Comparison of operating results for the year ended December 31, 1998 to the year ended December 31, 1997

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 in which 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, 1998 and 1997 is summarized as follows:

(1) Communities which were owned and fully stabilized throughout both 1998 and 1997.

(2) Communities which were completed and fully stabilized during 1998 but not 1997.

(3) Communities in the development/lease-up phase which were not fully stabilized during all or any of 1998.

(4) Communities which were acquired subsequent to January 1, 1997.

(5) Communities which were sold subsequent to January 1, 1997.

Total property revenues increased $70,587, or 50.9 %, from $138,693 to $209,280 due primarily to increases in the number of apartment homes resulting from the acquisition and development of additional communities and to increases in rental rates on communities stabilized throughout both periods (“same store”). Additional information regarding the increases in total property revenues for three of the five community categories presented in the preceding table follows: