##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934
 For the transition period from            to
 Commission File Number 0-24497
 AIMCO Properties, L.P.
  Delaware
(State or other jurisdiction of
incorporation or organization)
    
    84-1275621
(I.R.S. Employer
Identification No.)4582 South Ulster Street Parkway, Suite 1100
Denver, Colorado
(Address of principal executive offices)
    
    80237
(Zip Code)
 (303) 757-8101
 Not Applicable
 þ o
 þ o




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##### Table of Contents



AIMCO PROPERTIES, L.P.
 TABLE OF CONTENTS
 FORM 10-Q
  
 PagePART I. FINANCIAL INFORMATIONITEM 1.
    
    
    
    Financial StatementsConsolidated Balance Sheets as of June 30, 2005 (unaudited) and December 31, 2004
    
    
    2Consolidated Statements of Income for the Three and Six Months Ended June 30, 2005
and 2004 (unaudited)
    
    
    3Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2005 and
2004 (unaudited)
    
    
    4Notes to Consolidated Financial Statements (unaudited)
    
    
    5ITEM 2.
    
    
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    16ITEM 3.
    
    
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    30ITEM 4.
    
    
    
    Controls and Procedures
    
    
    30PART II. OTHER INFORMATIONITEM 1.
    
    
    
    Legal Proceedings
    
    
    31ITEM2.
    
    
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    31ITEM 6.
    
    
    
    Exhibits
    
    
    32Signatures
    
    
    
    
    33Certification Pursuant to Section 302Certification Pursuant to Section 302Certification Pursuant to Section 906Certification Pursuant to Section 906Agreement re: Disclosure of Long-Term Debt Instruments
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AIMCO PROPERTIES, L.P.
 CONSOLIDATED BALANCE SHEETS
(In Thousands)
 June 30, 2005
    
    
    December 31, 2004(Unaudited)ASSETSReal estate:Land
    
    $
    2,365,560
    
    
    $
    2,203,430Buildings and improvements
    
    
    8,976,192
    
    
    
    8,529,269Total real estate
    
    
    11,341,752
    
    
    
    10,732,699Less accumulated depreciation
    
    
    (2,192,867
    )
    
    
    (1,999,535
    )Net real estate
    
    
    9,148,885
    
    
    
    8,733,164Cash and cash equivalents
    
    
    148,779
    
    
    
    105,343Restricted cash
    
    
    277,303
    
    
    
    268,940Accounts receivable
    
    
    88,716
    
    
    
    75,044Accounts receivable from affiliates
    
    
    44,984
    
    
    
    39,216Deferred financing costs
    
    
    68,716
    
    
    
    72,045Notes receivable from unconsolidated real estate partnerships
    
    
    168,918
    
    
    
    165,289Notes receivable from non-affiliates
    
    
    27,083
    
    
    
    31,716Notes receivable from Aimco
    
    
    12,954
    
    
    
    12,613Investment in unconsolidated real estate partnerships
    
    
    156,390
    
    
    
    207,445Other assets
    
    
    262,952
    
    
    
    267,038Assets held for sale
    
    
    27,940
    
    
    
    106,301Total assets
    
    $
    10,433,620
    
    
    $
    10,084,154LIABILITIES AND PARTNERS CAPITALSecured tax-exempt bond financing
    
    $
    1,107,067
    
    
    $
    1,133,794Secured notes payable
    
    
    4,718,177
    
    
    
    4,432,910Mandatorily redeemable preferred securities
    
    
    
    
    
    
    15,019Term loans
    
    
    400,000
    
    
    
    300,000Credit facility
    
    
    274,600
    
    
    
    68,700Total indebtedness
    
    
    6,499,844
    
    
    
    5,950,423Accounts payable
    
    
    46,666
    
    
    
    34,663Accrued liabilities and other
    
    
    400,333
    
    
    
    400,971Deferred income
    
    
    53,535
    
    
    
    47,020Security deposits
    
    
    40,254
    
    
    
    37,637Deferred income taxes payable, net
    
    
    14,312
    
    
    
    20,139Liabilities related to assets held for sale
    
    
    32,871
    
    
    
    89,387Total liabilities
    
    
    7,087,815
    
    
    
    6,580,240Minority interest in consolidated real estate partnerships
    
    
    214,546
    
    
    
    212,827Partners capital:Preferred units
    
    
    1,187,630
    
    
    
    1,131,041General Partner and Special Limited Partner
    
    
    1,711,159
    
    
    
    1,851,733Limited Partners
    
    
    339,680
    
    
    
    326,113High performance units
    
    
    (11,818
    )
    
    
    (8,880
    )Investment in Aimco Class A Common Stock
    
    
    (8,459
    )
    
    
    (8,920
    )Note receivable from Aimco
    
    
    (86,933
    )
    
    
    Total partners capital
    
    
    3,131,259
    
    
    
    3,291,087Total liabilities and partners capital
    
    $
    10,433,620
    
    
    $
    10,084,154
  2




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AIMCO PROPERTIES, L.P.
 CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Unit Data)
(Unaudited)
 For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004REVENUES:Rental and other property revenues
    
    $
    385,566
    
    
    $
    342,869
    
    
    $
    757,858
    
    
    $
    678,672Property management revenues, primarily from affiliates
    
    
    5,926
    
    
    
    9,063
    
    
    
    12,590
    
    
    
    17,319Activity fees and asset management revenues, primarily from affiliates
    
    
    6,680
    
    
    
    10,128
    
    
    
    14,698
    
    
    
    18,396Total revenues
    
    
    398,172
    
    
    
    362,060
    
    
    
    785,146
    
    
    
    714,387EXPENSES:Property operating expenses
    
    
    181,153
    
    
    
    162,515
    
    
    
    362,169
    
    
    
    321,231Property management expenses
    
    
    1,829
    
    
    
    2,162
    
    
    
    3,745
    
    
    
    4,590Activity and asset management expenses
    
    
    2,305
    
    
    
    4,716
    
    
    
    4,913
    
    
    
    7,027Depreciation and amortization
    
    
    107,715
    
    
    
    88,419
    
    
    
    211,345
    
    
    
    174,205General and administrative expenses
    
    
    21,723
    
    
    
    17,411
    
    
    
    42,574
    
    
    
    35,586Other expenses (income), net
    
    
    (812
    )
    
    
    599
    
    
    
    (1,540
    )
    
    
    (436
    )Total expenses
    
    
    313,913
    
    
    
    275,822
    
    
    
    623,206
    
    
    
    542,203Operating income
    
    
    84,259
    
    
    
    86,238
    
    
    
    161,940
    
    
    
    172,184Interest income
    
    
    8,719
    
    
    
    7,660
    
    
    
    16,786
    
    
    
    15,503Recovery of (provision for) losses on notes receivable
    
    
    (34
    )
    
    
    (1,180
    )
    
    
    1,558
    
    
    
    (1,101
    )Interest expense
    
    
    (96,502
    )
    
    
    (91,047
    )
    
    
    (190,169
    )
    
    
    (178,916
    )Deficit distributions to minority partners, net
    
    
    (1,698
    )
    
    
    (2,736
    )
    
    
    (3,170
    )
    
    
    (7,182
    )Equity in losses of unconsolidated real estate partnerships
    
    
    (418
    )
    
    
    (1,038
    )
    
    
    (1,319
    )
    
    
    (2,472
    )Impairment losses related to unconsolidated real estate partnerships
    
    
    (275
    )
    
    
    (1,881
    )
    
    
    (531
    )
    
    
    (1,733
    )Gain on dispositions of real estate related to unconsolidated entities
and other
    
    
    2,915
    
    
    
    2,097
    
    
    
    4,773
    
    
    
    2,097Loss before minority interest, discontinued operations and
cumulative effect of change in accounting principle
    
    
    (3,034
    )
    
    
    (1,887
    )
    
    
    (10,132
    )
    
    
    (1,620
    )Minority interest in consolidated real estate partnerships
    
    
    1,663
    
    
    
    4,123
    
    
    
    5,076
    
    
    
    5,690Income (loss) from continuing operations
    
    
    (1,371
    )
    
    
    2,236
    
    
    
    (5,056
    )
    
    
    4,070Income from discontinued operations, net
    
    
    32,736
    
    
    
    12,980
    
    
    
    38,409
    
    
    
    30,756Income before cumulative effect of change in accounting principle
    
    
    31,365
    
    
    
    15,216
    
    
    
    33,353
    
    
    
    34,826Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,957
    )Net income
    
    
    31,365
    
    
    
    15,216
    
    
    
    33,353
    
    
    
    30,869Net income attributable to preferred unitholders
    
    
    24,627
    
    
    
    23,743
    
    
    
    49,701
    
    
    
    45,840Net income (loss) attributable to common unitholders
    
    $
    6,738
    
    
    $
    (8,527
    )
    
    $
    (16,348
    )
    
    $
    (14,971
    )Earnings (loss) per common unit  basic:Loss from continuing operations (net of preferred distributions)
    
    $
    (0.25
    )
    
    $
    (0.21
    )
    
    $
    (0.52
    )
    
    $
    (0.40
    )Income from discontinued operations
    
    
    0.31
    
    
    
    0.13
    
    
    
    0.36
    
    
    
    0.30Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.04
    )Net income (loss) attributable to common unitholders
    
    $
    0.06
    
    
    $
    (0.08
    )
    
    $
    (0.16
    )
    
    $
    (0.14
    )Earnings (loss) per common unit  diluted:Loss from continuing operations (net of preferred distributions)
    
    $
    (0.25
    )
    
    $
    (0.21
    )
    
    $
    (0.52
    )
    
    $
    (0.40
    )Income from discontinued operations
    
    
    0.31
    
    
    
    0.13
    
    
    
    0.36
    
    
    
    0.30Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.04
    )Net income (loss) attributable to common unitholders
    
    $
    0.06
    
    
    $
    (0.08
    )
    
    $
    (0.16
    )
    
    $
    (0.14
    )Weighted average common units outstanding
    
    
    104,550
    
    
    
    104,156
    
    
    
    104,412
    
    
    
    104,251Weighted average common units and equivalents outstanding
    
    
    104,550
    
    
    
    104,156
    
    
    
    104,412
    
    
    
    104,251Distributions declared per common unit
    
    $
    0.60
    
    
    $
    0.60
    
    
    $
    1.20
    
    
    $
    1.20
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AIMCO PROPERTIES, L.P.
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In Thousands, Unaudited)
 For the Six MonthsEnded June 30,2005
    
    
    2004CASH FLOWS FROM OPERATING ACTIVITIES:
    
    $
    
    
    
    $Net income
    
    
    33,353
    
    
    
    30,869Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    211,345
    
    
    
    174,205Discontinued operations
    
    
    (37,482
    )
    
    
    (12,442
    )Other adjustments
    
    
    (7,531
    )
    
    
    6,348Net changes in operating assets and operating liabilities
    
    
    (18,668
    )
    
    
    (32,996
    )Net cash provided by operating activities
    
    
    181,017
    
    
    
    165,984CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of real estate
    
    
    (158,584
    )
    
    
    (122,166
    )Capital expenditures
    
    
    (201,401
    )
    
    
    (102,930
    )Proceeds from dispositions of real estate
    
    
    140,160
    
    
    
    159,460Change in funds held in escrow from tax-free exchanges
    
    
    40
    
    
    
    (32,225
    )Cash from newly consolidated properties
    
    
    1,623
    
    
    
    13,281Purchases of non-real estate related corporate assets
    
    
    (7,218
    )
    
    
    (20,083
    )Purchases of general and limited partnership interests and other assets
    
    
    (61,547
    )
    
    
    (35,232
    )Originations of notes receivable from unconsolidated real estate partnerships
    
    
    (15,125
    )
    
    
    (28,176
    )Originations of notes receivable from Aimco
    
    
    (85,412
    )
    
    
    (69,678
    )Proceeds from repayment of notes receivable
    
    
    13,043
    
    
    
    18,897Proceeds from repayment of notes receivable from Aimco
    
    
    
    
    
    
    69,678Distributions received from investments in unconsolidated real estate partnerships
    
    
    34,945
    
    
    
    41,624Other investing activities
    
    
    783
    
    
    
    (305
    )Net cash used in investing activities
    
    
    (338,693
    )
    
    
    (107,855
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from secured notes payable borrowings
    
    
    328,543
    
    
    
    154,788Principal repayments on secured notes payable
    
    
    (191,093
    )
    
    
    (181,682
    )Proceeds from tax-exempt bond financing 58
    
    
    
    
    
    
    69,471Principal repayments on tax-exempt bond financing
    
    
    (26,740
    )
    
    
    (46,137
    )Net borrowings on term loans and revolving credit facility
    
    
    305,900
    
    
    
    193,213Redemption of mandatorily redeemable preferred securities
    
    
    (15,019
    )
    
    
    (98,875
    )Proceeds from issuance of preferred units, net
    
    
    
    
    
    
    123,572Redemption of preferred units
    
    
    (31,250
    )
    
    
    (99,926
    )Repurchase and redemption of common units and warrant purchase
    
    
    (2,512
    )
    
    
    (13,088
    )Contributions from minority interest
    
    
    17,403
    
    
    
    22,155Payment of distributions to minority interest
    
    
    (14,181
    )
    
    
    (27,367
    )Payment of distributions to General Partner and Special Limited Partner
    
    
    (113,423
    )
    
    
    (113,162
    )Payment of distributions to Limited Partners
    
    
    (11,087
    )
    
    
    (9,848
    )Payment of distributions to High Performance Units
    
    
    (2,856
    )
    
    
    (2,854
    )Payment of distributions to preferred units
    
    
    (47,074
    )
    
    
    (43,344
    )Other financing activities
    
    
    4,501
    
    
    
    (6,024
    )Net cash provided by (used in) financing activities
    
    
    201,112
    
    
    
    (79,108
    )NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    43,436
    
    
    
    (20,979
    )CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    105,343
    
    
    
    114,432CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    148,779
    
    
    $
    93,453Supplemental cash flow information:Issuance of preferred units associated with the purchase of real estate
    
    $
    85,412
    
    
    $
    69,678Secured debt assumed in connection with purchase of real estate
    
    $
    38,740
    
    
    $
    19,311
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AIMCO PROPERTIES, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2005
(Unaudited)
 Note 1  Organization
     
    
    owned an equity interest in and consolidated 170,131 units in 673 properties (which we
refer to as consolidated), of which 169,373 units were also managed by us;
    
    owned an equity interest in and did not consolidate 40,799 units in 303 properties
(which we refer to as unconsolidated), of which 34,012 units were also managed by us; and
    
    provided services or managed, for third-party owners, 48,824 units in 497 properties,
primarily pursuant to long-term agreements (including 42,664 units in 433 properties that
are asset managed only, and not also property managed), although in certain cases we may
indirectly own generally less than one percent of the operations of such properties through
a partnership syndication or other fund.
  5




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Note 2  Basis of Presentation
   Principles of Consolidation
  Consolidation of Variable Interest Entities
 Minority Interest in Consolidated Real Estate Partnerships
  Use of Estimates
  6




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Accounting for the Impairment of
Long-Lived Assets to be Disposed Of,
 Stock-Based Compensation
  Accounting for Stock-Based Compensation, Accounting for Stock-Based
Compensation-Transition and Disclosure-an amendment of FASB Statement No. 123, Accounting for Stock Issued to Employees
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net income (loss) attributable to common unitholders,
as reported
    
    $
    6,738
    
    
    $
    (8,527
    )
    
    $
    (16,348
    )
    
    $
    (14,971
    )Add: Stock-based employee compensation expense included in
reported net incomeRestricted stock awards
    
    
    2,227
    
    
    
    1,290
    
    
    
    4,082
    
    
    
    1,705Stock options
    
    
    470
    
    
    
    411
    
    
    
    923
    
    
    
    775Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards:Restricted stock awards
    
    
    (2,227
    )
    
    
    (1,290
    )
    
    
    (4,082
    )
    
    
    (1,705
    )Stock options
    
    
    (882
    )
    
    
    (1,101
    )
    
    
    (1,755
    )
    
    
    (2,157
    )Pro forma net income (loss) attributable to common unitholders
    
    $
    6,326
    
    
    $
    (9,217
    )
    
    $
    (17,180
    )
    
    $
    (16,353
    )Basic earnings (loss) per common unit:Reported
    
    $
    0.06
    
    
    $
    (0.08
    )
    
    $
    (0.16
    )
    
    $
    (0.14
    )Pro forma
    
    $
    0.06
    
    
    $
    (0.09
    )
    
    $
    (0.16
    )
    
    $
    (0.16
    )Diluted earnings (loss) per common unit:Reported
    
    $
    0.06
    
    
    $
    (0.08
    )
    
    $
    (0.16
    )
    
    $
    (0.14
    )Pro forma
    
    $
    0.06
    
    
    $
    (0.09
    )
    
    $
    (0.16
    )
    
    $
    (0.16
    )
 7




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Note 3  Acquisitions
 Real Estate Acquisitions
   Acquisitions of Partnership Interests
  Note 4  Mandatorily Redeemable Preferred Securities
  Note 5  Term Loans
  Note 6  Commitments and Contingencies
 Commitments
  8




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
    
    invest up to $50 million for a 20% limited liability company interest in Casden
Properties LLC. As of June 30, 2005, we had invested $44.8 million. Casden Properties LLC
intends to pursue new development opportunities in Southern California and other markets.
We have an option, but not an obligation, to purchase at completion all multifamily rental
projects developed by Casden Properties LLC; and
    
    pay $2.5 million per quarter for five years (for an aggregate amount of $50 million) to
Casden Properties LLC as a retainer on account for redevelopment services on our assets (as
of June 30, 2005, $32.5 million has been paid).
 Guarantees
  Legal Matters
        9




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Note 7  Partners Capital
 Preferred OP Units
  Common OP Units
    High Performance Units
  11




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Note 8  Discontinued Operations and Assets Held for Sale
   For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Rental and other property revenues
    
    $
    4,560
    
    
    $
    29,298
    
    
    $
    12,438
    
    
    $
    61,849Property operating expense
    
    
    (3,086
    )
    
    
    (12,797
    )
    
    
    (7,511
    )
    
    
    (27,707
    )Depreciation and amortization
    
    
    (229
    )
    
    
    (5,646
    )
    
    
    (1,236
    )
    
    
    (11,138
    )Other (expenses) income, net
    
    
    (114
    )
    
    
    (256
    )
    
    
    (322
    )
    
    
    (507
    )Operating income
    
    
    1,131
    
    
    
    10,599
    
    
    
    3,369
    
    
    
    22,497Interest income
    
    
    33
    
    
    
    49
    
    
    
    84
    
    
    
    102Interest expense
    
    
    (1,135
    )
    
    
    (6,831
    )
    
    
    (2,543
    )
    
    
    (14,634
    )Minority interest in consolidated real estate
partnerships
    
    
    64
    
    
    
    (584
    )
    
    
    192
    
    
    
    (893
    )Income before gain on dispositions of real estate,
impairment losses, deficit distributions to minority
partners, and income tax
    
    
    93
    
    
    
    3,233
    
    
    
    1,102
    
    
    
    7,072Gain on dispositions of real estate, net of
minority partners interest
    
    
    29,953
    
    
    
    10,225
    
    
    
    37,051
    
    
    
    21,552Impairment losses on real estate assets sold or
held for sale
    
    
    (231
    )
    
    
    (477
    )
    
    
    (2,187
    )
    
    
    (491
    )Recovery of deficit distributions to minority
partners, net
    
    
    4,127
    
    
    
    91
    
    
    
    3,662
    
    
    
    3,412Income tax arising from disposals
    
    
    (1,206
    )
    
    
    (92
    )
    
    
    (1,219
    )
    
    
    (789
    )Income from discontinued operations
    
    $
    32,736
    
    
    $
    12,980
    
    
    $
    38,409
    
    
    $
    30,756
  12




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Note 9  Earnings per Unit
  For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Numerator:Income (loss) from continuing operations
    
    $
    (1,371
    )
    
    $
    2,236
    
    
    $
    (5,056
    )
    
    $
    4,070Less net income attributable to preferred unitholders
    
    
    (24,627
    )
    
    
    (23,743
    )
    
    
    (49,701
    )
    
    
    (45,840
    )Numerator for basic and diluted earnings per unit
 Loss from continuing operations
    
    $
    (25,998
    )
    
    $
    (21,507
    )
    
    $
    (54,757
    )
    
    $
    (41,770
    )Income from discontinued operations
    
    $
    32,736
    
    
    $
    12,980
    
    
    $
    38,409
    
    
    $
    30,756Cumulative effect of change in accounting principle
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (3,957
    )Net income
    
    $
    31,365
    
    
    $
    15,216
    
    
    $
    33,353
    
    
    $
    30,869Less net income attributable to preferred unitholders
    
    
    (24,627
    )
    
    
    (23,743
    )
    
    
    (49,701
    )
    
    
    (45,840
    )Numerator for basic and diluted earnings per unit
 Net income (loss) attributable to common
unitholders
    
    $
    6,738
    
    
    $
    (8,527
    )
    
    $
    (16,348
    )
    
    $
    (14,971
    )Denominator:Denominator for basic earnings per unit  weighted
average number of common units outstanding
    
    
    104,550
    
    
    
    104,156
    
    
    
    104,412
    
    
    
    104,251Effect of dilutive securities:Dilutive potential common units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Denominator for diluted earnings per unit
    
    
    104,550
    
    
    
    104,156
    
    
    
    104,412
    
    
    
    104,251Earnings (loss) per common unit:Basic earnings (loss) per common unit:Loss from continuing operations (net of
preferred distributions)
    
    $
    (0.25
    )
    
    $
    (0.21
    )
    
    $
    (0.52
    )
    
    $
    (0.40
    )Income from discontinued operations
    
    
    0.31
    
    
    
    0.13
    
    
    
    0.36
    
    
    
    0.30Cumulative effect of change in accounting principle.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.04
    )Net income (loss) attributable to common
unitholders
    
    $
    0.06
    
    
    $
    (0.08
    )
    
    $
    (0.16
    )
    
    $
    (0.14
    )Diluted earnings (loss) per common unit:Loss from continuing operations (net of
preferred distributions)
    
    $
    (0.25
    )
    
    $
    (0.21
    )
    
    $
    (0.52
    )
    
    $
    (0.40
    )Income from discontinued operations
    
    
    0.31
    
    
    
    0.13
    
    
    
    0.36
    
    
    
    0.30Cumulative effect of change in accounting principle.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.04
    )Net income (loss) attributable to common
unitholders
    
    $
    0.06
    
    
    $
    (0.08
    )
    
    $
    (0.16
    )
    
    $
    (0.14
    )
  13




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Note 10  Business Segments
  Disclosures about Segments of an
Enterprise and Related Information
  For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Revenues:Real estate segment
    
    $
    385,566
    
    
    $
    342,869
    
    
    $
    757,858
    
    
    $
    678,672Investment management segment:Gross revenues
    
    
    32,543
    
    
    
    35,604
    
    
    
    67,058
    
    
    
    71,581Elimination of intersegment revenues
    
    
    (19,937
    )
    
    
    (16,413
    )
    
    
    (39,770
    )
    
    
    (35,866
    )Net revenues after elimination
    
    
    12,606
    
    
    
    19,191
    
    
    
    27,288
    
    
    
    35,715Total revenues of reportable segments
    
    $
    398,172
    
    
    $
    362,060
    
    
    $
    785,146
    
    
    $
    714,387Net operating income:Real estate segment
    
    $
    204,413
    
    
    $
    180,354
    
    
    $
    395,689
    
    
    $
    357,441Investment management segment
    
    
    8,472
    
    
    
    12,313
    
    
    
    18,630
    
    
    
    24,098Total net operating income of reportable segments
    
    
    212,885
    
    
    
    192,667
    
    
    
    414,319
    
    
    
    381,539Reconciliation of net operating income of
reportable
segments to operating income:Depreciation and amortization
    
    
    (107,715
    )
    
    
    (88,419
    )
    
    
    (211,345
    )
    
    
    (174,205
    )General and administrative expenses
    
    
    (21,723
    )
    
    
    (17,411
    )
    
    
    (42,574
    )
    
    
    (35,586
    )Other (expenses) income, net
    
    
    812
    
    
    
    (599
    )
    
    
    1,540
    
    
    
    436Operating income
    
    $
    84,259
    
    
    $
    86,238
    
    
    $
    161,940
    
    
    $
    172,184
 ASSETS (in thousands):
 June 30, 2005
    
    
    December 31, 2004Total assets for reportable segments (1)
    
    $
    10,035,280
    
    
    $
    9,706,305Corporate and other assets
    
    
    398,340
    
    
    
    377,849Total consolidated assets
    
    $
    10,433,620
    
    
    $
    10,084,154
 (1)
    
    Total assets for reportable segments include assets associated with both the real
estate and investment management business segments.
 14




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Note 11  Recent Accounting Developments
 Share-Based Payment
 Accounting
Changes and Error Corrections,
 Determining Whether a
General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar
Entity When the Limited Partners Have Certain Rights
 Note 12  Notes Receivable from Aimco
  
 15




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ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward Looking Statements
 The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements in certain circumstances. Certain information included in this Report contains or may
contain information that is forward-looking, including, without limitation, statements regarding
the effect of acquisitions, our future financial performance and the effect of government
regulations. Actual results may differ materially from those described in the forward-looking
statements and will be affected by a variety of risks and factors that are beyond our control
including, without limitation: national and local economic conditions; the general level of
interest rates; the terms of governmental regulations that affect us and interpretations of those
regulations; the competitive environment in which we operate; financing risks, including the risk
that our cash flows from operations may be insufficient to meet required payments of principal and
interest; real estate risks, including variations of real estate values and the general economic
climate in local markets and competition for tenants in such markets; acquisition and development
risks, including failure of such acquisitions to perform in accordance with projections; the timing
of acquisitions and dispositions; litigation, including costs associated with prosecuting or
defending claims and any adverse outcomes; and possible environmental liabilities, including costs,
fines or penalties that may be incurred due to necessary remediation of contamination of properties
presently owned or previously owned by us. In addition, Aimcos current and continuing
qualification as a real estate investment trust involves the application of highly technical and
complex provisions of the Internal Revenue Code and depends on its ability to meet the various
requirements imposed by the Internal Revenue Code, through actual operating results, distribution
levels and diversity of stock ownership. Readers should carefully review our financial statements
and the notes thereto, as well as the risk factors described in our Annual Report on Form 10-K for
the year ended December 31, 2004 and the other documents we file from time to time with the
Securities and Exchange Commission. As used herein and except as the context otherwise requires,
we, our, us and the Company refer to the Partnership and the Partnerships consolidated
corporate subsidiaries and consolidated real estate partnerships, collectively.
 Executive Overview
      16




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##### Table of Contents



Results of Operations
 Overview
 Three months ended June 30, 2005 compared to June 30, 2004
  
    
    an increase in net operating income associated with property operations, which
included increases related to acquisition, newly consolidated and same store
properties; and
    
    an increase in income from discontinued operations, primarily related to higher net
gains on dispositions of real estate.
  
    
    higher depreciation and amortization expense;
    
    higher interest expense; and
    
    an increase in general and administrative expenses.
 Six months ended June 30, 2005 compared to six months ended June 30, 2004
  
    
    an increase in net operating income associated with property operations, which
included increases related to acquisition, newly consolidated and same store properties;
    
    an increase in income from discontinued operations, primarily related to higher net
gains on dispositions of real estate; and
    
    the 2004 cumulative effect of change in accounting principle due to implementation of
the FASB Interpretation No. 46, Consolidation of
Variable Interest Entities,or FIN 46.
  
    
    higher depreciation and amortization expense;
    
    higher interest expense; and
    
    an increase in general and administrative expenses.
  17




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Rental Property Operations
   For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Rental and other property revenues
    
    $
    385,566
    
    
    $
    342,869
    
    
    $
    757,858
    
    
    $
    678,672Property operating expenses
    
    
    181,153
    
    
    
    162,515
    
    
    
    362,169
    
    
    
    321,231Net operating income
    
    $
    204,413
    
    
    $
    180,354
    
    
    $
    395,689
    
    
    $
    357,441
   18




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##### Table of Contents



Conventional Same Store Property Operating Results
  For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Our share of same store revenues
    
    $
    268,914
    
    
    $
    252,263
    
    
    $
    532,611
    
    
    $
    505,087Our share of same store expenses
    
    
    119,879
    
    
    
    112,409
    
    
    
    237,312
    
    
    
    223,236Our share of same store net operating
income
    
    $
    149,035
    
    
    $
    139,854
    
    
    $
    295,299
    
    
    $
    281,851Adjustments to reconcile same store net
operating income to real estate segment net
operating income (1)
    
    
    55,378
    
    
    
    40,500
    
    
    
    100,390
    
    
    
    75,590Real estate segment net operating income
    
    $
    204,413
    
    
    $
    180,354
    
    
    $
    395,689
    
    
    $
    357,441Same Store StatisticsProperties
    
    
    525
    
    
    
    525
    
    
    
    525
    
    
    
    525Apartment units
    
    
    146,473
    
    
    
    146,473
    
    
    
    146,473
    
    
    
    146,473Average physical occupancy
    
    
    90.9
    %
    
    
    87.0
    %
    
    
    90.6
    %
    
    
    88.2
    %Average rent/unit/month
    
    $
    745
    
    
    $
    733
    
    
    $
    743
    
    
    $
    731
 (1)
    
    Includes: (i) minority partners share of consolidated, less our share of
unconsolidated, property revenues and property operating expenses (at current period
ownership); (ii) property revenues and property operating expenses related to consolidated
properties other than same store properties (e.g., affordable, acquisition and
redevelopment properties); and (iii) eliminations and other adjustments made in accordance
with GAAP.
   19




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##### Table of Contents



Property Management
   For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Property management revenues, primarily from
affiliates
    
    $
    5,926
    
    
    $
    9,063
    
    
    $
    12,590
    
    
    $
    17,319Property management expenses
    
    
    1,829
    
    
    
    2,162
    
    
    
    3,745
    
    
    
    4,590Net operating income from property management
    
    $
    4,097
    
    
    $
    6,901
    
    
    $
    8,845
    
    
    $
    12,729
  Activity Fees and Asset Management
   For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Activity fees and asset management
revenues, primarily from affiliates
    
    $
    6,680
    
    
    $
    10,128
    
    
    $
    14,698
    
    
    $
    18,396Activity and asset management expenses
    
    
    2,305
    
    
    
    4,716
    
    
    
    4,913
    
    
    
    7,027Net operating income from activity fees and
asset management
    
    $
    4,375
    
    
    $
    5,412
    
    
    $
    9,785
    
    
    $
    11,369
   20




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Depreciation and Amortization
   General and Administrative Expenses
   Interest Expense
   21




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##### Table of Contents



Income from Discontinued Operations, Net
      Cumulative Effect of Change in Accounting Principle
  Critical Accounting Policies and Estimates
  Impairment of Long-Lived Assets
  22




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##### Table of Contents




    
    the general economic climate;
    
    competition from other apartment communities and other housing options;
    
    local conditions, such as an increase in unemployment or an increase in the supply of
apartments, that might adversely affect apartment occupancy or rental rates;
    
    changes in governmental regulations and the related cost of compliance;
    
    increases in operating costs (including real estate taxes) due to inflation and other
factors, which may not be offset by increased rents;
    
    changes in tax laws and housing laws, including the enactment of rent control laws or
other laws regulating multifamily housing;
    
    changes in market capitalization rates; and
    
    the relative illiquidity of such investments.
  Notes Receivable and Interest Income Recognition
    Allowance for Losses on Notes Receivable
  23




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Capitalized Costs
    24




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##### Table of Contents



Funds From Operations
   For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net income (loss) attributable to common unitholders (1)
    
    $
    6,738
    
    
    $
    (8,527
    )
    
    $
    (16,348
    )
    
    $
    (14,971
    )Adjustments:Depreciation and amortization (2)
    
    
    107,715
    
    
    
    88,419
    
    
    
    211,345
    
    
    
    174,205Depreciation and amortization related to non-real estate assets
    
    
    (4,524
    )
    
    
    (4,287
    )
    
    
    (8,315
    )
    
    
    (9,207
    )Depreciation of rental property related to minority partners
interest (3)
    
    
    (10,667
    )
    
    
    (11,905
    )
    
    
    (21,291
    )
    
    
    (22,269
    )Depreciation of rental property related to unconsolidated
entities
    
    
    4,631
    
    
    
    5,574
    
    
    
    10,589
    
    
    
    11,644Gain on dispositions of real estate related to unconsolidated
entities and other
    
    
    (2,915
    )
    
    
    (2,097
    )
    
    
    (4,773
    )
    
    
    (2,097
    )Gain on dispositions of non-depreciable assets
    
    
    118
    
    
    
    875
    
    
    
    793
    
    
    
    875Deficit distributions to minority partners, net (4)
    
    
    1,698
    
    
    
    2,736
    
    
    
    3,170
    
    
    
    7,182Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,957Discontinued operations:Gain on dispositions of real estate, net of minority partners
interest (3)
    
    
    (29,953
    )
    
    
    (10,225
    )
    
    
    (37,051
    )
    
    
    (21,552
    )Depreciation of rental property, net of minority partners
interest (3)
    
    
    170
    
    
    
    5,209
    
    
    
    900
    
    
    
    10,365Recovery of deficit distributions to minority partners, net (4)
    
    
    (4,127
    )
    
    
    (91
    )
    
    
    (3,662
    )
    
    
    (3,412
    )Income tax arising from disposals
    
    
    1,206
    
    
    
    92
    
    
    
    1,219
    
    
    
    789Preferred OP Unit distributions
    
    
    24,627
    
    
    
    23,655
    
    
    
    48,578
    
    
    
    45,752Redemption related preferred OP Unit issuance costs
    
    
    
    
    
    
    88
    
    
    
    1,123
    
    
    
    88Funds From Operations
    
    $
    94,717
    
    
    $
    89,516
    
    
    $
    186,277
    
    
    $
    181,349Preferred OP Unit distributions
    
    
    (24,627
    )
    
    
    (23,655
    )
    
    
    (48,578
    )
    
    
    (45,752
    )Redemption related preferred OP Unit issuance costs
    
    
    
    
    
    
    (88
    )
    
    
    (1,123
    )
    
    
    (88
    )Distributions on dilutive preferred OP Units
    
    
    1,191
    
    
    
    1,059
    
    
    
    1,625
    
    
    
    1,949Funds From Operations attributable to common unitholders
- diluted
    
    $
    71,281
    
    
    $
    66,832
    
    
    $
    138,201
    
    
    $
    137,458Weighted average number of common OP Units, common OP
Unit equivalents and dilutive preferred OP Units outstanding:Common OP Units and equivalents (5)
    
    
    105,078
    
    
    
    104,171
    
    
    
    104,843
    
    
    
    104,281Dilutive preferred OP Units
    
    
    3,527
    
    
    
    1,794
    
    
    
    2,401
    
    
    
    1,784Total
    
    
    108,605
    
    
    
    105,965
    
    
    
    107,244
    
    
    
    106,065
 25




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##### Table of Contents



(1)
    
    Represents the numerator for earnings per common unit, calculated in accordance with
GAAP.(2)
    
    Includes amortization of management contracts where we are the general partner. Such
management contracts were established in certain instances where we acquired a general
partner interest in either a consolidated or an unconsolidated partnership. Because the
recoverability of these management contracts depends primarily on the operations of the
real estate owned by the limited partnerships, we believe it is consistent with the White
Paper to add back such amortization, as the White Paper directs the add-back of
amortization of assets uniquely significant to the real estate industry.(3)
    
    Minority partners interest, means minority interest in our consolidated real estate
partnerships.(4)
    
    In accordance with GAAP, deficit distributions to minority partners are charges
recognized in our income statement when cash is distributed to a non-controlling partner in
a consolidated real estate partnership in excess of the positive balance in such partners
capital account, which is classified as minority interest on our balance sheet. We record
these charges for GAAP purposes even though there is no economic effect or cost. Deficit
distributions to minority partners occur when the fair value of the underlying real estate
exceeds its depreciated net book value because the underlying real estate has appreciated
or maintained its value. As a result, the recognition of expense for deficit distributions
to minority partners represents, in substance, either (a) our recognition of depreciation
previously allocated to the non-controlling partner or (b) a payment related to the
non-controlling partners share of real estate appreciation. Based on White Paper guidance
that requires real estate depreciation and gains to be excluded from FFO, we add back
deficit distributions and subtract related recoveries in our reconciliation of net income
to FFO.(5)
    
    Represents the denominator for earnings per common unit  diluted, calculated in
accordance with GAAP, plus additional common OP Unit equivalents that are dilutive for FFO.
 Liquidity and Capital Resources
    Operating Activities
  26




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##### Table of Contents



Investing Activities
       27




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##### Table of Contents



Actual Cost
    
    
    Cost Per UnitCapital Replacements Detail:Building interiors
    
    $
    6,615
    
    
    $
    43Includes: hot water heaters, kitchen/bathBuilding exteriors
    
    
    8,036
    
    
    
    52Includes: roofs, exterior painting, electrical, plumbingLandscaping and grounds
    
    
    4,130
    
    
    
    27Includes: parking lot improvements, pool improvementsTurnover related
    
    
    17,015
    
    
    
    111Includes: carpet, vinyl, tile, appliance, and fixture replacementsCapitalized site payroll and indirect costs
    
    
    6,560
    
    
    
    43Total our share of Capital Replacements
    
    $
    42,356
    
    
    $
    276Capital Replacements:Conventional
    
    $
    39,587Affordable
    
    
    2,769Total our share of Capital Replacements
    
    
    42,356Capital Improvements:Conventional
    
    
    45,814Affordable
    
    
    9,220Total our share of Capital Improvements
    
    
    55,034Casualties:Conventional
    
    
    12,674Affordable
    
    
    717Total our share of casualties
    
    
    13,391Redevelopment:Conventional
    
    
    50,841Affordable
    
    
    1,560Total our share of redevelopment
    
    
    52,401Total our share of capital expenditures
    
    
    163,182Plus minority partners share of consolidated spending
    
    
    44,282Less our share of unconsolidated spending
    
    
    (6,063
    )Total capital expenditures per Consolidated Statement of Cash Flows.
    
    $
    201,401
   Financing Activities
  28




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Future Capital Needs
  29




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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
    
 ITEM 4. Controls and Procedures
 Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  30




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. Legal Proceedings
  
 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
 Unregistered Sales of Equity Securities.
    Repurchases of Equity Securities.
 Maximum NumberTotal Number of
    
    
    of Units thatAverage
    
    
    Units Purchased as
    
    
    May Yet BeTotal Number
    
    
    Price
    
    
    Part of Publicly
    
    
    Purchased Under theof Units
    
    
    Paid
    
    
    Announced Plans or
    
    
    Plans or Programs (1)Fiscal period
    
    Purchased
    
    
    per Unit
    
    
    Programs
    
    
    (in millions)April 1 - April 30, 2005
    
    
    5,869
    
    
    $
    36.73
    
    
    
    n/a
    
    
    
    n/aMay 1 - May 31, 2005
    
    
    10,877
    
    
    
    37.02
    
    
    
    n/a
    
    
    
    n/aJune 1 - June 30, 2005
    
    
    2,921
    
    
    
    38.44
    
    
    
    n/a
    
    
    
    n/aTotal
    
    
    19,667
    
    
    $
    37.14
    
    
    
    n/a
 (1)
    
    The terms of our Partnership Agreement do not provide for a maximum number of Units that
may be repurchased, and other than the express terms of our Partnership Agreement we have no
publicly announced plans or programs of repurchase.
 Distribution Payments.
 31




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##### Table of Contents



ITEM 6. Exhibits
  EXHIBIT NO.10.1
    
    First Amendment to Senior Secured Credit Agreement, dated as of June
16, 2005, by and among Apartment Investment and Management Company,
AIMCO Properties, L.P., AIMCO/Bethesda Holdings, Inc., and NHP
Management Company as the borrowers, and Bank of America, N.A.,
Keybank National Association, and the lenders listed therein (Exhibit
10.1 to Aimcos Current Report on Form 8-K, dated June 16, 2005, is
incorporated herein by this reference).10.2
    
    Forty-Seventh Amendment to the Third Amended and Restated Agreement
of Limited Partnership of AIMCO Properties, L.P. (Exhibit 4.1 to
AIMCO Properties, L.P.s Current Report on Form 8-K dated May 31,
2005, is incorporated herein by this reference)31.1
    
    Certification of the equivalent of the chief executive officer
pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of the equivalent of the chief financial officer
pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification of the equivalent of the chief executive officer
pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification of the equivalent of the chief financial officer
pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 200299.1
    
    Agreement re: disclosure of long-term debt instruments
 32




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##### Table of Contents



AIMCO PROPERTIES, L.P.
 
 SIGNATURES
  AIMCO PROPERTIES, L.P.By: AIMCO GP, Inc. its general partnerBy:
    
    /s/ PAUL J. McAULIFFEPaul J. McAuliffeExecutive Vice President andChief Financial Officer(duly authorized officer andprincipal financial officer)By:
    
    /s/ THOMAS M. HERZOGThomas M. HerzogExecutive Vice President andChief Accounting Officer
  33




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##### Table of Contents



INDEX TO EXHIBITS
 10.1
    
    First Amendment to Senior Secured Credit Agreement, dated as of June
16, 2005, by and among Apartment Investment and Management Company,
AIMCO Properties, L.P., AIMCO/Bethesda Holdings, Inc., and NHP
Management Company as the borrowers, and Bank of America, N.A.,
Keybank National Association, and the lenders listed therein (Exhibit
10.1 to Aimcos Current Report on Form 8-K, dated June 16, 2005, is
incorporated herein by this reference).10.2
    
    Forty-Seventh Amendment to the Third Amended and Restated Agreement
of Limited Partnership of AIMCO Properties, L.P. (Exhibit 4.1 to
AIMCO Properties, L.P.s Current Report on Form 8-K dated May 31,
2005, is incorporated herein by this reference)31.1
    
    Certification of the equivalent of the chief executive officer
pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of the equivalent of the chief financial officer
pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification of the equivalent of the chief executive officer
pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification of the equivalent of the chief financial officer
pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 200299.1
    
    Agreement re: disclosure of long-term debt instruments