The South Florida acquisition was accounted for under the purchase method of accounting in accordance with Accounting Principles Board Opinion No. 16. Accordingly, assets acquired and liabilities assumed were recorded at their estimated fair values. The accompanying consolidated statements of operations include the operating results of South Florida since April 1, 1998, the closing date of the acquisition. The following unaudited pro forma information for the year ended December 31, 1998 has been prepared assuming the South Florida acquisition had been consummated on January 1, 1998. The unaudited pro forma information (1) includes the historical operating results of the properties and operations acquired and (2) does not purport to be indicative of the results which actually would have been obtained had the South Florida acquisition been consummated on January 1, 1998 or which may be attained in future periods.

In April 1998, Gables acquired four multifamily apartment communities comprising a total of 913 apartment homes located in Houston, Texas (“Greystone”). In connection with that acquisition, Gables assumed $31.0 million of indebtedness at fair value and issued 665 Units valued at $18.0 million. In addition, in December 1999, Gables issued 34 Units valued at $0.9 million related to a deferred portion of the purchase price that was contingent upon 1999 economic performance.

Secondary Common Share Offerings

Since the IPO, Gables has issued a total of 14,831 common shares in eight offerings generating $347,771 in net proceeds which were generally used (1) to reduce outstanding indebtedness under interim financing vehicles utilized to fund Gables’ development and acquisition activities and (2) for general working capital purposes, including funding of future development and acquisition activities.

Preferred Share Offerings

On July 24, 1997, Gables issued 4,600 shares of 8.30% Series A Cumulative Redeemable Preferred Shares (liquidation preference $25.00 per share). The net proceeds from this offering of $111.0 million were used to reduce outstanding indebtedness under interim financing vehicles. The Series A Preferred Shares may be redeemed by Gables at $25.00 per share plus accrued and unpaid dividends on or after July 24, 2002. The Series A Preferred Shares have no stated maturity, sinking fund or mandatory redemption and are not convertible into any other Gables securities.

On June 18, 1998, Gables issued 180 shares of 5.0% Series Z Cumulative Redeemable Preferred Shares (liquidation preference $25.00 per share) in connection with the acquisition of a parcel of land for future development. The Series Z Preferred Shares may be redeemed by Gables at any time for $25.00 per share plus accrued and unpaid dividends and are subject to mandatory redemption on June 18, 2018. The Series Z Preferred Shares are not subject to any sinking fund or convertible into any other Gables securities.

Issuances of Common Operating Partnership Units

Since the IPO, the Operating Partnership has issued a total of 4,421 Units in connection with the South Florida acquisition, the Greystone acquisition, the acquisition of other operating apartment communities, and the acquisition of a parcel of land for future development.

Issuance of Preferred Operating Partnership Units

On November 12, 1998, the Operating Partnership issued 2,000 of its 8.625% Series B Preferred Units to an institutional investor. The net proceeds from this issuance of $48.7 million were used to reduce outstanding indebtedness under interim financing vehicles. The Series B Preferred Units may be redeemed by Gables at its option after November 14, 2003 and are exchangeable by the holder into 8.625% Series B Cumulative Redeemable Preferred Shares of Gables on a one-for-one basis. This exchange right is generally not exercisable until after November 14, 2008. The Series B Preferred Units have no stated maturity, sinking fund, or mandatory redemption.