Letter to Shareholders:


We are pleased to share with you Post’s operating and financial results for 2006 and plans for the upcoming year.

For 2006, a share of Post common stock returned a total of 19 percent, including reinvested dividends. For the three years ended December 31, 2006, a share of Post common stock delivered an average annualized total return of 24 percent. This three-year total return exceeded the average annualized total return of the S&P 500 of 10.5 percent, and was just under the 26 percent annualized total return of the NAREIT Equity REIT Index.

We operate today in a favorable environment. Our Sunbelt and Mid-Atlantic markets are experiencing solid economic and job growth, household formation and in-migration. Apartment supply is constrained by sharply higher construction costs and longer development entitlement and permitting processes. Demographic trends favor multifamily housing, with population growth concentrated among empty-nesters and the young, echo-boom generation. Capital is abundant and real estate asset values are strong.





Attractive market fundamentals are only part of the story. Our operating results also reflect the deliberate repositioning of the portfolio around properties with an irreplaceable combination of quality and location and regular investment in technology platforms and the Post^® brand.

For 2006, same-store net operating income growth – at 6.0 percent – was the best in the past decade. We currently expect a similar rate of growth for 2007. During the past year, we implemented new automated revenue pricing software to drive an optimal mix of rent growth and occupancy. Average monthly rents on a same-store basis rose by 5.2 percent for all of 2006. More importantly, for the fourth quarter of 2006, average rents for the same-store communities were up 7.2 percent, year-over-year. Embedding this kind of growth in the rent roll creates momentum heading into 2007.





During the past year, we continued shaping and focusing the portfolio, selling $175 million of properties and acquiring $152 million. As a result, properties in the greater Washington, D.C. area – a market with high barriers to entry – should be the second-largest contributors to net operating income in 2007. Our market concentration was also further reduced in Atlanta, and the young average age of the Company’s properties was preserved. According to independent research analysts, Post has one of the newest and highest-quality portfolios of all publicly traded apartment REITs,^(a) and in each of the seven markets where data is available for Post and the other publicly traded apartment REITs, Post reported the highest rents per square foot.^(b) This is the intended result of the Post^® brand and portfolio strategy – high quality, well located properties operated by experienced, well-trained associates that command among the highest rents in the market.

Never taking success for granted, we continually look for new ways to enhance our properties and our brand. In 2006, we launched a 24/7 contact center to handle prospect calls and Internet inquiries, retooled the web site to enhance Internet leasing capabilities and continued to centralize and automate procurement. We also redecorated and updated leasing offices, model apartments and resident amenity spaces at more than 30 properties, with a goal to update the resident common areas of every property by the end of 2008.

Beyond the cosmetic, we also launched the top-to-bottom renovation of two of our properties. At Post Chastain^® in Atlanta, and Post Worthington^TM in Dallas, approximately $30,000 per unit is being invested to renovate these communities both inside and out. New granite countertops, flooring, cabinetry, lighting, appliances and fixtures are being installed in apartment units. Upgrades are also being completed to each leasing office, fitness center, pool and courtyard, while adding features, like Internet cafés, that appeal to our discriminating customer base. Rent increases being achieved on these renovations are expected to produce an attractive return on our incremental investment. More than that, we believe we will have reduced the cap rate (raised the value) of these properties, while positioning each one to compete with new properties coming online with a much higher production cost. Planning is now underway for additional major renovations on other properties to commence later in 2007.

The primary focus of Post’s value creation effort, however, is development. During 2006, construction commenced on three new developments and one property expansion, located in three different markets. These developments included a mix of 826 apartment units and 85 condominiums, and brought the total pipeline of developments under construction at year-end to $257 million. In December, the doors opened at Post Carlyle Square^TM in Alexandria, Virginia. Leasing is off to a strong start, with the community more than 30 percent leased in its first three months of operation. Post Carlyle Square^TM typifies the kind of community we look to develop. It features luxury apartment finishes, outstanding on-site resident amenities and is located in a walkable neighborhood with shopping, employment, dining and entertainment venues. We believe that substantial value has already been created through the development of this asset – value that should only be enhanced with time.

Beyond our current developments under construction, predevelopment activities are underway on 12 additional communities located in seven markets that are targeted to commence construction in the next 12 to 18 months. These proposed developments include more than 3,000 apartment units and nearly 500 condominiums, with an expected investment currently estimated at $800 million.

Although the for-sale housing market slowed in 2006, we closed the sales of more than 200 condominium homes during the year. We expect to continue dedicating roughly 10 percent of our asset base to the for-sale business. Doing so meets the growing customer preference for urban high-rise and mid-rise living, sharpens a product expertise that is increasingly relevant in a period of shifting household demographics, and provides a hedge on market cycles that alternately favor owning versus renting.

All of the investment activity discussed above is facilitated by an exceptionally strong balance sheet. Debt as a percentage of undepreciated real estate assets was just shy of 40 percent at year-end. Although this is relatively low by real estate financing standards, and by Post’s historical standards, it reflects our looking ahead to the investment opportunity present in the predevelopment pipeline.

Finally, a word about our Associates. They are some of the most passionate and talented in the industry. Our landscape group – which most days is at work before dawn giving our properties their signature look – is a great example. Each year, since 1990, a different Post^® apartment community has been awarded the National Grand Award by the Professional Grounds Management Society in the category of Best Maintained Apartment or Condominium. Winning anything 16 years in a row is quite an accomplishment, no matter on what field – or flowerbed – you find yourself competing! As always, we appreciate the investment and the support of our fellow shareholders. We look forward with anticipation to the coming year.


Robert C. Goddard, III
Chairman of the Board



David P. Stockert
President and CEO


(a) Source: Green Street Advisors, Apartment REITs: February '07 Update, February 15, 2007
(b) Source: Axiometrics Inc., Apartment REITs and Markets Performance Summary, Fourth Quarter 2006