Edgar Filing: IRT PROPERTY CO

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K/A No. 1

[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2001

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From __________to__________

Commission File Number 1-7859

IRT PROPERTY COMPANY
(Exact name of registrant as specified in its charter)

GEORGIA 58-1366611
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

200 GALLERIA PARKWAY, SUITE 1400
ATLANTA, GEORGIA 30339
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (770) 955-4406

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Shares of Common Stock New York Stock Exchange
$1 Par Value

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

As of March 15, 2002, the aggregate market value of the 30,217,130 common
shares held by nonaffiliates of the registrant was $348,403,510 based upon the
closing price of $11.53 on the New York Stock Exchange composite tape on such
date. (For this computation, the registrant has excluded the market value of all
common shares reported as beneficially owned by executive officers and directors
of the registrant; such exclusion shall not be deemed to constitute an admission
that any such person is an "affiliate" of the registrant.) As of March 15, 2002,
there were 30,541,026 outstanding shares of Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE

The information called for by Part III (Items 10, 11, 12 and 13) of this
report is incorporated by reference to the registrant's definitive proxy
statement, to be filed pursuant to Regulation 14A (the "Proxy Statement"), for
the 2002 Annual Meeting of Shareholders of the Company, to be held on May 30,
2002. Other than those portions of the Proxy Statement specifically incorporated
by reference pursuant to Items 10 through 13 of Part III of this report, no
other portions of the Proxy Statement shall be deemed so incorporated.

FORM 10-K
FISCAL YEAR ENDED DECEMBER 31, 2001
TABLE OF CONTENTS

ITEM PAGE
---- ----
PART I

1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . 20
4. Submission of Matters to a Vote of Security Holders. . . . . . . . . 20

PART II

5. Market for Registrant's Common Equity and Related Stockholder Matters 21
6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . 22
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations. . . . . . . . . . . . . . . . . . . . . 23
8. Financial Statements and Supplementary Data . . . . . . . . . . . . . 38
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . . . . . . . . . 76

PART III

10. Directors and Executive Officers of the Registrant. . . . . . . . . . 76
11. Executive Compensation. . . . . . . . . . . . . . . . . . . . . . . . 76
12. Security Ownership of Certain Beneficial Owners and Management. . . . 76
13. Certain Relationships and Related Transactions. . . . . . . . . . . . 76

PART IV

14. Exhibits, Financial Statement Schedules and Reports on Form 8-K . . . 76

PART I
Unless the context otherwise requires, all references to "we," "our" or
"us" in this report refer collectively to IRT Property Company and its
subsidiaries ("IRT" or the "Company"), including IRT Partners, L.P., IRT
Management Company, IRT Capital Corporation II, VW Mall, Inc. and IRT Alabama.

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS

This report contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Forward-looking statements involve risks and
uncertainties. You can identify these forward-looking statements through our
use of words such as "may," "will," "intend," "project," "expect," "anticipate,"
"assume," "believe," "estimate," "continue," or other similar words.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors, which may be beyond our control. Our actual results may differ
significantly from those expressed or implied in our forward-looking statements.

Factors that might cause such differences include, but are not limited to:

- changes in tax laws or regulations, especially those relating to real
estate investment trusts and real estate in general;

- the number, frequency and duration of vacancies that we experience;

- our ability to solicit new tenants and to obtain lease renewals from
existing tenants on terms that are favorable to us;

- tenant bankruptcies and closings;

- the general financial condition of, or possible mergers or
acquisitions involving, our tenants and competitors;

- competition;

- changes in interest rates and national and local economic conditions;

- possible environmental liabilities;

- the availability, cost and terms of financing;

- our ability to identify, acquire, construct or develop additional
properties that result in the returns anticipated or sought;

- our ability to effectively integrate properties or portfolio
acquisitions or other mergers or acquisitions; and

- the factors and risks identified in this report under the heading
"Risk Factors."

You should also carefully consider any other factors contained in this
report, including the information incorporated by reference into this report.
You should pay particular attention to those factors discussed in any of our
other filings with the Securities and Exchange Commission under the heading
"Risk Factors." You should not rely on the information contained in any
forward-looking statements, and you should not expect us to update or revise any
forward-looking statements.

ITEM 1. BUSINESS

ORGANIZATION

IRT Property Company ("IRT" or the "Company") was founded in 1969 and
became a public company in May 1971 (NYSE: IRT). The Company is an owner,
operator, redeveloper and developer of high quality, well located neighborhood
and community shopping centers throughout the southeastern United States. The
Company's investment portfolio consists of 87 shopping centers, three shopping
center investments, four development properties, one industrial property and
four mortgage loans. The 87 shopping centers and the three shopping center
investments total approximately 9.7 million square feet of retail space, located
in eleven southeastern states. IRT shopping centers are anchored by
necessity-oriented retailers such as supermarkets, drug stores, national value
retailers and department stores.

The Company has four wholly-owned subsidiaries. VW Mall, Inc. ("VWM") was
formed in July 1994, but is currently inactive. IRT Alabama, Inc. ("IRTAL") was
formed in August 1997 to purchase Madison Centre in Madison, Alabama, which it
continues to own, but it conducts no significant operations beyond this
property. IRT Management Company ("IRTMC") was formed in 1990 and currently
holds 93.3% of the operating units of IRT Partners L.P.

IRT Capital Corporation II ("IRTCCII") is a taxable real estate investment
trust ("REIT") subsidiary formed under the laws of Georgia in 1999. IRTCCII
elected on March 15, 2001 to become a taxable REIT subsidiary pursuant to the
Tax Relief Extension Act of 1999, as amended (the "REIT Modernization Act of
1999"). Although IRTCCII is primarily used by the company to develop properties,
it also has the ability to buy and sell properties, provide equity to developers
and perform third-party management, leasing and brokerage operations.

The Company also serves as sole general partner of IRT Partners, L.P.
("LP"), a Georgia limited partnership formed in 1998 to enhance the Company's
acquisition opportunities through a "downreit" structure. This structure offers
potential sellers the ability to make a tax-deferred sale of their real estate
investment in exchange for Operating Partnership Units ("OP Units") of LP. OP
Units receive the same distributions as the Company's common stock and are
redeemable for shares of the Company's common stock. IRT and IRTMC, together,
owned approximately 94.3% of LP as of December 31, 2001. The accounts of LP are
included in the consolidated financial statements included in this report.

REIT QUALIFICATION AND SHAREHOLDER TAXATION

The Company has elected since its inception to be treated as a REIT under
the Internal Revenue Code of 1986, as amended (the "Code"). In accordance with
the Code, a REIT must distribute at least 90% (95% prior to 2001) of its taxable
income to its shareholders each year and meet certain other qualifications as
prescribed by the Code. If all qualifications are met, the Company will not be
taxed on that portion of its taxable income which is distributed to its
shareholders. This treatment of REIT distributions allows us to pass through
substantially all of our earnings to our shareholders without paying federal or
state income tax at the corporate level, thus effectively eliminating a
significant portion of the double taxation (initially at the corporate level and
then again at the shareholder level) that usually results from investments in
corporations. For the special provisions applicable to REITs, see Sections
856-860 of the Code. IRT intends to continue to elect to be treated and to
continue to qualify as a REIT under the Code.

This would reduce the net earnings of the Company available for investment or
distribution to our shareholders because of the additional tax liability. In
addition, distributions to our shareholders would no longer be required, which
would likely substantially reduce or even eliminate any dividends paid by the
Company to its shareholders. Even if the Company maintains its qualification for
taxation as a REIT, the Company also may be subject to certain state and local
taxes on its income and property and to federal income and excise taxes on its
undistributed income.

For most of the Company's U.S. shareholders, amounts distributed by the
Company out of current accumulated earnings and profits are includable as
ordinary income for federal income tax purposes unless properly designated by
the Company as capital gain dividends. Generally, if the Company makes
distributions in excess of its current and accumulated earnings and profits,
those distributions will be considered first a tax-free return of capital,
thereby reducing the tax basis of the shareholder's shares until the tax basis
is zero. Such distributions in excess of the tax basis will be taxable as gain
realized from the sale of the Company's shares.

INVESTMENT PHILOSOPHY

The Company's fundamental business is the ownership of real estate
investments in income-producing properties. We concentrate on neighborhood and
community shopping centers in the southeastern United States. The Company's
investment portfolio includes 87 shopping centers, three shopping center
investments, four development properties, one industrial property and four
mortgage loans. For a description of the Company's individual investments and
material developments during 2001 regarding these investments and the Company as
a whole, please refer to Item 2, Item 7 and Item 8 included elsewhere within
this report and the Company's Annual Report to Shareholders for the year ended
December 31, 2001.

The Company's mission is to maximize growth and long-term real estate value
while providing attractive annual returns for our shareholders. The Company
seeks to achieve this mission through strategic property location and tenant
diversification, developments and capital recycling and acquisitions and
dispositions.

Property Location and Tenant Diversification
The Company owns and operates 87 shopping centers in ten states primarily
located in Florida (25), Georgia (20), Louisiana (14) and North Carolina (13).
We have developed a regional as well as local expertise since operating
investments within the southeastern U.S. since 1969.

Within the respective states, over 80% of IRT's properties, based on gross
leasable area ("GLA") and rental revenues, are located in primary and secondary
markets. IRT defines primary markets as those that have a metropolitan
statistical area ("MSA") population of greater than 1 million people. Secondary
markets have a MSA population between 250,000 and 1 million. IRT considers
markets with MSA population under 250,000 to be tertiary markets. The Company
places emphasis on obtaining and maintaining shopping centers in primary or
secondary markets and reducing the number of shopping centers in tertiary
markets.

On average, within a three mile radius of our shopping centers, there is an
estimated population of 44,516 with a median household income of $43,876. We
locate our shopping centers to have clear visibility for our tenants and close
to residential communities to allow convenient access by neighborhood shoppers.

The Company emphasizes a diverse and stable tenant base for our shopping
centers. We have over 1,000 different tenants with primarily necessity-oriented
retailers as anchors. Necessity-oriented anchors include supermarkets, such as
Publix, Kroger and Bi-Lo; drug stores, such as Eckerds, CVS Drugs and
Walgreen's; national value retailers, such as Wal-Mart, Bed Bath & Beyond and
Office Depot; and department stores, such as Stein Mart, TJ Maxx and Big Lots.
As of December 31, 2001, the Company's five largest tenants, as a percentage of
revenues, are Publix (8.6%), Kroger (6.8%), Wal-Mart (4.9%), Kmart (4.5%) and
Winn Dixie (2.7%). These necessity oriented retailers help maintain a steady
traffic flow for our centers and our tenants.

Developments and Capital Recycling
The Company initiated a development program with the creation of IRTCCII.
The Company maintains a conservative approach toward development and manages the
development risk primarily by purchasing the land for development only after
anchor lease execution and pre-leasing the development before commencement of
construction.

During 2001, we completed the first development property, Regency Square, a
85,864 square foot shopping center, located in Port Richey, Florida and anchored
by a 44,270 square foot Publix. The Company is in the process of developing four
shopping centers for an aggregate of approximately 423,000 square feet and
continues to search for other development opportunities.

Existing properties are continuously reviewed by the Company for revenue
growth potential. Appropriate programs to renovate and modernize properties are
designed and implemented in order to improve leasing arrangements and tenant
retention, thereby increasing rental revenues and property values. In addition
to the continual investment in the shopping centers, the Company is in the
process of three shopping center expansions for a total of 49,887 square feet.
The Company mitigates the investment risk by usually extending the anchor's
lease term in connection with an expansion.

Acquisitions and Dispositions
In making new real estate investments, the Company intends to continue to
place primary emphasis on obtaining an equity interest in well-located, income
producing properties with attractive yields and potential for increases in
income and capital appreciation. The Company focuses on neighborhood and
community shopping centers, primarily in the southeastern United States;
however, the company will consider acquisitions in other regions. Also, the
Company continually reviews, considers and evaluates mergers and acquisitions
with companies engaged in businesses similar or complementary to ours.

The Company also considers the disposition or exchange of existing
investments in order to improve its investment portfolio. During 1999, the
Company identified those investments that are in tertiary markets and focused
its efforts to sell these properties. During 1999, 2000 and 2001 the Company has
four, five and three shopping centers, respectively, for approximately $37.8
million.

OPERATING PHILOSOPHY

The Company directly provides property management and leasing services for
all of its operating properties. Self-management enables the Company to
emphasize and more closely control leasing and property management. Internal
property management also provides the Company opportunities for operating
efficiencies by enabling it to acquire additional properties without
proportionate increases in property management expenses. The Company's property
management program is staffed by property management and leasing professionals
located in offices in Atlanta, Georgia; Orlando, Florida; Ft. Lauderdale,
Florida and New Orleans, Louisiana. During 2000, the Company upgraded its
internal systems to allow information access for all southeastern locations,
thereby improving communication and information transmittal between the regional
offices and corporate headquarters.

The Company has principal offices in Atlanta, Georgia and presently employs
a total of 63 people located in its four southeastern locations. Since its
founding in 1969, the Company has successfully operated and grown through three
major real estate recessions. The Company believes its management has the
experience and expertise necessary to preserve values and enhance future
operating performance.

FINANCIAL PHILOSOPHY

Maintaining a conservative capital structure that allows the Company
continued cost-effective access to the capital markets is an important element
of the Company's growth strategy. The Company believes its financial position as
of December 31, 2001, including the following measures, demonstrates
management's discipline in applying conservative capital policies:

- Long-term variable rate debt was 16.0% of total market capitalization.
- Unencumbered real estate assets as a percentage of real estate
investments at cost was 66% as only 25 out of the 90 shopping center
investments were encumbered.

The Company currently has an effective shelf registration statement
pursuant to which the Company may issue up to $300 million of common stock,
preferred stock, depositary shares, debt securities and warrants. As of December
31, 2001, the Company had issued $50 million in debt securities from the shelf
registration, and the Company issued an additional $25 million of debt
securities in January 2002, leaving $225 million of securities available for
issuance under the shelf registration statement.

The Company presently anticipates that cash flows from operations will
continue to provide adequate capital to fund its operating and administrative
expenses, regular debt service obligations and the payment of dividends. The
Company intends to finance future acquisitions and developments with additional
secured or unsecured borrowings, its revolving credit facility, proceeds from
property sales, the issuance of OP Units of LP or the issuance of common or
preferred stock of the Company. The Company intends to closely monitor and
review such financing activity to ensure compliance with certain covenants and
restrictions and to maintain the Company's investment grade bond rating.

INDUSTRY AND COMPETITIVE CONDITIONS

The results of the Company's operations depend upon the performance of its
existing investment portfolio, the availability of suitable opportunities for
new investments, the yields available on such new investments and the Company's
cost of capital. Yields will vary with the type of investment involved, the
condition of the financial and real estate markets, the nature and geographic
location of the investment, competition and other factors. The performance of a
real estate investment company is strongly influenced by the cycles of the real
estate industry. As financial intermediaries providing equity funds for real
estate projects, real estate investment companies are generally subject to the
same market and economic forces as other real estate investors.

In seeking new investment opportunities, the Company competes with other
real estate investors, including pension funds, foreign investors, real estate
partnerships, other real estate investment trusts and other domestic real estate
companies, such as Weingarten Realty Investors, Regency Realty Corporation, JDN
Realty Corporation and Equity One, Inc. With respect to properties presently
owned by the Company or in which it has investments, the Company and its tenants
and borrowers compete with other owners of like properties, such as Weingarten
Realty Investors, Regency Realty Corporation, JDN Realty Corporation and Equity
One, Inc., for tenants and/or customers depending on the nature of the
investment. Management believes that the Company is well positioned to compete
effectively for new investments and tenants.

For any borrowed funds that may be used in new investment activity, the
Company would be in competition with other borrowers seeking both secured and
unsecured borrowings in the banking, real estate lending and public debt
markets.

REGULATION

The Company is subject to federal, state and local environmental
regulations regarding the ownership, development and operation of real property.
The Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. sec. 9601 et seq, as amended. ("CERCLA"), and applicable state laws
subject the owner of real property to claims or liability for the costs of
removal or remediation of hazardous substances that are disposed of on real
property in amounts that require removal or remediation. Liability under CERCLA
and applicable state superfund laws can be imposed on the owner of real property
or the operator of a facility without regard to fault or even knowledge of the
disposal of hazardous substances. The failure to undertake remediation where it
is necessary may adversely affect the owner's ability to sell real estate or
borrow money using such real estate as collateral. In addition to claims for
cleanup costs, the presence of hazardous substances on a property could result
in claims by private parties for personal injury or property damage.

The Company has obtained independent Phase I environmental site assessments
(which generally do not include environmental sampling, monitoring or laboratory
analysis) for property acquisitions beginning in 1989, and otherwise as required
by its lenders. Except as otherwise disclosed and based upon information
presently available to the Company, the Company presently has no reason to
believe that any environmental contamination has occurred nor any violation of
any applicable environmental law, statute, regulation or ordinance exists that
would have a material adverse effect on the Company's financial position taken
as a whole. For the years commencing January 1, 2000, the Company has acquired
environmental and pollution legal liability insurance coverage to mitigate the
associated risks.

RISK FACTORS

Set forth below are some of the risks that management believes are material
to investors in the Company's common stock ("Shares") or the OP Units, which are
redeemable on a one-for-one basis for Shares or their cash equivalent. We refer
to the Shares and the OP Units together as our "Securities," and the investors
who own Shares or OP Units as our "Security Holders."

OWNING AND OPERATING RETAIL REAL ESTATE ENTAILS RISKS THAT COULD ADVERSELY
AFFECT OUR PERFORMANCE

Dependence on the Retail Industry. Our properties consist predominately of
community and neighborhood shopping centers and we depend upon Companies in the
retail industry to occupy our properties. The market for retail space may be
adversely affected by consolidation of retailers, the relatively weak financial
condition of certain retailers and overbuilding in certain markets.

Internet Sales. Retail sales over the Internet have been increasing rapidly.
The success of electronic commerce businesses in attracting customers of our
tenants could adversely affect our tenants and other companies, and thus the
demand for retail space. A reduction in the demand for retail space would
adversely affect our performance.

Major Tenants. As of December 31, 2001, the Company's five largest tenants, as a
percentage of revenues, are Publix (8.6%), Kroger (6.8%), Wal-Mart (4.9%), Kmart
(4.5%) and Winn Dixie (2.7%). We could be adversely affected if any of our major
tenants experienced a significant downturn in its business or failed to renew
its leases as they expired. A downturn in the business of other significant
tenants could also affect us adversely; however, as of December 31, 2001, we
received no more than 1.2% of our annualized base rental revenue from any other
single tenant.

Bankruptcy of Tenants. A financially troubled tenant could seek the protection
of the bankruptcy laws, which might result in rejection and termination of the
tenant's lease. Whether or not a financially troubled tenant seeks the
protection of the bankruptcy laws, we could experience delays and incur
significant costs and delays in enforcing our rights against a financially
troubled tenant that does not pay its rent when due.

In October 1999, a grocery anchor, Jitney Jungle, filed for reorganization under
Chapter 11 of the United States Bankruptcy Code. At the time of filing, the
Company had leases with Jitney Jungle at 10 store locations. Jitney Jungle
disavowed two of these leases at the time of the bankruptcy filing. During 2000,
Jitney Jungle rejected three additional leases, and in January 2001 the
remaining five leases were rejected by the bankruptcy court. As of December 31,
2001, of the 10 original Jitney Jungle locations, three are fully leased to
grocery operators, two are fully leased to other national tenants and one is
partially leased to a national tenant. The Company is negotiating with retailers
for three of the remaining four locations.

Subsequent to December 31, 2001, on January 22, 2002, one of the Company's
anchor tenants, Kmart Corporation, filed for bankruptcy protection. The Company
has eight stores leased to Kmart which accounted for 4.5% of the Company's total
revenues for the year ended December 31, 2001. On March 8, 2002, Kmart
Corporation announced nationwide store closings that included two stores in
IRT's portfolio. The two stores, located at Pinhook Plaza and Siegen Village in
Louisiana, are scheduled to close when store-closing inventory sales are
completed. Rental income from these two stores in 2001 was approximately
$730,000, including base rents and all related charges of property taxes and
common area maintenance. The Company is aggressively marketing these locations
to prospective tenants and believes the revenue lost when the stores close will
not have a material adverse affect on the Company.

Other tenants have also filed for protection under bankruptcy laws, however; the
Company presently believes the financial losses are not significant with regard
to the Company's overall portfolio of tenants.

Vacancies and Lease Renewals. Our anchor tenants' leases generally have terms
of up to 20 years, often with one or more renewal options. We may not be able
to find a replacement tenant at the end or nonrenewal of a lease. The space may
remain vacant or may be re-leased at terms that vary materially and unfavorably
from the original terms.

Tenant Closings. Certain leases permit the tenant to close its operations at the
leased location. Although the tenant would still be responsible for its rental
obligations, any rents based on the sales of that tenant could be lost. Such a
closure could adversely affect customer traffic as well as the business of, and
revenues received from, other tenants at a shopping center. Rental rates and
occupancy may also be affected adversely at such a center.

DEVELOPMENT AND CONSTRUCTION RISKS COULD IMPACT OUR PERFORMANCE

The Company has begun to develop shopping centers to enhance the value of our
portfolio. The Company may be unable to obtain, or face delays in obtaining,
necessary zoning, land-use, building, occupancy and other required governmental
permits and authorizations, which could result in increased development costs.
We also may incur construction costs for a property that exceeds original
estimates due to increased materials, labor or other costs, which would make
completion of the property uneconomical and the Company may not be able to
increase rents to compensate for the increase in construction costs. Because
occupancy rates and rents at a newly developed shopping center may fluctuate
depending on a number of factors, including market and economic conditions, the
Company may be unable to meet its profitability goals for that shopping center.

REAL ESTATE INDUSTRY RISKS MAY AFFECT OUR PERFORMANCE

Concentration in the Southeast. Most of our real estate portfolio is located in
the southeastern United States. This region has experienced rapid growth in
recent years; however, this growth may not continue. Our business could be
adversely affected generally by changes in the region's growth and economic
condition.

Uncertainty of Meeting Acquisition Objectives. We continually seek additional
shopping centers and portfolios of shopping centers. We seek purchases with
attractive initial yields and/or which may enhance our revenues and funds from
operations through renovation, development, expansion and re-leasing programs.
We also regularly evaluate and consider mergers and acquisitions with companies
engaged in businesses similar or complementary to ours. However, we may not be
able to meet our acquisition goals and cannot assure you that any acquisition
will increase our revenues or funds from operations or result in a certain
yield. In addition, we incur certain internal and external costs evaluating
possible transactions, many of which are not recoverable when the transaction
does not close.

Competition. We compete with numerous other real estate companies. Other
retail properties within our markets compete with us for tenants. The location
and number of competitive retail properties could affect the Company's occupancy
levels and rental increases.

Other real estate companies compete with us for development, redevelopment and
acquisition opportunities. Such competitors may be willing and able to pay more
for such opportunities than we would. This may increase the prices sought by
sellers of these properties.

ENVIRONMENTAL PROBLEMS ARE POSSIBLE AND COULD BE COSTLY

Possible Environmental Liabilities. An owner or operator of real estate may be
liable for the costs of removal of the releases of certain hazardous or toxic
substances. The presence of hazardous or toxic substances on or near our
properties, or the failure to properly clean them up, may adversely affect our
ability to sell or rent the property or to use such property as collateral for
our borrowings. Corrective costs could adversely affect our financial condition
and performance.

Lack of Environmental Analyses. The Company has obtained independent Phase I
environmental site assessments for property acquisitions beginning in 1989 and
otherwise as required by its lenders. A Phase I assessment, however, has not
been obtained for several properties. Moreover, Phase I assessments generally do
not include environmental sampling, monitoring or laboratory analysis. As a
result, there may be environmental contamination at our properties of which we
are unaware. For the years commencing January 1, 2000, the Company has acquired
environmental and pollution legal liability insurance coverage to mitigate the
associated risks. However, there is no assurance that this insurance will be
adequate to protect the Company against unforeseen liabilities, which could
adversely affect the Company's performance and financial condition.

Presence of Dry Cleaning Solvents. A number of Company properties include
facilities leased to dry cleaners. At some of these properties, dry cleaning
solvents have been discovered in soil and or groundwater. In each such instance
either the amount detected was below reportable limits or the state regulatory
authority has informed the Company that no further enforcement action would be
taken. In Florida, the state regulatory authority has admitted the affected
Company property into the state-sponsored fund responsible for the clean up of
dry cleaning spills. Neither the admission of a property into the Florida fund
nor the assurances of the relevant state regulatory authority ensures that the
Company will not incur additional costs or penalties associated with corrective
action.

COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT AND OTHER LAWS MAY BE COSTLY

Our properties must comply with the federal Americans with Disabilities Act of
1990, as amended (the "ADA"). This law requires that disabled persons must be
able to enter and use public properties like our shopping centers. The ADA, or
other federal, state and local laws may require us to modify our properties,
which may adversely affect our financial performance, and may limit renovations.
If we fail to obey such laws, we may pay fines or damages.

SOME POTENTIAL LOSSES ARE NOT COVERED BY INSURANCE

We carry comprehensive liability, fire, extended coverage and rental loss
insurance on all of our properties. We believe this insurance coverage is
reasonably adequate. Certain types of losses, such as lease and other contract
claims, generally are not insured. Should an uninsured loss or a loss in excess
of insured limits occur, we could lose some or all of our investment in a
property, and the anticipated future revenue from the property could be
adversely affected. Notwithstanding any such loss, we would still owe mortgage
debt or other financial obligations related to the property.

OUR PERFORMANCE IS SUBJECT TO RISKS ASSOCIATED WITH DEBT FINANCING

At December 31, 2001, we had $334 million in long-term debt. On December 31,
2001, our debt-to-total market capitalization ratio was 51% without giving
effect to the conversion of the subordinated debentures or the OP Units, and 47%
assuming conversion of our subordinated debentures and the OP Units held by
unaffiliated persons. Of our long-term debt, 40.3% was secured by mortgages on
our properties. If the Company was unable to meet mortgage payments, the
mortgagee could foreclose upon the property, appoint a receiver and receive an
assignment of rents and leases or pursue other remedies, all with a consequent
loss of revenues and asset value to the Company. Foreclosures could also create
taxable income without accompanying cash proceeds, thereby hindering the
Company's ability to meet the REIT distribution requirements of the Code. We
must pay our debts on time. Interest and principal on the Company's debt must
be paid before dividends can be paid to shareholders. We may not be able to
refinance existing indebtedness on favorable terms.

We are obligated on floating rate debt, and historically have not used interest
rate protection instruments. If we do not hedge our exposure to increases in
interest rates through interest rate protection or cap agreements, increases in
rates may reduce cash flow and our ability to service our debt. Our
organizational documents place no limit on the amount of indebtedness we may
incur.

SECURITY HOLDERS MAY BE ADVERSELY AFFECTED BY THE DILUTION OF COMMON STOCK

The Company may issue additional Shares or OP Units without Security Holder
approval. Additionally, each OP Unit may be redeemed by the holder for one
share of common stock or, at our option, the cash value of one share of common
stock. Such issuances may dilute your interest in the Company.

OUR LIQUIDITY IS SUBJECT TO THE RESTRICTIONS ON SALES OF CERTAIN PROPERTIES

We have agreements that limit our sale of certain properties acquired by LP in
exchange for OP Units for up to 10 years. We may enter into similar agreements
in the future with future sellers of properties that take OP Units in exchange
for transferring properties to LP. These agreements may prevent sales of
properties that could be advantageous to our Security Holders.

THE ABILITY TO EFFECT CHANGES IN CONTROL OF THE COMPANY MAY BE LIMITED

Certain provisions of the law, our charter documents and Company policies may
have the effect of delaying or preventing a change in control of the Company or
other transaction that could, if consummated, provide investors with a premium
over the then-prevailing market price of the Company's securities. These
provisions include the ownership limit described below and the Company's
Shareholders' Rights Plan. Also, any future series of preferred stock may have
certain voting or other provisions that could delay, deter or prevent a change
of control or other transaction that might involve a premium price or otherwise
be of benefit to other equity interests in the Company. For a description of
the Company's Shareholders Rights Plan, see the Company's Current Report on Form
8-K dated August 21, 1998.

THE COMPANY IS SUBJECT TO OWNERSHIP LIMITS AND CERTAIN ADVERSE EFFECTS OF
FAILING TO QUALIFY AS A REIT

Concentration of Ownership of the Company is Limited. In order to qualify as a
REIT under the Code, we must satisfy various tests related to the sources and
amounts of our income, the nature of our assets and our stock ownership. For
example, not more than 50% in value of the outstanding shares of the Company may
be owned, directly or indirectly, by five or fewer individuals. Our charter
authorizes our directors to take such action as may be required to preserve our
qualification as a REIT, including, but not limited to, limits on the ownership
of our securities. These limits may have the effect of delaying, deferring or
preventing a change in control of the Company.

REIT Investment Limitations. To qualify as a REIT under the Code, we must hold
certain types of real estate and other investments. This limits our ability to
diversify our assets outside of real estate.

Adverse Effects of Failing to Qualify as a REIT. If the Company fails to
qualify as a REIT under the Code, it will be subject to income taxes on its
taxable income. The Company also may be disqualified from treatment as a REIT
for the four taxable years following the year during which qualification is
lost. This would reduce the net earnings of the Company available for
investment or distribution to Security Holders because of the additional tax
liability for the year(s) involved. In addition, distributions to our Security
Holders would no longer be required, which would likely substantially reduce, or
even eliminate, any dividends paid by the Company to its shareholders.

ITEM 2. PROPERTIES
(In thousands, except for square footage)

The following tables and notes thereto describe the properties in which the
Company had investments at December 31, 2001, as well as the mortgage
indebtedness to which the Company's investments were subject. These tables
should be read in conjunction with the consolidated financial statements and
notes thereto included elsewhere in this report.

I. EQUITY INVESTMENTS (LAND AND BUILDINGS)

The Company had a fee or leasehold interest in land and improvements
thereon as follows:

GROSS PERCENT
DATE LEASEABLE LEASED YEAR
DESCRIPTION ACQUIRED AREA 12/31/01 COMPLETED
------------------------------- ------------- ----------------- --------- -----------

SHOPPING CENTERS
Alafaya Commons 11/96 120,586 sq. ft. 96% 1987
Orlando, FL
Ambassador Row 12/94 193,982 sq. ft. 99% 1980 & 1991
Lafayette, LA
Ambassador Row - Courtyards 12/94 155,483 sq. ft. 81% 1986 & 1991
Lafayette, LA
Asheville Plaza (3) 4/86 49,800 sq. ft. 100% 1967
Asheville, NC
Bay Pointe Plaza (3) 12/98 97,390 sq. ft. 96% 1998
St. Petersburg, FL
Bluebonnet Village 12/94 90,215 sq. ft. 98% 1983
Baton Rouge, LA
The Boulevard 12/94 68,012 sq. ft. 64% 1976 & 1994
Lafayette, LA
Carrollwood Center (3) 11/01 96,243 sq. ft. 85% 1971 & 1996
Tampa, FL
Centre Point Plaza (3) 12/92 & 12/93 163,642 sq. ft. 100% 1989 & 1993
Smithfield, NC
Charlotte Square (3) 8/98 96,188 sq. ft. 92% 1998
Port Charlotte, FL
Chastain Square 12/97 87,815 sq. ft. 100% 1981 & 2001
Atlanta, GA
Chelsea Place 7/93 81,144 sq. ft. 100% 1992
New Port Richey, FL
Chestnut Square (3) 1/92 39,640 sq. ft. 100% 1985
Brevard, NC
Colony Square 2/88 50,000 sq. ft. 100% 1987
Fitzgerald, GA
Commerce Crossing 12/92 100,668 sq. ft. 100% 1988
Commerce, GA
Country Club Plaza 1/95 64,686 sq. ft. 92% 1982
Slidell, LA
Countryside Shops 6/94 173,161 sq. ft. 97% 1986, 1988
Cooper City, FL & 1991

The Crossing 12/94 113,989 sq. ft. 100% 1988 & 1993
Slidell, LA
Daniel Village 3/98 164,549 sq. ft. 92% 1988
Augusta, GA
Douglas Commons 8/92 97,027 sq. ft. 100% 1998
Douglasville, GA
Elmwood Oaks 1/92 130,284 sq. ft. 100% 1989
Harahan, LA
Fairview Oaks 6/97 77,052 sq. ft. 100% 1997
Ellenwood, GA
Forest Hills Centre (3) 8/90 74,180 sq. ft. 97% 1990 & 1995
Wilson, NC
Forrest Gallery (3) 12/92 214,450 sq. ft. 97% 1987
Tullahoma, TN
The Galleria (3) 8/86 & 12/87 92,344 sq. ft. 88% 1986, 1990
Wrightsville Beach, NC & 1996
Grassland Crossing 2/97 90,906 sq. ft. 96% 1996
Alpharetta, GA
Greenwood 7/97 128,532 sq. ft. 91% 1982 & 1994
Palm Springs, FL
Gulf Gate Plaza 6/79 174,566 sq. ft. 88% 1969 & 1974
Naples, FL
Heritage Walk 6/93 159,991 sq. ft. 100% 1991 & 1992
Milledgeville, GA
Lancaster Plaza 4/86 77,400 sq. ft. 91% 1971
Lancaster, SC
Lancaster Shopping Center 8/86 & 12/87 29,047 sq. ft. 89% 1963 & 1987
Lancaster, SC
Lawrence Commons (3) 8/92 52,295 sq. ft. 98% 1987
Lawrenceburg, TN
Lexington Shopping Center 6/88 & 6/89 36,535 sq. ft. 100% 1981 & 1989
Lexington, VA
Mableton Crossing 6/98 86,819 sq. ft. 96% 1998
Mableton, GA
MacLand Pointe 1/93 79,699 sq. ft. 98% 1992 & 1993
Marietta, GA
Madison Centre 8/97 64,837 sq. ft. 96% 1997
Huntsville, AL
Market Place 4/97 73,686 sq. ft. 42% 1976
Norcross, GA
McAlpin Square (2) 12/97 176,807 sq. ft. 96% 1979
Savannah, GA
Millervillage 12/94 94,559 sq. ft. 33% 1983 & 1992
Baton Rouge, LA
New Smyrna Beach Regional 8/92 118,451 sq. ft. 88% 1987
New Smyrna Beach, FL

North River Village 12/92 & 12/93 177,128 sq. ft. 100% 1988 & 1993
Ellenton, FL
North Village Center (1) 8/86 60,356 sq. ft. 98% 1984
North Myrtle Beach, SC
Old Kings Commons 5/88 84,759 sq. ft. 100% 1988
Palm Coast, FL
Parkmore Plaza 12/92 159,067 sq. ft. 68% 1986 & 1992
Milton, FL
Paulding Commons 8/92 192,391 sq. ft. 99% 1991
Dallas, GA
Pensacola Plaza 7/86 56,098 sq. ft. 100% 1985
Pensacola, FL
Pine Ridge Square (3) 12/00 117,399 sq. ft. 100% 1986
Coral Springs, FL
Pinhook Plaza 12/94 192,501 sq. ft. 70% 1979 & 1992
Lafayette, LA
Plaza Acadienne (2) 12/94 105,419 sq. ft. 98% 1980
Eunice, LA
Plaza North (3) 8/92 47,240 sq. ft. 95% 1986
Hendersonville, NC
Powers Ferry Plaza 5/97 83,101 sq. ft. 91% 1979 & 1983
Marietta, GA
Providence Square (3) 12/71 85,930 sq. ft. 96% 1973
Charlotte, NC
Regency Square 3/01 85,864 sq. ft. 87% 2001
Port Richey, FL
Riverside Square (3) 8/98 103,241 sq. ft. 90% 1998
Coral Springs, FL
Riverview Shopping Center (3) 3/72 130,058 sq. ft. 91% 1973 & 1974
Durham, NC
Salisbury Marketplace (3) 9/96 76,970 sq. ft. 87% 1987
Salisbury, NC
Scottsville Square 8/92 38,450 sq. ft. 94% 1986
Bowling Green, KY
Seven Hills 7/93 64,590 sq. ft. 100% 1991
Spring Hill, FL
Shelby Plaza (2) (3) 4/86 103,000 sq. ft. 100% 1972
Shelby, NC
Sherwood South 12/94 75,607 sq. ft. 98% 1972, 1988
Baton Rouge, LA & 1992
Shipyard Plaza 4/88 66,857 sq. ft. 100% 1987
Pascagoula, MS
Shoppes of Lago Mar (3) 2/99 82,613 sq. ft. 92% 1995
Miami, FL
Shoppes of Silverlakes 11/97 126,638 sq. ft. 93% 1995 & 1996
Pembroke Pines, FL

Siegen Village 12/94 174,578 sq. ft. 100% 1988 & 1996
Baton Rouge, LA
Smyrna Village (3) 8/92 83,334 sq. ft. 97% 1992
Smyrna, TN
Smyth Valley Crossing 12/92 126,841 sq. ft. 100% 1989
Marion, VA
South Beach Regional 8/92 289,319 sq. ft. 94% 1990 & 1991
Jacksonville Beach, FL
Spalding Village 8/92 235,318 sq. ft. 98% 1989
Griffin, GA
Spring Valley 3/98 75,415 sq. ft. 98% 1998
Columbia, SC
Stadium Plaza 8/92 70,475 sq. ft. 98% 1988
Phenix City, AL
Stanley Market Place (3) 1/92 40,364 sq. ft. 89% 1980 & 1991
Stanley, NC
Tamarac Town Square (3) 8/98 124,685 sq. ft. 94% 1998
Tamarac, FL
Tarpon Heights 1/95 56,605 sq. ft. 50% 1982
Galliano, LA
Thomasville Commons 8/92 148,754 sq. ft. 100% 1991
Thomasville, NC
Town & Country 1/98 71,283 sq. ft. 96% 1998
Kissimmee, FL
Treasure Coast Plaza (3) 5/98 133,781 sq. ft. 96% 1998
Vero Beach, FL
Unigold Shopping Center (3) 4/01 102,985 sq. ft. 94% 1987
Orlando, FL
Venice Plaza (1) 6/79 155,987 sq. ft. 88% 1971 & 1979
Venice, FL
Village at Northshore 12/94 144,373 sq. ft. 100% 1988 & 1993
Slidell, LA
Walton Plaza 8/98 43,460 sq. ft. 100% 1991
Augusta, GA
Waterlick Plaza 10/89 98,694 sq. ft. 79% 1973 & 1988
Lynchburg, VA
Watson Central 12/92 & 10/93 227,747 sq. ft. 90% 1989 & 1993
Warner Robins, GA
Wesley Chapel Crossing 12/92 170,792 sq. ft. 100% 1989
Decatur, GA
West Gate Plaza 6/74 & 1/85 64,378 sq. ft. 100% 1974 & 1995
Mobile, AL
West Towne Square 3/90 89,596 sq. ft. 88% 1988
Rome, GA
Williamsburg at Dunwoody (3) 3/99 44,928 sq. ft. 92% 1983
Dunwoody, GA

Willowdaile Shopping Center (3) 8/86 & 12/87 120,815 sq. ft. 80% 1986
Durham, NC

Total Shopping Centers 9,346,444 sq. ft.

INDUSTRIAL PROPERTIES
Industrial Buildings 6/79 188,513 sq. ft. 79% 1956 & 1963
Charlotte, NC

DEVELOPMENT PROPERTIES
Conway Crossing 6/79 6,000 sq. ft. - 1972
Orlando, FL
Lutz Lake Crossing 9/00 68,000 sq. ft. - -
Tampa, FL
Miramar 6/99 185,000 sq. ft. - -
Miami, FL
Shops at Huntcrest 9/01 97,000 sq. ft. - -
Lawrenceville, GA

Total Development Properties 356,000 sq. ft.
---------

TOTAL EQUITY INVESTMENTS IN
LAND AND BUILDINGS 9,890,957 sq. ft.
========= =======

NOTES:

(1) The Company owns a 49.5% interest in the property of North Village Center and is
entitled to 54.5% of the financial performance of the property. The Company also owns a
75% interest in Venice Plaza Shopping Center. These investments are consolidated for
reporting purposes and minority interests are recorded.

(2) Subject to ground leases expiring in 2005 for McAlpin Square, 2007 for Shelby Plaza
and 2008 for Plaza Acadienne, with renewal options to extend the terms to 2017, 2033 and
2035, respectively. The Company has options to purchase the land at Shelby Plaza and
McAlpin Square.

(3) Ownership through IRT Partners, L.P.

II. EQUITY INVESTMENTS (LAND PURCHASE-LEASEBACKS)

The Company owned land under the following property, which is net leased
back to the lessee. The improvements on the property are owned by others but
will revert to the Company at the end of the lease term.

LAND LEASE
DATE AREA YEAR EXPIRATION
DESCRIPTION ACQUIRED IN ACRES IMPROVEMENTS COMPLETED DATE
---------------------------- -------- -------- --------------------- --------- ----------

Grand Marche Shopping Center 9/72 11.38 200,585 sq. ft. 1969 2012
Lafayette, LA

III. EQUITY INVESTMENTS (DIRECT FINANCING LEASES)

The Company has a fee interest in land and improvements thereon in the
following properties occupied by tenants under leases which are treated as
direct financing leases.

GROSS PERCENT
DATE LEASEABLE LEASED YEAR
DESCRIPTION ACQUIRED AREA 12/31/2001 COMPLETED
--------------------------- -------- ----------------- ----------- ---------

SHOPPING CENTERS
Wal-Mart Stores, Inc. 6/85 54,223 sq. ft. 100% 1985
Mathews, LA
Wal-Mart Stores, Inc. 7/85 53,571 sq. ft. 100% 1985
Marble Falls, TX ------- -------

TOTAL EQUITY INVESTMENTS IN
DIRECT FINANCING LEASES 107,794 sq. ft.
========= =======

IV. MORTGAGE LOAN INVESTMENTS

The Company had mortgage loans receivable on the following properties:

SECURITY
------------------------------ STATED
TYPE OF LAND MATURITY INTEREST
DESCRIPTION LOAN AREA IMPROVEMENTS DATE RATE
------------------------------ ------------- ------- ------------ ------------ ------------

RESIDENTIAL
Mill Creek Club Condominiums 1st Mortgage - 4 units 2006-2007 8.63%-12.38%
Nashville, TN Participation (1)
Cypress Chase "A" Condominiums 1st Mortgage 2.00 acres recreational May 2009 10.00%
Lauderdale Lakes, FL ------

Total Residential 2.00
=======

SHOPPING CENTERS
Freehome Village 1st Mortgage 89,720 sq. ft. development October 2002 LIBOR + 3.0% (2)
Cherokee County, GA
Fort Walton Beach Plaza 2nd Mortgage 48,248 sq. ft. - June 2003 7.0%
Ft. Walton Beach, FL -------

Total Shopping Centers 137,968
=======

(1)The Company has a 46.2% interest in the total loan outstanding.

(2) The interest rate is based upon the one month London Interbank Offering Rate ("LIBOR") at month end plus the
specified premium.

V. MORTGAGE INDEBTEDNESS

Indebtedness of the Company secured by its investments (not including
mortgage debt owed by a lessee of its land purchase-leaseback investment) was as
follows:

PRINCIPAL ANNUAL
MATURITY BALANCE INTEREST CONSTANT
INVESTMENT DATE 12/31/2001 RATE PAYMENT
---------------------------- -------- ----------- --------- ---------

Thomasville Commons 6/1/02 (1) $ 5,211 9.63% $ 583
Thomasville, NC
Town & Country 12/1/02 (1) 2,029 7.65% 214
Kissimmee, FL
Elmwood Oaks 6/1/05 (1) 7,500 8.38% 628 (2)
Harahan, LA
Shoppes of Lago Mar (6) 4/1/06 (1) 5,423 7.50% 532
Miami, FL
North Village Center 3/15/09 1,876 (3) 8.13% 343
North Myrtle Beach, SC
Tamarac Town Square (5) (6) 10/1/09 (1) 6,354 9.19% 651
Tamarac, FL
Spalding Village 9/1/10 (1) 11,080 8.19% 1,158
Griffin, GA
Charlotte Square (5) (6) 2/1/11 (1) 3,727 9.19% 394
Port Charlotte, FL
Pine Ridge (6) 5/1/11 (1) 7,502 7.02% 603
Coral Springs, FL
Heritage Walk 5/1/11 (1) 7,166 7.25% 589
Milledgeville, GA
Macland Pointe 5/1/11 (1) 5,972 7.25% 491
Marietta, GA
Riverside Square (5) (6) 3/1/12 (1) 7,877 9.19% 808
Coral Springs, FL
Village at Northshore 7/1/13 (4) 4,650 9.00% 648
Slidell, LA

Treasure Coast Plaza (6) 4/1/15 5,286 8.00% 646
Vero Beach, FL
Shoppes of Silverlakes 7/1/15 3,056 7.75% 364
Pembroke Pines, FL
Grassland Crossing 12/1/16 (1) 6,265 7.87% 623
Alpharetta, GA
Mableton Crossing 8/15/18 (1) 4,328 6.85% 308
Mableton, GA
Chastain Square 2/28/24 4,093 6.50% 348
Atlanta, GA
Daniel Village 2/28/24 4,473 6.50% 381
Augusta, GA
Douglas Commons 2/28/24 5,331 6.50% 454
Douglasville, GA
Fairview Oaks 2/28/24 5,045 6.50% 429
Ellenwood, GA
Madison Centre 2/28/24 4,093 6.50% 348
Huntsville, AL
Paulding Commons 2/28/24 6,949 6.50% 591
Dallas, GA
Siegen Village 2/28/24 4,521 6.50% 385
Baton Rouge, LA
Wesley Chapel Crossing 2/28/24 3,570 6.50% 304
Decatur, GA

Total 133,377

Interest Premium (5) 1,295
-----------

TOTAL MORTGAGE INDEBTEDNESS $ 134,672 $ 12,823
=========== =========

NOTES:

(1) Balloon payment at maturity

(2) Interest only. Entire principal due at maturity.

(3) Although the Company is a partner or joint venturer in this investment, 100% of the
mortgage note payable is recorded for financial reporting purposes.

(4) Callable anytime after 7/30/03.

(5) For financial reporting purposes, mortgage indebtedness is valued assuming current
interest rates at date of acquisition.

(6) Ownership through IRT Partners, L.P.

VI. ACQUISITIONS

TOTAL
DATE INITIAL CASH PRINCIPAL
ACQUIRED PROPERTY NAME CITY, STATE AREA COST PAID TENANTS
-------- --------------------------- ----------- ------- -------- ------- --------------------

4/12/01 Unigold Shopping Center Orlando, FL 102,985 sq. ft. $ 8,000 $ 7,903 Winn-Dixie

11/30/01 Carrollwood Center Tampa, FL 96,242 sq. ft. 6,763 6,763 Publix, Eckerd Drugs
------- -------- -------

199,227 sq. ft. $ 14,763 $14,666
======= ======== =======

VII. DISPOSITIONS

DATE SALES CASH FINANCIAL
SOLD PROPERTY NAME CITY, STATE AREA PRICE PROCEEDS GAIN (LOSS)
-------- ------------------------------- -------------------- ------- ------- --------- ------------

4/18/01 Eden Center Eden, NC 56,355 sq. ft. $ 3,950 $ 3,830 $ 742

5/4/01 Old Phoenix National Bank Medina County, Ohio 73,074 sq. ft. 3,500 3,465 1,525

5/31/01 Chadwick Square Hendersonville, NC 32,100 sq. ft. 2,401 2,351 366

6/8/01 Ft. Walton Beach Plaza Ft. Walton Beach, FL 48,248 sq. ft. 1,650 1,300 (135)

11/13/01 Lawrence County Shopping Center Sybene, OH 135,605 sq. ft. 786 783 347
------- ------- --------- ------------

345,382 sq. ft. $12,287 $ 11,729 $ 2,845
======= ======= ========= ============

PROPERTY PRINCIPAL
PROPERTY NAME TYPE TENANTS
------------------------------- ----------------------- ---------

Eden Center Shopping Center Food Lion

Old Phoenix National Bank Direct Financing Lease -

Chadwick Square Shopping Center Food Lion

Ft. Walton Beach Plaza Shopping Center -

Lawrence County Shopping Center Land Purchase-Leaseback -

ITEM 3. LEGAL PROCEEDINGS

Presently, there are no material pending legal proceedings of which the
Company is aware involving the Company, its subsidiaries or its properties.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of the Company's shareholders
during the fourth quarter of the Company's fiscal year ended December 31, 2001.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY
HOLDER MATTERS

The Company's common stock began trading on the New York Stock Exchange
("NYSE") in May 1971 under the symbol "IRT." As of February 11, 2002, the
Company had approximately 2,500 stockholders of record. The following table
shows the high and low sale prices for the Company's common stock as reported on
the NYSE for the periods indicated and the distributions declared by the
Company.

DISTRIBUTIONS
HIGH LOW DECLARED
------ ------ -------------

2001
First Quarter $ 9.35 $ 8.19 $ 0.235
Second Quarter 10.89 8.86 0.235
Third Quarter 10.88 9.55 0.235
Fourth Quarter 11.28 10.25 0.235

2000
First Quarter $ 8.63 $ 7.69 $ 0.235
Second Quarter 8.75 7.88 0.235
Third Quarter 9.25 8.56 0.235
Fourth Quarter 8.50 7.56 0.235

Dividends paid during 2001 and 2000 totaled $28.6 million and $29.8
million, respectively. IRT has paid 96 consecutive quarterly dividends and the
current annualized dividend rate is $0.94 per share. The Company presently does
not foresee any restrictions upon its ability to continue its dividend payment
policy of distributing at least the 90% (95% for years prior to 2001) of its
otherwise taxable ordinary income required for qualification as a REIT by the
Code.

The Company has not issued any unregistered securities during the last
three years.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
(In thousands, except per share amounts)

The following table sets forth selected consolidated financial data for the
Company and should be read in conjunction with the consolidated financial
statements and notes thereto included elsewhere in this report.

AS OF OR FOR THE YEARS ENDED
-----------------------------------------------------
2001 2000 1999 1998 1997
--------- --------- --------- --------- ---------

OPERATING DATA
Gross revenues $ 87,584 $ 85,363 $ 85,391 $ 79,870 $ 67,118
Expenses 64,255 60,277 58,703 55,179 44,902
--------- --------- --------- --------- ---------

Earnings from operations 23,329 25,086 26,688 24,691 22,216
Income tax provision (53) - - - -
Minority interest of unitholders in
operating partnership (554) (596) (683) (262) -
Gain on sales of properties 2,498 4,549 2,483 1,213 3,897
--------- --------- --------- --------- ---------

Earnings before extraordinary item 25,220 29,039 28,488 25,642 26,113
Extraordinary item:
Loss on extinguishment of debt - - (157) (57) -
--------- --------- --------- --------- ---------

Net earnings $ 25,220 $ 29,039 $ 28,331 $ 25,585 $ 26,113
========= ========= ========= ========= =========

PER SHARE DATA
Earnings before extraordinary item - basic $ 0.83 $ 0.92 $ 0.86 $ 0.78 $ 0.82
Net earnings - basic $ 0.83 $ 0.92 $ 0.86 $ 0.78 $ 0.82
Weighted average shares outstanding - basic 30,322 31,536 33,119 32,940 31,868

Earnings before extraordinary item - diluted $ 0.83 $ 0.91 $ 0.86 $ 0.78 $ 0.82
Net earnings - diluted $ 0.83 $ 0.91 $ 0.86 $ 0.78 $ 0.82
Weighted average shares outstanding - diluted 33,301 34,432 33,904 33,305 31,921

Dividends paid $ 0.94 $ 0.94 $ 0.93 $ 0.915 $ 0.90

BALANCE SHEET DATA
Real estate, before
accumulated depreciation $682,419 $633,016 $630,005 $622,117 $537,160
Real estate, net of
accumulated depreciation 573,075 536,833 543,835 547,174 474,633
Total assets 590,500 574,560 565,896 562,259 498,153
Total debt 334,361 319,498 290,493 281,585 226,947
Total liabilities 349,611 331,426 302,301 292,401 238,476
Total shareholder's equity 233,134 235,153 256,203 262,773 259,676

OTHER DATA
Net cash flows from (used in):
Operating activities $ 39,490 $ 38,416 $ 41,452 $ 36,728 $ 34,792
Investing activities (24,229) (17,011) (8,551) (39,586) (60,273)
Financing activities (13,635) (21,088) (32,731) 2,927 22,582

Funds from operations - diluted (1) $ 41,559 $ 42,313 $ 43,037 $ 40,324 $ 36,543
Weighted average shares outstanding - diluted
(Funds from operations) 33,301 34,432 35,973 35,463 34,766

(1) The Company defines funds from operations, consistent with the NAREIT definition, as net income
before gains (losses) on the sale of real estate investments and extraordinary items plus
depreciation and amortization of capital leasing costs. Conversion of the 7.30% subordinated
debentures is dilutive and therefore assumed for all years presented. Conversion of the OP Units is
dilutive and therefore assumed for 2001, 2000, 1999 and 1998. Management believes funds from
operations should be considered along with, but not as an alternative to, net income as defined by
generally accepted accounting principles as a measure of the Company's operating performance. Funds
from operations does not represent cash generated from operating activities in accordance with
generally accepted accounting principles and is not necessarily indicative of cash available to fund
operating needs.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Dollars in thousands, except per share amounts)

The following discussion and analysis should be read in conjunction with
the consolidated financial statements and notes thereto included elsewhere in
this report.

OVERVIEW

IRT Property Company ("IRT" or the "Company") was founded in 1969 and
became a public company in May 1971 (NYSE: IRT). The Company is an owner,
operator, redeveloper and developer of high quality, well located neighborhood
and community shopping centers throughout the southeastern United States. The
Company's portfolio consists of 87 shopping centers, three shopping center
investments, four development properties, one industrial property and four
mortgage loans. The 87 shopping centers and the three shopping center
investments total approximately 9.7 million square feet of retail space and are
located in eleven southeastern states. IRT shopping centers are anchored by
necessity-oriented retailers such as supermarkets, drug stores, national value
retailers and department stores.

GEOGRAPHIC MARKETS

The Company owns and operates 87 shopping centers in ten states primarily
located in Florida (25), Georgia (20), Louisiana (14) and North Carolina (13).
No one shopping center accounts for more than 3.5% of rental income. The
following table summarizes the Company's shopping centers by state for total
gross leasable area ("GLA") and rental income for the years ended December 31,
2001 and 2000:

% OF GLA % OF RENTAL INCOME
------------------ ------------------
2001 2000 2001 2000
------ ------ ------ ------

Florida 32.3% 30.3% 38.4% 36.3%
Georgia 25.1% 25.3% 25.6% 25.8%
Louisiana 17.8% 18.1% 14.4% 14.4%
North Carolina 12.5% 13.7% 11.2% 12.8%
Tennessee 3.7% 3.8% 3.2% 3.3%
Virginia 2.8% 2.9% 2.3% 2.2%
South Carolina 2.6% 2.6% 2.0% 2.1%
Alabama 2.1% 2.2% 2.2% 2.2%
Mississippi 0.7% 0.7% 0.3% 0.6%
Kentucky 0.4% 0.4% 0.4% 0.3%
------ ------ ------ ------

100.0% 100.0% 100.0% 100.0%
====== ====== ====== ======

Within the respective states, over 80% of IRT's properties, based on GLA
and rental revenues, are located in primary and secondary markets. IRT defines
primary markets as those that have a metropolitan statistical area ("MSA")
population of greater than 1 million people. Secondary markets have a MSA
population between 250,000 and 1 million. IRT considers markets with MSA
population under 250,000 to be tertiary markets.

The Company continues to place emphasis on obtaining shopping centers in
primary or secondary markets and reducing the number of shopping centers in
tertiary markets. Since the beginning of 1997, the Company has purchased 23
properties in primary or secondary markets for approximately $199,000. In 2001,
these acquisitions contributed to over 33% of rental income. During the same
time period, the Company has disposed of 13 shopping centers in tertiary
markets.

The following table summarizes the percentage of GLA and rental income from
the respective markets for the years ended December 31, 2001 and 2000:

% OF GLA % OF RENTAL INCOME
------------------ ------------------
2001 2000 2001 2000
------ ------ ------ ------

Primary 46.9% 43.5% 57.3% 54.3%
Secondary 34.4% 34.8% 27.7% 29.0%
Tertiary 18.7% 21.7% 15.0% 16.7%
------ ------ ------ ------

100.0% 100.0% 100.0% 100.0%
====== ====== ====== ======

TENANTS AND LEASING

The Company's 87 shopping centers are anchored by necessity-oriented
retailers such as supermarkets, drug stores, national value retailers and
department stores. The Company's five largest tenants, as a percentage of
revenues, are Publix (8.6%), Kroger (6.8%), Wal-Mart (4.9%), Kmart (4.5%) and
Winn Dixie (2.7%). As of December 31, 2001, of the Company's 9.7 million square
feet of retail space, approximately 2.7 million, or 27.8%, was leased to grocery
stores. Including anchor tenants, the Company has over 1,000 different tenants.
The following table represents the percent leased and the average base rent per
square foot by state as of the years ended December 31, 2001 and 2000:

AVERAGE BASE RENT
% LEASED PER SQUARE FOOT
----------------- -----------------
2001 2000 2001 2000
----- ----- ----- -----

Florida 92% 91% $9.10 $9.06
Georgia 95% 97% 8.19 8.07
Louisiana 87% 87% 7.22 7.22
North Carolina 94% 93% 6.64 6.77
Tennessee 97% 98% 6.60 6.53
Virginia 92% 92% 6.93 6.85
South Carolina 95% 95% 6.06 5.93
Alabama 98% 100% 7.90 7.88
Mississippi 100% 100% 5.62 7.74
Kentucky 94% 94% 7.81 7.55
----- ----- ----- -----

Total of all properties 93% 93% $7.94 $7.87
===== ===== ===== =====

The overall percent leased remained constant at 93% for both 2001 and 2000.
This was due to the releasing of the former Jitney Jungle locations of
approximately 155,149 square feet in 2001, partially offset by lease
terminations of approximately 121,472 square feet in 2001.

Base rent per square foot increased from $7.87 per square foot in 2000 to
$7.94 per square foot in 2001 due to increased renewal rental rates and higher
rates on new properties. The Company renewed leases at an average increase of
4.4% in rental revenues. The Company also completed one development and
purchased two properties during 2001, which have higher base rents per square
foot.

The necessity-oriented retailers, such as those occupying the Company's
properties, typically perform better in an economic recession; however, adverse
changes in general or local economic conditions could result in the inability of
some existing tenants to meet their lease obligations and could adversely affect
the Company's ability to attract or retain tenants.

In October 1999, a grocery anchor, Jitney Jungle, filed for reorganization
under Chapter 11 of the United States Bankruptcy Code. At the time of filing,
the Company had leases with Jitney Jungle at 10 store locations. Jitney Jungle
disavowed two of these leases at the time of the bankruptcy filing. During 2000,
Jitney Jungle rejected three additional leases, and in January 2001 the
remaining five leases were rejected by the bankruptcy court. As of December 31,
2001, of the 10 original Jitney Jungle locations, three are fully leased to
grocery operators, two are fully leased to other national tenants and one is
partially leased to a national tenant. The Company is negotiating with retailers
for three of the remaining four locations.

Subsequent to December 31, 2001, on January 22, 2002, one of the Company's
anchor tenants, Kmart Corporation, filed for bankruptcy protection. The Company
has eight stores leased to Kmart which accounted for 4.5% of the Company's total
revenues for the year ended December 31, 2001. On March 8, 2002, Kmart
Corporation announced nationwide store closings that included two stores in
IRT's portfolio. The two stores, located at Pinhook Plaza and Siegen Village in
Louisiana, are scheduled to close when store-closing inventory sales are
completed. Rental income from these two stores in 2001 was approximately $730,
including base rents and all related charges of property taxes and common area
maintenance. The Company is aggressively marketing these locations to
prospective tenants and believes revenue lost when the stores close will not
have a material adverse affect on the Company.

Other tenants have also filed for protection under bankruptcy laws,
however; the Company presently believes the financial losses are not significant
with regard to the Company's overall portfolio of tenants.

As of December 31, 2001, our leases with anchor tenants had a weighted
average life of 8.37 years. Anchor tenants are defined as supermarkets, drug
stores, national value retailers, department stores and other tenants leasing in
excess of 10,000 square feet which, in management's opinion, have the
traffic-generating qualities necessary to be considered an anchor. Our leases
with shop tenants, which include all other tenants except anchors, had a
weighted average life of 3.11 years as of December 31, 2001. The following table
represents anchor and shop tenant's lease expirations as of December 31, 2001:

APPROXIMATE ANNUALIZED
NUMBER OF LEASED BASE RENT AVERAGE
LEASE YEAR LEASES AREA IN UNDER EXPIRING BASE RENT
EXPIRATION EXPIRING SQUARE FEET LEASES PER SQUARE FOOT
---------- --------- ----------- --------------- ----------------

2002 284 637,850 $ 6,967,880 $ 10.92
2003 308 850,032 8,664,941 10.19
2004 283 789,595 8,170,834 10.35
2005 191 858,095 7,218,754 8.41
2006 179 855,910 7,970,614 9.31
2007 54 648,409 4,397,032 6.78
2008 22 405,751 2,441,356 6.02
2009 26 739,023 4,096,609 5.54
2010 19 275,808 1,847,470 6.70
2011 17 496,761 3,197,176 6.44
2012 12 412,875 2,862,523 6.93
Thereafter 50 1,725,695 12,073,532 7.00
--------- ----------- --------------- ----------------

Total 1,445 8,695,804 $ 69,908,721 $ 8.04
========= =========== =============== ================

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Significant estimates and assumptions within the
financial statements include valuation adjustments to tenant related accounts,
determination of useful lives of assets subject to depreciation or amortization
and impairment evaluation of operating and development properties and other
long-term assets. However, application of these accounting policies involves the
exercise of judgment and use of assumptions as to future uncertainties and, as a
result, actual results could differ significantly from those estimates.

Additional discussion of accounting policies that we consider to be
significant, including further discussion of the critical accounting policies
described below, are included in the notes to the consolidated financial
statements in Item 8 of this report.

Revenue Recognition
Leases with tenants are accounted for as operating leases. Rental revenue
is recognized on a straight-line basis over the initial lease term. Certain
tenants are required to pay percentage rents based on their gross sales
exceeding specified amounts. This percentage rental revenue is recorded upon
collection. The Company receives reimbursements from tenants for real estate
taxes, common area maintenance and other recoverable costs. These tenant
reimbursements are recognized as revenue in the period the related expense is
recorded.

The Company makes valuation adjustments to all tenant related revenue based
upon the tenant's credit and business risk. The Company suspends the accrual of
income on specific investments where interest, reimbursement or rental payments
are delinquent sixty days or more. These valuation adjustments are estimates
that affect the Company's net earnings since an increase or decrease in the
valuation adjustments directly leads to a decrease or increase in net earnings,
respectively.

Rental Properties
Rental properties are stated at cost less accumulated depreciation. Costs
incurred for the acquisition, renovation, and betterment of the properties are
capitalized and depreciated over their estimated useful lives. Recurring
maintenance and repairs are charged to expense as incurred. Depreciation is
computed on a straight-line basis generally for a period of sixteen to forty
years for buildings and significant improvements. Tenant improvements are
depreciated on a straight-line basis over the life of the related lease.

When costs are capitalized, the Company must make a judgment of the useful
life of the asset for purposes of determining the amount of yearly depreciation,
which affects net earnings. If the useful life were increased, yearly
depreciation would be reduced, thus increasing net earnings.

Impairment of Properties
The Company periodically evaluates the carrying value of its long-lived
assets, including operating and development properties, in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of." Impairment is based on whether it is probable that undiscounted future cash
flows from each property will be less than its net book value. The Company
assesses whether there are any indicators that the value of the asset may be
impaired. In addition, judgments are made in calculating the undiscounted cash
flows. These assessments and judgments could have a material impact on net
earnings since, if an impairment exists, the asset is written down to its
estimated fair value and an impairment loss is recognized thereby reducing net
earnings.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998 SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," was issued. This statement, as amended, establishes
accounting and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability measured at its
fair market value. SFAS No. 133 requires that changes in the derivative's fair
market value be recognized currently in earnings unless specific hedge
accounting criteria are met. Special accounting for qualifying hedges allows a
derivative's gains and losses to offset related results on the hedged item in
the income statement and requires that a company must formally document,
designate, and assess the effectiveness of transactions that receive hedge
accounting. The Company adopted this statement on January 1, 2001. The Company
did not hold and has not engaged in transactions using derivative financial
instruments. The adoption of this statement did not have a material effect on
the Company's balance sheet or results of operations.

In June 2001, SFAS No. 141, "Business Combinations," was issued. This
statement eliminates pooling of interests accounting and requires all business
combinations initiated after June 30, 2001 to be accounted for using the
purchase method. The Company adopted this standard on July 1, 2001 and adoption
of this standard did not have a significant effect on the Company's financial
statements.

In June 2001, SFAS No. 142, "Goodwill and Other Intangible Assets," was
issued establishing accounting and reporting standards that address how goodwill
and intangible assets should be accounted for within the financial statements.
The statement requires companies to not amortize goodwill and intangible assets
with infinite lives, but to test such assets for impairment on a regular basis.
An intangible asset that has a finite life should be amortized over its useful
life and evaluated for impairment on a regular basis. This statement is
effective for fiscal years beginning after December 15, 2001. The Company
adopted this standard on January 1, 2002 and adoption of this standard did not
have a significant effect on the Company's financial statements.

In August 2001, SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets," was issued establishing new rules and clarifying
implementation issues with SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of," by allowing a
probability-weighted cash flow estimation approach to measure the impairment
loss of a long-lived asset. The statement also established new standards for
accounting for discontinued operations. Transactions that qualify for reporting
in discontinued operations include the disposal of a component of an entity's
operations that comprises operations and cash flows that can be clearly
distinguished, operationally and for financial reporting purposes, from the rest
of the entity. The statement is effective for fiscal years beginning after
December 15, 2001. The Company adopted this standard on January 1, 2002 and
adoption of this standard did not have a significant effect on the Company's
financial statements.

COMPARISON OF 2001 TO 2000 RESULTS OF OPERATIONS

Revenues
Total revenues increased $2,221, or 2.6%, to $87,584 in 2001 primarily due
to an increase in income from rental properties of $1,829 and gains on sale of
outparcels of $1,350. These increases were partially offset by a decrease in
interest income of $801 and a decrease in interest on direct financing leases of
$157.

Income from rental properties increased $1,829, or 2.2%, to $85,448 in
2001. Included in income from rental properties is minimum rent, percentage rent
and other rental income. Minimum rents increased $1,651, or 2.5%, primarily due
to an increase in rental rates per square foot from $7.87 in 2000 to $7.94 in
2001 and the core portfolio of properties contributing $579, or an increase of
0.7%, over 2000. The core portfolio is defined as properties held in the same
corresponding period from the current and prior year, excluding those properties
sold or acquired during the same corresponding period. Income from rental
properties increased $2,996 due to two properties acquired in 2001 and one
property in 2000, which was partially offset by a $1,747 decrease in income
attributable to the sale of four properties in 2001 and five properties in 2000.
Percentage rent, based on tenant's gross sales exceeding specified amounts,
decreased $120, or 11.8%, to $896 for 2001 due to several anchor tenants closing
in 2001. Other rental income such as tenant reimbursements, tenant allowances
(bad debt reserves) and lease cancellation fees, increased $298, or 2.0%, to
$15,575. This increase was partially due to an increase in tenant reimbursements
for common area maintenance ("CAM") of $817, or 5.8%. Tenants reimburse us for
specific expenses relating to the property, such as maintenance, taxes and
insurance. The reimbursements received as a percentage of expenditures were
75.2% in 2001 and 75.8% in 2000. This slight decrease in the recovery percentage
is due to an increase in operating costs and a loss of a bankrupt anchor tenant.
Tenant allowances decreased $281, or 47.1%, from 2000 and represented only 0.4%
of rental income in 2001. Lease cancellation fees decreased $742, or 11.8%, due
to the one-time lease termination fee of an anchor in 2000.

Interest income decreased $801, or 66.6%, to $401 in 2001 from $1,202 in
2000. The decrease was due to interest charged to previously unconsolidated
affiliates in 2000 which was partially offset by interest on cash investments in
2001.

Interest on direct financing leases decreased $157, or 29%, due to the sale
of one direct financing lease investment in May 2001 for $3,500.

In 2001, the Company sold land outparcels that are located at the Company's
shopping centers. As a result, three outparcels and an investment classified as
a land purchase leaseback were sold for $2,113, resulting in a gain of $1,350.

Expenses
Total expenses increased $4,030, or 6.7%, to $64,251 in 2001 due to
increases in operating expenses of rental properties of $1,358, interest expense
of $789, depreciation of $720, amortization of debt costs of $100 and general
and administrative expenses of $1,063.

Operating expenses of rental properties increased $1,358, or 6.9%, to
$21,159 in 2001. This increase was partially due to an increase of real estate
taxes of $317, or 4.4%, over 2000 as a result of increased property values.
Insurance costs increased by $201, or 20.4%, over 2000 due to a general increase
in premiums. The Company amortizes lease fees that are capitalized and the
amortization expense increased $387, or 46.4%, in 2001 due to increased leasing
activity in 2001 and 2000 in connection with the releasing of the former Jitney
Jungle stores. During 2001, the Company executed over 1.2 million square feet of
new or renewed leases, or 14% of the Company's portfolio. Tenant reimbursable
operating

expenses increased $412, or 6.2%, primarily due to higher operating and
maintenance costs. Overall, the operating expenses of properties increased due
to core portfolio operating expenses increasing $851, or 4.4%, over 2000 and the
three properties acquired during 2001 and 2000 increasing expenses $825. These
increases were partially offset by a decrease in expenses of $319 from the sales
of nine properties during 2001 and 2000.

Interest expense increased $789, or 3.6%, in 2001 primarily due to the
higher interest rate on three new mortgage notes as compared to the credit line.
This interest increase was partially offset by a repaid mortgage in 2000 and a
decrease of $188 on bank interest due to a lower effective interest rate of
6.48% in 2001 as compared to 7.61% in 2000.

The net increase of $720, or 5.0%, in depreciation expense in 2001 was due
to the acquisition of a shopping center in the fourth quarter of 2000 and two
shopping centers during 2001, net of the effect of the disposition of three
properties in 2001 and five properties in 2000.

Amortization of debt costs increased $100, or 18.4%, primarily due to the
new $50,000 of 7.77% senior notes issued in March 2001.

General and administrative expenses increased $1,063, or 30.3%, to $4,570
in 2001. $790 of this increase relates to salary expenses for additional
personnel, primarily for development efforts, partially offset by a $366
increase of capitalized development costs, as compared to 2000. $530 of the
general and administrative expense increase is due to a one time lawsuit
settlement and a write-off of one-time transaction costs incurred in 2001. Total
general and administrative expenses as a percentage of total revenues was 5.2%
and 4.1% for 2001 and 2000, respectively. Excluding the one time expenses,
general and administrative expenses as a percentage of total revenues would have
been 4.6% for 2001.

Other
Equity in losses of unconsolidated affiliates decreased $52 to $4 in 2001
due to consolidation of a previously unconsolidated subsidiary as a wholly-owned
subsidiary in the first quarter of 2001.

Income taxes were $53 in 2001 compared to no income tax expense in 2000 due
to consolidation of a previously unconsolidated subsidiary as a wholly-owned
subsidiary in the first quarter of 2001.

Minority interest expense decreased $42, or 7.1%, to $554 in 2001. Minority
interest represents the interest of an unaffiliated limited partner in the
earnings of a partnership with the Company. Due to the Company acquiring one
property in 2000 and two properties in 2001 for inclusion in the partnership,
the Company increased its percentage ownership of the partnership from 93% in
2000 to 94.3% in 2001. Therefore this change in percentage ownership decreased
the limited partner's interest in the earnings of the partnership.

Gains on sales of properties decreased $2,051 to $2,498 in 2001 from $4,549
in 2000. The Company sold three investments in limited growth, or tertiary,
markets during 2001 for approximately $8,001. The Company also sold one
investment, accounted for as a direct financing lease, for $3,500. In 2000, the
Company sold five investments for approximately $17,386.

Net Earnings
Net earnings decreased $3,819, or 13.2%, to $25,220 in 2001 from $29,039 in
2000. The decrease was attributable to a reduction in the gains on sales of
properties and higher operating expenses of the properties along with a lower
tenant reimbursement rate and higher general and administrative expenses. These
increases in expenses were partially offset by an increase in revenues primarily
from the increase in base rents per square foot and gains on outparcel sales.

COMPARISON OF 2000 TO 1999 RESULTS OF OPERATIONS

Revenues
Total revenues decreased $28, or 0.03%, to $85,363 in 2000. This slight
decrease is due to a $138 decrease in income in rental properties, a $18
decrease in interest on direct financing leases and a $969 decrease in other
income. These decreases were offset by a $821 increase in interest income.

Income from rental properties increased $138, or 0.2%, to $83,619 in 2000.
Included in income from rental properties is minimum rent, percentage rent and
other rental income. Minimum rents decreased $1,400, or 2.0%, primarily from the
decrease in income of $1,912 related to the sales of five properties in 2000 and
four properties in 1999. This decrease was partially offset by an increase in
revenues related to two acquisitions in 1999 of $585 and an increase in rental
rates per square foot from $7.82 in 1999 to $7.87 in 2000. Percentage rent,
based on tenant's gross sales exceeding specified amounts, decreased $2, or
0.2%, to $1,016 for 2000. Other rental income such as tenant reimbursements,
tenant allowances and lease cancellation fees, increased $1,540, or 11.2%, to
$15,277. This increase was partially due to an increase in tenant reimbursements
for CAM of $475, or 3.5%. Tenants reimburse us for specific expenses relating to
the property such as maintenance, taxes and insurance. The reimbursements
received as a percentage of expenditures were 75.8% in 2000 and 77.0% in 1999.
This decrease in the recovery percentage is primarily due to the loss of a
bankrupt anchor tenant, Jitney Jungle. Tenant allowances increased $287, or
92.1%, from 1999 primarily due to a $323 write-off of the receivables related to
the bankrupt tenant. Tenant allowances represented only 0.7% of rental income in
2000. Lease cancellation fees increased $1,125 to $1,392 in 2001 due to a $1,189
termination of an anchor tenant. The core portfolio's income increased by
$1,465, or 1.9%; however this was due to the one-time lease termination fee
partially offset by the write-off in the tenant allowances.

Interest income increased $821, or 215.7%, to $1,202 in 2000 from $381 in
1999. The increase was due to a new loan pursuant to a development agreement and
a loan to an unconsolidated affiliate for several additional developments.

Interest on direct financing leases decreased $18, or 3.3%, due to normal
recurring principal amortization of the direct financing leases.

Other income in 1999 of $969 represented a one-time transaction in which
the Company relinquished an option to purchase a development as part of a joint
venture agreement. No such transaction occurred in 2000.

Expenses
Total expenses increased $1,514, or 2.6%, to $60,221 in 2000 due to
increases in operating expenses of rental properties of $343, interest expense
of $516, depreciation of $499, amortization of debt costs of $81 and general and
administrative expenses of $75.

Operating expenses of rental properties increased $343, or 1.8%, to $19,801
in 2000. This increase was partially due to an increase in insurance costs of
$61, or 6.5%, over 1999 and an increase in the amortization of lease fees of
$358, or 75.4%, over 1999. The increase in lease fees is due to the two
acquisitions in 1999 as well as re-leasing of two of the former Jitney Jungle
stores. During 2000, the Company executed over 1.2 million square feet of new or
renewed leases representing 13.1% of the Company's portfolio. These increases
were partially offset by tenant reimbursement expenses decreasing $172, or 2.5%,
primarily due to lower property maintenance costs. Overall, the operating
expenses of rental properties increased due to the core portfolio operating
expenses increasing $812, or 4.5%, over 1999 and due to the two properties
acquired during 1999 increasing expenses $158. These increases were offset by a
decrease in expenses of $627 from the sales of nine properties during 2000 and
1999.

Interest expense increased $516, or 2.4%, in 2000 primarily due to an
increase in bank indebtedness interest of $700 or 48%. The bank interest
increased because of a higher effective interest rate of 7.97% in 2000, as
compared to 7.62% in 1999 and a higher average borrowing amount during 2000.
This interest increase was partially offset by a repaid mortgage in 2000,
representing approximately $273.

The net increase of $499, or 3.6%, in depreciation expense in 2000 was due
to the acquisition of two shopping centers in 1999, net of the effect of the
disposition of five properties in 2000 and four properties in 1999.

Amortization of debt costs increased $81, or 17.6%, primarily due to the
costs associated with increasing the Company's credit facilities.

General and administrative expenses increased $75, or 2.2%, to $3,507 in
2000 primarily due to salary expenses for personnel, partially offset by an
increase of capitalized development costs as compared to 1999. Total general and
administrative expenses as a percentage of total revenues was 4.1% and 4.0% for
2000 and 1999, respectively.

Other
Equity in losses of unconsolidated affiliates increased $60 to $56 in 2000
due to an increase in the development expenses of one of the unconsolidated
subsidiaries.

Minority interest expense decreased $87, or 12.7%, to $596 in 2000.
Minority interest represents the interest of an unaffiliated limited partner in
the earnings of a partnership with the Company. The partnership net earnings
decreased $1,406, or 14.4%, in 2000, thus the earnings attributable to the
minority interest decreased. The Company increased its percentage ownership of
the partnership from 92.9% in 1999 to 93.0% in 2000.

Gains on sales of properties increased $2,066 to $4,549 in 2000 from $2,483
in 1999. The Company sold five investments in limited growth, or tertiary,
markets during 2000 for approximately $17,386. In 1999, the Company sold four
investments for approximately $12,777.

Net Earnings
Net earnings increased $708, or 2.5%, to $29,039 in 2000 from $28,331 in
1999. The increase was attributable to an increase on the gains on sales of
properties and higher interest income offset by an increase in operating
expenses and equity in losses of unconsolidated affiliates.

LIQUIDITY AND CAPITAL RESOURCES

The Company presently expects cash from operating activities to be its
primary source of funds to pay dividends, mortgage note payments and certain
capital improvements on properties. Net cash from operating activities was
$39,490 in 2001 as compared to $38,416 in 2000, an increase of 2.8%. The
increase in cash flow is due to the rental income from two acquisitions in 2001
and one in 2000. Dividends paid during 2001 and 2000 were $28,589 and $29,782,
respectively. Mortgage principal payments for 2001 and 2000 were $2,577 and
$2,134, respectively. Total capital expenditures on operating properties for
2001 and 2000 were $9,135 and $7,986, respectively.

Other planned activities, including property acquisitions, new
developments, certain capital improvement programs and debt repayments, are
expected to be funded to the extent necessary by bank borrowings, mortgage
financing, periodic sales or exchanges of existing properties, the issuance of
OP Units and public or private offerings of stock or debt. Net cash used in
investing activities was $24,229 in 2001, as compared to $17,011 in 2000, an
increase of $7,218, or 42.4%. This increase in cash used in investing activities
was due to an increase in acquisitions over 2000 of $3,228 to $14,666 in 2001,
as well as an increase in capital expenditures relating to the re-tenanting of
anchor spaces due to the former bankrupt tenant. Development activities
increased by $3,352 to $13,443 in 2001 as the Company began three developments
and completed one development.

Net cash used in financing activities decreased to $13,635 in 2001 from
$21,088 in 2000, a decrease of $7,453, or 35.3%. This decrease was due to the
Company's stock buyback program ending in January 2001 as well as obtaining
additional mortgage notes payable of $20,740 during 2001.

In November 1999, the Board of Directors authorized the Company to
repurchase up to $25,000 of its common stock through the open market or in
privately negotiated transactions. During 2001 and 2000, the Company repurchased
47,000 and 2,488,701 shares, for a cost of $405 and $20,818, respectively,
including commissions and other costs. On January 16, 2001, the Company
completed the stock repurchase program. The Company repurchased a total of
3,028,276 shares at an average price of $8.26 per share.

The Company has a Dividend Reinvestment Plan (the "DRIP") which allows
shareholders, who own at least 100 shares of the Company's common stock, to
elect to reinvest all or a portion of their distributions in newly issued shares
of common stock of the Company. The Company did not receive any proceeds under
the DRIP in 2001 and 1999 as shares were purchased on the open market to fund
the DRIP. In 2000, the Company issued 59,089 treasury shares and received net
proceeds of $497.

In May 1998, the Company filed a shelf registration statement covering up
to $300,000 of common stock, preferred stock, depositary shares, debt securities
and warrants. In January 2001, the Company filed a new shelf registration
statement to replace and update the 1998 shelf registration statement. The
Company presently intends to use the net proceeds of any offerings under such
shelf registration for general corporate purposes, which may include, without
limitation, repayment of maturing obligations, redemption of outstanding
indebtedness or other securities, financing future acquisitions and for working
capital. As of December 31, 2001, the Company had issued $50,000 in debt
securities from the shelf registration. The Company also issued $25,000 of debt
securities under the shelf registration statement in January 2002, resulting in
$225,000 of securities remaining available for issuance under the shelf
registration statement.

On March 23, 2001, the Company established a Medium Term Note Program (the
"MTN Program"), pursuant to the Company's shelf registration statement filed in
January 2001. The MTN Program allows the Company, from time to time, to issue
and sell up to $100,000 of medium term notes. Medium term notes have a maturity
of nine months or more from the date of issuance. On March 29, 2001, pursuant to
the MTN Program, the Company issued $50,000 of 7.77% medium term notes due April
1, 2006. Net proceeds from the issuance totaled $49,328 and were used to
substantially repay the $50,000 of 7.45% senior notes that were due on April 1,
2001. On January 23, 2002, an additional $25,000 of 7.84% medium term notes were
issued to redeem the 7.3% convertible subordinated debentures. These new notes
are due on January 23, 2012. As a result, the Company has $25,000 of medium term
notes available for issuance under its MTN Program.

At December 31, 2001, the Company also had outstanding $75,000 of 7.25%
senior notes due August 15, 2007 that were issued on August 15, 1997.

As of December 31, 2001, the Company also had outstanding $23,275 of 7.3%
convertible subordinated debentures due August 15, 2003. The Company had the
option to redeem the debentures at par plus accrued interest and, on December
24, 2001, the Company gave notice it intended to exercise such redemption option
by January 24, 2002. On January 24, 2002, the Company redeemed all of the
outstanding 7.3% convertible subordinated debentures at par for $23,220. Prior
to redemption, 165 bonds were converted into 14,659 shares of common stock.

The Company uses secured borrowings to meet capital requirements. As of
December 31, 2001, the Company had $134,677 in mortgage notes payable at a
weighted average interest rate of 7.39%, which are due in monthly installments
with maturity dates ranging from 2002 to 2024.

In April 2001, the Company entered into three secured mortgages totaling
$20,740, secured by first mortgages on three properties. These notes are due and
payable in ten years and the principal amortization is based on a thirty year
amortization schedule. The notes bear interest at a weighted average interest
rate of 7.17% and range from 7.02% to 7.25%.

Future principal amortization and balloon payments applicable to mortgage
notes payable at December 31, 2001 are as follows:

PRINCIPAL BALLOON
YEAR AMORTIZATION PAYMENTS TOTAL
---------------- ------------- --------- --------

2002 $ 2,684 $ 7,155 $ 9,839
2003 2,805 - 2,805
2004 3,023 - 3,023
2005 3,266 7,500 10,766
2006 3,393 4,797 8,190
Thereafter 53,150 45,604 98,754
------------- --------- --------

$ 68,321 $ 65,056 133,377
============= =========
Interest Premium 1,295
--------

$134,672
========

On November 1, 1999, the Company obtained a $100,000 unsecured revolving
loan facility (the "Revolving Loan"), which was scheduled to mature on November
1, 2002. This Revolving Loan replaced the Company's previous credit facility and
is led by a different financial institution and further backed by a syndicate of
four other financial institutions. Not later than November 1 of each year
commencing in 2000, the Company may request to extend the maturity date for an
additional 12-month period beyond the

existing maturity date. The interest rate is, at the option of the Company,
either prime, fluctuating daily, or LIBOR plus the "Applicable Margin"
(currently 115 basis points), which is subject to adjustment based upon the
rating of the senior unsecured long-term debt obligations of the Company. The
Company may borrow, repay and/or reborrow under this loan at any time. In
addition, the Company secured a $5,000 unsecured swing line, bearing interest at
LIBOR plus the Applicable Margin, scheduled to mature on October 31, 2000. In
October 2000, the Company requested and was approved an extension of the
maturity date of the Revolving Loan and the swing line to November 1, 2003. The
Company also secured an option to increase the Revolving Loan at its discretion
by $50,000. The terms of the Company's credit facilities include certain
restrictive covenants, which the Company was in compliance with as of December
31, 2001.

As of December 31, 2001 and 2000, the borrowings under the Company's credit
facilities totaled $51,654 and $55,000, respectively. The average interest rates
for 2001 and 2000 were 6.48% and 7.61%, respectively. At December 31, 2001, the
weighted average interest rate was 3.67% on outstanding borrowings under the
Revolving Loan.

LP, IRTCCII, IRTAL and IRTMC guarantee the Company's indebtedness under the
Company's existing unsecured revolving term loan and its other senior debt.

The Company presently believes, based on currently proposed plans and
assumptions relating to its operations, the Company's existing financial
arrangements, together with cash flows from operations, will be sufficient to
satisfy its foreseeable cash requirements for the next year. At December 31,
2001 the Company's market capitalization was approximately $657,619, of which
51%, or $334,361, was from financing sources. It is the Company's present
intention to have access to the capital resources necessary to expand and
develop its business while maintaining its investment grade ratings with Moody's
Investor Services and Standard and Poor's. Accordingly, the Company may, from
time to time, seek to obtain funds through additional security offerings or debt
financings in a manner consistent with its current debt capitalization policy.

INFLATION AND ECONOMIC FACTORS

The effects of inflation upon the Company's results of operations and
investment portfolio are varied. From the standpoint of revenues, inflation has
the dual effect of both increasing the tenant revenues upon which percentage
rentals are based and allowing increased fixed rentals as rental rates rise
generally to reflect higher construction costs on new properties. This positive
effect is partially offset by increasing operating and interest expenses, but
usually not to the extent of the increases in revenues.

The Federal Reserve regulates the supply of money through various means,
including open market dealings in United States government securities, the
discount rate at which banks may borrow from the Federal Reserve, and the
reserve requirements on deposits. Such activities affect the availability and
cost of credit, generally, and the Company's costs under its bank credit
facilities, in particular.

ENVIRONMENTAL FACTORS

Certain of the Company's properties have environmental concerns that have
been or are being addressed. The North Carolina Department of Environment,
Health and Natural Resources ("DEHNR") informed the Company, by letter dated
November 30, 2000, that the Company's Industrial property in Charlotte, North
Carolina ("Industrial Property"), continues to be included on the North Carolina
Inactive Hazardous Waste Sites Priority List ("Priority List"). According to
DEHNR, the Priority List is a list of sites in North Carolina where uncontrolled
disposal, spills, or releases of hazardous substances have been

identified. The Company also has been informed by a third-party consultant that
hazardous substances may be present in groundwater under the Industrial Property
in excess of regulatory limits. DEHNR indicated in its November 30 letter that
it was simply notifying us of inclusion of the Industrial Property on the
Priority List and the letter is not an order to conduct any work, but we are
invited to consider a voluntary cleanup.

The Company has begun investigating this matter, including the basis for
inclusion of the Industrial Property on the Priority List and scope and source
of any such hazardous substances in groundwater (which may be a result of, among
other things, prior ownership and usage of the Industrial Property or
contaminants from other nearby properties), and whether its insurance will cover
these costs in whole or in part. Depending on the results of this investigation,
notification of DEHNR may be required and certain corrective actions performed.
Based on information presently available, the Company presently believes that
the costs of any such corrective action is not expected to have a material
adverse effect on the Company.

Since January 1, 2000, the Company has maintained environmental and
pollution legal liability insurance coverage to attempt to mitigate the
associated risks. Although no assurance can be given that Company properties
will not be affected adversely in the future by environmental problems, the
Company presently believes that there are no environmental matters that are
reasonably likely to have a material adverse effect on the Company's financial
position. See "Regulation" located within this report.

FUNDS FROM OPERATIONS

The Company defines funds from operations, consistent with the National
Association of Real Estate Investment Trusts ("NAREIT") definition, as net
earnings on real estate investments less gains (losses) on sale of properties
and extraordinary items plus depreciation and amortization of capitalized
leasing costs. Interest and amortization of issuance costs related to
convertible subordinated debentures and minority interest expenses are added
back to funds from operations when assumed conversion of the debentures and OP
Units is dilutive. The conversion of the debentures and the OP Units are
dilutive and therefore assumed for the fiscal years ended December 31, 2001,
2000 and 1999. Management believes funds from operations should be considered
along with, but not as an alternative to, net earnings as defined by generally
accepted accounting principles as a measure of the Company's operating
performance. Funds from operations does not represent cash generated from
operating activities in accordance with generally accepted accounting principles
and is not necessarily indicative of cash available to fund cash needs.

The following data is presented with respect to the calculation of funds
from operations under the NAREIT definition for 2001, 2000 and 1999 (in
thousands except per share amounts):

2001 2000 1999
-------- -------- --------

Net earnings $25,220 $29,039 $28,331
Gain on sales of properties (2,498) (4,549) (2,483)
Depreciation (1) 14,841 14,149 13,708
Amortization of capitalized leasing fees (1) 1,225 849 504
Amortization of capitalized leasing income 153 166 160
Loss on extinguishment of debt - - 157
-------- -------- --------

Funds From Operations 38,941 39,654 40,377
Interest on convertible debentures 1,699 1,699 1,699
Amortization of convertible debenture costs 100 100 100
Amounts attributable to minority interests 819 860 861
-------- -------- --------

Fully Diluted Funds From Operations $41,559 $42,313 $43,037
======== ======== ========

Per Share:
Fully Diluted Funds From Operations $ 1.25 $ 1.23 $ 1.20
======== ======== ========

Applicable weighted average shares 33,301 34,432 35,973
======== ======== ========

(1) Net of amounts attributable to minority interests

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
(dollars in thousands)

The Company's primary exposure to market risk is interest rate risk as it
relates to the Company's variable interest rate bank credit facilities. As
market conditions fluctuate, interest rates either increase or decrease and
interest expense from the variable rate bank credit facilities will move in the
same manner as the interest rates. At December 31, 2001, the variable rate debt
represented 15.5% of the total debt outstanding and the average interest rate
for the year ended December 31, 2001 was 6.48%. If the average interest rate for
the credit facilities was 100 basis points higher or lower, annual interest
expense would be increased or decreased by approximately $430.

The Company also utilizes mortgage notes payable and senior unsecured notes
with fixed rates. Sudden changes in interest rates generally do not affect the
Company's interest expense as these debt instruments have fixed rates for
extended periods of time. The Company's potential risk is from increases in
long-term real estate mortgage rates or borrowing rates that may occur. As the
debt instruments mature, the Company typically refinances such debt at the then
current market interest rates, which may be more or less than the interest rates
on the maturing debt. As of December 31, 2001, fixed rate debt represented 84.5%
of the total debt outstanding.

On December 24, 2001, the Company gave notice it intended to redeem all of
the 7.3% convertible subordinated debentures on January 24, 2002. The Company
intended to refinance this maturing obligation in 2002, and on January 23, 2002,
the Company issued $25,000 of 7.84% senior unsecured notes. Due to the higher
interest rate of the 7.84% refinancing, the Company's yearly interest expense,
as compared to the interest from the 7.3% convertible subordinated debentures,
will increase by approximately $261.

The table below provides information about the Company's financial
instruments that are sensitive to changes in interest rates or market
conditions, including estimated fair values for the Company's interest rate
sensitive liabilities as of December 31, 2001. As the table incorporates only
those exposures that exist as of December 31, 2001, it does not address
exposures which could arise after that date. Moreover, because there were no
firm commitments to sell the obligations at fair value as of December 31, 2001,
except as described above, the information presented has limited predictive
value. As a result, the Company's ultimate realized gain or loss with respect to
interest rate fluctuations will depend on the exposures that arise during a
future period and at prevailing interest rates. Dollar amounts in the following
table are in thousands.

Expected Maturity/Principal Repayment Total
Nominal* ------------------------------------------------------- Fair
Interest Rate 2002 2003 2004 2005 2006 Thereafter Balance Value
-------------- ------- ------- ------ ------- ------- ----------- -------- --------

Variable Rate Liabilities:
Lines of Credit Facilities 3.67% $ - $51,654 $ - $ - $ - $ - $ 51,654 $ 51,654

Fixed Rate Liabilities:
7.3% Convertible Subordinated
Debentures - fixed rate 7.30% 23,275 - - - - - 23,275 23,828
7.25% Senior Notes - fixed rate 7.25% - - - - - 75,000 75,000 85,743
7.77% Senior Notes - fixed rate 7.77% - - - - 50,000 - 50,000 57,578
Mortgage Notes Payable 7.39% 9,952 2,924 3,149 10,899 8,331 99,417 134,672 137,522
------- ------- ------ ------- ------- ----------- -------- --------

Total Liabilities $33,227 $54,578 $3,149 $10,899 $58,331 $ 174,417 $334,601 $356,325
======= ======= ====== ======= ======= =========== ======== ========

* Average rates as of December 31, 2001

IRT PROPERTY COMPANY AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

PAGE
----

Report of Independent Public Accountants. . . . . . . . . . 39

Consolidated Balance Sheets:
December 31, 2001 and 2000. . . . . . . . . . . . . . . 40

Consolidated Statements of Earnings:
For the Years Ended December 31, 2001, 2000 and 1999. . 41

Consolidated Statements of Changes in Shareholder's Equity:
For the Years Ended December 31, 2001, 2000 and 1999. . 42

Consolidated Statements of Cash Flows:
For the Years Ended December 31, 2001, 2000 and 1999. . 43

Notes to Consolidated Financial Statements:
December 31, 2001, 2000 and 1999. . . . . . . . . . . . 44

SCHEDULES

III Real Estate and Accumulated Depreciation . . . . . . 68
IV Mortgage Loans on Real Estate. . . . . . . . . . . . . 75

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To IRT Property Company:

We have audited the accompanying consolidated balance sheets of IRT
Property Company (a Georgia corporation) and subsidiaries as of December 31,
2001 and 2000, and the related consolidated statements of earnings, changes in
shareholders' equity and cash flows for each of the three years ended December
31, 2001. These financial statements and the schedules referred to below are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and schedules based on our
audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of IRT Property Company and
subsidiaries as of December 31, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years ended December 31,
2001, in conformity with accounting principles generally accepted in the United
States.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the index to
consolidated financial statements are presented for purposes of complying with
the Securities and Exchange Commission's rules and are not part of the basic
financial statements. These schedules have been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly state in all material respects the financial data required to be
set forth therein in relation to the basic financial statements taken as a
whole.

ARTHUR ANDERSEN LLP

Atlanta, Georgia
January 24, 2002

IRT PROPERTY COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2001 AND 2000
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

2001 2000
---------- ---------

ASSETS
Real estate investments:
Rental properties $ 659,820 $632,337
Properties under development 22,599 679
---------- ---------
682,419 633,016
Accumulated depreciation (109,344) (96,183)
---------- ---------
Net rental properties 573,075 536,833

Equity investment in and advances to unconsolidated affiliates - 17,342
Net investment in direct financing leases 2,174 4,245
Mortgage loans, net 1,160 4,313
---------- ---------
Net real estate investments 576,409 562,733

Cash and cash equivalents 2,457 831
Prepaid expenses and other assets 11,634 10,996
---------- ---------

Total assets $ 590,500 $574,560
========== =========

LIABILITIES & SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable, net $ 134,672 $116,509
7.3% convertible subordinated debentures, net 23,275 23,275
Senior notes, net 124,760 124,714
Indebtedness to banks 51,654 55,000
Accrued interest 4,598 5,010
Accrued expenses and other liabilities 10,652 6,918
---------- ---------

Total liabilities 349,611 331,426

Commitments and contingencies (Notes 5, 8 and 13)

Minority interest payable 7,755 7,981

Shareholders' equity:
Preferred stock, $1 par value, authorized 10,000,000 shares;
none issued - -
Common stock, $1 par value, 150,000,000 shares authorized;
33,234,206 shares issued in 2001 and 2000, respectively 33,234 33,234
Additional paid-in capital 272,172 272,040
Deferred compensation/stock loans (1,732) (1,850)
Treasury stock, at cost, 2,738,204 and 2,889,276 shares
in 2001 and 2000, respectively (22,783) (23,883)
Cumulative distributions in excess of net earnings (47,757) (44,388)
---------- ---------

Total shareholders' equity 233,134 235,153
---------- ---------

Total liabilities and shareholders' equity $ 590,500 $574,560
========== =========

The accompanying notes are an integral part of these consolidated balance
sheets.

IRT PROPERTY COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

2001 2000 1999
-------- -------- --------

REVENUES:
Income from rental properties $85,448 $83,619 $83,481
Interest income 401 1,202 381
Interest on direct financing leases 385 542 560
Other income - - 969
Gain on sale of outparcels 1,350 - -
-------- -------- --------

Total revenues 87,584 85,363 85,391
-------- -------- --------

EXPENSES:
Operating expenses of rental properties 21,159 19,801 19,458
Interest expense 22,793 22,004 21,488
Depreciation 15,088 14,368 13,869
Amortization of debt costs 641 541 460
General and administrative 4,570 3,507 3,432
-------- -------- --------

Total expenses 64,251 60,221 58,707

Equity in (losses) earnings of unconsolidated affiliates (4) (56) 4
-------- -------- --------

Earnings before income taxes, minority interest,
gain on sales of properties and extraordinary item 23,329 25,086 26,688

Income tax provision (53) - -

Minority interest of unitholders in operating partnership (554) (596) (683)

Gain on sales of operating properties 2,498 4,549 2,483
-------- -------- --------

Earnings before extraordinary item 25,220 29,039 28,488

EXTRAORDINARY ITEM:
Loss on extinguishment of debt - - (157)
-------- -------- --------

Net earnings $25,220 $29,039 $28,331
======== ======== ========

PER SHARE: (Note 20)
Earnings before extraordinary item - basic $ 0.83 $ 0.92 $ 0.86
Extraordinary item - basic - - -
-------- -------- --------
Net earnings - basic $ 0.83 $ 0.92 $ 0.86
======== ======== ========

Earnings before extraordinary item - diluted $ 0.83 $ 0.91 $ 0.86
Extraordinary item - diluted - - -
-------- -------- --------
Net earnings - diluted $ 0.83 $ 0.91 $ 0.86
======== ======== ========

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic 30,322 31,536 33,119
======== ======== ========
Diluted 33,301 34,432 33,904
======== ======== ========

The accompanying notes are an integral part of these consolidated statements.

IRT PROPERTY COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(IN THOUSANDS)

2001 2000 1999
--------- --------- ---------

Cash flows from operating activities:
Net earnings $ 25,220 $ 29,039 $ 28,331
Adjustments to reconcile earnings to net cash from operating activities:
Depreciation 15,088 14,368 13,869
Gain on sale of operating properties (2,498) (4,549) (2,483)
Gain on sale of outparcels (1,350) - -
Minority interest of unitholders in partnership (213) 288 (50)
Straight line rent adjustment (533) (153) -
Amortization of deferred compensation 118 122 103
Amortization of debt costs and discounts 673 700 519
Amortization of capitalized leasing income 152 166 160
Extraordinary loss - extinguishment of debt - - 157
Changes in assets and liabilities:
Increase in accrued interest on debentures and senior notes 40 - -
Decrease (increase) in interest receivable, prepaid expenses
and other assets 476 (1,708) (146)
Increase in accrued expenses and other liabilities 2,317 143 992
--------- --------- ---------

Net cash flows from operating activities 39,490 38,416 41,452
--------- --------- ---------

Cash flows used in investing activities:
Additions to operating properties, net (23,801) (19,424) (14,714)
Additions to development properties, net (13,443) - -
Proceeds from sales of operating properties, net 11,196 16,719 12,409
Proceeds from sale of outparcels, net 2,113 - -
Investment in unconsolidated affiliates - (10,091) (7,251)
Purchase of unconsolidated affiliate, net of assets acquired 177 - -
Distribution from dissolution of unconsolidated affiliate 21 - -
Funding of mortgage loans (516) (4,507) -
Collections of mortgage loans, net 24 292 1,005
--------- --------- ---------

Net cash flows used in investing activities (24,229) (17,011) (8,551)
--------- --------- ---------

Cash flows used in financing activities:
Cash dividends, net (28,589) (29,285) (30,908)
Purchase of treasury stock (405) (20,818) (3,776)
Exercise of stock options 1,600 287 37
Issuance of shares under stock purchase plan 24 - -
Proceeds from mortgage notes payable 20,740 - 40,000
Principal amortization of mortgage notes payable (2,577) (2,134) (1,835)
Repayment of mortgage notes payable - (3,521) (3,958)
Proceeds from 7.77% senior notes issuance 50,000 - -
Repayment of 7.45% senior notes (50,000) - -
(Decrease) increase in bank indebtedness (3,346) 34,600 (31,100)
Payment of deferred financing costs (1,082) (217) (1,191)
--------- --------- ---------

Net cash flows used in financing activities (13,635) (21,088) (32,731)
--------- --------- ---------

Net increase in cash and cash equivalents 1,626 317 170
Cash and cash equivalents at beginning of period 831 514 344
--------- --------- ---------

Cash and cash equivalents at end of period $ 2,457 $ 831 $ 514
========= ========= =========

Supplemental disclosures of cash flow information:
Total cash paid during period for interest $ 23,937 $ 21,501 $ 21,344
========= ========= =========

The accompanying notes are an integral part of these consolidated statements.

IRT PROPERTY COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

Total Shares
------------------ Additional Deferred
Common Treasury Common Paid-In Treasury Compensation/
Stock Stock Stock Capital Stock Stock Loans
------- --------- -------- --------- ---------- ---------------

BALANCE AT DECEMBER 31, 1998 33,252 - $33,252 $272,975 $ - $ (2,386)
Net earnings - - - - - -
Dividends declared - $.93 per share - - - - - -
Exercise of options, net 4 - 4 33 - -
Amortization of deferred compensation - - - - - 103
Forfeiture of restricted stock (22) - (22) (203) - 225
Adjustment to minority interest of unitholders
in operating partnership for
issuance of additional units - - - (357) - -
Acquisition of treasury stock - (517) - - (4,026) 250
------- --------- -------- --------- ---------- ---------------

BALANCE AT DECEMBER 31, 1999 33,234 (517) 33,234 272,448 (4,026) (1,808)
Net earnings - - - - - -
Dividends declared - $.94 per share - 59 - (16) 513 -
Exercise of options, net - 37 - (8) 295 -
Amortization of deferred compensation - - - - - 122
Issuance of restricted stock to employees - 25 - 13 191 (204)
Forfeiture of restricted stock - (5) - (2) (38) 40
Adjustment to minority interest of unitholders
in operating partnership for
issuance of additional units - - - (395) - -
Acquisition of treasury stock - (2,488) - - (20,818) -
------- --------- -------- --------- ---------- ---------------

BALANCE AT DECEMBER 31, 2000 33,234 (2,889) 33,234 272,040 (23,883) (1,850)
Net earnings - - - - - -
Dividends declared - $.94 per share - - - - - -
Exercise of options, net - 196 - 114 1,486 -
Shares issued pursuant to
the stock purchase plan - 2 - 5 19 -
Amortization of deferred compensation - - - - - 118
Adjustment to minority interest of unitholders
in operating partnership for
issuance of additional units - - - 13 - -
Acquisition of treasury stock - (47) - - (405) -
------- --------- -------- --------- ---------- ---------------

BALANCE AT DECEMBER 31, 2001 33,234 (2,738) $33,234 $272,172 $ (22,783) $ (1,732)
======= ========= ======== ========= ========== ===============

Cumulative
Distributions Total
in Excess of Shareholders'
Net Earnings Equity
-------------- ---------------

BALANCE AT DECEMBER 31, 1998 $ (41,068) $ 262,773
Net earnings 28,331 28,331
Dividends declared - $.93 per share (30,908) (30,908)
Exercise of options, net - 37
Amortization of deferred compensation - 103
Forfeiture of restricted stock - -
Adjustment to minority interest of unitholders
in operating partnership for
issuance of additional units - (357)
Acquisition of treasury stock - (3,776)
-------------- ---------------

BALANCE AT DECEMBER 31, 1999 (43,645) 256,203
Net earnings 29,039 29,039
Dividends declared - $.94 per share (29,782) (29,285)
Exercise of options, net - 287
Amortization of deferred compensation - 122
Issuance of restricted stock to employees -
Forfeiture of restricted stock - -
Adjustment to minority interest of unitholders
in operating partnership for
issuance of additional units - (395)
Acquisition of treasury stock - (20,818)
-------------- ---------------

BALANCE AT DECEMBER 31, 2000 (44,388) 235,153
Net earnings 25,220 25,220
Dividends declared - $.94 per share (28,589) (28,589)
Exercise of options, net - 1,600
Shares issued pursuant to
the stock purchase plan - 24
Amortization of deferred compensation - 118
Adjustment to minority interest of unitholders
in operating partnership for
issuance of additional units - 13
Acquisition of treasury stock - (405)
-------------- ---------------

BALANCE AT DECEMBER 31, 2001 $ (47,757) $ 233,134
============== ===============

The accompanying notes are an integral part of these consolidated statements.

IRT PROPERTY COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2001, 2000, AND 1999
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED WITH RESPECT TO SQUARE FOOTAGE)

1. ORGANIZATION AND NATURE OF OPERATIONS

IRT Property Company, individually and collectively with its subsidiaries
("IRT" or the "Company"), was founded in 1969 and became a public company in May
1971 (NYSE: IRT). The Company is an owner, operator, redeveloper and developer
of high quality, well located neighborhood and community shopping centers. The
Company's portfolio consists of 87 shopping centers, three shopping center
investments, four development properties, one industrial property and four
mortgage loans. The 87 shopping centers and the three shopping center
investments total approximately 9.7 million square feet of retail space and are
located in eleven southeastern states. IRT shopping centers are anchored by
necessity-oriented retailers such as supermarkets, drug stores, national value
retailers and department stores.

IRT Capital Corporation II ("IRTCCII") is a taxable real estate investment
trust ("REIT") subsidiary and was formed under the laws of Georgia in 1999.
IRTCCII elected on March 15, 2001 to become a taxable REIT subsidiary pursuant
to the Tax Relief Extension Act of 1999 as amended (the "REIT Modernization Act
of 1999"). Although IRTCCII is primarily used by the company to develop
properties, it also has the ability to buy and sell properties, provide equity
to developers and perform third-party management, leasing and brokerage
operations.

The Company also serves as general partner of LP, a Georgia limited
partnership formed in 1998 to enhance the Company's acquisition opportunities
through a "downreit" structure. This structure offers potential sellers the
ability to make a tax-deferred sale of their real estate investment in exchange
for Operating Partnership Units ("OP Units") of LP. OP Units receive the same
distributions as the Company's common stock and are redeemable for shares of the
Company's common stock. IRT and IRTMC, together, owned approximately 1% and
93.3%, respectively, of LP as of December 31, 2001. The accounts of LP are
included in the accompanying consolidated financial statements.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION

The accompanying consolidated financial statements include the accounts of
IRT, its wholly-owned subsidiaries, majority-owned and controlled subsidiaries
and the partnership. Prior to 2001, the Company had investments in affiliates
over which the Company did not exercise control, and therefore accounted for the
investments by the equity method. Intercompany transactions and balances have
been eliminated in consolidation.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Significant estimates and assumptions within the
financial statements include impairment evaluation of operating and development
properties and other long-term assets, determination of useful lives of assets
subject to depreciation or amortization and valuation adjustments to tenant
related accounts. Actual results could differ from those estimates.

REVENUE RECOGNITION

Leases with tenants are accounted for as operating leases. Rental revenue
is recognized on a straight-line basis over the initial lease term. Certain
tenants are required to pay percentage rents based on their gross sales
exceeding specified amounts. This percentage rental revenue is recorded upon
collection. The Company receives reimbursements from tenants for real estate
taxes, common area maintenance and other recoverable costs. These tenant
reimbursements are recognized as revenue in the period the related expense is
recorded.

The Company makes valuation adjustments (bad debt reserves) to all tenant
related revenue based upon the tenant's credit and business risk. The Company
suspends the accrual of income on specific investments where interest,
reimbursement or rental payments are delinquent sixty days or more.

Other non-rental revenue is recognized as revenue when earned.

Gains on sales of real estate assets are recognized at the time title to
the asset is transferred to the buyer, subject to the adequacy of the buyer's
initial and continuing investment and the assumption by the buyer of all future
ownership risks of the property. The gain for sales of operating properties is
calculated based on the net carrying value of the property at the time of sale.
The net carrying value represents the cost of acquisition, renovation or
betterment of the property less the accumulated depreciation of such costs. For
gains on outparcel sales, the gain is calculated based on the value assigned to
the outparcel lot through specific identification of costs or the relative sales
value of the outparcel lot to the entire property.

RENTAL PROPERTIES AND PROPERTIES UNDER DEVELOPMENT

Rental properties are stated at cost less accumulated depreciation. Costs
incurred for the acquisition, renovation, and betterment of the properties are
capitalized and depreciated over their estimated useful lives. Recurring
maintenance and repairs are charged to expense as incurred. Depreciation is
computed on a straight-line basis generally for a period of sixteen to forty
years for buildings and significant improvements. Tenant improvements are
depreciated on a straight-line basis over the life of the related lease.

Properties under development are stated at cost. Depreciation does not
begin until the asset is placed in service. Acquisition, development and
construction costs are capitalized, including predevelopment costs, interest and
salaries. Predevelopment costs include costs for zoning, planning, development
feasibility studies and other costs directly related to the development
property. Unsuccessful predevelopment efforts and their related costs are
expensed when it is probable development efforts will not continue. Interest
costs and salaries directly attributable to the development process are
capitalized for the period of development to ready the property for its intended
use.

The Company periodically evaluates the carrying value of its long-lived
assets, including operating and development properties, in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of." Impairment is based on whether it is probable that undiscounted future cash
flows from each property will be less than its net book value. If an impairment
exists, the asset is written down to its estimated fair value and an impairment
loss is recognized. Management believes that no material impairment existed at
December 31, 2001, and accordingly no loss was recognized.

CASH EQUIVALENTS

The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.

DEFERRED LEASING COSTS

Internal and external commission costs incurred in obtaining tenant leases
are included in prepaid expenses and other assets. The costs are amortized on a
straight-line basis over the terms of the related leases. Upon lease
cancellation or termination, unamortized costs are charged to operations.

DEBT ISSUE AND DEFERRED FINANCE COSTS

Costs related to the issuance of debt instruments and loan costs incurred
in obtaining long-term financing are included within prepaids and other assets.
The costs are capitalized and amortized over the life of the related issue or
financing on a straight-line basis, which approximates the effective interest
method. Upon conversion, in the event of redemption or prepayment, applicable
unamortized costs are charged to shareholder's equity or to operations,
respectively.

INCOME TAXES

If the Company fails to qualify as a REIT in any taxable year, the Company
will be subject to federal income tax, at regular corporate tax rates, on its
taxable income. The Company may be disqualified from treatment as a REIT for the
four taxable years following the year during which its REIT qualification is
lost. Even if the Company maintains its qualification for taxation as a REIT,
the Company also may be subject to certain state and local taxes on its income
and property and to federal income and excise taxes on its undistributed income.

The Company has one wholly-owned subsidiary, IRTCCII, that elected on March
15, 2001 to become a taxable REIT subsidiary pursuant to the REIT Modernization
Act of 1999. The services provided by this subsidiary generate taxable income
and are taxed at regular corporate income tax rates. The corresponding income
tax is expensed.

EARNINGS PER SHARE

Basic EPS excludes dilution and is computed by dividing net earnings by the
weighted average number of shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common shares were exercised or converted into common shares
and then shared in the earnings of the Company.

STOCK-BASED COMPENSATION

The Company accounts for its stock-based compensation plans under
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB No. 25"). The Company has adopted the disclosure option of SFAS
No. 123, "Accounting for Stock-Based Compensation." SFAS No. 123 requires
companies that do not choose to account for stock-based compensation as
prescribed by the statement to disclose the pro forma effects on net income and
earnings per share as if SFAS No. 123 had been adopted. Additionally, certain
other disclosures are required with respect to stock-based compensation and the
assumptions used to determine the pro forma effects of SFAS No. 123.

SEGMENT REPORTING

In 1998 the Company adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." This statement 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. The Company's chief operating
decision maker is its senior management group.

The Company owns and operates retail shopping centers in the southeastern
United States. Such shopping centers generate rental and other revenue through
the leasing of shop spaces to a diverse base of tenants. The Company evaluates
the performance of each of its shopping centers on an individual basis due to
specific geographical market demographics and local competitive forces. However,
because the shopping centers have generally similar economic characteristics and
tenants, the shopping centers have been aggregated into one reportable segment.

DERIVATIVE FINANCIAL INSTRUMENTS

RECENT ACCOUNTING PRONOUNCEMENTS

RECLASSIFICATION OF PRIOR YEAR AMOUNTS

Certain prior year amounts in the consolidated financial statements have
been reclassified to conform with the 2001 presentation.

3. RENTAL PROPERTIES

Buildings and related improvements are depreciated on a straight-line basis
for a period of 16 to 40 years. Tenant improvements are depreciated on a
straight-line basis over the life of the related lease. Rental properties are
comprised of the following:

DECEMBER 31,
------------------
2001 2000
-------- --------

Land covered by purchase-leaseback agreements $ 250 $ 686
Land related to building and improvements 153,300 146,781
Building and improvements 493,188 476,510
Tenant improvements 13,082 9,039
-------- --------

Total rental properties $659,820 $633,016
======== ========

Upon expiration of the leases for land covered by purchase-leaseback
agreements, all improvements on the land will become the property of the
Company. The lessee of one of these properties had the option, subject to
certain conditions, to repurchase the land. The option price was for an amount
greater than the Company's carrying value of the related land. This option to
repurchase the land was exercised in 2001, resulting in a gain to the Company of
$347, included in the gain on outparcel sale in the accompanying Consolidated
Statements of Earnings.

Rental properties acquired and disposed in 2001 and 2000 are summarized
below.

SHOPPING CENTER ACQUISITIONS

Date Square Year Built/ % Leased Total Initial
Acquired Property Name City, State Footage Renovated at Acquisition Cost Cash Paid
----------------- --------------------------- ----------------- ------- --------- --------------- ------------- ---------

2001 ACQUISITIONS
4/12/01 Unigold Shopping Center Orlando, FL 102,985 1987 97% $ 8,000 $ 7,903
11/30/01 Carrollwood Center Tampa, FL 96,242 1971/1996 85% 6,763 6,763
------- ------- ----------
199,227 $14,763 $ 14,666
======= ======= ==========

2000 ACQUISITIONS
12/28/00 Pine Ridge Square Coral Springs, FL 117,399 1986 100% $11,600 $ 11,438

SHOPPING CENTER DISPOSITIONS

Date Square Sales Net Gain
Sold Property Name City, State Footage Price Proceeds (Loss)
----------------- ----------------------- -------------------- ------- ------- --------- -------

2001 DISPOSITIONS
4/18/01 Eden Center Eden, NC 56,355 $ 3,950 $ 3,830 $ 742
5/31/01 Chadwick Square Hendersonville, NC 32,100 2,401 2,351 366
6/8/01 Ft. Walton Beach Plaza Ft. Walton Beach, FL 48,248 1,650 1,300 (135)
------- ------- --------- -------
136,703 $ 8,001 $ 7,481 $ 973
======= ======= ========= =======

2000 DISPOSITIONS
1/14/00 Palm Gardens Largo, FL 49,890 $ 1,500 $ 1,389 $ 804
8/1/00 Palm Gardens (1) 651 651
2/18/00 Westgate Square Sunrise, FL 104,853 11,355 10,271 1,934
8/31/00 Abbeville Abbeville, SC 59,525 177 135 (5)
10/3/00 Carolina Place Hartsville, SC 36,560 2,104 2,016 228
12/29/00 Chester Plaza Chester, SC 71,443 2,250 2,257 937
------- ------- --------- -------
322,271 $17,386 $ 16,719 $4,549
======= ======= ========= =======

(1) Represents additional sale proceeds received subsequent to the sale of the property.

4. PROPERTIES UNDER DEVELOPMENT

Development properties consisted of the following:

DECEMBER 31,
--------------
2001 2000
------- -----

Land related to building and improvements $11,491 $ 415
Building and improvements 11,108 264
------- -----

Total development properties $22,599 $ 679
======= =====

At December 31, 2001, the Company was is in the process of developing four
shopping centers.

- Conway Crossing, located in Orlando, Florida, will consist of a 44,270
square foot Publix with 28,740 additional square feet of shop space.
- The Shops at Huntcrest, in Lawrenceville, Georgia, will be a 97,000 square
foot shopping center anchored by a 54,340 square foot Publix.
- Lutz Lake Crossing, in Tampa, Florida, will have approximately 68,000
square feet of retail space, anchored by a 44,270 square foot Publix.
- Miramar, located in Broward County, Florida, encompasses approximately 23
acres and site preparation has been completed. This development is
anticipated to consist of one outparcel and a 185,000 square foot
developable tract for a national anchor tenant.

During the year, IRTCCII completed the first development property, Regency
Square, a 85,864 square foot shopping center, located in Port Richey, Florida
and anchored by a 44,270 square foot Publix. The total cost of the development
property was $9,817.

Costs capitalized for development properties include, but are not limited
to, interest and internal development costs. Amounts capitalized for interest in
2001, 2000 and 1999 were $776, $906 and $288, respectively. Internal development
costs capitalized in 2001, 2000 and 1999 were $642, $276 and $230, respectively.

5. DEVELOPMENT AGREEMENTS

The Company enters into agreements to develop shopping centers with local
developers. The agreements consist of the Company committing to loan a fixed
amount, at a specified interest rate, for the development of the shopping center
and the Company then purchasing the center upon the developer meeting certain
budgetary and leasing requirements. The loan is secured by the development
property and due upon completion. The developer is responsible for all
construction matters as well as initial leasing efforts. Generally, the purchase
price to the Company is based on the shopping center's net operating income and
an implied rate of return at the time when the developer meets the specified
requirements.

During 2001, the Company completed a development agreement, Chastain Square
II. This agreement was to expand a currently owned shopping center by 13,500
square feet. The Company loaned the developer a total of $3,645, which was
repaid upon completion of the expansion. The Company then purchased the
expansion for approximately $4,155.

As of December 31, 2001, the Company is involved in one development
agreement, Freehome Village, a 89,720 square foot shopping center. The Company
has loaned $846 for development and the shopping center should be completed in
2003.

The Company accounts for such development loans as mortgage loans in the
accompanying Consolidated Balance Sheets. See Note 8 for an explanation of the
loan terms.

6. INVESTMENT IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES

IRT Capital Corporation ("IRTCC") was formed under the laws of Georgia in
1996 and subsequently dissolved in January 2001. This taxable subsidiary of the
Company had the ability to develop properties, buy and sell properties, provide
equity to developers and perform third-party management, leasing and brokerage.
The Company held 96% of the non-voting common stock and 1% of the voting common
stock of IRTCC. The remaining common stock was held by a former member of the
Board of Directors and a former executive officer of the Company. In January
2001, the Company purchased the remaining outstanding common stock from the
former member of the Board of Directors and the former executive officer of the
Company for $16. Subsequent to IRTCC becoming wholly-owned, the Company
dissolved IRTCC and recognized a $4 loss. The loss upon dissolution is included
within the accompanying Consolidated Income Statements. Prior to IRTCC becoming
wholly owned and consolidated, it was accounted for by the Company under the
equity method.

IRTCCII was formed under the laws of Georgia in 1999 and is used by the
Company primarily to develop properties. IRTCCII elected on March 15, 2001 to
become a taxable REIT subsidiary pursuant to the REIT Modernization Act of 1999.
In conjunction with the election, the Company made IRTCCII wholly-owned by
purchasing the remaining outstanding common stock of IRTCCII for $2. Prior to
March

15, 2001, the Company held 96% of the non-voting common stock and 1% of the
voting common stock of IRTCCII. The remaining common stock was held by an
executive officer and a director of the Company. IRTCCII was accounted for by
the Company under the equity method prior to it becoming wholly-owned and
consolidated as of March 15, 2001.

LP, IRTCCII, IRTAL and IRTMC guarantee the Company's indebtedness under the
Company's existing unsecured revolving term loan and its other senior debt. The
guarantees are joint and several and full and unconditional.

Condensed consolidating financial information for the wholly owned
subsidiaries and the affiliates is presented as follows:

GUARANTORS
-------------------------------- CONSOLIDATED
IRT PROPERTY COMBINED IRT ELIMINATING IRT PROPERTY
COMPANY SUBSIDIARIES(1) PARTNERS, LP ENTRIES COMPANY
-------------- ---------------- -------------- ------------- --------------
AS OF DECEMBER 31, 2001

ASSETS
Net rental properties $ 399,312 $ 28,138 $ 145,625 $ - $ 573,075
Investment in affiliates 122,168 - - (122,168) -
Other assets 35,677 33,488 21,248 (72,988) 17,425
-------------- ---------------- -------------- ------------- --------------

Total assets 557,157 61,626 166,873 (195,156) 590,500
============== ================ ============== ============= ==============

LIABILITIES
Mortgage notes payable 93,115 4,093 37,464 - 134,672
Senior Notes, net 124,760 - - - 124,760
Indebtedness to banks 51,654 - - - 51,654
Other liabilities 84,928 24,431 2,154 (65,233) 46,280
-------------- ---------------- -------------- ------------- --------------

Total liabilities 354,457 28,524 39,618 (65,233) 357,366
-------------- ---------------- -------------- ------------- --------------

SHAREHOLDERS' EQUITY
Total shareholders' equity 202,700 33,102 127,255 (129,923) 233,134
-------------- ---------------- -------------- ------------- --------------

Total liabilities and shareholders' equity $ 557,157 $ 61,626 $ 166,873 $ (195,156) $ 590,500
============== ================ ============== ============= ==============

FOR THE YEAR ENDED DECEMBER 31, 2001

REVENUES
Income from rental properties $ 60,846 $ 1,306 $ 23,296 $ - $ 85,448
Interest Income 1,043 - 417 (1,059) 401
Interest on direct financing leases 385 - - - 385
Other income 696 10,989 293 (10,628) 1,350
-------------- ---------------- -------------- ------------- --------------

Total revenues 62,970 12,295 24,006 (11,687) 87,584
-------------- ---------------- -------------- ------------- --------------

EXPENSES
Operating expenses of rental properties 14,679 298 6,182 - 21,159
Interest expense 20,449 632 2,772 (1,060) 22,793
Depreciation 10,974 219 3,895 - 15,088
Amortization of debt costs 629 3 9 - 641
General and administrative 2,920 289 1,050 311 4,570
-------------- ---------------- -------------- ------------- --------------

Total expenses 49,651 1,441 13,908 (749) 64,251
-------------- ---------------- -------------- ------------- --------------

Equity in earnings (losses) of affiliates 10,801 - - (10,805) (4)
-------------- ---------------- -------------- ------------- --------------

Earnings before income taxes, minority
interest and gain on sales of properties 24,120 10,854 10,098 (21,743) 23,329

Income tax provision - (53) - - (53)

Minority interest in operating partnership - - - (554) (554)

Gain on sales of properties 1,390 - 1,108 - 2,498
-------------- ---------------- -------------- ------------- --------------

Net Earnings $ 25,510 $ 10,801 $ 11,206 $ (22,297) $ 25,220
============== ================ ============== ============= ==============

Net cash flows provided by (used in)
operating activities $ 26,432 $ 10,741 $ 13,699 $ (11,382) $ 39,490
============== ================ ============== ============= ==============

Net cash flows (used in) provided by
investing activities $ (9,088) $ (4,164) $ (10,979) $ 2 $ (24,229)
============== ================ ============== ============= ==============

Net cash flows (used in) provided by
financing activities $ (9,796) $ (6,357) $ (8,863) $ 11,381 $ (13,635)
============== ================ ============== ============= ==============

GUARANTORS
-----------------------------------------------------
IRT PROPERTY COMBINED IRT IRT CAPITAL
COMPANY SUBSIDIARIES (1) PARTNERS, LP CORPORATION II
-------------- -------------- -------------- ----------------
AS OF DECEMBER 31, 2000

ASSETS
Net rental properties $ 394,144 $ 5,575 $ 137,114 $ 17,989
Investment in affiliates 107,555 - - -
Mortgage loans, net 4,313 - - -
Other assets 25,131 21,720 8,700 397
-------------- -------------- -------------- ----------------

Total assets 531,143 27,295 145,814 18,386
============== ============== ============== ================

LIABILITIES
Mortgage notes payable 81,741 4,173 30,595 -
Senior Notes, net 124,714 - - -
Indebtedness to banks 55,000 - - -
Other liabilities 54,344 1,319 8,320 18,396
-------------- -------------- -------------- ----------------

Total liabilities 315,799 5,492 38,915 18,396
-------------- -------------- -------------- ----------------

SHAREHOLDERS' EQUITY
Total shareholders' equity 215,344 21,803 106,899 (10)
-------------- -------------- -------------- ----------------

Total liabilities and shareholders' equity $ 531,143 $ 27,295 $ 145,814 $ 18,386
============== ============== ============== ================

FOR THE YEAR ENDED DECEMBER 31, 2000

REVENUES
Income from rental properties $ 62,636 $ 688 $ 20,295 $ 123
Interest Income 871 - 331 -
Interest on direct financing leases 542 - - -
Other income 84 7,705 - -
-------------- -------------- -------------- ----------------

Total revenues 64,133 8,393 20,626 123
-------------- -------------- -------------- ----------------

EXPENSES
Operating expenses of rental properties 14,302 128 5,371 78
Interest expense 19,290 273 2,441 -
Depreciation 10,710 77 3,581 30
Amortization of debt costs 539 2 - -
General and administrative 2,656 3 848 79
-------------- -------------- -------------- ----------------

Total expenses 47,497 483 12,241 187
-------------- -------------- -------------- ----------------

Equity in earnings (losses) of affiliates 16,236 - - -
-------------- -------------- -------------- ----------------

Earnings before minority interest, gain on
sales of properties and extraordinary item 32,872 7,910 8,385 (64)

Minority interest in operating partnership - - - -

Gain on sales of properties 4,549 - - -
-------------- -------------- -------------- ----------------

Net Earnings $ 37,421 $ 7,910 $ 8,385 $ (64)
============== ============== ============== ================

Net cash flows provided by (used in) operating activities $ 28,178 $ 7,645 $ 10,837 $ 881
============== ============== ============== ================
Net cash flows provided by (used in) investing activities $ (13,749) $ (14) $ (13,898) $ (10,841)
============== ============== ============== ================
Net cash flows provided by (used in) financing activities $ (20,395) $ (7,631) $ 9,345 $ 10,148
============== ============== ============== ================

FOR THE YEAR ENDED DECEMBER 31, 1999

REVENUES
Income from rental properties $ 62,942 $ - $ 19,802 $ 54
Interest Income 57 - 324 -
Interest on direct financing leases 560 - - -
Other income 1,067 9,012 - -
-------------- -------------- -------------- ----------------

Total revenues 64,626 9,012 20,126 54
-------------- -------------- -------------- ----------------

EXPENSES
Operating expenses of rental properties 14,420 - 4,909 21
Interest expense 18,835 - 2,418 -
Depreciation 10,443 - 3,350 10
Amortization of debt costs 460 - - -
General and administrative 2,642 2 788 20
-------------- -------------- -------------- ----------------

Total expenses 46,800 2 11,465 51
-------------- -------------- -------------- ----------------

Equity in earnings (losses) of affiliates 18,802 - - -
-------------- -------------- -------------- ----------------

Earnings before minority interest, gain on
sales of properties and extraordinary item 36,628 9,010 8,661 3

Minority interest in operating partnership - - - -

Gain on sales of properties 1,353 - 1,130 -
-------------- -------------- -------------- ----------------

Earnings before extraordinary item 37,981 9,010 9,791 3

EXTRAORDINARY ITEM
Loss on extingquishment of debt (157) - - -
-------------- -------------- -------------- ----------------

Net Earnings $ 37,824 $ 9,010 $ 9,791 $ 3
============== ============== ============== ================

Net cash flows provided by (used in) operating activities $ 30,113 $ 8,854 $ 12,218 $ (45)
============== ============== ============== ================
Net cash flows provided by (used in) investing activities $ 7,217 $ - $ (2,246) $ (7,188)
============== ============== ============== ================
Net cash flows provided by (used in) financing activities $ (36,389) $ (8,854) $ (10,716) $ 7,223
============== ============== ============== ================

CONSOLIDATED
IRT CAPITAL ELIMINATING IRT PROPERTY
CORPORATION I ENTRIES COMPANY
--------------- ------------- --------------
AS OF DECEMBER 31, 2000

ASSETS
Net rental properties $ - $ (17,989) $ 536,833
Investment in affiliates - (90,213) 17,342
Mortgage loans, net - - 4,313
Other assets 31 (39,907) 16,072
--------------- ------------- --------------

Total assets 31 (148,109) 574,560
=============== ============= ==============

LIABILITIES
Mortgage notes payable - - 116,509
Senior Notes, net - - 124,714
Indebtedness to banks - - 55,000
Other liabilities 2 (39,197) 43,184
--------------- ------------- --------------

Total liabilities 2 (39,197) 339,407
--------------- ------------- --------------

SHAREHOLDERS' EQUITY
Total shareholders' equity 29 (108,912) 235,153
--------------- ------------- --------------

Total liabilities and shareholders' equity $ 31 $ (148,109) $ 574,560
=============== ============= ==============

FOR THE YEAR ENDED DECEMBER 31, 2000

REVENUES
Income from rental properties $ 15 $ (138) $ 83,619
Interest Income - - 1,202
Interest on direct financing leases - - 542
Other income - (7,789) -
--------------- ------------- --------------

Total revenues 15 (7,927) 85,363
--------------- ------------- --------------

EXPENSES
Operating expenses of rental properties - (78) 19,801
Interest expense - - 22,004
Depreciation - (30) 14,368
Amortization of debt costs - - 541
General and administrative 10 (89) 3,507
--------------- ------------- --------------

Total expenses 10 (197) 60,221
--------------- ------------- --------------

Equity in earnings (losses) of affiliates - (16,292) (56)
--------------- ------------- --------------

Earnings before minority interest, gain on
sales of properties and extraordinary item 5 (24,022) 25,086

Minority interest in operating partnership - (596) (596)

Gain on sales of properties - - 4,549
--------------- ------------- --------------

Net Earnings $ 5 $ (24,618) $ 29,039
=============== ============= ==============

Net cash flows provided by (used in) operating activities $ (7) $ (9,118) $ 38,416
=============== ============= ==============
Net cash flows provided by (used in) investing activities $ - $ 21,491 $ (17,011)
=============== ============= ==============
Net cash flows provided by (used in) financing activities $ - $ (12,555) $ (21,088)
=============== ============= ==============

FOR THE YEAR ENDED DECEMBER 31, 1999

REVENUES
Income from rental properties $ 5 $ 678 $ 83,481
Interest Income - - 381
Interest on direct financing leases - - 560
Other income - (9,110) 969
--------------- ------------- --------------

Total revenues 5 (8,432) 85,391
--------------- ------------- --------------

EXPENSES
Operating expenses of rental properties - 108 19,458
Interest expense - 235 21,488
Depreciation - 66 13,869
Amortization of debt costs - - 460
General and administrative 7 (27) 3,432
--------------- ------------- --------------

Total expenses 7 382 58,707
--------------- ------------- --------------

Equity in earnings (losses) of affiliates - (18,798) 4
--------------- ------------- --------------

Earnings before minority interest, gain on
sales of properties and extraordinary item (2) (27,612) 26,688

Minority interest in operating partnership - (683) (683)

Gain on sales of properties - - 2,483
--------------- ------------- --------------

Earnings before extraordinary item (2) (28,295) 28,488

EXTRAORDINARY ITEM
Loss on extingquishment of debt - - (157)
--------------- ------------- --------------

Net Earnings $ (2) $ (28,295) $ 28,331
=============== ============= ==============

Net cash flows provided by (used in) operating activities $ 36 $ (9,724) $ 41,452
=============== ============= ==============
Net cash flows provided by (used in) investing activities $ - $ (6,334) $ (8,551)
=============== ============= ==============
Net cash flows provided by (used in) financing activities $ (35) $ 16,040 $ (32,731)
=============== ============= ==============

NOTES:
(1) Includes IRT Management Co. and IRT Alabama.

7. NET INVESTMENT IN DIRECT FINANCING LEASES

At December 31, 2001, two retail facilities are leased to Wal-Mart Stores,
Inc. at a total annual rental of $333 plus percentage rentals of 1% of gross
sales in excess of the tenants' actual sales for its fiscal year ended January
31, 1990. Rental income, including percentage rent, from these leases totaled
$281, $402 and $399 in 2001, 2000 and 1999, respectively.

The Company sold in May 2001 ten branch bank buildings acquired in a 1984
merger. These facilities were leased to The Old Phoenix National Bank at a
total annual rental of $313. For 2001, the Company recognized rental income of
$104. The Company sold the bank buildings for $3,500 and recognized a gain from
the sale of $1,525.

Of the total rental income on direct financing leases, $153, $166 and $160
was recorded as amortization of capitalized leasing income in 2001, 2000 and
1999, respectively.

The Company is to receive minimum lease payments of $333 per year during
2002 through 2006 and a total of $1,332 thereafter through the remaining lease
terms.

8. MORTGAGE LOANS

Under an October 2000 development agreement, the Company has a mortgage
loan for the development of a 89,720 square foot center, Freehome Village,
located in Cherokee County, Georgia. The Company has guaranteed to loan an
amount not to exceed $925, of which $846 has been distributed as of December 31,
2001. The loan bears interest at the one month London Interbank Offering Rate
("LIBOR") plus a premium of 3%. Interest income recognized from this loan was
$53 and $17 for 2001 and 2000, respectively. The loan is secured by the
development property and is due in full in October 2002.

Chastain Square II, another development loan made pursuant to a January
2000 development agreement was repaid in full in October 2001. This loan had an
interest rate of one month LIBOR plus a premium of 2.5% and had a balance
preceding the payment of $3,663. Interest income recognized from this loan was
$207 and $218 for 2001 and 2000, respectively. See Note 5 for an explanation of
the development agreements.

The Company also has two mortgage loans, Cypress Chase "A" Condominiums and
Mill Creek Club Condominiums. The Cypress Chase "A" Condominium loan has an
interest rate of 10.0% and is due in May 2009. The Mill Creek Club Condominium
loan is a participating loan of which the Company has a 46.2% interest. The
loans associated with the Company's interest are due in 2006 and 2007 and have
interest rates ranging from 8.63% to 12.38%. As of December 31, 2001 the balance
outstanding on these two mortgage loans was approximately $91.

In June 2001, the Company entered into a second mortgage in the amount of
$250, with an interest rate of 7.0%, in connection with the sale of an operating
property. The loan is due in its entirety in June 2003.

The Company's investments in mortgage loans, all of which are secured by
real estate investments, are summarized by type of loan at December 31, 2001 and
2000, as follows:

2001 2000
----------------------- -----------------------
NUMBER AMOUNT NUMBER AMOUNT
OF LOANS OUTSTANDING OF LOANS OUTSTANDING
-------- ------------- -------- -------------

First Mortgage 2 $ 922 3 $ 4,325
Mortgage Participation 1 16 1 19
Second Mortgage 1 250 - -
-------- ------------- -------- -------------
4 1,188 4 4,344
Less: Interest discounts and
negative goodwill - (28) - (31)
-------- ------------- -------- -------------

Mortgage Loans, net 4 $ 1,160 4 $ 4,313
======== ============= ======== =============

Annual principal payments applicable to mortgage loan investments in the
next five years and thereafter are as follows:

YEAR AMOUNT
---------- -------

2002 $ 855
2003 260
2004 11
2005 6
2006 7
Thereafter 21
-------

$ 1,160
=======

Based on current rates at which similar loans would be made, the estimated
fair value of mortgage loans was approximately $1,239 and $4,354 at December 31,
2001 and 2000, respectively.

9. MORTGAGE NOTES PAYABLE

Mortgage notes payable are collateralized by various real estate
investments having a net carrying value of approximately $207,895 at December
31, 2001. These notes have stated interest rates ranging from 6.50% to 9.625%
and are due in monthly installments with maturity dates ranging from 2002 to
2024.

In April 2001, the Company entered into three notes totaling $20,740,
secured by first mortgages on three properties. These notes are due and payable
in ten years and the principal amortization is based on a thirty year
amortization schedule. The notes bear interest at a weighted average interest
rate of 7.17% and range from 7.02% to 7.25%. Costs associated with obtaining the
secured notes totaled $366 and are being amortized over the term of the loans.

During 2000, the Company made a scheduled balloon payment at maturity of
$3,521 on a note bearing interest at 7.75%.

Future principal amortization and balloon payments applicable to mortgage
notes payable at December 31, 2001 are as follows:

PRINCIPAL BALLOON
YEAR AMORTIZATION PAYMENTS TOTAL
---------------- ------------- --------- --------

2002 $ 2,684 $ 7,155 $ 9,839
2003 2,805 - 2,805
2004 3,023 - 3,023
2005 3,266 7,500 10,766
2006 3,393 4,797 8,190
Thereafter 53,150 45,604 98,754
------------- --------- --------

$ 68,321 $ 65,056 133,377
============= =========
Interest Premium 1,295
--------

$134,672
========

Based on the borrowing rates currently available to the Company for notes
with similar terms and maturities, the estimated fair value of mortgage notes
payable was approximately $137,522 and $129,371 at December 31, 2001 and 2000,
respectively.

10. CONVERTIBLE SUBORDINATED DEBENTURES

Effective August 31, 1993, the Company issued $86,250 of 7.3% convertible
subordinated debentures due August 15, 2003, $23,275 of which are outstanding as
of December 31, 2001. Interest on the debentures is payable semi-annually on
February 15 and August 15. The debentures are convertible at any time prior to
maturity into common stock of the Company at $11.25 per share, subject to
adjustment in certain events. Costs associated with the issuance of the
debentures are approximately $3,701 and are being amortized over the life of the
debentures.

During 1997, $1,653 of these debentures were converted into 146,921 shares
of common stock. During 1998, $5,178 of these debentures were converted into
460,263 shares of common stock. No debentures were converted during 2001, 2000
or 1999. Based upon the conversion price, 2,068,889 authorized but unissued
common shares have been reserved for possible issuance if the $23,275 debentures
outstanding at December 31, 2001 are converted.

The Company had the option to redeem the debentures at par and, on December
24, 2001, the Company gave notice it intended to exercise such redemption option
by January 24, 2002. See Note 25 for additional disclosure.

Based on the closing market price of the debentures at year-end, the estimated
fair value of the debentures was approximately $23,828 and $22,111 at December
31, 2001 and 2000, respectively.

11. SENIOR NOTES

On March 26, 1996, the Company issued $50,000 of 7.45% senior notes. These
notes were due April 1, 2001 and were repaid on such date. These senior notes
were issued at a discount of $84 which was amortized over the life of the notes
on a straight-line basis for financial reporting purposes. Net proceeds from the
issuance totaled approximately $49,394. Interest on the 7.45% senior notes was
payable semi-annually on April 1 and October 1. Costs associated with the
issuance of these senior notes totaled approximately $522 and were amortized
over the life of the notes.

On August 15, 1997, the Company issued $75,000 of 7.25% senior notes due
August 15, 2007. These senior notes were issued at a discount of $426 which is
being amortized over the life of the notes on a straight-line basis for
financial reporting purposes. Net proceeds from the issuance totaled $73,817.
Interest on the 7.25% senior notes is payable semi-annually on February 15 and
August 15. Costs associated with the issuance of these senior notes totaled
approximately $757 and are being amortized over the life of the notes.

On March 23, 2001, the Company established a Medium Term Note Program (the
"MTN Program"), pursuant to the Company's shelf registration statement filed in
January, 2001. The MTN Program allows the Company, from time to time, to issue
and sell up to $100,000 of medium term notes. Medium term notes have a maturity
of nine months or more from the date of issuance and are unconditionally
guaranteed as to the payment of principal, premium, if any, and interest, if
any, by each of LP, IRTMC, IRTAL and IRTCCII.

On March 29, 2001, pursuant to the MTN Program, the Company issued $50,000
of 7.77% senior notes due April 1, 2006. Net proceeds from the issuance totaled
$49,328. Interest on these senior notes is payable semi-annually on April 1 and
October 1. Costs associated with the issuance of these senior notes totaled
approximately $672 and are being amortized over the life of the notes.

12. INDEBTEDNESS TO BANKS

On November 1, 1999, the Company obtained a $100,000 unsecured revolving
loan facility ("Revolving Loan"), which was scheduled to mature on November 1,
2002. This loan replaced the Company's previous credit facility which was
cancelled in conjunction with the new Revolving Loan. Due to the cancellation of
the previous credit facility, the Company recognized an extraordinary loss of
$157 for the write-off of the related unamortized loan costs. In addition to
the new Revolving Loan, the Company secured a $5,000 swing line credit facility
with terms similar to those of the Revolving Loan and a scheduled maturity date
of October 31, 2000. On November 1, 2000, the Company extended the maturity
date of the Revolving Loan and swing line credit facility to November 1, 2003.
Also on November 1, 2000, the Company secured an option to increase the
Revolving Loan at its discretion by $50,000.

Under the Revolving Loan, the Company may elect to pay interest at either
the lender's prime, adjusted daily, or the London Interbank Offered Rates
("LIBOR"), plus the "Applicable Margin" based upon the rating of the senior
unsecured debt obligations of the Company. The Applicable Margin ranges from
0.95% to 1.40%. The Applicable Margin based on the Company's current rating is
1.15%. At December 31, 2001, the weighted average interest rate was 3.67% on
outstanding borrowings under the Revolving Loan. The terms of the Revolving
Loan and swing line credit facility require the Company to pay an annual
facility fee equal to 0.2% of the total commitment and include certain
restrictive covenants which require compliance with certain financial ratios and
measurements. At December 31, 2001, the Company was in compliance with these
covenants.

LP, IRTCCII, IRTAL and IRTMC guarantee the Company's indebtedness on the
Revolving Loan and swing line credit facility.

The following data is presented with respect to the Revolving Loan and
swing line credit facility in 2001 and 2000:

2001 2000
-------- --------

Available balance at year end $53,346 $50,000
Average borrowing for the period $43,355 $35,583
Maximum amount outstanding during the period $57,000 $55,000
Average interest rate for the period 6.48% 7.61%
Interest rate at year end 3.67% 7.97%

The Company incurred facility fees of approximately $224, $202, and $201
for the years ended December 31, 2001, 2000 and 1999, respectively.

13. COMMITMENTS AND CONTINGENCIES

The Company has entered into change in control employment agreements with
certain key executives. Under each agreement in the event employment is
terminated following a "Change In Control," the Company is committed to pay
certain benefits, including the payment of each employee's base salary through
the expiration of each agreement.

Certain of the Company's properties have environmental concerns that have
been or are being addressed. The Company maintains limited insurance coverage
for this type of environmental risk. Although no assurance can be given that
Company properties will not be affected adversely in the future by environmental
problems, the Company presently believes that there are no environmental matters
that are reasonably likely to have a material adverse effect on the Company's
financial position.

14. MINORITY INTEREST

Minority interest for the years ended December 31, 2001 and 2000 represents
a 5.66% and 7.0% interest, respectively, in the results of the LP which are
owned by a third party. In 1998, LP was formed with a contribution of three
Florida shopping centers by an unaffiliated limited partner and a contribution
of twenty shopping centers by the Company. Subsequent to the formation of LP,
the Company has contributed cash to acquire seven shopping centers and LP has
divested of five shopping centers. At December 31, 2001 and 2000, 815,852 OP
Units were held by the limited partner. The unaffiliated limited partner has the
option to require LP to redeem its OP Units at any time, in which event LP has
the option to purchase the OP Units for cash or convert them into one share of
the Company's common stock for each OP Unit.

Adjustments have been made to the minority interest balance in LP to
properly reflect its ownership interest in the Company. During 2001, 2000 and
1999, adjustments of $13, $(395) and $(357) were recorded, respectively. The
adjustments are a result of the purchase or issuance of additional shares of
common stock and OP units.

The Company also records a minority interest for the limited partners'
share of equity in two properties. The two properties in which the Company has a
general partner interest are Venice Plaza (75% interest) and North Village
Center (49.5% interest). The aggregate balance of the minority interests as of
December 31, 2001 and 2000 is $528 and $434, respectively, and is included
within accrued expenses and other liabilities on the accompanying Consolidated
Balance Sheets.

15. DEFERRED COMPENSATION AND STOCK LOANS

On June 18, 1998, 119,760 restricted shares of common stock were granted
and 119,760 shares (the "Loan Shares") were issued pursuant to recourse loans
due June 18, 2008. The loans were made to certain Company officers as incentives
for future services. The restricted shares vest ratably over 10 years from the
date of grant. The restricted shares and the Loan Shares were valued at the
closing price of the Company's common stock on June 18, 1998 of $10.437.

On January 7, 2000, an additional 25,001 restricted shares of common stock
were granted to certain Company officers as incentives for future services. The
restricted shares vest ratably over 9 years from the date of grant. The
restricted shares were valued at the closing price of the Company's common stock
on January 7, 2000 of $8.1875.

16. TREASURY STOCK

On January 16, 2001, the Company completed the stock repurchase program.
The Company repurchased a total of 3,028,276 shares at an average price of $8.26
per share.

17. RENTAL INCOME

Leases with tenants are accounted for as operating leases. Certain tenants
are required to pay percentage rents based on gross sales exceeding stated
amounts. The Company receives reimbursements from tenants for real estate taxes,
common area maintenance and other recoverable costs. Rents from tenants are
summarized as follows:

2001 2000 1999
------- ------- -------

Minimum rental income $68,977 $67,326 $68,726
Percentage rental income 896 1,016 1,018
Other rental income 15,575 15,277 13,737
------- ------- -------

Total rental income $85,448 $83,619 $83,481
======= ======= =======

Minimum rents to be received from tenants on noncancellable operating
leases for the Company's shopping center, industrial, and land
purchase-leaseback investments at December 31, 2001 are as follows:

YEAR AMOUNT
---------- --------

2002 $ 68,920
2003 62,197
2004 54,232
2005 46,147
2006 37,922
Thereafter 189,982
--------

$459,400
========

18. INCOME TAXES

The Company has one subsidiary, IRTCCII, that became wholly-owned by the
Company in March 2001. As a result, IRTCCII had federal taxable income of $179
which caused income tax expense of $53.

19. CASH DISTRIBUTIONS AND DIVIDEND REINVESTMENT PLAN

The Company has elected since inception to be treated as a REIT under the
Code. In accordance with the Code, a REIT must distribute at least 90% (95%
prior to 2001) of its taxable income to its shareholders each year. See Note 2
for additional disclosure. The differences between taxable income as reported on
the Company's tax return (estimated 2001 and actual 2000 and 1999) and net
earnings as reported on the Consolidated Statements of Earnings are as follows:

2001 2000 1999
-------- -------- --------

Net earnings available to common shareholders $25,220 $29,039 $28,331
Rental income timing differences 1,032 (628) 152
Taxable direct financing lease income 152 171 161
Depreciation timing differences on real estate 1,402 1,032 666
Minority interest adjustments 445 (172) 1,003
Taxable gain (loss) on sale of operating properties 1,903 (1,638) 760
Taxable loss (gain) for unconsolidated affiliates - 56 (4)
Elimination of earnings for taxable REIT subsidiary (36) - -
Miscellaneous timing differences (97) 66 (21)
-------- -------- --------

Taxable income available to common shareholders $30,021 $27,926 $31,048
======== ======== ========

The following is a reconciliation between dividends declared and dividends
applied in 2000 and 1999 and estimated to be applied in 2001 to meet REIT
distribution requirments:

2001 2000 1999
------- -------- -------

Dividends Declared $28,589 $29,782 $30,908
Portion of dividends declared in current year,
and paid in current year, which was applied
to the prior year distribution requirements - (140) -
Portion of dividends declared in subsequent
year, and paid in subsequent year, which
will apply to current year 1,432 - 140
------- -------- -------

Dividends applied to meet current year
REIT distribution requirements $30,021 $29,642 $31,048
======= ======== =======

The taxability of per share distributions paid to shareholders during the
years ended December 31, 2001, 2000 and 1999 was as follows:

2001 2000 1999
-------------------- -------------------- --------------------
AMOUNT PERCENTAGE AMOUNT PERCENTAGE AMOUNT PERCENTAGE
------- ----------- ------- ----------- ------- -----------

Ordinary income $ 0.769 81.8% $ 0.787 83.7% $ 0.787 84.6%
Capital gains 0.171 18.2% 0.092 9.8% 0.143 15.4%
Return of capital - 0.0% 0.061 6.5% - 0.0%
------- ----------- ------- ----------- ------- -----------

Total rental income $ 0.940 100.0% $ 0.940 100.0% $ 0.930 100.0%
======= =========== ======= =========== ======= ===========

20. EARNINGS PER SHARE

Basic earnings per share were computed by dividing net earnings by the
weighted average number of shares of common stock outstanding during the year.
The effects of the conversion of the 7.3% subordinated debentures have been
included in the calculation of diluted earnings per share, as they are dilutive
for the year ended December 31, 2001 and 2000. The effects of such conversion of
the 7.3% debentures for the year ended December 31, 1999 is excluded, as they
are antidilutive. The effects of the conversion of the OP Units have been
included in the calculation of diluted earnings per share, as they are dilutive
for the years ended December 31, 2001, 2000 and 1999. The effects of the
exercise of certain stock options and issuances of restricted stock, using the
treasury stock method, have been included in the diluted earnings per share
calculation for the year ended December 31, 2001. Also, the effects of the stock
options were dilutive for the year ended December 31, 2000. However, the effects
of the restricted stock for the year ended December 31, 2000 and the effects of
the stock options and restricted stock for the year ended December 31, 1999 were
antidilutive and excluded from the calculation.

PER SHARE
INCOME SHARES AMOUNT
------- -------------- ---------
(in thousands)

For the fiscal year ended December 31, 2001
Basic net earnings available to shareholders $25,220 30,322 $ 0.83
=======
Options outstanding - 91
Restricted stock - 3
Minority interest of unitholders in operating partnership 554 816
Conversion of 7.3% debentures 1,799 2,069
------- --------------

Diluted net earnings available to shareholders $27,573 33,301 $ 0.83
======= ============== =======

For the fiscal year ended December 31, 2000
Basic net earnings available to shareholders $29,039 31,536 $ 0.92
=======
Options outstanding - 11
Minority interest of unitholders in operating partnership 596 816
7.3% Convertible Debentures 1,799 2,069
------- --------------

Diluted net earnings available to shareholders $31,434 34,432 $ 0.91
======= ============== =======

For the fiscal year ended December 31, 1999
Basic net earnings available to shareholders $28,331 33,119 $ 0.86
=======
Minority interest of unitholders in operating partnership 683 785
------- --------------

Diluted net earnings available to shareholders $29,014 33,904 $ 0.86
======= ============== =======

21. STOCK OPTION AND PURCHASE PLANS

Effective May 8, 1989, the Company adopted and its shareholders approved
the 1989 Stock Option Plan (the "1989 Plan"). The 1989 Plan includes provisions
for a) the granting of both Incentive Stock Options ("ISOs") (as defined in
Section 422A of the Code) and nonqualified options to officers and employees and
b) the automatic granting of nonqualified options for 1,250 shares to each
non-employee director upon the election and each annual re-election of each
non-employee director. Under the terms of the 1989 Plan, the option price shall
be no less than the fair market value of the optioned shares at the date of
grant. The options are automatically vested and expire after ten years.

Effective June 18, 1998, the Company adopted and its shareholders approved
the 1998 Long-Term Incentive Plan (the "1998 Plan"). The 1998 Plan includes
provisions for the granting of ISOs, nonqualified options, stock appreciation
rights, performance shares, restricted stock, dividend equivalents and other
stock-based awards. Under the terms of the 1998 Plan, the option exercise price
shall be no less than the fair market value of the optioned shares at the date
of the grant. The options are automatically vested and expire after ten years.

The Company also adopted the IRT Property Company 2000 Employee Stock
Purchase Plan (the "ESPP"), approved by the shareholders on May 16, 2000. The
ESPP allows eligible employees to acquire shares of the Company's stock on a
quarterly basis through payroll deductions. A maximum of 300,000 shares of
common stock is reserved for issuance under the ESPP. The purchase price of the
shares of common stock are 90% of the lesser of the closing price of a share of
common stock on the first trading day of the purchase period or the last trading
day of the purchase period. The Company initiated the ESPP

in 2001 and there were two purchase periods in 2001, which ended on September
30, 2001 and December 31, 2001, respectively. For the purchase period ended
September 30, 2001, 1,159 shares were purchased at a price of $9.72 per share.
For the purchase period ended December 31, 2001, 1,380 shares were purchased at
a price of $9.36 per share.

The Company accounts for these plans under APB 25, under which no
compensation cost has been recognized. Had compensation cost for these plans
been determined consistent with SFAS 123, the Company's net income and earnings
per share would have been reduced to the following pro forma amounts:

2001 2000 1999
------- ------- -------

Net earnings:
As reported $25,220 $29,039 $28,331
Pro forma $25,080 $28,932 $28,331

EPS - basic:
As reported $ 0.83 $ 0.92 $ 0.86
Pro forma $ 0.83 $ 0.92 $ 0.85

EPS - diluted:
As reported $ 0.83 $ 0.91 $ 0.86
Pro forma $ 0.82 $ 0.90 $ 0.85

Because the SFAS 123 method of accounting has not been applied to options
granted prior to January 1, 1995, the resulting pro forma compensation cost may
not be representative of that to be expected in future years.

Under SFAS 123, the fair value of each option grant and stock purchase
right is estimated as of the date of grant and date of purchase, respectively,
using the Black-Scholes option pricing model. The weighted average fair value of
options granted is $0.40, $0.46 and $0.62 for 2001, 2000 and 1999, respectively.
The weighted average fair value of the rights to purchase stock pursuant to the
ESPP were $1.98 for 2001. The following weighted-average assumptions were used
for option grants and stock purchase rights in 2001, 2000 and 1999,
respectively:

2001 2000 1999
------ ------ ------

Risk free interest rate 4.98% 6.71% 4.74%
Expected dividend yield 11.10% 12.03% 9.50%
Expected volatility 21.00% 21.00% 21.00%
Expected annual forfeiture rate 0.00% 5.00% 5.00%
Expected lives (in years) 5 5 5

Details of the stock option activity during 2001, 2000, and 1999 are as
follows:

NUMBER OF SHARES
---------------------- OPTION PRICE
EMPLOYEES DIRECTORS PER SHARE
---------- ---------- ---------------

Options outstanding at December 31, 1998 485,968 67,500 $ 7.63 - $14.90
Granted 156,400 - $ 9.69
Granted - 5,000 $ 9.38
Exercised (4,000) - $ 9.25
Expired unexercised (130,500) (10,000) $ 9.25 - $14.90
---------- ----------

Options outstanding at December 31, 1999 507,868 62,500 $ 7.63 - $13.38
Granted 321,393 - $ 7.81 - $8.63
Granted - 5,000 $ 8.75
Exercised (36,800) - $ 7.81
Expired unexercised (107,032) (10,000) $ 7.81 - $12.50
---------- ----------

Options outstanding at December 31, 2000 685,429 57,500 $ 7.63 - $13.38
Granted 317,627 - $ 8.31
Granted - 25,000 $ 10.30
Exercised (204,818) - $ 7.81 - $10.13
Expired unexercised (25,000) (6,250) $7.625 - $10.25
---------- ----------

Options outstanding at December 31, 2001 773,238 76,250 $ 7.81 - $13.38
========== ==========

The following table summarizes information about stock options outstanding
and exercisable at December 31, 2001:

NUMBER WEIGHTED AVERAGE WEIGHTED
RANGE OF OUTSTANDING REMAINING AVERAGE
EXERCISE PRICES AND EXERCISABLE CONTRACTUAL LIFE EXERCISE PRICE
---------------- --------------- ---------------- ---------------

7.81 - $ 8.75 422,688 8.56 years $ 8.35
9.25 - $ 9.75 192,950 5.22 years $ 9.58
10.00 - $10.75 85,500 4.57 years $ 10.35
11.38 - $11.69 124,850 5.61 years $ 11.58
12.00 - $13.38 23,500 1.27 years $ 12.52
---------------- - ------ --------------- ---------------- ---------------

7.81 - $13.38 849,488 6.77 years $ 9.42
================ = ====== =============== ================ ===============

22. EMPLOYEE RETIREMENT BENEFITS

Under the Company's 401(k) Plan, employees who annually work over 1,750
hours and are at least 18 years of age are eligible for participation in the
Plan. Employees may elect to make contributions to the Plan as defined by the
Internal Revenue Code. The Company matches 100% of such contributions up to 6%
of the individual participant's compensation, based on the length of service.
The Company contributed approximately $192, $184 and $159 to the 401(k) Plan in
2001, 2000 and 1999, respectively.

23. SUMMARY OF NONCASH INVESTING AND FINANCING ACTIVITIES

Significant noncash transactions for the years ended December 31, 2001,
2000 and 1999 were as follows:

2001 2000 1999
----- ------ -------

Adjustment for minority interest ownership of LP $ 13 $(395) $ (357)
Issuance of employee restricted stock - $ 204 -
Mortgages assumed in purchase of rental properties - - $5,742

24. RELATED PARTY TRANSACTIONS

Beginning in 2000, the Company provides management services for two
shopping centers owned principally by real estate joint ventures in which an
officer of the Company has economic interests. Such services are performed
pursuant to management agreements which provide for fees based upon a percentage
of gross revenues from the properties and other direct costs incurred in
connection with management of the centers. The Consolidated Statements of
Earnings include management fee income from these management services of $100
and $14 for the years ended December 31, 2001 and 2000.

25. SUBSEQUENT EVENTS

On January 22, 2002, one of the Company's tenants, Kmart Corporation, filed
for bankruptcy protection. The Company has eight stores leased to Kmart which
accounted for 4.5% of the Company's revenues for the year ended December 31,
2001.

On January 23, 2002, pursuant to the MTN Program, the Company issued
$25,000 of 7.84% senior unsecured notes due January 23, 2012. Proceeds were used
to redeem the Company's 7.3% convertible subordinated debentures and to
partially prepay a mortgage note payable.

On January 24, 2002, the Company redeemed all of the outstanding 7.3%
convertible subordinated debentures due August, 2003 at par plus accrued
interest. Prior to redemption, 165 bonds were converted into 14,659 shares of
common stock. The Company paid $23,220 to redeem the remaining bonds
outstanding.

26. EVENTS SUBSEQUENT TO DATE OF AUDITOR'S REPORT (UNAUDITED)

On February 19, 2002, the Company acquired Parkwest Crossing, a 85,602
square foot neighborhood shopping center located in the Raleigh-Durham area of
North Carolina. The Company acquired the center for approximately $6,600,
including an assumption of a $4,800, 8.1% mortgage secured by the property. The
mortgage is due and payable in ten years and the principal amortization is based
on a thirty year amortization schedule.

On March 1, 2002, the Company prepaid a 9.63% mortgage note payable which
was due on June 1, 2002 for approximately $5,210.

27. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following is a summary of the unaudited quarterly financial information
for the fiscal years ended December 31, 2001 and 2000.

2001
------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
--------- --------- --------- ---------

Revenues $ 21,869 $ 21,960 $ 21,864 $ 21,891
========= ========= ========= =========

Earnings before income taxes, minority interest and
gain on sales of properties $ 6,049 $ 5,692 $ 5,833 $ 5,755
Income taxes - (53) - -
Minority interest - OP unitholders (61) (244) (117) (132)
Gain on sales of properties - 2,498 - -
--------- --------- --------- ---------

Net earnings $ 5,988 $ 7,893 $ 5,716 $ 5,623
========= ========= ========= =========

Per share:
Basic $ 0.20 $ 0.26 $ 0.19 $ 0.18
========= ========= ========= =========
Diluted $ 0.19 $ 0.26 $ 0.19 $ 0.18
========= ========= ========= =========

2000
------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
--------- --------- --------- ---------

Revenues $ 21,468 $ 21,356 $ 21,738 $ 20,803
========= ========= ========= =========

Earnings before minority interest and
gain on sales of properties $ 6,749 $ 6,402 $ 6,244 $ 5,695
Minority interest - OP unitholders (159) (157) (143) (138)
Gain on sales of properties 2,738 - 644 1,166
--------- --------- --------- ---------

Net earnings $ 9,328 $ 6,245 $ 6,745 $ 6,723
========= ========= ========= =========

Per share:
Basic $ 0.29 $ 0.20 $ 0.21 $ 0.22
========= ========= ========= =========
Diluted $ 0.28 $ 0.20 $ 0.21 $ 0.22
========= ========= ========= =========

SCHEDULE III

IRT PROPERTY COMPANY AND SUBSIDIARIES

REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2001
(IN THOUSANDS, EXCEPT USEFUL LIVES)

COSTS AMOUNT ACCUMULATED USEFUL
INITIAL CAPITALIZED AT WHICH DEPRECIATION LIFE OF
ENCUM- COST TO SUBSEQUENT TO CARRIED AT AT CLOSE BUILDINGS DATE
DESCRIPTION BRANCES COMPANY ACQUISITION CLOSE OF YEAR OF YEAR (YEARS) ACQUIRED
-------------------------------- -------- -------- --------------- -------------- --------- ---------- ----------------

Alafaya Commons
Orlando, FL
Land $ - $ 5,526 $ - $ 5,526 $ - 40 November, 1996
Buildings 4,724 498 5,222 666

Ambassador Row
Lafayette, LA
Land - 2,452 - 2,452 - 40 December, 1994
Buildings 7,244 876 8,120 1,578

Ambassador Row Courtyards
Lafayette, LA
Land - 2,899 - 2,899 - 40 December, 1994
Buildings 8,698 1,476 10,174 1,851

Asheville Plaza (1)
Asheville, NC
Land - 53 15 68 - 30 April, 1986
Buildings 336 2 338 178

Bay Pointe Plaza (1)
St. Petersburg, FL
Land - 3,250 - 3,250 - 40 December, 1998
Buildings 3,138 2,040 5,178 265

Bluebonnet Village
Baton Rouge, LA
Land - 2,540 (146) 2,394 - 40 December, 1994
Buildings 5,510 415 5,925 1,081

The Boulevard
Lafayette, LA
Land - 948 - 948 - 40 December, 1994
Buildings 2,845 260 3,105 570

Carrollwood Center (1)
Tampa, FL
Land - 1,661 - 1,661 - 40 November, 2001
Buildings 4,999 87 5,086 10

Centre Pointe Plaza (1)
Smithfield, NC
Land - 984 12 996 - 40 December, 1992 &
Buildings 8,003 303 8,306 1,957 December, 1993

Charlotte Square (1)
Port Charlotte, FL
Land 3,993 2,114 - 2,114 - 40 August, 1998
Buildings 3,892 364 4,256 391

Chastain Square
Atlanta, GA
Land 4,093 1,689 1,700 3,389 - 40 December, 1997
Buildings 5,069 2,609 7,678 554

Chelsea Place
New Port Richey, FL
Land - 1,388 - 1,388 - 40 July, 1993
Buildings 5,550 77 5,627 1,197

Chestnut Square (1)
Brevard, NC
Land - 296 - 296 - 40 January, 1992
Buildings 1,113 106 1,219 323

Colony Square
Fitzgerald, GA
Land - 273 - 273 - 40 February, 1988
Buildings 2,456 254 2,710 1,073

Commerce Crossing
Commerce, GA
Land - 380 1 381 - 40 December, 1992
Buildings 4,090 132 4,222 959

Country Club Plaza
Slidell, LA
Land - 1,069 - 1,069 - 40 January, 1995
Buildings 3,010 193 3,203 648

Countryside Shops
Cooper City, FL
Land - 5,652 - 5,652 - 40 June, 1994
Buildings 10,977 1,053 12,030 2,267

The Crossing
Slidell, LA
Land - 1,282 - 1,282 - 40 December, 1994
Buildings 3,214 109 3,323 662

Daniel Village
Augusta, GA
Land 4,473 2,633 - 2,633 - 40 March, 1998
Buildings 9,612 190 9,802 952

Douglas Commons
Douglasville, GA
Land 5,331 2,543 3 2,546 - 40 August, 1992
Buildings 5,958 341 6,299 1,573

Elmwood Oaks
Harahan, LA
Land 7,500 4,559 - 4,559 - 40 January, 1992
Buildings 6,560 118 6,678 1,705

Fairview Oaks
Ellenwood, GA
Land 5,045 714 - 714 - 40 June, 1997
Buildings 6,396 2 6,398 727

Forest Hills Centre (1)
Wilson, NC
Land - 870 (9) 861 - 40 August, 1990
Buildings 4,121 772 4,893 1,327

Forrest Gallery (1)
Tullahoma, TN
Land - 2,137 11 2,148 - 40 December, 1992
Buildings 9,978 821 10,799 2,689

The Galleria (1)
Wrightsville Beach, NC
Land - 1,070 (41) 1,029 - 40 August, 1986
Buildings 6,139 1,390 7,529 2,597 & December, 1987

Grassland Crossing
Alpharetta, GA
Land 6,265 1,075 - 1,075 - 40 February, 1997
Buildings 8,832 410 9,242 1,204

Greenwood
Palm Springs, FL
Land - 4,129 - 4,129 - 40 July, 1997
Buildings 8,954 325 9,279 1,091

Gulf Gate Plaza
Naples, FL
Land - 278 - 278 - 28 June, 1979
Buildings 1,858 2,553 4,411 3,475

Heritage Walk
Milledgeville, GA
Land 7,166 810 - 810 - 40 June,1993
Buildings 7,944 121 8,065 1,736

Lancaster Plaza
Lancaster, SC
Land - 121 - 121 - 30 April, 1986
Buildings 744 604 1,348 822

Lancaster Shopping Center
Lancaster, SC
Land - 338 - 338 - 30 August, 1986 &
Buildings 1,228 77 1,305 621 December, 1987

Lawrence Commons (1)
Lawrenceburg, TN
Land - 816 - 816 - 40 August, 1992
Buildings 2,729 63 2,792 695

Lexington Shopping Center
Lexington, VA
Land - 312 - 312 - 30 June, 1988 &
Buildings 1,639 650 2,289 1,024 June, 1989

Mableton Crossing
Mableton, GA
Land 4,328 2,781 - 2,781 - 40 June, 1998
Buildings 5,389 12 5,401 478

Macland Pointe
Marietta, GA
Land 5,972 1,252 (12) 1,240 - 40 January, 1993
Buildings 4,317 642 4,959 1,126

Madison Centre
Madison, AL
Land 4,093 2,772 - 2,772 - 40 August, 1997
Buildings 3,046 20 3,066 338

Market Place
Norcross, GA
Land - 3,820 - 3,820 - 40 April, 1997
Buildings 3,254 450 3,704 544

McAlpin Square
Savannah, GA
Land - - - - - 40 December, 1997
Buildings 6,152 1,475 7,627 765

Millervillage
Baton Rouge, LA
Land - 1,927 - 1,927 - 40 December, 1994
Buildings 5,662 130 5,792 1,088

New Smyrna Beach Regional
New Smyrna Beach, FL
Land - 3,704 7 3,711 - 40 August, 1992
Buildings 6,401 483 6,884 1,834

North River Village
Ellenton, FL
Land - 2,949 - 2,949 - 40 December, 1992 &
Buildings 7,161 651 7,812 1,607 December, 1993

North Village Center
North Myrtle Beach, SC
Land 1,876 483 - 483 - 37 August, 1986
Buildings 2,785 114 2,899 993

Old Kings Commons
Palm Coast, FL
Land - 1,491 - 1,491 - 40 May, 1988
Buildings 4,474 197 4,671 1,694

Parkmore Plaza
Milton, FL
Land - 1,799 8 1,807 - 40 December, 1992
Buildings 6,454 612 7,066 1,567

Paulding Commons
Dallas, GA
Land 6,949 2,312 3 2,315 - 40 August, 1992
Buildings 10,607 234 10,841 2,627

Pensacola Plaza
Pensacola, FL
Land - 131 - 131 - 30 July, 1986
Buildings 2,392 187 2,579 1,381

Pine Ridge Sqare (1)
Coral Springs, FL
Land 7,502 2,909 - 2,909 - 40 December, 2000
Buildings 8,727 34 8,761 219

Pinhook Plaza
Lafayette, LA
Land - 2,768 - 2,768 - 40 December, 1994
Buildings 8,304 475 8,779 1,591

Plaza Acadienne
Eunice, LA
Land - - - - - 40 December, 1994
Buildings 2,918 135 3,053 579

Plaza North (1)
Hendersonville, NC
Land - 658 - 658 - 40 August, 1992
Buildings 1,796 65 1,861 448

Powers Ferry Plaza
Marietta, GA
Land - 1,725 (9) 1,716 - 40 May, 1997
Buildings 5,785 585 6,370 762

Providence Square (1)
Charlotte, NC
Land - 450 - 450 - 35 December, 1971
Buildings 1,896 2,422 4,318 3,545

Regency Square
Port Richey, FL
Land - 3,036 - 3,036 - 40 March, 2001
Buildings 6,195 - 6,195 180

Riverside Square (1)
Coral Springs, FL
Land 8,488 5,893 - 5,893 - 40 August, 1998
Buildings 7,131 223 7,354 672

Riverview Shopping Center (1)
Durham, NC
Land - 400 - 400 - 35 March, 1972
Buildings 1,823 4,713 6,536 3,166

Salisbury Marketplace (1)
Salisbury, NC
Land - 734 - 734 - 40 August, 1996
Buildings 3,878 62 3,940 543

Scottsville Square
Bowling Green, KY
Land - 653 1 654 - 20 August, 1992
Buildings 1,782 196 1,978 809

Seven Hills
Spring Hill, FL
Land - 1,903 - 1,903 - 40 July, 1993
Buildings 2,977 43 3,020 662

Shelby Plaza (1)
Shelby, NC
Land - - - - - 21 April, 1986
Buildings 937 855 1,792 1,156

Sherwood South
Baton Rouge, LA
Land - 496 - 496 - 40 December, 1994
Buildings 1,489 487 1,976 473

Shipyard Plaza
Pascagoula, MS
Land - 359 - 359 - 40 April, 1988
Buildings 4,130 381 4,511 1,498

Shoppes at Lago Mar (1)
Miami, FL
Land 5,423 3,170 - 3,170 - 40 February, 1999
Buildings 6,743 17 6,760 477

Shoppes of Silverlakes
Pembroke Pines, FL
Land 3,056 4,043 - 4,043 - 40 November, 1997
Buildings 12,826 179 13,005 1,367

Siegen Village
Baton Rouge, LA
Land 4,521 2,375 (325) 2,050 - 40 December, 1994
Buildings 6,952 695 7,647 1,190

Smyrna Village (1)
Smyrna, TN
Land - 968 21 989 - 40 August, 1992
Buildings 4,744 181 4,925 1,186

Smyth Valley Crossing
Marion, VA
Land - 1,693 7 1,700 - 40 December, 1992
Buildings 5,231 276 5,507 1,313

South Beach Regional
Jacksonville Beach, FL
Land - 3,958 20 3,978 - 40 August, 1992
Buildings 17,130 1,784 18,914 4,553

Spalding Village
Griffin, GA
Land 11,080 2,814 3 2,817 - 40 August, 1992
Buildings 12,470 239 12,709 3,093

Spring Valley
Columbia, SC
Land - 1,382 - 1,382 - 40 March, 1998
Buildings 4,722 129 4,851 459

Stadium Plaza
Phenix City, AL
Land - 1,829 2 1,831 - 40 August, 1992
Buildings 2,614 96 2,710 663

Stanley Market Place (1)
Stanley, NC
Land - 198 - 198 - 35 January, 1992
Buildings 1,603 66 1,669 442

Tamarac Town Square (1)
Tamarac, FL
Land 6,772 4,637 - 4,637 - 40 August, 1998
Buildings 6,015 979 6,994 647

Tarpon Heights
Galliano, LA
Land - 706 - 706 - 40 January, 1995
Buildings 2,117 15 2,132 381

Thomasville Commons
Thomasville, NC
Land 5,211 963 - 963 - 40 August, 1992
Buildings 6,183 105 6,288 1,518

Town & Country
Kissimmee, FL
Land 2,029 1,065 - 1,065 - 40 January, 1998
Buildings 3,200 23 3,223 328

Treasure Coast (1)
Vero Beach, FL
Land 5,286 2,471 - 2,471 - 40 May, 1998
Buildings 8,622 240 8,862 804

Unigold Shopping Center (1)
Orlando, FL
Land - 2,410 - 2,410 - 40 April, 2001
Buildings 5,627 87 5,714 95

Venice Plaza
Venice, FL
Land - 333 - 333 - 27 June, 1979
Buildings 1,973 1,342 3,315 2,231

Village at Northshore
Slidell, LA
Land 4,650 2,066 - 2,066 - 40 December, 1994
Buildings 6,197 1,206 7,403 1,209

Walton Plaza
Augusta, GA
Land - 598 - 598 - 40 August 1998
Buildings 2,561 2 2,563 427

Waterlick Plaza
Lynchburg, VA
Land - 1,071 - 1,071 - 40 October, 1989
Buildings 5,091 329 5,420 1,737

Watson Central
Warner Robins, GA
Land - 1,646 12 1,658 - 40 December, 1992 &
Buildings 11,317 184 11,501 2,597 October, 1993

Wesley Chapel Crossing
Decatur, GA
Land 3,570 3,829 9 3,838 - 40 December, 1992
Buildings 7,032 272 7,304 1,703

West Gate Plaza
Mobile, AL
Land - 475 - 475 - 25 June, 1974 &
Buildings 3,782 656 4,438 1,706 January, 1985

West Towne Square
Rome, GA
Land - 325 - 325 - 40 March, 1990
Buildings 5,581 376 5,957 1,835

Williamsburg at Dunwoody (1)
Dunwoody, GA
Land - 1,638 - 1,638 - 40 March 1999
Buildings 3,964 32 3,996 286

Willowdaile Shopping Center (1)
Durham, NC
Land - 937 (178) 759 - 40 August, 1986 &
Buildings 7,352 985 8,337 3,026 December, 1987

Industrial Buildings
Charlotte, NC - Industrial
Land - 143 176 319 - 14 June, 1979
Buildings 2,170 1,360 3,530 3,254

Grand Marche
Shopping Center
Lafayette, LA
Land - 250 - 250 - September, 1972

Conway Crossing
Orlando, FL
Land - 337 774 1,111 - - June, 1979
Buildings 147 3,318 3,465 4

Lutz Lake Crossing
Tampa, FL
Land - 3,304 - 3,304 - - September, 2000
Buildings 3,671 - 3,671 -

Miramar
Miami, FL
Land - 3,551 - 3,551 - - June, 1999
Buildings 2,187 - 2,187 -

Shops at Huntcrest
Tampa, FL
Land - 3,525 - 3,525 - - September, 2001
Buildings 1,785 - 1,785 -

$134,672 $630,007 $ 52,412 $ 682,419 $ 109,344
======== ======== =============== ============== =========

YEAR
DESCRIPTION COMPLETED
-------------------------------- ----------

Alafaya Commons
Orlando, FL
Land 1987
Buildings

Ambassador Row
Lafayette, LA
Land 1980 &
Buildings 1991

Ambassador Row Courtyards
Lafayette, LA
Land 1986 &
Buildings 1991

Asheville Plaza (1)
Asheville, NC
Land 1967
Buildings

Bay Pointe Plaza (1)
St. Petersburg, FL
Land 1998
Buildings

Bluebonnet Village
Baton Rouge, LA
Land 1983
Buildings

The Boulevard
Lafayette, LA
Land 1976 &
Buildings 1994

Carrollwood (1)
Tampa, FL
Land 1971 &
Buildings 1996

Centre Pointe Plaza (1)
Smithfield, NC
Land 1989 &
Buildings 1993

Charlotte Square (1)
Port Charlotte, FL
Land 1998
Buildings

Chastain Square
Atlanta, GA
Land 1981 &
Buildings 2001

Chelsea Place
New Port Richey, FL
Land 1992
Buildings

Chestnut Square (1)
Brevard, NC
Land 1985
Buildings

Colony Square
Fitzgerald, GA
Land 1987
Buildings

Commerce Crossing
Commerce, GA
Land 1988
Buildings

Country Club Plaza
Slidell, LA
Land 1982
Buildings

Countryside Shops
Cooper City, FL
Land 1986, 1988
Buildings & 1991

The Crossing
Slidell, LA
Land 1988 &
Buildings 1993

Daniel Village
Augusta, GA
Land 1998
Buildings

Douglas Commons
Douglasville, GA
Land 1988
Buildings

Elmwood Oaks
Harahan, LA
Land 1989
Buildings

Fairview Oaks
Ellenwood, GA
Land 1997
Buildings

Forest Hills Centre (1)
Wilson, NC
Land 1990 &
Buildings 1995

Forrest Gallery (1)
Tullahoma, TN
Land 1987
Buildings

The Galleria (1)
Wrightsville Beach, NC
Land 1986, 1990
Buildings &1996

Grassland Crossing
Alpharetta, GA
Land 1996
Buildings

Greenwood
Palm Springs, FL
Land 1982 &
Buildings 1994

Gulf Gate Plaza
Naples, FL
Land 1969 &
Buildings 1974

Heritage Walk
Milledgeville, GA
Land 1991 &
Buildings 1992

Lancaster Plaza
Lancaster, SC
Land 1971
Buildings

Lancaster Shopping Center
Lancaster, SC
Land 1963 &
Buildings 1987

Lawrence Commons (1)
Lawrenceburg, TN
Land 1987
Buildings

Lexington Shopping Center
Lexington, VA
Land 1981 &
Buildings 1989

Mableton Crossing
Mableton, GA
Land 1998
Buildings

Macland Pointe
Marietta, GA
Land 1992 &
Buildings 1993

Madison Centre
Madison, AL
Land 1997
Buildings

Market Place
Norcross, GA
Land 1976
Buildings

McAlpin Square
Savannah, GA
Land 1979
Buildings

Millervillage
Baton Rouge, LA
Land 1983 &
Buildings 1992

New Smyrna Beach Regional
New Smyrna Beach, FL
Land 1987
Buildings

North River Village
Ellenton, FL
Land 1988 &
Buildings 1993

North Village Center
North Myrtle Beach, SC
Land 1984
Buildings

Old Kings Commons
Palm Coast, FL
Land 1988
Buildings

Parkmore Plaza
Milton, FL
Land 1986 &
Buildings 1992

Paulding Commons
Dallas, GA
Land 1991
Buildings

Pensacola Plaza
Pensacola, FL
Land 1985
Buildings

Pine Ridge Sqare (1)
Coral Springs, FL
Land 1986
Buildings

Pinhook Plaza
Lafayette, LA
Land 1979 &
Buildings 1992

Plaza Acadienne
Eunice, LA
Land 1980
Buildings

Plaza North (1)
Hendersonville, NC
Land 1986
Buildings

Powers Ferry Plaza
Marietta, GA
Land 1979 &
Buildings 1983

Providence Square (1)
Charlotte, NC
Land 1973
Buildings

Regency Square
Port Richey, FL
Land 2001
Buildings

Riverside Square (1)
Coral Springs, FL
Land 1998
Buildings

Riverview Shopping Center (1)
Durham, NC
Land 1973 &
Buildings 1994

Salisbury Marketplace (1)
Salisbury, NC
Land 1987
Buildings

Scottsville Square
Bowling Green, KY
Land 1986
Buildings

Seven Hills
Spring Hill, FL
Land 1991
Buildings

Shelby Plaza (1)
Shelby, NC
Land 1972
Buildings

Sherwood South
Baton Rouge, LA
Land 1972, 1988
Buildings & 1992

Shipyard Plaza
Pascagoula, MS
Land 1987
Buildings

Shoppes at Lago Mar (1)
Miami, FL
Land 1995
Buildings

Shoppes of Silverlakes
Pembroke Pines, FL
Land 1995 &
Buildings 1996

Siegen Village
Baton Rouge, LA
Land 1988 &
Buildings 1996

Smyrna Village (1)
Smyrna, TN
Land 1992
Buildings

Smyth Valley Crossing
Marion, VA
Land 1989
Buildings

South Beach Regional
Jacksonville Beach, FL
Land 1990 &
Buildings 1991

Spalding Village
Griffin, GA
Land 1989
Buildings

Spring Valley
Columbia, SC
Land 1998
Buildings

Stadium Plaza
Phenix City, AL
Land 1988
Buildings

Stanley Market Place (1)
Stanley, NC
Land 1980 &
Buildings 1991

Tamarac Town Square (1)
Tamarac, FL
Land 1998
Buildings

Tarpon Heights
Galliano, LA
Land 1982
Buildings

Thomasville Commons
Thomasville, NC
Land 1991
Buildings

Town & Country
Kissimmee, FL
Land 1998
Buildings

Treasure Coast (1)
Vero Beach, FL
Land 1998
Buildings

Unigold (1)
Orlando, FL
Land 1987
Buildings

Venice Plaza
Venice, FL
Land 1971 &
Buildings 1979

Village at Northshore
Slidell, LA
Land 1988 &
Buildings 1993

Walton Plaza
Augusta, GA
Land 1991
Buildings

Waterlick Plaza
Lynchburg, VA
Land 1973 &
Buildings 1988

Watson Central
Warner Robins, GA
Land 1989 &
Buildings 1993

Wesley Chapel Crossing
Decatur, GA
Land 1989
Buildings

West Gate Plaza
Mobile, AL
Land 1974 &
Buildings 1995

West Towne Square
Rome, GA
Land 1988
Buildings

Williamsburg at Dunwoody (1)
Dunwoody, GA
Land 1983
Buildings

Willowdaile Shopping Center (1)
Durham, NC
Land 1986
Buildings

Industrial Buildings
Charlotte, NC - Industrial
Land 1956 &
Buildings 1963

Grand Marche
Shopping Center
Lafayette, LA
Land 1969

Conway Crossing
Orlando, FL
Land 1972
Buildings

Lutz Lake Crossing
Tampa, FL
Land -
Buildings

Miramar
Miami, FL
Land -
Buildings

Shops at Huntcrest
Tampa, FL
Land -
Buildings

(1) Ownership through IRT Partners, L.P.

Real estate activity is summarized as follows:

2001 2000 1999
--------- --------- ---------

RENTAL AND DEVELOPMENT PROPERTIES:

Cost -
Balance at beginning of year $633,016 $630,005 $622,117
Acquisitions and improvements 59,008 19,613 20,456
Retirements (231) - -

691,793 649,618 642,573
Cost of properties sold (9,374) (16,602) (12,568)

Balance at end of year $682,419 $633,016 $630,005

Accumulated depreciation -
Balance at beginning of year $ 96,183 $ 86,170 $ 74,943
Depreciation 15,088 14,368 13,869

111,271 100,538 88,812
Accumulated depreciation related to
rental properties sold (1,927) (4,355) (2,642)

Balance at end of year $109,344 $ 96,183 $ 86,170
=========

SCHEDULE IV

IRT PROPERTY COMPANY AND SUBSIDIARIES

MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 2001
(IN THOUSANDS)

Face Amount
Final Periodic and Carrying
Type of Type of Interest Maturity Payment Amount of
Location of Property Loan Property Rate Date Terms Mortgages
-------------------- --------------- --------------- --------- ------------- -------- -----------

Lauderdale Lakes, FL First Mortgage Condominiums 10.00% May, 2009 (1) $ 76

Cherokee County, GA First Mortgage Shopping Center Variable (2) October, 2002 (3) 846

Nashville, TN First Mortgage Condominiums 8.63% - 2006-2007 (1) 16
Participation 12.38%

Ft. Walton Beach, FL Second Mortgage Shopping Center 7.00% June, 2003 (3) 250
-----------

1,188

Less interest discounts and negative goodwill (28)
-----------

$ 1,160
===========

(1) Monthly payments include principal and interest.

(2) The interest rate is based upon the one month LIBOR rate at month end plus a premium established in the
respective note agreement.

(3) Interest is payable monthly. Entire principal balance is payable on the maturity date.

Mortgage loan activity is summarized as follows:

Year Ended December 31,
--------------------------
2001 2000 1999
------- ------- --------

Balance at beginning of year $4,313 $ 92 $ 1,097
New mortgage loans 4,507 4,507 365
Amortization of interest discounts and negative
goodwill 6 6 4
Collections of principal (292) (292) (1,374)
------- ------- --------

Balance at end of year $8,534 $4,313 $ 92
======= ======= ========

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

The information called for by Part III (Items 10, 11, 12 and 13) is
incorporated herein by reference to the Sections entitled: Directors and
Executive Officers of the Registrant, Executive Compensation, Security Ownership
of Certain Beneficial Owners and Management, and Certain Relationships and
Related Transactions to Company's definitive proxy statement for the Company's
2002 Annual Meeting of Shareholders of the Company, to be filed pursuant to
Regulation 14A and to General Instruction G(3) to the Report on Form 10-K. The
Company's 2002 Annual meeting of Shareholders of the Company is scheduled to be
held on May 30, 2002.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

FINANCIAL STATEMENTS AND SCHEDULES

Included in Part II of this Report are the following:

Report of Independent Public Accountants

Consolidated Balance Sheets at December 31, 2001 and 2000

Consolidated Statements of Earnings for the Years Ended December 31,
2001, 2000 and 1999

Consolidated Statements of Changes in Shareholders' Equity for the
Years Ended December 31, 2001, 2000 and 1999

Consolidated Statements of Cash Flows for the Years Ended December 31,
2001, 2000 and 1999

Notes to Consolidated Financial Statements

Schedule III - Real Estate and Accumulated Depreciation

Schedule IV - Mortgage Loans on Real Estate

EXHIBITS

3.1 The Company's Amended and Restated Articles of Incorporation were filed as
an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997, which is incorporated by reference herein.

3.1.1 Articles of Amendment to the Amended and Restated Articles of
Incorporation were filed as an exhibit to the Company's Current Report on
Form 8-K dated June 9, 1999, which is incorporated by reference herein.

3.2 The Company's By-Laws, as amended, were filed as an exhibit to the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
1995, which is incorporated by reference herein.

3.2.1 Amendments to By-laws of IRT Property Company filed as Exhibit 3.1 to the
Company's report on Form 8-K dated August 21, 1998, which is incorporated
by reference herein.

3.2.2 Amendment to the By-laws of IRT Property Company filed as an exhibit to
the Company's Registration Statement on Form S-3 (333-53638) dated January
12, 2001, which is incorporated by reference herein.

4.1 The Indenture dated August 15, 1993 between the Company and Trust Company
Bank, as Trustee, relating to the 7.3% Convertible Subordinated Debentures
due August 15, 2003 was filed as an exhibit to the Company's Form 10-K for
the year ended December 31, 1993, which is incorporated by reference
herein.

4.2 The form of 7.3% Convertible Subordinated Debenture was included in 4.1
above.

4.3 The Indentures dated as of November 9, 1995 between the Company and
SunTrust Bank, Atlanta, Georgia, as Trustee, relating to Senior Debt
Securities and Subordinated Debt Securities were filed as an exhibit to the
Company's Form 10-K for the year ended December 31, 1995, which is
incorporated by reference herein.

4.4 First Supplemental Indenture dated as of March 26, 1996 between IRT
Property Company and SunTrust Bank, Atlanta, Georgia, as Trustee, was filed
as an exhibit to the Company's Form 8-K dated March 26, 1996, which is
incorporated by reference herein.

4.5 Supplemental Indenture No. 2, dated August 15, 1997, between IRT Property
Company and SunTrust Bank, Atlanta, Georgia, as Trustee, was filed as an
exhibit to the Company's Form 8-K dated August 15, 1997, which is
incorporated by reference herein.

4.6 Supplemental Indenture No. 3, dated September 9, 1998, between IRT Property
Company and SunTrust Bank, Atlanta, Georgia, as Trustee, was filed as an
exhibit to the Company's Form 8-K dated September 15, 1998, which is
incorporated by reference herein.

4.7 The Indenture, dated as of September 9, 1998, between the Company and
SunTrust Bank, Atlanta, Georgia, as Trustee, relating to Senior Debt
Securities was filed as an exhibit to the Company's Form 8-K dated
September 15, 1998, which is incorporated by reference herein.

4.8 The Indenture, dated as of September 9, 1998, between the Company and
SunTrust Bank, Atlanta, Georgia, as Trustee, relating to Subordinated Debt
Securities was filed as an exhibit to the Company's Form 8-K dated
September 15, 1998, which is incorporated by reference herein.

4.9 Supplemental Indenture No. 1, dated September 9, 1998, between the Company,
IRT Partners, L.P. and SunTrust Bank, Atlanta, Georgia, as Trustee, to the
Indenture dated September 9, 1998, relating to Senior Debt Securities, was
filed as an exhibit to the Company's Form 8-K dated September 15, 1998,
which is incorporated by reference herein.

4.10 IRT Property Company Stock Certificate Legend Regarding Shareholder Rights
Agreement which was filed as an exhibit to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1999, which is incorporated by
reference herein.

4.11 Supplemental Indenture No. 2, dated as of November 1, 1999, among IRT
Property Company, an issuer, IRT Capital Corporation II, IRT Management
Company, IRT Alabama, Inc., and IRT Partners L.P., as guarantors, and
SunTrust Bank, Atlanta, Georgia, as trustee (Registration Statement No.
333-48571), incorporated by reference to Exhibit No. 4.5 of the Company's
report on Form 8-K dated November 12, 1999.

4.12 Supplemental Indenture No. 4, dated as of November 1, 1999, among IRT
Property Company, an issuer, IRT Capital Corporation II, IRT Management
Company, IRT Alabama, Inc., and IRT Partners L.P., as guarantors, and
SunTrust Bank, Atlanta, Georgia, as trustee (Registration Statement No.
333-48571), incorporated by reference to Exhibit No. 4.7 of the Company's
report on Form 8-K dated November 12, 1999.

10.1 The Company's 1989 Stock Option Plan was filed as an exhibit to the
Company's Form 8-K dated March 22, 1989, which is incorporated by reference
herein.

10.2 Amendment No. 1 to the Company's 1989 Stock Option Plan was filed as an
exhibit to the Company's Form 10-K for the year ended December 31, 1993,
which is incorporated by reference herein.

10.3 The Company's Key Employee Stock Option Plan was filed as an exhibit to the
Company's Registration Statement on Form S-2 (No. 2-88716) dated January 4,
1984, which is incorporated by reference herein.

10.4 IRT Property Company Long-Term Incentive Plan was filed in the Company's
Definitive Proxy Statement dated May 22, 1998, which is incorporated by
reference herein.

10.5 The Company's Deferred Compensation Plan for Outside Directors dated
December 22, 1995 was filed as an exhibit to the Company's Form 10-K for
the year ended December 31, 1995, which is incorporated by reference
herein.

10.6 Amended and Restated Employment Agreement between the Company and Thomas H.
McAuley dated as of November 11, 1997 was filed as an exhibit to the
Company's Form 10-K for the year ended December 31, 1997, which is
incorporated by reference herein.

10.7 Change in Control Employment Agreement between the Company and W. Benjamin
Jones III dated as of November 11, 1997 was filed as an exhibit to the
Company's Form 10-K for the year ended December 31, 1997, which is
incorporated by reference herein.

10.8 Change in Control Employment Agreement between the Company and Robert E.
Mitzel dated as of November 11, 1997 was filed as an exhibit to the
Company's Form 10-K for the year ended December 31, 1997, which is
incorporated by reference herein.

10.9 Agreement of Limited Partnership of IRT Partners L.P., and Amendment No. 1
was filed as an exhibit to the Company's report on Form 8-K dated September
15, 1998, which is incorporated by reference herein.

10.10 Loan Agreement dated February 25, 1999 between IRT Property Company, IRT
Alabama, Inc. and General Electric Capital Assurance Company.

10.11 Secured Promissory Note from W. Benjamin Jones III to IRT Property Company
dated June 18, 1998 was filed as an exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998, which is
incorporated by reference herein.

10.12 Pledge Agreement by and between W. Benjamin Jones III and IRT Property
Company dated June 18, 1998 was filed as an exhibit to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998, which is
incorporated by reference herein.

10.13 Restricted Stock Award Agreement by and between W. Benjamin Jones III and
IRT Property Company dated June 18, 1998 was filed as an exhibit to the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1998, which is incorporated by reference herein.

10.14 Secured Promissory Note from Robert E. Mitzel to IRT Property Company
dated June 18, 1998 was filed as an exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998, which is
incorporated by reference herein.

10.15 Pledge Agreement by and between Robert E. Mitzel and IRT Property Company
dated June 18, 1998 was filed as an exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998, which is
incorporated by reference herein.

10.16 Restricted Stock Award Agreement by and between Robert E. Mitzel and IRT
Property Company dated June 18, 1998 was filed as an exhibit to the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1998, which is incorporated by reference herein.

10.17 Secured Promissory Note from Thomas H. McAuley to IRT Property Company
dated June 18, 1998 was filed as an exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998, which is
incorporated by reference herein.

10.18 Pledge Agreement by and between Thomas H. McAuley and IRT Property Company
dated June 18, 1998 was filed as an exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998, which is
incorporated by reference herein.

10.19 Restricted Stock Award Agreement by and between Thomas H. McAuley and IRT
Property Company dated June 18, 1998 was filed as an exhibit to the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1998, which is incorporated by reference herein.

10.20 $100,000,000 Credit Agreement dated as of November 1, 1999, among the
Company, Wachovia Bank, N.A., First Union National Bank, Wachovia
Securities, Inc., AmSouth Bank, SouthTrust Bank, N.A., and SunTrust Bank,
Atlanta incorporated by reference to Exhibit No. 10.12 of the Company's
report on Form 8-K dated November 12, 1999.

10.21 $5,000,000 Revolving Loan Credit Agreement dated as of November 1, 1999,
among the Company and Wachovia Bank, N.A., incorporated by reference to
Exhibit No. 10.13 of the Company's report on Form 8-K dated November 12,
1999.

10.22 Change in Control Agreement between the Company and James G. Levy dated as
of August 1, 1999 which was filed as an exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1999, which is
incorporated by reference herein.

10.23 Change in Control Agreement between the Company and Daniel F. Lovett dated
August 1, 1999 which was filed as an exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1999, which is
incorporated by reference herein.

10.24 First Amendment to the Restricted Stock Award Agreement and Pledge
Agreement and Secured Promissory Note between Thomas H. McAuley and IRT
Property Company dated December 17, 1999 which was filed as an exhibit to
the Company's Form 10-K for the year ended December 31, 1999, which is
incorporated by reference herein.

10.25 First Amendment to the Restricted Stock Award Agreement and Pledge
Agreement and Secured Promissory Note between W. Benjamin Jones III and IRT
Property Company dated December 17, 1999 which was filed as an exhibit to
the Company's Form 10-K for the year ended December 31, 1999, which is
incorporated by reference herein.

10.26 First Amendment to the Restricted Stock Award Agreement and Pledge
Agreement and Secured Promissory Note between Robert E. Mitzel and IRT
Property Company dated December 17, 1999 which was filed as an exhibit to
the Company's Form 10-K for the year ended December 31, 1999, which is
incorporated by reference herein.

10.27 Restricted Stock Award Agreement between James G. Levy and IRT Property
Company dated January 7, 2000 which was filed as an exhibit to the
Company's Form 10-K for the year ended December 31, 1999, which is
incorporated by reference herein.

10.28 Restricted Stock Award Agreement between Kip R. Marshall and IRT Property
Company dated January 7, 2000 which was filed as an exhibit to the
Company's Form 10-K for the year ended December 31, 1999, which is
incorporated by reference herein.

10.29 Restricted Stock Award Agreement between Daniel P. Lovett and IRT Property
Company dated January 7, 2000 which was filed as an exhibit to the
Company's Form 10-K for the year ended December 31, 1999, which is
incorporated by reference herein.

10.30 Restricted Stock Award Agreement between E. Thornton Anderson and IRT
Property Company dated January 7, 2000 which was filed as an exhibit to the
Company's Form 10-K for the year ended December 31, 1999, which is
incorporated by reference herein.

10.31 Change in Control Agreement between E. Thornton Anderson and IRT Property
Company dated January 1, 2000 which was filed as an exhibit to the
Company's Form 10-K for the year ended December 31, 1999, which is
incorporated by reference herein.

11 Computation of Per Share Earnings.

12 Ratio of Earnings to Fixed Charges.

21 Company Subsidiaries.

23 Consent of Arthur Andersen LLP to the incorporation of their report
included in this Form 10-K in the Company's previously filed Registration
Statements File Nos. 33-65604, 33-66780, 33-59938, 33-64628, 33-64741,
33-63523, 333-38847, 333-62435, 333-38847, 333-48571, 333-53638 and
333-59366.

99.1 Confirmation of Receipt of Representations Letter from Arthur Andersen LLP.

REPORTS ON FORM 8-K

The Company did not file any Current Reports on Form 8-K during the last
quarter of the period covered by this Form 10-K.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

April 9, 2002

IRT PROPERTY COMPANY

By: /s/ Thomas H. McAuley
------------------------------------
Thomas H. McAuley
President, Chief Executive Officer,
Chairman of the Board & Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

NAME TITLE DATE
---- ----- ----

/s/ Thomas H. McAuley President, April 9, 2002
------------------------------ Chief Executive Officer,
Thomas H. McAuley Chairman of the Board &
Director

/s/ James G. Levy Executive Vice-President & April 9, 2002
------------------------------ Chief Financial Officer
James G. Levy

/s/ Patrick L. Flinn Director April 9, 2002
------------------------------
Patrick L. Flinn

/s/ Homer B. Gibbs, Jr. Director April 9, 2002
------------------------------
Homer B. Gibbs, Jr.

/s/ Samuel W. Kendrick Director April 9, 2002
------------------------------
Samuel W. Kendrick

/s/ Bruce A. Morrice Director April 9, 2002
------------------------------
Bruce A. Morrice

/s/ Thomas P. D'Arcy Director April 9, 2002
------------------------------
Thomas P. D'Arcy