Colonial Properties Trust Announces Sale of Colonial Pinnacle and Colonial Promenade Tutwiler Farm and Reaffirms 2006 Annual Guidance

Business Wire, Oct 2, 2006

BIRMINGHAM, Ala. -- Colonial Properties Trust (NYSE: CLP), a real estate investment trust that owns a portfolio of multifamily, office and retail properties, announced that it signed a contract to sell Colonial Pinnacle Tutwiler Farm and Colonial Promenade Tutwiler Farm, both located in Birmingham, Ala. The transaction, which is subject to on-going due-diligence and customary closing conditions, is expected to generate an unlevered IRR of approximately 20 percent.

"The sale of these assets is consistent with our strategy of maximizing the value of assets and redeploying the capital," said Reynolds Thompson, chief executive officer of the company. "This transaction clearly illustrates how we create value through the development of retail shopping centers as well as the potential value imbedded in our development pipeline which is approaching $1.0 billion."

Colonial Promenade Tutwiler Farm, a 514,000 square foot power center which is anchored by Super Target and Home Depot as well as six other mid-size anchors, opened in 2000 and is currently 100 percent occupied. The company estimates a gain from this sale ranging from $0.20 - $0.25 of earnings per diluted share (EPS), which is expected to be recognized in the fourth quarter.

Colonial Pinnacle Tutwiler Farm, a 447,000 square foot lifestyle shopping center, is scheduled to open in October. Leasing is well ahead of schedule and the center is expected to open 98 percent leased with tenants including Belk, J.C. Penney, Best Buy, Ann Taylor Loft, Chico's and Joseph A. Banks. The estimated gain from the sale ranges from $0.30 - $0.35 of EPS and funds from operations per share (FFOPS), which is also expected to occur in the fourth quarter of 2006.

The company also announced that sales from its for-sale residential projects have slowed substantially which is expected to have a negative impact on third quarter earnings. Conversely, the company expects that fourth quarter earnings will be significantly above expectations as a result of the Tutwiler Farm dispositions.

"We are reaffirming our annual guidance range of $3.78 - $3.90 FFOPS," said Weston Andress, president and chief financial officer. "Our ability to create value in multiple ways is somewhat unique to the Colonial Properties Trust platform. We have numerous ways to generate transactional income. While one revenue source, for-sale residential, did not meet our expectations, Colonial Pinnacle Tutwiler Farm leased up faster than we projected and its sale allows us to offset the slowdown in the for-sale residential business."

The company expects a shift in transactional income away from the for-sale residential business toward merchant development income. "We expect for-sale residential sales to be slow; however, we have a significant merchant development pipeline which currently consists of two retail projects, Colonial Pinnacle Alabaster II and Colonial Pinnacle Fultondale. There is significant value creation in the development of both of these assets and it is consistent with our strategy to harvest this value and reinvest the capital in development or higher growth assets. We also have multifamily development projects, Colonial Grand at Canyon Creek and Colonial Grand at Traditions, which will likely be sold upon completion for portfolio management."

Colonial Properties Trust, through its subsidiaries, owns a portfolio of multifamily, office and retail properties where you live, work and shop in the Sunbelt. Colonial Properties Trust performs development, acquisition, management, leasing and brokerage services for its portfolio and properties owned by third parties. The company has a total market capitalization of approximately $5.6 billion. As of June 30, the company owns or manages 44,757 apartment units, 19.7 million square feet of office space and 11.9 million square feet of retail shopping space. Headquartered in Birmingham, Ala., Colonial Properties is listed on the New York Stock Exchange under the symbol CLP and is included in the S&P SmallCap 600 Index. For more information, visit www.colonialprop.com.

Safe Harbor Statement

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Estimates of future earnings, by definition, and certain other statements in this press release may, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve known and unknown risks, uncertainties and other factors that may cause the company's actual results, performance, achievements or transactions to be materially different from the results, performance, achievements or transactions expressed or implied by the forward looking statements. Factors that impact such forward looking statements include, among others, real estate conditions and markets; performance of affiliates or companies in which we have made investments; changes in operating costs; legislative or regulatory decisions; our ability to continue to maintain our status as a REIT for federal income tax purposes; our ability to close transactions; the effect of any rating agency action; the cost and availability of new debt financings; level and volatility of interest rates or capital market conditions; effect of any terrorist activity or other heightened geopolitical crisis; or other factors affecting the real estate industry generally.