<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
             of 1934 for the fiscal year ended DECEMBER 31, 2000, or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
            Act of 1934 for the period from __________ to __________

              COMMISSION FILE NUMBER: 1934 ACT FILE NUMBER: 0-25968

                    CHARLES E. SMITH RESIDENTIAL REALTY L.P.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

          DELAWARE                                                54-1681657
-------------------------------                              -------------------
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

         2345 CRYSTAL DRIVE
      CRYSTAL CITY, ARLINGTON, VA                                        22202
----------------------------------------                              ----------
(Address of principal executive offices)                              (Zip Code)

       Registrant's telephone number, including area code: (703) 920-8500

           Securities registered pursuant to Section 12(b) of the Act:

                  Class A Units of Limited Partnership Interest
                  ---------------------------------------------
                                (Title of Class)

        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. [ ]

                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the proxy statement of Charles E. Smith Residential Realty
Inc. for its annual shareholders meeting to be held in 2001 are incorporated by
reference into Part III.
<PAGE>

                           FORWARD-LOOKING STATEMENTS

         When used throughout this report, the words "believes", "anticipates",
"expects" and similar expressions are intended to identify forward-looking
statements. Such statements indicate that assumptions have been used that are
subject to a number of risks and uncertainties which could cause actual
financial results or management plans and objectives to differ materially from
those projected or expressed herein, including: the effect of national and
regional economic conditions, particularly with regard to the levels of
multifamily property occupancy and rental growth in the Washington, D.C.,
southeast Florida, Chicago, and Boston metropolitan areas; the Company's ability
to identify and secure additional properties and sites that meet its criteria
for acquisition or development; the acceptance of the Company's financing plans
by the capital markets, and the effect of prevailing market interest rates and
the pricing of the Company's stock; and other risks described from time-to-time
in the Company's filings with the Securities and Exchange Commission. Given
these uncertainties, readers are cautioned not to place undue reliance on such
statements. The Company undertakes no obligation to publicly release the result
of any revisions to these forward-looking statements that may be made to reflect
any future events or circumstances.


                                     PART I

ITEM 1.  BUSINESS.

         Charles E. Smith Residential Realty, Inc. (the "Company") is a
self-administered and self-managed equity real estate investment trust ("REIT")
that is engaged primarily in the acquisition, development, management and
operation of multifamily properties. The Company, together with its subsidiaries
as described below, is a fully integrated real estate organization with in-house
acquisition, development, financing, marketing, leasing, and property management
expertise. The Company's primary strategy for growth is to acquire, develop, own
and manage high quality multifamily properties for income generation and
long-term value appreciation.

         The Company is structured as an umbrella partnership REIT whereby all
of the Company's properties, property interests, and business assets are owned
by, and its operations are conducted through, Charles E. Smith Residential
Realty L.P., a Delaware limited partnership (the "Operating Partnership") of
which the Company is the sole general partner and holder of approximately 66% of
the common and preferred units of limited partnership interest ("Units") as of
March 1, 2001. The other limited partners of the Operating Partnership (the
"Minority Interest") include former owners of properties and property service
businesses acquired by the Operating Partnership (see "History of the Company"
below) and investors holding preferred units. As of December 31, 2000 the
Operating Partnership owned 100% of the non-voting common stock, which
represents 99% of the total economic interest of three operating companies
(collectively, the "Property Service Businesses") which provide services to
multifamily and commercial properties including properties owned by the
Operating Partnership. The three Property Service Businesses are: Smith Realty
Company, which provides management, leasing, development and insurance services
and furnished corporate apartments; Consolidated Engineering Services, Inc.,
which provides engineering and

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technical services; and Smith Management Construction, Inc., which provides
construction and interior renovation services. As the sole general partner of
the Operating Partnership, the Company has the exclusive power to manage and
conduct the business of the Operating Partnership, subject to the consent of the
holders of Units in connection with the sale of all or substantially all of the
assets of the Operating Partnership. Some references made herein to the Company
include the Operating Partnership and the Property Service Businesses, as the
context requires.

         As of March 1, 2001, the Company, through the Operating Partnership and
its subsidiaries, owned 59 operating multifamily properties containing 27,186
apartment units, had 480 units under construction at one owned site, had 226
units under construction at one site for which the Company owned substantially
all of the economic interest, and had an agreement to purchase 383 units at one
additional site. The Operating Partnership also had interests in three operating
multifamily properties totaling 1,267 apartment units and in one property under
construction totaling 630 units. In addition, the Operating Partnership owned
one freestanding retail shopping center aggregating 205,000 square feet. Most of
the Company's properties are located in the Washington, D.C. metropolitan area
with additional properties in the Chicago, Illinois and Boston, Massachusetts
metropolitan areas and in southeast Florida (collectively, the "Properties").

         The Company's executive offices are located at 2345 Crystal Drive,
Crystal City, Arlington, Virginia 22202, and its telephone number is (703)
920-8500. The Company is a Maryland corporation formed in 1993. The Company
completed its initial public offering of common stock on June 30, 1994. The
Operating Partnership is a Delaware limited partnership formed in 1993; it
commenced business operations on June 30, 1994.

HISTORY OF THE COMPANY

         The Company and the Operating Partnership were formed to succeed to the
property assets and certain asset management and property service businesses of
the Charles E. Smith Companies (the "Smith Companies"). On June 30, 1994, the
Company consummated an initial public offering (the "Initial Public Offering")
of 8,632,800 shares of its common stock, $.01 par value per share, and a private
placement of 416,667 shares of its common stock. The Company contributed the net
proceeds of such offerings to the Operating Partnership in return for 9,049,467
Units of general and limited partnership interest therein. On that same date,
the Operating Partnership acquired, in exchange for 12,131,292 Units, 30
properties, partial interests in two additional properties, all of the
non-voting common stock of the Property Service Businesses (representing 99% of
the economic interest), and notes of the Property Service Businesses in the
aggregate amount of $44.5 million, (collectively, the "Formation Transactions").
On January 1, 2001, Smith Realty Company granted voting rights to the non-voting
shareholders. Also the Property Service Businesses and the Company elected to
treat the Property Service Businesses as taxable REIT subsidiaries.

         Since the Formation Transactions and through March 1, 2001, the
Operating Partnership developed four and acquired 37 multifamily properties
totaling 19,094 apartment units, acquired interests in operating multifamily
properties totaling 1,267 units, and sold ten multifamily properties totaling
3,743 units plus one retail center with 230,926 square feet of leasable area.
Since the Formation Transactions, the Company and Operating Partnership have
issued an additional $694

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million in common and preferred equity, including Operating Partnership units
exchanged for acquisitions, net of costs. In addition, the Operating Partnership
had $1,065 million of fixed rate mortgage indebtedness at December 31, 2000,
secured by certain properties (see "Mortgage Financing"), maintained two
unsecured lines of credit with a total capacity of $150 million plus an
additional secured line with potential capacity of $300 million, and had a
construction loan with capacity of $32.5 million.

BUSINESS STRATEGY

         The Company seeks growth in funds from operations (a common measure of
equity real estate investment trust performance, defined as net income [loss]
computed in accordance with generally accepted accounting principles, excluding
gains or losses from debt restructuring and property sales, plus depreciation
and amortization of assets unique to the real estate industry) while preserving
and enhancing property values by pursuing the following strategies: (i)
maximizing cash flow from operations of the Properties by seeking to maintain
high occupancy levels, obtain rent increases, manage resident turnover
efficiently, make strategic capital investments, initiate new resident fees and
control operating expenses; (ii) acquiring additional multifamily properties for
Common Stock, Units, or cash in situations where, in the judgment of management,
the Company's business strengths have the potential to increase property
performance and value; (iii) developing new multifamily properties consistent
with the predecessor Smith Companies' historical policies of constructing and
maintaining high quality properties for long-term income and value enhancement;
and (iv) actively promoting the comprehensive services of the Property Service
Businesses. In addition to its activities in the Washington, D.C. metropolitan
area, the Company also seeks to acquire additional properties or portfolios in
Chicago, Boston, southeast Florida and other markets with characteristics
similar to the Company's current portfolio that offer opportunities for income
generation and long-term growth.

FINANCING STRATEGY

         To the extent that the Company's board of directors determines to seek
additional capital for acquisitions or otherwise, the Company may raise such
capital through additional equity offerings, debt financing, asset sales or
retention of cash flow (subject to provisions of the Internal Revenue Code of
1986, as amended, requiring the distribution by a REIT of a certain percentage
of taxable income and taking into account taxes that would be imposed on
undistributed taxable income), or a combination of these methods.

EQUITY

         As long as the Operating Partnership is in existence, the net proceeds
of all equity capital raised by the Company ("Stock") will be contributed to the
Operating Partnership in exchange for limited partnership interests in the
Operating Partnership ("Units") having the same characteristics as those of the
securities issued by the Company.

         During 2000, the Company issued 559,802 shares of common stock valued
at $21,600,000 to Consolidated Engineering Services, Inc. ("CES"). CES exchanged
the shares to partially fund its

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geographic expansion through the acquisitions of Illingworth Corporation, Hayes
Mechanical, Inc., Betlem Service Corporation, and Aircond Corporation.

         In April 2000, the Company acquired Dearborn Place, a 185-unit,
27-story property, built in 1987 and located in downtown Chicago. In conjunction
with this acquisition approximately 36,000 Operating Partnership units valued at
$1.3 million were issued.

         The Company currently has on file with the Securities and Exchange
Commission two effective registration statements which allow the sale of up to
$450,000,000 in debt or equity securities, of which approximately $266,000,000
remains available. As long as the Operating Partnership is in existence, the net
proceeds of all equity capital raised by the Company will be contributed to the
Operating Partnership in exchange for limited partnership interests in the
Operating Partnership. The Company and the Operating Partnership also may issue
securities senior to the Common Stock or Units, including additional preferred
stock or debt securities (either of which may be convertible into common stock
or Units or may be accompanied by warrants to purchase common stock or Units).

DEBT

         The Company's policy is to incur debt (including debt incurred under
its lines of credit) only if upon such incurrence its ratio of debt to total
market capitalization would be 60% or less ("market capitalization" is defined
as common and convertible preferred stock and units multiplied by the Company's
stock price plus debt plus the liquidation value of perpetual preferred shares
and units). The Company and its Board of Directors may reevaluate or modify this
financing policy from time to time in light of economic conditions, relative
costs of debt and equity capital, market values of properties, growth and
acquisition opportunities and other factors. At December 31, 2000, the Company's
debt to total market capitalization ratio was 37.3%.

PROPERTY MANAGEMENT

         The Company and its Property Service Businesses are experienced in the
management and leasing of multifamily properties. The Company believes that the
management and leasing of its own portfolio has resulted in consistent income
growth and reduced operating expenses. The Property Service Businesses have
provided the Company both with a source of cash flow and with economies of scale
in conjunction with the management and leasing of its own Properties. These
Property Service Businesses also allow the Company and its subsidiaries to
establish additional relationships with residents that benefit the Properties.

DEVELOPMENT

         Prior to July 1999, the Company obtained certain development services
through a cost reimbursement arrangement with Charles E. Smith Construction,
Inc., an affiliate of Robert H. Smith and Robert P. Kogod. In July 1999, the
Company brought this expertise in-house, by hiring nearly all of the development
personnel, in recognition of the significant increase in the Company's
development activities and the desire to eliminate a growing related party
transaction. No

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development services are provided other than those rendered to the Company and
its affiliates including partially owned properties.

PROPERTY SERVICE BUSINESSES

         SMITH REALTY COMPANY ("SRC"). SRC, an operating business unit of the
Company, is the successor to a long-established, integrated business with
extensive experience in leasing and managing multifamily properties. This
business unit has been managing and leasing multifamily housing in the
Washington, D.C. metropolitan area since 1946 and, as of March 1, 2001, manages
71 apartment properties, of which 61 are owned by the Operating Partnership. It
also assists in the development and acquisition of additional multifamily
properties and provides furnished corporate apartments directly or through
subsidiary corporations. Prior to December 2000, SRC provided corporate
apartments in Chicago, Illinois through Noel Enterprises, Inc. (d/b/a "SCL
West"), a wholly-owned subsidiary acquired in 1998, for a total purchase price
of $6.3 million. In December 2000, SRC sold Noel Enterprises, Inc. The Company
recognized a loss on the sale of $5.4 million, primarily reflecting the
write-off of unamortized goodwill.

         The corporate services businesses, conducted through SRC, enable a
central office to provide supporting services in the areas of insurance, legal
advice, accounting, finance, information systems, human resources, office
administration and marketing to the Company and the Property Service Businesses,
as well as to third parties, including Charles E. Smith Commercial Realty L.P.
("CESCR"), an affiliate of Messrs. Smith and Kogod, who are directors of the
Company. Services are provided at cost (including overhead) in accordance with
cost and executive sharing agreements approved by the independent directors of
the Company. In management's opinion, the allocation methods provide reasonable
estimates of the costs that would have been incurred by the Company had the
services been provided by the Company.

         Historically, SRC solicited, procured and arranged financing for a fee
on behalf of commercial office properties affiliated with the Company. In 1997
and 1998, the majority of these commercial office properties were rolled up into
a master partnership, CESCR. In connection with the formation of CESCR, the
Company entered into an agreement to provide financing services to certain
properties owned by CESCR only through December 31, 1998. On May 1, 1999, the
Company received, from an affiliate of Messrs. Smith and Kogod, 79,905 Operating
Partnership units valued at $2.5 million as a final settlement related to
properties owned by CESCR and immediately canceled the units. During 2000, SRC
and CESCR entered into an agreement through October 31, 2005 to equally share
finance fees generated by refinancings on properties controlled by Messrs. Smith
and Kogod but not owned by CESCR. The Company earned $0.2 million during 2000
under this agreement. Management does not expect any significant future income
from Financing Services.

         During 1999, SRC sold its retail management and leasing business to
CESCR for $1.1 million plus certain adjustments. The Company recognized a gain
on the sale of $0.8 million.

         CONSOLIDATED ENGINEERING SERVICES, INC. ("CES"). CES, an operating
business unit of the Company, is a broad-based building technology services
company with expertise in the management,

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operation, maintenance, installation and repair of a building's "physical
plant". The Company provides a variety of related services, including on-site
facilities management and maintenance, automated environmental monitoring and
control, engineering consulting, and mechanical and electrical repair and
installation.

         In 1999, CES initiated a growth strategy to expand CES's market
leadership position beyond the Mid-Atlantic region through a combination of
internal growth and friendly acquisitions or mergers with high-quality firms in
key regions such as the Midwest and Northeast. Management of CES and the Company
believe this strategy will position CES for a transaction in the next
one-to-three year period, in order to fully realize the inherent value of this
business. During the third quarter of 1999, CES expanded its facilities
management services by acquiring a similar business from CESCR for cash of $1.4
million plus certain adjustments, which CES borrowed from the Operating
Partnership. The Operating Partnership also acquired 95% non-voting interests in
AASE, Inc., an environmental consulting firm headquartered in Maryland with a
satellite office in New York City, and Combustioneer Corporation, Inc., a
mechanical contracting firm headquartered in Maryland. The Company invested
$11.5 million, which consisted of 161,765 Operating Partnership units valued at
$5.4 million and cash of $6.1 million. Subsequently, the Operating Partnership
contributed its 95% non-voting interests to CES in return for additional CES
stock.

         In November 1999, CES acquired New England Mechanical Services, Inc.
("NEMSI"), one of the largest engineering and mechanical contractors in the
northeastern United States. NEMSI is headquartered in Connecticut with
operations in Connecticut, Massachusetts and Rhode Island, and will retain its
name while operating as CES's northeast regional office. CES invested $23
million, which consisted of $16 million in cash and 200,000 shares of common
stock of the Company valued at $7 million. CES borrowed $18.4 million from the
Operating Partnership, of which $7 million was used to purchase the common stock
from the Company. The balance of $4.6 million was provided by a capital
contribution from the Operating Partnership.

         In June 2000, CES obtained a $50 million acquisition line of credit
from a bank group. The line, which is guaranteed by the Operating Partnership,
bears interest at a selected London Interbank Offered Rate ("LIBOR") plus
75-to-120 basis points, depending upon the Operating Partnership's leverage
ratio. As of December 31, 2000, CES had drawn $50.0 million on the line at an
average interest rate of 7.69% to fund acquisition activities. In February 2001,
the line of credit was extended through March 2001. As of March 2001, the
Company was in the process of obtaining a one-year extension of the line of
credit.

         Also in June 2000, CES acquired Illingworth Corporation, a privately
owned mechanical services company in Milwaukee, Wisconsin. The acquisition
builds CES's presence in the Midwest and adds new services, such as installation
and maintenance of industrial piping and medical gas systems, to CES's product
line. The purchase price of $11.0 million was funded using a combination of
93,275 shares of the Company's common stock (purchased by CES from the Company
for approximately $3.5 million), and cash drawn on CES's line of credit.

         In July 2000, CES acquired Hayes Mechanical, Inc., a privately held,
full-service mechanical services company in Chicago, Illinois. The $18.6 million
purchase price consisted of 211,268 shares

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of the Company's common stock (purchased by CES from the Company for
approximately $7.5 million), assumed debt of $0.7 million and $10.4 million of
cash. CES funded the transaction with cash borrowed from the Operating
Partnership in exchange for a promissory note.

         In July 2000, CES purchased Betlem Service Corporation, a mechanical
services company located in Rochester, New York. The purchase price of $4.6
million consisted of 35,898 shares of the Company's common stock (purchased by
CES from the Company for $1.4 million) and cash of $3.2 million. CES funded the
transaction with cash borrowed from the Operating Partnership in exchange for a
promissory note.

         In September 2000, CES purchased Aircond Corporation, the largest
independent commercial and industrial heating, ventilating, and air conditioning
company in the Southeast, headquartered in Atlanta, Georgia. The $25.4 million
purchase price consisted of 219,361 shares of the Company's common stock
(purchased by CES from the Company for approximately $9.2 million), and $16.2
million of cash. CES funded the transaction with cash borrowed from the
Operating Partnership in exchange for a promissory note and cash drawn on CES's
line of credit.

         In February 2001, Consolidated Engineering Services, Inc. acquired
Commonwealth Air Conditioning and Heating, Inc., one of the largest independent
service contractors in the metropolitan Boston, Massachusetts area. The purchase
price of $19.1 million consisted of 100,310 shares of the Company's common stock
(purchased by CES from the Company for $4.6 million) and $14.5 million in cash.
CES funded the transaction with cash borrowed from the Operating Partnership in
exchange for a promissory note.

         SMITH MANAGEMENT CONSTRUCTION, INC. ("SMC"). SMC, an operating business
unit of the Company, is a construction management and general contracting
company that provides interior construction and renovation services to the
Properties and various other affiliated and unaffiliated third-party clients.
This business focuses primarily on capital improvement projects and office and
retail tenant space construction and alteration, and provides the expertise
necessary to take a project from the initial planning and pre-construction stage
through the completion of construction. In 2000, oversight was provided to
approximately $92 million of construction activity.

EMPLOYEES

         As of March 1, 2001, the Company and its affiliates had approximately
2,700 full-time and part-time employees, the latter primarily employed in
on-site clerical positions. This total includes 1,000 employees who provide
on-site property services and, in the Property Service Businesses, 1,300
employees in CES, 100 employees in SMC, and 300 employees in SRC.

RECENT DEVELOPMENTS

         ACQUISITION PROPERTIES. During 2000, the Company, through the Operating
Partnership, acquired eight operating multifamily properties containing 3,543
apartment units, as further described below.

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         Ocean Crest. In January 2000, the Company acquired two properties in
southeast Florida, Ocean Crest Beach (formerly Ocean View at Sunset Pointe -
North), a 943-unit property, and Ocean Crest Club (formerly Ocean View at Sunset
Pointe - South), a 527-unit property. The total capitalized cost of $102.9
million consisted of $8.1 million in proceeds from the December 1999 sale of one
multifamily property, with the balance drawn on the Company's line of credit.

         The Company plans to make additional investments over the next two
years to reposition the Ocean Crest properties. Currently, the Company has
committed and begun a $25 million capital improvement program of which
approximately $2 million was spent as of December 31, 2000. Depending upon the
expected incremental return, the Company may further invest up to $25 million
for additional improvements.

         Delaware Place. In April 2000, the Company acquired Delaware Place
(formerly, Dearborn Place), a 185-unit, 27-story property, built in 1987 and
located in downtown Chicago. The $25.4 million transaction was funded through a
combination of approximately 36,000 Operating Partnership units valued at $1.3
million, $13.9 million in cash, and $10.2 million in assumed debt bearing an
interest rate of 9.25%. The assumed debt was paid off with funds drawn on the
Company's line of credit.

         Reston Landing. In June 2000, the Company acquired Reston Landing, a
newly developed 400-unit property, located in Reston, Virginia. The $43.7
million cash transaction was primarily funded with proceeds of approximately $41
million from the tax deferred sale of Worldgate Centre, a retail center located
in Herndon, Virginia.

         Harbour House. In October 2000, the Company acquired Harbour House, an
804-unit, high-rise apartment property located on a 10.6 acre, oceanfront site
in Southeast Florida. The property consists of two 14-story towers constructed
in 1962 and 1964, respectively, with luxury amenities and direct beachfront
access. The purchase price of $94.3 million was funded through draws on the
Company's line of credit. The Company plans to invest an additional $25 to $45
million over the next several years, depending upon the incremental return on
investment, to upgrade and reposition the property. As part of this analysis,
management is evaluating other alternatives for the north tower, including a
possible sale. The final determination will be based on the most attractive
economic opportunity for the Company.

         New River Village. In November 2000, the Company purchased New River
Village, a recently constructed 240-unit, six-story mid-rise located in Fort
Lauderdale, Florida. The capitalized cost of $29.5 million was funded using
proceeds from the disposition of two multifamily properties located in Northern
Virginia. The purchase contract contains an earnout provision whereby the seller
will receive a payment in 2001 tied to the property's financial performance.

         2201 Wilson Boulevard. The Company acquired this recently constructed
219-unit, ten-story high-rise in the Rosslyn/Ballston submarket of Northern
Virginia in November 2000. The capitalized cost of $27.6 million was also funded
using proceeds from the disposition of two multifamily properties located in
Northern Virginia. The purchase contract contains an earnout

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provision whereby the seller will receive a payment in 2001 tied to the
property's financial performance.

         Sagamore Towers. In December 2000, the Company purchased this 225-unit,
12-story high-rise in Quincy, Massachusetts. The purchase price of $20.5 million
was funded using proceeds from the disposition of two multifamily properties
located in Northern Virginia and the assumption of debt. The Company plans to
invest an additional $9 to $10 million on capital improvements to reposition the
property.

         DISPOSITION PROPERTIES. During 2000, the Company sold a retail shopping
center and two multifamily properties in northern Virginia.

         In June 2000, the Company sold Worldgate Centre for $41 million to fund
the acquisition of Reston Landing. The Company recognized a gain on the sale of
$4.0 million.

         In October 2000, the Company sold a parcel of land held for
development. The Company recognized a loss on sale of $0.3 million.

         In November 2000, the Company sold Orleans Village, an 851-unit garden
property, and Berkeley, a 138-unit mid-rise property. The proceeds of $72.2
million were used to acquire New River Village, 2201 Wilson Boulevard, and
Sagamore Towers in an I.R.C. Section 1031 tax-deferred exchange. The Company
recognized a gain of $68.0 million on the sale of the two properties.

         DEVELOPMENT PROPERTIES. At December 31, 2000, the Company had two
properties totaling 706 apartment units under construction, and had delivered
all 1,515 units on the remaining three properties in the Development Portfolio.
In addition, the Company has contracts to purchase two tracts of land in the
Boston metropolitan area upon which up to 1,200 units could be constructed in
the future; these contracts are subject to satisfactory fulfillment of
conditions which may or may not be met.

         UNDER CONSTRUCTION

         Alban Towers. In August 1999, the Company entered into an agreement
with an affiliate of Starwood Capital Group to jointly purchase and redevelop
Alban Towers, a historic landmark property in Washington, D.C. Estimated cost of
the 226-unit project is $63 million with initial delivery expected in the second
quarter of 2001 and completion expected in late 2001. The increase of $5 million
in budget cost is due primarily to hard cost increases for unforeseen
conditions, upgrades, and underestimated garage costs. In addition, capitalized
interest costs are higher due to the project's extension. Under the agreement,
the Company has the right to acquire Starwood's interest for $100,000 at the end
of five years from construction completion.

         Park Millennium. The Company began construction of this 480-unit
high-rise apartment property in downtown Chicago in the third quarter of 2000.
Estimated cost of this project is $106.0 million with completion expected in
late 2002.

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         COMPLETED

         Courthouse Place. In June 1999, the Company completed the construction
of this 564-unit high-rise apartment property in Arlington, Virginia for a total
capitalized cost of $69.0 million. During 2000, Courthouse Place had an average
economic occupancy of 98.9% and average monthly revenue per apartment unit of
approximately $1,472.

         One Superior Place. Initial delivery of this 52-story, 809-unit
high-rise apartment and commercial center in downtown Chicago occurred in July
1999. Construction was completed and the property stabilized in June 2000 with a
total expected capitalized cost of $125.6 million, including earnout. The
development agreement contains an earnout provision whereby the developer will
receive a payment in 2002 tied to the property's financial performance. At
December 31, 2000, the actual capitalized cost was $113.1 million.

         Park Connecticut. Initial delivery of this 142-unit high-rise apartment
building in Washington, D.C. occurred in March 2000. Construction was completed
in June 2000 and the property reached stabilized occupancy in October 2000. The
total expected capitalized cost for the property is $30.4 million. At December
31, 2000, the actual capitalized cost was $28.2 million.

         JOINT VENTURES. During 1999, the Company entered into three joint
venture agreements, as further described below.

         Renaissance. In March 1999, the Company and J.P. Morgan Strategic
Property Fund ("J.P. Morgan") formed a joint venture that acquired the
Renaissance, a 330-unit multifamily property in Tysons Corner, Virginia, for
approximately $37.0 million. The joint venture plans to invest an additional
$2.0 million in capital improvements and has placed debt of $19.0 million on the
property. The debt carries an interest rate of 6.48% and matures in February
2006. Ownership interests in the joint venture are held 75% by J.P. Morgan and
25% by the Company. The Company's initial equity contribution totaled $4.4
million consisting of 21,903 Operating Partnership units valued at $0.7 million
and cash of $3.7 million.

         Springfield Station. In May 1999, the Company and J.P. Morgan formed a
joint venture to own and operate the Company's recently developed 631-unit
Springfield Station property. The Company sold a 52% interest in Springfield
Station to J.P. Morgan and received proceeds of approximately $50.0 million from
the transaction. The joint venture placed $37.0 million in debt financing on the
property at 6.85% fixed interest, which matures on June 1, 2009. The Company
recognized a $4.5 million gain on the transaction.

         Stoneridge at University Center. In May 1999, the Company and J.P.
Morgan also formed a development joint venture ("University Center") to develop
a new $66 million 630-unit multifamily property in Loudoun County, Virginia at
the western end of the Dulles Technology corridor. The Company is providing
development services to the venture and has also provided a construction
completion guarantee. An Affiliate, Smith Realty Company, provides management
and marketing services. Ownership interests are held 60% by J.P. Morgan and 40%
by the Company.

                                       10
<PAGE>

         Construction commenced during the third quarter of 1999. The first
deliveries occurred in June 2000 with final completion expected in the third
quarter of 2001. The joint venture obtained a $31 million, interest-only
construction loan in May 2000 with interest at LIBOR plus 125 basis points,
payable monthly, due May 10, 2003.

         OTHER. In October 2000, the Company acquired for $0.5 million an
ownership interest in Broadband Residential, Inc., a privately owned
telecommunications company managed and owned by a consortium of multifamily real
estate companies and focused on developing high-speed data, video and voice
solutions for the multifamily industry. The Company also agreed to provide
Broadband Residential with access and exclusive marketing and licensing rights
for data, video and voice communications to 29,046 of the Company's apartment
units, subject to present contractual obligations. In January 2001, the Company
invested an additional $0.3 million in Broadband Residential.


TAX STATUS

         The Company has made an election to be taxed as a REIT under Sections
856 through 860 of the Internal Revenue Code, commencing with its taxable year
ended December 31, 1994. The primary benefit of REIT status is that the Company
generally will not be subject to federal income tax on income that it
distributes to shareholders provided it distributes at least 90% of its REIT
taxable income to its shareholders. In order to support and maintain a REIT
election, the Company must meet certain annual asset and income tests which the
Company believes it has satisfied. Accordingly, the Company has made no
provision for federal income taxes. However, the Company is subject to certain
state and local taxes on its income and property and to Federal income and
excise taxes on any undistributed income. In addition, the Property Service
Businesses, which do not qualify as REITs, are subject to federal, state, and
local taxes on their net taxable income.

         Effective January 1, 2001, all of the Property Service Businesses,
Broadband Residential, and the Company elected to treat the Property Service
Businesses and Broadband Residential as taxable REIT subsidiaries. Smith Realty
Company ("SRC") also converted the Company's 99% non-voting stock into voting
stock resulting in the Company's control of SRC. Accordingly, the Company will
begin consolidating the financial results of SRC in 2001 instead of using the
equity method of accounting. This will have no impact to net income or FFO but
will simply change the financial statement presentation of SRC's results.

FINANCIAL INFORMATION

         For information relating to the Company's operating segments, please
refer to Footnote 15 in the Financial Statements.

EXECUTIVE OFFICERS OF THE COMPANY

         The following is a biographical summary of the experience of the
executive officers of the Company:

                                       11
<PAGE>

         ROBERT H. SMITH. Mr. Smith is Chairman of the Board of the Company,
Co-Chairman of the Board of SMC and SRC, and Director of each of the Property
Service Businesses. From 1962 to 2000, Mr. Smith was the President, Chief
Executive Officer and a Director of Charles E. Smith Construction, Inc. and its
predecessor companies, where he directed all phases of development and
construction of the Smith Companies' office, retail and residential real estate
projects. He is also Co-Chairman of the Board and a Director of Charles E. Smith
Commercial Realty, Inc. which together with its subsidiaries and affiliates is
engaged in the ownership, operation, and management of commercial office
buildings. Mr. Smith joined the Smith Companies in 1950. Mr. Smith is 72 years
old and the brother-in-law of Robert P. Kogod.

         ROBERT P. KOGOD. Mr. Kogod is Chairman of the Executive Committee of
the Board of the Company, Co-Chairman of the Board of SMC and SRC, and Director
of each of the Property Service Businesses. From 1994 to January 2000, Mr. Kogod
was Co-Chief Executive Officer and Co-Chairman of the Board of the Company. From
1964 to 1997, Mr. Kogod was the President, Chief Executive Officer and a
Director of Charles E. Smith Management, Inc., where he oversaw and directed all
phases of the leasing and management of the Smith Companies' commercial real
estate portfolio. He is also the Co-Chairman of the Board and a Director of
Charles E. Smith Commercial Realty Inc., which together with its subsidiaries
and affiliates is engaged in the ownership, operation, and management of
commercial office buildings. Mr. Kogod joined the Smith Companies in 1959. Mr.
Kogod is 69 years old and the brother-in-law of Robert H. Smith.

         ERNEST A. GERARDI, JR. Mr. Gerardi is President, Chief Executive
Officer and a Director of the Company. Mr. Gerardi is also Chairman of the Board
and Chief Executive Officer of CES, and President and Chief Executive Officer of
SMC and SRC. In addition, he is a Director of each of the Property Service
Businesses. From 1985 until 1994, Mr. Gerardi was a member of the Executive
Committee of Charles E. Smith Management, Inc., where he had overall
responsibility for all day-to-day business operations and long-range planning.
From 1985 through 1993, he served as Executive Vice President and Senior
Executive Vice President of Charles E. Smith Management, Inc. Prior to joining
the Smith Companies in 1985, Mr. Gerardi was with Arthur Andersen and Co. where
he served as senior partner in charge of the firm's accounting and financial
practice for over 250 professionals in Washington, D.C. During his 27 years with
Arthur Andersen, he specialized in management consultation and strategic
planning. He is also a member of the American Institute of Certified Public
Accountants and the D.C. Institute of Certified Public Accountants. Mr. Gerardi
is 65 years old.

         In February 2001, Mr. Gerardi announced that he will reduce his work
schedule for health reasons and plans to step down as President and Chief
Executive Officer when a replacement is appointed.

         WESLEY D. MINAMI. Mr. Minami is Executive Vice President, Chief
Operating Officer and Chief Financial Officer of the Company and SRC and has
overall responsibility for the management and operation of the multifamily
portfolio. In addition, he is responsible for the Company's debt portfolio,
corporate financial planning, and its treasury, accounting, controls and
information systems departments. Prior to joining the Company in 1997, Mr.
Minami was the Chief Financial

                                       12
<PAGE>

Officer for Ascent Entertainment Company where he was responsible for an $86
million initial public offering spin-off of Ascent, which had been a
wholly-owned subsidiary of Comsat Corporation. Formerly, he had served as the
Treasurer of Comsat Corporation. From 1985 to 1993, Mr. Minami held several
positions, including Senior Vice President, Chief Financial Officer at Oxford
Realty Services Corporation which developed and managed a portfolio of over
45,000 apartment units. Mr. Minami is 44 years old.

         JOHN W. GUINEE. Mr. Guinee is Executive Vice President and Chief
Investment Officer of the Company and SRC, and is responsible for the
acquisition and disposition efforts of the Company. Prior to joining the Company
in 1997, Mr. Guinee was a Managing Director with LaSalle Advisors, where he
headed an acquisitions group with an annual investment volume of $250-$300
million and led the REIT securities private placement effort. Additional
responsibilities during his 12 years with LaSalle Advisors included asset
management and investor relations. From 1982 through 1985, Mr. Guinee was a
development manager with Gerald D. Hines Interests in San Francisco. Mr. Guinee
is 45 years old.

         ALFRED G. NEELY. Mr. Neely is President-Development Division of the
Company, responsible for the zoning, planning and development of all multifamily
properties. Since joining Charles E. Smith Construction, Inc., in 1989 initially
as a Senior Vice President and then as a Group Senior Vice President, Mr. Neely
has been responsible for zoning, planning and development. Prior to joining the
Smith Companies, Mr. Neely was Executive Vice President and Managing General
Partner of the New Height Group, a real estate and development company in
Denver, Colorado. During his ten years with this company, Mr. Neely was
responsible for development and management of mixed-use properties. Mr. Neely is
55 years old.

         MATTHEW B. MCCORMICK. Mr. McCormick is Executive Vice President -
Residential Services of the Company and SRC. From January 1998 to September
2000, he was Senior Vice President - Residential Management. Prior to that, Mr.
McCormick was the Senior Vice President and Department Head of the Retail Group,
where he was responsible for retail property management and leasing, as well as
outside retail brokerage services. Prior to joining the Smith Companies in 1988,
Mr. McCormick was a retail specialist with the Washington, D.C., office of
Coldwell Banker. Mr. McCormick is 40 years old.

         ROBERT D. ZIMET. Mr. Zimet is Senior Vice President, General Counsel
and Secretary of the Company and Group Senior Vice President of SRC. He has been
the General Counsel and a Senior Vice President of Charles E. Smith Management,
Inc., since joining the Smith Companies in 1983, and became a Group Senior Vice
President in 1991. He continues in these capacities for Charles E. Smith
Commercial Realty, Inc., an owner, operator, and manager of commercial office
buildings. Mr. Zimet is responsible for the legal affairs of the Company and the
Smith Companies, as well as supervision of the Human Resources and Office
Services departments of Smith Realty Company. Mr. Zimet is 62 years old.

                                       13
<PAGE>

ITEM 2.  PROPERTIES

         The properties as of March 1, 2001 consist of the following:

<TABLE>
<CAPTION>
                                                                          Portfolio
                                            --------------------------------------------------------------------
                                                                                      Partially
                                             Core    Acquisition       Development      Owned     Retail   Total
                                             ----    -----------       -----------     --------   -----    -----

<S>                                          <C>     <C>               <C>             <C>        <C>      <C>
OWNED
      Multifamily - operating                 40          16               3             -            -      59
      Multifamily - under construction         -           -               2             -            -       2
      Retail                                   -           -               -             -            1       1

PARTIALLY OWNED
      Multifamily - operating                  -           -               -             3            -       3
      Multifamily - under construction         -           -               -             1            -       1
                                            ----        ----             ---           ---         ----     ---

Total                                         40          16               5             4            1      66
                                            ====        ====             ===           ===         ====     ===
</TABLE>

         The Retail Property and twenty-one of the owned multifamily properties
were acquired in connection with the Formation Transactions. Additionally, the
Company acquired a minority limited partnership interest in one other
multifamily property in the Formation Transactions. The Company increased its
interest in a subsequent transaction.

         All of the Company's properties are located in developed areas that
include other residential and retail properties. The number of competitive
residential properties in a particular area could have a material effect on the
Company's ability to lease apartment units and on the rents charged. In
addition, other forms of single and multifamily residential properties provide
housing alternatives to tenants and potential tenants of the Company's
residential properties. The Company's retail property faces similar competition
with other retail properties with respect to tenant leases. The Company believes
that the properties are well located in their markets and are well constructed
and designed. In the opinion of management, the Company's properties are
adequately covered by insurance.

MULTIFAMILY PROPERTIES

         The 59 operating Multifamily Properties owned as of December 31, 2000
contain a total of 27,186 apartment units, of which 72% are mid-rise or
high-rise buildings, ranging in size from 115 to 1,339 apartment units. Eight of
the properties are located in the Chicago, Illinois metropolitan area, three are
located in the Boston, Massachusetts metropolitan area, and six are located in
southeast Florida with the balance in the Washington D.C. metropolitan area. All
of the 59 properties are 100% owned by the Company and its subsidiaries. In
2000, the average monthly rental revenue per core unit was $1,256 and the
average economic occupancy was 97.2% for the Core Residential Portfolio
(Multifamily Properties owned as of December 31, 1998.) As of December 31, 2000,
the average age of the operating Multifamily Properties, weighted by year 2000
revenues, was 24 years.

                                       14
<PAGE>

         Each of the Multifamily Properties is established in its local market
and provides residents with numerous amenities and services, which may include
24-hour desk service, swimming pools, tennis courts, exercise rooms and/or
saunas, party or meeting rooms, tenant newsletters, and laundry facilities.
Nearly all units are wired for cable television, and many units also offer
additional features, such as washer/dryer, microwave, fireplace, and
patio/balcony. The Company maintains an ongoing program of regular maintenance
and capital improvements and renovations, including roof replacement and
exterior maintenance, kitchen and bath appliance replacements, balcony repairs,
landscaping, and replacements of various building systems. In addition, the
Company periodically initiates discretionary capital improvement programs such
as full kitchen and bath renovations or installations of washers and dryers in
units. Management considers these programs individually on their merits and
their ability to generate additional rental revenue.

         The following table sets forth certain additional information relating
to the Multifamily Properties as of December 31, 2000 (occupancy is calculated
based upon economic occupancy which measures occupancy beginning on the rent
commencement date; monthly revenue per unit is total property revenue divided by
the number of apartment units; and certain data may be omitted for properties
not operated by the Company for the entire year):

                                       15
<PAGE>

<TABLE>
<CAPTION>
                                            CHARLES E. SMITH RESIDENTIAL REALTY L.P.
-----------------------------------------------------------------------------------------------------------------------------------
                                                 Residential Portfolio Statistics
                                               For the Year Ended December 31, 2000

                                                                                      Monthly          %                       %
                                                                Average                 GOI          Change                  Change
                                                   Apartment     Sq. Ft.    GOI      Per Unit        From     Occupancy       From
           Property                Type              Units      Per Unit    2000       2000           1999       2000         1999
---------------------------     ---------         ----------    --------    ----     --------        ------   ---------       ----
                                                                          (in 000s)
CORE RESIDENTIAL PORTFOLIO
Washington, D.C.
<S>                             <C>                <C>           <C>     <C>         <C>             <C>        <C>          <C>
    1841 Columbia Road          Mid-rise              115          635   $   1,546     $ 1,120         7.4%       99.3%       -0.1%
    2501 Porter Street          High-rise             202          757       4,088       1,686         3.8%       95.5%       -3.7%
    Albemarle                   High-rise             235        1,122       4,093       1,451        11.6%       97.8%        0.4%
    Calvert-Woodley             High-rise             136          909       2,265       1,388         9.1%       98.8%       -0.1%
    Car Barn                    Garden                196          959       2,441       1,038         8.4%       98.0%       -1.0%
    Cleveland House             High-rise             216          897       3,623       1,398        12.9%       97.4%       -0.9%
    Connecticut Heights         High-rise             519          656       6,753       1,084        13.1%       98.0%        1.1%
    Corcoran House              High-rise             138          528       1,630         984         9.3%       97.4%       -1.1%
    Statesman                   High-rise             281          593       3,209         952        10.3%       97.9%       -0.9%
    Van Ness South              High-rise             625          957       9,687       1,292         8.8%       98.6%       -0.6%
    The Kenmore                 High-rise             376          715       4,179         926        12.2%       98.1%       -0.3%
    Tunlaw Gardens              Garden                167          850       1,946         971        13.9%       97.3%       -0.1%
    Tunlaw Park                 Mid-rise              120          855       1,889       1,312        12.9%       98.5%        1.8%
                                                ----------  -----------  ----------  ----------  -----------  ----------  ----------
                                                    3,326          808   $  47,349   $   1,186        10.2%       97.9%       -0.4%
Northern Virginia
    CRYSTAL CITY
    The Bennington              High-rise             348          798       4,849       1,161         3.7%       96.9%       -0.3%
    Crystal House I             High-rise             426          896       5,973       1,169         7.4%       98.0%       -0.1%
    Crystal House II            High-rise             402          896       5,381       1,116         7.0%       98.2%        0.0%
    Crystal Square              High-rise             378        1,080       5,976       1,318         6.7%       98.6%       -0.4%
    Crystal Place               High-rise             180          915       3,094       1,432         4.7%       97.7%        0.5%
    Gateway Place               High-rise             162          828       3,489       1,795         6.0%       83.8%       -3.4%
    Water Park Towers           High-rise             360          959       6,929       1,604         6.6%       95.7%        0.8%
    Crystal Plaza               High-rise             540        1,124       9,160       1,414         6.7%       98.7%       -0.5%
    Crystal Towers              High-rise             912        1,118      14,203       1,298         6.5%       98.5%       -0.4%
    Parc Vista                  High-rise             299          770       5,145       1,434        -1.5%       90.6%       -5.8%
                                                ----------  -----------  ----------  ----------  -----------  ----------  ----------
                                                    4,007          980   $  64,199   $   1,335         5.7%       96.7%       -0.7%
    ROSSLYN/BALLSTON
    Courthouse Plaza            High-rise             396          838       7,075       1,489         9.1%       97.1%       -0.9%
    Lincoln Towers              High-rise             714          878      12,812       1,495         8.9%       96.3%        0.9%
                                                ----------  -----------  ----------  ----------  -----------  ----------  ----------
                                                    1,110          864   $  19,887   $   1,493         9.0%       96.6%        0.3%
    TYSONS/DULLES
    Charter Oak                 Garden                262        1,098       3,380       1,075         5.1%       96.6%       -0.8%
    Oaks of Tysons              Garden                218          967       3,088       1,181         9.5%       95.0%       -1.0%
    Bedford Village             Garden                752        1,098       9,818       1,088        10.0%       97.1%       -0.2%
    Patriot Village             Garden              1,065        1,149      13,388       1,048         8.9%       97.7%        0.3%
    Westerly                    Garden                320          921       4,856       1,264         7.1%       96.7%       -0.9%
                                                ----------  -----------  ----------  ----------  -----------  ----------  ----------
                                                    2,617        1,086   $  34,530   $   1,100         8.6%       97.0%       -0.3%
    OTHER
    Arlington Overlook          Mid-rise              711          877       8,046         943        10.0%       96.7%       -0.1%
    Boulevard of Old Town       Garden                159          672       1,812         950         4.8%       97.1%       -0.7%
    Columbia Crossing           Garden                247          977       3,863       1,303         8.2%       98.8%        0.4%
    Concord Village             Garden                531          925       5,964         936         7.9%       97.6%        1.5%
    Newport Village             Garden                937        1,060      11,522       1,025         7.0%       97.9%       -0.2%
    Skyline Towers              High-rise             940        1,107      12,612       1,118         7.2%       98.0%        1.1%
                                                ----------  -----------  ----------  ----------  -----------  ----------  ----------
                                                    3,525          992   $  43,819   $   1,036         7.7%       97.7%        0.4%
Boston/Chicago
    2000 Commonwealth           High-rise             188          862       4,383       1,943         7.0%       99.2%        1.3%
    One East Delaware           High-rise             306          704       7,985       2,175         6.3%       98.2%        0.3%
    McClurg Court               High-rise           1,075          732      18,111       1,404         5.6%       96.1%        0.7%
    Cronin's Landing            Mid-rise              281        1,062       7,348       2,179         9.8%       99.1%        2.4%
                                                ----------  -----------  ----------  ----------  -----------  ----------  ----------
                                                    1,850          791   $  37,827   $   1,704         6.7%       97.4%        1.0%
                                                ----------  -----------  ----------  ----------  -----------  ----------  ----------
                                                   16,435          936   $ 247,611   $   1,256         7.7%       97.2%       -0.1%
                                                ----------  -----------  ----------  ----------  -----------  ----------  ----------
</TABLE>

                                       16
<PAGE>

<TABLE>
<CAPTION>
                                                                                          Monthly      %                        %
                                                                  Average                  GOI       Change                  Change
                                                       Apartment  Sq. Ft.       GOI      Per Unit     From     Occupancy      From
               Property                     Type        Units     Per Unit     2000       2000        1999       2000         1999
---------------------------              ---------     ---------- --------     ----      --------    ------    ---------     ------
                                                                              (in 000s)
ACQUISITION PORTFOLIO
    1999
<S>                                     <C>              <C>         <C>     <C>          <C>            <C>      <C>           <C>
    Buchanan House (Crystal City, VA)   High-rise           442      1,173   $   8,389    $ 1,582        N/A       97.6%        N/A
    Park Lincoln (Chicago, IL)          High-rise           139        581       2,010      1,205        N/A       95.2%        N/A
    Terrace (Chicago, IL)               Garden              427        814       4,396        858        N/A       94.6%        N/A
    The Consulate (Washington, DC)      High-rise           269        828       4,249      1,316        N/A       95.0%        N/A
    Countryside (Chicago, IL)           Garden              720        872       8,100        938        N/A       93.4%        N/A
    Stonegate (Chicago, IL)             Garden            1,158        581       9,888        712        N/A       92.0%        N/A
    Mirador (S.E. Florida)              High-rise         1,339        772      13,340        830        N/A       95.9%        N/A
    Ocean View (S.E. Florida)           High-rise         1,199      1,080      13,910        967        N/A       95.8%        N/A

    2000
    Ocean Crest Club (S.E. Florida)     High-rise           527        987       5,894        N/A        N/A        N/A         N/A
    Ocean Crest Beach (S.E. Florida)    High-rise           943        995      10,773        N/A        N/A        N/A         N/A
    Delaware Place (Chicago, IL)        High-rise           185        706       2,770        N/A        N/A        N/A         N/A
    Harbour House (S.E. Florida)        High-rise           804        990       2,192        N/A        N/A        N/A         N/A
    New River Village (S.E. Florida)    Mid-rise            240      1,128         436        N/A        N/A        N/A         N/A
    2201 Wilson Boulevard (Rosslyn/
      Ballston, VA)                     High-rise           219        838         522        N/A        N/A        N/A         N/A
    Sagamore Towers (Boston, MA)        High-rise           225        707         112        N/A        N/A        N/A         N/A
    Reston Landing (Tysons/Dulles, VA)  Garden              400        995       3,373        N/A        N/A        N/A         N/A
                                                       ---------  ---------  ----------
                                                          9,236        801   $  90,354
                                                       ---------  ---------  ----------

DEVELOPMENT PORTFOLIO
    Courthouse Place (Rosslyn/Ballston,
      VA                                High-rise           564        850   $   9,960    $ 1,472        N/A      98.9%         N/A
    One Superior Place (Chicago, IL)    High-rise           809        729      17,285        N/A        N/A        N/A         N/A
    Park Connecticut (Washington, DC)   High-rise           142        915       2,106        N/A        N/A        N/A         N/A
    Alban Towers (Washington, DC)(1)    Mid-rise            226        915         N/A        N/A        N/A        N/A         N/A
    Park Millennium (Chicago, IL)(1)    High-rise           480        907         N/A        N/A        N/A        N/A         N/A
                                                       ---------  ---------  ----------
                                                          2,221        829   $  29,351
                                                       ---------  ---------  ----------

ALL RESIDENTIAL PROPERTIES                               27,892              $ 367,316
                                                       =========             ==========


PARTIALLY-OWNED PORTFOLIO

    Renaissance (25% owned)             High-rise           330        984   $   5,226    $ 1,320        N/A      98.4%         N/A
    Springfield Station (48% owned)     Garden/Mid-rise     631        909       8,760      1,157        N/A      98.0%         N/A
    Brandywine (25% owned)              High-rise           306      1,009       4,992      1,359        N/A      97.9%         N/A
    Stoneridge at University Center
      (40% owned)(1)                    Garden)             630        993         N/A        N/A        N/A        N/A         N/A
                                                       ---------  ---------  ----------

                                                          1,897        966   $  18,978
                                                       =========  =========  ==========
</TABLE>

(1) Property is currently under construction.

                                       17
<PAGE>

         The following table sets forth the total number of apartment units in
the Core Residential Portfolio, the economic occupancy, and the average monthly
rental revenue per unit during 2000 and in each of the previous three years:

CORE MULTIFAMILY PROPERTIES
                                                               Average Monthly
Year         Number of Units         Percent Occupied*         Revenue Per Unit
----         ---------------         -----------------         ----------------

2000             16,435                    97.2%                  $ 1,256
1999             15,482                    97.5%                  $ 1,119
1998             14,301                    96.6%                  $   970
1997             14,198                    96.4%                  $   901

* Based on economic occupancy


RETAIL PROPERTY

         SKYLINE MALL. Skyline Mall is a two-level, enclosed retail shopping
center located on Route 7 in Northern Virginia, at the intersection of Fairfax
County, Arlington County, and the City of Alexandria, Virginia. Originally
developed by the Smith Companies in 1977, it is part of a mixed-use community
which also includes over two million square feet of office space and over 3,300
high-rise condominium and apartment units (including Skyline Towers, a 940-unit
Multifamily Property owned by the Company), all within walking distance. The
Property has 204,914 square feet of leasable area and had an average occupancy
rate of 91.1% in 2000 with average rent per leased square foot of $15.69 gross
and $12.53 net. The property contains the 79,920 square foot Skyline Racquet and
Health Club, an AMC Cinema, and approximately 40 other stores, including
restaurants, fashion and specialty retailers, and various business and general
services. Approximately 10% of the leases, based on net rentable area, are
scheduled to expire prior to December 31, 2005.

         In June 2000, the Company sold Worldgate Centre, a retail shopping
center located in Herndon, Virginia, which had been held by the Company since
the Formation Transactions. Proceeds from the sale of approximately $41 million
were used to acquire a 400-unit multifamily property in a tax-deferred exchange.

PROPERTY MARKETS

         The Company believes that economic trends and market conditions in the
locations where the Company operates -- Washington, D.C., Northern Virginia,
Chicago, Boston and Southeast Florida -- indicate a potential for continued high
occupancy and rental rate growth in the year 2001.

                                       18
<PAGE>

These markets all experienced substantial employment growth in 2000, as shown in
the following table:

                                   Employment                 % Employment
Market                          Increase - 2000                  Increase
------                          ---------------               ------------

Washington D.C MSA                  111,700                        4.2%
o   Northern Virginia                63,000                        5.8%
o   District of Columbia             19,400                        3.1%

Chicago - MSA                        53,200                        1.3%

Boston -MSA                          53,800                        2.7%

Southeast Florida                    74,300                        3.5%
o   Miami/Dade                       29,100                        3.0%
o   Ft. Lauderdale/Broward           23,300                        3.6%

USA Average                              --                        2.0%
------------------------------
Source: U.S. Labor Dept., BLS

         In the Washington D.C. metropolitan area, which is the sector where the
majority (61%) of the Company Properties are located, employment and population
growth in recent years has been strong, particularly in the Northern Virginia
segment of the metropolitan area (47% of the Company's portfolio), and this is
expected to continue in future years. The exceptional recent growth in Northern
Virginia is substantially attributable to strong growth in the technology
services sector, particularly the information technology services segment. The
Company believes that this trend will modulate somewhat in 2001, but that the
growth outlook for the information technology sector will continue to be
positive because, in contrast to other technology intensive markets, the
technology sector in Northern Virginia is software and services based with very
little manufacturing, and therefore likely to be less impacted by an economic
downturn. The outlook for the District of Columbia (14% of the Company's
portfolio) continued to show improvement in 2000, with increasingly positive
employment growth.

                                       19
<PAGE>

         Demand for multifamily rental apartments continues to be strong in all
of the Company's markets as evidenced by high occupancy and rent growth rates.
Surveys of comparable investment grade apartment properties are conducted in
each these markets annually by The REIS Reports, Inc. The results of these
surveys are shown in the following tables:

<TABLE>
<CAPTION>
Metro Area Market                              Occupancy                 % Rental Rate Growth
-----------------                       ----------------------           --------------------
                                        1999              2000             1999         2000
                                        ----              ----             ----         ----
<S>                                    <C>               <C>               <C>         <C>
Washington D.C. area
o   Northern Virginia                  98.7%             99.1%             9.9%        11.8%
o   Washington D.C.                    98.4%             98.7%            10.6%        10.6%

Chicago                                97.6%             97.5%             3.6%         4.9%
o   Downtown                           98.0%             97.9%             4.3%         6.8%
Boston                                 98.7%             99.3%            11.7%        14.5%

Southeast Florida                      96.5%             97.2%             3.9%         5.4%
o   Miami/Dade                         96.6%             97.8%             5.9%         6.7%
o   Fort Lauderdale                    96.7%             97.9%             1.3%         5.4%
</TABLE>
-------------------------
Source: The REIS Reports, Inc. February, 2001

         The supply of new rental apartment properties in the Company's markets
has been in balance with or less than demand in recent years, particularly in
the more desirable urban submarkets where the Company concentrates its focus. In
the Washington metro area the supply of new multifamily properties has been
increasing moderately over the past several years and is likely to continue to
do so based on multifamily permits data compiled by the U.S. Census Bureau.
These data show that the number of multifamily permits issued in the area were,
9,266 in 1999 and 8,798 in 2000, however these data include both for-sale
condominium and rental apartment properties. These levels remain well below the
peak of over 13,000 in 1987. Much of the new supply of rental apartments is
occurring in the outer suburban areas and does not compete directly with the
Company's properties, which are predominantly in the urban submarkets within
Interstate 495, the Capital Beltway. Downtown Chicago has actually experienced a
net decrease in higher end rental apartments in recent years due to condo
conversions, and there are less than 1000 units of new rental apartments
currently under construction in the downtown area. In Boston there has not been
a new apartment building delivered in over 15 years and there is no new rental
apartment construction presently underway in the downtown area.

         Overall, the Company believes that the anticipated increases in
employment and population projected for the Northern Virginia, Washington D.C.,
Chicago, Boston and Southeast Florida markets, together with limited increases
in supply of new rental units in locations competitive with the Company's
properties, will result in the Company's multifamily rental submarkets remaining
in a strong occupancy position for at least the next 12-18 months. As a result,
the Company believes that these conditions will provide an opportunity to
continue to increase rental apartment revenue levels, and will also allow
additional development and acquisition opportunities.

                                       20
<PAGE>

MORTGAGE FINANCING

As of December 31, 2000, 48 of the 62 owned Properties were subject to Mortgage
Loans aggregating approximately $1,065,000,000. The Mortgage Loans are
collateralized by first lien mortgages or deeds of trust on 28 Properties
organized into six pools and individual loans (the "Individual Mortgages") on 20
Properties. The Mortgage Loans bear interest at a weighted average interest rate
of 7.29% at December 31, 2000. The Properties collateralizing each Mortgage
Loan, the outstanding principal balances as of December 31, 2000, the applicable
interest rates, and the maturity dates for each Mortgage Loan are set forth in
the chart below.

                                       21
<PAGE>

<TABLE>
<CAPTION>
                                                       12/31/00
Mortgage Pool/                                        Outstanding     Interest                   Maturity
Collateral                 Location                    Principal        Rate                       Date
-----------------------------------------------------------------------------------------------------------------
                                                        (000's)
<S>                        <C>                        <C>               <C>                 <C>
FNMA CREDIT FACILITY                                  $  140,000        6.75%               November 1, 2013 (8)
                                                          29,507        6.85%               June 1, 2007 (8)
                                                          49,400        8.00%               February 1, 2010 (12)
Bedford Village            Fairfax County, Virginia
Car Barn                   Washington, D.C.
Concord Village            Arlington, Virginia
Crystal Place              Arlington, Virginia
Crystal Square             Arlington, Virginia
Arlington Overlook         Arlington, Virginia
Newport III (1)            Alexandria, Virginia
Ocean View                 Southeast, Florida
2201 Wilson Boulevard      Arlington, Virginia
New River Village          Southeast, Florida


MORTGAGE POOL ONE                                         53,000        6.88%               June 5, 2008 (2)
Waterpark                  Arlington, Virginia
Parc Vista                 Arlington, Virginia


MORTGAGE POOL TWO                                         29,259        7.27%               July 1, 2004 (7)
Charter Oaks               Fairfax County, Virginia
Oaks of Tysons             Fairfax County, Virginia

MORTGAGE POOL THREE                                      111,398        7.99%               July 1, 2009 (7)
Calvert Woodley            Washington, D.C.
Cleveland House            Washington, D.C.
Columbia Crossing          Arlington, Virginia
Courthouse Plaza           Arlington, Virginia
Gateway Place              Arlington, Virginia
Newport I/II (1)           Alexandria, Virginia
Skyline Mall               Fairfax County, Virginia
2501 Porter Street         Washington, D.C.

MORTGAGE POOL FOUR                                        53,494        7.92%               July 1, 2012 (3)
Albemarle                  Washington, DC
Corcoran House             Washington, DC
Statesman                  Washington, DC
The Kenmore                Washington, DC


MORTGAGE POOL FIVE                                        60,800        7.61%               October 1, 2015 (10)
Van Ness South             Washington, DC
Tunlaw Park                Washington, DC
Tunlaw Gardens             Washington, DC
</TABLE>

                                       22
<PAGE>

<TABLE>
<CAPTION>
                                                       12/31/00
Mortgage Pool/                                        Outstanding     Interest                   Maturity
Collateral                 Location                    Principal        Rate                       Date
-----------------------------------------------------------------------------------------------------------------
                                                        (000's)
<S>                        <C>                        <C>               <C>                 <C>

INDIVIDUAL MORTGAGES
1841 Columbia Road         Washington, D.C.               3,900         7.34%                September 1, 2006 (2)
Crystal Towers             Arlington, Virginia           43,254         6.80%                January 1, 2006 (6)
2000 Commonwealth          Boston, Massachusetts         17,100         6.30%                January 1, 2007 (2)
Connecticut Heights        Washington, D.C.              20,000         7.10%                April 1, 2008 (2)
Cronin's Landing           Waltham, Massachusetts        31,830         6.90%                March 1, 2009 (7)
Patriot Village            Fairfax County, Virginia      31,095         8.24%                August 1, 2009 (4)
Crystal Plaza              Arlington, Virginia           32,823         6.86%                November 1, 2009 (6)
Crystal House I/II         Arlington, Virginia           38,250         6.29%                January 1, 2011 (5)
2nd Mort.-Crystal
  House I/II               Arlington, Virginia           11,000         7.12%                January 1, 2011 (2)
Skyline Towers             Fairfax County, Virginia      49,300         6.45%                January 1, 2011  (5)
2nd Mort.-Skyline Towers   Fairfax County, Virginia      13,000         7.07%                January 1, 2011 (2)
Bennington                 Arlington, Virginia           11,952         7.50%                October 1, 2020 (7)
Consulate                  Washington, D.C.              12,324         7.38%                April 1, 2001 (7)
Mirador                    Southeast Florida             33,834         8.65%                July 10, 2001 (6)
Countryside                Palatine, Illinois            28,000         7.23%                July 1, 2006 (2)
Stonegate                  Glendale Heights, Illinois    32,199         8.31%                February 1, 2007 (6)
Park Lincoln               Chicago, Illinois              6,170         6.50%                April 1, 2007 (6)
Terrace                    Elk Grove, Illinois           15,600         6.64%                April 1, 2007 (2)
Buchanan House             Arlington, Virginia           38,000         6.67%                February 1, 2011 (9)
Sagamore Towers            Quincy, Massachusetts          6,606         6.97%                August 1, 2006 (11)
McClurg Court              Chicago, Illinois             61,750         7.66%                October 1, 2014 (10)
                                                     ----------         -----
                                                     $1,064,845         7.29%
                                                     ==========         =====
</TABLE>

--------------------------------------------------------------------------------

(1)      Operated as a single property, but divided for collateralization
         purposes.
(2)      Interest only.
(3)      Twenty-year amortization begins in July 2010.
(4)      Thirty-year amortization begins in August 2004.
(5)      Thirty-year amortization begins in December 2008.
(6)      Thirty-year amortization.
(7)      Twenty-five year amortization.
(8)      Thirty-year amortization beings in December 2003.
(9)      Thirty-year amortization begins in May 2009.
(10)     Thirty-year amortization begins in October 2010.
(11)     Twenty-year amortization.
(12)     Thirty-year amortization begins in January 2007.

                                       23
<PAGE>

MORTGAGE POOLS

         The loan secured by Mortgage Pool Three was interest only through June
30, 1999, at which time amortization began using a 25-year amortization schedule
with a balloon payment at maturity. In addition, any prepayment on this loan
would be subject to a yield maintenance premium. The loan is
cross-collateralized with the $29.3 million mortgage from the same lender,
Northwestern Mutual.

         In 1999, the Company closed on a $269.5 million standby credit facility
with Fannie Mae which provides for non-recourse, long-term debt for up to
fifteen years. The initial draw on this facility was made during 1998 for $140
million at 6.75% for fifteen years. A second draw was made in May 1999 for $29.5
million at 6.845% for eight years. A third draw was made in February 2000 for
$49.4 million at 8.0% for ten years. Terms and rates of draws on this facility
are determined at the time of the draw. The facility contains certain
restrictive covenants including a limit on debt to asset value and maintenance
of debt service coverage ratios.

         In June 2000, the Company closed on four mortgage loans totaling $53.5
million. Each of the loans has a fixed interest rate of 7.92%. The loans require
monthly payments of interest only through July 2010, at which time principal
amortization begins using a 20-year amortization with a balloon payment due July
1, 2012.

         In September 2000, the Company closed on three mortgage loans totaling
$60.8 million. The loans each have a fixed interest rate of 7.61% and a 15-year
term. The loans require payments of interest only for a minimum of ten years
with a balloon payment due October 1, 2015. All three loans are cross-defaulted
and cross-collateralized.

INDIVIDUAL MORTGAGES

         The Individual Mortgages relate to debt secured by individual
Multifamily Properties. The loans require monthly payments of interest and, in
certain cases, principal. The loan secured by Patriot Village was refinanced in
September 1996 and was obtained jointly with a ground lessor, with a portion of
the principal allocated to each of them. The ground lessor has been allocated
$9.9 million of the refinanced loan (of the total of $41.0 million outstanding
as of December 31, 2000), for which the Operating Partnership is contingently
liable. The loan requires the payment of interest only through August 2004, at
which time amortization begins using a 30-year amortization schedule with a
balloon payment due in August 2009. The Company remits full debt service to the
lender and reduces its ground rent payment by the corresponding amount of debt
service relating to the principal assigned to the ground lessor.

         In December 2000, the Company acquired Sagamore Towers and assumed an
existing $6.3 million loan which is collateralized by the property, carries an
8.38% interest rate and matures in August 2006. The Company may prepay the loan
after September 1, 2003, subject to a prepayment penalty equal to the greater of
yield maintenance or 1% of the outstanding loan balance at that time. The
Company has recorded a fair value adjustment on the loan of $0.3 million
resulting in an effective interest rate of 6.97%.

                                       24
<PAGE>

         Also in December 2000, the Company closed on two second mortgage loans
totaling $24.0 million. The loans require monthly payments of interest only and
mature coterminously with their respective first mortgages in January 2011.

LINES OF CREDIT

         On February 5, 2001, the Company closed on two unsecured credit
facilities - a $100 million line and a $50 million line - with bank groups lead
by PNC Bank, N.A., as administrative agent, which refinanced $150 million of
existing unsecured credit facilities which were to mature in March, 2001. Draws
upon the lines are subject to certain unencumbered asset requirements and bear
interest based on London Interbank Offer Rate (LIBOR) plus an applicable margin
of 85 to 125 basis points based on the leverage ratio of the Company. If the
Company chooses to and obtains an investment grade rating, the applicable margin
will be between 62.5 and 100 basis points over LIBOR based on such rating. The
Company also pays a quarterly fee ranging from 0.125% to 0.20% on the full
amount available under the lines of credit, depending upon the applicable
leverage ratio or investment rating. The line of credit agreements contain
certain restrictive covenants, including maintenance of minimum equity value,
debt to equity ratios and debt service coverage requirements substantially
equivalent to the previous credit facilities.

         In May 2000, the Company obtained a ten-year, $300 million secured line
of credit from Freddie Mac. Borrowings under the line bear interest at a spread
of 63 to 161 basis points over LIBOR depending on the interest coverage ratio.
Initial availability under the agreement was $125.3 million, which can increase
to $300 million with appreciation in value of the properties collateralizing the
borrowings and/or with the addition of properties to the collateral pool. Loan
costs of $0.9 million were capitalized in connection with this agreement. The
Company made an initial draw of $60 million substantially all of which was used
to repay a portion of its $185 million line of credit.

         In September 2000, the Company converted $61.8 million of its $300
million line of credit to mortgage debt. The new mortgage has a fixed interest
rate of 7.66% and a 14-year term. Payments of interest only are required for a
minimum of ten years with a balloon payment due October 1, 2014. The loan is
collateralized by one property. With the conversion of this portion of the line
of credit, the availability under the line decreased from $125.3 million to
$63.5 million.

         In December 2000, the Company paid the balance of a construction loan
in connection with the development of One Superior Place in Chicago, Illinois.
This property was simultaneously added to the collateral pool for the Freddie
Mac line of credit. With the addition of this collateral, the availability under
this line increased to $163.8 million.

CONSTRUCTION LOANS

         In connection with the development of Alban Towers in Washington, D.C.,
the Company obtained a $32.5 million interest-only construction loan in August
1999. Interest (currently at LIBOR plus 150 basis points) is payable monthly
with the principal balance due February 5, 2002.

                                       25
<PAGE>

The loan is collateralized by the property. The loan balance at December 31,
2000, was $14.9 million. Capacity under this construction loan was increased to
$35.8 million in January 2001.

ITEM 3.  LEGAL PROCEEDINGS.

         The Company and/or the Property Service Businesses are presently
subject to legal actions or claims for damages that arise in the ordinary course
of business. In the opinion of management and counsel to the Company, the
ultimate outcome of such litigation will not have a material adverse effect on
the Company's financial position, results of operations or cash flows.


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

         None.

                                       26
<PAGE>

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.

         There is no established public trading market for the Units of the
Operating Partnership. The Company's shares of Common Stock have been listed on
the New York Stock Exchange ("NYSE") since June 24, 1994, trading under the
symbol "SRW." Prior to that date, the Company's shares of Common Stock were not
publicly traded.


         The following table sets forth the distributions made by the Operating
Partnership with respect to each such period:

                                                          Distribution
         Period                                             Per Unit
         ------                                             --------

         January 1, 1999, to March 31, 1999                 $  0.535
         April 1, 1999, to June 30, 1999                    $  0.535
         July 1, 1999, to September 30, 1999                $  0.550
         October 1, 1999, to December 31, 1999              $  0.550

         January 1, 2000, to March 31, 2000                 $  0.550
         April 1, 2000, to June 30, 2000                    $  0.550
         July 1, 2000, to September 30, 2000                $  0.585
         October 1, 2000, to December 31, 2000              $  0.585

On March 1, 2001, the Operating Partnership had approximately 860 unitholders of
record.

                                       27
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA.

         The following table sets forth selected historical financial and
operating information for the Company (as hereinafter defined in the Notes to
Consolidated Financial Statements). The following information should be read in
conjunction with all of the financial statements and notes thereto included
elsewhere in this Form 10-K. The historical operating data for the years ended
December 31, 2000, 1999, 1998, 1997, and 1996 have been derived from the
financial statements of the Company which have been audited by Arthur Andersen
LLP, the Company's independent accountants.

                                       28
<PAGE>

   Charles E. Smith Residential Realty L.P.
   SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                                       Year Ended December 31,
                                                            ------------------------------------------------------------------------
   (Dollars in Thousands, Except Per Unit Data)                2000         1999 (1)        1998 (1)          1997           1996
------------------------------------------------------------------------------------------------------------------------------------

   OPERATING DATA
<S>                                                       <C>            <C>              <C>              <C>             <C>
      Rental properties
          Revenues                                          $  383,233   $   301,233      $   250,067      $  199,944       $163,939
          Expenses                                             191,574       152,856          130,449         104,333         89,136
      Equity in income of Property Service Businesses
        before gains/losses                                      8,373         5,740            8,433           7,597          7,846
      Corporate general & administrative expenses               11,290         9,607            8,947           6,563          5,255
      Interest income                                              345         1,091              809           1,063          1,029
      Interest expense                                          78,371        57,094           47,334          45,411         43,606
      Income before gains/losses and extraordinary items       113,181        89,699           73,027          52,297         34,817
      Net income of the Operating Partnership                  179,248       153,814           69,870          52,210         34,817

      Earnings per common unit - basic
          Before extraordinary item                         $     4.44   $      4.25      $      2.50      $     1.89      $    1.59
          Extraordinary item                                        --         (0.01)           (0.54)             --             --
                                                            ------------------------------------------------------------------------
                                                            $     4.44   $      4.24      $      1.96      $     1.89      $    1.59
                                                            ========================================================================
      Earnings per common unit - diluted
          Before extraordinary item                         $     4.09   $      4.05      $      2.49      $     1.88      $    1.59
          Extraordinary item                                        --         (0.01)           (0.54)             --             --
                                                            ------------------------------------------------------------------------
                                                            $     4.09   $      4.04      $      1.95      $     1.88      $    1.59
                                                            ========================================================================
   OTHER DATA

       Funds from Operations (2):

          Net income of the Operating Partnership           $  179,248   $   153,814      $    69,870      $   52,210      $  34,817
          Less: Preferred dividends                             (3,955)       (8,093)          (3,647)             --             --
                Gain on sales                                  (66,067)      (64,475)         (18,150)             --             --
          Plus: Depreciation and amortization of rental
                property                                        44,778        33,906           28,958          20,666         17,931
                Depreciation from unconsolidated
                properties                                       1,015           570               --              --             --
                Other                                              434           430            5,173              --             --
                Extraordinary item - loss on
                extinguishment of debt                              --           360           16,384              87             --
                                                            ------------------------------------------------------------------------

           Funds from Operations of the Operating
             Partnership                                    $  155,453   $   116,512      $    98,588      $   72,963      $  52,748
                                                            ========================================================================


      Net cash flows provided by (used in):

          Operating activities                              $  183,256   $   141,185      $   118,566      $   75,223      $  50,958
          Investing activities                                (356,825)     (298,490)        (289,995)       (196,924)      (72,742)
          Financing activities                                 163,012       167,862          171,429         117,803         16,204


      Cash dividends per unit                                  $ 2.235   $     2.155      $     2.095      $    2.035      $   1.975

      Average core occupancy rate (3)                             97.2%         97.5%            96.6%           96.4%         97.0%
      Apartment units - core portfolio (4)                      16,435        15,482           14,301          14,198         12,462
      Apartment units - total portfolio                         28,453        24,948           19,279          18,236         15,200

   BALANCE SHEET DATA

      Rental properties, net (5)                            $1,911,767   $ 1,539,042      $ 1,093,963      $  804,323      $ 470,093
      Total assets                                           2,075,232     1,704,778        1,185,399         865,506        522,211
      Total mortgage loans and notes payable                 1,223,704       969,323          790,579         610,971        546,544
      Other Limited Partners' Interest, at redemption
        value (6)                                              679,675       535,135          426,258         502,719        351,873
      General Partner's General and Limited Partnership
        Interest                                               115,659       151,782          (56,676)       (264,369)     (389,252)
</TABLE>

                                       29
<PAGE>

                      FOOTNOTES TO SELECTED FINANCIAL DATA

1.       Certain reclassifications have been made to conform to the current
         year's presentation.

2.       Funds from Operations (FFO) is defined by the National Association of
         Real Estate Investment Trusts (NAREIT) as net income (loss), computed
         in accordance with Generally Accepted Accounting Principles (GAAP),
         excluding gains (or losses) from debt restructuring and property sales,
         plus depreciation/amortization of assets unique to the real estate
         industry. FFO does not represent cash flow from operating activities in
         accordance with GAAP (which, unlike Funds from Operations, generally
         reflects all cash effects of transactions in the determination of net
         income) and should not be considered an alternative to net income as an
         indication of the Company's performance or to cash flow as a measure of
         liquidity or ability to make distributions. The Company considers FFO a
         meaningful, additional measure of operating performance because it
         excludes the assumption that the value of real estate assets diminishes
         predictably over time, and because industry analysts have accepted it
         as a performance measure. Comparison of the Company's presentation of
         FFO, using the NAREIT definition, to similarly titled measures for
         other REITs may not necessarily be meaningful due to possible
         differences in the application of the NAREIT definition used by such
         REITs.

3.       Average occupancy is defined as gross potential rent for the core
         portfolio less vacancy allowance divided by gross potential rent for
         the period, expressed as a percentage.

4.       Core portfolio represents operating properties fully owned or
         stabilized by the Company as of December 31 two years prior to the
         reporting date. Total portfolio represents all operating properties
         fully or partially-owned by the Company at the reporting date.

5.       At the formation of the Company, all contributed rental properties were
         recorded at historical cost which was significantly less than market
         value resulting in diluted shareholders' equity.

6.       Common limited partnership units of the Other Limited Partners may be
         redeemed at the unitholder's discretion. Consequently, the Other
         Limited Partners' Interest, measured at redemption value, is not
         included in partner's equity. Partner's equity has been adjusted to
         reflect the redemption value of Other Limited Partners' Interest. (See
         footnote 9 to the financial statements.)

                                       30
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

FORWARD-LOOKING STATEMENTS

         When used throughout this report, the words "believes", "anticipates",
"expects" and similar expressions are intended to identify forward-looking
statements. Such statements indicate that assumptions have been used that are
subject to a number of risks and uncertainties which could cause actual
financial results or management plans and objectives to differ materially from
those projected or expressed herein, including: the effect of national and
regional economic conditions, particularly with regard to the levels of
multifamily property occupancy and rental growth in the Washington, D.C.,
southeast Florida, Chicago, and Boston metropolitan areas; the Company's ability
to identify and secure additional properties and sites that meet its criteria
for acquisition or development; the acceptance of the Company's financing plans
by the capital markets, and the effect of prevailing market interest rates and
the pricing of the Company's stock; and other risks described from time-to-time
in the Company's filings with the Securities and Exchange Commission. Given
these uncertainties, readers are cautioned not to place undue reliance on such
statements. The Company undertakes no obligation to publicly release the result
of any revisions to these forward-looking statements that may be made to reflect
any future events or circumstances.

THE COMPANY

         Charles E. Smith Residential Realty, Inc. (the "Company") is a public
equity real estate investment trust ("REIT") that is engaged primarily in the
acquisition, development, management and operation of multifamily properties.
Together with its subsidiaries, the Company is a fully integrated real estate
organization with in-house acquisition, development, financing, marketing,
leasing and property management expertise. The Company is structured as an
umbrella partnership REIT, under which all property ownership and business
operations are conducted through Charles E. Smith Residential Realty L.P. (the
"Operating Partnership") and its subsidiaries. The Company is the sole general
partner of the Operating Partnership. Some reference made herein to the Company
include the Operating Partnership and the Property Service Businesses, as the
context requires.

         On June 30, 1994, the Company completed an initial public offering and
used the proceeds to purchase a proportionate limited partnership interest in
the Operating Partnership, which is the successor entity of the CES Group. On
the same date, the Operating Partnership exchanged units of limited partnership
interest for the CES Group properties and, through financing partnerships,
issued mortgage debt.

         As of December 31, 2000, the Company, through the Operating Partnership
and its subsidiaries, owned 59 and had partial interests in three operating
multifamily properties. The Company also owned or had interests in three
multifamily properties under construction and had a contingent agreement to
purchase one to-be-constructed multifamily property. The Company also owned one
retail shopping center, an enclosed mall containing a total of approximately
205,000 square feet of retail space.

                                       31
<PAGE>

The residential properties consist of the following:

<TABLE>
<CAPTION>
                                 Number of                         Number of Properties by Location
                                 ---------              -------------------------------------------------------
         Type              Properties     Units         Washington, DC  Chicago, IL  Boston, MA   Southeast, FL
-------------------------  ----------     -----         --------------  -----------  ----------   -------------
<S>                           <C>         <C>                  <C>          <C>           <C>           <C>
OPERATING PROPERTIES
  Core Portfolio
    High-Rise/Mid-Rise        29         11,581
    Garden                    11          4,854
                              --         ------
                              40         16,435                36           2             2             -
                              --         ------
  Acquisition Portfolio
    High-Rise/Mid-Rise        12          6,531
    Garden                     4          2,705
                              --         ------
                              16          9,236                 4           5             1             6
                              --         ------
  Development Portfolio
    High-Rise/Mid-Rise         3          1,515                 2           1             -             -
                              --         ------

  Partially- Owned             3          1,267                 3           -             -             -
                              --         ------
                              62         28,453
                              --         ------

UNDER CONSTRUCTION             3          1,336                 2           1             -              -
                              --         ------               ---         ---           ---            ---
                              65         29,789                47           9             3              6
                              ==         ======               ===         ===           ===            ===
</TABLE>

         Additionally, the Operating Partnership owned substantially all the
equity in the following entities, (collectively, the "Property Service
Businesses') which provide various services as described below.

o        Smith Realty Company ("SRC") provides property management and leasing
         services to multifamily properties and assists in development and
         acquisition efforts. SRC also provides furnished corporate apartments
         (directly or through subsidiary corporations) and administrative
         services.

o        Smith Management Construction, Inc. ("SMC") provides construction and
         project management services for capital improvement, tenant build out
         and large scale renovation projects of office, retail and residential
         properties.

o        Consolidated Engineering Services, Inc. ("CES") and its affiliates
         provide on-site facilities management and maintenance, automated
         environmental monitoring and control, engineering consulting, and
         mechanical and electrical repair and installation services.

Both SMC and CES provide services to commercial office properties ("Affiliates")
owned or managed by Charles E. Smith Commercial Realty, L.P. ("CESCR") of which
Messrs. Smith and Kogod are directors. See Notes to Consolidated Financial
Statements for additional information on services provided to related parties by
the Property Service Businesses.

                                       32
<PAGE>

RENTAL PROPERTIES

         Revenue, expenses and income from the properties were as follows (in
thousands):

                                          Year Ended December 31,
------------------------------------------------------------------------
                                        2000       1999 (1)     1998 (1)
                                        ----       --------     --------

Core Portfolio:
     Revenues                        $ 247,611    $ 229,893    $ 206,630
     Expenses                          (91,449)     (88,830)     (81,768)
                                     ---------    ---------    ---------
                                     $ 156,162    $ 141,063    $ 124,862
                                     =========    =========    =========
Acquisition/Disposition Portfolio:
     Revenues                        $ 103,515    $  56,938    $  38,957
     Expenses                          (43,408)     (23,362)     (17,002)
                                     ---------    ---------    ---------
                                     $  60,107    $  33,576    $  21,955
                                     =========    =========    =========
Development Portfolio:
     Revenues                        $  29,351    $  10,975    $   1,258
     Expenses                          (10,370)      (5,187)      (1,300)
                                     ---------    ---------    ---------
                                     $  18,981    $   5,788    $     (42)
                                     =========    =========    =========
Retail Portfolio:
     Revenues                        $   2,756    $   3,427    $   3,222
     Expenses                           (1,569)      (1,571)      (1,421)
                                     ---------    ---------    ---------
                                     $   1,187    $   1,856    $   1,801
                                     =========    =========    =========
Total Rental Properties:
     Revenues                        $ 383,233    $ 301,233    $ 250,067
     Expenses                         (146,796)    (118,950)    (101,491)
     Depreciation                      (44,778)     (33,906)     (28,958)
                                     ---------    ---------    ---------
Income from Rental Properties        $ 191,659    $ 148,377    $ 119,618
                                     =========    =========    =========

(1)      Certain prior year balances have been reclassified to conform with
         current year presentation.

         The operating segments are based upon the maturity of each property.
Core consists of all multifamily properties owned as of December 31, 1998.
Acquisition/Disposition consists of purchased properties, which have not yet
reflected one full year of operations, and disposed properties. Development
consists of properties which the Company has constructed or is in the process of
constructing which have not yet had a full calendar year of stabilized operating
results. Retail consists of one free standing retail property.

RENTAL REVENUE AND OCCUPANCY RATES

         The Company seeks to maximize rental revenues in its submarkets
primarily by balancing aggressive rent increases against decreased occupancy.
Typically, these two components are inversely related. The Company also
generates revenues through rental of garage and ground floor retail space as
well as rental of furnished corporate apartments in certain owned apartment
properties. During 2000, the Company also significantly expanded its kitchen and
bath renovation program for properties with demonstrated ability to generate
required returns on the investment.

                                       33
<PAGE>

         Average revenue per apartment unit for the Company's core multifamily
properties increased approximately 7.7% in 2000 as compared with 1999. Core
revenue growth was 6.5% in 1999 (based on properties owned as of December 31,
1997) as compared with 1998.

         The Company achieved the increased rate of revenue growth in 2000,
without significant impact to occupancy (97.2%) which was essentially unchanged
from the prior year (97.3%) and reflects the strength of the Company's
submarkets.

         Average occupancy of the Company's core properties in the Washington,
D.C. metropolitan area, where approximately 89% of the Company's core portfolio
is located, is consistent with the area's market-wide average occupancy, based
on annual surveys of comparable investment grade apartment properties conducted
by REIS, Inc. as follows:

            Occupancy - Washington, D.C. Area
            ---------------------------------
                  Company       Market
                  -------       ------

2000               97.2%        98.7%
1999               97.5%        98.4%
1998               96.6%        97.0%

         It is important to note that market data from REIS, Inc. is determined
on a physical occupancy basis, whereas the Company's occupancy data is
calculated on an economic basis. Physical occupancy data commonly yields a
slightly higher percentage than economic occupancy because apartment units are
considered physically rented when a rental applicant's deposit is received, a
point in time generally prior to the actual rent commencement date used in
computing economic occupancy.

        A schedule of residential portfolio statistics follows:

                                       34
<PAGE>

<TABLE>
<CAPTION>
                                            CHARLES E. SMITH RESIDENTIAL REALTY L.P.
-----------------------------------------------------------------------------------------------------------------------------------
                                                 Residential Portfolio Statistics
                                               For the Year Ended December 31, 2000

                                                                                      Monthly          %                       %
                                                                Average                 GOI          Change                  Change
                                                   Apartment     Sq. Ft.    GOI      Per Unit        From     Occupancy       From
           Property                Type             Units       Per Unit    2000       2000           1999       2000         1999
           --------                ----             -----       --------    ----       ----           ----       ----         ----
                                                                          (in 000s)
CORE RESIDENTIAL PORTFOLIO

Washington, D.C.
<S>                             <C>                <C>           <C>     <C>         <C>             <C>        <C>          <C>
    1841 Columbia Road          Mid-rise              115          635   $   1,546     $ 1,120         7.4%       99.3%       -0.1%
    2501 Porter Street          High-rise             202          757       4,088       1,686         3.8%       95.5%       -3.7%
    Albemarle                   High-rise             235        1,122       4,093       1,451        11.6%       97.8%        0.4%
    Calvert-Woodley             High-rise             136          909       2,265       1,388         9.1%       98.8%       -0.1%
    Car Barn                    Garden                196          959       2,441       1,038         8.4%       98.0%       -1.0%
    Cleveland House             High-rise             216          897       3,623       1,398        12.9%       97.4%       -0.9%
    Connecticut Heights         High-rise             519          656       6,753       1,084        13.1%       98.0%        1.1%
    Corcoran House              High-rise             138          528       1,630         984         9.3%       97.4%       -1.1%
    Statesman                   High-rise             281          593       3,209         952        10.3%       97.9%       -0.9%
    Van Ness South              High-rise             625          957       9,687       1,292         8.8%       98.6%       -0.6%
    The Kenmore                 High-rise             376          715       4,179         926        12.2%       98.1%       -0.3%
    Tunlaw Gardens              Garden                167          850       1,946         971        13.9%       97.3%       -0.1%
    Tunlaw Park                 Mid-rise              120          855       1,889       1,312        12.9%       98.5%        1.8%
                                                ----------  -----------  ----------  ----------  -----------  ----------  ----------
                                                    3,326          808   $  47,349   $   1,186        10.2%       97.9%       -0.4%
Northern Virginia
    CRYSTAL CITY
    The Bennington              High-rise             348          798       4,849       1,161         3.7%       96.9%       -0.3%
    Crystal House I             High-rise             426          896       5,973       1,169         7.4%       98.0%       -0.1%
    Crystal House II            High-rise             402          896       5,381       1,116         7.0%       98.2%        0.0%
    Crystal Square              High-rise             378        1,080       5,976       1,318         6.7%       98.6%       -0.4%
    Crystal Place               High-rise             180          915       3,094       1,432         4.7%       97.7%        0.5%
    Gateway Place               High-rise             162          828       3,489       1,795         6.0%       83.8%       -3.4%
    Water Park Towers           High-rise             360          959       6,929       1,604         6.6%       95.7%        0.8%
    Crystal Plaza               High-rise             540        1,124       9,160       1,414         6.7%       98.7%       -0.5%
    Crystal Towers              High-rise             912        1,118      14,203       1,298         6.5%       98.5%       -0.4%
    Parc Vista                  High-rise             299          770       5,145       1,434        -1.5%       90.6%       -5.8%
                                                ----------  -----------  ----------  ----------  -----------  ----------  ----------
                                                    4,007          980   $  64,199   $   1,335         5.7%       96.7%       -0.7%
    ROSSLYN/BALLSTON
    Courthouse Plaza            High-rise             396          838       7,075       1,489         9.1%       97.1%       -0.9%
    Lincoln Towers              High-rise             714          878      12,812       1,495         8.9%       96.3%        0.9%
                                                ----------  -----------  ----------  ----------  -----------  ----------  ----------
                                                    1,110          864   $  19,887   $   1,493         9.0%       96.6%        0.3%
    TYSONS/DULLES
    Charter Oak                 Garden                262        1,098       3,380       1,075         5.1%       96.6%       -0.8%
    Oaks of Tysons              Garden                218          967       3,088       1,181         9.5%       95.0%       -1.0%
    Bedford Village             Garden                752        1,098       9,818       1,088        10.0%       97.1%       -0.2%
    Patriot Village             Garden              1,065        1,149      13,388       1,048         8.9%       97.7%        0.3%
    Westerly                    Garden                320          921       4,856       1,264         7.1%       96.7%       -0.9%
                                                ----------  -----------  ----------  ----------  -----------  ----------  ----------
                                                    2,617        1,086   $  34,530   $   1,100         8.6%       97.0%       -0.3%
    OTHER
    Arlington Overlook          Mid-rise              711          877       8,046         943        10.0%       96.7%       -0.1%
    Boulevard of Old Town       Garden                159          672       1,812         950         4.8%       97.1%       -0.7%
    Columbia Crossing           Garden                247          977       3,863       1,303         8.2%       98.8%        0.4%
    Concord Village             Garden                531          925       5,964         936         7.9%       97.6%        1.5%
    Newport Village             Garden                937        1,060      11,522       1,025         7.0%       97.9%       -0.2%
    Skyline Towers              High-rise             940        1,107      12,612       1,118         7.2%       98.0%        1.1%
                                                ----------  -----------  ----------  ----------  -----------  ----------  ----------
                                                    3,525          992   $  43,819   $   1,036         7.7%       97.7%        0.4%
Boston/Chicago
    2000 Commonwealth           High-rise             188          862       4,383       1,943         7.0%       99.2%        1.3%
    One East Delaware           High-rise             306          704       7,985       2,175         6.3%       98.2%        0.3%
    McClurg Court               High-rise           1,075          732      18,111       1,404         5.6%       96.1%        0.7%
    Cronin's Landing            Mid-rise              281        1,062       7,348       2,179         9.8%       99.1%        2.4%
                                                ----------  -----------  ----------  ----------  -----------  ----------  ----------
                                                    1,850          791   $  37,827   $   1,704         6.7%       97.4%        1.0%
                                                ----------  -----------  ----------  ----------  -----------  ----------  ----------
                                                   16,435          936   $ 247,611   $   1,256         7.7%       97.2%       -0.1%
                                                ----------  -----------  ----------  ----------  -----------  ----------  ----------
</TABLE>

                                       35
<PAGE>

<TABLE>
<CAPTION>
                                                                                         Monthly        %                      %
                                                                  Average                  GOI        Change                Change
                                                       Apartment  Sq. Ft.       GOI      Per Unit      From     Occupancy    From
               Property                    Type         Units     Per Unit     2000       2000         1999       2000       1999
             ------------                -------       ---------  --------   --------   ---------     ------   ----------   -------
                                                                              (in 000s)
ACQUISITION PORTFOLIO
    1999
<S>                                     <C>              <C>         <C>     <C>          <C>            <C>      <C>           <C>
    Buchanan House (Crystal City, VA)   High-rise           442      1,173   $   8,389    $ 1,582        N/A      97.6%         N/A
    Park Lincoln (Chicago, IL)          High-rise           139        581       2,010      1,205        N/A      95.2%         N/A
    Terrace (Chicago, IL)               Garden              427        814       4,396        858        N/A      94.6%         N/A
    The Consulate (Washington, DC)      High-rise           269        828       4,249      1,316        N/A      95.0%         N/A
    Countryside (Chicago, IL)           Garden              720        872       8,100        938        N/A      93.4%         N/A
    Stonegate (Chicago, IL)             Garden            1,158        581       9,888        712        N/A      92.0%         N/A
    Mirador (S.E. Florida)              High-rise         1,339        772      13,340        830        N/A      95.9%         N/A
    Ocean View (S.E. Florida)           High-rise         1,199      1,080      13,910        967        N/A      95.8%         N/A

    2000
    Ocean Crest Club (S.E. Florida)     High-rise           527        987       5,894        N/A        N/A        N/A         N/A
    Ocean Crest Beach (S.E. Florida)    High-rise           943        995      10,773        N/A        N/A        N/A         N/A
    Delaware Place (Chicago, IL)        High-rise           185        706       2,770        N/A        N/A        N/A         N/A
    Harbour House (S.E. Florida)        High-rise           804        990       2,192        N/A        N/A        N/A         N/A
    New River Village (S.E. Florida)    Mid-rise            240      1,128         436        N/A        N/A        N/A         N/A
    2201 Wilson Boulevard (Rosslyn/
      Ballston, VA)                     High-rise           219        838         522        N/A        N/A        N/A         N/A
    Sagamore Towers (Boston, MA)        High-rise           225        707         112        N/A        N/A        N/A         N/A
    Reston Landing (Tysons/Dulles, VA)  Garden              400        995       3,373        N/A        N/A        N/A         N/A
                                                       ---------  ---------  ----------
                                                          9,236        801   $  90,354
                                                       ---------  ---------  ----------
DEVELOPMENT PORTFOLIO
    Courthouse Place (Rosslyn/Ballston,
      VA                                High-rise           564        850   $   9,960    $ 1,472        N/A      98.9%         N/A
    One Superior Place (Chicago, IL)    High-rise           809        729      17,285        N/A        N/A        N/A         N/A
    Park Connecticut (Washington, DC)   High-rise           142        915       2,106        N/A        N/A        N/A         N/A
    Alban Towers (Washington, DC)(1)    Mid-rise            226        915         N/A        N/A        N/A        N/A         N/A
    Park Millennium (Chicago, IL)(1)    High-rise           480        907         N/A        N/A        N/A        N/A         N/A
                                                       ---------  ---------  ----------
                                                          2,221        829   $  29,351
                                                       ---------  ---------  ----------

ALL RESIDENTIAL PROPERTIES                               27,892              $ 367,316
                                                       =========             ==========

PARTIALLY-OWNED PORTFOLIO
    Renaissance (25% owned)             High-rise           330        984   $   5,226    $ 1,320        N/A      98.4%         N/A
    Springfield Station (48% owned)     Garden/Mid-rise     631        909       8,760      1,157        N/A      98.0%         N/A
    Brandywine (25% owned)              High-rise           306      1,009       4,992      1,359        N/A      97.9%         N/A
    Stoneridge at University Center
      (40% owned)(1)                    Garden              630        993         N/A        N/A        N/A        N/A         N/A
                                                       ---------  ---------  ----------
                                                          1,897        966   $  18,978
                                                       =========  =========  ==========
</TABLE>

(1) Property is currently under construction.

                                       36
<PAGE>

PROPERTY SERVICE BUSINESSES

         Operating results from the Property Service Businesses were as follows
(in thousands):

                                                 Year Ended December 31,
                                      ------------------------------------------
                                         2000            1999           1998
                                         ----            ----           ----

Revenues                              $ 277,907       $ 144,637       $ 107,290
Expenses                               (262,708)       (136,247)        (97,471)
                                      ---------       ---------       ---------
                                         15,199           8,390           9,819
(Loss) gain on Sale                      (5,359)            802              --
Amortization of Goodwill                 (2,587)           (788)             --
Depreciation                             (4,239)         (1,862)         (1,386)
                                      ---------       ---------       ---------
Income from Property
Service Businesses                    $   3,014       $   6,542       $   8,433
                                      =========       =========       =========

         Smith Realty Company provides property management and leasing personnel
and services to the Operating Partnership for 61 owned multifamily properties at
cost plus 5% in accordance with a service agreement. SRC provides similar
services under separate management agreements for the four partially owned
properties as well as eight third party owners totaling approximately 4,000
apartment units. The management agreements generally have one-year terms and
four of the eight third-party agreements are with Affiliates.

         SRC also maintains a furnished corporate apartment business ("Smith
Corporate Living" or "SCL"). SCL rents unfurnished apartments from third
parties, which it furnishes and re-rents primarily to corporate users as an
attractive alternative to extended-stay hotel arrangements. In May 1998, SRC
acquired Noel Enterprises, Inc. ("SCL West"), a provider of furnished corporate
apartments in Chicago for $6.3 million. Due to its sustained failure to meet
performance expectations in the suburban Chicago furnished market, SRC sold SCL
West in December 2000 and recognized a loss of $5.4 million primarily due to
unamortized goodwill. As of January 1, 2001, SRC assumed the unfurnished leases
previously held by SCL West in the downtown Chicago area and plans to continue
operating these as furnished corporate apartments.

         Smith Management Construction, Inc., provides services to the Operating
Partnership at cost and to Affiliates and third parties at cost plus a fee.
During 2000, approximately 40% of total revenues were derived from Affiliates,
20% from the Company, and 40% from third parties.

         Consolidated Engineering Services, Inc., and its affiliates provide
services to the Operating Partnership and Affiliates at cost and to third
parties at cost plus a fee. During 2000, approximately 15% of total revenues
were derived from Affiliates, 2% from the Company, and 83% from third parties.

         CES initiated a growth strategy in 1999 to expand CES's market
leadership position beyond the Mid-Atlantic region through a combination of
internal growth and friendly acquisitions or mergers with high-quality firms in
key geographic regions. Management of both CES and the

                                       37
<PAGE>

Company believe this strategy will position CES for a transaction in the next
one-to-three years, which will fully realize the inherent value of this
business. Accordingly, the Company increased its investment in CES and related
businesses as follows.

         During 2000, CES acquired 4 privately owned mechanical service
companies for a total cost of approximately $59.6 million which consisted of
559,802 shares of the Company's common stock (purchased by CES from the Company
for $21.6 million), assumed debt of $0.7 million and cash of $37.3 million. CES
funded $34 million through the Operating Partnership in exchange for promissory
notes while the remaining $24.9 million was drawn on CES's bank line of credit.
In addition, the Operating Partnership contributed to CES its interest in
Combustioneer, Inc., a 1999 acquisition.

         During 1999, CES acquired 3 privately owned mechanical services
companies for $34.5 million and a facilities management business from CESCR for
$1.4 million. Total acquisitions cost of $35.9 million consisted of 200,000
shares of the Company's common stock and 161,765 Operating Partnership units
(purchased by CES from the Company and the Operating Partnership for $12.4
million) and cash of $23.5 million. CES funded $25.8 million through the
Operating Partnership in exchange for promissory notes of which $24.4 million
was refinanced with a draw on its line of credit. The balance of $10.1 million
was provided by capital contributions from the Operating Partnership.

         The following discussion compares historical results of operations for
the years ended December 31, 2000 and 1999 as well as the years ended December
31, 1999 and 1998. The discussion should be read in conjunction with the
"Selected Financial Data," and the financial statements and notes thereto
included elsewhere in this annual report.

RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2000

COMPARISON TO YEAR ENDED DECEMBER 31, 1999

         SUMMARY. Net income of the Operating Partnership increased 16.5%, or
$25.4 million, from $153.8 million for the year ended December 31, 1999 to
$179.2 million for the year ended December 31, 2000. Funds from Operations
("FFO") of the Operating Partnership increased $38.9 million or 33.4% during the
same period. The increase in FFO is primarily due to operating income growth
from the core portfolio and the newly delivered development properties. The
increase in net income is primarily due to the increase in net operating income
from rental properties, which was partially offset by an increase in interest
expense.

         RENTAL PROPERTIES. Revenue from rental properties increased $82.0
million, or 27.2%, from $301.2 million for 1999 to $383.2 million for 2000.
Expenses (including depreciation) from all rental operations increased $38.7
million, or 25.3%, from $152.9 million in 1999 to $191.6 million in 2000.

         CORE PORTFOLIO. Revenue from the core portfolio increased $17.7
million, or 7.7%, over the prior year primarily due to continued strong demand
in all of our submarkets as a result of our

                                       38
<PAGE>

premium locations and our ability to capitalize on the continuing urban living
trend occurring throughout the country. In addition, approximately 1.1% of this
growth is attributable to the Company's kitchen and bath renovation program.
Under this program, a significant renovation of a kitchen and/or bath is made
upon turnover of an apartment unit when we are able to increase the rent
sufficient to achieve a minimum 15% return on the new investment. Revenue growth
by submarket ranged from 5.7% to 10.2% in 2000. Consistent with 1999, the
highest revenue growth occurred in the northwest Washington, D.C. submarket (up
10.2%) reflecting the urban living trend as well as a heavy concentration of
kitchen and bath renovations. The lowest growth of 5.7% in the Crystal City
submarket was primarily due to higher vacancy in furnished apartments and few
kitchen/bath renovations.

         Average monthly revenue per core apartment unit increased from $1,166
in 1999 to $1,256 per month during 2000. Average economic occupancy for the
portfolio was essentially flat at 97.2% in 2000 compared to 97.3 % in 1999.

         Operating expenses on the core portfolio increased 2.9% over the prior
year. This was primarily due to higher real estate taxes (up 7.7% or $1.3
million) associated primarily with rising assessments, higher utilities (up 7.5%
or $1.2 million) due primarily to mild 1999 weather, higher payroll costs (up
6.2% or $1.3 million) due to wage increases and additional management costs
associated with geographic expansion. These increases were partially offset by
lower marketing and redecoration costs (down $1.2 million) as a result of the
strong rental demand and lower turnover.

         ACQUISITION/DISPOSITION PORTFOLIO. The sixteen acquisition properties
and three disposition properties, contributed $46.6 million, or 56.8%, of the
total rental revenue increase and $20.0 million, or 72.0%, of the increase in
operating expenses resulting in a contribution to net operating income of $26.6
million. Total capitalized cost of the acquisition portfolio at December 31,
2000 was $789.7 million.

         During 2000, the Company sold two operating multifamily properties and
recognized gains of $68.0 million.

         DEVELOPMENT PORTFOLIO. In June 2000, One Superior Place in Chicago
completed delivery of its 809 units and also reached stabilization. This
52-story high-rise produced net operating income of $10.7 million for the
current year compared to $0.8 million in the prior year. Total capitalized cost
at December 31, 2000 was $113.1 million, which does not reflect an earnout
payment expected to be paid to the developer in early 2002.

         Park Connecticut delivered initial units in March 2000 with final
delivery of its 142 units as of June 30, 2000. The property reached stabilized
occupancy in October 2000 and produced net operating income of $0.9 million for
the year. Total capitalized cost at December 31, 2000 was $28.2 million.

         In June 1999, Courthouse Place completed delivery of its 564 units. The
property reached stabilized occupancy in September 1999 and produced net
operating income of $7.4 million for the current year, compared to $4.4 million
in the prior year.

                                       39
<PAGE>

         RETAIL PORTFOLIO. The Company sold Worldgate Centre in June 2000 for
$41 million to fund the acquisition of Reston Landing. The Company recognized a
gain of $4.0 million on the sale, which leaves Skyline Mall as the Company's
only freestanding retail property. Revenue from Skyline decreased significantly
($0.7 million or 19.6%) in 2000 compared to 1999 primarily due to efforts to
attract a high-end grocery tenant. As a result, certain space which became
vacant during the year was planned to be part of the new lease arrangement. As
of March 1, 2001, however, no such tenant had been secured. The Company is
currently evaluating redevelopment and sale options for this property. Average
occupancy decreased from 98.1% in 1999 to 91.1% in 2000.

         PROPERTY SERVICE BUSINESSES. The Company uses the equity method of
accounting for its non-voting interest in the Property Service Businesses.
Income from the Property Service Businesses decreased $3.5 million, or 53.9%,
during 2000 compared to 1999 due primarily to the $5.4 million loss recognized
on the sale of SCL West in December 2000. The loss was primarily due to the
write-off of goodwill recorded upon the acquisition of SCL West in 1998. Income
from the Property Service Businesses before gains and losses increased by $2.6
million or 45.9% over 1999 due primarily to the expansion of Consolidated
Engineering.

         Income before interest on promissory notes from Consolidated
Engineering was $7.4 million for 2000 reflecting an increase of $2.4 million or
49% over 1999. This was due to both internal growth as well as the $95.5 million
invested in the acquisition of eight businesses during 1999 and 2000. CES funded
$50 million of the acquisitions with a bank line of credit secured in 2000 which
is guaranteed by the Operating Partnership. The balance of the acquisition
funding was provided by the Operating Partnership in exchange for promissory
notes.

         Non-cash depreciation and amortization charges for CES totaled $5.4
million for 2000, an increase of $3.9 million over 1999 primarily due to
goodwill amortization charges associated with the acquisitions. Operating
margins declined from 9.9% in 1999 to 8.0% in 2000 primarily due to additional
personnel and other infrastructure costs which were planned to support the
strategic acquisition program.

         Income from Smith Management Construction increased $0.5 million to
$1.6 million in 2000. This was offset by a $2.0 million loss for Smith Corporate
Living. Due to the sale of SCL West, the Company expects this line of business
to return to profitability in 2001.

         During 2000, SRC and CESCR entered into an agreement through October
31, 2005 to equally share finance fees generated by refinancings on properties
controlled by Messrs. Smith and Kogod but not owned by CESCR. The Company earned
$0.2 million during 2000 under this agreement. Management does not expect any
significant future income from Financing Services.

         Recent tax legislation which became effective January 1, 2001 allows
the direct ownership and control by REITs of taxable REIT subsidiaries ("TRS").
A TRS may engage in activities which were previously considered impermissible
for REITs in terms of maintaining REIT status. On January 1, 2001, the Company
and all of its Property Service Businesses elected TRS status in accordance with
the new legislation. However, SRC has changed. Simultaneously SRC converted

                                       40
<PAGE>

the Company's 99% non-voting interest into a 99% voting interest. Therefore, the
Company will begin consolidating in 2001 the financial results of SRC instead of
using the equity method of accounting. This will have no impact to net income or
FFO but will simply change the financial statement presentation of SRC's
results. No changes were made to the ownership structure of CES or SMC.

         PARTIALLY-OWNED PORTFOLIO. The Company's share of income from the
partially-owned portfolio totaled $2.5 million and $1.2 million for 2000 and
1999, respectively. The increase is primarily due to the fact that three of the
properties were acquired as joint venture interests in mid-1999.

         OTHER. Corporate general and administrative expenses were 2.9% of total
revenues. Historically, the Company's objective has been to maintain this
expense at no more than 3% of revenues. The increase in total cost of $1.7
million, or 17.5%, was due primarily to higher personnel and technology related
costs, particularly related to geographic expansion. Interest expense increased
by $21.3 million, or 37.3%, primarily due to the financing of acquisition and
development activity as well as a slightly higher average borrowing rate.


RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999

COMPARISON TO YEAR ENDED DECEMBER 31, 1998

         SUMMARY. Net income of the Operating Partnership increased 120.1%, or
$83.9 million, from $69.9 million for the year ended December 31, 1998 to $153.8
million for the year ended December 31, 1999. Funds from Operations ("FFO") of
the Operating Partnership increased $17.9 million or 18.2% during the same
period. The increase in FFO was primarily due to core portfolio operating income
growth and newly delivered development properties. This increase was partially
offset by higher interest expense and reduced income from the Property Service
Businesses. The increase in net income is primarily due to the $63.7 million in
gains from the sale of properties.

         RENTAL PROPERTIES. Revenue from rental properties increased $51.1
million, or 20.5%, from $250.1 million for 1998 to $301.2 million for 1999.
Expenses (including depreciation) from all rental operations increased $22.5
million, or 17.2%, from $130.4 million in 1998 to $152.9 million in 1999.

         CORE PORTFOLIO. Revenue from the 1999 core portfolio (based on
properties owned as of December 31, 1997) increased $12.7 million, or 6.5% over
the prior year due to rent increases in all submarkets and improved occupancy.
Average monthly revenue per core apartment unit increased from $1,050 in 1998 to
$1,119 per month during 1999. Revenue growth by submarket over 1998 ranged from
5.9% in the Northern Virginia properties to 9.1% in the Boston/Chicago
properties. Average economic occupancy for the portfolio increased to 97.5% in
1999 from 96.5% in 1998. Operating expenses on the core portfolio increased 3%
over the prior year. This was primarily due to higher real estate taxes ($1.0
million) due to higher rates and assessments in Virginia, higher

                                       41
<PAGE>

utilities ($0.7 million), and higher payroll costs ($1.4 million) due to salary
increases and additional staffing. These increases were partially offset by
lower repairs and maintenance costs ($0.5 million).

         ACQUISITION/DISPOSITION PORTFOLIO. The thirteen acquisition properties
and six disposition properties, contributed $28.7 million, or 56.2%, of the
total rental revenue increase and $11.1 million, or 63.8%, of the increase in
operating expenses resulting in a contribution to net operating income of $17.6
million. Total capitalized cost of the acquisition portfolio at December 31,
1999 was $606.0 million.

         DEVELOPMENT PORTFOLIO. In June 1999, Courthouse Place completed
delivery of its 564 units. The project provided net operating income of $4.4
million for the year ended December 31, 1999.

         One Superior Place delivered initial units in July 1999 and had a total
of 494 units delivered as of December 31, 1999. The project had net capitalized
cost of $109.9 million at December 31, 1999 and provided net operating income of
$0.8 million for the year.

         RETAIL PORTFOLIO. Retail revenues for 1999 remained unchanged from the
1998 total of $10.0 million due primarily to occupancy gains at Skyline
offsetting higher vacancies at Worldgate. Total average occupancy at the two
retail properties decreased slightly from 98.4% in 1998 to 98.1% in 1999.

         PROPERTY SERVICE BUSINESSES. Income from the Property Service
Businesses decreased $1.9 million, or 22.4%, during 1999 compared to 1998 due
primarily to the absence of Financing fees in 1999 compared to 1998 fees of $1.8
million. In addition, income from furnished apartments and construction services
decreased in 1999, which was partially offset by increased Consolidated
Engineering income.

         In May 1999, the Company finalized the settlement of financing services
provided to commercial office partnerships now owned by CESCR, an affiliate of
Messrs. Smith and Kogod. This settlement was initiated by the formation of CESCR
in 1997, at which time the Company entered into an agreement to provide
financing services for certain properties owned by CESCR only through December
31, 1998. The Company received from an affiliate of Messrs. Smith and Kogod
79,905 Operating Partnership units valued at $2.5 million as final settlement
related to properties owned by CESCR and immediately canceled the units. The
transaction was accounted for as a capital transaction, therefore no gain or
loss was recorded. During 2000, SRC and CESCR entered into an agreement through
October 31, 2005 to equally share finance fees generated by refinancings on
properties controlled by Messrs. Smith and Kogod but not owned by CESCR. The
Company earned $0.2 million during 2000 under this agreement. Management does
not expect any significant future income from Financing Services.

         Smith Realty Company's furnished corporate apartment business had a net
loss of $1.7 million during 1999 due primarily to higher than anticipated
vacancies caused by softness in the suburban Chicago market. Income from
Management Construction declined by $0.6 million, or 34%, to $1.1 million due
primarily to slower than expected timing on affiliated commercial office
projects.

                                       42
<PAGE>

         SRC also recognized a gain of $0.8 million on the sale of its retail
management business to CESCR.

         Consolidated Engineering Services and affiliates contributed an
increase of $1.3 million, or 37%, in income during the year due primarily to the
acquisition of four businesses in 1999 for a total cost of approximately $36
million.

         PARTIALLY-OWNED PORTFOLIO. The Company entered into three joint venture
agreements during 1999 on Renaissance, Springfield Station and University
Center. The Company's share of income from partially owned properties totaled
$1.2 million for the year.

         OTHER. Corporate general and administrative expenses increased by $0.7
million, or 7.4%, due primarily to the Company's acquisition efforts during the
year in addition to higher personnel costs. Interest expense increased by $9.8
million, or 20.6%, primarily due to financing of acquisition and development
activities.

LIQUIDITY AND CAPITAL RESOURCES

SUMMARY

         Net cash flow provided by operating activities was $183.3 million for
2000 compared to $141.2 million for 1999. The increase of $42.1 million was
primarily due to property cash flows. Approximately $15 million was contributed
by the Core portfolio as a result of the 10.7% growth in net operating income.
The balance relates primarily to the Acquisition and Development portfolios,
which contributed an increase of $40 million in net operating income less
additional interest expense of $21 million.

         Net cash flow used by the Company for investing activities increased
$58.3 million in 2000, from $298.5 million to $356.8 million. This was primarily
due to cash inflows of $80.3 million from sales during 1999, partially offset by
lower acquisition and development spending in 2000. All sales of operating
properties in 2000 were non-cash, tax deferred transactions. Cash flows on
acquisition, development and additions were $326.4 million in 2000 compared to
$338.8 in 1999

         Net cash flow provided by financing activities was $163.0 million in
2000 compared to $167.9 million in 1999. During 2000, the Company raised
approximately $21.6 million through sales of common stock to CES. In addition,
the Company completed a number of debt financing transactions which resulted in
net cash inflows of $240.5 million. In 2000, the Company and the Operating
Partnership also paid common and preferred dividends/distributions of $103.8
million. The common dividend of $2.235 per share/unit, an increase of 3.7% over
1999, was comprised of three quarterly dividends of $0.55 per share/unit and one
quarterly dividend of $0.585.

                                       43
<PAGE>

EQUITY ACTIVITY

         As long as the Operating Partnership is in existence, the net proceeds
of all equity capital raised by the Company will be contributed to the Operating
Partnership in exchange for limited partnership interests in the Operating
Partnership ("Units") having the same characteristics as those of the securities
issued by the Company.

         All references to issuance by the Company of Common and Preferred stock
also resulted in issuance of equivalent units by the Operating Partnership.

         In April 2000, the Operating Partnership issued 35,898 units valued at
$1.3 million in connection with the Delaware Place (formerly, Dearborn Place)
acquisition.

         During 2000, the Company sold 559,802 shares of common stock valued at
$21.6 million to Consolidated Engineering Services, Inc. CES distributed the
shares to partially fund its acquisitions of Illingworth Corporation, Hayes
Mechanical, Inc., Betlem Service Corporation, and Aircond Corporation.

         The Company issued 307,928 shares of common stock during 2000 in
connection with the exercise of options.

FUNDS FROM OPERATIONS

         FFO is defined by the National Association of Real Estate Investment
Trusts ("NAREIT") as net income (loss), computed in accordance with Generally
Accepted Accounting Principles ("GAAP"), excluding gains (or losses) from debt
restructuring and property sales, plus depreciation/amortization of assets
unique to the real estate industry. FFO does not represent cash flow from
operating activities in accordance with GAAP (which, unlike FFO, generally
reflects all cash effects of transactions and other events in the determination
of net income) and should not be considered an alternative to net income as an
indication of the Company's performance or to cash flow as a measure of
liquidity or ability to make distributions. The Company considers FFO a
meaningful, additional measure of operating performance primarily because it
excludes the assumption that the value of real estate assets diminishes
predictably over time, and because industry analysts have accepted it as a
performance measure. Comparison of the Company's presentation of FFO, using the
NAREIT definition, to similarly titled measures for other REITs may not
necessarily be meaningful due to possible differences in the application of the
NAREIT definition used by such REITs.

                                       44
<PAGE>

         The Company's FFO for the years ended December 31, 2000, 1999 and 1998
was as follows (in thousands):

                                                  Year Ended December 31,
                                            ------------------------------------
                                               2000         1999          1998
                                            ---------    ---------    ----------

Net Income of the Operating Partnership     $ 179,248    $ 153,814    $  69,870
Preferred dividends                            (3,955)      (8,093)      (3,647)
Gains on sales                                (71,426)     (63,673)     (18,150)
Equity in (gain) loss on sales                  5,359         (802)           "
Depreciation of rental property                44,778       33,906       28,958
Depreciation of unconsolidated properties       1,015          570            "
Amortization of goodwill                          434          430          250
Loss on unused treasury lock                        "            "        4,923
Extraordinary item - loss on
   extinguishment of debt                           "          360       16,384
                                            ---------    ---------    ---------

Funds from Operations of
   the Operating Partnership                $ 155,453    $ 116,512    $  98,588
                                            =========    =========    =========


PROPERTY ACQUISITIONS/DISPOSITIONS

         The Company acquired the following operating properties during 2000 and
1999:

<TABLE>
<CAPTION>
                                                                           Total Cost (Dollars in Thousands)
                                                     Number of             ---------------------------------
      Name                                             Units                 2000                    1999
      ----                                             -----                 ----                    ----
<S>                                                    <C>                  <C>                    <C>
      Ocean Crest Beach and Ocean Crest Club
          (S.E. Florida)                               1,470                $102,900(1)            $     ---
      Delaware Place (Chicago, IL)                       185                  25,400                     ---
      Reston Landing (Tysons/Dulles, VA)                 400                  43,700                     ---
      Harbour House (S.E. Florida)                       804                  94,300(1)                  ---
      2201 Wilson Boulevard  (Rosslyn/Ballston, VA)      219                  27,600(2)                  ---
      New River Village (S.E. Florida)                   240                  29,500(2)                  ---
      Sagamore Towers (Boston, MA)                       225                  20,500(1)                  ---
      Buchanan House (Crystal City, VA)                  442                     ---                  66,000(1)
      The Park Lincoln (Chicago, IL)                     139                     ---                  13,600
      Terrace (Chicago, IL)                              427                     ---                  25,700
      Countryside (Chicago, IL)                          720                     ---                  44,800
      Stonegate (Chicago, IL)                          1,158                     ---                  57,700
      The Consulate (Washington, D.C.)                   269                     ---                  32,700
      Mirador (S.E. Florida)                           1,339                     ---                  86,300(1)
      Ocean View (S.E. Florida)                        1,199                     ---                  77,700(1)
                                                                            --------                --------
                                                                            $343,900                $404,500
                                                                            ========                ========
</TABLE>

(1)      The Company expects to spend significant additional funds in structural
         repairs and repositioning improvements.
(2)      Does not reflect expected earnout payments of $5.5 million to be made
         in 2001.

                                       45
<PAGE>

         During the first quarter of 1999, the Company acquired the land beneath
the Crystal Square property and the 5.1% net profit interest in the Crystal
Plaza property. The purchase price of $10.0 million consisted of 32,258
Operating Partnership Units valued at $1.0 million and $9.0 million cash drawn
upon the line of credit. In addition, the Company acquired a parcel of land for
development in Chicago, Illinois for $8.6 million.

         During the third quarter of 1999, the Company also acquired land for
development for cash of $8.3 million. However, the Company decided not to
proceed with development of this parcel and sold it in October 2000. The Company
recognized a loss on sale of $0.3 million.

         During 1999, the Company sold six operating multifamily properties
totaling 1,905 units (four in northern Virginia, one in Washington, D.C. and one
in suburban Maryland) for a total of $100.3 million. Four of the six sales were
completed as tax-deferred I.R.C. Section 1031 exchanges. The gains recognized on
the sales totaled $59.1 million.

         In June 2000, the Company sold Worldgate Centre, one of its retail
properties, under an I.R.C. Section 1031 tax-deferred exchange. The proceeds of
$41.0 million were used to acquire Reston Landing, a 400-unit multifamily
property located in Reston, Virginia. The Company recognized a gain on sale of
$4.0 million.

         In November 2000, the Company sold two properties in Northern Virginia
- Orleans Village (851 units) and Berkeley (138 units) under an I.R.C. Section
1031 tax-deferred exchange. The proceeds of $72.2 million were used to acquire
three multifamily properties - New River Village, 2201 Wilson Boulevard, and
Sagamore Towers. The Company recognized a total gain of $68.0 million on the
sale of the two properties.

                                       46
<PAGE>

DEVELOPMENT

         The Company's development pipeline as of December 31, 2000, consisted
of the following projects:

<TABLE>
<CAPTION>
                        Number     Units     Initial        Estimated     Estimated   Estimated
                       of Units  Delivered   Delivery       Completion  Stabilization    Cost
                       --------  ---------   --------       ----------  -------------    ----
                                                                                    (in millions)
<S>                      <C>        <C>      <C>            <C>           <C>          <C>
Stoneridge at
  University Center
 (Tysons/Dulles,VA) (1)    630      150      June 2000      Q3, 2001      Q4, 2001      $ 66


Alban Towers (2)
  (Washington, DC)         226      N/A      Q2, 2001       Q4, 2001      Q1, 2002        63

Park Millennium
  (Chicago, IL)            480      N/A      Q2, 2002       Q4, 2002      Q1, 2003       106
                         -----      ---                                                 ----
                         1,336      150                                                 $235
                         =====      ===                                                 ====
</TABLE>

(1)      The Company has a 40% ownership interest.

(2)      The Company owns substantially all of the economic interest.


COMMITMENTS

         As of December 31, 2000, the Company had one contract in place to
purchase a to-be-constructed multifamily property as follows:


                         Number    Estimated         Purchase       Estimated
                        of Units   Completion          Date            Cost
                        --------   ----------          ----            ----
                                                                   (in millions)
Ballston Place
  (Rosslyn/Ballston)      383       Q2, 2001         Q4, 2001         $   54

         The contract is contingent upon satisfactory completion of construction
and attainment of final certificates of occupancy by the owners. At December 31,
2000, the Company had posted a $5.1 million letter-of-credit in accordance with
the contract, to be drawn upon only in the event the Company defaults on its
contractual obligations to purchase the completed asset. This letter of credit
was increased to $10.9 million in January 2001.

         Several other acquisition and development projects are being pursued by
the Company. As of December 31, 2000, the capitalized development costs related
to probable development projects totaled $2.5 million. The Company anticipates
meeting funding requirements for acquisitions and development, including the
repositioning program, through draws on its lines of credit, long-term
borrowings, asset sales and public or private issuances of equity, including
Operating Partnership unit exchanges.

                                       47
<PAGE>

PARTIALLY-OWNED PORTFOLIO

         In March 1999, the Company and J.P. Morgan Strategic Property Fund
("J.P. Morgan") formed a joint venture ("Renaissance"), which acquired the
Renaissance, a 330-unit multifamily property in Tysons Corner, Virginia, for
approximately $37 million. The joint venture has placed debt of $19.0 million on
the property which carries an interest rate of 6.48% and matures in February
2006. Ownership interests are held 75% by J.P. Morgan and 25% by the Company.

         In May 1999, the Company and J.P. Morgan formed a joint venture
("Springfield Station") to own and operate the Springfield Station, a 631-unit
multifamily property developed by the Company. The Company sold a 52% interest
in Springfield Station to J.P. Morgan and received proceeds of approximately $50
million from the transaction. The joint venture placed $37 million in debt
financing on the property at 6.85% fixed interest, which matures on June 1,
2009. The Company recognized a $4.5 million gain on the transaction.

         In May 1999, the Company and J.P. Morgan also formed a development
joint venture ("University Center") to develop a new 630-unit multifamily
property in Loudoun County, Virginia at the western end of the Dulles Technology
corridor. The Company is providing development services to the venture and has
also provided a construction completion guarantee. An affiliate, Smith Realty
Company, provides management and marketing services. Ownership interests are
held 60% by J.P. Morgan and 40% by the Company.

         Construction commenced during the third quarter of 1999. The first
deliveries occurred in June 2000 with final completion expected in the third
quarter of 2001. The joint venture obtained a $31 million, interest-only
construction loan in May 2000 with interest at LIBOR plus 125 basis points,
payable monthly, due May 10, 2003.


OTHER

         In October 2000, the Company purchased an ownership interest in
Broadband Residential, Inc. a privately owned telecommunications company managed
and owned by a consortium of multifamily real estate companies and focused on
developing high-speed data, video and voice solutions for the multifamily
industry. The Company also agreed to provide Broadband Residential with access
and exclusive marketing and licensing rights for data, video and voice
communications to 29,046 of the Company's apartment units, subject to present
contractual obligations. The Company has accounted for its investment of $0.5
million on the cost basis.

         In January 2001, the Company invested an additional $0.3 million in
Broadband. In return, the Company received warrants to purchase 401,086 shares
of additional stock in Broadband to which the Company has attributed no value.

                                       48
<PAGE>

DEBT

         As of December 31, 2000, the Company had the following mortgage
indebtedness and other borrowings carrying a weighted average interest rate of
7.27% and collateralized by 51 of the 62 owned properties:

                         Dollars in
                          Thousands   Percent of Total
                          ---------   ----------------

Fixed rate debt:
   Mortgages              $1,064,845       87.0%
Variable rate debt:
   $300M Line of Credit      112,000        9.2%
   $100M Line of Credit       32,000        2.6%
   $50 M Line of Credit           --         --
   Construction loan          14,859        1.2%

                          $1,223,704      100.0%
                          ==========      =====

         As of December 31, 2000, the Company's Debt to Total Market
Capitalization Ratio was 37.3% (based on 21.9 million common shares, 7.2 million
convertible preferred shares and units, and 13.5 million partnership units
outstanding at a stock price of $47.00, and $50 million of perpetual preferred
stock) versus 38.6% at December 31, 1999. The Company's Interest Coverage Ratios
for the years ended December 31, 2000 and 1999 were 3.21:1 and 3.33:1,
respectively.

         The scheduled principal payments for all mortgage loans and notes
payable are as follows (in thousands):

                  Year ended
                  December 31,
                      2001                       $   83,313
                      2002                           20,413
                      2003                            6,010
                      2004                           33,833
                      2005                            6,851
                      Thereafter                  1,073,284
                                                 ----------
                                                 $1,223,704
                                                 ==========


         At December 31, 2000, the Company had $187.4 million of unused
borrowing capacity available on its line of credit and construction loans.
Amounts outstanding under lines of credit averaged $101.1 million and $78.7
million for the years ended December 31, 2000, and 1999, respectively.

         The Company anticipates meeting principal repayment requirements
through long-term borrowings, asset sales, public or private issuances of debt
securities or public or private equity offerings.

                                       49
<PAGE>

         During 2000, the Company completed several debt financing transactions:

         o        In February 2000, the Company drew $49.4 million on its Fannie
                  Mae credit facility at 8.0% for ten years. The Company used
                  $37 million of the proceeds to repay a portion of its line of
                  credit with the balance used for working capital needs. Ocean
                  View (formerly, Ocean View at Aventura) was added to the
                  collateral pool in connection with this draw.

         o        In May 2000, the Company obtained a ten-year, $300 million
                  secured line of credit from Freddie Mac. Borrowings under the
                  line bear interest at a spread of 63 to 161 basis points over
                  LIBOR depending on the interest coverage ratio. Initial
                  availability under the agreement is approximately $125.3
                  million, which can increase to $300 million with appreciation
                  in value of the properties collateralizing the borrowings
                  and/or with the addition of properties to the collateral pool.
                  Loan costs of $0.9 million were capitalized in connection with
                  this agreement. The Company made an initial draw of $60
                  million substantially all of which was used to repay a portion
                  of its $185 million line of credit. The outstanding balance at
                  December 31, 2000 was $112.0 million at an average interest
                  rate of 6.76%.

         o        In June 2000, with the new capacity from the Freddie Mac
                  facility in place, the Company elected to decrease the
                  commitment on its $185 million line of credit to $100 million,
                  and decrease the commitment on its $100 million line of credit
                  to $50 million.

         o        In June 2000, the Company closed on four mortgage loans
                  totaling $53.5 million. Each of the loans has a fixed interest
                  rate of 7.92%. The loans require monthly payments of interest
                  only through July 2010, at which time principal amortization
                  begins using a 20-year amortization with a balloon payment due
                  July 1, 2012. The loans are collateralized by four properties.

         o        In September 2000, the Company converted $61.8 million of its
                  $300 million line of credit to mortgage debt. The new mortgage
                  has a fixed interest rate of 7.66% and a 14-year term.
                  Payments of interest only are required for a minimum of ten
                  years with a balloon payment due October 1, 2014. The loan is
                  collateralized by one property. With the conversion of this
                  portion of the line of credit, the availability under the line
                  decreased from $125.3 million to $63.5 million.

         o        In September 2000, the Company closed on three mortgage loans
                  totaling $60.8 million. The loans each have a fixed interest
                  rate of 7.61% and a 15-year term. The loans require payments
                  of interest only for a minimum of ten years with a balloon
                  payment due October 1, 2015. All three loans are
                  cross-defaulted and cross-collateralized.

         o        In November 2000, the Company acquired Sagamore Towers and
                  assumed an existing $6.3 million loan which is collateralized
                  by the property, carries an 8.38% interest rate and matures in
                  August 2006. The Company may prepay the loan after September
                  1, 2003, subject to a prepayment penalty equal to the greater
                  of yield maintenance or 1% of the

                                       50
<PAGE>

                  outstanding loan balance at that time. The Company has
                  recorded a fair value adjustment on the loan of $0.3 million
                  for an effective interest rate of 6.97%.

         o        In December 2000, the Company closed on two second mortgage
                  loans totaling $24.0 million. The $13.0 million loan has a
                  fixed interest rate of 7.07% and is collaterialized by Skyline
                  Towers. The $11.0 million loan has a fixed interest rate of
                  7.12% and is collateralized by Crystal Houses I and II. The
                  loans require monthly payments of interest only and mature
                  coterminous with their respective first mortgages in January
                  2011.

         o        In December 2000, the Company drew on its line of credit to
                  pay off the balance of a construction loan made in connection
                  with the development of One Superior Place in Chicago,
                  Illinois. This property was simultaneously added to the
                  collateral pool for the Freddie Mac line of credit. With the
                  addition of this collateral, the availability under this line
                  increased to $163.8 million.


OTHER

         CAPITAL IMPROVEMENTS. In 2000, total capital improvements were $71.7
million, of which $38.0 million, or $2,311 per apartment unit, was for the core
portfolio. Approximately 64% of the capital expenditures on the core portfolio
are considered by management to be non-recurring, repositioning improvements
which directly result in higher revenues. For example, the Company renovated
approximately 2,100 kitchens and baths during 2000 based solely on the ability
to charge and obtain a rent premium. Absent that ability, the improvements would
not have been made. Therefore, management considers such improvements as
one-time, non-recurring capital expenditures, which significantly enhance the
asset. The remaining capital expenditures on the core portfolio indirectly
influence the Company's ability to generate revenues and are considered more
recurring in nature and less discretionary. For example, periodic replacement is
expected for items such as appliances and HVAC equipment. However, the Company
does not generate additional revenue from these improvements and has little
discretion as to whether or not they are made. A summary of core capital
expenditures during 2000 follows:


                                               Total $  Average $ Per
                  Expenditure Type              Spent     Core Unit
                  ----------------             -------     -------
                                            (in thousands)

                  Kitchen/Bath                 $22,651     $ 1,378
                  Washer/Dryer                   1,484          90
                                               -------     -------
                       Core Repositioning       24,135       1,468

                  Recurring Improvements        13,852         843
                                               -------     -------

                  Total Capital Expenditures
                      - Core Portfolio         $37,987     $ 2,311
                                               =======     =======


         INCOME TAXES. The Company is taxed as a REIT under Sections 856 through
860 of the Internal Revenue Code of 1986, as amended. As such, the Company
generally is not subject to

                                       51
<PAGE>

Federal corporate income taxes on net income it distributes currently to
shareholders provided that the Company distributes at least 95% (90% effective
January 1, 2001) of its taxable income each year. REITs are subject to certain
organizational requirements and asset and income tests in order to maintain
their REIT status. The Property Service Businesses are taxable corporations, and
thus pay Federal and state income taxes on their net income. Such taxes amounted
to $1.7 million, $1.5 million, and $0.6 million for 2000, 1999, and 1998.

         EFFECT OF INFLATION. Substantially all of the leases at the multifamily
properties are for a term of one year or less, which enables the Company to seek
increased rents upon renewal or reletting of apartments. Retail tenant leases
provide for pass-through of common area maintenance, real estate taxes and other
operating costs to tenants, which reduces the impact of inflation.

         YEAR 2000. The Company did not experience any malfunctions or errors in
its operating or business systems when the date changed from 1999 to 2000. Based
on operations since January 1, 2000, the Company does not expect any significant
impact on its on-going business as a result of the "Year 2000 Issue".

         MANAGEMENT. The Company's current President and CEO, Ernest Gerardi,
Jr., announced in February 2001 that he will reduce his work schedule for health
reasons and plans to step down as President and CEO once a replacement is
appointed.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK.

         Market risks relating to the Company's operations result primarily from
changes in short-term LIBOR interest rates. The Company does not have any direct
foreign exchange or other significant market risk.

         The Company's exposure to market risk for changes in interest rates
relate primarily to the Company's unsecured lines of credit and construction
loans. The Company primarily enters into fixed and variable rate debt
obligations to support acquisitions, development, capital expenditures and
working capital needs. The Company continuously evaluates its level of variable
debt with respect to total debt and other factors including its assessment of
the current and future economic environment. The Company did not have any
derivative financial instruments at December 31, 2000, but did have such
instruments in previous years. In 1997, the Company entered into two treasury
rate lock agreements, the purpose of which was to obtain what the Company
considered advantageous pricing for future anticipated debt issuance. In 1998,
the Company closed out a treasury rate lock agreement in conjunction with a $53
million secured mortgage loan due in 2005 issued in June 1998. The Company
closed out its remaining treasury rate lock agreement in 1998 at a loss of $4.9
million. The lock was originally put in place in anticipation of a planned,
unsecured financing, which ultimately did not occur.

                                       52
<PAGE>

         The fair values of the Company's financial instruments (including such
items in the financial statement captions as cash, other assets, mortgage loans,
construction loans, accounts payable and other liabilities and lines of credit)
approximate their carrying of contract values based on their nature, terms, and
interest rates which approximate current market rates. The fair value of
mortgage loans payable is estimated using discounted cash flow analyses with an
interest rate similar to that of current market borrowing arrangements. The fair
value of the Company's mortgage loans payable approximates their carrying value
at December 31, 2000.

         The Company and CES had $209,000,000 and $152,000,000 in variable rate
debt outstanding at December 31, 2000 and 1999, respectively. A hypothetical 1%
increase in interest rates would have had an annualized unfavorable impact of
approximately $2,090,000 and $1,520,000, respectively, on the Company's earnings
and cash flows based upon these year-end debt levels. The Company cannot predict
the effect of adverse changes in interest rates on its variable rate debt and
therefore its exposure to market risk, nor can there be any assurance that fixed
rate, long-term debt will be available to the Company at advantageous pricing.
Consequently, future results may differ materially from the estimated adverse
changes discussed above.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         See Index to Consolidated and Combined Financial Statements on Page F-1
of this Form 10-K.


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

         None.

                                       53
<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         The information required by this item with respect to directors is
hereby incorporated by reference to the material appearing under the caption
"Election of Directors" in the Company's definitive proxy statement for the
annual meeting of shareholders to be held in 2001 (the "Proxy Statement").
Information required by this item with respect to executive officers is provided
in Item 1 of this report. See "Executive Officers of the Company."

         Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership of such securities with the Securities and
Exchange Commission and the NYSE. To the best of the Company's knowledge, all
required reports were timely filed during and with respect to the fiscal year
ended December 31, 2000, except for the following reports which were filed late:
John Guinee (two reports, six transactions).


ITEM 11. EXECUTIVE COMPENSATION.

         The information required by this item is hereby incorporated by
reference to the material appearing under the caption "Executive Compensation"
in the Proxy Statement.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The information required by this item is hereby incorporated by
reference to the material appearing under the caption "Voting Securities and
Principal Holders Thereof" in the Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The information required by this item is hereby incorporated by
reference to the material appearing under the caption "Certain Relationships and
Related Transactions" in the Proxy Statement.

                                       54
<PAGE>

                                     PART IV


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

14(a)(1) FINANCIAL STATEMENTS

         Reference is made to the Index to Financial Statements and Schedule on
Page F-1 of this Form 10-K.

14(a)(2) FINANCIAL STATEMENT SCHEDULES

         Reference is made to the Index to Financial Statements and Schedule on
Page F-1 of this Form 10-K.

         All other schedules have been omitted because the required information
of such other schedules is not present in amounts sufficient to require
submission of the schedule or because the required information is included in
the consolidated financial statements.

14(a)(3) EXHIBITS

         2.1      Third Party Management and Leasing, Hotel Asset Management and
                  Corporate Services Business Transfer Agreement by and between
                  Charles E. Smith Residential Realty, Inc. and Smith Property
                  Management, Inc. (Incorporated by reference to Exhibit No. 2.1
                  of the Company's Form 10-K for the year ended December 31,
                  1994)

         2.2      REIT Properties Management and Leasing Business Transfer
                  Agreement by and between Charles E. Smith Management, Inc. and
                  Charles E. Smith Residential Realty L.P. (Incorporated by
                  reference to Exhibit No. 2.2 of the Company's Form 10-K for
                  the year ended December 31, 1994)

         2.3      Assignment by Robert H. Smith, Clarice R. Smith, Robert P.
                  Kogod and Arlene R. Kogod to Charles E. Smith Management, Inc.
                  of 99% of all Partnership Interests of Residential Associates
                  Limited Partnership (Incorporated by reference to Exhibit No.
                  2.3 of the Company's Form 10-K for the year ended December 31,
                  1994)

         2.4      Assignment and Assumption Agreement by Residential Associates
                  Limited Partnership and Charles E. Smith Residential Realty
                  L.P. (Incorporated by reference to Exhibit No. 2.4 of the
                  Company's Form 10-K for the year ended December 31, 1994)

                                       55
<PAGE>

         2.5      Debt Assumption Agreement and Accord and Satisfaction of Debt
                  by Charles E. Smith Management, Inc. and Charles E. Smith
                  Residential Realty L.P. (Incorporated by reference to Exhibit
                  No. 2.5 of the Company's Form 10-K for the year ended December
                  31, 1994)

         2.6      Debt Contribution Agreement between Charles E. Smith
                  Management, Inc. and Charles E. Smith Residential Realty L.P.
                  (the "Operating Partnership") (Incorporated by reference to
                  Exhibit No. 2.6 of the Company's Form 10-K for the year ended
                  December 31, 1994)

         3.1      Amended and Restated Articles of Incorporation of Charles E.
                  Smith Residential Realty, Inc. (the "Company") (Incorporated
                  by reference to Exhibit No. 3.1 of the Company's Registration
                  Statement on Form S-11, No. 33-75288)

         3.2      Articles of Amendment to Articles of Amendment and Restatement
                  of Articles of Incorporation of Charles E. Smith Residential
                  Realty, Inc. (Incorporated by reference to Exhibit No. 3.2 in
                  the Company's Form 10-K for the year ended December 31, 1998)

         3.3      Amended and Restated Bylaws of the Company (Incorporated by
                  reference to Exhibit 3.2 in the Company's Registration
                  Statement on Form S-3 (File No. 33-93986))

         3.4      Articles Supplementary to Amended and Restated Articles of
                  Incorporation of the Company (Incorporated by reference to
                  Exhibit No. 3.1 of Company's Quarterly Report on Form 10-Q for
                  the Quarter Ended June 30, 1997)

         3.5      Articles Supplementary of the Company for Classifying and
                  Designating Series B Cumulative Convertible Redeemable
                  Preferred Stock (Incorporated by reference to Exhibit No. 4.1
                  of the Company's Report on Form 8-K dated October 3, 1997 and
                  filed October 20, 1997)

         3.6      Certificate of Correction relating to Articles Supplementary
                  for Series B Cumulative Convertible Redeemable Preferred Stock
                  (Incorporated by reference to Exhibit No. 4.2 of the Company's
                  Report on Form 8-K dated October 3, 1997 and filed October 20,
                  1997)

         3.7      Articles Supplementary for Series C Cumulative Redeemable
                  Preferred Stock (Incorporated by reference to Exhibit No. 3.5
                  in the Company's Registration Statement on Form S-3, File No.
                  333-17053)

         3.8      Articles Supplementary of the Company for Classifying and
                  Designating a Series of Preferred Stock as Series D Junior
                  Participating Preferred Stock and Fixing Distribution and
                  Other Preferences and Rights of Such Series (Incorporated by
                  reference to Exhibit No. 3.8 of the Company's Form 10-K for
                  the year ended December 31, 1998)

                                       56
<PAGE>

         3.9      Articles Supplementary of the Company for Classifying and
                  Designating Series E Cumulative Convertible Redeemable
                  Preferred Stock (Incorporated by reference to Exhibit No. 99.1
                  of the Company's Quarterly Report on Form 10-Q for the Quarter
                  Ended June 30, 1999)

         3.10     Articles Supplementary of the Company for Classifying and
                  Designating Series F Cumulative Convertible Redeemable
                  Preferred Stock (Incorporated by reference to Exhibit No. 99.2
                  of the Company's Quarterly Report on Form 10-Q for the Quarter
                  Ended June 30, 1999)

         3.11     Articles Supplementary of the Company for Classifying and
                  Designating Series G Cumulative Convertible Redeemable
                  Preferred Stock (Incorporated by reference to Exhibit No. 99.3
                  of the Company's Quarterly Report on Form 10-Q for the Quarter
                  Ended June 30, 1999)

         3.12     Articles Supplementary of the Company for Classifying and
                  Designating Series H Cumulative Convertible Redeemable
                  Preferred Stock (Incorporated by reference to Exhibit No. 99.1
                  of the Company's Quarterly Report on Form 10-Q for the Quarter
                  Ended September 30, 1999)

         3.13     Certificate of Amendment of Amended and Restated By-laws of
                  Charles E. Smith Residential Realty, Inc. (Incorporated by
                  reference to Exhibit No. 3.13 of the Company's Form 10-K for
                  the year ended December 31, 1999)

         4.1      First Amended and Restated Agreement of Limited Partnership of
                  the Operating Partnership, as amended (Incorporated by
                  reference to Exhibit No. 4.1 of the Company's Form 10-K for
                  the year ended December 31, 1994)

         4.2      Certificate of Limited Partnership of the Operating
                  Partnership (Incorporated by reference to Exhibit No. 4.2 of
                  the Company's Form 10-K for the year ended December 31, 1994)

         4.3      Ninth Amendment to Amended and Restated Agreement of Limited
                  Partnership of the Operating Partnership (Incorporated by
                  reference to Exhibit No. 4.1 of the Company's Quarterly Report
                  on Form 10-Q for the Quarter Ended June 30, 1997)

         4.4      Tenth Amendment to Amended and Restated Agreement of Limited
                  Partnership of the Operating Partnership (Incorporated by
                  reference to Exhibit No. 4.4 of the Company's Form 10-K for
                  the year ended December 31, 1997)

         4.5      Fifteenth Amendment to First Amended and Restated Agreement of
                  Limited Partnership of the Operating Partnership (Incorporated
                  by reference to

                                       57
<PAGE>

                  Exhibit 99.1 of the Company's Quarterly Report on Form 10-Q
                  for the Quarter Ended March 31, 1998)

         4.6      Seventeenth Amendment to First Amended and Restated Agreement
                  of Limited Partnership of the Operating Partnership
                  (Incorporated by reference to Exhibit No. 4.6 of the Company's
                  Form 10-K for the year ended December 31, 1998)

         10.1     Noncompetition Agreement by and among the Company, the
                  Operating Partnership and Robert P. Kogod and Robert H. Smith
                  (Incorporated by reference to Exhibit No. 10.1 of the
                  Company's Form 10-K for the year ended December 31, 1994)

         10.2     Registration Rights and Lock-up Agreement (Incorporated by
                  reference to Exhibit No. 10.2 of the Company's Form 10-K for
                  the year ended December 31, 1994)

         10.3     Pledge Agreement (Incorporated by reference to Exhibit No.
                  10.3 of the Company's Form 10-K for the year ended December
                  31, 1994)

         10.4     First Amended and Restated 1994 Employee Stock and Unit Option
                  Plan (Incorporated by reference to Exhibit No. 10.4 of the
                  Company's Form 10-K for the year ended December 31, 1994)

         10.5     First Amended and Restated 1994 Employee Restricted Stock and
                  Restricted Unit Plan (Incorporated by reference to Exhibit No.
                  10.5 of the Company's Form 10-K for the year ended December
                  31, 1994)

         10.6     Non-Employee Directors Stock Option Plan (Incorporated by
                  reference to Exhibit No. 10.6 of the Company's Form 10-K for
                  the year ended December 31, 1994)

         10.7     Subscription Agreement (Incorporated by reference to Exhibit
                  No. 10.7 of the Company's Form 10-K for the year ended
                  December 31, 1994)

         10.8     Voting Stock Partnership Agreement for Smith Property
                  Management Partnership (Incorporated by reference to Exhibit
                  No. 10.8 of the Company's Form 10-K for the year ended
                  December 31, 1994)

         10.9     Voting Stock Partnership Agreement for Smith Management
                  Construction Partnership (Incorporated by reference to Exhibit
                  No. 10.9 of the Company's Form 10-K for the year ended
                  December 31, 1994)

         10.10    Voting Stock Partnership Agreement for Consolidated
                  Engineering Services Partnership (Incorporated by reference to
                  Exhibit No. 10.10 of the

                                       58
<PAGE>

                  Company's Form 10-K for the year ended December 31, 1994)

         10.11    Amended and Restated Articles of Incorporation of Smith Realty
                  Company (Incorporated by reference to Exhibit No. 10.11 of the
                  Company's Form 10-K for the year ended December 31, 1994

         10.12    By-Laws of Smith Property Management, Inc. (Incorporated by
                  reference to Exhibit No. 10.12 of the Company's Registration
                  Statement on Form S-11, No. 33-75288)

         10.13    Articles of Incorporation of Smith Management Construction,
                  Inc. (Incorporated by reference to Exhibit No. 10.13 of the
                  Company's Registration Statement on Form S-11, No. 33-75288)

         10.14    By-Laws of Smith Management Construction, Inc. (Incorporated
                  by reference to Exhibit No. 10.14 of the Company's
                  Registration Statement on Form S-11, No. 33-75288)

         10.15    Articles of Incorporation of Consolidated Engineering
                  Services, Inc. (Incorporated by reference to Exhibit No. 10.15
                  of the Company's Registration Statement on Form S-11, No.
                  33-75288)

         10.16    By-Laws of Consolidated Engineering Services, Inc.
                  (Incorporated by reference to Exhibit No. 10.16 of the
                  Company's Registration Statement on Form S-11, No. 33-75288)

         10.17    Certificate of Incorporation of Smith One, Inc. (Incorporated
                  by reference to Exhibit No. 10.17 of the Company's
                  Registration Statement on Form S-11, No. 33-75288)

         10.18    By-Laws of Smith One, Inc. (Incorporated by reference to
                  Exhibit No. 10.18 of the Company's Registration Statement on
                  Form S-11, No. 33-75288)

         10.19    Agreement of Limited Partnership of Smith Property Holdings
                  One L.P. (Incorporated by reference to Exhibit No. 10.19 of
                  the Company's Form 10-K for the year ended December 31, 1994)

         10.20    Agreement of Limited Partnership of Smith Property Holdings
                  One (D.C.) L.P. (Incorporated by reference to Exhibit No.
                  10.20 of the Company's Form 10-K for the year ended December
                  31, 1994)

         10.21    Certificate of Incorporation of Smith Two, Inc. (Incorporated
                  by reference to Exhibit No. 10.21 of the Company's
                  Registration Statement on Form S-11, No. 33-75288)

                                       59
<PAGE>

         10.22    By-Laws of Smith Two, Inc. (Incorporated by reference to
                  Exhibit No. 10.22 of the Company's Registration Statement on
                  Form S-11, No. 33-75288)

         10.23    Agreement of Limited Partnership of Smith Property Holdings
                  Two L.P. (Incorporated by reference to Exhibit No. 10.23 of
                  the Company's Form 10-K for the year ended December 31, 1994)

         10.24    Agreement of Limited Partnership of Smith Property Holdings
                  Two (D.C.) L.P. (Incorporated by reference to Exhibit No.
                  10.24 of the Company's Form 10-K for the year ended December
                  31, 1994)

         10.25    Certificate of Incorporation of Smith Three, Inc.
                  (Incorporated by reference to Exhibit No. 10.25 of the
                  Company's Registration Statement on Form S-11, No. 33-75288)

         10.26    By-Laws of Smith Three, Inc. (Incorporated by reference to
                  Exhibit No. 10.26 of the Company's Registration Statement on
                  Form S-11, No. 33-75288)

         10.27    Agreement of Limited Partnership of Smith Property Holdings
                  Three L.P. (Incorporated by reference to Exhibit No. 10.27 of
                  the Company's Form 10-K for the year ended December 31, 1994)

         10.28    Agreement of Limited Partnership of Smith Property Holdings
                  Three (D.C.) L.P. (Incorporated by reference to Exhibit No.
                  10.28 of the Company's Form 10-K for the year ended December
                  31, 1994)

         10.29    Certificate of Incorporation of Smith Four, Inc. (Incorporated
                  by reference to Exhibit No. 10.29 of the Company's
                  Registration Statement on Form S-11, No. 33-75288)

         10.30    By-Laws of Smith Four, Inc. (Incorporated by reference to
                  Exhibit No. 10.30 of the Company's Registration Statement on
                  Form S-11, No. 33-75288)

         10.31    Agreement of Limited Partnership of Smith Property Holding
                  Four L.P. (Incorporated by reference to Exhibit No. 10.31 of
                  the Company's Form 10-K for the year ended December 31, 1994)

         10.32    Amended and Restated Certificate of Incorporation of Smith
                  Five, Inc. (Incorporated by reference to Exhibit No. 10.32 of
                  the Company's Form 10-K for the year ended December 31, 1994)

         10.33    By-Laws of Smith Five, Inc. (Incorporated by reference to
                  Exhibit No. 10.33 of the Company's Registration Statement on
                  Form S-11, No. 33-75288)

                                       60
<PAGE>

         10.34    Agreement of Limited Partnership of Smith Property Holdings
                  Five (D.C.) L.P. (Incorporated by reference to Exhibit No.
                  10.34 of the Company's Form 10-K for the year ended December
                  31, 1994)

         10.35    License Agreement between Charles E. Smith Management, Inc.
                  and the Company (Incorporated by reference to Exhibit No.
                  10.35 of the Company's Form 10-K for the year ended December
                  31, 1994)

         10.36    License Agreement between Charles E. Smith Management, Inc.
                  and the Operating Partnership (Incorporated by reference to
                  Exhibit No. 10.36 of the Company's Form 10-K for the year
                  ended December 31, 1994)

         10.37    Agreement of Limited Partnership of Smith Property Holdings
                  Five L.P. (Incorporated by reference to Exhibit No. 10.0 of
                  the Company's Quarterly Report on Form 10-Q for the Quarter
                  Ended September 30, 1994)

         10.38    Certificate of Limited Partnership of Smith Property Holdings
                  Five L.P. (Incorporated by reference to Exhibit No. 10.38 of
                  the Company's Form 10-K for the year ended December 31, 1994)

         10.39    Deed of Trust and Security Agreement between Smith Property
                  Holdings Three L.P. ("Smith Three") and The Northwestern
                  Mutual Life Insurance Company ("Northwestern") (Incorporated
                  by reference to Exhibit No. 10.2 of the Company's Quarterly
                  Report on Form 10-Q for the Quarter Ended June 30, 1994)

         10.40    Guarantee of Recourse Obligations by Smith Three and the
                  Operating Partnership (Incorporated by reference to Exhibit
                  No. 10.3 of the Company's Quarterly Report on Form 10-Q for
                  the Quarter Ended June 30, 1994)

         10.41    Absolute Assignment of Leases and Rents between Smith Three
                  and Northwestern (Incorporated by reference to Exhibit No.
                  10.4 of the Company's Quarterly Report on Form 10-Q for the
                  Quarter Ended June 30, 1994)

         10.42    Promissory Note of Smith Three to Northwestern (Incorporated
                  by reference to Exhibit No. 10.5 of the Company's Quarterly
                  Report on Form 10-Q for the Quarter Ended June 30, 1994)

         10.43    Purchase Money Deed of Trust and Security Agreement between
                  Smith Property Holdings Three (D.C.) L.P. ("Smith Three D.C.")
                  and Northwestern (Incorporated by reference to Exhibit No.
                  10.6 of the Company's Quarterly Report on Form 10-Q for the
                  Quarter Ended June 30, 1994)

         10.44    Guarantee of Recourse Obligations by Smith Three D.C. and the
                  Operating

                                       61
<PAGE>

                  Partnership (Incorporated by reference to Exhibit No. 10.7 of
                  the Company's Quarterly Report on Form 10-Q for the Quarter
                  Ended June 30, 1994)

         10.45    Absolute Assignment of Leases and Rents between Smith Three
                  D.C. and Northwestern (Incorporated by reference to Exhibit
                  No. 10.8 of the Company's Quarterly Report on Form 10-Q for
                  the Quarter Ended June 30, 1994)

         10.46    Purchase Money Promissory Note of Smith Three D.C. to
                  Northwestern (Incorporated by reference to Exhibit No. 10.9 of
                  the Company's Quarterly Report on Form 10-Q for the Quarter
                  Ended June 30, 1994)

         10.47    Supplemental Loan Agreement by and among Smith Property
                  Holdings Two L.P. ("Smith Two"), Smith Property Holdings Two
                  (D.C.) L.P. ("Smith Two D.C.") and Green Park Financial
                  Limited Partnership ("Green Park") (Incorporated by reference
                  to Exhibit No. 10.47 of the Company's Form 10-K for the year
                  ended December 31, 1998)

         10.48    Supplemental Loan Agreement by and among Smith Property
                  Holdings One L.P. ("Smith One D.C."), Smith Property Holdings
                  One (D.C.) L.P. ("Smith One D.C.") and GMAC (Incorporated by
                  reference to Exhibit No. 10.13 of the Company's Quarterly
                  Report on Form 10-Q for the Quarter Ended June 30, 1994)

         10.49    Multifamily Note of Smith One to GMAC (Incorporated by
                  reference to Exhibit No. 10.14 of the Company's Quarterly
                  Report on Form 10-Q for the Quarter Ended June 30, 1994)

         10.50    Multifamily Note of Smith One D.C. to GMAC (Incorporated by
                  reference to Exhibit No. 10.15 of the Company's Quarterly
                  Report on Form 10-Q for the Quarter Ended June 30, 1994)

         10.51    Absolute Assignment of Leases and Rents by Smith One D.C. to
                  GMAC (Incorporated by reference to Exhibit No. 10.16 of the
                  Company's Quarterly Report on Form 10-Q for the Quarter Ended
                  June 30, 1994)

         10.52    Property Management Agreement by and between Smith One and the
                  Operating Partnership (Incorporated by reference to Exhibit
                  No. 10.17 of the Company's Quarterly Report on Form 10-Q for
                  the Quarter Ended June 30, 1994)

         10.53    Multifamily Deed of Trust, Assignment of Rents and Security
                  Agreement between Smith One D.C. and GMAC (Incorporated by
                  reference to Exhibit No. 10.18 of the Company's Quarterly
                  Report on Form 10-Q for the Quarter Ended June 30, 1994)

                                       62
<PAGE>

         10.54    Commercial Leasing and Property Management Agreement between
                  Smith Three and the Operating Partnership (Incorporated by
                  reference to Exhibit No. 10.19 of the Company's Quarterly
                  Report on Form 10-Q for the Quarter Ended June 30, 1994)

         10.55    Agreement of Limited Partnership of Smith Employment Services
                  L.P. (Incorporated by reference to Exhibit No. 10.58 of the
                  Company's Form 10-K for the year ended December 31, 1994)

         10.56    Certificate of Limited Partnership of Smith Employment
                  Services L.P. (Incorporated by reference to Exhibit No. 10.59
                  of the Company's Form 10-K for the year ended December 31,
                  1994)

         10.57    Second Restated and Amended Agreement of Limited Partnership
                  of First Herndon Associated Limited Partnership (Incorporated
                  by reference to Exhibit No. 10.1 of the Company's Quarterly
                  Report on Form 10-Q for the Quarter Ended June 30, 1995)

         10.58    Second Amendment to the Certificate of Limited Partnership of
                  First Herndon Associates Limited Partnership (Incorporated by
                  reference to Exhibit No. 10.2 of the Company's Quarterly
                  Report on Form 10-Q for the Quarter Ended June 30, 1995)

         10.59    Certificate of Incorporation of Smith Six, Inc. (Incorporated
                  by reference to Exhibit No. 10.1 of the Company's Quarterly
                  Report on Form 10-Q for the Quarter Ended March 31, 1995)

         10.60    By-Laws of Smith Six, Inc. (Incorporated by reference to
                  Exhibit No. 10.2 of the Company's Quarterly Report on Form
                  10-Q for the Quarter Ended March 31, 1995)

         10.61    Agreement of Limited Partnership of Smith Property Holdings
                  Six L.P. (Incorporated by reference to Exhibit No. 10.3 of the
                  Company's Quarterly Report on Form 10-Q for the Quarter Ended
                  March 31, 1995)

         10.62    Agreement of Limited Partnership of Smith Property Holdings
                  Six (D.C.) L.P. (Incorporated by reference to Exhibit No. 10.4
                  of the Company's Quarterly Report on Form 10-Q for the Quarter
                  Ended March 31, 1995)

         10.63    Certificate of Incorporation of Smith Seven, Inc.
                  (Incorporated by reference to Exhibit No. 10.66 of the
                  Company's Form 10-K for the year ended December 31, 1995)

                                       63
<PAGE>

         10.64    By-Laws of Smith Seven, Inc. (Incorporated by reference to
                  Exhibit No. 10.67 of the Company's Form 10-K for the year
                  ended December 31, 1995)

         10.65    Agreement of Limited Partnership of Smith Property Holdings
                  Seven L.P. (Incorporated by reference to Exhibit No. 10.68 of
                  the Company's Form 10-K for the year ended December 31, 1995)

         10.66    Commitment for Mortgage Loan to the Operating Partnership from
                  Northwestern Mutual Life Insurance Company (Incorporated by
                  reference to Exhibit No. 10.69 of the Company's Form 10-K for
                  the year ended December 31, 1995)

         10.67    First Amendment to First Amended and Restated Agreement of
                  1994 Employee Stock and Unit Option Plan of Charles E. Smith
                  Residential Realty, Inc. (Incorporated by reference to Exhibit
                  4.9 in the Company's Registration Statement on Form S-8, File
                  No. 333-67421)

         10.68    Second Amendment to First Amended and Restated Agreement of
                  1994 Employee Stock and Unit Option Plan of Charles E. Smith
                  Residential Realty, Inc. (Incorporated by reference to Exhibit
                  No. 10.71 of the Company's Form 10-K for the year ended
                  December 31, 1998)

         10.69    Rights Agreement between Charles E. Smith Residential Realty,
                  Inc. and First Union National Bank, as Rights Agent
                  (Incorporated by reference to Exhibit No. 10.72 of the
                  Company's Form 10-K for the year ended December 31, 1998)

         10.70    Third Amendment to First Amended and Restated of 1994 Employee
                  Restricted Stock and Unit Option Plan of Charles E. Smith
                  Residential Realty, Inc. (Incorporated by reference to Exhibit
                  No. 10.73 of the Company's Form 10-K for the year ended
                  December 31, 1999)

         10.71    First Amendment to First Amended and Restated 1994 Employee
                  Restricted Stock and Restricted Unit Plan of Charles E. Smith
                  Residential Realty, Inc. (Incorporated by reference to Exhibit
                  10.74 of the Company's Form 10-K for the year ended December
                  31, 1999)

         10.72    Fourth Amendment to First Amended and Restated 1994 Employee
                  Stock and Unit Option Plan of Charles E. Smith Residential
                  Realty, Inc. (Incorporated by reference to Exhibit 10.75 of
                  the Company's Form 10-K for the year ended December 31, 1999)

         10.73    Fifth Amendment to First Amended and Restated 1994 Employee
                  Stock and Unit Option Plan of Charles E. Smith Residential
                  Realty, Inc.

                                       64
<PAGE>

         10.74    Credit Agreement By and Among Smith Property Holdings Lincoln
                  Towers LLC and Smith Property Holdings McClurg Court LLC, as
                  Borrower and Columbia National Real Estate Finance, Inc., as
                  Lender. (Incorporated by reference to Exhibit 99.1 in the
                  Company's Quarterly Report on Form 10-Q for the Quarter Ended
                  June 30, 2000)

         10.75    Credit Agreement ($100,000,000 Revolving Line of Credit)
                  between the Operating Partnership and PNC Bank, National
                  Association, et al.

         10.76    Credit Agreement ($50,000,000 Revolving Line of Credit)
                  between the Operating Partnership and PNC Bank, National
                  Association, et al.

         21       Subsidiaries of the Registrant

         23.1     Consent of Arthur Andersen LLP

         27       Financial Data Schedule

                                       65
<PAGE>

14(b)    REPORTS ON FORM 8-K

         A Form 8-K dated October 25, 2000 was filed on November 9, 2000 to
report the Company's acquisition of Harbour House located in Southeast Florida.

14(c)    EXHIBITS

         The list of Exhibits filed with this report is set forth in response to
Item 14(a)(3). The required exhibit index has been filed with the exhibits.

14(dD)   FINANCIAL STATEMENTS

         See Index to Financial Statements and Schedules on Page F-1 of this
Form 10-K.

                                       66
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, on this
30th day of March 2001.


                                    CHARLES E. SMITH RESIDENTIAL REALTY L.P.
                                    by Charles E. Smith Residential Realty Inc.
                                         its General Partner




                                    By /s/ ERNEST A. GERARDI, JR.
                                       --------------------------
                                       Ernest A. Gerardi, Jr.
                                       President and Chief Executive Officer


         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated on this 30th day of March 2001.


    Signature                                 Title
    ---------                                 -----

/s/ ROBERT H. SMITH              Chairman of the Board and Director
--------------------------
Robert   H. Smith


/s/ ROBERT P. KOGOD              Director
--------------------------
Robert P. Kogod


/s/ ERNEST A. GERARDI, JR.       President, Chief Executive Officer,
--------------------------       and Director
Ernest A. Gerardi, Jr.


/s/ WESLEY D. MINAMI             Executive Vice President, Chief Operating
--------------------------       Officer and Chief Financial Officer
Wesley D. Minami

                                       67
<PAGE>

/s/ STEVEN E. GULLEY             Vice President, Controller, and Chief
--------------------------       Accounting Officer
Steven E. Gulley



/s/ R. MICHAEL MCCULLOUGH        Director
--------------------------
R. Michael McCullough



/s/ CHARLES B. GILL              Director
--------------------------
Charles B. Gill



/s/ KAREN HASTIE WILLIAMS        Director
--------------------------
Karen Hastie Williams



/s/ ROGER J. KILEY, JR.          Director
--------------------------
Roger J. Kiley, Jr.


                                       68
<PAGE>

                    CHARLES E. SMITH RESIDENTIAL REALTY L.P.

                   INDEX TO FINANCIAL STATEMENTS AND SCHEDULES


CHARLES E. SMITH RESIDENTIAL REALTY L.P.
FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT

                                                                  Pages
                                                                  -----

         Report of Independent Public Accountants                  F-2

         Consolidated Balance Sheets                               F-3

         Consolidated Statements of Operations                     F-4

         Consolidated Statements of Partner's Equity
         and Other Limited Partners' Interests                     F-5

         Consolidated Statements of Cash Flows                     F-6

         Notes to Consolidated Financial Statements                F-7 to F-39


SCHEDULES FILED AS PART OF THIS REPORT

         Schedule III - Real Estate and Accumulated Depreciation   S-1 to S-2


         All other Schedules have been omitted because the required information
         of such other Schedules is not present in amounts sufficient to require
         submission of the schedule or because the required information is
         included in the consolidated financial statements.

                                      F-1
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To Charles E. Smith Residential Realty L.P.:


We have audited the accompanying consolidated balance sheets of Charles E. Smith
Residential Realty L.P. (a Delaware limited partnership) and subsidiaries as of
December 31, 2000 and 1999, and the related consolidated statements of
operations, partner's equity and other limited partners' interest, and cash
flows for each of the years in the three year period ended December 31, 2000.
These consolidated financial statements and the schedule referred to below are
the responsibility of the management of Charles E. Smith Residential Realty L.P.
Our responsibility is to express an opinion on these consolidated financial
statements and schedule 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Charles
E. Smith Residential Realty L.P. and subsidiaries as of December 31, 2000 and
1999, and the consolidated results of their operations and their cash flows for
each of the years in the three year period ended December 31, 2000, in
conformity with accounting principles generally accepted in the United States.

Our audit was made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. Schedule III - Real Estate
and Accumulated Depreciation is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not a required part of the
basic consolidated financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic consolidated financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic consolidated financial statements taken as a whole.

                                                             ARTHUR ANDERSEN LLP

Vienna, Virginia
February 2, 2001

                                      F-2
<PAGE>

                    CHARLES E. SMITH RESIDENTIAL REALTY L.P.
                           CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                          As of December 31,
                                                                     --------------------------
                                                                         2000           1999
                                                                     -----------    -----------

        ASSETS

<S>                                                                  <C>            <C>
Rental property, net                                                 $ 1,850,171    $ 1,369,416
Rental property under development                                         61,596        169,626
Cash and cash equivalents                                                     --         10,557
Escrow funds                                                               6,483         18,309
Investment in and advances to Property Service Businesses                 89,244         70,282
Investment in unconsolidated properties                                   32,397         22,338
Deferred charges, net                                                     16,975         16,727
Security deposits                                                          8,807          4,058
Other assets                                                               9,559         23,465
                                                                     -----------    -----------
                                                                     $ 2,075,232    $ 1,704,778
                                                                     ===========    ===========

        LIABILITIES AND EQUITY

Liabilities
     Mortgage loans and notes payable:
        Mortgage loans                                               $ 1,064,845    $   817,278
        Construction loans                                                14,859         80,045
        Line of credit                                                   144,000         72,000
                                                                     -----------    -----------
           Total mortgage loans and notes payable                      1,223,704        969,323
     Accounts payable and accrued expenses                                47,387         44,480
     Security deposits                                                     8,807          4,058
                                                                     -----------    -----------
        Total liabilities                                              1,279,898      1,017,861
                                                                     -----------    -----------

Commitments and contingencies

Other Limited Partners' Interest
     Preferred units, at liquidation value                                45,000         45,000
     Common units - 13,503,732 and 13,855,404 units issued and
        outstanding at December 31, 2000 and 1999, respectively,
        at redemption value                                              634,675        490,135
                                                                     -----------    -----------
                                                                         679,675        535,135
                                                                     -----------    -----------

Partner's Equity
        Preferred units, at liquidation value                            251,500        251,500
        Common units - 21,916,759 and 20,673,039 units issued and
           outstanding at December 31, 2000 and 1999, respectively      (135,841)       (99,718)
                                                                     -----------    -----------
              Total partner's equity                                     115,659        151,782
                                                                     -----------    -----------

                                                                     $ 2,075,232    $ 1,704,778
                                                                     ===========    ===========
</TABLE>

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

                                      F-3
<PAGE>

                    CHARLES E. SMITH RESIDENTIAL REALTY L.P.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  (DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)

<TABLE>
<CAPTION>
                                                                              Year Ended December 31,
                                                                      -----------------------------------

                                                                         2000         1999         1998
                                                                      ---------    ---------    ---------
<S>                                                                   <C>          <C>          <C>
Rental Properties:
     Revenues                                                         $ 383,233    $ 301,233    $ 250,067

     Expenses
        Operating costs                                                (113,786)     (95,777)     (84,237)
        Real estate taxes                                               (33,010)     (23,173)     (17,254)
        Depreciation and amortization                                   (44,778)     (33,906)     (28,958)
                                                                      ---------    ---------    ---------
           Total expenses                                              (191,574)    (152,856)    (130,449)

Equity in income of unconsolidated properties                             2,465        1,192          448

Equity in income of Property Service Businesses before gains/losses       8,373        5,740        8,433

Corporate general and administrative expenses                           (11,290)      (9,607)      (8,947)
Interest income                                                             345        1,091          809
Interest expense                                                        (78,371)     (57,094)     (47,334)
                                                                      ---------    ---------    ---------


Income before gains/losses and extraordinary items                      113,181       89,699       73,027

Gain on sales                                                            71,426       63,673       18,150

Equity in gain (loss) on sales                                           (5,359)         802           --

Loss on unused treasury lock                                                 --           --       (4,923)
                                                                      ---------    ---------    ---------

Income before extraordinary item                                        179,248      154,174       86,254

Extraordinary item - loss on extinguishment of debt                          --         (360)     (16,384)
                                                                      ---------    ---------    ---------

Net income                                                              179,248      153,814       69,870

Less: Income attributable to common units                               (23,903)     (14,138)     (10,722)
                                                                      ---------    ---------    ---------

Net income attributable to common units                               $ 155,345    $ 139,676    $  59,148
                                                                      =========    =========    =========



Earnings per common unit - basic

      Income before extraordinary item                                $    4.44    $    4.25    $    2.50
      Extraordinary item                                                     --        (0.01)       (0.54)
                                                                      ---------    ---------    ---------

      Net income                                                      $    4.44    $    4.24    $    1.96
                                                                      =========    =========    =========

 Earnings per common unit - diluted

      Income before extraordinary item                                $    4.09    $    4.05    $    2.49
      Extraordinary item                                                     --        (0.01)       (0.54)
                                                                      ---------    ---------    ---------

      Net income                                                      $    4.09    $    4.04    $    1.95
                                                                      =========    =========    =========
</TABLE>

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

                                      F-4
<PAGE>

<TABLE>
<CAPTION>
                    CHARLES E. SMITH RESIDENTIAL REALTY L.P.
 CONSOLIDATED STATEMENTS OF PARTNER'S EQUITY AND OTHER LIMITED PARTNERS' INTEREST
                             (DOLLARS IN THOUSANDS)

                                                                 General Partner's General and           Other Limited
                                                                       Limited Interest               Partners' Interest
                                                                 ----------------------------    ----------------------------
                                                                                                                  Series H
                                                                  Preferred         Common          Common        Preferred
                                                                     Units           Units           Units           Units
                                                                 ------------    ------------    ------------    ------------

<S>                                                              <C>             <C>             <C>             <C>
Balance, December 31, 1997                                       $     79,675    $   (344,044)   $    502,719    $         --

    Units exchanged for acquisitions                                       --              --          11,820              --
    Adjustment for grants                                                  --              --             521              --
    Net income                                                             --          41,129          28,741              --
    Contribution by Charles E. Smith Residential Realty, Inc.          76,500          45,454              --              --
    Conversion of Preferred units to Common units                     (14,308)         14,308              --              --
    Offering costs                                                         --          (1,874)             --              --
    Repurchase and cancellation of Operating Partnership units             --              --            (594)             --
    Distributions                                                          --         (44,498)        (28,966)             --
    Other                                                                  --             121           2,878              --
    Adjustment to reflect Other Limited Partners' interest
       at redemption value                                                 --          90,861         (90,861)             --
                                                                 ------------    ------------    ------------    ------------

Balance, December 31, 1998                                            141,867        (198,543)        426,258              --

    Units exchanged for acquisitions                                       --              --          42,426              --
    Adjustment for grants                                                  --              --             762              --
    Net income                                                             --          95,278          58,536              --
    Contribution by Charles E. Smith Residential Realty, Inc.         130,000          30,625              --              --
    Proceeds from issuance of Preferred units                              --              --              --          45,000
    Conversion of Preferred units to Common units                     (20,367)         20,367              --              --
    Offering costs                                                         --          (4,837)             --              --
    Distributions                                                          --         (56,247)        (28,637)             --
    Other                                                                  --           3,596             833              --
    Adjustment to reflect Other Limited Partners' Interest
       at redemption value                                                 --          10,043         (10,043)             --
                                                                 ------------    ------------    ------------    ------------

Balance, December 31, 1999                                            251,500         (99,718)        490,135          45,000

    Units exchanged for acquisitions                                       --              --           1,270              --
    Cancellation of units                                                                              (1,821)
    Amortization of grants                                                 --              --             979              --
    Net income                                                             --         114,939          64,309              --
    Contribution by Charles E. Smith Residential Realty, Inc.              --          21,638              --              --
    Distributions                                                          --         (71,400)        (30,574)             --
    Exercise of options                                                    --           9,158              --              --
    Other                                                                  --             (81)             --              --
    Adjustment to reflect Other Limited Partners' Interest
       at redemption value                                                 --        (110,377)        110,377              --
                                                                 ------------    ------------    ------------    ------------

Balance, December 31, 2000                                       $    251,500    $   (135,841)   $    634,675    $     45,000
                                                                 ============    ============    ============    ============


Units issued and outstanding at December 31, 2000                   6,833,449      21,916,759      13,503,732       1,800,000
                                                                 ============    ============    ============    ============

Units issued and outstanding at December 31, 1999                   6,833,449      20,673,039      13,855,404       1,800,000
                                                                 ============    ============    ============    ============
</TABLE>

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

                                      F-5
<PAGE>

                    CHARLES E. SMITH RESIDENTIAL REALTY L.P.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                  Year Ended December 31,
                                                                            -----------------------------------
                                                                              2000          1999        1998
                                                                            ---------    ---------    ---------
<S>                                                                         <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                              $ 179,248    $ 153,814    $  69,870
    Adjustments to reconcile net income to net cash provided by operating
       activities:
          Extraordinary item - loss on extinguishment of debt                      --          360       16,384
          Loss on usused treasury lock                                             --           --        4,923
          Gain on sale                                                        (71,426)     (63,673)     (18,150)
          Depreciation and amortization                                        47,548       36,160       31,118
          Decrease (increase) in escrow funds                                   5,177       (4,075)       1,490
          Decrease (increase) in other assets                                  19,215       (1,925)       3,833
          Increase in accounts payable and accrued expenses                     3,494       20,524        9,098
                                                                            ---------    ---------    ---------
            Net cash provided by operating activities                         183,256      141,185      118,566
                                                                            ---------    ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisitions and development of rental property                          (254,690)    (305,737)    (255,695)
    Additions to rental property                                              (71,697)     (33,056)     (16,852)
    Disposition of rental property                                              8,223       88,558           --
    Increase in investment in and advances to Property Service Businesses     (18,962)     (36,240)     (14,492)
    Increase in investment in unconsolidated properties                       (10,179)      (5,540)          --
    Acquisition deposits and other                                             (9,520)      (6,475)      (2,956)
                                                                            ---------    ---------    ---------
            Net cash used in investing activities                            (356,825)    (298,490)    (289,995)
                                                                            ---------    ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
    (Increase) decrease in deferred charges                                    (4,450)       1,300       (6,149)
    Proceeds from sale of preferred stock and units, net                           --      170,163       74,626
    Proceeds from sale of common stock, net                                    21,638        7,000       45,454
    Mortgage loans, net                                                       233,728       87,041       58,495
    Lines of credit, net                                                       72,000      (33,000)      30,000
    Construction loans, net                                                   (65,186)      16,851       57,657
    Prepayment penalties                                                           --       (1,038)     (12,672)
    Loss on unused treasury lock                                                   --           --       (4,923)
    Repurchase of units                                                            --           --         (594)
    Dividends and distributions - Common                                      (80,037)     (71,394)     (63,253)
    Dividends and distributions - Preferred                                   (23,758)     (13,490)     (10,207)
    Other, net                                                                  9,077        4,429        2,995
                                                                            ---------    ---------    ---------
            Net cash provided by financing activities                         163,012      167,862      171,429
                                                                            ---------    ---------    ---------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                          (10,557)      10,557           --

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                 10,557           --           --
                                                                            ---------    ---------    ---------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                    $      --    $  10,557    $      --
                                                                            =========    =========    =========
</TABLE>

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

                                      F-6
<PAGE>

                    CHARLES E. SMITH RESIDENTIAL REALTY L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       ORGANIZATION AND FORMATION OF COMPANY

         Charles E. Smith Residential Realty, Inc. (the "Company"), formed in
June 1993, is a self-administered and self-managed equity real estate investment
trust ("REIT"). On June 30, 1994, the Company completed an initial public
offering and used the proceeds to acquire the sole general partnership and a
proportionate limited partnership interest in Charles E. Smith Residential
Realty L.P. (the "Operating Partnership") which is the successor entity to the
CES Group. Simultaneously, the entities that owned the properties and the
related service businesses included in the CES Group contributed the properties
and service businesses to the Operating Partnership (or corporations in which
the Operating Partnership owns substantially all of the non-voting equity) and
received in exchange, directly or indirectly, units of limited partnership in
the Operating Partnership. The contributed assets and liabilities were recorded
at historical net book value, which transferred a net carry-over deficit of
$244.2 million to the Operating Partnership. Some references made herein to the
Company include the Operating Partnership and the Property Service Businesses,
as the context requires.

         The Company, through the Operating Partnership and its subsidiaries, is
engaged in the ownership, operation, management, leasing, acquisition, and
development of real estate properties, primarily residential multifamily
properties. As of December 31, 2000, the Operating Partnership owned 59
operating multifamily properties containing 27,186 apartment units, had 480
units under construction at one owned site and had 226 units under construction
at one site for which the Company owned substantially all of the economic
interest. The Operating Partnership also had interests in three operating
multifamily properties totaling 1,267 units and in one property under
construction totaling 630 units. The Operating Partnership also had a contingent
agreement to purchase a to-be-constructed property totaling 383 units. In
addition, the Operating Partnership owned one freestanding community retail
shopping center aggregating 205,000 square feet. The properties are located in
the following metropolitan areas:

<TABLE>
<CAPTION>
                                                                              Southeast
                             Washington, D.C.       Chicago       Boston       Florida        Total
                             ----------------       -------       ------       -------        -----
<S>                                <C>                 <C>           <C>          <C>           <C>
MULTIFAMILY
     Operating                     45                  8             3            6             62
     Under Construction(1)          3                  1                                         4

RETAIL CENTERS                      1                 --            --           --              1
                                   --                 --            --           --             --
                                   49                  9             3            6             67
                                   ==                 ==            ==           ==             ==
</TABLE>

(1)      Includes one site under agreement to purchase.


         Additionally, the Operating Partnership owned substantially all of the
equity in entities which provide multifamily property management and leasing,
furnished corporate apartments, interior construction and renovation, and
building engineering and technical services (collectively, the "Property Service
Businesses").

                                      F-7
<PAGE>

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

         The accompanying consolidated financial statements include all of the
accounts of the Company, the Operating Partnership and its subsidiaries and
affiliates. The Company consolidates the Operating Partnership due to the
Company's control as sole general partner. The Company uses the equity method of
accounting for its non-voting interest in the Property Service Businesses as
well as its partial interests in the unconsolidated properties.

         All significant inter-company balances and transactions have been
eliminated.

RENTAL PROPERTY

         The Company recorded the contributed properties at the former owners'
historical cost. Rental property subsequently acquired or developed is recorded
at the Company's actual cost, including interest and real estate taxes incurred
during development, and increased or decreased, where material, by a fair value
adjustment on assumed debt. Fair value adjustments are based on current interest
rates available to the Company for the earlier of either a similar maturity or
the projected refinance date and are amortized to interest expense over that
period. Ordinary repairs and maintenance, such as minor replacements and
painting, are expensed as incurred. Major improvements, such as new HVAC
equipment and kitchen/bath renovations, are capitalized when they extend the
useful life, increase capacity or improve the efficiency of the asset.
Depreciation on buildings and improvements is computed using the straight-line
method over estimated useful asset lives as follows:

Base building                       40 years
Land improvements                   20 years
Building improvements               7 to 20 years
Tenant improvements                 Shorter of remaining lease term or useful
                                    life
Furniture, fixtures and equipment   3 to 10 years

SALES OF RENTAL PROPERTY

         Sales of property are recorded in the financial statements upon
transfer of title and when all other requirements of Statement of Financial
Accounting Standards No. 66 "Accounting For Sales of Real Estate" are met, which
generally occurs at settlement. Where possible, the Company prefers to structure
sales as tax-deferred I.R.C. Section 1031 exchanges in order to minimize taxable
gains to the shareholders. To receive favorable tax treatment, the Company must
follow certain specific rules including designating a trustee to receive and
maintain the sale proceeds and using the proceeds to acquire replacement
property within 180 days. The Company believes it has satisfactorily met all of
the requirements for sales transactions designated as Section 1031 exchanges.

                                      F-8
<PAGE>

         Gains or losses on the sale of rental property are recorded upon
settlement as the net sales price less the undepreciated book value of the
asset. Such gains or losses may differ substantially for tax purposes
particularly for transactions structured as tax-deferred Section 1031 exchanges.

DEFERRED CHARGES

         Deferred charges consist primarily of loan fees, which are amortized to
interest expense over the terms of the notes using the effective interest rate
method, and retail lease acquisition costs, which are amortized over the terms
of the related leases.

REVENUE RECOGNITION

         The Company has implemented Staff Accounting Bulletin ("SAB") 101,
"Revenue Recognition", which had no material impact on the financial statements.

         Rental income attributable to residential leases is recognized when due
from residents. The Company requires residents to initially execute a one-year
lease. At the expiration of the lease term, if not renewed, the lease converts
to a month-to-month basis.

         Minimum rental income attributable to retail leases is recognized on a
straight-line basis over the term of the lease regardless of when payments are
due. Minimum rental income recognized in excess of payments due was $1.5 million
and $5.7 million at December 31, 2000 and 1999, respectively, and is included in
other assets. The lease agreements contain provisions that provide for
reimbursement from the tenants for their share of real estate taxes and certain
common area maintenance costs.

         The future minimum lease payments to be received by the Company under
noncancelable retail leases as of December 31, 2000 are as follows (in
thousands):

                    Year Ending
                   December 31,
                   ------------
                       2001                     $      2,537
                       2002                            2,457
                       2003                            2,435
                       2004                            2,294
                       2005                            2,265
                    Thereafter                        12,769
                                                ------------
                                                $     24,757
                                                ============

INCOME TAXES

         These financial statements contain no provision for federal income
taxes since the entity is a partnership and, therefore, all federal income tax
liabilities and/or tax benefits are passed through to the individual partners in
accordance with the partnership agreement and the Internal Revenue Code.

                                      F-9
<PAGE>

         The Company's income tax basis in its assets and liabilities was $1,495
million and $1,197 million, respectively, at December 31, 2000 and $1,229
million and $948 million, respectively, at December 31, 1999.

CASH AND CASH EQUIVALENTS

         Cash and cash equivalents include all cash and cash equivalent
investments with original maturities of three months or less.


USE OF ESTIMATES IN THE FINANCIAL STATEMENTS

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions related to the net realizable value of rental property, the
collectibility of accounts and notes receivable, and the outcome of asserted and
unasserted claims 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 periods. Actual results could differ from those estimates.

IMPAIRMENT OF LONG-LIVED ASSETS

         Management assesses for impairment any property whenever events or
circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognized when the sum of the estimated undiscounted future
cash flows before interest charges is less than its carrying value. The loss is
measured as the difference between the carrying value and the fair value of the
property.

STOCK-BASED COMPENSATION

         The Company accounts for stock-based compensation programs under
Accounting Principles Board Opinion No. 25 whereby compensation expense is equal
to the excess, if any, of the quoted market price of the stock at the grant date
over the exercise price.

NEW ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities". In June 2000, the FASB issued
SFAS No. 138, which amends certain provisions of SFAS No. 133 to clarify areas
causing difficulty in implementation. The Company will adopt SFAS No. 133/138,
the adoption of which is expected to have no material impact on the Company's
results of operation, financial position or cash flow.

                                      F-10
<PAGE>

RECLASSIFICATIONS

         Certain reclassifications of the prior years' information have been
made to conform to the current year's presentation.


3.       RENTAL PROPERTY

RENTAL PROPERTY

         Rental property consists of the following as of December 31 (in
thousands):

                                     2000           1999
                                  -----------    -----------
Land                              $   293,765    $   215,748
Buildings and improvements          1,817,721      1,395,982
Property under construction            61,596        169,932
                                  -----------    -----------
                                    2,173,082      1,781,662
Less:  Accumulated depreciation      (261,315)      (242,620)
                                  -----------    -----------
                                  $ 1,911,767    $ 1,539,042
                                  ===========    ===========


         Depreciation expense of the Company was $44.3 million, $33.7 million
and $28.6 million for the years ended December 31, 2000, 1999 and 1998,
respectively. Repairs and maintenance expense of the Company was $14.6 million,
$14.5 million and $13.6 million for the years ended December 31, 2000, 1999 and
1998, respectively.

ACQUISITIONS

         During 2000, the Company acquired eight properties for $343.9 million,
adding 3,543 apartment units. The Operating Partnership issued a total of
approximately 36,000 Operating Partnership units valued at $1.3 million and
assumed $16.5 million in mortgage loans. The conversion of these Operating
Partnership units into Company common stock is generally restricted for up to
two years.

         In 1999, the Company acquired eight properties for $404.5 million,
adding 5,693 apartment units. The Operating Partnership issued a total of
approximately 1.1 million Operating Partnership units valued at $35.3 million
and assumed $106.9 million in mortgage loans that were adjusted to a fair value
of $108.5 million. The conversion of these Operating Partnership units into
Company common stock is generally restricted for up to two years. In addition,
the Company issued 694,586 common shares valued at $23.6 million and used the
proceeds from issuing 641,026 Series G Preferred Shares valued at $25 million in
connection with the Mirador (formerly, Forte Towers) acquisition. The balance
was funded from available cash and draws on the line of credit.

         In 1999, the Company acquired the land beneath its Crystal Square
property and the 5.1% net profit interest in its Crystal Plaza property. The
purchase price of $10.0 million consisted of

                                      F-11
<PAGE>

32,258 Operating Partnership units valued at $1.0 million and the assumption of
debt, which was repaid with $9.0 million cash drawn upon the line of credit.
This transaction was completed concurrently with the purchase by Charles E.
Smith Commercial Realty L.P. ("CESCR", a related party) of commercial land and
partnership interests. The Company also acquired the land beneath its Orleans
Village property during 1999. The purchase price of $0.4 million consisted of
7,797 Operating Partnership units valued at $0.2 million and cash of $0.2
million.

DISPOSITIONS

         All sales of property and property interests were made to unrelated
third parties for cash.

         In 2000, the Company sold two operating multifamily properties and one
retail property in northern Virginia for a total of $113.2 million. The sales
were completed as tax-deferred I.R.C. Section 1031 exchanges. The book gains
recognized on the sales totaled $71.4 million. The Company also sold a parcel of
land held for development at a loss of $0.3 million.

         In 1999, the Company sold six operating multifamily properties (one in
suburban Maryland, four in northern Virginia, and one in Washington, D.C.) for a
total of $100.3 million. Four of the six sales were completed as tax-deferred
I.R.C. Section 1031 exchanges. The book gains recognized on the sales totaled
$59.1 million. In addition, the Company sold a 52% interest in one property and
recognized an initial gain of $4.6 million (see Note 5). Subsequently, the
Company reduced the gain by $0.1 million based upon actual final costs.

DEVELOPMENT

         At December 31, 2000, the Company had 706 apartment units under
construction at two sites, and had a 40% interest in 630 additional units under
construction at one site. Total estimated development cost (including land) is
approximately $235 million of which $129 million is unfunded as of December 31,
2000.

4.       INVESTMENT IN AND ADVANCES TO PROPERTY SERVICE BUSINESSES

         The Company uses the equity method of accounting for its non-voting
interest in the Property Service Businesses, which include Smith Realty Company
("SRC"), Consolidated Engineering Services, Inc. and affiliates ("CES"), and
Smith Management Construction, Inc. ("SMC"). These companies provide services
which include property management, leasing, furnished corporate apartments,
engineering, construction and renovation. Under the equity method, the Company's
investment is adjusted for its proportionate share of earnings or losses of the
Property Service Businesses and by dividends received. The Operating Partnership
recognized its interest in the earnings of each of the Property Service
Businesses which aggregated $3.0 million, $6.5 million and $8.4 million for the
years ended December 31, 2000, 1999 and 1998, respectively. The Operating
Partnership recorded distributions aggregating $3.4 million, $9.8 million and
$10.5 million for the years ended December 31, 2000, 1999 and 1998,
respectively.

                                      F-12
<PAGE>

         The Property Service Businesses provide services to the Company under
one-year agreements, which are automatically renewable. Such services are
generally provided at cost (including a proportionate share of total overhead)
except property management and leasing services which are provided at cost plus
five percent. The Property Service Businesses also provide services to certain
partnerships and companies, which own multifamily and commercial office
properties and have Messrs. Smith and Kogod as the general partners or in
control positions ("Affiliates"). Such services are generally provided at cost
(including overhead) plus a fee, except for certain engineering and technical
services which are provided at cost and overhead.

         In November 1997, certain commercial office Affiliates combined into a
single partnership, CESCR. In conjunction with the combination, CES and SMC each
entered into agreements with CESCR through October 31, 2005 to continue
providing services under the same terms and conditions previously in place. In
addition, certain Financing Services personnel of SRC transferred to CESCR. SRC
entered into an agreement, which expired December 31, 1998, to provide Financing
Services for certain properties owned by CESCR. SRC earned $1.8 million in fee
income under this agreement in 1998. On May 1, 1999, the Company received from
an affiliate of Messrs. Smith and Kogod 79,905 Operating Partnership units
valued at $2.5 million as final settlement related to properties owned by CESCR
and immediately canceled the units. The transaction was accounted for as a
capital transaction, therefore no gain or loss was recorded. During 2000, SRC
and CESCR entered into an agreement through October 31, 2005 to equally share
finance fees generated by refinancings on properties controlled by Messrs. Smith
and Kogod but not owned by CESCR. The Company earned $0.2 million during 2000
under this agreement. Management does not expect any significant future income
from this agreement.

         In May 1998, SRC acquired Noel Enterprises, Inc. ("SCL West"), a
provider of furnished corporate apartments in Chicago for $6.3 million. Due to
its sustained failure to meet performance expectations in the suburban Chicago
furnished market, SRC sold SCL West in December 2000 and recognized a loss of
$5.4 million. As of January 1, 2001, SRC assumed the unfurnished leases
previously held by SCL West in the downtown Chicago area and plans to continue
operating these as furnished corporate apartments.

         During 1999, SRC sold its retail management and leasing business to
CESCR for $1.1 million plus certain adjustments. The Company recognized a gain
on the sale of $0.8 million.

         In addition to the above, SRC provided administrative services such as
accounting, systems and human resources services to the Operating Partnership
and Affiliates at cost (including overhead) in accordance with cost and
executive sharing agreements. In management's opinion, the allocation methods
provide reasonable estimates of the costs that would have been incurred had the
services been provided by the Operating Partnership.

                                      F-13
<PAGE>

         Total fees and administrative services charged by the Property Service
Businesses to the Operating Partnership and Affiliates follows (in thousands):

                                                       Year Ended December 31,
                                                      -------------------------
                                                      2000       1999      1998
                                                      ----       ----      ----
FEES CHARGED BY PROPERTY SERVICES BUSINESSES TO:

Operating Partnership                                $18,794   $15,569   $12,789
Affiliates                                            39,632    30,561    32,512

COSTS OF ADMINISTRATIVE SERVICES CHARGED BY SRC TO:

Operating Partnership                                $19,402   $14,006   $11,845
Affiliates                                             4,574     4,736     4,806


         The Operating Partnership had net working capital advances to the
Property Service Businesses of $59.5 million and $33.2 million at December 31,
2000 and 1999, respectively, which are reflected in the investment balance.

         Additionally, CES initiated an acquisition program in 1999.
Accordingly, the Company made additional loans to and investments in CES and
related businesses as follows.

         During 2000, CES acquired 4 privately owned mechanical service
companies for a total cost of approximately $59.6 million which consisted of
559,802 shares of the Company's common stock (purchased by CES from the Company
for $21.6 million), assumed debt of $0.7 million and cash of $37.3 million. CES
funded $34 million through the Operating Partnership in exchange for promissory
notes while the remaining $24.9 million was drawn on CES's bank line of credit
which is guaranteed by the Operating Partnership. In addition, the Operating
Partnership contributed to CES its interest in Combustioneer, Inc., a 1999
acquisition.

         During 1999, CES acquired 3 privately owned mechanical services
companies for $34.5 million and a facilities management business from CESCR for
$1.4 million. Total acquisitions cost of $35.9 million consisted of 200,000
shares of the Company's common stock and 161,765 Operating Partnership units
(purchased by CES from the Company and the Operating Partnership for $12.4
million) and cash of $23.5 million. CES funded $25.8 million through the
Operating Partnership in exchange for promissory notes of which $24.4 million
was refinanced in 2000 with a draw on its line of credit. The balance of $10.1
million was provided by capital contributions from the Operating Partnership.

                                      F-14
<PAGE>

         Combined summarized balance sheet information for the Property Service
Businesses follows (in thousands):

                                 As of December 31,
                              ----------------------
                                2000         1999
                              ---------    ---------
Assets(1)
     Accounts Receivable      $ 106,833    $  73,522
     Property, Net               19,703       10,589
     Goodwill                    61,983       28,302
     Other, Net                  14,304       12,876
                              ---------    ---------
                              $ 202,823    $ 125,289
                              =========    =========
Liabilities(1)
     Accounts Payable         $  36,627    $  39,255
     Deferred Revenue            15,124       13,976
     Due to Related Parties     148,756       52,816
     Other                        4,092        6,675
Equity                           (1,776)      12,567
                              ---------    ---------
                              $ 202,823    $ 125,289
                              =========    =========

(1)      Balance sheets exclude $44.5 million of notes due to the Operating
         Partnership which, under the equity method, are eliminated for purposes
         of carry-over basis accounting.


         Combined summarized income statement information for the Property
Service Businesses follows (in thousands):

                                   Year Ended December 31,
                            -----------------------------------
                               2000         1999         1998
                            ---------    ---------    ---------

Revenues                    $ 280,714    $ 146,098    $ 108,199
Operating Expenses           (261,804)    (137,776)     (98,072)
Depreciation/Amortization      (6,895)      (2,676)      (1,401)
Gain/(Loss) on Sale            (5,413)         810           --
Other Income/Expense, Net      (3,727)          95         (274)
                            ---------    ---------    ---------
      Net Income            $   2,875    $   6,551    $   8,452
                            =========    =========    =========

5.       INVESTMENT IN UNCONSOLIDATED PROPERTIES

         During 1999, the Company entered into three joint venture agreements
with J.P. Morgan Strategic Property Fund ("J.P. Morgan"), which include SPH
Renaissance LLC ("Renaissance"), SPH Springfield Station LLC ("Springfield
Station") and SPH University Center LLC ("University Center"). The Company also
has an equity investment in a fourth property, Brandywine, which it has held
since the initial public offering in 1994. The Company uses the equity method of
accounting for its interest in the unconsolidated properties.

         Renaissance. In March 1999, the Company and J.P. Morgan Strategic
Property Fund ("J.P. Morgan") formed a joint venture ("Renaissance"), which
acquired the Renaissance, a 330-unit multifamily property in Tysons Corner,
Virginia, for approximately $37 million. The joint venture has placed debt of
$19.0 million on the property which carries an interest rate of 6.48% and
matures in February 2006. Ownership interests in the joint venture are held 75%
by J.P. Morgan and 25%

                                      F-15
<PAGE>

by the Company. The Company's initial equity contribution totaled $4.4 million
consisting of 21,903 Operating Partnership units valued at $0.7 million and cash
of $3.7 million.

         Springfield Station. In May 1999, the Company and J.P. Morgan formed a
joint venture ("Springfield Station") to own and operate the Springfield
Station, a 631-unit multifamily property developed by the Company. The Company
sold a 52% interest in Springfield Station to J.P. Morgan and received proceeds
of approximately $50 million from the transaction. The joint venture placed $37
million in debt financing on the property at 6.85% fixed interest, which matures
on June 1, 2009.

         Stoneridge at University Center. In May 1999, the Company and J.P.
Morgan also formed a development joint venture ("University Center") to develop
a new 630-unit multifamily property in Loudoun County, Virginia at the western
end of the Dulles Technology corridor. The Company is providing development
services to the venture and has also provided a construction completion
guarantee. An affiliate, Smith Realty Company, provides management and marketing
services. Ownership interests are held 60% by J.P. Morgan and 40% by the
Company. Construction commenced during the third quarter of 1999. The first
deliveries occurred in June 2000 with final completion expected in the third
quarter of 2001. The joint venture obtained a $31 million, interest-only
construction loan in May 2000 with interest at LIBOR plus 125 basis points,
payable monthly, due May 10, 2003. As of December 31, 2000, the outstanding
balance on the loan was $13.5 million.

         Combined summarized balance sheet information for the unconsolidated
properties as of December 31, 2000 and 1999 follows (in thousands):

                                              2000       1999
                                            --------   --------
Assets
    Rental Property, Net                    $109,439   $111,482
    Rental Property Under Development         49,177     12,175
    Other                                      9,716      3,683
                                            --------   --------
                                            $168,332   $127,340
                                            ========   ========
Liabilities
    Mortgage Loans                          $ 60,500   $ 56,000
    Construction Loans                        17,888         --
    Accounts Payable and Accrued Expenses      1,694      3,999
    Other                                      1,151        219
Equity                                        87,099     67,122
                                            --------   --------
                                            $168,332   $127,340
                                            ========   ========

                                      F-16
<PAGE>

Combined summarized income statement information for the unconsolidated
properties for the year ended December 31, 2000 and the period from inception
through December 31, 1999 follows (in thousands):

                                     2000                1999
                                   --------            --------
Revenues                           $ 20,368            $ 13,470
Operating Expenses                   (7,390)             (4,252)
Interest Expense                     (3,910)             (2,635)
Depreciation                         (2,607)             (1,548)
Other, Net                             (833)               (553)
                                   --------            --------

Net Income                         $  5,628            $  4,482
                                   ========            ========

         The Company's share of net income was $2.5 million in 2000, $1.2
million in 1999, and $0.4 million in 1998.

6.       DEFERRED CHARGES

         Deferred charges consist of the following as of December 31 (in
thousands):

                                             2000        1999
                                             ----        ----

Loan Fees                                 $ 19,737    $ 15,288
Retail lease acquisition costs               2,043       4,475
Acquisition/Development Costs and Other      2,625       3,875
                                          --------    --------
                                            24,405      23,638
Less:  Accumulated Amortization             (7,430)     (6,911)
                                          --------    --------
                                          $ 16,975    $ 16,727
                                          ========    ========

         Amortization of loan fees (which is charged to interest expense) was
$1.7 million, $1.5 million and $1.6 million for the years ended December 31,
2000, 1999 and 1998, respectively. Other amortization expense was $0.3 million,
$0.2 million and $0.3 million for the years ended December 31, 2000, 1999 and
1998, respectively.

                                      F-17
<PAGE>

7.       MORTGAGE LOANS AND NOTES PAYABLE

         The Operating Partnership, through its subsidiary financing
partnerships, has mortgage loans and notes payable as follows as of December 31:

<TABLE>
<CAPTION>
                                  Balance as of December 31, Interest
                                       2000       1999        Rate      Maturity
                                       ----       ----        ----      --------
                                        (in thousands)
<S>                                  <C>        <C>           <C>     <C>
MORTGAGE POOLS
     FNMA Credit Facility            $140,000   $140,000      6.75%   November 1, 2013
     FNMA Credit Facility              29,507     29,507      6.85%   June 1, 2007
     FNMA Credit Facility              49,400         --      8.00%   February 1, 2010
     Pool One                          53,000     53,000      6.88%   June 5, 2008
     Pool Two                          29,259     29,720      7.27%   July 1, 2004
     Pool Three - Northwestern        111,398    116,034      7.99%   July 1, 2009
     Pool Four                         53,494         --      7.92%   July 1, 2012
     Pool Five                         60,800         --      7.61%   October 1, 2015

INDIVIDUAL MORTGAGES
     1841 Columbia Road                 3,900      3,900      7.34%   September 1, 2006
     Crystal Towers                    43,254     43,746      6.80%   January 1, 2006
     2000 Commonwealth                 17,100     17,100      6.30%   January 1, 2007
     Connecticut Heights               20,000     20,000      7.10%   April 1, 2008
     Cronin's Landing                  31,830     32,494      6.90%   March 1, 2009
     Patriot Village                   31,095     31,096      8.24%   August 1, 2009
     Crystal Plaza                     32,823     33,232      6.86%   November 1, 2009
     Crystal House I & II              38,250     38,250      6.29%   January 1, 2011
     2nd Mortgage - Crystal House
       I & II                          11,000         --      7.12%   January 1, 2011
     Skyline Towers                    49,300     49,300      6.45%   January 1, 2011
     2nd Mortgage - Skyline Towers     13,000         --      7.07%   January 1, 2011
     Bennington                        11,952     12,210      7.50%   October 1, 2020
     Consulate                         12,324     12,606      7.38%   April 1, 2001
     Mirador                           33,834     34,288      8.65%   July 10, 2001
     Countryside                       28,000     28,000      7.23%   July 1, 2006
     Stonegate                         32,199     32,915      8.31%   February 1, 2007
     Park Lincoln                       6,170      6,280      6.50%   April 1, 2007
     Terrace                           15,600     15,600      6.64%   April 1, 2007
     Buchanan House                    38,000     38,000      6.67%   February 1, 2011
     Sagamore                           6,606         --      6.97%   August 1, 2006
     McClurg Court                     61,750         --      7.66%   October 1, 2014

SECURED LINES OF CREDIT
     $300 million
       Freddie Mac revolver           112,000         --      6.76%   May 31, 2010

SECURED CONSTRUCTION LOANS
     One Superior Place                    --     77,999     --       N/A
     Alban Towers                      14,859      2,046      8.14%(1)February 5, 2002

UNSECURED LINES OF CREDIT
     $100 million
       PNC revolver                    32,000     47,000      7.69%(1)March 1, 2001(2)
     $50 million
       PNC revolver                        --     25,000     --       March 1, 2001(2)
                                   ---------- ----------
                                   $1,223,704 $  969,323
                                   ========== ==========
</TABLE>

(1)      Variable rate loan. Rate shown is at December 31, 2000.

(2)      Subsequent to December 31, 2000, maturity date was extended to March
         2004.

                                      F-18
<PAGE>

         These loans require monthly interest and, where applicable, principal
payments and are collateralized by mortgages or deeds of trust on 51 of the 62
owned properties, bear interest at a weighted-average interest rate of 7.27% as
of December 31, 2000 and have a weighted-average maturity of 8.9 years.

         As of December 31, 2000, the Company had $187.4 million of unused
borrowing capacity on lines of credit and construction loan. (Unused borrowing
capacity includes $51.8 million from the $300 million line, which reflects the
borrowing capacity currently available under the line of $163.8 million, less
$112.0 million used at December 31, 2000.) Amounts outstanding under lines of
credit averaged $101.1 million for the year ended December 31, 2000 compared to
$78.7 million for the year ended December 31, 1999.

         At December 31, 2000 and 1999, the Company was in compliance with all
loan covenants on its outstanding mortgages and lines of credit.

MORTGAGE POOLS

         The term "Mortgage Pool" is used only to indicate that multiple
properties collaterize the loan.

         The loan for Mortgage Pool Three bears interest at a fixed rate of
7.99% with monthly payments of principal and interest. Principal amortization
started on July 1, 1999 using a 25-year amortization schedule with a balloon
payment due July 1, 2009. The loan is secured by seven multifamily properties
and one retail property.

         The Fannie Mae standby credit facility provides for non-recourse,
long-term debt for up to fifteen years. The facility contains certain
restrictive covenants including a limit on debt to asset value and maintenance
of debt service coverage ratios. Draws on the facility are secured by ten of the
multifamily properties. The initial draw on this facility was made in October
1998 for $140 million at 6.75% for fifteen years. A second draw was made in May
1999 for $29.5 million at 6.845% for eight years. A third draw was made in
February 2000 for $49.4 million at 8.0% for ten years. The Company used $37
million of the proceeds to repay a portion of its line of credit with the
balance used for working capital needs. Ocean View (formerly, Ocean View at
Aventura) was added to the collateral pool in connection with this draw. Terms
and rates of subsequent draws on this facility will be determined at the time of
use.

         The Mortgage Pool One loan is a $53 million, secured loan due June 5,
2008 with a fixed rate of 6.88%. The loan is secured by two of the multifamily
properties. In conjunction with this loan, the Company terminated a $20 million
(notional value) treasury lock contract at a gain of $0.4 million, which is
being amortized over the term of the loan.

         The Mortgage Pool Two loan of $29.3 million at December 31, 2000 bears
interest at a fixed rate of 7.27%, requires monthly payments of interest and
principal, and is collateralized by two properties. The loan is partially
guaranteed by the Company.

                                      F-19
<PAGE>

         In June 2000, the Company closed on four mortgage loans totaling $53.5
million ("Mortgage Pool Four"). Each of the loans has a fixed interest rate of
7.92%. The loans require monthly payments of interest only through July 2010, at
which time principal amortization begins using a 20-year amortization with a
balloon payment due July 1, 2012. The loans are collateralized by four
properties.

         In September 2000, the Company closed on three mortgage loans totaling
$60.8 million ("Mortgage Pool Five"). The loans each have a fixed interest rate
of 7.61% and a 15-year term. The loans require payments of interest only for a
minimum of ten years with a balloon payment due October 1, 2015. All three loans
are cross-defaulted and cross-collateralized.

INDIVIDUAL MORTGAGES

         The term "Individual Mortgage" is used only to indicate that a single
property (or location) collateralizes the loan. Individual mortgages have fixed
interest rates ranging from 6.3% to 8.7%.

         In February 1999, the Company repaid the $7.4 million Buchanan House
mortgage through a draw on its line of credit. The Company paid a prepayment
penalty of $0.9 million.

         In March 1999, the Company obtained a $38.0 million mortgage on
Buchanan House with an effective fixed interest rate of 6.67%. The loan is
interest only through May 2009, at which time principal amortization begins
using a 30-year amortization schedule with a balloon payment due February 1,
2011.

         In March 1999, the Company repaid the $13.7 million mortgage on Terrace
assumed on acquisition. The Company paid a prepayment penalty of $0.2 million.
The Company obtained a new, interest only mortgage of $15.6 million at an
effective interest rate of 6.64% with principal due April 1, 2007.

         In September 1999, the Company refinanced the mortgage loan for 1841
Columbia Road. The old loan of $3.2 million was paid off and replaced with a new
loan in the amount of $3.9 million at an annual interest rate of 7.34%, due
September 1, 2006.

         In December 2000, the Company assumed an existing $6.3 million loan in
connection with the acquisition of Sagamore Towers which carries an 8.38%
interest rate and matures in August 2006. The Company may prepay the loan after
September 1, 2003, subject to a prepayment penalty equal to the greater of yield
maintenance or 1% of the outstanding loan balance at that time. The Company has
recorded a fair value adjustment on the loan of $0.3 million for an effective
interest rate of 6.97%.

         Also in December 2000, the Company closed on two second mortgage loans
totaling $24.0 million. The $13.0 million loan has a fixed interest rate of
7.07%, and is collateralized by Skyline Towers.

                                      F-20
<PAGE>

The $11.0 million loan has a fixed interest rate of 7.12% and is collateralized
by Crystal House I and II. The loans require monthly payments of interest only
and mature coterminous with their respective first mortgages in January 2011.

LINES OF CREDIT

         The Company has two unsecured lines of credit -- a $50 million line and
a $100 million line -- with PNC Bank, Bank of America, and U.S. Bank, as agents
on both lines, which mature in March 2001. Prior to June 2000, these lines had
commitments of $100 million and $185 million, respectively. The Company
decreased the commitments in conjunction with obtaining new financing from
Freddie Mac, as discussed below. Draws upon the lines are subject to certain
unencumbered asset requirements and bear interest at a selected London Interbank
Offer Rate (LIBOR) plus 75 to 120 basis points based on the leverage ratio of
the Company. If the Company receives an investment grade rating on its unsecured
debt, the interest rate will decrease to 60 to 90 basis points over LIBOR based
on the rating. The Company pays a fee of 0.20% on the full amount available
under the lines of credit. The line of credit agreements contain certain
restrictive covenants, including maintenance of minimum equity value, debt to
equity ratios and debt service coverage requirements. The maximum amounts
outstanding during 2000 and 1999 were $138 million and $123 million,
respectively.

         In May 2000, the Company obtained a ten-year, $300 million secured line
of credit from Freddie Mac. Borrowings under the line bear interest at a spread
of 63 to 161 basis points over LIBOR depending on the interest coverage ratio.
Initial availability under the agreement is $125.3 million, which can increase
to $300 million with appreciation in value of the properties collateralizing the
borrowings and/or with the addition of properties to the collateral pool. Loan
costs of $0.9 million were capitalized in connection with this agreement. The
Company made an initial draw of $60 million substantially all of which was used
to pay down debt on the Company's $185 million line of credit.

         In September 2000, the Company converted $61.8 million of its $300
million line of credit to mortgage debt. The new mortgage has a fixed interest
rate of 7.66% and a 14-year term. Payments of interest only are required for a
minimum of ten years with a balloon payment due October 1, 2014. The loan is
collateralized by one property. With the conversion of this portion of the line
of credit, the availability under the line decreased from $125.3 million to
$63.5 million.

         In December 2000, the Company drew on the line of credit to pay off the
balance of a construction loan made in connection with the development of One
Superior Place in Chicago, Illinois. This property was simultaneously added to
the collateral pool for the Freddie Mac line of credit. With the addition of
this collateral, the availability under this line increased to $163.8 million.

                                      F-21
<PAGE>

CONSTRUCTION LOANS

         In connection with the development of Alban Towers in Washington, D.C.,
the Company obtained a $32.5 million interest-only construction loan due
February 2002 with interest payable monthly at LIBOR plus 150 basis points at
December 31, 2000. The loan is collateralized by the property. The loan balance
at December 31, 2000 was $14.9 million.

         The scheduled principal payments for all mortgage loans and notes
payable are as follows (in thousands):

                    Year Ending
                    December 31,
                    -------------
                       2001                  $   83,313
                       2002                      20,413
                       2003                       6,010
                       2004                      33,833
                       2005                       6,851
                       Thereafter             1,073,284
                                             ----------
                                             $1,223,704
                                             ==========

8.       PARTNERS' EQUITY

         As long as the Operating Partnership is in existence, the net proceeds
of all equity capital raised by the Company will be contributed to the Operating
Partnership in exchange for limited partnership interests in the Operating
Partnership ("Units") having the same characteristics as those of the securities
issued by the Company.

         All references to issuance by the Company of Common and Preferred stock
also resulted in issuance by the Operating Partnership of equivalent units.

         Series A Cumulative Convertible Redeemable Preferred Stock ("Series A
Preferred Shares") has certain voting, dividend and liquidation preferences over
the common shares. Dividends are cumulative and are payable quarterly at the
greater of the rate declared on the common shares or the annual rate of $2.02
per share. The Series A Preferred Shares are not redeemable prior to May 15,
2003. On or after May 15, 2003, the Company, at its option, may redeem the
Series A Preferred Shares for cash at a redemption price of $27.08 per share,
plus accrued and unpaid dividends. Under certain circumstances, the Company may
elect to make such redemption with common stock at the then market price of the
common stock. Series A Preferred Shares may be converted into shares of common
stock on a one-for-one basis subject to certain limitations.

         Series B Cumulative Convertible Redeemable Preferred Stock ("Series B
Preferred Shares") has certain voting, dividend and liquidation preferences over
the common shares. The Series B Preferred shares have a liquidation preference
of $28.50 per share. Dividends are cumulative and are payable quarterly at the
greater of the rate declared on the shares of common stock of the Company or the
annual rate of $2.02 per share. Series B Preferred Shares may be converted into
shares of common stock on a one-for-one basis, subject to certain adjustments
and limitations related

                                      F-22
<PAGE>

to ownership of common stock of the Company. The Company may redeem Series B
Preferred Shares at any time for common shares, plus accrued and unpaid
dividends.

         Series C Cumulative Redeemable Preferred Stock ("Series C Preferred
Shares") has certain voting, dividend and liquidation preferences over the
common shares. The Series C Preferred Shares have a liquidation preference of
$100,000 per share and a current annual dividend rate of $7,910 per share. If
the securities receive an investment grade rating, the dividend rate will
decrease by $250 per share. Dividends are cumulative and are payable quarterly.
The Company may redeem Series C Preferred Shares after February 1, 2028, at the
liquidation price plus accrued dividends.

         In December 1998, the Company adopted a Shareholder Rights Plan (the
"Rights Plan") in which certain stock purchase rights were granted as a
distribution to holders of common stock. The Rights allow the holder to purchase
one one-thousandth of a share of preferred stock for $108 only if a person or
group becomes the owner of 15% or more of the common stock or announces an offer
to acquire 15% of more of the common stock. The Rights expire on December 13,
2008. The Company did not record a transaction related to the distribution
because the Rights have no marketable value.

         In March 1999, 125,367 Series B Preferred Shares were converted to
common shares on a one-for-one basis. In May 1999, the remaining 589,261 Series
B Preferred Shares were converted to common shares on a one-for-one basis.

         In July 1999, the Company entered into a purchase agreement for 684,931
shares of Series E Cumulative Convertible Redeemable Preferred Stock ("Series E
Preferred Shares"), $0.01 par value, at $36.50 per share for a total of $25.0
million, less $0.9 million of offering costs. The Series E Preferred Shares were
issued on July 13, 1999. The Company also entered into purchase agreements for
666,667 shares of Series F Cumulative Convertible Redeemable Preferred Stock
("Series F Preferred Shares"), $0.01 par value, at $37.50 and 641,026 shares of
Series G Cumulative Convertible Redeemable Preferred Stock ("Series G Preferred
Shares"), $0.01 par value, at $39.00. The Series F Preferred Shares were issued
on October 1, 1999 for $25.0 million, less $0.6 million of offering costs, and
the Series G Preferred Shares were issued on November 5, 1999 for $25.0 million,
less $0.4 million of offering costs. The dividend yield to be paid on these
preferred shares will be 7.75% in the first year following their issuance, 8.25%
in year two and 8.5% in year three and thereafter, with a minimum payment
equivalent to the dividend rate paid on the Company's common shares. Conversion
to common shares is on a one-for-one basis with call protection varying by
series between three and six years.

         The Company amended the Articles of Incorporation to designate and
establish the rights and privileges of the Series E, F, and G Preferred
Shareholders, which include certain voting, dividend and liquidation preferences
over the common shareholders. The Series E, F, and G Preferred Shares have
liquidation preferences of $36.50, $37.50, and $39.00, respectively. Dividends
are cumulative and are payable quarterly.

         In September 1999, the Company issued 2,200,000 shares of Series H
Cumulative Convertible Redeemable Preferred Stock ("Series H Preferred Shares"),
$0.01 par value, for $53.5

                                      F-23
<PAGE>

million, net of offering costs of $1.5 million. The Series H Preferred Shares
have a liquidation preference of $25 per share and a five-year non-call
provision. Dividends are payable quarterly at the greater of 8.125% of the
liquidation preference or the dividend declared on the number of shares of
common stock of the Company into which a Series H Preferred Share is
convertible. The holders of the Series H Preferred Shares have the right, at any
time, to convert such shares to shares of common stock at a conversion price of
$38.50 (equivalent to a conversion rate of approximately 0.65 shares of common
stock for each Series H Preferred Share). Simultaneously with the above, the
Operating Partnership issued 1.8 million Series H Cumulative Convertible
Redeemable Preferred Units ("Series H Preferred Units") for $43.7 million, net
of offering costs of $1.3 million. The Series H Preferred Units have terms
similar to the Series H Preferred Shares.

         In November 1999, the Company issued 694,586 shares of common stock in
a merger transaction with the owner of several Florida properties. The proceeds
of $23.6 million were used to fund the acquisition of Mirador (formerly, Forte
Towers).

         In December 1999, the Company issued 200,000 shares of common stock
valued at $7 million to Consolidated Engineering Services, Inc. CES distributed
the shares to partially fund its $23 million acquisition of New England
Mechanical Services, Inc.

         During 1999, the Operating Partnership issued approximately 1.3 million
Operating Partnership units valued at $42.4 million in connection with property
acquisitions.

         In April 2000, the Operating Partnership issued 35,898 units valued at
$1.3 million in connection with the Delaware Place (formerly, Dearborn Place)
acquisition.

         During 2000, the Company issued for cash 559,802 shares of common stock
valued at $21.6 million to Consolidated Engineering Services, Inc. CES
distributed the shares to partially fund its acquisitions of Illingworth
Corporation, Hayes Mechanical, Inc., Betlem Service Corporation, and Aircond
Corporation.

         As of December 31, 2000, approximately 16.3 million shares of the
Company's authorized common stock had been reserved for redemption of Operating
Partnership units and 1.0 million shares were reserved under the Company's
Dividend and Distribution Investment and Share Purchase Plan.

                                      F-24
<PAGE>

The following table sets forth the Company's issued and outstanding preferred
units as of December 31:

<TABLE>
<CAPTION>
                                                                                     2000       1999
                                                                                   --------   --------
                                                                                    (in thousands)
<S>                                                                                <C>        <C>
Series A Cumulative Convertible Redeemable Preferred
       Units, $0.01 par value: 2,640,325 units authorized;
       liquidation preference of $27.08; 2,640,325 units
       issued and outstanding at December 31, 2000 and 1999                        $ 71,500   $ 71,500

Series C Cumulative Redeemable Preferred Units, $0.01 par value; 500 units
       authorized; liquidation preference of $100,000; 500 units
       issued and outstanding at December 31, 2000 and 1999                          50,000     50,000

Series E Cumulative Convertible Redeemable Preferred Units, $0.01 par value;
       684,931 units authorized; liquidation preference of $36.50; 684,931 units
       issued and outstanding at December 31, 2000 and 1999                          25,000     25,000

Series F Cumulative Convertible Redeemable Preferred Units, $0.01 par value;
       666,667 units authorized; liquidation preference of $37.50; 666,667 units
       issued and outstanding at December 31, 2000 and 1999                          25,000     25,000

Series G Cumulative Convertible Redeemable Preferred Units, $0.01 par value;
       641,026 units authorized; liquidation preference of $39.00; 641,026 units
       issued and outstanding at December 31, 2000 and 1999                          25,000     25,000

Series H Cumulative Convertible Redeemable Preferred Units, $0.01 par value;
       4,040,404 units authorized; liquidation preference of $25.00; 4,000,000
       units
       issued and outstanding at December 31, 2000 and 1999                         100,000    100,000
                                                                                   --------   --------

                                                                                   $296,500   $296,500
                                                                                   ========   ========
</TABLE>


9.       OTHER LIMITED PARTNERS' INTEREST

         Common limited partnership units of the Other Limited Partners may be
redeemed at the unitholders' discretion. At the option of the Company, such
redemption may be made for cash, at the then fair value of the Company's stock,
or for shares of common stock of the Company on a one-for-one basis.

         In accordance with generally accepted accounting principles, the Other
Limited Partners' redemption rights are not included in partner's equity.
Consequently, the accompanying consolidated balance sheets and statements of
partner's equity reflect the Other Limited Partners' Common Interest

                                      F-25
<PAGE>

in the Operating Partnership, measured at redemption value. Such interest is
deducted from partner's equity.

10.      COMMITMENTS AND CONTINGENCIES

PURCHASE COMMITMENTS

         As of December 31, 2000, the Company had executed one contract to
purchase a 383 unit to-be-constructed multifamily property. The projected
purchase price is $54 million (including earnout) with a projected closing date
in the fourth quarter of 2001.

         This contract is contingent upon satisfactory completion of
construction and attainment of final certificates of occupancy by the owners. At
December 31, 2000, the Company had posted a $5.1 million letter-of-credit in
accordance with the contract to be drawn upon only if the Company defaults on
its contractual obligation to purchase the completed asset.

GROUND LEASES

         Seven of the Properties have ground leases expiring at various dates
between December 2032 and April 2067. Generally, each ground lease provides for
a nominal annual rental and an additional rental calculated from the results of
Property operations after capital expenditures.

         The base rental expense to the Company under the ground leases was $1.6
million for 2000, $1.6 million for 1999 and $1.7 million for 1998. The
additional rental expense to the Company under the ground leases was $2.8
million, $3.9 million and $4.1 million for the years ended December 31, 2000,
1999 and 1998, respectively. At the expiration of the ground leases, the land
and all of the improvements thereon will revert to the landowner. In most cases,
the leases are subordinated to the mortgage debt on the related rental property.

         The future nominal base annual rentals as of December 31, 2000 for the
ground leases are as follows (in thousands):

         Year Ending
         December 31,

             2001               $     1,619
             2002                     1,619
             2002                     1,619
             2004                     1,619
             2005                     1,619
          Thereafter                 89,538
                                -----------
                                $    97,633
                                ===========

                                      F-26
<PAGE>

LITIGATION

         The Company and/or the Property Service Businesses are presently
subject to legal actions or claims for damages that arise in the ordinary course
of business. In the opinion of management and counsel to the Company, the
ultimate outcome of such litigation will not have a material adverse effect on
the Company's financial position, results of operations or cash flows.

RETIREMENT PLANS

         Substantially all of the personnel employed by the Operating
Partnership and the Property Services Businesses are eligible and participate in
the Charles E. Smith 401(k) Retirement Plan, a defined contribution,
tax-qualified savings plan (the "Plan"). Generally, the employer contributes up
to 4% of employee-qualified earnings. The total contributions made by the
Operating Partnership were $0.2 million in 2000, $0.5 million in 1999, and $0.2
million in 1998. The total contributions made by the Property Services
Businesses were $0.7 million, $0.8 million and $0.7 million in 2000, 1999 and
1998, respectively.

         Certain executives of the Operating Partnership and the Property
Services Businesses are also eligible and participate in a Deferred Compensation
Plan, which was established in 1999. Total compensation deferred under this plan
was $0.9 million in 2000 and $0.5 million in 1999.


11.      RELATED-PARTY TRANSACTIONS

         The Company conducts business with entities in which Messrs. Smith and
Kogod exercise control. In each case, the Company's Board of Directors reviews
the transaction and obtains, as required, independent assurance as to the
arms-length nature of the terms. The following is a description of these
transactions.

o        For the seven months ended July 31, 1999 and the year ended December
         31, 1998, the Company paid approximately $1.7 million and $2.3 million,
         respectively, in payroll reimbursements to an entity controlled by
         Messrs. Smith and Kogod for efforts on development properties and
         potential development sites. Due to the higher level of activity
         associated with expanding the Company's development pipeline, the
         development personnel for which these reimbursements were made were
         hired directly by the Company in July 1999 and terminated their
         employment with the affiliate.

o        In connection with the development of Springfield Station, a contract
         was executed with an entity controlled by Messrs. Smith and Kogod to
         manage the construction of the apartments at a fee of 4% of hard
         construction costs. Construction management fees were $0.4 million and
         $0.7 million for the years ended December 31, 1999 and 1998,
         respectively. As of December 31, 1999, the contract was fulfilled and
         no additional payments were made.

                                      F-27
<PAGE>

o        In March 1999, the Company and J.P. Morgan formed a joint venture which
         acquired the Renaissance, a 330-unit multifamily property in Tysons
         Corner, Virginia for approximately $37 million. The transaction was
         reviewed and approved by the Company's independent Directors since
         Messrs. Smith and Kogod held a general partnership interest in the
         selling entity.

o        In May 1999, the Company finalized the settlement of financing services
         provided to commercial office partnerships now owned and managed by
         CESCR, an affiliate of Messrs. Smith and Kogod. This settlement was
         initiated by the formation of CESCR in 1997, at which time the Company
         entered into an agreement to provide financing services to CESCR only
         through December 31, 1998. On May 1, 1999, the Company received, from
         an affiliate of Messrs. Smith and Kogod, 79,905 Operating Partnership
         Units valued at $2.5 million as final settlement related to CESCR
         properties and immediately canceled the Units. In 2000, the Company and
         CESCR entered into an agreement to share fees on financing for
         Affiliates of Messr. Smith and Kogod. The Company earned $0.2 million
         under this agreement in 2000.

o        In August 1999, Consolidated Engineering Services, Inc. expanded its
         facilities management services by acquiring a similar business from
         CESCR for $1.4 million. This transaction was completed concurrently
         with the sale to CESCR of the Company's retail property management
         business, which primarily deals with non-Company owned assets, for $1.0
         million. The Company recognized a gain on the sale of $0.8 million.

                                      F-28
<PAGE>

12.      FAIR VALUE OF FINANCIAL INSTRUMENTS

         Statement of Financial Accounting Standards No. 107 requires disclosure
about fair value for all financial instruments. Based upon discounted cash flows
at borrowing rates currently available to the Operating Partnership for
mortgages with similar terms and remaining maturities, the fair value of
mortgages payable was approximately $1,088 million and $790 million at December
31, 2000 and 1999, respectively. The fair values of lines of credit and
construction loans approximate the carrying values.

13.      EARNINGS PER UNIT

         For the years ended December 31, 2000, 1999 and 1998, basic earnings
per common unit is computed based on 35.0 million, 33.0 million and 30.2 million
weighted average units outstanding during the year, respectively, and diluted
earnings per common unit is computed based on 42.8 million, 36.1 million, and
30.3 million weighted average units outstanding during the year adjusted for the
assumed conversion of dilutive securities, respectively. The per-unit impact of
the extraordinary items in 1999 and 1998 was $0.01 and $0.54 per common unit
(basic and diluted), respectively.

                                      F-29
<PAGE>

         A reconciliation of income (before extraordinary item) and units used
to calculate basic and diluted earnings per unit for 2000, 1999 and 1998
follows:

<TABLE>
<CAPTION>
                                                                           Weighted           Per-Unit
                                                        Income             Avg. Units          Amount
                                                        ------            -----------          ------
                                                    (In Thousands)      (In Thousands)
<S>                                                   <C>                     <C>             <C>
YEAR ENDED DECEMBER 31, 2000
Income Before Extraordinary Item                      $ 179,248
Income Attributable to Preferred Units                  (23,903)
                                                     ----------

Earnings Per Unit - Basic
      Income Attributable to Common
      Unitholders before Extraordinary Item           $  155,345              34,997          $   4.44
Effect of Dilutive Securities:
      Preferred Units - Series A, Series E,
        Series F, Series G, and Series H                  19,948               7,233              (.29)
      Options                                                 --                 607              (.06)
                                                      ----------          ----------          --------
Earnings Per Unit - Diluted                           $  175,293              42,837          $   4.09
                                                      ==========          ==========          ========


YEAR ENDED DECEMBER 31, 1999
Income Before Extraordinary Item                      $ 154,174
Income Attributable to Preferred Units                  (14,138)
                                                      ---------

Earnings Per Unit - Basic
      Income Attributable to Common
      Unitholders before Extraordinary Item           $  140,036              32,977          $   4.25
Effect of Dilutive Securities:
      Preferred Units - Series A and Series B              6,045               2,894              (.18)
      Options                                                 --                 221              (.02)
                                                      ----------          ----------          --------
Earnings Per Unit - Diluted                           $  146,081              36,092          $   4.05
                                                      ==========          ==========          ========


YEAR ENDED DECEMBER 31, 1998
Income Before Extraordinary Item                      $   86,254
Income Attributable to Preferred Units                   (10,722)
                                                      ---------

Earnings Per Unit - Basic
      Income Attributable to Common
      Unitholders before Extraordinary Item           $   75,532              30,184          $   2.50
Effect of Dilutive Securities:
      Options                                                 --                 165              (.01)
                                                      ----------          ----------          --------
Earnings Per Unit - Diluted                           $   75,532              30,349          $   2.49
                                                      ==========          ==========          ========
</TABLE>


         Options to purchase 0.2 million shares of common stock were not
included in the 2000 computation of diluted earnings per unit because the
options' exercise price was higher than the average price of the common units.

                                      F-30
<PAGE>

14.      INCENTIVE PLANS

         The Company applies Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" and related interpretations in
accounting for its plans. Accordingly, no compensation expense has been
recognized for its stock-based compensation plans other than for restricted
stock and performance-based awards. Had compensation cost for the Company's
other stock option plans been determined based on the fair value at the grant
date consistent with the methodology prescribed under Statement of Financial
Accounting Standard No. 123, the impact on the Operating Partnership would have
been as follows:

                                            Decrease in      Decrease in
                                             Earnings         Earnings
          Year Ended      Decrease in        Per Basic       Per Diluted
         December 31,     Net Income        Common Unit      Common Unit
         ------------     ----------        -----------      -----------
                        (in thousands)

            2000            $2,132            $   0.06         $   0.05
            1999             1,128                0.03             0.03
            1998               499                0.02             0.02


         The fair value of options granted during 2000, 1999 and 1998 is
estimated at approximately $3,313,000, $3,129,000, and $305,000, respectively,
based on the date of grant using the Black-Scholes option-pricing model. The
following assumptions were used:

                                         2000          1999          1998
                                         ----          ----          ----

Dividend Yield                            6.7%          6.5%          6.2%
Volatility                               14.8%         13.7%         13.0%
Risk-free Interest Rate                   6.1%          6.4%          5.1%
Expected Life                          4 years       4 years       4 years


                                      F-31
<PAGE>

OPTION PLANS

         The Company maintains an employee stock and unit option plan designed
for executive officers and other key employees of the Company, the Operating
Partnership and the Property Service Businesses. The Company also maintains a
Director's stock option plan which provides for automatic grants of vested
options, exercisable for 5,000 shares of common stock, to newly appointed
non-employee directors. The plans authorize the issuance of up to 5,650,000
shares of common stock and/or units pursuant to options granted. Options
outstanding under both plans are as follows:

<TABLE>
<CAPTION>
                                                       Weighted Average    Options
                                            Number      Exercise Price  Exercisable
                                            ------      --------------  -----------
<S>                                       <C>                  <C>        <C>
Options Outstanding, December 31, 1997    1,716,000        $   29         677,000

Options Granted                             189,000            31
Options Canceled                           (164,000)           32
Options Exercised                          (125,000)           24
                                         ----------

Options Outstanding, December 31, 1998    1,616,000            30(2)      707,000

Options Granted                           1,247,000            30
Options Canceled                           (116,000)           32
Options Exercised                          (135,000)           24
                                         ----------

Options Outstanding, December 31, 1999    2,612,000            30(2)      916,000

Options Granted                           1,212,000            37
Options Canceled                           (293,000)           33
Options Exercised                          (308,000)           29
                                         ----------

Options Outstanding, December 31, 2000    3,223,000        $   33       1,036,000(1)
                                         ==========
</TABLE>

(1)      Weighted average exercise price is $30

(2)      Range of exercise prices is $24-$45

         The exercise price of options granted under the plans may not be less
than the fair market value of the common stock on the date of grant. Payment for
shares and/or units granted under the plans may be made either in cash, or, if
permitted by the option agreement, by exchanging shares of common stock of the
Company having a fair market value equal to the option exercise price. The
weighted average remaining contractual life of options outstanding as of
December 31, 2000 was 8.1 years.

         Options granted under the employee plan have a maximum term of ten
years and vest generally in three to five equal annual installments beginning on
the first anniversary of the date of grant. Generally, options terminate three
months after the optionee's termination of employment with the Company. The
Executive Compensation Committee of the Board of Directors may provide, however,
that an option may be exercised over a longer period following termination of
employment, but in no event beyond the expiration date of the option.

                                      F-32
<PAGE>

RESTRICTED STOCK AND UNIT PLAN

         The Company maintains a restricted stock and unit plan for executive
officers and other key employees of the Company, the Operating Partnership and
the Property Service Businesses. Messrs. Smith and Kogod are not eligible to
participate under the plan. A maximum of 300,000 shares of common stock and/or
units may be issued under the plan. Restricted shares and/or units that have not
vested at the time of an employee's termination of employment with the Company
will be forfeited, except where such termination occurs by reason of death or
disability. Any restricted shares and/or units forfeited pursuant to the vesting
provisions of the plan will again be available for award under the plan.

         Grants were awarded as follows:

Total Grants at December 31, 1997    104,000
         Awards Granted               21,800
                                    --------
Total Grants at December 31, 1998    125,800
         Awards Granted               31,400
                                    --------
Total Grants at December 31, 1999    157,200
         Awards Granted               54,500
         Awards Cancelled            (10,900)
                                    --------
Total Grants at December 31, 2000    200,800
                                    ========

         Of the grants outstanding at December 31, 2000, 127,000 were vested.

         For the years ended December 31, 2000, 1999 and 1998, compensation
expense relating to the plan was $0.8 million, $0.8 million and $0.5 million,
respectively, based on the market value of the Company's stock at the date of
grant.

15.      SUPPLEMENTAL CASH FLOW DATA

         Information on non-cash investing and financing activities and cash
interest paid is as follows (in thousands):

                                          Year Ended December 31,

                                        2000       1999       1998
                                      --------   --------   --------

Cash Paid During the Period
    for Interest                      $ 81,456   $ 63,717   $ 52,242
Capitalized Interest                     4,700      8,021      6,520
Purchase of Properties for
   Operating Partnership Units           1,270     59,964     11,820
Paydown of debt in conjunction with
   the disposition of property           3,000         --         --
Assumption of Debt on Acquisitions      16,839    108,530     33,456
Sale Proceeds Held in Escrow           113,199     64,833     22,011
Purchase of Property with Escrow
    Proceeds                           119,848     74,448      4,308

                                      F-33
<PAGE>

16.      SEGMENT REPORTING

         Operating segments are defined as components of an enterprise about
which separate financial information is available that is evaluated regularly by
senior management in deciding how to allocate resources and in assessing
performance.

PROPERTY SEGMENTS

         The Company's primary business is the ownership and operation of
multifamily residential real estate. As such, the residential rental properties
constitute the three primary operating segments -- Core, Acquisition/Disposition
and Development portfolios -- depending upon the maturity of each property. Core
consists of all multifamily properties which have been owned more than one full
calendar year. Therefore, the 2000 Core represents properties owned as of
December 31, 1998. Acquisition/Disposition consists of purchased properties
which have not yet reflected one full calendar year of operations and disposed
properties. Development consists of properties which the Company has constructed
or is in the process of constructing which have not yet had a full calendar year
of stabilized operating results. On the first of January each year, Acquisition
and Development properties that meet the one year requirements are transferred
to the Core portfolio.

         The Company's fourth property segment is the Retail portfolio which
consists of one freestanding retail property.

         The Company evaluates performance for the Property Segments based on
Net Operating Income ("NOI") which is the difference between Rental Revenue and
Operating Expenses (which primarily excludes interest expense, general and
administrative costs and depreciation.)

PROPERTY SERVICE BUSINESS SEGMENTS

         The Company also evaluates the separate financial information of its
equity investment in the Property Service Businesses. These businesses provide
professional services such as property management, furnished corporate apartment
rentals, engineering and technical consulting, and construction management to
both Company-owned properties and properties owned by third parties. Given the
similarities in the nature of services, customers and distribution methods, the
Company considers the Property Service Businesses to be one segment. The Company
evaluates performance for the Property Service Business segment based on Funds
from Operations ("FFO"), which is defined using the revised definition adopted
by the National Association of Real Estate Investment Trusts ("NAREIT") as net
income (loss) (computed in accordance with generally accepted accounting
principles) excluding gains (or losses) from debt restructuring and sale of
property, plus depreciation/amortization of assets unique to the real estate
industry. Depreciation/amortization of assets not unique to the industry, such
as amortization of deferred financing costs and non-real estate assets, is not
added back.

         The accounting policies for all five segments are the same as those
described in the summary of significant accounting policies.

                                      F-34
<PAGE>

         Information concerning operations by segment for each of the three
years ended December 31, was as follows (in thousands):

PROPERTY SEGMENTS

<TABLE>
<CAPTION>
                                                            2000           1999           1998
                                                        -----------    -----------    -----------
NET OPERATING INCOME

<S>                                                     <C>            <C>            <C>
Core Portfolio                                          $   156,162    $   141,063    $   124,862
Acquisition/Disposition Portfolio                            60,107         33,576         21,955
Development Portfolio                                        18,981          5,788            (42)
Retail Portfolio                                              1,187          1,856          1,801
                                                        -----------    -----------    -----------

Consolidated Total                                          236,437        182,283        148,576

Depreciation and amortization                               (44,778)       (33,906)       (28,958)
Equity in income of unconsolidated properties                 2,465          1,192            448
Equity in income of Property Service Businesses               8,373          5,740          8,433
Corporate general and administrative expenses               (11,290)        (9,607)        (8,947)
Net interest expense                                        (78,026)       (56,003)       (46,525)
                                                        -----------    -----------    -----------

Income before gains and losses and extraordinary item       113,181         89,699         73,027


Gain on sales                                                71,426         63,673         18,150
Equity in gain (loss) on sales                               (5,359)           802             --
Loss on unused treasury lock                                     --             --         (4,923)
                                                        -----------    -----------    -----------

Income before extraordinary item                            179,248        154,174         86,254

Extraordinary item - loss on extinguishment of debt              --           (360)       (16,384)
                                                        -----------    -----------    -----------

Net income of the Operating Partnership                 $   179,248    $   153,814    $    69,870
                                                        ===========    ===========    ===========




REVENUES

Core Portfolio                                          $   247,611    $   229,893    $   206,630
Acquisition/Disposition Portfolio                           103,515         56,938         38,957
Development Portfolio                                        29,351         10,975          1,258
Retail Portfolio                                              2,756          3,427          3,222
                                                        -----------    -----------    -----------

Consolidated Total                                      $   383,233    $   301,233    $   250,067
                                                        ===========    ===========    ===========


REAL ESTATE ASSETS, GROSS

Core Portfolio                                          $ 1,092,712    $ 1,054,718    $ 1,018,968
Acquisition Portfolio                                       789,787        492,347        121,139
Development Portfolio                                       275,402        219,472        167,441
Retail Portfolio                                             15,181         15,125         15,098
                                                        -----------    -----------    -----------
         Subtotal                                         2,173,082      1,781,662      1,322,646
Accumulated depreciation                                   (261,315)      (242,620)      (228,683)
                                                        -----------    -----------    -----------

Consolidated Total, Net                                 $ 1,911,767    $ 1,539,042    $ 1,093,963
                                                        ===========    ===========    ===========
</TABLE>

                                      F-35
<PAGE>

PROPERTY SERVICE BUSINESS SEGMENT

                              2000       1999       1998
                              ----       ----       ----

Funds from Operations       $  8,807   $  6,170   $  8,683
Revenues                     277,907    144,637    107,290
Depreciation/Amortization      6,895      2,650      1,386


17.      EXTRAORDINARY ITEM

         The Company recognized extraordinary losses of $0.4 million and $16.4
million in connection with debt extinguishments in 1999 and 1998, respectively.
During 1998, losses of $4.1 million and $11.7 million were recognized in
connection with the repayment of Mortgage Pool One and Mortgage Pool Two,
respectively. The losses consisted of $2.9 million and $9.7 million in yield
maintenance premiums and $1.2 million and $2.0 million in non-cash write-offs of
unamortized loan fees. In addition, a loss of $0.6 million was recognized on the
write-off of unamortized loan fees associated with the termination of the $100
million line of credit and the refinancing of $9.2 million of mortgage loans.

18.      SUBSEQUENT EVENTS

         On January 1, 2001 Smith Realty Company and the Company elected to
treat SRC as a taxable REIT subsidiary. SRC also converted the Company's 99%
non-voting stock into voting stock resulting in the Company's control of SRC.
Accordingly, the Company will begin consolidating the financial results of SRC
in 2001 instead of using the equity method of accounting. This will have no
impact to net income but will simply change the financial statement presentation
of SRC's results.

         In January 2001, the Company increased its $5.1 million
letter-of-credit on a purchase commitment to $10.9 million.

         In February 2001, Consolidated Engineering Services, Inc. acquired
Commonwealth Air Conditioning and Heating, Inc., one of the largest independent
service contractors in the metropolitan Boston, Massachusetts area. The purchase
price of $19.1 million consisted of common stock (purchased by CES from the
Company) and cash. CES funded the transaction through the Operating Partnership
in exchange for a promissory note.

         In February 2001, the Company entered into and funded a $23.8 million
participating loan collateralized by Plaza 440, a 457 unit luxury high-rise
property in downtown Chicago. The loan, which matures September 1, 2009,
provides the Company with a 90% participation in the property cash flow after
debt service if certain minimum property performance thresholds are met.
Otherwise, the Company will earn a fixed interest rate of 7%. The loan is
subordinate to a first mortgage of $63 million at 7%. After two years, the loan
agreement provides the Company the option to convert its

                                      F-36
<PAGE>

loan to an ownership intent. Simultaneous with the loan transaction, Smith
Realty Company entered into a multi-year property management agreement with the
owner.

         Also in February 2001, the Company closed on two unsecured credit
facilities, one for $100 million and the other $50 million, both from bank
groups lead by PNC Bank, N.A., as administrative agent, which refinanced $150
million of existing unsecured credit facilities which were to mature in March
2001. Draws upon the lines are subject to certain unencumbered asset
requirements and bear interest based on London Interbank Offer Rate (LIBOR) plus
an applicable margin of 85 to 125 basis points based on the leverage ratio of
the Company. If the Company chooses to and obtains an Investment Grade Rating
the applicable margin will be between 62.5 and 100 basis points over LIBOR based
on such rating. The Company also pays a quarterly fee ranging from 0.125% to
0.20% on the full amount available under the lines of credit, depending upon the
applicable leverage ratio or investment rating. The line of credit agreements
contain certain restrictive covenants, including maintenance of minimum equity
value, debt to equity ratios and debt service coverage requirements.

                                      F-37
<PAGE>

19.      QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

         Quarterly financial information for 2000 and 1999 is as follows (in
thousands except per share data):

<TABLE>
<CAPTION>
                                                               Three Months Ended
                                                --------------------------------------------------
                                                March 31,    June 30,   September 30, December 31,
                                                   2000        2000         2000         2000
                                                ---------    ---------    ---------    -----------

<S>                                             <C>          <C>          <C>          <C>
Revenues                                        $  88,854    $  94,716    $  98,742    $ 100,921
Operating expenses (including depreciation)       (46,066)     (45,979)     (50,485)
                                                                                         (49,044)
Equity in income of unconsolidated properties         783          542          524          616
Equity in income of Property
   Service Businesses before loss                     519        1,636        2,890        3,328
Interest expense, net                             (17,793)     (20,048)     (19,268)
                                                                                         (20,917)
Corporate general and administrative
   expenses                                        (2,695)      (3,002)      (2,810)      (2,783)
                                                ---------    ---------    ---------    ---------
Income before gains/losses
   and extraordinary items                         23,602       27,865       29,593       32,121
Gain on sales                                          --        4,161           --       67,265
Equity in loss on sale                                 --           --           --       (5,359)
                                                ---------    ---------    ---------    ---------
Income before extraordinary item                   23,602       32,026       29,593       94,027
Extraordinary item - loss on extinguishment
     of debt                                           --           --           --           --
                                                ---------    ---------    ---------    ---------
Net income of Operating Partnership                23,602       32,026       29,593       94,027
Income attributable to preferred
     units                                         (5,925)      (5,926)      (5,925)      (6,127)
                                                ---------    ---------    ---------    ---------
Net income attributable to common
     units                                      $  17,677    $  26,100    $  23,668    $  87,900
                                                =========    =========    =========    =========

Earnings per common unit - basic
     Income before extraordinary item           $    0.51    $    0.75    $    0.67    $    2.48
     Extraordinary item                                --           --           --           --
                                                ---------    ---------    ---------    ---------

     Net income                                 $    0.51    $    0.75    $    0.67    $    2.48
                                                =========    =========    =========    =========

Earnings per common unit - diluted
     Income before extraordinary item           $    0.51    $    0.73    $    0.65    $    2.14
     Extraordinary item                                --           --           --           --
                                                ---------    ---------    ---------    ---------
     Net income                                 $    0.51    $    0.73    $    0.65    $    2.14
                                                =========    =========    =========    =========
</TABLE>

                                      F-38
<PAGE>

<TABLE>
<CAPTION>
                                                              Three Months Ended
                                                ------------------------------------------------
                                                March 31,    June 30, September 30, December 31,
                                                   1999        1999       1999        1999
                                                --------    --------    --------    ------------

<S>                                             <C>         <C>         <C>         <C>
Revenues                                        $ 69,033    $ 70,522    $ 79,194    $ 82,484
Operating expenses (including depreciation)      (35,786)    (34,313)    (41,072)    (41,685)
Equity in income of unconsolidated properties        116         214         347         515
Equity in income of Property
     Service Businesses before gain                    2       1,126       2,127       2,485
Interest expense, net                            (13,104)    (13,418)    (15,182)    (14,299)
Corporate general and administrative
     expenses                                     (2,209)     (2,420)     (2,156)     (2,822)
                                                --------    --------    --------    --------
Income before gains/losses and
   extraordinary items                            18,052      21,711      23,258      26,678
Gain on sales                                      1,858          (7)      5,214      56,608
Equity in gain on sale                                --          --          --         802
                                                --------    --------    --------    --------
Income before extraordinary item                  19,910      21,704      28,472      84,088
Extraordinary item - loss on extinguishment
     of debt                                        (359)         --          --          (1)
                                                --------    --------    --------    --------
Net income of Operating Partnership               19,551      21,704      28,472      84,087
Income attributable to preferred
     units                                        (2,354)     (2,401)     (3,272)     (6,111)
                                                --------    --------    --------    --------
Net income attributable to common
     units                                      $ 17,197    $ 19,303    $ 25,200    $ 77,976
                                                ========    ========    ========    ========

Earnings per common unit - basic
     Income before extraordinary item           $   0.55    $   0.60    $   0.75    $   2.30
     Extraordinary item                            (0.01)         --          --          --
                                                --------    --------    --------    --------
     Net income                                 $   0.54    $   0.60    $   0.75    $   2.30
                                                ========    ========    ========    ========

Earnings per common unit - diluted
     Income before extraordinary item           $   0.55    $   0.59    $   0.73    $   2.20
     Extraordinary item                            (0.01)         --          --          --
                                                --------    --------    --------    --------

     Net income                                 $   0.54    $   0.59    $   0.73    $   2.20
                                                ========    ========    ========    ========
</TABLE>

                                      F-39

                    CHARLES E. SMITH RESIDENTIAL REALTY L.P.
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                                DECEMBER 31, 2000
                          (DOLLAR AMOUNTS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                   Capitalized Costs Before
                                                                   Accumulated Depreciation at
                                     Initial Cost       Costs          December 31, 2000
                               --------------------  Capitalized   ---------------------------
                                      Building and   Subsequent To           Building and                Accumulated       Net
Properties                     Land   Improvements   Acquisition     Land    Improvements     Total      Depreciation    Property
----------------------------------------------------------------------------------------------------------------------------------

OPERATING PROPERTIES:
<S>                            <C>         <C>           <C>          <C>         <C>          <C>           <C>           <C>
Albemarle                        418           --        6,935          418        6,935        7,353        (4,133)        3,220
Arlington Overlook               810           --       20,731          810       20,731       21,541       (13,114)        8,427
Bedford Village                1,062           --       19,841        1,062       19,841       20,903       (10,281)       10,622
Bennington                     6,922       22,641        2,512        6,922       25,153       32,075        (3,123)       28,952
Boulevard of Old Town          2,653        6,391          854        2,653        7,245        9,898          (920)        8,978
Buchanan House                 9,061       56,935        7,691        9,061       64,626       73,687        (2,974)       70,713
Calvert-Woodley                  172           --        3,270          172        3,270        3,442        (2,229)        1,213
Car Barn                       3,576           --       14,337        3,576       14,337       17,913        (6,273)       11,640
Charter Oaks                   4,387       10,058        1,588        4,387       11,646       16,033        (1,454)       14,579
Cleveland House                  325           --        5,979          325        5,979        6,304        (3,602)        2,702
Columbia Crossing              4,701           --       18,986        4,701       18,986       23,687        (6,168)       17,519
1841 Columbia Road             3,611        2,000          654        3,611        2,654        6,265          (277)        5,988
2000 Commonwealth              3,827       23,703          595        3,827       24,298       28,125        (1,949)       26,176
Concord Village                   --           --        9,790           --        9,790        9,790        (6,788)        3,002
Connecticut Heights            6,956       18,700        4,904        6,956       23,604       30,560        (2,945)       27,615
Consulate                      4,808       27,842          357        4,808       28,199       33,007        (1,026)       31,981
Corcoran House                   230           --        2,751          230        2,751        2,981        (1,838)        1,143
Countryside                    6,530       38,270        3,015        6,530       41,285       47,815        (1,482)       46,333
Courthouse Place              10,316       58,561          463       10,316       59,024       69,340        (2,543)       66,797
Courthouse Plaza                  --           --       45,273           --       45,273       45,273       (14,768)       30,505
Cronin's Landing               9,114       54,427          680        9,114       55,107       64,221        (3,371)       60,850
Crystal House I                   --           --       12,832           --       12,832       12,832        (7,532)        5,300
Crystal House II                  --           --       10,890           --       10,890       10,890        (7,685)        3,205
Crystal Place                  1,245           --       19,229        1,245       19,229       20,474        (7,836)       12,638
Crystal Plaza                 10,250       35,355        3,170       10,250       38,525       48,775        (3,620)       45,155
Crystal Square                 7,524           --       16,273        7,524       16,273       23,797        (9,692)       14,105
Crystal Towers                12,607       57,189        4,495       12,607       61,684       74,291        (5,874)       68,417
Delaware Place                 3,856       21,631          578        3,856       22,209       26,065          (370)       25,695
Gateway Place                  1,660           --       17,980        1,660       17,980       19,640        (6,542)       13,098
Harbour House                 14,190       79,708        1,294       14,190       81,002       95,192          (332)       94,860
Kenmore                        4,456       11,837        2,569        4,456       14,406       18,862        (1,228)       17,634
Lincoln Towers                12,471       76,480        1,839       12,471       78,319       90,790        (6,252)       84,538
Mirador (formerly,
  Forte Towers)               12,824       73,426        9,673       12,824       83,099       95,923        (2,204)       93,719
McClurg Court                 10,637       63,487        5,043       10,637       68,530       79,167        (4,532)       74,635
                          ----------------------------------------------------------------------------------------------------------
     Subtotal                171,199      738,641      277,071      171,199    1,015,712    1,186,911      (154,957)    1,031,954
                          ----------------------------------------------------------------------------------------------------------
</TABLE>


                                Date of      Date      Depreciable
Properties                   Construction   Acquired     Lives
---------------------        ------------  --------- --------------

OPERATING PROPERTIES:

Albemarle                         1,966         -       5-40 years
Arlington Overlook                 1960         -       5-40 years
Bedford Village                    1967         -       5-40 years
Bennington                         1982      1995       5-40 years
Boulevard of Old Town              1941      1995       5-40 years
Buchanan House                     1972      1999       5-40 years
Calvert-Woodley                    1962        --       5-40 years
Car Barn                        1982/1986      --       5-40 years
Charter Oaks                       1970      1996       5-40 years
Cleveland House                    1962        --       5-40 years
Columbia Crossing               1990/1991      --       5-40 years
1841 Columbia Road                 1923      1996       5-40 years
2000 Commonwealth                  1986      1997       5-40 years
Concord Village                    1967        --       5-40 years
Connecticut Heights             1920s/1974   1995       5-40 years
Consulate                          1978      1999       5-40 years
Corcoran House                     1961        --       5-40 years
Countryside                        1972      1999       5-40 years
Courthouse Place                   1999        --       5-40 years
Courthouse Plaza                1988/1990      --       5-40 years
Cronin's Landing                   1998      1998       5-40 years
Crystal House I                    1969        --       5-40 years
Crystal House II                   1964        --       5-40 years
Crystal Place                      1986        --       5-40 years
Crystal Plaza                      1967      1997       5-40 years
Crystal Square                     1975        --       5-40 years
Crystal Towers                  1966/1967    1997       5-40 years
Delaware Place                     1987      2000       5-40 years
Gateway Place                      1987        --       5-40 years
Harbour House                   1962/1964    2000       5-40 years
Kenmore                            1950      1997       5-40 years
Lincoln Towers                     1992      1997       5-40 years
Mirador (formerly,
  Forte Towers)                 1964/1979    1999       5-40 years
McClurg Court                      1972      1998       5-40 years
     Subtotal

                                      S-1
<PAGE>

                    CHARLES E. SMITH RESIDENTIAL REALTY L.P.
                                  SCHEDULE III
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                                DECEMBER 31, 2000
                          (DOLLAR AMOUNTS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                   Capitalized Costs Before
                                                                   Accumulated Depreciation at
                                     Initial Cost       Costs          December 31, 2000
                               --------------------  Capitalized     --------------------
                                      Building and   Subsequent To           Building and                Accumulated       Net
Properties                     Land   Improvements   Acquisition     Land    Improvements     Total      Depreciation    Property
----------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>         <C>           <C>          <C>         <C>          <C>           <C>           <C>
     Subtotal from
     previous page           171,199      738,641      277,071      171,199    1,015,712    1,186,911      (154,957)    1,031,954

Newport Village                  281           --       19,700          281       19,700       19,981       (11,406)        8,575
New River Village              4,539       24,968          932        4,539       25,900       30,439           (80)       30,359
Oaks of Tysons                 3,819       12,567        1,540        3,819       14,107       17,926        (1,777)       16,149
Ocean Crest Club               5,208       29,405        2,190        5,208       31,595       36,803          (763)       36,040
Ocean Crest Beach             10,154       57,300        4,237       10,154       61,537       71,691        (1,488)       70,203
Ocean View (formerly,
  Aventura)                   11,600       66,051        4,173       11,600       70,224       81,824        (1,910)       79,914
One East Delaware              6,851       36,576          859        6,851       37,435       44,286        (2,990)       41,296
One Superior Place            16,907       98,711          495       16,907       99,206      116,113        (2,668)      113,445
Parc Vista                     5,830       33,222          756        5,830       33,978       39,808        (2,300)       37,508
Park Connecticut               4,133       17,891        6,172        4,133       24,063       28,196          (423)       27,773
Park Lincoln (fomerly,
  Park West)                   1,930       11,670        1,268        1,930       12,938       14,868          (618)       14,250
Patriot Village                   --           --       34,641           --       34,641       34,641       (18,215)       16,426
2501 Porter Street             1,126           --       18,722        1,126       18,722       19,848        (6,396)       13,452
Reston Landing                 6,638       37,112          665        6,638       37,777       44,415          (508)       43,907
Sagamore Towers                3,094       17,304          398        3,094       17,702       20,796            --        20,796
Skyline Mall                     482           --       14,697          482       14,697       15,179        (9,018)        6,161
Skyline Towers                   360           --       29,786          360       29,786       30,146       (18,356)       11,790
Statesman                        600           --        6,225          600        6,225        6,825        (3,938)        2,887
Stonegate (formerly,
  Somerset)                    8,383       49,317        4,045        8,383       53,362       61,745        (1,920)       59,825
Terrace                        3,753       21,933        1,595        3,753       23,528       27,281        (1,144)       26,137
Tunlaw Gardens                 1,530        5,609        2,026        1,530        7,635        9,165          (449)        8,716
Tunlaw Park                    1,251        5,414        1,065        1,251        6,479        7,730          (413)        7,317
Van Ness                      12,699       29,997        4,085       12,699       34,082       46,781        (3,476)       43,305
Water Park Towers              2,500           --       42,881        2,500       42,881       45,381       (13,469)       31,912
Westerly                       4,700       19,313          540        4,700       19,853       24,553        (2,633)       21,920
2201 Wilson Blvd               4,198       23,200          756        4,198       23,956       28,154            --        28,154

DEVELOPMENT PROPERTIES:

Alban Towers                   9,197       10,523       18,185        9,197       28,708       37,905            --        37,905
Park Millennium               14,020           --        9,671       14,020        9,671       23,691            --        23,691

                          ----------------------------------------------------------------------------------------------------------
     Total                   316,982    1,346,724      509,376      316,982    1,856,100    2,173,082      (261,315)    1,911,767
                          ==========================================================================================================
</TABLE>

                                 Date of                  Date    Depreciable
Properties                    Construction              Acquired     Lives
-----------------------       ------------             ---------  -----------
     Subtotal from
     previous page

Newport Village                      1971                   --   5-40 years
New River Village                    2000                 2000   5-40 years
Oaks of Tysons                       1980                 1995   5-40 years
Ocean Crest Club                  1962/1966               2000   5-40 years
Ocean Crest Beach                    1971                 2000   5-40 years
Ocean View (formerly,
  Aventura)                          1972                 1999   5-40 years
One East Delaware                    1989                 1997   5-40 years
One Superior Place                   2000                   --   5-40 years
Parc Vista                           1990                 1998   5-40 years
Park Connecticut                     2000                        5-40 years
Park Lincoln (fomerly,
  Park West)                         1969                 1999   5-40 years
Patriot Village                 1973/1975/1977              --   5-40 years
2501 Porter Street                1987/1988                 --   5-40 years
Reston Landing                       2000                 2000   5-40 years
Sagamore Towers                      1977                 2000   5-40 years
Skyline Mall                         1977                   --   5-40 years
Skyline Towers                       1972                   --   5-40 years
Statesman                            1961                   --   5-40 years
Stonegate (formerly,
  Somerset)                          1968                 1999   5-40 years
Terrace                              1968                 1999   5-40 years
Tunlaw Gardens                       1944                 1998   5-40 years
Tunlaw Park                          1953                 1998   5-40 years
Van Ness                             1970                 1996   5-40 years
Water Park Towers                    1989                   --   5-40 years
Westerly                             1995                   --   5-40 years
2201 Wilson Blvd                     2000                 2000   5-40 years

DEVELOPMENT PROPERTIES:

Alban Towers                                Under construction           --
Park Millennium                             Under construction           --

     Total

                                      S-1
<PAGE>

         The aggregate cost for Federal income tax purposes of the Company's
investment in real estate was approximately $1.8 billion and $1.4 billion at
December 31, 2000 and 1999, respectively.

         The changes in total real estate and accumulated depreciation for the
three years ended December 31 are as follows (in thousands):

                                                Total Real Estate Assets
                                      -----------------------------------------
                                          2000           1999           1998
                                          ----           ----           ----

BALANCE, Beginning of Year            $ 1,781,662    $ 1,322,646    $ 1,014,509
   Acquisitions                           348,011        413,391        190,933
   Development                             44,637        135,257        114,347
   Improvements                            71,697         33,056         16,852
   Retirements and Write-offs             (72,925)      (122,688)       (13,995)
                                      -----------    -----------    -----------
BALANCE, End of Year                  $ 2,173,082    $ 1,781,662    $ 1,322,646
                                      ===========    ===========    ===========


                                                Accumulated Depreciation
                                        ---------------------------------------
                                           2000           1999           1998
                                           ----           ----           ----

BALANCE, Beginning of Year              $ 242,620      $ 228,683      $ 210,186
   Depreciation Expense                    44,319         33,276         28,616
   Retirements and Write-offs             (25,624)       (19,339)       (10,119)
                                        ---------      ---------      ---------

BALANCE, End of Year                    $ 261,315      $ 242,620      $ 228,683
                                        =========      =========      =========



                                      S-2
<PAGE>

                                  EXHIBIT INDEX

Item                         Document                                       Page
----                         --------                                       ----

2.1      Third Party Management and Leasing, Hotel Asset Management and       -
         Corporate Services Business Transfer Agreement by and between
         Charles E. Smith Residential Realty, Inc. and Smith Property
         Management, Inc. (Incorporated by reference to Exhibit No. 2.1
         of the Company's Form 10-K for the year ended December 31, 1994)

2.2      REIT Properties Management and Leasing Business Transfer Agreement   -
         by and between Charles E. Smith Management, Inc. and Charles E.
         Smith Residential Realty L.P. (Incorporated by reference to Exhibit
         No. 2.2 of the Company's Form 10-K for the year ended December 31,
         1994)

2.3      Assignment by Robert H. Smith, Clarice R. Smith, Robert P. Kogod     -
         and Arlene R. Kogod to Charles E. Smith Management, Inc. of 99% of
         all Partnership Interests of Residential Associates Limited
         Partnership (Incorporated by reference to Exhibit No. 2.3 of the
         Company's Form 10-K for the year ended December 31, 1994)

2.4      Assignment and Assumption Agreement by Residential Associates        -
         Limited Partnership and Charles E. Smith Residential Realty L.P.
         (Incorporated by reference to Exhibit No. 2.4 of the Company's
         Form 10-K for the year ended December 31, 1994)

2.5      Debt Assumption Agreement and Accord and Satisfaction of Debt by     -
         Charles E. Smith Management, Inc. and Charles E. Smith Residential
         Realty L.P. (Incorporated by reference to Exhibit No. 2.5 of the
         Company's Form 10-K for the year ended December 31, 1994)

2.6      Debt Contribution Agreement between Charles E. Smith Management,     -
         Inc. and Charles E. Smith Residential Realty L.P. (the "Operating
         Partnership") (Incorporated by reference to Exhibit No. 2.6 of the
         Company's Form 10-K for the year ended December 31, 1994)

3.1      Amended and Restated Articles of Incorporation of Charles E. Smith   -
         Residential Realty, - Inc. (the "Company") (Incorporated by
         reference to Exhibit No. 3.1 of the Company's Registration Statement
         on Form S-11, No. 33-75288)

3.2      Articles of Amendment to Articles of Amendment and Restatement of    -
         Articles of Incorporation of Charles E. Smith Residential Realty,
         Inc. (Incorporated by reference to Exhibit No. 3.2 of the Company's
         Form 10-K for the year ended December 31, 1998)
<PAGE>

Item                         Document                                       Page
----                         --------                                       ----

3.3      Amended and Restated Bylaws of the Company (Incorporated by          -
         reference to Exhibit 3.2 in the Company's Registration Statement on
         Form S-3 (File No. 33-93986))

3.4      Articles Supplementary to Amended and Restated Articles of           -
         Incorporation of the Company (Incorporated by reference to Exhibit
         No. 3.1 of Company's Quarterly Report on Form 10-Q for the Quarter
         Ended June 30, 1997)

3.5      Articles Supplementary of the Company for Classifying and            -
         Designating Series B Cumulative Convertible Redeemable Preferred
         Stock (Incorporated by reference to Exhibit No. 4.1 of the
         Company's Report on Form 8-K dated October 3, 1997 and filed
         October 20, 1997)

3.6      Certificate of Correction relating to Articles Supplementary for     -
         Series B Cumulative Convertible Redeemable Preferred Stock
         (Incorporated by reference to Exhibit No. 4.2 of the Company's Report
         on Form 8-K dated October 3, 1997 and filed October 20, 1997)

3.7      Articles Supplementary for Series C Cumulative Redeemable            -
         Preferred Stock (Incorporated by reference to Exhibit No. 3.5 in
         the Company's Registration Statement on Form S-3, File No.
         333-17053)

3.8      Articles Supplementary of the Company for Classifying and            -
         Designating a Series of Preferred Stock as Series D Junior
         Participating Preferred Stock and Fixing Distribution and Other
         Preferences and Rights of Such Series (Incorporated by reference to
         Exhibit No. 3.8 of the Company's Form 10-K for the year ended
         December 31, 1998)

3.9      Articles Supplementary of the Company for Classifying and            -
         Designating Series E Cumulative Convertible Redeemable Preferred
         Stock (Incorporated by reference to Exhibit 99.1 of the Company's
         Quarterly Report on Form 10-Q for the Quarter Ended June 30, 1999)

3.10     Articles Supplementary of the Company for Classifying and            -
         Designating Series F Cumulative Convertible Redeemable Preferred
         Stock (Incorporated by reference to Exhibit No. 99.2 of the Company's
         Quarterly Report on Form 10-Q for the Quarter Ended June 30, 1999)

3.11     Articles Supplementary of the Company for Classifying and            -
         Designating Series G Cumulative Convertible Redeemable Preferred
         Stock (Incorporated by reference to Exhibit No. 99.3 of the Company's
         Quarterly Report on Form 10-Q for the Quarter Ended June 30, 1999)
<PAGE>

Item                         Document                                       Page
----                         --------                                       ----

3.12     Articles Supplementary of the Company for Classifying and            -
         Designating Series H Cumulative Convertible Redeemable Preferred
         Stock (Incorporated by reference to Exhibit No. 99.1 of the
         Company's Quarterly Report on Form 10-Q for the Quarter Ended
         September 30, 1999)

3.13     Certificate of Amendment of Amended and Restated By-laws of          -
         Charles E. Smith Residential Realty, Inc. (Incorporated by
         reference to Exhibit No. 3.13 of the Company's form 10-K for the
         year ended December 31, 1999)

4.1      First Amended and Restated Agreement of Limited Partnership of the   -
         Operating Partnership, - as amended (Incorporated by reference to
         Exhibit No. 4.1 of the Company's Form 10-K for the year ended
         December 31, 1994)

4.2      Certificate of Limited Partnership of the Operating Partnership      -
         (Incorporated by reference to Exhibit No. 4.2 of the Company's Form
         10-K for the year ended December 31, 1994)

4.3      Ninth Amendment to Amended and Restated Agreement of Limited         -
         Partnership of the Operating Partnership (Incorporated by reference
         to Exhibit No. 4.1 of the Company's Quarterly Report on Form 10-Q
         for the Quarter Ended June 30, 1997)

4.4      Tenth Amendment to Amended and Restated Agreement of Limited         -
         Partnership of the Operating Partnership (Incorporated by reference
         to Exhibit No. 4.4 of the Company's Form 10-K for the year ended
         December 31, 1997)

4.5      Fifteenth Amendment to First Amended and Restated Agreement of       -
         Limited Partnership of the Operating Partnership (Incorporated by
         reference to Exhibit 99.1 of the Company's Quarterly Report on Form
         10-Q for the Quarter Ended March 31, 1998)

4.6      Seventeenth Amendment to First Amended and Restated Agreement of     -
         Limited Partnership of the Operating Partnership (Incorporated by
         reference to Exhibit No. 4.6 of the Company's Form 10-K for the year
         ended December 31, 1998)

10.1     Noncompetition Agreement by and among the Company, the Operating     -
         Partnership and Robert P. Kogod and Robert H. Smith (Incorporated
         by reference to Exhibit No. 10.1 of the Company's Form 10-K for the
         year ended December 31, 1994)
<PAGE>

Item                         Document                                       Page
----                         --------                                       ----

10.2     Registration Rights and Lock-up Agreement (Incorporated by reference -
         to Exhibit No. 10.2 of the Company's Form 10-K for the year ended
         December 31, 1994)

10.3     Pledge Agreement (Incorporated by reference to Exhibit No. 10.3 of   -
         the Company's Form 10-K for the year ended December 31, 1994)

10.4     First Amended and Restated 1994 Employee Stock and Unit Option Plan  -
         (Incorporated by reference to Exhibit No. 10.4 of the Company's Form
         10-K for the year ended December 31, 1994)

10.5     First Amended and Restated 1994 Employee Restricted Stock and        -
         Restricted Unit Plan (Incorporated by reference to Exhibit No. 10.5
         of the Company's Form 10-K for the year ended December 31, 1994)

10.6     Non-Employee Directors Stock Option Plan (Incorporated by reference  -
         to Exhibit No. 10.6 of the Company's Form 10-K for the year ended
         December 31, 1994)

10.7     Subscription Agreement (Incorporated by reference to Exhibit No.     -
         10.7 of the Company's Form 10-K for the year ended December 31,
         1994)

10.8     Voting Stock Partnership Agreement for Smith Property Management     -
         Partnership (Incorporated by reference to Exhibit No. 10.8 of the
         Company's Form 10-K for the year ended December 31, 1994)

10.9     Voting Stock Partnership Agreement for Smith Management              -
         Construction Partnership (Incorporated by reference to Exhibit No.
         10.9 of the Company's Form 10-K for the year ended December 31,
         1994)

10.10    Voting Stock Partnership Agreement for Consolidated Engineering      -
         Services Partnership (Incorporated by reference to Exhibit No.
         10.10 of the Company's Form 10-K for the year ended December 31,
         1994)

10.11    Amended and Restated Articles of Incorporation of Smith Realty       -
         Company (Incorporated by reference to Exhibit No. 10.11 of the
         Company's Form 10-K for the year ended December 31, 1994)

10.12    By-Laws of Smith Property Management, Inc. (Incorporated by          -
         reference to Exhibit No. 10.12 of the Company's Registration
         Statement on Form S-11, No. 33-75288)
<PAGE>

Item                         Document                                       Page
----                         --------                                       ----

10.13    Articles of Incorporation of Smith Management Construction, Inc.     -
         (Incorporated by reference to Exhibit No. 10.13 of the Company's
         Registration Statement on Form S-11, No. 33-75288)

10.14    By-Laws of Smith Management Construction, Inc. (Incorporated by      -
         reference to Exhibit No. 10.14 of the Company's Registration
         Statement on Form S-11, No. 33-75288)

10.15    Articles of Incorporation of Consolidated Engineering Services,      -
         Inc. (Incorporated by reference to Exhibit No. 10.15 of the
         Company's Registration Statement on Form S-11, No. 33-75288)

10.16    By-Laws of Consolidated Engineering Services, Inc. (Incorporated     -
         by reference to Exhibit No. 10.16 of the Company's Registration
         Statement on Form S-11, No. 33-75288)

10.17    Certificate of Incorporation of Smith One, Inc. (Incorporated by     -
         reference to Exhibit No. 10.17 of the Company's Registration
         Statement on Form S-11, No. 33-75288)

10.18    By-Laws of Smith One, Inc. (Incorporated by reference to Exhibit     -
         No. 10.18 of the Company's Registration Statement on Form S-11, No.
         33-75288)

10.19    Agreement of Limited Partnership of Smith Property Holdings One      -
         L.P. (Incorporated by reference to Exhibit No. 10.19 of the
         Company's Form 10-K for the year ended December 31, 1994)

10.20    Agreement of Limited Partnership of Smith Property Holdings One      -
         (D.C.) L.P. (Incorporated by reference to Exhibit No. 10.20 of the
         Company's Form 10-K for the year ended December 31, 1994)

10.21    Certificate of Incorporation of Smith Two, Inc. (Incorporated by     -
         reference to Exhibit No. 10.21 of the Company's Registration
         Statement on Form S-11, No. 33-75288)

10.22    By-Laws of Smith Two, Inc. (Incorporated by reference to Exhibit     -
         No. 10.22 of the Company's Registration Statement on Form S-11, No.
         33-75288)

10.23    Agreement of Limited Partnership of Smith Property Holdings Two      -
         L.P.(Incorporated by reference to Exhibit No. 10.23 of the
         Company's Form 10-K for the year ended December 31, 1994)
<PAGE>

10.24    Agreement of Limited Partnership of Smith Property Holdings Two      -
         (D.C.) L.P. (Incorporated by reference to Exhibit No. 10.24 of the
         Company's Form 10-K for the year ended December 31, 1994)

10.25    Certificate of Incorporation of Smith Three, Inc. (Incorporated by   -
         reference to Exhibit No. 10.25 of the Company's Registration
         Statement on Form S-11, No. 33-75288)

10.26    By-Laws of Smith Three, Inc. (Incorporated by reference to Exhibit   -
         No. 10.26 of the Company's Registration Statement on Form S-11, No.
         33-75288)

10.27    Agreement of Limited Partnership of Smith Property Holdings Three    -
         L.P. (Incorporated by reference to Exhibit No. 10.27 of the
         Company's Form 10-K for the year ended December 31, 1994)

10.28    Agreement of Limited Partnership of Smith Property Holdings Three    -
         (D.C.) L.P. (Incorporated by reference to Exhibit No. 10.28 of the
         Company's Form 10-K for the year ended December 31, 1994)

10.29    Certificate of Incorporation of Smith Four, Inc. (Incorporated by    -
         reference to Exhibit No. 10.29 of the Company's Registration
         Statement on Form S-11, No. 33-75288)

10.30    By-Laws of Smith Four, Inc. (Incorporated by reference to Exhibit    -
         No. 10.30 of the Company's Registration Statement on Form S-11, No.
         33-75288)

10.31    Agreement of Limited Partnership of Smith Property Holding Four      -
         L.P. (Incorporated by reference to Exhibit No. 10.31 of the
         Company's Form 10-K for the year ended December 31, 1994)

10.32    Amended and Restated Certificate of Incorporation of Smith Five,     -
         Inc. (Incorporated by reference to Exhibit No. 10.32 of the
         Company's Form 10-K for the year ended December 31, 1994)

10.33    By-Laws of Smith Five, Inc. (Incorporated by reference to Exhibit    -
         No. 10.33 of the Company's Registration Statement on Form S-11, No.
         33-75288)

10.34    Agreement of Limited Partnership of Smith Property Holdings Five     -
         (D.C.) L.P. (Incorporated by reference to Exhibit No. 10.34 of the
         Company's Form 10-K for the year ended December 31, 1994)
<PAGE>

Item                         Document                                       Page
----                         --------                                       ----

10.35    License Agreement between Charles E. Smith Management, Inc. and      -
         the Company (Incorporated by reference to Exhibit No. 10.35 of the
         Company's Form 10-K for the year ended December 31, 1994)

10.36    License Agreement between Charles E. Smith Management, Inc. and the  -
         Operating Partnership (Incorporated by reference to Exhibit No.
         10.36 of the Company's Form 10-K for the year ended December 31, 1994)

10.37    Agreement of Limited Partnership of Smith Property Holdings Five     -
         L.P. (Incorporated by reference to Exhibit No. 10.0 of the Company's
         Quarterly Report on Form 10-Q for the Quarter Ended September 30,
         1994)

10.38    Certificate of Limited Partnership of Smith Property Holdings Five   -
         L.P. (Incorporated by reference to Exhibit No. 10.38 of the Company's
         Form 10-K for the year ended December 31, 1994)

10.39    Deed of Trust and Security Agreement between Smith Property          -
         Holdings Three L.P. ("Smith Three") and The Northwestern Mutual
         Life Insurance Company ("Northwestern") (Incorporated by reference
         to Exhibit No. 10.2 of the Company's Quarterly Report on Form 10-Q
         for the Quarter Ended June 30, 1994)

10.40    Guarantee of Recourse Obligations by Smith Three and the Operating   -
         Partnership - (Incorporated by reference to Exhibit No. 10.3 of the
         Company's Quarterly Report on Form 10-Q for the Quarter Ended June
         30, 1994)

10.41    Absolute Assignment of Leases and Rents between Smith Three and      -
         Northwestern (Incorporated by reference to Exhibit No. 10.4 of the
         Company's Quarterly Report on Form 10-Q for the Quarter Ended June
         30, 1994)

10.42    Promissory Note of Smith Three to Northwestern (Incorporated by      -
         reference to Exhibit No. 10.5 of the Company's Quarterly Report on
         Form 10-Q for the Quarter Ended June 30, 1994)

10.43    Purchase Money Deed of Trust and Security Agreement between Smith    -
         Property Holdings Three (D.C.) L.P. ("Smith Three D.C.") and
         Northwestern (Incorporated by reference to Exhibit No. 10.6 of the
         Company's Quarterly Report on Form 10-Q for the Quarter Ended June
         30, 1994)

10.44    Guarantee of Recourse Obligations by Smith Three D.C. and the        -
         Operating Partnership (Incorporated by reference to Exhibit No.
         10.7 of the Company's Quarterly Report on Form 10-Q for the Quarter
         Ended June 30, 1994)
<PAGE>

Item                         Document                                       Page
----                         --------                                       ----

10.45    Absolute Assignment of Leases and Rents between Smith Three D.C.     -
         and Northwestern (Incorporated by reference to Exhibit No. 10.8 of
         the Company's Quarterly Report on Form 10-Q for the Quarter Ended
         June 30, 1994)

10.46    Purchase Money Promissory Note of Smith Three D.C. to Northwestern   -
         (Incorporated by reference to Exhibit No. 10.9 of the Company's
         Quarterly Report on Form 10-Q for the Quarter Ended June 30, 1994)

10.47    Supplemental Loan Agreement by and among Smith Property Holdings     -
         Two L.P. ("Smith Two"), Smith Property Holdings Two (D.C.) L.P.
         ("Smith Two D.C.") and Green Park Financial Limited Partnership
         ("Green Park") (Incorporated by reference to Exhibit No. 10.47 of
         the Company's Form 10-K for the year ended December 31, 1998)

10.48    Supplemental Loan Agreement by and among Smith Property Holdings     -
         One L.P. ("Smith One D.C."), Smith Property Holdings One (D.C.)
         L.P. ("Smith One D.C.") and GMAC (Incorporated by reference to
         Exhibit No. 10.13 of the Company's Quarterly Report on Form 10-Q
         for the Quarter Ended June 30, 1994)

10.49    Multifamily Note of Smith One to GMAC (Incorporated by reference     -
         to Exhibit No. 10.14 of the Company's Quarterly Report on Form
         10-Q for the Quarter Ended June 30, 1994)

10.50    Multifamily Note of Smith One D.C. to GMAC (Incorporated by          -
         reference to Exhibit No. 10.15 of the Company's Quarterly Report
         on Form 10-Q for the Quarter Ended June 30, 1994)

10.51    Absolute Assignment of Leases and Rents by Smith One D.C. to GMAC    -
         (Incorporated by reference to Exhibit No. 10.16 of the Company's
         Quarterly Report on Form 10-Q for the Quarter Ended June 30, 1994)

10.52    Property Management Agreement by and between Smith One and the       -
         Operating Partnership (Incorporated by reference to Exhibit No.
         10.17 of the Company's Quarterly Report on Form 10-Q for the
         Quarter Ended June 30, 1994)

10.53    Multifamily Deed of Trust, Assignment of Rents and Security          -
         Agreement between Smith One D.C. and GMAC (Incorporated by
         reference to Exhibit No. 10.18 of the Company's Quarterly Report
         on Form 10-Q for the Quarter Ended June 30, 1994)

10.54    Commercial Leasing and Property Management Agreement between Smith   -
         Three and the Operating Partnership (Incorporated by reference to
         Exhibit No. 10.19 of the Company's Quarterly Report on Form 10-Q
         for the Quarter Ended June 30, 1994)
<PAGE>

Item                         Document                                       Page
----                         --------                                       ----

10.55    Agreement of Limited Partnership of Smith Employment Services L.P.   -
         (Incorporated by reference to Exhibit No. 10.58 of the Company's
         Form 10-K for the year ended December 31, 1994)

10.56    Certificate of Limited Partnership of Smith Employment Services      -
         L.P. (Incorporated by reference to Exhibit No. 10.59 of the
         Company's Form 10-K for the year ended December 31, 1994)

10.57    Second Restated and Amended Agreement of Limited Partnership of      -
         First Herndon Associated Limited Partnership (Incorporated by
         reference to Exhibit No. 10.1 of the Company's Quarterly Report on
         Form 10-Q for the Quarter Ended June 30, 1995)

10.58    Second Amendment to the Certificate of Limited Partnership of        -
         First Herndon Associates Limited Partnership (Incorporated by
         reference to Exhibit No. 10.2 of the Company's Quarterly Report
         on Form 10-Q for the Quarter Ended June 30, 1995)

10.59    Certificate of Incorporation of Smith Six, Inc. (Incorporated by     -
         reference to Exhibit No. 10.1 of the Company's Quarterly Report on
         Form 10-Q for the Quarter Ended March 31, 1995)

10.60    By-Laws of Smith Six, Inc. (Incorporated by reference to Exhibit     -
         No. 10.2 of the Company's Quarterly Report on Form 10-Q for the
         Quarter Ended March 31, 1995)

10.61    Agreement of Limited Partnership of Smith Property Holdings Six      -
         L.P. (Incorporated by reference to Exhibit No. 10.3 of the Company's
         Quarterly Report on Form 10-Q for the Quarter Ended March 31, 1995)

10.62    Agreement of Limited Partnership of Smith Property Holdings Six      -
         (D.C.) L.P. (Incorporated by reference to Exhibit No. 10.4 of the
         Company's Quarterly Report on Form 10-Q for the Quarter Ended March
         31, 1995)

10.63    Certificate of Incorporation of Smith Seven, Inc. (Incorporated by   -
         reference to Exhibit No. 10.66 of the Company's Form 10-K for the
         year ended December 31, 1995)
<PAGE>

Item                         Document                                       Page
----                         --------                                       ----

10.64    By-Laws of Smith Seven, Inc. (Incorporated by reference to Exhibit   -
         No. 10.67 of the Company's Form 10-K for the year ended December 31,
         1995)

10.65    Agreement of Limited Partnership of Smith Property Holdings Seven    -
         L.P. (Incorporated by reference to Exhibit No. 10.68 of the Company's
         Form 10-K for the year ended December 31, 1995)

10.66    Commitment for Mortgage Loan to the Operating Partnership from       -
         Northwestern Mutual Life Insurance Company (Incorporated by
         reference to Exhibit No. 10.69 of the Company's Form 10-K for the
         year ended December 31, 1995)

10.67    First Amendment to First Amended and Restated Agreement of 1994      -
         Employee Stock and Unit Option Plan of Charles E. Smith Residential
         Realty, Inc. (Incorporated by reference to Exhibit 4.9 in the
         Company's Registration Statement on Form S-8, File No. 333-67421)

10.68    Second Amendment to First Amended and Restated Agreement of 1994     -
         Employee Stock and Unit Option Plan of Charles E. Smith Residential
         Realty, Inc. (Incorporated by reference to Exhibit No. 10.71 of the
         Company's Form 10-K for the year ended December 31, 1998)

10.69    Rights Agreement between Charles E. Smith Residential Realty, Inc.   -
         and First Union National Bank, as Rights Agent (Incorporated by
         reference to Exhibit No. 10.72 of the Company's Form 10-K for the
         year ended December 31, 1998)

10.70    Third Amendment to First Amended and Restated 1994 Employee          -
         Restricted Stock and Unit Option Plan of Charles E. Smith
         Residential Realty, Inc. (Incorporated by reference to Exhibit No.
         10.73 of the Company's Form 10-K for the year ended December 31,
         1999)

10.71    First Amendment to First Amended and Restated 1994 Employee          -
         Restricted Stock and Restricted Unit Plan of Charles E. Smith
         Residential Realty, Inc. (Incorporated by reference to Exhibit
         10.74 of the Company's Form 10-K for the year ended December 31,
         1999)

10.72    Fourth Amendment to First Amended and Restated 1994 Employee Stock   -
         and Unit Option Plan of Charles E. Smith Residential Realty, Inc.
         (Incorporated by reference to Exhibit 10.75 of the Company's Form
         10-K for the year ended December 31, 1999)

10.73    Fifth Amendment to First Amended and Restated 1994 Employee Stock
         and Unit option Plan of Charles E. Smith Residential
         Realty, Inc.                                                       E-1
<PAGE>

Item                         Document                                       Page
----                         --------                                       ----

10.74    Credit Agreement By and Among Smith Property Holdings Lincoln        -
         Towers LLC and Smith Property Holdings McClurg Court LLC, as
         Borrower and Columbia National Real Estate Finance, Inc., as
         Lender. (Incorporated by reference to Exhibit 99.1 in the
         Company's Quarterly Report on Form 10-Q for the Quarter Ended June
         30, 2000)

10.75    Credit Agreement ($100,000,000 Revolving Line of Credit) between    E-2
         the Operating Partnership and PNC Bank, National Association,
         et al.

10.76    Credit Agreement ($50,000,000 Revolving Line of Credit) between     E-3
         the Operating Partnership and PNC Bank, National Association,
         et al.

21       Subsidiaries of the Registrant                                      E-4

23.1     Consent of Arthur Andersen LLP                                      E-5

27       Financial Data Schedule                                              -