48.00. These options had a weighted average exercise price of $38.87 and a weighted average remaining contractual life of 4.1 years. Of these outstanding options, 1,198 were exercisable at June 30, 2009 at a weighted average exercise price of $38.43.

For the six months ended June 30, 2009 and 2008, the Company granted 106 and 78 shares of restricted stock, respectively, to Company officers and directors. The restricted share grants generally vest ratably over three to five year periods. The weighted average grant date fair value for the restricted shares for the six months ended June 30, 2009 and 2008 was $12.19 and $42.25, respectively, per share. The total value of the restricted share grants for the six months ended June 30, 2009 and 2008 was $1,288 and $3,308, respectively. The compensation cost is amortized ratably into compensation expense over the applicable vesting periods. Total compensation expense relating to the restricted stock was $610 and $822 for the three months ended and $1,195 and $1,574 for the six months ended June 30, 2009 and 2008, respectively.

A summary of the activity related to the Company’s restricted stock for the six months ended June 30, 2009 and 2008 is presented below:


	Six months ended June 30,
	2009			2008
	Shares	Weighted Average Grant-Date Fair Value		Shares	Weighted Average Grant-Date Fair Value
Unvested share, beginning or period	128	$	33	119	$	35
Granted	106		12	78		42
Vested	-		-	(8)		36
Forfeited	(1)		43	-		-

Unvested shares, end of period	233		23	189		38

At June 30, 2009, there was $3,904 of unrecognized compensation cost related to restricted stock. This cost is expected to be recognized over a weighted average period of 2.2 years. The total intrinsic value of restricted shares vested for the six months ended June 30, 2009 and 2008 was $2 and $292, respectively.

Employee Stock Purchase Plan

The Company maintains an Employee Stock Purchase Plan (the “ESPP”) approved by Company shareholders in 2005. The maximum number of shares issuable under the ESPP is 300. The purchase price of shares of common stock under the ESPP is equal to 85% of the lesser of the closing price per share of common stock on the first or last day of the trading period, as defined. The Company records the aggregate cost of the ESPP (generally the 15% discount on the share purchases) as a period expense. Total compensation expense relating to the ESPP was $38 and $0 for the three months ended and $75 and $75 for the six months ended June 30, 2009 and 2008, respectively.

11. INCOME TAXES

The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). To qualify as a REIT, the Company must distribute annually at least 90% of its adjusted taxable income, as defined in the Code, to its shareholders and satisfy certain other organizational and operating requirements. It is management’s current intention to adhere to these requirements and maintain the Company’s REIT status. As a REIT, the Company generally will not be subject to federal income tax at the corporate level on the taxable income it distributes to its shareholders. Should the Company fail to qualify as a REIT in any tax year, it may be subject to federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years. The Company may be subject to certain state and local taxes on its income and property, and to federal income taxes and excise taxes on its undistributed taxable income.

- 19 -

POST PROPERTIES., INC. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

12.		LEGAL PROCEEDINGS, COMMITMENTS AND CONTINGENCIES
		In November 2006, the Equal Rights Center (“ERC”) filed a lawsuit against the Company and the Operating Partnership in the United States District Court for the District of Columbia. This suit alleges various violations of the Fair Housing Act (“FHA”) and the Americans with Disabilities Act (“ADA”) at properties designed, constructed or operated by the Company and the Operating Partnership in the District of Columbia, Virginia, Colorado, Florida, Georgia, New York, North Carolina and Texas. The plaintiff seeks compensatory and punitive damages in unspecified amounts, an award of attorneys’ fees and costs of suit, as well as preliminary and permanent injunctive relief that includes retrofitting multi-family units and public use areas to comply with the FHA and the ADA and prohibiting construction or sale of noncompliant units or complexes. On April 18, 2007, ERC filed a motion for a preliminary injunction to prohibit the Company and the Operating Partnership from selling any alleged noncompliant apartment communities or condominium units while the litigation is ongoing. On July 25, 2007 the court entered an order denying ERC’s motion for the preliminary injunction. Fact discovery is mostly completed by both parties, and the parties exchanged affirmative expert reports on July 8, 2008. According to an amended scheduling order issued by the court on July 13, 2008, the parties are to exchange expert rebuttal reports on October 3, 2008, complete expert discovery by November 18, 2008, and submit the last briefing on dispositive motions by February 3, 2009. It is possible that the dates set forth in the Court’s current scheduling order will be further extended. At this stage in the proceeding, it is not possible to predict or determine the outcome of the lawsuit, nor is it possible to estimate the amount of loss that would be associated with an adverse decision.
		The Company is involved in various other legal proceedings incidental to its business from time to time, most of which are expected to be covered by liability or other insurance. Management of the Company believes that any resolution of pending proceedings or liability to the Company which may arise as a result of these various other legal proceedings will not have a material adverse effect on the Company’s results of operations or financial position.
		The Company has recently undertaken an initiative to evaluate potential water penetration damage in certain of its communities with an exterior insulation finishing system (“EFIS”). The Company has initiated an inspection process of each of its EFIS communities for the purpose of determining what, if any, improvements will be required at the communities. At this stage in the evaluation process, it is not possible to estimate the range of possible future improvement costs.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~-20-~~(Unaudited, in thousands, except per share or unit and apartment unit data)

In the preparation of income tax returns in federal and state jurisdictions, the Company and its taxable REIT subsidiaries assert certain tax positions based on their understanding and interpretation of the income tax law. The taxing authorities may challenge such positions and the resolution of such matters could result in the payment and recognition of additional income tax expense. Management believes it has used reasonable judgments and conclusions in the preparation of its income tax returns. The Company and its subsidiaries’ (including the TRSs) income tax returns are subject to examination by federal and state tax jurisdictions for years 2005 through 2007. Net income tax loss carryforwards and other tax attributes generated in years prior to 2005 are also subject to challenge in any examination of the 2005 to 2007 tax years. In the fourth quarter of 2008, the Company received notice that its TRSs’ federal income tax return for the 2005 was selected for Internal Revenue Service examination. At this stage, it is not possible to predict or determine the outcome of the examination, nor is it possible to estimate the amount or whether any adjustments will be required to that tax return.

As of June 30, 2009, the Company’s taxable REIT subsidiaries (“TRSs”) had unrecognized tax benefits of approximately $797 which primarily related to uncertainty regarding the sustainability of certain deductions taken on prior year income tax returns of the TRS with respect to the amortization of certain intangible assets. The Company does not expect any significant change in this unrecognized tax benefit in the remainder of 2009. To the extent these unrecognized tax benefits are ultimately recognized, they may affect the effective tax rate in a future period. The Company’s policy is to recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense. Accrued interest and penalties for the six months ended June 30, 2009 and at June 30, 2009 were not material to the Company’s results of operations, cash flows or financial position.

The Company utilizes TRSs principally to perform such non-REIT activities as asset and property management, for-sale housing (condominiums) conversions and sales and other services. These TRSs are subject to federal and state income taxes. For the three and six months ended June 30, 2009, the TRS recorded no net income tax expense (benefit) as the provision for estimated income taxes payable is expected to be offset by deferred tax benefits resulting from current period temporary differences.

At December 31, 2008, management had established valuation allowances of approximately $24,121 against net deferred tax assets due primarily to historical losses at the TRSs in prior years and the variability of the income of these subsidiaries. The tax benefits associated with such unused valuation allowances may be recognized in future periods, if the taxable REIT subsidiaries generate sufficient taxable income to utilize such amounts or if the Company determines that it is more likely than not that the related deferred tax assets are realizable.

A summary of the components of the TRS deferred tax assets and liabilities at December 31, 2008 are included in the footnotes to the Company’s audited financial statements included in the Form 10-K. Other than the increase in net deferred tax assets and valuation allowances of approximately $29,800 resulting from impairment charges of $76,317 recorded at the TRSs in the three and six months ended June 30, 2009, there were no material changes to the components of deferred tax assets, deferred tax asset valuation allowances and deferred liabilities at June 30, 2009.

12. LEGAL PROCEEDINGS, COMMITMENTS AND CONTINGENCIES

In November 2006, the Equal Rights Center (“ERC”) filed a lawsuit against the Company and the Operating Partnership in the United States District Court for the District of Columbia. This suit alleges various violations of the Fair Housing Act (“FHA”) and the Americans with Disabilities Act (“ADA”) at properties designed, constructed or operated by the Company and the Operating Partnership in the District of Columbia, Virginia, Colorado, Florida, Georgia, New York, North Carolina and Texas. The plaintiff seeks compensatory and punitive damages, an award of attorneys’ fees and costs of suit, as well as preliminary and permanent injunctive relief that includes retrofitting multi-family units and public use areas to comply with the FHA and the ADA and prohibiting construction or sale of noncompliant units or complexes. On April 18, 2007, ERC filed a motion for a preliminary injunction to prohibit the Company and the Operating Partnership from selling any alleged noncompliant apartment communities or condominium units while the litigation is ongoing. On July 25, 2007 the court entered an order denying ERC’s motion for the preliminary injunction. Discovery was completed by both parties on April 30, 2008, with the exception of the Company’s discovery related to ERC’s untimely $9 million damages allegation, which the Court has stayed pending resolution of certain motions. The parties filed cross-motions for summary judgment on December 17, 2008, oppositions to summary judgment on February 20, 2009, and replies in support of summary judgment on March 17, 2009. On February 20, 2009, the Department of Justice filed an amicus brief on behalf of ERC, and the Company filed a response. In addition, the Company has filed various additional pretrial motions, including two motions in limine and three motions to strike. The plaintiff has filed one motion to strike. The Court has not set a hearing or rendered its decision on the pending motions, including summary judgment. At this stage in the proceeding, it is not possible to predict or determine the outcome of the lawsuit, nor is it possible to estimate the amount of loss that would be associated with an adverse decision.

- 20 -

POST PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited, in thousands, except per share or unit and apartment unit data)

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

As announced in 2008, the Company is underway with an initiative to engage third-party engineers and consultants to inspect and evaluate each of its communities that have stucco exteriors or exterior insulation finishing systems (“EIFS”) for potential water penetration and other related issues. At this time, the Company has determined that varying levels of remediation and improvements may be required to be performed at approximately 30 properties in its portfolio. The Company currently estimates that the aggregate cost of this initiative will be approximately $45,000 to complete the scope of the remediation and improvements, although the scope and cost will vary considerably among individual properties. The Company currently expects that a substantial majority of the costs related to these remediation efforts will be recorded as annually and periodically recurring capital expenditures. In addition and as a result of this project, the Company currently estimates that the net book value of certain building components totaling approximately $6,500 to $7,000 will be retired and, as such, are being depreciated on an accelerated basis over the remaining estimated useful life of those assets, which is expected to be not later than 2009. The work has been completed at five properties, is currently underway at approximately eleven properties and is expected to be completed at all the properties by 2010. The work may include, but not be limited to, remediation, improvements and replacements of exterior stucco and EIFS siding, windows and doors, roofing and gutters, exterior sealants and coatings. From the inception of this initiative through June 30, 2009, the Company has recorded accelerated depreciation of approximately $3,903 and has capitalized approximately $14,885 related to this project. There can be no assurance that the scope of work or the Company’s preliminary estimates of costs will not change in future periods.

13. SUBSEQUENT EVENTS

The Company evaluated the accounting and disclosure requirements for subsequent events reporting through the issuance date of the financial statements. In July 2009, the Company closed the sales of two apartment communities, containing 798 units, for aggregate gross sales proceeds of $102,300. The Company expects to recognize gains on these asset sales of approximately $54,500 in the third quarter of 2009.

- 21 -

POST APARTMENT HOMES, L.P.

CONSOLIDATED BALANCE SHEETS

(In thousands)

	June 30,				December 31,
	June 30, 2009			December 31, 2008
	2008				2007
	(Unaudited)
	(Unaudited)
Assets
Assets
Real estate assets
Real estate assets
Land	$	268,541		$	258,593
Land	$	232,160			$	276,680
Building and improvements		1,874,469			1,802,496
Building and improvements		1,649,338				1,840,563
Furniture, fixtures and equipment		217,297			205,221
Furniture, fixtures and equipment		190,407				204,433
Construction in progress		123,072			138,496
Construction in progress		135,232				134,125
Land held for future investment		82,039			81,555
Land held for future development		123,167				154,617
		2,565,418			2,486,361
		2,330,304				2,610,418
Less: accumulated depreciation		(587,116)			(553,814)
Less: accumulated depreciation		(499,981	)			(562,226	)
Condominiums, for-sale and under construction		90,911			65,507
For-sale condominiums		26,314				38,844
Assets held for sale, net of accumulated depreciation of $28,441 and$42,379 at June 30, 2009 and December 31, 2008		63,364			85,097
Assets held for sale, net of accumulated depreciation of $93,844 and $4,031 at June 30, 2008 and December 31, 2007, respectively		258,610				24,576
Total real estate assets		2,132,577			2,083,151
Total real estate assets		2,115,247				2,111,612
Investments in and advances to unconsolidated real estate entities		8,706			39,300
Investments in and advances to unconsolidated real estate entities		22,815				23,036
Cash and cash equivalents		3,694			75,472
Cash and cash equivalents		17,988				11,557
Restricted cash		10,614			10,164
Restricted cash		9,956				5,642
Deferred charges, net		9,582			10,278
Deferred charges, net		10,159				10,538
Other assets		32,328			34,290
Other assets		37,141				105,756
Total assets	$	2,197,501		$	2,252,655
Total assets	$	2,213,306			$	2,268,141
Liabilities and partners’ equity
Liabilities and partners’ equity
Indebtedness	$	1,086,790		$	1,112,913
Indebtedness, including $34,261 and $0 secured by assets held for sale as of June 30, 2008 and December 31, 2007, respectively	$	1,064,405			$	1,059,066
Accounts payable and accrued expenses		97,949			93,175
Accounts payable and accrued expenses		99,003				100,215
Investments in unconsolidated real estate entities		54,334			15,985
Distribution payable		198,~~982~~914			8,888	~~19,933~~
Accrued interest payable		45,~~790~~137			5,493	~~4,388~~
Security deposits and prepaid rents		15,~~892~~779			15,941	~~11,708~~
Total liabilities		1,~~204~~268,~~072~~903			1,252,395	~~1,195,310~~
Minority interests in consolidated real estate entities		2,921				3,972
Redeemable common units		4,094			4,410
Commitments and contingencies
Partners’ equity
Equity
Preferred units		95,000				95,000
Operating Partnership equity
Common units
Preferred units		95,000			95,000
General partner		10,697				11,329
Common units
Limited partner		904,024				966,535
General partner		9,878			10,540
Accumulated other comprehensive income (loss)		(3,408	)			(4,005	)
Limited partner		818,492			883,909
Total partners’ equity		1,006,313				1,068,859
Accumulated other comprehensive income (loss)		-			(1,819)
Total liabilities and partners’ equity	$	2,213,306			$	2,268,141
Total Operating Partnership equity		923,370			987,630
Noncontrolling interests - consolidated real estate entities		1,134			8,220
Total equity		924,504			995,850
Total liabilities and equity	$	2,197,501		$	2,252,655

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

-21 22 -

POST APARTMENT HOMES, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per unit data) ~~(Unaudited)~~

	Three months ended						Six months ended
	June 30,						June 30,
	2008			2007			2008			2007
Revenues
Rental	$	62,286		$	60,873		$	124,474		$	121,538
Other property revenues		4,084			3,651			7,381			7,050
Other		235			128			474			245
Total revenues		66,605			64,652			132,329			128,833
Expenses
Property operating and maintenance (exclusive of items shown separately below)		33,555			32,265			66,012			63,616
Depreciation		14,386			14,375			28,649			28,726
General and administrative		4,956			5,959			10,804			11,407
Investment, development and other		1,356			1,955			2,814			3,505
Strategic review costs		2,091			—			8,161			—
Impairment and severance costs		29,300			—			29,300			—
Total expenses		85,644			54,554			145,740			107,254
Operating income (loss)		(19,039	)		10,098			(13,411	)		21,579
Interest income		61			213			271			463
Interest expense		(10,112	)		(10,863	)		(20,268	)		(21,908	)
Amortization of deferred financing costs		(859	)		(829	)		(1,710	)		(1,641	)
Gains (losses) on sales of real estate assets, net		(368	)		62,738			1,751			66,444
Equity in income of unconsolidated real estate entities		420			310			821			814
Other income (expense)		66			(261	)		(108	)		(522	)
Minority interest in consolidated property partnerships		427			(716	)		61			(693	)
Income (loss) from continuing operations		(29,404	)		60,690			(32,593	)		64,536
Discontinued operations
Income from discontinued property operations		4,128			4,158			7,699			7,981
Gains on sales of real estate assets		—			—			2,311			17,153
Income from discontinued operations		4,128			4,158			10,010			25,134
Net income (loss)		(25,276	)		64,848			(22,583	)		89,670
Distributions to preferred unitholders		(1,910	)		(1,910	)		(3,819	)		(3,819	)
Net income (loss) available to common unitholders	$	(27,186	)	$	62,938		$	(26,402	)	$	85,851
Per common unit data — Basic
Income (loss) from continuing operations (net of preferred distributions)	$	(0.71	)	$	1.33		$	(0.82	)	$	1.38
Income from discontinued operations		0.09			0.09			0.23			0.57
Net income (loss) available to common unitholders	$	(0.61	)	$	1.43		$	(0.60	)	$	1.95
Weighted average common units outstanding — basic		44,305			44,086			44,287			44,064
Per common unit data — Diluted
Income (loss) from continuing operations (net of preferred distributions)	$	(0.71	)	$	1.31		$	(0.82	)	$	1.35
Income from discontinued operations		0.09			0.09			0.23			0.56
Net income (loss) available to common unitholders	$	(0.61	)	$	1.40		$	(0.60	)	$	1.91
Weighted average common units outstanding — diluted		44,305			44,900			44,287			44,840

(Unaudited)


	Three months ended June 30,				Six months ended June 30,
	2009		2008		2009		2008
Revenues
Rental	$	64,808	$	66,208	$	130,192	$	132,364
Other property revenues		4,033		4,108		7,601		7,425
Other		277		235		503		474

Total revenues		69,118		70,551		138,296		140,263


Expenses
Total property operating and maintenance (exclusive of items shown separately below)		32,658		35,195		65,356		69,591
Depreciation		18,009		15,213		35,601		30,310
General and administrative		3,964		4,351		8,373		9,485
Investment and development		793		1,274		1,790		2,664
Other investment costs		646		244		1,299		499
Strategic review costs		-		2,091		-		8,161
Impairment, severance and other costs		9,658		29,300		9,658		29,300

Total expenses		65,728		87,668		122,077		150,010


Operating income (loss)		3,390		(17,117)		16,219		(9,747)

Interest income		23		61		138		271
Interest expense		(12,241)		(11,004)		(26,419)		(22,035)
Amortization of deferred financing costs		(682)		(859)		(1,616)		(1,710)
Net gains (losses) on condominium sales activities		232		(368)		(28)		1,751
Equity in income (loss) of unconsolidated real estate entities		(74,656)		420		(74,546)		821
Other income (expense), net		50		66		1,109		(108)
Net gain (loss) on early extinguishment of indebtedness		(79)		-		819		-

Loss from continuing operations		(83,963)		(28,801)		(84,324)		(30,757)

Discontinued operations
Income from discontinued property operations		2,026		3,232		4,635		6,036
Gains on sales of real estate assets		24,742		-		24,742		2,311

Income from discontinued operations		26,768		3,232		29,377		8,347

Net loss		(57,195)		(25,569)		(54,947)		(22,410)
Noncontrolling interests - consolidated real estate entities		8,150		293		8,226		(173)

Net income available to the Operating Partnership		(49,045)		(25,276)		(46,721)		(22,583)
Distributions to preferred unitholders		(1,910)		(1,910)		(3,819)		(3,819)

Net income available to common unitholders	$	(50,955)	$	(27,186)	$	(50,540)	$	(26,402)


Per common unit data - Basic
Loss from continuing operations (net of preferred distributions)	$	(1.75)	$	(0.69)	$	(1.80)	$	(0.78)
Income from discontinued operations		0.61		0.07		0.66		0.19

Net income (loss) available to common unitholders	$	(1.14)	$	(0.61)	$	(1.13)	$	(0.59)

Weighted average common units outstanding - basic		44,337		44,305		44,335		44,287

Per common unit data - Diluted
Loss from continuing operations (net of preferred distributions)	$	(1.75)	$	(0.69)	$	(1.80)	$	(0.78)
Income from discontinued operations		0.61		0.07		0.66		0.19

Net income (loss) available to common unitholders	$	(1.14)	$	(0.61)	$	(1.13)	$	(0.59)

Weighted average common units outstanding - diluted		44,337		44,305		44,335		44,287

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

-22 23 -

POST APARTMENT HOMES, L.P.

CONSOLIDATED STATEMENTS OF ~~PARTNERS’~~ EQUITY ~~(In~~ ~~thousands) (Unaudited)~~

										Accumulated
				Common Units						Other
	Preferred			General			Limited			Comprehensive
	Units			Partner			Partners			Income (Loss)			Total
Partners’ Equity, December 31, 2007	$	95,000		$	11,329		$	966,535		$	(4,005	)	$	1,068,859
Comprehensive income (loss)
Net income (loss)		3,819			(264	)		(26,138	)		—			(22,583	)
Net change in derivative value		—			—			—			597			597
Total comprehensive income (loss)														(21,986	)
Contributions from the Company related to employee stock purchase, stock option and other plans		—			9			894			—			903
Equity-based compensation		—			23			2,292			—			2,315
Distributions to preferred unitholders		(3,819	)		—			—			—			(3,819	)
Distributions to common unitholders ($0.90 per unit)		—			(400	)		(39,559	)		—			(39,959	)
Partners’ Equity, June 30, 2008	$	95,000		$	10,697		$	904,024		$	(3,408	)	$	1,006,313

(In thousands)

(Unaudited)


2009	Preferred Units		Common Units				Accumulated Other Comprehensive Income (Loss)		Total Operating Partnership Equity		Noncontrolling Interests - Consolidated Real Estate Entities		Total Equity		Redeemable Common Units
			Common Units
			General Partner		Limited Partners
Equity, December 31, 2008	$	95,000	$	10,540	$	883,909	$	(1,819)	$	987,630	$	8,220	$	995,850	$	4,410
Comprehensive income
Net income (loss)		3,819		(503)		(49,789)		-		(46,473)		(8,226)		(54,699)		(248)
Net change in derivative value		-		-		-		1,819		1,819		-		1,819		10

Total comprehensive income (loss)										(44,654)		(8,226)		(52,880)		(238)
Contributions from the Company related to employee stock purchase, stock option and other plans		-		3		322		-		325				325		-
Equity-based compensation		-		16		1,611		-		1,627				1,627		9
Purchase of common units		-		-		-				-				-		-
Distributions to preferred unitholders		(3,819)		-		-		-		(3,819)				(3,819)		-
Distributions to common unitholders ($0.40 per unit)		-		(178)		(17,561)		-		(17,739)				(17,739)		(87)
Consolidation of equity method investment (see note 3)		-		-		-		-		-		1,560		1,560		-
Distributions to noncontrolling interests - consolidated real estate entities		-		-		-		-		-		(420)		(420)		-

Equity, June 30, 2009	$	95,000	$	9,878	$	818,492	$	-	$	923,370	$	1,134	$	924,504	$	4,094


2008
Equity, December 31, 2007	$	95,000	$	11,329	$	949,984	$	(3,962)	$	1,052,351	$	3,972	$	1,056,323	$	16,508
Comprehensive income
Net income (loss)		3,819		(262)		(25,934)		-		(22,377)		173		(22,204)		(206)
Net change in derivative value		-		-		-		(1,172)		593		-		593		4

Total comprehensive income										(21,784)		173		(21,611)		(202)
Contributions from the Company related to employee stock purchase, stock option and other plans		-		9		894		-		903		-		903		-
Adjustment for noncontrolling interest of unitholders in Operating Partnership upon conversion of units into common shares and at dates of capital transactions		-		-		3,881		(16)		3,865		-		3,865		(3,865)
Equity-based compensation		-		23		2,274		-		2,297		-		2,297		18
Distributions to preferred unitholders		(3,819)		-		-		-		(3,819)		-		(3,819)		-
Distributions to common unitholders ($0.90 per unit)		-		(400)		(39,288)		-		(39,688)		-		(39,688)		(271)
real estate entities		-		-				-		-		(1,224)		(1,224)		-
Adjustment to redemption value of noncontrolling interests - Operating Partnership		-		-		3,474		-		3,474		-		3,474		(3,474)

Equity, June 30, 2008	$	95,000	$	10,699	$	895,285	$	(5,150)	$	997,599	$	2,921	$	1,000,520	$	8,714

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

-23 24 -

POST APARTMENT HOMES, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, except per unit data)

(Unaudited)

	Six months ended
	Six months endedJune 30,
	June 30,
	2009			2008
	2008				2007
Cash Flows From Operating Activities
Cash Flows From Operating Activities
Net loss	$	(54,947)		$	(22,410)
Net income (loss)	$	(22,583	)		$	89,670
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation		35,601			32,272
Depreciation		32,272				34,103
Amortization of deferred financing costs		1,616			1,710
Amortization of deferred financing costs		1,710				1,641
Gains on sales of real estate assets, net		(24,714)			(4,062)
Minority interest in consolidated entities		173				831
Other expense (income), net		(215)			563
Gains on sales of real estate assets		(4,062	)			(83,597	)
Asset impairment charges		9,658			28,947
Other expense		563				562
Equity in (income) loss of unconsolidated entities		74,546			(821)
Asset impairment charges		28,947				—
Distributions of earnings of unconsolidated entities		896			1,429
Equity in income of unconsolidated entities		(821	)			(814	)
Deferred compensation		44			278
Distributions of earnings of unconsolidated entities		1,429				1,238
Equity-based compensation		1,636			2,315
Deferred compensation		278				277
Net gain on early extinguishment of debt		(819)			-
Equity-based compensation		2,315				1,985
Changes in assets, increase in:
Changes in assets, (increase) decrease in:
Other assets		(59)			(3,860)
Other assets		(3,860	)			(3,597	)
Deferred charges		(205)			(178)
Deferred charges		(178	)			(15	)
Changes in liabilities, increase (decrease) in:
Changes in liabilities, increase (decrease) in:
Accrued interest payable		(356)			402
Accrued interest payable		402				(57	)
Accounts payable and accrued expenses		(722)			(1,667)
Accounts payable and accrued expenses		(1,667	)			2,153
Security deposits and prepaid rents		(612)			(130)
Security deposits and prepaid rents		(130	)			517
Net cash provided by operating activities		41,348			34,788
Net cash provided by operating activities		34,788				44,897
Cash Flows From Investing Activities
Cash Flows From Investing Activities
Construction and acquisition of real estate assets, net of payables		(75,460)			(69,689)
Construction and acquisition of real estate assets, net of payables		(69,689	)			(55,254	)
Net proceeds from sales of real estate assets		55,235			104,906
Net proceeds from sales of real estate assets		104,906				150,988
Capitalized interest		(6,597)			(6,671)
Capitalized interest		(6,671	)			(5,795	)
Annually recurring capital expenditures		(6,307)			(5,640)
Annually recurring capital expenditures		(5,640	)			(6,080	)
Periodically recurring capital expenditures		(18,537)			(3,331)
Periodically recurring capital expenditures		(3,331	)			(3,867	)
Community rehabilitation and other revenue generating capital expenditures		(3,503)			(7,951)
Community rehabilitation and other revenue generating capital expenditures		(7,951	)			(7,206	)
Corporate additions and improvements		(126)			(421)
Corporate additions and improvements		(421	)			(1,608	)
Investments in and advances to unconsolidated entities		(5,104)			(262)
Distributions from (investments in and advances to) unconsolidated entities		(262	)			22,506
Note receivable collections and other investments		1,017			1,529
Note receivable collections and other investments		1,529				230
Net cash provided by (used in) investing activities		(59,382)			12,470
Net cash provided by investing activities		12,470				93,914
Cash Flows From Financing Activities
Cash Flows From Financing Activities
Lines of credit repayments, net		(20,951)			(113,004)
Lines of credit proceeds (repayments), net		(113,004	)			(27,969	)
Proceeds from indebtedness		288,517			120,000
Proceeds from indebtedness		120,000				—
Payments on indebtedness		(295,840)			(2,542)
Payments on indebtedness		(2,542	)			(67,632	)
Payments of financing costs and other		(3,709)			(952)
Payments of financing costs		(952	)			(246	)
Contributions from the Company related to employee stockpurchase and stock option plans		279			624
Redemption of common units		—				(3,694	)
Distributions to noncontrolling interests - real estate entities		(420)			(1,224)
Contributions from the Company related to employee stock purchase and stock option plans		624				3,806
Distributions to common unitholders		(17,714)			(39,559)
Capital contributions (distributions) of minority interests		(1,224	)			430
Distributions to noncontrolling interests - non-Company common unitholders		(87)			(351)
Distributions to common unitholders		(39,910	)			(39,797	)
Distributions to preferred unitholders		(3,819)			(3,819)
Distributions to preferred unitholders		(3,819	)			(1,909	)
Net cash used in financing activities		(53,744)			(40,827)
Net cash used in financing activities		(40,827	)			(137,011	)
Net increase (decrease) in cash and cash equivalents		(71,778)			6,431
Net increase in cash and cash equivalents		6,431				1,800
Cash and cash equivalents, beginning of period		75,472			11,557
Cash and cash equivalents, beginning of period		11,557				3,663
Cash and cash equivalents, end of period	$	3,694		$	17,988
Cash and cash equivalents, end of period	$	17,988			$	5,463

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

-24 25 -

POST APARTMENT HOMES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ~~(Unaudited,~~ ~~in thousands, except per share or unit and apartment unit data)~~

1.		ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
		Organization
		Post Apartment Homes, L.P. (the “Operating Partnership”), a Georgia limited partnership, and its subsidiaries develop, own and manage upscale multi-family apartment communities in selected markets in the United States. Post Properties, Inc. (the “Company”) through its wholly-owned subsidiaries is the sole general partner, a limited partner and owns a majority interest in the Operating Partnership. The Operating Partnership, through its operating divisions and subsidiaries conducts substantially all of the on-going operations of Post Properties, Inc., a publicly traded company which operates as a self-administered and self-managed real estate investment trust.
		At June 30, 2008, the Company owned 99.3% of the common limited partnership interests (“Common Units”) in the Operating Partnership and 100% of the preferred limited partnership interests (“Preferred Units”). The Company’s weighted average common ownership interest in the Operating Partnership was 99.3% and 98.6% for the three months ended and 99.2% and 98.5% for the six months ended June 30, 2008 and 2007, respectively. Common Units held by persons other than the Company totaled 293 at June 30, 2008 and represented a 0.7% ownership interest in the Operating Partnership. Each Common Unit may be redeemed by the holder thereof for either one share of Company common stock or cash equal to the fair market value thereof at the time of such redemptions, at the option of the Operating Partnership. The Operating Partnership presently anticipates that it will cause shares of common stock to be issued in connection with each such redemption rather than paying cash (as has been done in all redemptions to date). With each redemption of outstanding Common Units for Company common stock, the Company’s percentage ownership interest in the Operating Partnership will increase. In addition, whenever the Company issues shares of common stock, the Company will contribute any net proceeds therefrom to the Operating Partnership and the Operating Partnership will issue an equivalent number of Common Units to the Company.
		At June 30, 2008, the Operating Partnership owned 22,140 apartment units in 61 apartment communities, including 1,747 apartment units in five communities held in unconsolidated entities and 1,736 apartment units in five communities currently under construction and/or in lease-up. The Operating Partnership is also developing and selling 514 for-sale condominium homes in four communities (including 137 units in one community held in an unconsolidated entity) and is converting apartment homes in two communities initially consisting of 349 units into for-sale condominium homes through a taxable REIT subsidiary. At June 30, 2008, approximately 41.6%, 20.0%, 12.0% and 10.0% (on a unit basis) of the Operating Partnership’s operating communities were located in the Atlanta, Dallas, the greater Washington D.C. and Tampa metropolitan areas, respectively.
		Under the provisions of the limited partnership agreement, as amended, Operating Partnership net profits, net losses and cash flow (after allocations to preferred ownership interests) are allocated to the partners in proportion to their common ownership interests. Cash distributions from the Operating Partnership shall be, at a minimum, sufficient to enable the Company to satisfy its annual dividend requirements to maintain its REIT status under the Code.
		Conclusion of Strategic Process
		On January 23, 2008, the Company announced that its Board of Directors had authorized management, working with financial and legal advisors, to initiate a formal process to pursue a possible business combination or other sale transaction and to seek proposals from potentially interested parties. The Board ended the process on June 25, 2008 due to the increasingly difficult market environment and a lack of definitive proposals. For the three and six months ended June 30, 2008, the Operating Partnership incurred approximately $2,091 and $8,161, respectively, of strategic review costs related to this process.
		Basis of Presentation
		The accompanying unaudited financial statements have been prepared by the Operating Partnership’s management in accordance with generally accepted accounting principles for interim financial information and applicable rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normally recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for the three and six months ended June 30, 2008 are not necessarily indicative of the results that may be expected for the full year. These financial statements should be read in conjunction with the Operating Partnership’s audited financial statements and notes thereto included in its Annual Report on Form 10-K, as amended, for the year ended December 31, 2007 (the “Form 10-K”).

(Unaudited, in thousands, except per share or unit and apartment unit data)

~~-25-~~ 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization

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

At June 30, 2009, the Company owned 99.5% of the common limited partnership interests (“Common Units”) in the Operating Partnership and 100% of the preferred limited partnership interests (“Preferred Units”). The Company’s weighted average common ownership interest in the Operating Partnership was 99.5% and 99.3% for the three months ended and 99.5% and 99.2% for the six months ended June 30, 2009 and 2008, respectively. Common Units held by persons other than the Company totaled 219 at June 30, 2009 and represented a 0.5% ownership interest in the Operating Partnership. Each Common Unit may be redeemed by the holder thereof for either one share of Company common stock or cash equal to the fair market value thereof at the time of such redemptions, at the option, but outside the control, of the Operating Partnership. The Operating Partnership presently anticipates that it will cause shares of common stock to be issued in connection with each such redemption rather than paying cash (as has been done in all redemptions to date). With each redemption of outstanding Common Units for Company common stock, the Company’s percentage ownership interest in the Operating Partnership will increase. In addition, whenever the Company issues shares of common stock, the Company will contribute any net proceeds therefrom to the Operating Partnership and the Operating Partnership will issue an equivalent number of Common Units to the Company.

At June 30, 2009, the Company owned 20,662 apartment units in 57 apartment communities, including 1,747 apartment units in five communities held in unconsolidated entities and 1,736 apartment units in five communities currently under construction and/or in lease-up. The Company is also developing and selling 362 for-sale condominium homes in three communities (including 129 units in one community held in an unconsolidated entity) and is converting apartment homes in two communities initially consisting of 349 units into for-sale condominium homes through a taxable REIT subsidiary. At June 30, 2009, approximately 37.2%, 21.5%, 12.9% and 10.7% (on a unit basis) of the Company’s operating communities were located in the Atlanta, Dallas, the greater Washington D.C. and Tampa metropolitan areas, respectively.

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

Basis of Presentation

The accompanying unaudited financial statements have been prepared by the Operating Partnership’s management in accordance with generally accepted accounting principles for interim financial information and applicable rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normally recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for the three and six months ended June 30, 2009 are not necessarily indicative of the results that may be expected for the full year. These financial statements should be read in conjunction with the Operating Partnership’s audited financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2008 (the “Form 10-K”).

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

- 26 -

POST APARTMENT HOMES, L.P. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

~~The~~NOTES ~~accompanying~~TO ~~consolidated~~CONSOLIDATED ~~financial~~FINANCIAL ~~statements~~STATEMENTS include the consolidated accounts of the Operating Partnership and their wholly owned subsidiaries. The Operating Partnership also consolidates other entities in which it has a controlling financial interest or entities where it is determined to be the primary beneficiary under Financial Accounting Standards Board Interpretation No. 46R (“FIN 46R”), “Consolidation of Variable Interest Entities.” Under FIN 46R, variable interest entities (“VIEs”) are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. The primary beneficiary is required to consolidate a VIE for financial reporting purposes. The application of FIN 46R requires management to make significant estimates and judgments about the Operating Partnership’s and its other partners’ rights, obligations and economic interests in such entities. For entities in which the Operating Partnership has less than a controlling financial interest or entities where it is not deemed to be the primary beneficiary under FIN 46R, the entities are accounted for using the equity method of accounting (under the provisions of Emerging Issues Task Force (“EITF”) No. 04-5). Accordingly, the Operating Partnership’s share of the net earnings or losses of these entities is included in consolidated net income. All significant inter-company accounts and transactions have been eliminated in consolidation. Revenue Recognition Residential properties are leased under operating leases with terms of generally one year or less. Rental revenues from residential leases are recognized on the straight-line method over the approximate life of the leases, which is generally one year. The recognition of rental revenues from residential leases when earned has historically not been materially different from rental revenues recognized on a straight-line basis. Under the terms of residential leases, the residents of the Operating Partnership’s residential communities are obligated to reimburse the Operating Partnership for certain utility usage, water and electricity (at selected properties), where the Operating Partnership is the primary obligor to the public utility entity. These utility reimbursements from residents are reflected as other property revenues in the consolidated statements of operations. Sales and the associated gains or losses of real estate assets and for-sale condominiums are recognized in accordance with the provisions of SFAS No. 66, “Accounting for Sales of Real Estate.” For condominium conversion projects, revenues from individual condominium unit sales are recognized upon the closing of the sale transactions (the “Completed Contract Method”), as all conditions for full profit recognition have been met at that time and the conversion construction periods are typically very short. Under SFAS No. 66, the Operating Partnership uses the relative sales value method to allocate costs and recognize profits from condominium conversion sales. In accordance with SFAS No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets,” gains on sales of condominium units at complete community condominium conversion projects are included in discontinued operations. For condominium conversion projects relating to a portion of an existing apartment community, the Operating Partnership also recognizes revenues and the associated gains under the Completed Contract Method, as discussed herein. Since a portion of an operating community does not meet the requirements of a component of an entity under SFAS No. 144, the revenues and gains on sales of condominium units at partial condominium communities are included in continuing operations. For newly developed condominiums, the Operating Partnership accounts for each project under either the Completed Contract Method or the “Percentage of Completion Method,” based on a specific evaluation of the factors specified in SFAS No. 66 and the guidance provided by EITF 06-8. The factors used to determine the appropriate accounting method are the legal commitment of the purchaser in the real estate contract, whether the construction of the project is beyond a preliminary phase, sufficient units have been contracted to ensure the project will not revert to a rental project, the aggregate project sale proceeds and costs can be reasonably estimated and the buyer has made an adequate initial and continuing cash investment under the contract in accordance with SFAS No. 66 and the guidance provided by EITF 06-8. Under the Percentage of Completion Method, revenues and the associated gains are recognized over the project construction period generally based on the percentage of total project costs incurred to estimated total project costs for each condominium unit under a binding real estate contract. As of June 30, 2008, all newly developed condominium projects are accounted for under the Completed Contract Method.

~~-26-~~(Unaudited, in thousands, except per share or unit and apartment unit data)

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

Revenue Recognition

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

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

For newly developed condominiums, the Operating Partnership accounts for each project under either the Completed Contract Method or the “Percentage of Completion Method,” based on a specific evaluation of the factors specified in SFAS No. 66 and the guidance provided by EITF 06-8. The factors used to determine the appropriate accounting method are the legal commitment of the purchaser in the real estate contract, whether the construction of the project is beyond a preliminary phase, sufficient units have been contracted to ensure the project will not revert to a rental project, the aggregate project sale proceeds and costs can be reasonably estimated and the buyer has made an adequate initial and continuing cash investment under the contract in accordance with SFAS No. 66 and the guidance provided by EITF 06-8. Under the Percentage of Completion Method, revenues and the associated gains are recognized over the project construction period generally based on the percentage of total project costs incurred to estimated total project costs for each condominium unit under a binding real estate contract. As of March 31, 2009, all newly developed condominium projects are accounted for under the Completed Contract Method.

Real Estate Assets, Depreciation and Impairment

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

- 27 -

POST APARTMENT HOMES, L.P. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

~~Recently~~NOTES ~~Issued~~TO ~~and~~CONSOLIDATED ~~Adopted~~FINANCIAL ~~Accounting~~STATEMENTS Pronouncements SFAS No. 157, “Fair Value Measurements,” was issued in September 2006. The Operating Partnership adopted SFAS No. 157 on January 1, 2008. SFAS No. 157 provides a definition of fair value and establishes a framework for measuring fair value. SFAS No. 157 clarified the definition of fair value and defines it as the price that would be received to sell an asset or paid to transfer a liability in a transaction between willing market participants. Additional disclosures focusing on the methods used to determine fair value are also required using the following hierarchy:

•(Unaudited, ~~Level 1 — Quoted prices~~ in ~~active~~thousands, ~~markets~~except ~~for~~per ~~identical~~share ~~assets~~ or ~~liabilities~~unit ~~that~~and ~~are~~apartment ~~accessible~~unit data) at the measurement date. • Level 2 — Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. • Level 3 — Unobservable inputs for the assets or liability.

~~The~~ period ~~Operating~~are ~~Partnership applies SFAS No. 157~~ in ~~relation~~excess toof the ~~valuation~~asset’s ofnet ~~its~~book ~~derivative instrument~~value at ~~fair value (see note 6) and~~ the ~~Operating~~balance ~~Partnership’s~~sheet ~~impairment~~date. ~~valuation analysis~~If ~~related~~any to real estate ~~assets~~asset ~~(see~~held ~~note~~for ~~8).~~investment ~~The~~is ~~following~~considered ~~table~~impaired, ~~presents the Operating~~a ~~Partnership’s~~loss ~~real~~is ~~estate~~provided ~~assets~~to ~~and~~reduce ~~derivative~~the ~~liabilities~~carrying ~~reported at fair market~~ value ~~and~~ of the ~~related~~asset ~~level~~to inits ~~the~~estimated fair value ~~hierarchy as defined by SFAS No~~. ~~157~~ ~~used to measure those assets and liabilities at June 30, 2008:~~

	Fair value measurements as of June 30, 2008
Assets (Liabilities)	Total			Level 1		Level 2			Level 3
Real estate assets, land held for development and sale	$	44,773		$	—	$	—		$	44,773
Interest rate swap agreement		(2,189	)		—		(2,189	)		—

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

		SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — including an amendment of FASB Statement No. 115,” was issued in February 2007. SFAS No. 159 gives the Operating Partnership the irrevocable option to carry most financial assets and liabilities at fair value, with changes in fair value recognized in earnings. The Operating Partnership adopted SFAS No. 159 on January 1, 2008, and the adoption did not have a material impact on the Operating Partnership’s financial position and results of operations. The Operating Partnership did not elect to record any of its financial assets and liabilities at fair value in 2008 that were not recorded as such under existing accounting pronouncements.
		SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements,” was issued in December 2007. SFAS No. 160 requires all entities to report noncontrolling (minority) interests in subsidiaries as equity in the consolidated financial statements. SFAS No. 160 is effective for the Operating Partnership on January 1, 2009. The Operating Partnership is currently evaluating the potential impact of SFAS No. 160 on the Operating Partnership’s financial position and results of operations.
		SFAS No. 141R, “Business Combinations,” was issued in December 2007. SFAS No. 141R will replace SFAS No. 141 on the date it becomes effective. SFAS No. 141R will require 1) acquirers to recognize all of the assets acquired and liabilities assumed in a business combination, 2) that the acquisition date be used to determine fair value for all assets acquired and all liabilities assumed, and 3) enhanced disclosures for the acquirer surrounding the financial effects of the business combination. The provisions of SFAS 141R will lead to the expensing of acquisition related transaction costs and the potential recognition of acquisition related contingencies. SFAS No. 141R is effective for the Operating Partnership on January 1, 2009. The Operating Partnership is currently evaluating the potential impact of SFAS No. 141R on the Operating Partnership’s financial position and results of operations.
2.		REAL ESTATE ACTIVITY
		Dispositions
		The Operating Partnership classifies real estate assets as held for sale after the approval of its board of directors and after the Operating Partnership has commenced an active program to sell the assets. At June 30, 2008, the Operating Partnership had eight apartment communities, containing 2,615 units, and certain parcels of land classified as held for sale. These real estate assets are reflected in the accompanying consolidated balance sheet at $258,610, which represents the lower of their depreciated cost or fair value less costs to sell. At June 30, 2008, the Operating Partnership also had portions of two communities being converted to condominiums and certain completed condominium units at newly developed condominium communities totaling $26,314 classified as for-sale condominiums on the accompanying consolidated balance sheet.

In addition, for-~~27-~~sale condominium assets under development are evaluated for impairment using the methodology for assets held for future investment (using projected future undiscounted cash flows). However, once construction of these assets is completed and units are ready for their intended use, for-sale condominium assets are evaluated for impairment using the methodology for assets held for sale (using discounted projected future cash flows).

Recently Issued and Adopted Accounting Pronouncements

SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – An Amendment of ARB No. 51,” was issued in December 2007. SFAS No. 160 requires all entities to report noncontrolling interests (previously referred to as minority interests) in subsidiaries as equity in the consolidated financial statements. The Operating Partnership adopted the accounting and disclosure requirements of SFAS No. 160 on January 1, 2009 and has amended the presentation for its noncontrolling interests in the Operating Partnership and in consolidated real estate entities retrospectively on its consolidated balance sheets, consolidated statements of operations and consolidated statements of equity and accumulated earnings.

FASB Staff Position EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities,” (“FSP EITF 03-6-1”) was issued in June 2008. FSP EITF 03-6-1 was effective January 1, 2009. FSP EITF 03-6-1 requires that unvested share based payment awards that contain non-forfeitable rights to dividends or dividend equivalents be treated as participating securities for purposes of the computation of net income available to common stockholders. The Operating Partnership adopted FSP EITF 03-6-1 retrospectively, effective January 1, 2009. In accordance with FSP EITF 03-6-1, prior period earnings per share amounts have been adjusted accordingly. The adoption of FSP EITF 03-6-1 did not have a material impact on the Operating Partnership’s financial position, results of operations or earnings per share.

SFAS No. 141R, “Business Combinations,” was issued in December 2007 and replaced SFAS No. 141. SFAS No. 141R requires (1) acquirers to recognize all of the assets acquired and liabilities assumed in a business combination at fair value, (2) that the acquisition date be used to determine fair value for all assets acquired and all liabilities assumed, and (3) enhanced disclosures for the acquirer surrounding the financial effects of the business combination. The provisions of SFAS 141R also requires the expensing of acquisition related transaction costs and the potential recognition of acquisition related contingencies. The Operating Partnership adopted SFAS No. 141R on January 1, 2009, and it did not have an impact on the Operating Partnership’s financial position or results of operations.

- 28 -

POST APARTMENT HOMES, L.P. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

~~For~~NOTES ~~the~~TO ~~three~~CONSOLIDATED ~~and~~FINANCIAL ~~six~~STATEMENTS months ended June 30, 2008 and 2007, income from continuing operations included net gains from condominium sales activities at newly developed and condominium conversion projects representing portions of existing communities. In addition to the condominium gains included in continuing operations, the Operating Partnership expensed certain sales and marketing costs associated with pre-sale condominium communities and condominium communities under development and such costs are included in condominium expenses in the table below. A summary of revenues and costs and expenses of condominium activities included in continuing operations for the three and six months ended June 30, 2008 and 2007 was as follows:

	Three months ended						Six months ended
	June 30,						June 30,
	2008			2007			2008			2007
Condominium revenues	$	10,051		$	25,222		$	18,348		$	31,091
Condominium costs and expenses		(10,419	)		(19,524	)		(16,597	)		(23,885	)
Gains (losses) on sales of condominiums, net	$	(368	)	$	5,698		$	1,751		$	7,206

(Unaudited, in thousands, except per share or unit and apartment unit data)

~~For~~ clarifies the ~~three~~circumstances ~~and~~under ~~six~~which ~~months ended June 30, 2007, gains on sales of real estate assets in continuing operations also included~~ a ~~gain~~company ofshould ~~$55,300~~consider ~~related~~recognition ~~to the Operating Partnership’s transfer~~ of ~~two~~those ~~operating~~events ~~apartment~~or ~~communities~~transactions tooccurring aafter ~~newly formed unconsolidated entity in which~~ the ~~Operating~~balance ~~Partnership~~sheet ~~retained~~date aas ~~25% non-controlling interest for aggregate proceeds of approximately $89,351. The gain was calculated~~ well as ~~the~~provides ~~difference~~guidance ~~between~~regarding the ~~proceeds~~required received from the independent third party for its 75% interest in the unconsolidated entity and the Operating Partnership’s 75% proportionate share of the net book value of operating communities transferred to the unconsolidated entitydisclosures. The ~~unconsolidated entity obtained mortgage financing secured by the apartment communities totaling approximately $85,723, of which approximately $21,431 was distributed to the~~ Operating Partnership. ~~Additionally,~~adopted for the three and six months ended June 30, 2007, gains on sales of real estate assets in continuing operations included gains of $1,740 and $3,938, respectively, on the sales of land sites in Atlanta, Georgia and Dallas, Texas. Under SFAS No. 165 ~~144 “Accounting for the Impairment or Disposal of Long-Lived Assets,” the operating results of real estate assets designated~~ as ~~held for sale are included in discontinued operations in the consolidated statement~~ of ~~operations for all periods presented. Additionally, all gains and losses on the sale of these assets are included in discontinued operations. For the six months ended~~ June 30, ~~2008,~~2009. ~~income~~The ~~from~~adoption ~~discontinued operations included the results~~ of ~~operations~~SFAS ofNo. 165 ~~eight~~did ~~apartment~~not ~~communities~~have ~~classified~~a asmaterial ~~held~~impact ~~for~~on ~~sale during~~ the ~~first~~Operating ~~and~~Partnership’s ~~second~~financial statements ~~quarters~~or ~~of 2008 and one apartment community through its sale date in January 2008. For the six months ended June 30, 2007, income from discontinued operations included the~~ results of operations of(see ~~the~~note eight apartment communities classified as held for sale at June 30, 2008, the apartment community sold in 2008, a condominium conversion community through its sell out date in February 2007 and three apartment communities sold in 2007 through their respective sale dates13). ~~The revenues and expenses of these communities for the three months ended June 30, 2008 and 2007 were as follows:~~

	Three months ended				Six months ended
	June 30,				June 30,
	2008		2007		2008		2007
Revenues
Rental	$	11,196	$	13,013	$	22,502	$	26,272
Other property revenues		471		645		875		1,241
Total revenues		11,667		13,658		23,377		27,513
Expenses
Property operating and maintenance (exclusive of items shown separately below)		3,763		4,384		7,900		9,126
Depreciation		1,698		2,685		3,623		5,377
Interest		1,944		2,336		3,921		4,891
Minority interest in consolidated property partnerships		134		95		234		138
Total expenses		7,539		9,500		15,678		19,532
Income from discontinued property operations	$	4,128	$	4,158	$	7,699	$	7,981

~~-28-~~SFAS No. 167, “Amendments to FASB Interpretation No. 46(R),” was issued in June 2009. SFAS No. 167 addresses the impact that the elimination of the qualifying special purpose entity (“QSPE”) concept has on FIN 46(R) and will require companies to evaluate all entities, even those previously considered to be QSPEs, as potential variable interest entities (“VIEs”). SFAS No. 167 also addresses the timely accounting and disclosure requirements of companies’ variable interests by (1) requiring ongoing reassessments of whether or not the company is the primary beneficiary, (2) adding an additional reconsideration requirement, (3) eliminating the quantitative approach previously used to determine the primary beneficiary of a VIE and (4) amending certain guidance for determining which entities are VIEs. SFAS No. 167 is effective for the Operating Partnership on January 1, 2010. The Operating Partnership is currently evaluating the potential impact of SFAS No. 167 on the Operating Partnership’s financial position and results of operations.

2.	REAL ESTATE ACTIVITY

Dispositions

The Operating Partnership classifies real estate assets as held for sale after the approval of the Company’s board of directors and after the Operating Partnership has commenced an active program to sell the assets. At June 30, 2009, the Operating Partnership had two apartment communities, containing 798 units, and certain parcels of land classified as held for sale. These real estate assets are reflected in the accompanying consolidated balance sheet at $63,364, which represents the lower of their depreciated cost or fair value less costs to sell. At June 30, 2009, the Operating Partnership also had portions of two communities being converted to condominiums and certain completed condominium units at developed condominium communities totaling $8,796 classified as for-sale condominiums on the accompanying consolidated balance sheet.


	Three months ended June 30,				Six months ended June 30,
	2009		2008		2009		2008
Condominium revenues	$	6,176	$	10,051	$	8,222	$	18,348
Condominium costs and expenses		(5,944)		(10,419)		(8,250)		(16,597)

Gains (losses) on sales of condominiums	$	232	$	(368)	$	(28)	$	1,751

- 29 -

POST APARTMENT HOMES, L.P. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

~~For~~NOTES ~~the~~TO ~~six~~CONSOLIDATED ~~months~~FINANCIAL ~~ended~~STATEMENTS June 30, 2008, the Operating Partnership recognized net gains in discontinued operations of $2,311 from the sale of one community, containing 143 units. This sale generated net proceeds of approximately $19,433. For the six months ended June 30, 2007, the Operating Partnership recognized net gains in discontinued operations of $16,974 from the sale of one community, containing 182 units. The sale generated net proceeds of $23,741. For the six months ended June 30, 2007, gains on sales of real estate assets included in discontinued operations also included net gains from condominium sales at one condominium conversion community that sold out in February 2007. A summary of revenues and costs and expenses of condominium activities included in discontinued operations was as follows:

	Six months ended
	June 30, 2007
Condominium revenues	$	560
Condominium costs and expenses		(381	)
Gains on condominium sales	$	179

(Unaudited, in thousands, except per share or unit and apartment unit data)

3.		INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES
		At June 30, 2008, the Operating Partnership holds investments in four individual limited liability companies (the “Property LLCs”) with institutional investors. Three of the Property LLCs own apartment communities. The fourth Property LLC commenced construction in 2007 of a mixed-use development, consisting of for-sale condominiums and Class A office space. The Operating Partnership holds a 35% equity interest in two Property LLCs, each owning one apartment community. The Operating Partnership holds a 25% interest in one Property LLC owning three apartment communities, and a 50% interest in the condominium portion of the Property LLC developing the mixed-use project. In 2007, another Property LLC completed the sell-out of a condominium conversion community, initially consisting of 121 units.
		In 2007, the Operating Partnership’s investment in the 25% owned Property LLC resulted from the transfer of three previously owned apartment communities to the Property LLC co-owned with an institutional investor. The assets, liabilities and members’ equity of this Property LLC were recorded at fair value based on agreed-upon amounts contributed to the Property LLC. At June 30, 2008, the Operating Partnership’s investment in the 25% owned Property LLC reflects a credit investment of $13,885 resulting primarily from distributions of financing proceeds in excess of the Operating Partnership’s historical cost investment. The credit investment is reflected in consolidated liabilities on the Operating Partnership’s consolidated balance sheet.
		The Operating Partnership accounts for its investments in these Property LLCs using the equity method of accounting. At June 30, 2008, the Operating Partnership’s investment in these Property LLCs totaled $22,815, excluding the credit investment discussed above. The excess of the Operating Partnership’s investment over its equity in the underlying net assets of certain Property LLCs was approximately $5,986 at June 30, 2008. The excess investment related to Property LLCs holding apartment communities is being amortized as a reduction to earnings on a straight-line basis over the lives of the related assets. The excess investment related to the Property LLC constructing condominiums will be recognized as additional costs as the condominiums are sold. The Operating Partnership provides real estate services (development, construction and property management) to the Property LLCs for which it earns fees.
		The operating results of the Operating Partnership include its allocable share of net income from the investments in the Property LLCs. A summary of financial information for the Property LLCs in the aggregate was as follows:

three and six months ended June 30, 2009, income from discontinued operations included the results of operations of two apartment communities classified as held for sale at June 30, 2009 and one apartment community through its sale date in 2009. For the three and six months ended June 30, 2008, income from discontinued operations included the results of operations of the two apartment communities classified as held for sale at June 30, 2009, the apartment community sold in 2009 and four apartment communities sold in 2008 through their respective sale dates.

~~-29-~~ The revenues and expenses of these communities for the three and six months ended June 30, 2009 and 2008 were as follows:


	Three months ended June 30,				Six months ended June 30,
	2009		2008		2009		2008
Revenues
Rental	$	3,228	$	7,275	$	7,463	$	14,613
Other property revenues		196		447		454		831

Total revenues		3,424		7,722		7,917		15,444

Expenses
Total property operating and maintenance (exclusive of items shown separately below)		1,087		2,567		2,559		5,292
Depreciation		-		871		-		1,962
Interest		311		1,052		723		2,154

Total expenses		1,398		4,490		3,282		9,408

Income from discontinued property operations	$	2,026	$	3,232	$	4,635	$	6,036

For the three and six months ended June 30, 2009, the Operating Partnership recognized net gains in discontinued operations of $24,742 from the sale of one community, containing 530 units. This sale generated net proceeds of approximately $47,013. For the six months ended June 30, 2008, the Operating Partnership recognized net gains in discontinued operations of $2,311 from the sale of one community, containing 143 units. This sale generated net proceeds of approximately $19,433.

3.	INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES

At June 30, 2009, the Operating Partnership holds investments in various individual limited liability companies (the “Apartment LLCs”) with institutional investors that own apartment communities. The Operating Partnership holds a 25% to 35% equity interest in these Apartment LLCs. The Operating Partnership and its joint venture partner also hold an approximate pro-rata 49% interest in a limited liability company (the “Mixed-Use LLC”) that is in the process of constructing a mixed-use development, consisting of 129 luxury condominium units, sponsored by the Operating Partnership and its partner, and Class A office space, sponsored by two additional independent investors.

The Operating Partnership’s investment in the 25% owned Apartment LLCs at June 30, 2009 and December 31, 2008 reflects a credit investment of $14,514 and $14,263, respectively. These credit balances resulted from distribution of financing proceeds in excess of the Operating Partnership’s historical cost upon the formation of the Apartment LLC and are reflected in consolidated liabilities on the Operating Partnership’s consolidated balance sheet.

At June 30, 2009, the Operating Partnership holds a majority interest in a limited liability company (the “Condominium LLC”), which holds the approximate pro-rata 49% interest in the Mixed-Use LLC, which is constructing condominiums as part of a mixed-use development with other investors as discussed above. As such, the Operating Partnership consolidated the Condominium LLC. At June 30, 2009, the Operating Partnership’s consolidated investment in the Mixed-Use LLC reflects a credit investment of $39,820. The credit investment results from the recognition of a $74,733 non-cash impairment charge, or $68,219 net of the noncontrolling joint venture interest in the entity, recorded for the three and six months ended June 30, 2009 related to the condominium portion of the project. The impairment charge to write-down the asset to estimated fair value resulted from a determination that the estimated undiscounted cash flows related to the condominium asset under construction were not sufficient to recover the carrying value of the asset. The impairment charge was reflective of deteriorating market conditions for luxury condominiums in the Atlanta market, including weakening economic conditions, price discounting for competitive products and more restrictive mortgage lending conditions in 2009. Upon the completion of the condominium portion of the mixed-use development, the condominium asset will be distributed to the Condominium LLC. The Condominium LLC has entered into a licensing and branding arrangement with a third party. This arrangement provides for the payment of a guaranteed licensing fee upon the earlier of the sale of the condominium units as they occur or September 2012. The licensing fee will be paid from the proceeds of condominium sales at the Condominium LLC.

- 30 -

POST APARTMENT HOMES, L.P. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

	June 30,		December 31,
Balance Sheet Data	2008		2007
Real estate assets, net of accumulated depreciation of $18,361 and $15,204, respectively	$	362,036	$	325,705
Cash and other		7,246		7,254
Total assets	$	369,282	$	332,959
Mortgage/construction notes payable	$	250,270	$	214,549
Other liabilities		9,993		5,541
Total liabilities		260,263		220,090
Members’ equity		109,019		112,869
Total liabilities and members’ equity	$	369,282	$	332,959
Operating Partnership’s equity investment in Property LLCs	$	8,930	$	9,348

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Three months ended						Six months ended
	June 30,						June 30,
Income Statement Data	2008			2007			2008			2007
Revenues
Rental	$	6,794		$	4,142		$	13,487		$	6,955
Other property revenues		482			307			883			479
Other		13			19			36			37
Total revenues		7,289			4,468			14,406			7,471
Expenses
Property operating and maintenance		2,882			1,520			5,635			2,532
Depreciation and amortization		2,104			1,281			4,236			1,942
Interest		2,500			1,331			4,999			2,019
Total expenses		7,486			4,132			14,870			6,493
Income (loss) from continuing operations		(197	)		336			(464	)		978
Discontinued operations
Income (loss) from discontinued operations		—			10			(2	)		31
Gains (losses) on sales of real estate assets, net		—			(83	)		—			775
Income from discontinued operations		—			(73	)		(2	)		806
Net income (loss)	$	(197	)	$	263		$	(466	)	$	1,784
Operating Partnership’s share of net income	$	420		$	310		$	821		$	814

(Unaudited, in thousands, except per share or unit and apartment unit data)

~~For~~The ~~the~~Operating ~~three~~Partnership ~~and~~accounts ~~six~~for ~~months~~its ~~ended~~investments ~~June~~in ~~30,~~the ~~2007,~~Apartment ~~gains~~and ~~(losses)~~Mixed-Use onLLCs ~~real~~using ~~estate assets represent net gains (losses) from condominium sales at~~ the equity ~~condominium~~method ~~conversion~~of ~~community held by a Property LLC that completed its sell out in 2007~~accounting. At June 30, ~~2008,~~2009 ~~mortgage/construction~~and ~~notes payable include a $49~~December 31,~~996~~ ~~mortgage note that bears interest at 4.13%~~2008, ~~requires~~the ~~monthly~~Operating ~~interest~~Partnership’s ~~payments~~investment ~~and~~in ~~annual~~these ~~principal~~Apartment ~~payments of $1 through 2009. Thereafter, the note requires monthly principal~~ and ~~interest payments based on a 25~~Mixed-~~year~~Use ~~amortization~~LLCs ~~schedule~~totaled ~~and matures in 2034. The note is prepayable without penalty in May 2008. Another mortgage note payable totaling~~ $178,~~000~~706 ~~bears interest at a fixed rate of 4.04% requires interest only payments~~ and ~~matures in 2008. Subsequent to June 30~~$39,300, ~~2008~~respectively, ~~this~~excluding ~~mortgage note was refinanced by~~ the ~~Property~~credit ~~LLC.~~investments ~~The new mortgage note payable totaling $29,272 bears interest at 5~~discussed above.~~83%,~~ ~~requires monthly interest only payments and matures in 2013.~~ The ~~note~~excess isof ~~prepayable~~the ~~without~~Operating ~~penalty~~Partnership's ininvestment ~~August~~over ~~2011.~~its ~~Three~~equity ~~additional mortgage notes were entered into~~ in ~~conjunction~~the ~~with~~underlying ~~the~~net ~~formation~~assets of ~~the~~certain ~~25%~~Apartment ~~owned~~LLCs ~~Property~~was ~~LLC~~approximately ~~in 2007. Two notes total~~ $856,~~723,~~389 ~~bear interest~~ at ~~5.63%~~June 30, ~~require interest only payments and mature in 2017~~2009. The ~~third~~excess ~~mortgage~~investment ~~note~~related ~~totals~~to ~~$41,000, bears interest at 5.71%, requires interest only payments, and matures in 2017. In 2007,~~ the ~~Property~~Apartment ~~LLC~~LLCs ~~constructing~~is ~~the~~being ~~mixed-use~~amortized as ~~development entered into~~ a ~~construction~~reduction ~~loan~~to ~~facility~~earnings ~~with~~on ana ~~aggregate~~straight-line ~~capacity~~basis ofover ~~$187,128. At June 30, 2008,~~ the ~~construction~~lives ~~loan had an outstanding balance~~ of ~~$56,550,~~the ~~bears~~related ~~interest at LIBOR plus 1~~assets.~~35%~~ ~~and~~The ~~matures in 2011. Under the terms of the construction loan facility, the~~ Operating Partnership ~~and~~provides ~~its~~real ~~50%~~estate ~~equity~~services ~~partner have jointly and severally guaranteed approximately $25~~(development,~~313~~ ~~of the~~ construction ~~loan attributable to the condominium portion of the project. Additionally, the Operating Partnership~~ and ~~its~~property ~~50%~~management) ~~equity~~to ~~partner have jointly and severally guaranteed certain debt service payments of~~ the ~~condominium~~Apartment ~~portion of the loan not to exceed approximately $6,153,~~ and ~~all~~Mixed-Use ofLLCs ~~the~~for ~~equity~~which ~~owners~~it earns ~~of the project, including the Operating Partnership, have guaranteed the completion of the first building at the project~~fees.

~~-30-~~The operating results of the Operating Partnership include its allocable share of net income from the investments in the Apartment and Mixed-Use LLCs. A summary of financial information for the Property LLCs in the aggregate was as follows:


Balance Sheet Data	June 30, 2009		December 31, 2008
Real estate assets, net of accumulated depreciation of $24,726 and $21,528, respectively	$	351,420	$	398,167
Cash and other		7,421		6,768

Total assets	$	358,841	$	404,935

Mortgage/construction notes payable	$	301,785	$	289,013
Other liabilities		22,444		6,979

Total liabilities		324,229		295,992
Members’ equity		34,612		108,943

Total liabilities and members’ equity	$	358,841	$	404,935

Operating Partnership’s equity investment in Property LLCs (1)	$	(45,628)	$	23,315


	Three months ended June 30,				Six months ended June 30,
Income Statement Data	2009		2008		2009		2008
Revenues
Rental	$	6,642	$	6,794	$	13,306	$	13,487
Other property revenues		496		482		961		883
Other		3		13		3		36

Total revenues		7,141		7,289		14,270		14,406

Expenses
Property operating and maintenance		2,976		2,882		5,829		5,635
Depreciation and amortization		1,651		2,104		3,292		4,236
Impairment charge (2)		71,679		-		71,679		-
Interest		2,986		2,500		5,939		4,999

Total expenses		79,292		7,486		86,739		14,870

Income (loss) from continuing operations		(72,151)		(197)		(72,469)		(464)

Discontinued operations
Income (loss) from discontinued operations		-		-		-		(2)

Income from discontinued operations		-		-		-		(2)

Net income (loss)	$	(72,151)	$	(197)	$	(72,469)	$	(466)

Operating Partnership’s share of net income	$	(74,656)	$	420	$	(74,546)	$	821


(1) At June 30, 2009 and December 31, 2008, the Operating Partnership’s equity investment is shown net of its credit investments of $54,334 and $15,985, respectively. At December 31, 2008, the credit investment included $1,722 related to the Land LLC discussed below. (2) The impairment charge recognized at the unconsolidated entity level excludes the write-off of the Operating Partnership’s costs in excess of its invested capital.

- 31 -

POST APARTMENT HOMES, L.P. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

4.NOTES ~~INDEBTEDNESS~~TO AtCONSOLIDATED ~~June~~FINANCIAL ~~30,~~STATEMENTS ~~2008 and December 31, 2007, the Operating Partnership’s indebtedness consisted of the following:~~

	Payment					Maturity		June 30,		December 31,
Description	Terms		Interest Rate			Date		2008		2007
Senior Unsecured Notes	Int.			5.13% - 7.70	%		2010-2013	$	535,000	$	535,000
Unsecured Lines of Credit
Syndicated Line of Credit		N/A	LIBOR + 0.575%(1)				2010		120,000		245,000
Cash Management Line		N/A	LIBOR + 0.575%				2010		24,271		12,275
									144,271		257,275
Fixed Rate Secured Notes
FNMA	Prin. and Int.			6.15	%(2)		2029		94,000		94,000
Other	Prin. and Int.			4.27% - 6.50	%		2009-2015		291,134		172,791
									385,134		266,791
Total								$	1,064,405	$	1,059,066

(Unaudited, in thousands, except per share or unit and apartment unit data)

(1)		Represents stated rate. At June 30, 2008, the weighted average interest rate was 3.06%.
(2)		Interest rate is fixed at 6.15%, inclusive of credit enhancement and other fees, to 2009 through an interest rate swap arrangement.

The Mixed-Use LLC and a related limited liability company (the “Land LLC”) holding land for future investment (see below) entered into a construction loan facility with an aggregate capacity of $187,128. At June 30, 2009, the construction loan had an outstanding balance of $103,442, bears interest at LIBOR plus 1.35% and matures in 2011. As discussed below, a portion of the construction loan is included in consolidated indebtedness. Under the terms of the construction loan facility, the Operating Partnership and its equity partner in the Condominium LLC have jointly and severally guaranteed approximately $25,313 of the construction loan held at the unconsolidated Mixed-Use LLC attributable to the condominium portion of the project as well as certain debt service payments of the condominium portion of the loan held at the Mixed-Use LLC not to exceed approximately $6,153. Finally, all of the equity owners of the project at the unconsolidated Mixed-Use LLC, including the Operating Partnership, have jointly and severally guaranteed the completion of the first mixed-use building of the project.

~~Debt~~In ~~maturities~~April ~~The~~2009, the Operating Partnership made aggregate ~~maturities~~additional investments and advances of $1,527 to the previously unconsolidated Land LLC that holds land adjacent to the condominium project discussed above for future investment, whereby the Operating Partnership’s ~~indebtedness~~obtained ~~are~~a asmajority ~~follows:~~interest in the Land LLC. As a result, the Operating Partnership consolidated the Land LLC in the second quarter of 2009. The consolidation of the Land LLC resulted in the consolidation of a portion of the construction loan discussed above totaling $8,153 at June 30, 2009 (see note 4). Subsequently, consistent with the impairment analysis performed for the adjacent condominium development discussed above, the Operating Partnership determined that the land held for future development of a second phase condominium tower on this site was not economically viable due to limitations on the potential future use of this site and the continued worsening of conditions in the U.S. economy and the housing markets, specifically in the Atlanta upper-end single family and condominium markets. As a result, the Operating Partnership concluded that the carrying value of the land held for future investment was not recoverable, and in the second quarter of 2009, the Operating Partnership recorded a non-cash impairment charge of $9,658, or $8,098 net of the noncontrolling joint venture interest in the entity, to write-off the carrying value of the land held for investment.

Remainder of 2008	$	3,572
2009		76,618
2010		332,899	(1)
2011		141,431
2012		103,296
Thereafter		406,589
	$	1,064,405

4.	INDEBTEDNESS

~~(1)~~At June 30, ~~Includes~~2009 ~~outstanding~~and ~~balances~~December 31, on2008, ~~lines~~the Operating Partnership’s indebtedness consisted of ~~credit~~the ~~totaling~~following: ~~$144,271.~~

Debt issuances In January 2008, the Operating Partnership closed a $120,000 secured, fixed rate mortgage note payable. The note bears interest at 4.88%, requires interest only payments and matures in 2015. The note contains an automatic one year extension under which the interest rate converts to a variable rate, as defined. Unsecured Lines of Credit At June 30, 2008, the Operating Partnership utilizes a $600,000 syndicated unsecured revolving line of credit (the “Syndicated Line”) that matures in April 2010 for its short-term financing needs. The Syndicated Line currently has a stated interest rate of LIBOR plus 0.575% or the prime rate and was provided by a syndicate of 17 banks led by Wachovia Bank, N.A. and JP Morgan Securities, Inc. Additionally, the Syndicated Line requires the payment of annual facility fees currently equal to 0.15% of the aggregate loan commitment. The Syndicated Line provides for the interest rate and facility fee rate to be adjusted up or down based on changes in the credit ratings on the Operating Partnership’s senior unsecured debt. The rates under the Syndicated Line are based on the higher of the Operating Partnership’s unsecured debt ratings in instances where the Operating Partnership has split unsecured debt ratings. The Syndicated Line also includes a competitive bid option for short-term funds up to 50% of the loan commitment at rates generally below the stated line rate. The credit agreement for the Syndicated Line contains customary restrictions, representations, covenants and events of default, including fixed charge coverage and maximum leverage ratios. The Syndicated Line also restricts the amount of capital the Operating Partnership can invest in specific categories of assets, such as


Description	Payment Terms	Interest Rate		Maturity Date	June 30, 2009		December 31, 2008

Senior Unsecured Notes	Int.	5.13% -7.70%	(1)	2010-2013	$	360,142	$	535,000


Unsecured Lines of Credit
Syndicated Line of Credit	N/A	LIBOR + 0.80%	(2)	2010		15,000		40,000
Cash Management Line	N/A	LIBOR + 0.80%		2010		14,913		10,864

						29,913		50,864

Secured Notes
FNMA	Prin. and Int.	Remarketed rate		2029		-		92,275
Other	Prin. and Int.	4.88% - 6.11%	(3)	2011-2019		688,582		434,774

						688,582		527,049


Secured Variable Rate Construction Note	Int.	LIBOR + 1.35%		2011		8,153		-


Total					$	1,086,790	$	1,112,913

~~-31-~~ (1) Of the Operating Partnership’s senior unsecured notes, there are no scheduled maturities in 2009. Notes for approximately $100,505 bearing interest at 7.7% mature in 2010. The remaining notes mature between 2011 and 2013.

(2)	Represents stated rate. At June 30, 2009, the weighted average interest rate was 1.1%.

(3)	Of the Operating Partnership’s secured notes, there are no scheduled maturities in 2009 or 2010. All of the notes mature between 2011 and 2019.

- 32 -

POST APARTMENT HOMES, L.P. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

		improved land, properties under construction, condominium properties, non-multifamily properties, debt or equity securities, notes receivable and unconsolidated affiliates. At June 30, 2008, the Operating Partnership had issued letters of credit to third parties totaling $2,100 under this facility.
		Additionally, at June 30, 2008, the Operating Partnership had a $30,000 unsecured line of credit with Wachovia Bank, N.A. (the “Cash Management Line”). The Cash Management Line matures in April 2010 and carries pricing and terms, including debt covenants, substantially consistent with the Syndicated Line.
5.		PARTNERS’ EQUITY
		Computations of Earnings (Loss) Per Common Unit
		For the three and three months ended June 30, 2008 and 2007, a reconciliation of the numerator and denominator used in the computation of basic and diluted income (loss) from continuing operations per common unit is as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Three months ended						Six months ended
	June 30,						June 30,
	2008			2007			2008			2007
Income (loss) from continuing operations available to common unitholders (numerator):
Income (loss) from continuing operations	$	(29,404	)	$	60,690		$	(32,593	)	$	64,536
Less: Preferred unit distributions		(1,910	)		(1,910	)		(3,819	)		(3,819	)
Income (loss) from continuing operations available to common unitholders	$	(31,314	)	$	58,780		$	(36,412	)	$	60,717
Common units (denominator):
Weighted average units outstanding — basic		44,305			44,086			44,287			44,064
Dilutive units from stock options and awards (1)		—			814			—			776
Weighted average units outstanding — diluted (1)		44,305			44,900			44,287			44,840

(Unaudited, in thousands, except per share or unit and apartment unit data)

~~(1)~~Debt ~~For~~Maturities the three and six months ended June 30, 2008, the potential dilution from the Company’s outstanding stock options to purchase 307 and 358 shares, respectively, were antidilutive to the loss from continuing operations per unit calculation. As such, the amounts were excluded from weighted average units for the periods.

		For the three and six months ended June 30, 2008 and 2007, stock options to purchase 2,414 and 213 shares of common stock, respectively, and 2,414 and 183, respectively, were excluded from the computation of diluted earnings (loss) per common unit as these stock options and awards were antidilutive.
6.		DERIVATIVE FINANCIAL INSTRUMENTS
		The Operating Partnership adopted the provisions of SFAS No. 157 on January 1, 2008. To comply with the provisions of SFAS No. 157, the Operating Partnership’s fair value measurement of its derivative instrument at June 30, 2008 uses Level 2 observable inputs that incorporate credit valuation adjustments to appropriately reflect both its risk of nonperformance and the counterparty’s risk of nonperformance.
		At June 30, 2008, the Operating Partnership had an outstanding interest rate swap agreement with a notional value of approximately $93,890 with a maturity date in 2009. The swap arrangement is a variable to fixed rate swap at a fixed rate of 5.21% and the swap was designated as a cash flow hedge of the Operating Partnership’s FNMA variable rate debt. The interest rate swap agreement is included on the accompanying consolidated balance sheet at fair value. At June 30, 2008, the fair value of the interest rate swap agreement represented a liability of $2,189, and the liability was included in consolidated liabilities in the accompanying consolidated balance sheet. The increase in the value of this cash flow hedge of $1,499 and $35 for the three and six months ended June 30, 2008, respectively, was recorded as a change in accumulated other comprehensive income (loss), a partners’ equity account, in the accompanying consolidated balance sheet.
		In prior years, a previous interest rate swap arrangement, accounted for as a cash flow hedge, became ineffective under generally accepted accounting principles (SFAS No. 133, as amended). Under SFAS No. 133, as amended, the Operating Partnership is required to amortize into interest expense the cumulative unrecognized loss on the terminated interest rate swap arrangement of

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

-32-


Remainder of 2009	$	770
2010		132,032	(1)
2011		59,637
2012		104,381
2013		206,515
Thereafter		583,455

	$	1,086,790

(1)	Includes outstanding balances on lines of credit totaling $29,913.

Debt Issuances

In January 2009, the Operating Partnership closed five, cross-collateralized secured mortgage loans. The mortgage loans have an aggregate principal amount of approximately $202,162, require interest-only payments for the first two years and then principal and interest payments for the remaining term of the loans based on a 30-year amortization schedule. The loans bear interest at a fixed rate of 5.99% and mature in 2019. In April 2009, certain documents related to these loans were modified to facilitate the securitization of such loans under a Federal Home Loan Mortgage Corporation multifamily loan securitization program. Such amendments did not change the basic economic terms of the loans; however, in connection with such amendments the Operating Partnership received modification fees in an aggregate amount of approximately $2,022 plus reimbursement of certain costs incurred in connection with such modifications. The modification fees received will be amortized over the remaining term of the loans.

In March 2009, the Operating Partnership refinanced a maturing $33,954 mortgage loan using the proceeds of a new $34,800 mortgage loan. The new mortgage loan requires monthly interest-only payments for the first two years and then requires monthly principal and interest payments for the remaining term of the loan based on a 30-year amortization schedule. The loan bears interest at a fixed rate of 5.61% and matures in 2019.

In April 2009, the Operating Partnership closed a $51,555 mortgage loan. The mortgage loan requires interest-only payments for the first two years and then principal and interest payments for the remaining term of the loan based on a 30-year amortization schedule. The loan bears interest at a fixed rate of 5.84% through its initial maturity in 2018, at which time the loan is automatically extended for one year to 2019 and bears a variable interest rate based on a 250 basis point spread over the Freddie Mac Reference Bills^® Securities rate.

Debt Retirements

In February 2009, the Operating Partnership made a public tender offer for any and all of its $185,000, 7.7% senior unsecured notes due December 2010 and its $100,000, 5.125% senior unsecured notes due October 2011. Upon expiration of the tender offer, the Operating Partnership repurchased $84,495 of its 7.7% senior notes due December 2010 at par and $90,363 face amount of its 5.125% senior notes due October 2011 at $85,845. This note repurchase resulted in a net gain on extinguishment of $3,445.

In March 2009, the Operating Partnership fully redeemed its $92,275 weekly remarketed, variable rate taxable mortgage bonds. The Operating Partnership also settled and terminated a related interest rate swap arrangement (see note 6) in conjunction with the debt extinguishment. The bond retirement and swap termination resulted in a net extinguishment loss of $2,626.

Unsecured Lines of Credit

At June 30, 2009, the Operating Partnership utilizes a $600,000 syndicated unsecured revolving line of credit (the “Syndicated Line”) that matures in April 2010 for its short-term financing needs. The Syndicated Line may be extended for an additional year at the Operating Partnership’s option through April 2011. The Syndicated Line currently has a stated interest rate of LIBOR plus 0.80% or the prime rate and was provided by a syndicate of 16 banks led by Wells Fargo Bank, N.A. and JPMorgan Chase Bank, N.A. Additionally, the Syndicated Line requires the payment of annual facility fees currently equal to 0.175% of the aggregate loan commitment. The Syndicated Line provides for the interest rate and facility fee rate to be adjusted up or down based on changes in the credit ratings on the Operating Partnership’s senior unsecured debt (see below).

- 33 -

POST APARTMENT HOMES, L.P. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

~~$4,021,~~NOTES ~~included~~TO inCONSOLIDATED ~~partners’~~FINANCIAL ~~equity,~~STATEMENTS over the remaining life of the swap through 2009. Total amortization expense related to this swap was $281 for the three months ended and $562 for the six months ended June 30, 2008 and 2007. On February 1, 2008, a $28,495 interest rate cap arrangement expired on its maturity date with no change in value from December 31, 2007. A summary of comprehensive income (loss) for the three and six months ended June 30, 2008 and 2007 is as follows:

	Three months ended					Six months ended
	June 30,					June 30,
	2008			2007		2008			2007
Net income (loss)	$	(25,276	)	$	64,848	$	(22,583	)	$	89,670
Change in derivatives (1)		1,780			1,060		597			1,128
Comprehensive income (loss)	$	(23,496	)	$	65,908	$	(21,986	)	$	90,798

(Unaudited, in thousands, except per share or unit and apartment unit data)

~~(1)~~ The ~~For~~rates under the ~~three~~Syndicated ~~and~~Line ~~six~~are ~~months~~based ~~ended~~on ~~June~~the 30higher of the Operating Partnership’s unsecured debt ratings in instances where the Operating Partnership has split unsecured debt ratings. The Syndicated Line also includes a competitive bid option for short-term funds up to 50% of the loan commitment at rates generally below the stated line rate. The credit agreement for the Syndicated Line contains customary restrictions, ~~2008~~representations, covenants and ~~2007~~events of default, including fixed charge coverage and maximum leverage ratios. The Syndicated Line also restricts the ~~change~~amount inof ~~derivatives~~capital ~~balance~~the ~~includes~~Operating anPartnership ~~adjustment~~can invest in specific categories of ~~$281~~assets, such as improved land, properties under construction, condominium properties, non-multifamily properties, debt or equity securities, notes receivable and ~~$562~~unconsolidated affiliates. At June 30, ~~respectively~~2009, ~~for~~the ~~amortized~~Operating Partnership ~~swap~~had ~~costs~~issued ~~included~~letters inof ~~net~~credit ~~income~~to third parties totaling $3,654 under this facility.

7.		SEGMENT INFORMATION
		Segment Description
		In accordance with SFAS No. 131, “Disclosure About the Segments of an Enterprise and Related Information,” the Operating Partnership presents segment information based on the way that management organizes the segments within the enterprise for making operating decisions and assessing performance. The segment information is prepared on the same basis as the internally reported information used by the Operating Partnership’s chief operating decision makers to manage the business.
		The Operating Partnership’s chief operating decision makers focus on the Operating Partnership’s primary sources of income from apartment community rental operations. Apartment community rental operations are generally broken down into four segments based on the various stages in the apartment community ownership lifecycle. These segments are described below. All commercial properties and other ancillary service and support operations are combined in the line item “other” in the accompanying segment information. The segment information presented below reflects the segment categories based on the lifecycle status of each community as of January 1, 2007. The segment information for the three months ended June 30, 2007 has been adjusted due to the restatement impact of reclassifying the operating results of the assets designated as held for sale or sold subsequent to June 30, 2007 to discontinued operations under SFAS No. 144 (see note 2).

In March 2009, Standard & Poor’s rating service lowered the Operating Partnership’s corporate credit rating to BBB- from BBB and at the same time revised its outlook to stable. This change resulted in the interest rate spread increase to 80.0 basis points over LIBOR from 57.5 basis points on the Operating Partnership’s revolving lines of credit and the facility fee increased to 17.5 basis points from 15.0 basis points.

•Additionally, ~~Fully~~at ~~stabilized~~June 30, ~~communities~~2009, ~~— those apartment communities which have been stabilized (~~the ~~earlier~~Operating ofPartnership ~~the~~had ~~point at which~~ a ~~property~~$30,000 ~~reaches~~unsecured ~~95%~~line ~~occupancy~~of orcredit ~~one~~with ~~year~~Wells ~~after~~Fargo ~~completion~~Bank, ofN.A. ~~construction) for both~~ (the ~~current~~“Cash ~~and~~Management ~~prior year~~Line”). •The ~~Communities~~Cash ~~stabilized~~Management ~~during~~Line ~~2007~~matures ~~— communities which reached stabilized occupancy~~ in ~~the~~April ~~prior~~2010 and ~~year.~~carries •pricing ~~Development, rehabilitation~~ and ~~lease-up~~terms, ~~communities~~including —debt ~~those apartment communities under development~~covenants, ~~rehabilitation~~substantially ~~and~~consistent ~~lease-up~~with ~~during~~ the ~~period.~~Syndicated • Condominium conversion and other communities — those portions of existing apartment communities being converted into condominiums and other communities converted to joint venture ownership that are reflected in continuing operationsLine. ~~• Acquired communities — those communities acquired in the current or prior year.~~

~~Segment~~Debt ~~Performance~~Compliance Measure Management uses contribution to consolidated property net operating income (“NOI”) as the performance measure for its operating segments. The Operating Partnership uses net operating income, including net operating income of stabilized communities, as an operating measure. Net operating income is defined as rental and other property revenue from real estate operations less total property and maintenance expenses from real estate operations (excluding depreciation and amortization). The Operating Partnership believes that net operating income is an important supplemental measure of operating performance for a REIT’s operating real estate because it provides a measure of the core operations, rather than factoring in depreciation and

~~-33-~~The Operating Partnership’s Syndicated Line and senior unsecured notes contain customary restrictions, representations and events of default and require the Operating Partnership to meet certain financial covenants. Debt service and fixed charge coverage covenants require the Operating Partnership to maintain coverages of a minimum of 1.5 to 1.0, as defined in applicable debt arrangements. Leverage covenants generally require the Operating Partnership to maintain calculated covenants above/below minimum/maximum thresholds. The primary leverage ratios under these arrangements include total debt to total asset value (maximum of 60%), total secured debt to total asset value (maximum of 35% or 40%, respectively) and unencumbered assets to unsecured debt (minimum of 1.5 to 1.0 or 1.6 to 1.0, respectively), as defined in the applicable debt arrangements. Management believes the Operating Partnership was in compliance with these financial covenants at June 30, 2009.

5.	EQUITY AND NONCONTROLLING INTERESTS

Computations of Earnings (Loss) Per Common Unit


		Three months ended June 30,				Six months ended June 30,
		2009		2008		2009		2008
Loss from continuing operations attributable to common unitholders (numerator):
Loss from continuing operations		$	(83,963)	$	(28,801)	$	(84,324)	$	(30,757)
Noncontrolling interests - consolidated real estate entities			8,150		293		8,226		(173)
Preferred unit distributions			(1,910)		(1,910)		(3,819)		(3,819)
Unvested restricted stock (allocation of earnings)			202		56		177		48

Loss from continuing operations attributable to common unitholders		$	(77,521)	$	(30,362)	$	(79,740)	$	(34,701)


Common units (denominator):
Weighted average units outstanding - basic			44,337		44,305		44,335		44,287
Dilutive units from stock options (1)			-		-		-		-

Weighted average units outstanding - diluted (1)			44,337		44,305		44,335		44,287


(1)	The potential dilution from the Company’s outstanding stock options to purchase 0 and 268 shares, for the three months ended June 30, 2009 and 2008, respectively, and 0 and 322 shares, for the six months ended June 30, 2009 and 2008, respectively, were antidilutive to the loss from continuing operations per unit calculation. As such, these amounts were excluded from weighted average units for the periods.

- 34 -

POST APARTMENT HOMES, L.P. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

~~amortization,~~NOTES ~~financing~~TO ~~costs~~CONSOLIDATED ~~and~~FINANCIAL ~~general~~STATEMENTS and administrative expenses generally incurred at the corporate level. This measure is particularly useful, in the opinion of the Operating Partnership, in evaluating the performance of operating segment groupings and individual properties. Additionally, the Operating Partnership believes that net operating income, as defined, is a widely accepted measure of comparative operating performance in the real estate investment community. The Operating Partnership believes that the line on the Operating Partnership’s consolidated statement of operations entitled “net income” is the most directly comparable GAAP measure to net operating income. Segment Information The following table reflects each segment’s contribution to consolidated revenues and NOI together with a reconciliation of segment contribution to property NOI to consolidated net income (loss) for the three and six months ended June 30, 2008 and 2007. Additionally, substantially all of the Operating Partnership’s assets relate to the Operating Partnership’s property rental operations. Asset cost, depreciation and amortization by segment are not presented because such information at the segment level is not reported internally.

	Three months ended						Six months ended
	June 30,						June 30,
	2008			2007			2008			2007
Revenues
Fully stabilized communities	$	51,585		$	50,286		$	102,518		$	99,789
Communities stabilized during 2007		2,665			1,711			5,218			2,833
Development, rehabilitation and lease-up communities		4,543			3,974			8,838			7,799
Condominium conversion and other communities		188			2,760			389			6,784
Acquired communities		1,321			—			2,677			—
Other property segments		6,068			5,793			12,215			11,383
Other		235			128			474			245
Consolidated revenues	$	66,605		$	64,652		$	132,329		$	128,833
Contribution to Property Net Operating Income
Fully stabilized communities	$	30,190		$	30,223		$	60,914		$	60,257
Communities stabilized during 2007		1,621			618			3,051			795
Development, rehabilitation and lease-up communities		1,733			1,911			3,525			3,911
Condominium conversion and other communities		116			1,505			237			3,855
Acquired communities		720			—			1,385			—
Other property segments, including corporate management expenses		(1,565	)		(1,998	)		(3,269	)		(3,846	)
Consolidated property net operating income		32,815			32,259			65,843			64,972
Interest income		61			213			271			463
Other revenues		235			128			474			245
Minority interest in consolidated property partnerships		427			(716	)		61			(693	)
Depreciation		(14,386	)		(14,375	)		(28,649	)		(28,726	)
Interest expense		(10,112	)		(10,863	)		(20,268	)		(21,908	)
Amortization of deferred financing costs		(859	)		(829	)		(1,710	)		(1,641	)
General and administrative		(4,956	)		(5,959	)		(10,804	)		(11,407	)
Investment and development		(1,356	)		(1,955	)		(2,814	)		(3,505	)
Strategic review costs		(2,091	)		—			(8,161	)		—
Impairment and severance charges		(29,300	)		—			(29,300	)		—
Gains (losses) on sales of real estate assets, net		(368	)		62,738			1,751			66,444
Equity in income of unconsolidated real estate entities		420			310			821			814
Other income (expense)		66			(261	)		(108	)		(522	)
Income (loss) from continuing operations		(29,404	)		60,690			(32,593	)		64,536
Income from discontinued operations		4,128			4,158			10,010			25,134
Net income (loss)	$	(25,276	)	$	64,848		$	(22,583	)	$	89,670

(Unaudited, in thousands, except per share or unit and apartment unit data)

~~-34-~~Stock options to purchase 2,527 shares of common stock for the three and six months ended June 30, 2009 and 2,414 shares of common stock for the three and six months ended June 30, 2008 were excluded from the computation of diluted earnings (loss) per common unit as these stock options were antidilutive.

Noncontrolling Interests

The Operating Partnership adopted SFAS No. 160 on January 1, 2009. SFAS No. 160, in conjunction with other existing GAAP, established criterion used to evaluate the characteristics of noncontrolling interests in consolidated entities to determine whether noncontrolling interests are classified and accounted for as permanent equity or “temporary” equity (presented between liabilities and permanent equity on the consolidated balance sheet). In conjunction with the issuance of SFAS No. 160, EITF Topic No. D-98, “Classification and Measurement of Redeemable Securities,” (“EITF D-98”) was revised to clarify the treatment of noncontrolling interests with redemption provisions. If a noncontrolling interest has a redemption feature that permits the issuer to settle in either cash or common shares at the option of the issuer but the equity settlement feature is deemed to be outside of the control of the issuer, then those noncontrolling interests are classified as “temporary” equity. The Operating Partnership currently has two types of noncontrolling interests, (1) noncontrolling interests related to its non-Company common unitholders and (2) noncontrolling interests related to its consolidated real estate entities. The Operating Partnership determined that the noncontrolling interests related to its non-Company common unitholders met the criterion to be classified and accounted for as “temporary” equity (reflected outside of total equity as “Redeemable Common Units”). The Operating Partnership further determined that the noncontrolling interests in its consolidated real estate entities met the criterion to be classified and accounted for as a component of permanent equity.

For the three and six months ended June 30, 2009 and 2008, income from continuing operations, income from discontinued operations and net income available to the Operating Partnership were comprised of the following amounts, net of its noncontrolling interests:


	Three months ended June 30,				Six months ended June 30,
	2009		2008		2009		2008
Loss from continuing operations	$	(75,813)	$	(28,508)	$	(76,098)	$	(30,930)
Income from discontinued operations		26,768		3,232		29,377		8,347

Net income available to the Operating Partnership	$	(49,045)	$	(25,276)	$	(46,721)	$	(22,583)

6.	FAIR VALUE MEASURES AND OTHER FINANCIAL INSTRUMENTS

The Operating Partnership applies SFAS No. 157, “Fair Value Measurements,” in relation to the valuation of real estate assets recorded at fair value, to its impairment valuation analysis of real estate assets (see note 8) and to its disclosure of the fair value of financial instruments, principally indebtedness (see note 4). The disclosure of estimated fair value of real estate assets and long-term indebtedness was determined by management using available market information and appropriate valuation methodologies available to management at June 30, 2009. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, there can be no assurance that the estimates presented below, using Level 2 and 3 inputs, are indicative of the amounts the Operating Partnership could realize on disposition of the real estate assets or indebtedness. The use of different market assumptions and/or estimation methodologies could have a material effect on the estimated fair value amounts.

At June 30, 2009, certain parcels of land held for sale were carried at their estimated fair value of $14,850 on the Operating Partnership’s consolidated balance sheet, using Level 3 inputs consisting primarily of comparable appraisals and land sale activity. There was no change in the estimated fair value of these land parcels measured under SFAS No. 157 for the three and six months ended June 30, 2009. In the three and six months ended June 30, 2009, the Operating Partnership recognized impairment charges (see notes 3 and 8) to write-off a parcel of land held for future investment to its estimated fair value of zero and to write-down its investment in an unconsolidated entity constructing condominiums to its estimated fair value, resulting in a credit investment of $39,820. The estimated fair value of the land and condominiums was determined using Level 3 inputs, consisting primarily of independent appraisals and discounted cash flow models.

At June 30, 2009, the estimated fair value of fixed rate debt was approximately $1,039,672 (carrying value of $1,048,724) and the estimated fair value of the Operating Partnership’s variable rate debt, including the Operating Partnership’s lines of credit, was approximately $36,329 (carrying value of $38,066).

- 35 -

POST APARTMENT HOMES, L.P. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

8.		IMPAIRMENT AND SEVERANCE COSTS
		After an evaluation of its development pipeline in light of difficult current market conditions, the Operating Partnership recorded impairment charges of approximately $28,947 in the second quarter of 2008. The impairment charges relate to the substantial cessation of current development activities associated with four land parcels in pre-development which were written down to their estimated fair market values, as well as the write-off of capitalized pursuit costs associated with certain abandoned projects. Fair market value for the assets recorded at fair value in the second quarter of 2008 was determined using Level 3 unobservable inputs, such as estimated cash flows, market capitalization rates and market internal rates of return.
		Additionally, in the second quarter of 2008, the Operating Partnership recorded severance charges of approximately $353 related to a management and staff workforce reduction that was initiated in the second quarter. The impairment and severance charges reflected management’s decision to reduce the size of its workforce and lower overhead expenses in response in part to its decision to reduce the number of markets in which the Operating Partnership operates, to sell additional operating assets and to focus its development strategy on fewer projects in the near term. The Operating Partnership expects to record additional severance charges in the third quarter of 2008 of approximately $1,600 relating to additional headcount reductions in July 2008. The Operating Partnership may also record additional severance charges in the second half of 2008 or in future periods, depending on market conditions and the Operating Partnership’s business plans.
		In prior years, the Operating Partnership recorded severance charges associated with the departure of certain executive officers of the Operating Partnership. Under certain of these arrangements, the Operating Partnership is required to make certain payments and provide specified benefits through 2013 and 2016. The following table summarizes the activity relating to aggregate net severance charges for the six months ended June 30, 2008 and 2007:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Six months ended
	June 30,
	2008			2007
Accrued severance charges, beginning of period	$	11,215		$	12,832
Severance charges		353			283
Payments for period		(1,633	)		(1,518	)
Interest accretion		366			370
Accrued severance charges, end of period	$	10,301		$	11,967

(Unaudited, in thousands, except per share or unit and apartment unit data)

9.		SUPPLEMENTAL CASH FLOW INFORMATION
		Interest paid (including capitalized amounts of $6,671 and $5,795 for the six months ended June 30, 2008 and 2007, respectively), aggregated $30,458 and $32,651 for the six months ended June 30, 2008 and 2007, respectively.
		For the six months ended June 30, 2008 and 2007, the Operating Partnership and the Operating Partnership’s taxable REIT subsidiaries made income tax payments to federal and state taxing authorities totaling $1,700 and $1,062, respectively.
		Non-cash investing and financing activities for the six months ended June 30, 2008 and 2007 were as follows:
		For the six months ended June 30, 2008 and 2007, the Operating Partnership amortized approximately $562 of accumulated other comprehensive non-cash losses into earnings related to an interest rate swap derivative financial instrument (see note 6). Other than the amortization discussed herein, for the six months ended June 30, 2008 the Operating Partnership’s derivative financial instruments, accounted for as cash flow hedges, increased in value causing a decrease in accounts payable and accrued expenses and a corresponding decrease in partner’s equity of $35. For the six months ended June 30, 2007, the Operating Partnership’s derivative financial instruments accounted for as cash flow hedges decreased in value causing an increase in accounts payable and accrued expenses and a corresponding decrease in partner’s equity of $566.
		The Operating Partnership committed to distribute $19,982 and $21,831 for the three months ended June 30, 2008 and 2007, respectively.
		For the six months ended June 30, 2008 and 2007, the Company issued common shares for director compensation, totaling $278 and $277, respectively. These stock issuances were non-cash transactions. The Operating Partnership bears the compensation costs associated with the Company’s compensation plans. As such, the Operating Partnership issued common units to the Company in amounts equal to the above.

In March 2009, the Operating Partnership early terminated its only interest rate swap through a terminating payment of $1,554 to the swap counter-party. The swap was terminated in conjunction with the early extinguishment of the indebtedness being hedged by the swap. In 2008, this interest rate swap became ineffective under generally accepted accounting principles. As a result, the gross change in the market value of the interest rate swap arrangement from January 1, 2009 through the swap termination date in March 2009 of $874 was recognized in other income in the consolidated statement of operations. Additionally, the Operating Partnership was required to amortize into expense the cumulative unrecognized loss on the interest rate swap over the remaining life of the swap. Total amortization expense related to this swap was $658 from January 1, 2009 through the swap termination date in March 2009. The remaining unamortized loss on the swap of $1,161 was recognized as a loss on the termination of the swap and was included in the net gain (loss) from early debt extinguishment on the consolidated statement of operations for the six months ended June 30, 2009.

~~-35-~~A summary of comprehensive income for the three and six months ended June 30, 2009 and 2008 was as follows:


		Three months ended June 30,				Six months ended June 30,
		2009		2008		2009		2008
Net loss		$	(57,195)	$	(25,569)	$	(54,947)	$	(22,410)
Change in derivatives (1)			-		1,780		1,829		597

Total comprehensive income (loss)			(57,195)		(23,789)		(53,118)		(21,813)
Less:
Comprehensive income attributable to noncontrolling interests			8,150		293		8,226		(173)

Total Operating Partnership comprehensive income		$	(49,045)	$	(23,496)	$	(44,892)	$	(21,986)


(1)	For the six months ended June 30, 2009, the change in derivatives balance includes an adjustment of $658 for amortized swap costs as well as an adjustment for $1,161 to write-off the remaining unamortized balance in equity, both included in net income. For the three and six months ended June 30, 2008, the change in derivatives balance includes an adjustment of $281 and $562 for amortized swap costs included in net income.

7.	SEGMENT INFORMATION

Segment Description

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

The Operating Partnership’s chief operating decision makers focus on the Operating Partnership’s primary sources of income from apartment community rental operations. Apartment community rental operations are generally broken down into four segments based on the various stages in the apartment community ownership lifecycle. These segments are described below. All commercial properties and other ancillary service and support operations are combined in the line item “other” in the accompanying segment information. The segment information presented below reflects the segment categories based on the lifecycle status of each community as of January 1, 2008. The segment information for the three and six months ended June 30, 2008 has been adjusted due to the restatement impact of reclassifying the operating results of the assets designated as held for sale or sold subsequent to June 30, 2008 to discontinued operations under SFAS No. 144 (see note 2).

•

Communities stabilized during 2008 – communities which reached stabilized occupancy in the prior year.

- 36 -

POST APARTMENT HOMES, L.P. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

10.		EQUITY-BASED COMPENSATION PLANS
		Equity Compensation Plans
		As the primary operating subsidiary of the Company, the Operating Partnership participates in and bears the compensation expenses associated with the Company’s stock-based compensation plans. The information discussed below relating to the Company’s stock-based compensation plans is also applicable for the Operating Partnership.
		Incentive Stock Plans
		Incentive stock awards are granted under the Company’s 2003 Incentive Stock Plan (the “2003 Stock Plan”). Under the 2003 Stock Plan, an aggregate of 4,000 shares of common stock were reserved for issuance. Of this amount, not more than 500 shares of common stock are available for grants of restricted stock. The exercise price of each option granted under the 2003 Stock Plan may not be less than the market price of the Company’s common stock on the date of the option grant and all options may have a maximum life of ten years. Participants receiving restricted stock grants are generally eligible to vote such shares and receive dividends on such shares. Substantially all stock option and restricted stock grants are subject to annual vesting provisions (generally three to five years) as determined by the compensation committee overseeing the 2003 Stock Plan. At June 30, 2008, stock options outstanding under the 2003 Stock Plan and the Company’s previous stock plan totaled 2,414.
		Compensation costs for stock options have been estimated on the grant date using the Black-Scholes option-pricing method. The Company did not grant any stock options for the six months ended June 30, 2008. For options granted during the six months ended June 30, 2007, the weighted average assumptions used in the Black-Scholes option-pricing model were dividend yield of 3.8%, expected volatility of 18.1%, risk-free interest rate of 4.8% and expected option term of 5.0 years.
		The Company’s assumptions were derived from the methodologies discussed herein. The expected dividend yield reflects the Company’s current historical yield, which is expected to approximate the future yield. Expected volatility was based on the historical volatility of the Company’s common stock. The risk-free interest rate for the expected life of the options was based on the implied yields on the U.S. Treasury yield curve. The weighted average expected option term was based on the Company’s historical data for prior period stock option exercise and forfeiture activity.
		For the six months ended June 30, 2008 and 2007, the Company granted stock options to purchase zero and 199 shares of Company common stock, respectively, to Company officers and directors, of which zero and 28 shares, respectively, were granted to the Company’s non-executive chairman of the board. The Company recorded compensation expense related to stock options of $309 and $379 for the three months ended and $666 and $758 for the six months ended June 30, 2008 and 2007, respectively, under the fair value method. Upon the exercise of stock options, the Company issues shares of common stock from treasury shares or, to the extent treasury shares are not available, from authorized common shares.
		A summary of stock option activity under all plans for the six months ended June 30, 2008 and 2007 is presented below:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Six months ended
	June 30,
	2008					2007
				Weighted Average					Weighted Average
	Shares			Exercise Price		Shares			Exercise Price
Options outstanding, beginning of period		2,455		$	34		2,375		$	33
Granted		—			—		199			48
Exercised		(39	)		37		(94	)		36
Forfeited		(2	)		39		(7	)		41
Options outstanding, end of period		2,414			34		2,473			34
Options exercisable, end of period		2,037			33		1,648			33
Weighted-average fair value of options granted during the period	$	—				$	7.22

(Unaudited, in thousands, except per share or unit and apartment unit data)

At• ~~June 30~~Development, ~~2008,~~rehabilitation ~~there~~and ~~was~~lease-up ~~$1,007~~communities of– ~~unrecognized~~those ~~compensation~~apartment ~~cost~~communities ~~related~~under todevelopment, ~~unvested~~rehabilitation ~~stock~~and ~~options. This cost is expected to be recognized over a weighted~~lease-~~average~~up ~~period of 0.7 years. The total intrinsic value of stock options exercised~~ during the ~~six months ended June 30, 2008 and 2007 was $194 and $1,148, respectively~~period. The aggregate intrinsic values of stock options outstanding, exercisable and expected to vest at June 30, 2008 were $2,851, $2,376 and $2,805, respectively. The weighted average remaining contractual lives of stock options outstanding, exercisable and expected to vest at June 30, 2008 were 4.8, 4.4 and 4.8 years, respectively. Stock options expected to vest at June 30, 2008 totaled 2,389 at a weighted average exercise price of approximately $33.96.

~~-36-~~ • Condominium conversion and other communities – those portions of existing apartment communities being converted into condominiums and other communities converted to joint venture ownership that are reflected in continuing operations.

Segment Performance Measure

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

- 37 -

POST APARTMENT HOMES, L.P. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

AtNOTES ~~June~~TO ~~30,~~CONSOLIDATED ~~2008,~~FINANCIAL ~~the~~STATEMENTS Company had separated its outstanding options into two ranges based on exercise prices. There were 1,380 options outstanding with exercise prices ranging from $23.90 to $36.13. These options have a weighted average exercise price of $29.17 and a weighted average remaining contractual life of 4.7 years. Of these outstanding options, 1,243 were exercisable at June 30, 2008 at a weighted average exercise price of $29.49. In addition, there were 1,034 options outstanding with exercise prices ranging from $36.47 to $48.00. These options had a weighted average exercise price of $40.37 and a weighted average remaining contractual life of 5.1 years. Of these outstanding options, 794 were exercisable at June 30, 2008 at a weighted average exercise price of $39.09. For the six months ended June 30, 2008 and 2007, the Company granted 78 and 49 shares of restricted stock, respectively, to Company officers and directors, of which 9 and 4 shares, respectively, were granted to the Company’s non-executive chairman of the board. The restricted share grants generally vest ratably over three to five year periods. The weighted average grant date fair value for the restricted shares for the six months ended June 30, 2008 and 2007 was $42.25 and $48.15, respectively, per share. The total value of the restricted share grants for the six months ended June 30, 2008 and 2007 was $3,308 and $2,371, respectively. The compensation cost is amortized ratably into compensation expense over the applicable vesting periods. Total compensation expense relating to the restricted stock was $822 and $619 for the three months ended and $1,574 and $1,104 for the six months ended June 30, 2008 and 2007, respectively. A summary of the activity related to the Company’s restricted stock for the six months ended June 30, 2008 and 2007 is presented below:

	Six months ended
	June 30,
	2008					2007
				Weighted Average					Weighted Average
				Grant-Date					Grant-Date
	Shares			Fair Value		Shares			Fair Value
Unvested shares, beginning or period		119		$	35		125		$	31
Granted		78			42		49			48
Vested		(8	)		36		(4	)		28
Forfeited		—			—		(1	)		41
Unvested shares, end of period		189			38		169			36

(Unaudited, in thousands, except per share or unit and apartment unit data)

		At June 30, 2008, there was $5,225 of unrecognized compensation cost related to restricted stock. This cost is expected to be recognized over a weighted average period of 2.2 years. The total intrinsic value of restricted shares vested for the six months ended June 30, 2008 and 2007 was $292 and $235, respectively.
		Employee Stock Purchase Plan
		The Company maintains an Employee Stock Purchase Plan (the “ESPP”) under a plan approved by Company shareholders in 2005, and the maximum number of shares issuable is 300. The purchase price of shares of common stock under the ESPP is equal to 85% of the lesser of the closing price per share of common stock on the first or last day of the trading period, as defined. The Company records the aggregate cost of the ESPP (generally the 15% discount on the share purchases) as a period expense. Total compensation expense relating to the ESPP was zero and $61 for the three months ended and $75 and $123 for the six months ended June 30, 2008 and 2007, respectively.
11.		INCOME TAXES
		Income or losses of the Operating Partnership are allocated to the partners of the Operating Partnership for inclusion in their respective income tax returns. Accordingly, no provisions or benefit for income taxes has been made in the accompanying financial statements. The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). In order for the Company to qualify as a REIT, it must distribute 90% of its REIT taxable income, as defined in the Code, to its unitholders and satisfy certain other organizational and operating requirements. The Operating Partnership intends to make sufficient cash distributions to the Company to enable it to meet its annual REIT distribution requirements.
		In the preparation of income tax returns in federal and state jurisdictions, the Operating Partnership and its taxable REIT subsidiaries assert certain tax positions based on their understanding and interpretation of the income tax law. The taxing authorities may challenge such positions and the resolution of such matters could result in the payment and recognition of additional income tax expense. Management believes it has used reasonable judgments and conclusions in the preparation of its

Segment Information

~~-37-~~The following table reflects each segment’s contribution to consolidated revenues and NOI together with a reconciliation of segment contribution to property NOI to consolidated net income for the three and six months ended June 30, 2009 and 2008. Additionally, substantially all of the Operating Partnership’s assets relate to the Operating Partnership’s property rental operations. Asset cost, depreciation and amortization by segment are not presented because such information at the segment level is not reported internally.


	Three months ended June 30,				Six months ended June 30,
	2009		2008		2009		2008
Revenues
Fully stabilized communities	$	57,292	$	59,297	$	114,985	$	117,907
Communities stabilized during 2008		2,698		2,384		5,352		4,504
Development, rehabilitation and lease-up communities		3,495		2,160		6,240		4,334
Condominium conversion and other communities		38		188		107		389
Other property segments		5,318		6,287		11,109		12,655
Other		277		235		503		474

Consolidated revenues	$	69,118	$	70,551	$	138,296	$	140,263


Contribution to Property Net Operating Income
Fully stabilized communities	$	34,590	$	34,519	$	69,214	$	69,139
Communities stabilized during 2008		1,531		1,191		2,967		1,998
Development, rehabilitation and lease-up communities		668		469		1,232		1,393
Condominium conversion and other communities		24		116		68		237
Other property segments, including corporate management expenses		(630)		(1,174)		(1,044)		(2,569)

Consolidated property net operating income		36,183		35,121		72,437		70,198


Interest income		23		61		138		271
Other revenues		277		235		503		474
Depreciation		(18,009)		(15,213)		(35,601)		(30,310)
Interest expense		(12,241)		(11,004)		(26,419)		(22,035)
Amortization of deferred financing costs		(682)		(859)		(1,616)		(1,710)
General and administrative		(3,964)		(4,351)		(8,373)		(9,485)
Investment and development		(793)		(1,274)		(1,790)		(2,664)
Other investment costs		(646)		(244)		(1,299)		(499)
Strategic review costs		-		(2,091)		-		(8,161)
Impairment, severance and other charges		(9,658)		(29,300)		(9,658)		(29,300)
Gains (losses) on sales of real estate assets, net		232		(368)		(28)		1,751
Equity in income (loss) of unconsolidated real estate entities		(74,656)		420		(74,546)		821
Other income (expense), net		50		66		1,109		(108)
Net gain (loss) on early extinguishment of indebtedness		(79)		-		819		-


Loss from continuing operations		(83,963)		(28,801)		(84,324)		(30,757)
Income from discontinued operations		26,768		3,232		29,377		8,347


Net loss	$	(57,195)	$	(25,569)	$	(54,947)	$	(22,410)

- 38 -

POST APARTMENT HOMES, L.P. ~~NOTES~~ ~~TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in thousands, except per share or unit and apartment unit data)~~

		income tax returns. The Operating Partnership and its subsidiaries’ (including the TRSs) income tax returns are subject to examination by federal and state tax jurisdictions for years 2004 through 2006. Net income tax loss carryforwards and other tax attributes generated in years prior to 2004 are also subject to challenge in any examination of the 2004 to 2006 tax years.
		As of June 30, 2008, the Operating Partnership’s taxable REIT subsidiaries (“TRSs”) had unrecognized tax benefits of approximately $797 which primarily related to uncertainty regarding the sustainability of certain deductions taken on prior year income tax returns of the TRS with respect to the amortization of certain intangible assets. The Operating Partnership does not expect any significant change in this unrecognized tax benefit in the remainder of 2008. To the extent these unrecognized tax benefits are ultimately recognized, they may affect the effective tax rate in a future period. The Operating Partnership’s policy is to recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense. Accrued interest and penalties for the three and six months ended June 30, 2008 and at June 30, 2008 were not material to the Operating Partnership’s results of operations, cash flows or financial position.
		The Operating Partnership utilizes TRSs principally to perform such non-REIT activities as asset and property management, for-sale housing (condominiums) conversions and sales and other services. These TRSs are subject to federal and state income taxes. For the three and six months ended June 30, 2008, the TRS recorded no net income tax expense (benefit) as the provision for estimated income taxes payable is expected to be fully offset by deferred tax benefits resulting from current period temporary differences and reductions of valuation allowances recorded in prior years.
		At December 31, 2007, management had established valuation allowances of approximately $3,157 against net deferred tax assets due primarily to historical losses at the TRSs in years prior to 2007 and the variability of the income of these subsidiaries. The tax benefits associated with such unused valuation allowances may be recognized in future periods, if the taxable REIT subsidiaries generate sufficient taxable income to utilize such amounts or if the Operating Partnership determines that it is more likely than not that the related deferred tax assets are realizable.
		A summary of the components of the TRS deferred tax assets and liabilities at December 31, 2007 are included in the footnotes to the Operating Partnership’s audited financial statements included in the Form 10-K. Other than the activity discussed above relating to the three and six months ended June 30, 2008, there were no material changes to the components of deferred tax assets and liabilities at June 30, 2008.
12.		LEGAL PROCEEDINGS, COMMITMENTS AND CONTINGENCIES
		In November 2006, the Equal Rights Center (“ERC”) filed a lawsuit against the Company and the Operating Partnership in the United States District Court for the District of Columbia. This suit alleges various violations of the Fair Housing Act (“FHA”) and the Americans with Disabilities Act (“ADA”) at properties designed, constructed or operated by the Company and the Operating Partnership in the District of Columbia, Virginia, Colorado, Florida, Georgia, New York, North Carolina and Texas. The plaintiff seeks compensatory and punitive damages in unspecified amounts, an award of attorneys’ fees and costs of suit, as well as preliminary and permanent injunctive relief that includes retrofitting multi-family units and public use areas to comply with the FHA and the ADA and prohibiting construction or sale of noncompliant units or complexes. On April 18, 2007, ERC filed a motion for a preliminary injunction to prohibit the Company and the Operating Partnership from selling any alleged noncompliant apartment communities or condominium units while the litigation is ongoing. On July 25, 2007 the court entered an order denying ERC’s motion for the preliminary injunction. Fact discovery is mostly completed by both parties, and the parties exchanged affirmative expert reports on July 8, 2008. According to an amended scheduling order issued by the court on July 13, 2008, the parties are to exchange expert rebuttal reports on October 3, 2008, complete expert discovery by November 18, 2008, and submit the last briefing on dispositive motions by February 3, 2009. It is possible that the dates set forth in the Court’s current scheduling order will be further extended. At this stage in the proceeding, it is not possible to predict or determine the outcome of the lawsuit, nor is it possible to estimate the amount of loss that would be associated with an adverse decision.
		The Operating Partnership is involved in various other legal proceedings incidental to its business from time to time, most of which are expected to be covered by liability or other insurance. Management of the Operating Partnership believes that any resolution of pending proceedings or liability to the Operating Partnership which may arise as a result of these various other legal proceedings will not have a material adverse effect on the Operating Partnership’s results of operations or financial position.
		The Operating Partnership has recently undertaken an initiative to evaluate potential water penetration damage in certain of its communities with an exterior insulation finishing system (“EFIS”). The Operating Partnership has initiated an inspection process of each of its EFIS communities for the purpose of determining what, if any, improvements will be required at the communities. At this stage in the evaluation process, it is not possible to estimate the range of possible future improvement costs.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~-38-~~(Unaudited, in thousands, except per share or unit and apartment unit data)

8.	IMPAIRMENT, SEVERANCE AND OTHER CHARGES

For the three and six months ended June 30, 2009, the Operating Partnership recorded aggregate impairment charges of $76,317 (net of $8,074 of noncontrolling interests) to write-down the carrying value of its investment in an unconsolidated condominium development and a parcel of adjacent land. These impairment charges are more fully discussed in note 3.

In prior years, the Operating Partnership recorded severance charges associated with the departure of certain executive officers of the Operating Partnership. Under certain of these arrangements, the Operating Partnership is required to make certain payments and provide specified benefits through 2013 and 2016. The following table summarizes the activity relating to aggregate net severance charges for such executive officers for the six months ended June 30, 2009 and 2008:


	Six months ended June 30,
	2009		2008

Accrued severance charges, beginning of period	$	9,405	$	11,215
Severance charges		-		353
Payments for period		(1,184)		(1,633)
Interest accretion		279		366

Accrued severance charges, end of period	$	8,500	$	10,301

The Operating Partnership recorded impairment charges of approximately $28,947 in the three and six months ended June 30, 2008. The impairment charges related to the substantial cessation of current development activities associated with four land parcels in pre-development which were written down to their estimated fair market values, as well as the write-off of capitalized pursuit costs associated with certain abandoned projects. Additionally, in the second quarter of 2008, the Operating Partnership recorded severance charges of approximately $353 related to a management and staff workforce reduction that was initiated in the second quarter. The impairment and severance charges reflected management’s decision to reduce the size of its workforce and lower overhead expenses in response in part to its decision to reduce the number of markets in which the Operating Partnership operates, to sell additional operating assets and to focus its development strategy on fewer projects in the near term.

In 2008, the Company announced that its Board of Directors had initiated a formal process to pursue a possible business combination or other sale transaction. The process ended in the second quarter of 2008 without a business combination or other sale transaction. For the three and six months ended June 30, 2008, the Operating Partnership incurred approximately $2,091 and $8,161, respectively, of strategic review costs related to this process.

9.	SUPPLEMENTAL CASH FLOW INFORMATION

For the six months ended June 30, 2009 and 2008, the Operating Partnership and the Operating Partnership’s taxable REIT subsidiaries made income tax payments to federal and state taxing authorities totaling $1,028 and $1,700, respectively.

Non-cash investing and financing activities for the six months ended June 30, 2009 and 2008 were as follows:

In the three months ended June 30, 2009, the Operating Partnership became the majority owner of and consolidated a previously unconsolidated entity (see note 3). This consolidation resulted in increases in land held for future investment and other assets of $9,658, cash of $248, indebtedness of $8,153, accounts payable and accrued expenses of $192 and noncontrolling interests of $1,560. This was a non-cash transaction.

For the six months ended June 30, 2009 and 2008, the Operating Partnership amortized approximately $658 and $562, respectively, of accumulated other comprehensive non-cash losses into earnings related to an interest rate swap derivative financial instrument (see note 6). For the six months ended June 30, 2009, the Operating Partnership recognized a loss equal to the remaining unamortized balance of accumulated other comprehensive income (an equity account) of $1,161 related to a terminated interest rate swap derivative financial instrument. The Operating Partnership also recognized other income during the first quarter of $874 to record an increase in the value of the ineffective interest rate swap derivative financial instrument prior to its termination (see note 6). This increase in value also caused a decrease in accounts payable and accrued expenses during the first half of 2009. Other than the amortization discussed herein, for the six months ended June 30, 2008, the Operating Partnership’s derivative financial instruments, accounted for as cash flow hedges, increased in value causing a decrease in accounts payable and accrued expenses and a corresponding decrease in equity of $35.

- 39 -

~~MANAGEMENT’S~~POST ~~DISCUSSION~~APARTMENT ~~AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (In thousands~~HOMES, ~~except~~L.P. ~~per share and apartment unit data)~~

~~ITEM~~NOTES 2.TO ~~MANAGEMENT’S~~CONSOLIDATED ~~DISCUSSION AND ANALYSIS OF~~ FINANCIAL ~~CONDITION~~STATEMENTS ~~AND RESULTS OF OPERATIONS~~

(Unaudited, in thousands, except per share or unit and apartment unit data)

The Operating Partnership pays distributions a quarter in arrears. At June 30, 2009 and 2008, the Operating Partnership committed to distribute and had accrued $8,914 and $19,982, respectively.

For the six months ended June 30, 2009 and 2008, the Company issued common shares for director compensation, totaling $44 and $278, respectively. These were non-cash transactions. The Operating Partnership bears the compensation costs associated with the Company’s compensation plans. As such, the Operating Partnership issued common units to the Company in amounts equal to the above.

10.

EQUITY-BASED COMPENSATION PLANS

Equity Compensation Plans

As the primary operating subsidiary of the Company, the Operating Partnership participates in and bears the compensation expenses associated with the Company’s stock-based compensation plans. The information discussed below relating to the Company’s stock-based compensation plans is also applicable for the Operating Partnership.

Incentive Stock Plans

A summary of stock option activity under all plans for the six months ended June 30, 2009 and 2008 is presented below:


	Six months ended June 30,
	2009				2008
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Options outstanding, beginning of period		2,382	$	34		2,455	$	34
Granted		346		12		-		-
Exercised		-		-		(39)		37
Forfeited		(201)		36		(2)		39

Options outstanding, end of period		2,527		31		2,414		34

Options exercisable, end of period		2,121		33		2,037		33

Weighted-average fair value of options granted during the period	$	2.09			$	-

- 40 -

POST APARTMENT HOMES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited, in thousands, except per share or unit and apartment unit data)

4.7 years, respectively. Stock options expected to vest at June 30, 2009 totaled 2,510 at a weighted average exercise price of approximately $30.84.

A summary of the activity related to the Company’s restricted stock for the six months ended June 30, 2009 and 2008 is presented below:


	Six months ended June 30,
	2009			2008
	Shares	Weighted Average Grant-Date Fair Value		Shares	Weighted Average Grant-Date Fair Value
Unvested share, beginning or period	128	$	33	119	$	35
Granted	106		12	78		42
Vested	-		-	(8)		36
Forfeited	(1)		43	-		-

Unvested shares, end of period	233		23	189		38

Employee Stock Purchase Plan

11. INCOME TAXES

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

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

- 41 -

POST APARTMENT HOMES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited, in thousands, except per share or unit and apartment unit data)

its income tax returns. The Operating Partnership and its subsidiaries’ (including the TRSs) income tax returns are subject to examination by federal and state tax jurisdictions for years 2005 through 2007. Net income tax loss carryforwards and other tax attributes generated in years prior to 2005 are also subject to challenge in any examination of the 2005 to 2007 tax years. In the fourth quarter of 2008, the Operating Partnership received notice that its TRSs’ federal income tax return for the 2005 was selected for Internal Revenue Service examination. At this stage, it is not possible to predict or determine the outcome of the examination, nor is it possible to estimate the amount or whether any adjustments will be required to that tax return.

As of June 30, 2009, the Operating Partnership’s taxable REIT subsidiaries (“TRSs”) had unrecognized tax benefits of approximately $797 which primarily related to uncertainty regarding the sustainability of certain deductions taken on prior year income tax returns of the TRS with respect to the amortization of certain intangible assets. The Operating Partnership does not expect any significant change in this unrecognized tax benefit in the remainder of 2009. To the extent these unrecognized tax benefits are ultimately recognized, they may affect the effective tax rate in a future period. The Operating Partnership’s policy is to recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense. Accrued interest and penalties for the six months ended June 30, 2009 and at June 30, 2009 were not material to the Operating Partnership’s results of operations, cash flows or financial position.

The Operating Partnership utilizes TRSs principally to perform such non-REIT activities as asset and property management, for-sale housing (condominiums) conversions and sales and other services. These TRSs are subject to federal and state income taxes. For the three and six months ended June 30, 2009, the TRS recorded no net income tax expense (benefit) as the provision for estimated income taxes payable is expected to be offset by deferred tax benefits resulting from current period temporary differences.

At December 31, 2008, management had established valuation allowances of approximately $24,121 against net deferred tax assets due primarily to historical losses at the TRSs in prior years and the variability of the income of these subsidiaries. The tax benefits associated with such unused valuation allowances may be recognized in future periods, if the taxable REIT subsidiaries generate sufficient taxable income to utilize such amounts or if the Operating Partnership determines that it is more likely than not that the related deferred tax assets are realizable.

A summary of the components of the TRS deferred tax assets and liabilities at December 31, 2008 are included in the footnotes to the Operating Partnership’s audited financial statements included in the Form 10-K. Other than the increase in net deferred tax assets and valuation allowances of approximately $29,800 resulting from impairment charges of $76,317 recorded at the TRSs in the three and six months ended June 30, 2009, there were no material changes to the components of deferred tax assets, deferred tax asset valuation allowances and deferred liabilities at June 30, 2009.

12. LEGAL PROCEEDINGS, COMMITMENTS AND CONTINGENCIES

In November 2006, the Equal Rights Center (“ERC”) filed a lawsuit against the Company and the Operating Partnership in the United States District Court for the District of Columbia. This suit alleges various violations of the Fair Housing Act (“FHA”) and the Americans with Disabilities Act (“ADA”) at properties designed, constructed or operated by the Company and the Operating Partnership in the District of Columbia, Virginia, Colorado, Florida, Georgia, New York, North Carolina and Texas. The plaintiff seeks compensatory and punitive damages, an award of attorneys’ fees and costs of suit, as well as preliminary and permanent injunctive relief that includes retrofitting multi-family units and public use areas to comply with the FHA and the ADA and prohibiting construction or sale of noncompliant units or complexes. On April 18, 2007, ERC filed a motion for a preliminary injunction to prohibit the Company and the Operating Partnership from selling any alleged noncompliant apartment communities or condominium units while the litigation is ongoing. On July 25, 2007 the court entered an order denying ERC’s motion for the preliminary injunction. Discovery was completed by both parties on April 30, 2008, with the exception of the Company and the Operating Partnership’s discovery related to ERC’s untimely $9 million damages allegation, which the Court has stayed pending resolution of certain motions. The parties filed cross-motions for summary judgment on December 17, 2008, oppositions to summary judgment on February 20, 2009, and replies in support of summary judgment on March 17, 2009. On February 20, 2009, the Department of Justice filed an amicus brief on behalf of ERC, and the Company and the Operating Partnership filed a response. In addition, the Company and the Operating Partnership have filed various additional pretrial motions, including two motions in limine and three motions to strike. The plaintiff has filed one motion to strike. The Court has not set a hearing or rendered its decision on the pending motions, including summary judgment. At this stage in the proceeding, it is not possible to predict or determine the outcome of the lawsuit, nor is it possible to estimate the amount of loss that would be associated with an adverse decision.

The Operating Partnership is involved in various other legal proceedings incidental to its business from time to time, most of which are expected to be covered by liability or other insurance. Management of the Operating Partnership believes that any

- 42 -

POST APARTMENT HOMES, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited, in thousands, except per share or unit and apartment unit data)

resolution of pending proceedings or liability to the Operating Partnership which may arise as a result of these various other legal proceedings will not have a material adverse effect on the Operating Partnership’s results of operations or financial position.

As announced in 2008, the Operating Partnership is underway with an initiative to engage third-party engineers and consultants to inspect and evaluate each of its communities that have stucco exteriors or exterior insulation finishing systems (“EIFS”) for potential water penetration and other related issues. At this time, the Operating Partnership has determined that varying levels of remediation and improvements may be required to be performed at approximately 30 properties in its portfolio. The Operating Partnership currently estimates that the aggregate cost of this initiative will be approximately $45,000 to complete the scope of the remediation and improvements, although the scope and cost will vary considerably among individual properties. The Operating Partnership currently expects that a substantial majority of the costs related to these remediation efforts will be recorded as annually and periodically recurring capital expenditures. In addition and as a result of this project, the Operating Partnership currently estimates that the net book value of certain building components totaling approximately $6,500 to $7,000 will be retired and, as such, are being depreciated on an accelerated basis over the remaining estimated useful life of those assets, which is expected to be not later than 2009. The work has been completed at five properties, is currently underway at approximately eleven properties and is expected to be completed at all the properties by 2010. The work may include, but not be limited to, remediation, improvements and replacements of exterior stucco and EIFS siding, windows and doors, roofing and gutters, exterior sealants and coatings. From the inception of this initiative through June 30, 2009, the Operating Partnership has recorded accelerated depreciation of approximately $3,903 and has capitalized approximately $14,885 related to this project. There can be no assurance that the scope of work or the Operating Partnership’s preliminary estimates of costs will not change in future periods.

13. SUBSEQUENT EVENTS

The Operating Partnership evaluated the accounting and disclosure requirements for subsequent events reporting through the issuance date of the financial statements. In July 2009, the Operating Partnership closed the sales of two apartment communities, containing 798 units, for aggregate gross sales proceeds of $102,300. The Operating Partnership expects to recognize gains on these asset sales of approximately $54,500 in the third quarter of 2009.

- 43 -

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Unaudited, in thousands, except per share or unit and apartment unit data)

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

(In thousands, except apartment unit data)

Company Overview

Post Properties, Inc. and its subsidiaries develop, own and manage upscale ~~multifamily~~multi-family communities in selected markets in the United States. As used in this report, the term “Company” includes Post Properties, Inc. and its subsidiaries, including Post Apartment Homes, L.P. (the “Operating Partnership”), unless the context indicates otherwise. The Company, through its wholly-owned subsidiaries is the general partner and owns a majority interest in the Operating Partnership which, through its subsidiaries, conducts substantially all of the on-going operations of the Company. At June 30, ~~2008~~2009, the Company owned 2220,~~140~~662 apartment units in 6157 apartment communities, including 1,747 apartment units in five communities held in unconsolidated entities and 1,736 apartment units in five communities currently under construction and/or in lease-up. The Company is also developing and selling ~~514~~362 for-sale condominium homes in ~~four~~three communities (including ~~137~~ 129 units in one community held in an unconsolidated entity) and is converting apartment homes in two communities initially consisting of 349 units into for-sale condominium homes through a taxable REIT subsidiary. At June 30, ~~2008~~2009, approximately 4137.62%, 2021.05%, 12.09% and 10.07% (on a unit basis) of the Company’s operating communities were located in the Atlanta, Dallas, the greater Washington D.C. and Tampa metropolitan areas, respectively.

At June 30, ~~2008~~2009, the Company owned approximately 99.35% of the common limited partnership interests (“Common Units”) in the Operating Partnership. Common Units held by persons other than the Company represented a 0.75% common minority interest in the Operating Partnership.

Conclusion of Strategic Process and Strategies to Enhance Shareholder Value

On January 23, 2008, the Company announced that its Board of Directors had authorized management, working with financial and legal advisors, to initiate a formal process to pursue a possible business combination or other sale transaction and to seek proposals from potentially interested parties. The Board announced on June 25, 2008 that the process had concluded without a business combination or other sale transaction due to the increasingly difficult market environment and a lack of definitive proposals. For the three and six months ended June 30, 2008, the Company incurred approximately $2,091 and $8,161, respectively, of strategic review costs related to this process. At the same time, the Board reaffirmed its commitment to actively pursue other strategies to enhance shareholder value through the following strategies:

	•		Realizing value through asset sales, the proceeds of which can be used to repay debt, pay potential special dividends or repurchase shares, and fund committed investments:
			The Company is currently, or expects to commence, marketing for sale eight apartment communities from which it currently expects to realize gross proceeds of approximately $500,000. The communities, comprising 2,615 apartment units, include five communities located in Atlanta, Georgia, one community located in the northern Virginia submarket of greater Washington, D.C., and the Company’s only two communities located in New York City. As of June 30, 2008, all eight communities were classified on the Company’s balance sheet as held for sale. The Company’s ability to sell these apartment communities will be dependent on the sales market for multifamily assets and the continued availability of financing at terms attractive to potential buyers. The Company currently expects to use net proceeds to repay debt, pay potential special dividends or repurchase shares of its common stock and fund its committed investments. There can be no assurance that the gross proceeds will be realized or used for the purposes intended or that these sales will close.
			The objectives above follow the Company’s strategy over recent years of repositioning its real estate portfolio and building its development and value creation capabilities centered upon its Southeast, Southwest and Mid-Atlantic regions. During this time, the Company has been a net seller of apartment assets in an effort to exploit opportunities to harvest value and recycle capital through the sale of non-core assets that no longer meet the Company’s growth objectives. The Company’s asset sales program has been consistent with its strategy of reducing its concentration in Atlanta, Georgia and Dallas, Texas, building critical mass in fewer markets and leveraging the Post® brand in order to improve operating efficiencies. The Company has redeployed capital raised from its asset sales to strengthen its balance sheet, by reducing high-coupon preferred equity and debt, and reinvesting in assets that the Company believes demonstrate better growth potential. In this regard, the Company disposed of 807 apartment units in 2007 and 143 units in the first half of 2008 for aggregate gross proceeds of approximately $91,800 and $19,850, respectively. In 2007, the Company also transferred three communities, containing 1,202 apartment units, to a newly formed unconsolidated entity, in which

-39-

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (In thousands, except per share and apartment unit data)

the Company retained a 25% interest. The 75% interest in these communities effectively sold to the institutional partner generated gross proceeds of approximately $136,200. • Cutting costs by reducing corporate overhead, development and property management expenses: The Company is taking steps to reduce overhead expenses, including the elimination of 24 property management, corporate and development employment positions as of July 31, 2008 and certain other positions though attrition, which the Company currently expects will reduce overhead costs prospectively on an annual basis by approximately $3,000. The Company recognized severance charges of $353 and expects to recognize additional severance charges of approximately $1,600 relating to these job eliminations in the second and third quarters of 2008, respectively. There can be no assurance that the Company will not recognize additional severance charges in the third quarter of 2008 or that the anticipated overhead savings will be achieved. • Focusing the Company by evaluating the number of markets within which it operates, and the appropriate size of its development pipeline: After an evaluation of its development pipeline in light of difficult current market conditions, the Company decided to defer further activities on four of its development projects and abandon the pursuit of certain other development projects. These development projects included Allen Plaza I in Atlanta, Georgia, the third phase of Post Lake® at Baldwin Park in Orlando, Florida, Post Soho Square™ in Tampa, Florida, and Post Walk® at Citrus Park Village in Tampa, Florida which is also currently held for sale. The total projected development costs of these projects totaled more than $430,000. As a result, the Company recognized impairment charges in the second quarter of 2008 of $28,947 to write down these four projects to fair market value and to write off pursuit costs on abandoned projects. As discussed above, the Company has also decided to exit the New York market through the sale of its two high-rise apartment communities located in Manhattan. • Pursuing construction loan financing and joint venture equity to fund development activity: As of June 30, 2008, the Company’s aggregate pipeline of development projects under construction totaled approximately $525,200 (including the Company’s share, net of joint venture partner interests, of $479,400). The Company also owns land for which it is in pre-development with respect to approximately 1,822 rental apartment units and approximately 133,000 square feet of retail amenities. Total projected future development costs of this pre-development pipeline are currently estimated to be approximately $380,000. Of the Company’s share of its active development pipeline discussed above, approximately $280,000 of estimated construction costs remain to be funded (approximately $250,000, excluding committed construction loan financing). The Company expects primarily to fund its active development pipeline using asset sale proceeds and available borrowing capacity under its unsecured revolving lines of credit. The Company is also currently pursuing potential construction loan financing and joint venture equity to fund its development pipeline and future project starts that are currently in pre-development. The start of future developments will depend in large part on local market conditions, the Company’s ability to generate asset sale proceeds and the Company’s ability to attract potential construction loan financing and joint venture equity to fund development activities on terms that management believes are attractive. If unable to do so, the Company expects to postpone projects currently in pre-development. Based on the factors discussed above, there can be no assurance that projects in pre-development will commence construction in the future or at all or that actual development costs will approximate estimated costs. Also, should the Company change its current expectations regarding the timing and intended future use of projects currently in pre-development, the Company may be required to recognize additional impairment losses in future periods, if the Company determines that the carrying values of such assets are not recoverable through future cash flows.

Operations Overview

~~The~~As ~~Company’s~~a ~~operating~~result ~~results~~of ~~have~~events ~~benefited from generally improved fundamentals~~ in the ~~multifamily~~ ~~apartment~~global ~~market~~capital ~~over~~markets ~~approximately~~and the ~~last~~U.S. ~~three years~~economy, ~~although~~including ~~the~~a ~~rate~~severe oftightening ~~growth began~~

POSTTable PROPERTIES,of INC. POST APARTMENT HOMES, L.P. Contents

Table of Contents

Filing Compare · POST APARTMENT HOMES LP