Gables is a fully integrated real estate company engaged in the multifamily apartment community management, development, construction, acquisition and disposition businesses. Gables also provides related brokerage and corporate rental housing services. Substantially all of these businesses are conducted through Gables Realty Limited Partnership (the “Operating Partnership”). Gables controls the Operating Partnership through Gables GP, Inc. (“Gables GP”), a wholly-owned subsidiary and the sole general partner of the Operating Part-nership. This structure is commonly referred to as an umbrella partnership REIT or “UPREIT.” At December 31, 1999, Gables was a 79.8% economic owner of the common equity of the Operating Partnership. Gables’ third-party management businesses are conducted through two subsidiaries of the Operating Partnership, Central Apartment Management, Inc. and East Apartment Management, Inc.

Gables’ limited partnership and indirect general partnership interests in the Operating Partnership entitle it to share in cash distributions from, and in the profits and losses of, the Operating Partnership in proportion to its ownership interest therein and entitles Gables to vote on all matters requiring a vote of the limited partners. Generally, the other limited partners of the Operating Partnership are persons who contributed their direct or indirect interests in certain properties to the Operating Partnership primarily in connection with the IPO, the South Florida acquisition and the Greystone acquisition (each as defined below). The Operating Partnership is obligated to redeem each common unit of limited partnership interest (“Unit”) held by a person other than Gables at the request of the holder for an amount equal to the fair market value of a share of Gables’ common shares at the time of such redemption, provided that Gables, at its option, may elect to acquire each Unit presented for redemption for one common share or cash. With each redemption, Gables’ percentage ownership interest in the Operating Partnership will increase. In addition, whenever Gables issues common shares or preferred shares, it is obligated to contribute any net proceeds to the Operating Partnership and the Operating Partnership is obligated to issue an equivalent number of common or preferred units, as applicable, to Gables.

As of December 31, 1999, Gables owned 79 completed multifamily apartment communities comprising 23,278 apartment homes, of which 38 were developed and 41 were acquired by Gables, and an indirect 25% general partner interest in two apartment communities developed by Gables comprising 663 apartment homes. Gables also owned three multifamily apartment communities under development at December 31, 1999 that are expected to comprise 940 apartment homes upon completion and an indirect 20% interest in eight apartment communities under development or in lease-up at December 31, 1999 that are expected to comprise 2,471 apartment homes upon completion. As of December 31, 1999, Gables owned parcels of land for the future development of 11 apartment communities expected to comprise an estimated 2,433 apartment homes. There can be no assurance that Gables will develop these parcels of land. Additionally, Gables has contracts or options to acquire additional parcels of land. There can be no assurance that Gables will acquire these land parcels; however, it is Gables’ intent to develop an apartment community on each of these parcels of land, if purchased.

On April 1, 1998, Gables acquired the properties and operations of Trammell Crow Residential South Florida (“South Florida”), which consisted of 15 multifamily apartment communities containing a total of 4,197 apartment homes, and all of South Florida’s residential construction and development and third-party management activities. In consideration for those properties and operations, Gables (1) paid $155.0 million in cash, (2) assumed $135.9 million of tax-exempt debt, and (3) issued 2,348 Units valued at $64.9 million. In addition, on January 1, 2000, Gables issued 470 Units valued at $10.4 million and paid cash of $0.3 million related to a deferred portion of the purchase price. The acquisition increased the size of Gables’ portfolio under management on April 1, 1998 from 28,000 to 40,000 apartment homes.