909111--2/28/2007--COLONIAL_PROPERTIES

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{investment, property, distribution}

{debt, indebtedness, cash}

{stock, price, share}

{cost, contract, operation}

{loan, real, estate}

{acquisition, growth, future}

{tax, income, asset}

{regulation, change, law}

{provision, law, control}

{cost, regulation, environmental}

{capital, credit, financial}

{operation, natural, condition}

{loss, insurance, financial}

{stock, price, operating}

{operation, international, foreign}

{cost, operation, labor}

Risks Associated with Real Estate We face numerous risks associated with the real estate industry that could adversely affect our results of operations through decreased revenues or increased costs. Real estate investments are illiquid, and therefore we may not be able to sell our properties in response to economic changes which could adversely affect our results of operations or financial condition. We are subject to significant regulation, which could adversely affect our results of operations through increased costs and/or an inability to pursue business opportunities. Compliance or failure to comply with the Americans with Disabilities Act could result in substantial costs. Risks Associated with Our Operations The development or conversion of for-sale projects could adversely affect our results of operations. Our properties may not generate sufficient rental income to pay our expenses if we are unable to lease our new properties or renew leases or re-lease space at our existing properties as leases expire, which may adversely affect our operating results. We may not be able to control our operating costs or our expenses may remain constant, even if our revenues decrease, causing our results of operations to be adversely affected. An economic downturn, a natural disaster or an act of terrorism in an area in which our properties are concentrated could adversely affect our results of operations or financial condition. Tenant bankruptcies and downturns in tenants businesses may adversely affect our operating results by decreasing our revenues. Risks associated with the property management, leasing and brokerage businesses could adversely affect our results of operations by decreasing our revenues. We could incur significant costs related to environmental issues which could adversely affect our results of operations through increased compliance costs or our financial condition if we become subject to a significant liability. Costs associated with moisture infiltration and resulting mold remediation may be costly. Uninsured or underinsured losses could adversely affect our financial condition. Competition for acquisitions could reduce the number of acquisition opportunities available to us and result in increased prices for properties, which could adversely affect our return on properties we purchase. We may be unable to successfully integrate and effectively manage the properties we acquire, which could adversely affect our results of operations. We may not be able to achieve the anticipated financial and operating results from our acquisitions, which would adversely affect our operating results. We may be unable to develop new properties or redevelop existing properties successfully, which could adversely affect our results of operations due to unexpected costs, delays and other contingencies. Our joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on our joint venture partners financial condition, any disputes that may arise between us and our joint venture partners and our exposure to potential losses from the actions of our joint venture partners. Risks Associated with Our Indebtedness and Financing We have substantial indebtedness and our cash flow may not be sufficient to make required payments on our indebtedness or repay our indebtedness as it matures. Our degree of leverage could limit our ability to obtain additional financing which would negatively impact our results of operation and financial condition. Due to the amount of our variable rate debt, rising interest rates would adversely affect our results of operation. We have entered into debt agreements with covenants that restrict our operating activities, which could adversely affect our results of operations, and violation of these restrictive covenants could adversely affect our financial condition through debt defaults or acceleration. Our inability to obtain sufficient third party financing could adversely affect our results of operations and financial condition because we depend on third party financing for our development, expansion or acquisition activities. Our senior notes do not have an established trading market, therefore, holders of our notes may not be able to sell their notes. Risks Associated with Our Organization Some of our trustees and officers have conflicts of interest and could exercise influence in a manner inconsistent with the interests of our shareholders. Restrictions on the acquisition and change in control of the Company may have adverse effects on the value of our common shares. Our board of directors has adopted a shareholder rights plan that could discourage a third party from making a proposal to acquire us. We may change our business policies in the future, which could adversely affect our financial condition or results of operations. Risks Related to Our Shares Market interest rates and low trading volume may have an adverse effect on the market value of our common shares. A large number of shares available for future sale could adversely affect the market price of our common shares. Changes in market conditions or a failure to meet the market s expectations with regard to our earnings and cash distributions could adversely affect the market price of our common shares. Risks Associated with Income Tax Laws Our failure to qualify as a REIT would decrease the funds available for distribution to our shareholders and adversely affect the market price of our common shares. Even if we qualify as a REIT, we will be required to pay some taxes.

Full 10-K form ▸

909111--2/28/2007--COLONIAL_PROPERTIES_TRUST