Common Equity Repurchase Program

In 1999, Gables announced a common equity repurchase program pursuant to which it is authorized to purchase up to $100 million of its outstanding common shares or Units. Gables has repurchased shares from time to time in open market and privately negotiated transactions, depending on market prices and other conditions, using proceeds from sales of selected assets. Units have also been repurchased for cash upon their presentation for redemption by unitholders. As of December 31, 1999, Gables had repurchased 2,131 common shares and 248 Units for a total of $55,935, of which $1,168 was accrued for unsettled share repurchases at December 31, 1999.

Shelf Registration Statement

Gables and the Operating Partnership have an effective shelf registration statement on file with the Securities and Exchange Commission providing $500 million of equity capacity and $300 million of debt capacity. Gables believes it is prudent to maintain shelf registration capacity in order to facilitate future capital raising activities. To date, there have been no issuances under this shelf registration statement.

Other Financing Activity

Property Sales

During 1999, Gables sold three apartment communities located in Atlanta comprising 676 apartment homes, two apartment communities located in Memphis comprising 490 apartment homes, one apartment community located in Houston comprising 412 apartment homes, and an outparcel of land from an existing development community located in Dallas. The net proceeds from these sales totaled $96.7 million and were used to pay down outstanding borrowings under interim financing vehicles and purchase common shares and Units under Gables’ common equity repurchase program.

Gables Residential Apartment Portfolio Joint Venture

On March 26, 1999, Gables entered into a joint venture agreement with an affiliate of J.P. Morgan Investment Management, Inc. (“J.P. Morgan”). Gables’ economic ownership interest in the joint venture is currently 20%. The business purpose of the joint venture is to develop, own and operate eight multifamily apartment communities, located in four of Gables’ nine markets. On March 26, 1999, Gables contributed its interest in seven of the development communities to the joint venture in return for (1) cash of $60,347 and (2) an initial capital account in the joint venture of $15,214. On December 2, 1999, Gables contributed its interest in the eighth development community to the joint venture in return for (1) cash of $4,774 and (2) an increase in the initial capital account in the joint venture of $1,233. As of the respective contribution dates, Gables (1) had commenced construction of four of the communities, (2) owned the land for the future development of three of the communities, and (3) owned the acquisition right for the land for the future development of one of the communities. The capital budget for the development of the eight communities is $238 million and is being funded with 50% equity and 50% debt. The equity component is being funded 80% by J.P. Morgan and 20% by Gables. Gables’ portion of the equity is being funded through contributions of cash and property. As of December 31, 1999, Gables had funded $22.2 million of its budgeted $23.8 million equity commitment to the joint venture. Gables serves as the managing member of the venture and has responsibility for all day-to-day operating matters. Gables also serves as the property manager, developer and general contractor for construction activities.

Results of Operations

Comparison of operating results for the year ended December 31, 1999 to the year ended December 31, 1998

Gables’ net income is generated primarily from the operation of its apartment communities. For purposes of evaluating comparative operating performance, Gables categorizes its operating communities based on the period each community reaches stabilized occupancy. A community is considered by Gables to have achieved stabilized occupancy on the earlier to occur of (1) attainment of 93% physical occupancy or (2) one year after completion of construction. The operating performance for all of Gables’ apartment communities combined for the years ended December 31, 1999 and 1998 is summarized as follows: