Revenue Management in a Declining Market Ray Thornton, Vice President of IT Applications and Support Colonial Properties Trust May 1, 2009

Agenda Company Background History of Revenue Management at CLP Observations from the Field Internal Control of Revenue Management Process KPI Performance History

Company Background

History of Revenue Management at CLP

Observations from the Field

Internal Control of Revenue Management Process

KPI Performance History

Company Background Colonial Properties Trust (NYSE:CLP) Headquartered in Birmingham, Alabama Commercial (Office and Retail) Capabilities 57 Properties Sunbelt Markets (Atlanta, Orlando, Dallas are largest) MRI CM for Property Management www.colonialprop.com

Colonial Properties Trust (NYSE:CLP)

Headquartered in Birmingham, Alabama

Commercial (Office and Retail) Capabilities

57 Properties

Sunbelt Markets (Atlanta, Orlando, Dallas are largest)

MRI CM for Property Management

Company Background Multifamily Capabilities 119 properties with 32,000 units Average Rent of $803 20 Sun Belt Markets (Atlanta, Charlotte, Orlando, Dallas are largest) Average Age is 15 Years 80% of Company NOI MRI RM for Property Management LRO for Revenue Management www.colonialprop.com

Multifamily Capabilities

119 properties with 32,000 units

Average Rent of $803

20 Sun Belt Markets (Atlanta, Charlotte, Orlando, Dallas are largest)

Average Age is 15 Years

80% of Company NOI

MRI RM for Property Management

LRO for Revenue Management

History of Revenue Management * * CLP is currently rolling out remainder of portfolio PILOT1 PILOT 2 +3.2% +2.2% ROLLOUT PROGRESSION IMPLEMENTATION MSA Units April 2007 Pilot properties from Mobile, Richmond, Savannah, Raleigh, DFW, Atlanta, Greensboro, Orlando, Charleston 2300 October 2007 Phoenix 950 November 2007 Orlando 1300 November 2007 Bradenton, Sarasota, Tampa 700 December 2007 DallasFort Worth 3500 January 2008 Raleigh 1900 January 2008 Richmond 1200 January 2008 Virginia Beach 500 December 2007 Atlanta 3424 August 2008 Charlotte 4100 August 2008 Savannah 600 21,100

Observations from the Field PROS The daily price changes created a sense of urgency to close the deal on the prospect. Multi-term pricing allowed the leasing associate to have more options and focus more on the prospect’s needs. Consolidates all supply-related data (traffic, expirations, leasing velocity) into a 16 week pricing forecast. Pricing follows a disciplined and “non-emotional” approach that would be more defensible for fair housing. The pricing model allowed for a smooth lease expiration matrix. LRO has made management transition on the properties easier. Pricing process is automated to where all pricing sources (WebsiteILS) are in synch and much of STARS pricing approach is automated. Pricing process automates renewal generation process and requires that renewals are not less then the expiring lease (unless overridden). CONS System is expensive at first glance. Make sure you do a business case with a hurdle rate. System could “dumb down” some of the pricing decisions at the property level (i.e. “The computer told me to do that.”) System is somewhat unproven in a down market.

PROS

The daily price changes created a sense of urgency to close the deal on the prospect.

Multi-term pricing allowed the leasing associate to have more options and focus more on the prospect’s needs.

Consolidates all supply-related data (traffic, expirations, leasing velocity) into a 16 week pricing forecast.

Pricing follows a disciplined and “non-emotional” approach that would be more defensible for fair housing.

The pricing model allowed for a smooth lease expiration matrix.

LRO has made management transition on the properties easier.

Pricing process is automated to where all pricing sources (WebsiteILS) are in synch and much of STARS pricing approach is automated.

Pricing process automates renewal generation process and requires that renewals are not less then the expiring lease (unless overridden).

CONS

System is expensive at first glance. Make sure you do a business case with a hurdle rate.

System could “dumb down” some of the pricing decisions at the property level (i.e. “The computer told me to do that.”)

System is somewhat unproven in a down market.

Internal Controls – Best Practices Change Management Senior Management Buy-in? Regional Management is the Key! Traffic Entered Promptly Marketing Sources Correct Market Comps Shopped Weekly Shopped Accurately Pricing Awareness of Previous Rents Minimal Overrides Calls are Attended

Change Management

Senior Management Buy-in?

Regional Management is the Key!

Traffic

Entered Promptly

Marketing Sources Correct

Market Comps

Shopped Weekly

Shopped Accurately

Pricing

Awareness of Previous Rents

Minimal Overrides

Calls are Attended

Market Comps – Shopped Weekly SAMPLE

Market Comps – Shopped Accurately SAMPLE

Pricing – Awareness of Previous Rents SAMPLE

Pricing – Minimal Overrides SAMPLE

Pricing – Calls are Attended SAMPLE

KPI Performance History KPIs Tracked Revenue Per Occupied Unit (RPU) (Internal) Net Effective Rent (External) Physical Occupancy (External) Lease Expirations (Internal)

KPIs Tracked

Revenue Per Occupied Unit (RPU) (Internal)

Net Effective Rent (External)

Physical Occupancy (External)

Lease Expirations (Internal)

Revenue Per Unit Indexed (Pilot 1) Source: CLP Data

Revenue Per Unit Indexed (Pilot 2) Source: CLP Data

RentOccupancy Gap (RevMan vs NonRevMan) Atlanta Charlotte Source: AxioMetrics

RentOccupancy Gap (NonRevMan vs RevMan) Dallas Overall Source: AxioMetrics

Effective RentOccupancy (CLP to NonRevMan Peers) Effective Rental Rate Gap Occupancy Gap Source: CLP Data, AxioMetrics

Lease Expirations Source: CLP Data

So Does It Work? ImprovingStabilized Markets RM reacts quicker and drives rents up faster than manual process while maintaining occupancy. Many studies and pilots prove this. Declining Markets RM reacts quicker and drives rents down faster than manual process in order to preserve occupancy. But does it react too quickly and discount too aggressively? Per Rainmaker, ASN and Simpson have proven it works in a declining market.

ImprovingStabilized Markets

RM reacts quicker and drives rents up faster than manual process while maintaining occupancy.

Many studies and pilots prove this.

Declining Markets

RM reacts quicker and drives rents down faster than manual process in order to preserve occupancy. But does it react too quickly and discount too aggressively?

Per Rainmaker, ASN and Simpson have proven it works in a declining market.

Ansley and Reagan say THANKS!! THANK YOU!

THANK YOU!