Gables adopted SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information,” during 1998. SFAS No. 131 established standards for reporting financial and descriptive information about operating segments in annual financial statements. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Gables’ chief operating decision maker is its senior management group.

Gables owns, operates and develops multifamily apartment communities in nine major markets located in Texas, Georgia, Florida and Tennessee. These apartment communities generate rental revenue and other income through the leasing of apartment homes to a diverse base of residents. Gables evaluates the performance of each of its apartment communities on an individual basis. However, because each of the apartment communities has similar economic characteristics, residents, and products and services, they have been aggregated into one reportable segment. These segments comprise 95%, 96% and 96% of Gables’ total revenues for the years ended December 31, 1999, 1998 and 1997, respectively.

The primary financial measure for Gables’ reportable business segment is net operating income (“NOI”), which represents total property revenues less property operating and maintenance expenses (as reflected in the accompanying statements of operations). Accordingly, NOI excludes certain expenses included in the determination of net income. Current year NOI is compared to prior year NOI and current year budgeted NOI as a measure of financial performance. The NOI yield or return on total capitalized costs is an additional measure of financial performance. NOI from apartment communities totaled $155,121, $138,778, and $91,101 for the years ended December 31, 1999, 1998 and 1997, respectively. All other segment measurements are disclosed in Gables’ consolidated financial statements.

Gables also provides management, brokerage, corporate apartment home and development and construction services to third parties. These operations, on an individual and aggregate basis, do not meet the quantitative thresholds for segment reporting per SFAS No. 131.