Office Leases

Gables is party to office operating leases with various terms. Future minimum lease payments and rent expense for such leases are not material.

Contingencies

The various entities comprising Gables are subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are generally covered by insurance. While the resolution of these matters cannot be predicted with certainty, management believes that the final outcome of such matters will not have a material adverse effect on the financial position or results of its operations.

Extraordinary loss, net of $602 for the year ended December 31, 1997 represents (1) the write-off of unamortized deferred financing costs and prepaid credit enhancement fees associated with the defeasance of the tax-exempt bond financing encumbering a property that was sold in January 1997, and (2) the write-off of unamortized deferred financing costs associated with the February 28, 1997 retirement of a conventional mortgage note payable scheduled to mature on September 1, 1997. The extraordinary loss totaling $712 is presented net of the $110 portion of the loss attributable to the minority interest unitholders.

Disclosure about the estimated fair value of financial instruments is based on pertinent information available to management as of December 31, 1999. Such amounts have not been comprehensively revalued for purposes of these financial statements since that date and current estimates of fair value may differ significantly from the amounts presented herein.

Cash Equivalents

Gables estimates that the fair value of cash equivalents approximates carrying value due to the relatively short maturity of these instruments.

Notes Payable

Gables estimates that the fair value of notes payable approximates carrying value based upon its effective current borrowing rate for issuance of debt with similar terms and remaining maturities.

Interest Rate Protection Agreements

The estimated fair value of the two interest rate swap agreements is $460 at December 31, 1999. The estimated fair value for these agreements is based on the value of cash flows arising in the difference in the strike price per the agreements and projected LIBOR rates over the remaining term of these agreements.

Basic earnings per share are computed based on net income available to common shareowners and the weighted average number of common shares outstanding. Diluted earnings per share reflect the assumed issuance of common shares under Gables’ share option and incentive plan and upon conversion of Units. The numerator and denominator used for both basic and diluted earnings per share computations are as follows:

For the year ended December 31, 1998, 506 Units issuable upon settlement of long-term liability were not included in diluted earnings per share because the effect was anti-dilutive.

Options to purchase 1,557 and 1,279 shares were outstanding at December 31, 1999 and 1998, respectively, but were not included in the computation of diluted earnings per share because the effect was anti-dilutive.