##### 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, 2006
 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
    
    84-1275621(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)4582 South Ulster Street Parkway, Suite 1100Denver, Colorado
    
    80237(Address of principal executive offices)
    
    (Zip Code)
 (303) 757-8101
 Not Applicable
 þ o
  o þ o
 Yes
o No
þ




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##### 



AIMCO PROPERTIES, L.P.
 TABLE OF CONTENTS
 FORM 10-Q
 PagePART I. FINANCIAL INFORMATIONITEM 1.
    
    Financial StatementsConsolidated Balance Sheets as of June 30, 2006 (Unaudited) and December 31, 2005
    
    
    2Consolidated Statements of Income for the Three and Six Months Ended June 30, 2006
and 2005 (Unaudited)
    
    
    3Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2006 and
2005 (Unaudited)
    
    
    4Notes to Consolidated Financial Statements (Unaudited)
    
    
    5ITEM 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    19ITEM 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    33ITEM 4.
    
    Controls and Procedures
    
    
    33PART II. OTHER INFORMATIONITEM 1.
    
    Legal Proceedings
    
    
    34ITEM 1A.
    
    Risk Factors
    
    
    34ITEM 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    34ITEM 6.
    
    Exhibits
    
    
    35Signatures
    
    
    
    
    36Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906Agreement Re: Disclosure of Long-Term Debt Instruments
  1




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements
 AIMCO PROPERTIES, L.P.
 
 CONSOLIDATED BALANCE SHEETS
 (In Thousands, Except Unit Data)
 June 30,
    
    
    December 31,2006
    
    
    2005(Unaudited)ASSETSReal estate:Land
    
    $
    2,337,304
    
    
    $
    2,241,907Buildings and improvements
    
    
    9,621,985
    
    
    
    8,314,585Total real estate
    
    
    11,959,289
    
    
    
    10,556,492Less accumulated depreciation
    
    
    (2,806,835
    )
    
    
    (2,116,043
    )Net real estate
    
    
    9,152,454
    
    
    
    8,440,449Cash and cash equivalents
    
    
    323,463
    
    
    
    161,730Restricted cash
    
    
    341,267
    
    
    
    284,068Accounts receivable
    
    
    65,830
    
    
    
    59,888Accounts receivable from affiliates
    
    
    24,984
    
    
    
    43,070Deferred financing costs
    
    
    74,529
    
    
    
    65,188Notes receivable from unconsolidated real estate partnerships
    
    
    45,705
    
    
    
    177,218Notes receivable from non-affiliates
    
    
    51,497
    
    
    
    23,760Notes receivable from Aimco
    
    
    13,655
    
    
    
    13,299Investment in unconsolidated real estate partnerships
    
    
    57,905
    
    
    
    166,667Other assets
    
    
    221,081
    
    
    
    216,789Deferred income tax assets, net
    
    
    
    
    
    
    9,835Assets held for sale
    
    
    32,981
    
    
    
    369,797Total assets
    
    $
    10,405,351
    
    
    $
    10,031,758LIABILITIES AND PARTNERS CAPITALProperty tax-exempt bond financing
    
    $
    1,043,755
    
    
    $
    1,040,549Property loans payable
    
    
    5,163,064
    
    
    
    4,438,542Term loans
    
    
    400,000
    
    
    
    400,000Credit facility
    
    
    
    
    
    
    217,000Total indebtedness
    
    
    6,606,819
    
    
    
    6,096,091Accounts payable
    
    
    30,460
    
    
    
    34,381Accrued liabilities and other
    
    
    396,474
    
    
    
    423,633Deferred income
    
    
    98,814
    
    
    
    46,872Security deposits
    
    
    43,851
    
    
    
    37,800Deferred income tax liabilities, net
    
    
    6,219
    
    
    
    Liabilities related to assets held for sale
    
    
    18,135
    
    
    
    228,871Total liabilities
    
    
    7,200,772
    
    
    
    6,867,648Minority interest in consolidated real estate partnerships
    
    
    269,679
    
    
    
    218,708Partners capital:Preferred units
    
    
    1,087,968
    
    
    
    1,183,620General Partner and Special Limited Partner
    
    
    1,528,930
    
    
    
    1,570,046Limited Partners
    
    
    342,576
    
    
    
    301,452High Performance Units
    
    
    (17,039
    )
    
    
    (16,307
    )Investment in Aimco Class A Common Stock
    
    
    (7,535
    )
    
    
    (7,997
    )Notes receivable from Aimco
    
    
    
    
    
    
    (85,412
    )Total partners capital
    
    
    2,934,900
    
    
    
    2,945,402Total liabilities and partners capital
    
    $
    10,405,351
    
    
    $
    10,031,758
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AIMCO PROPERTIES, L.P.
 
 CONSOLIDATED STATEMENTS OF INCOME
 (In Thousands, Except Per Unit Data)
(Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005REVENUES:Rental and other property revenues
    
    $
    419,234
    
    
    $
    344,659
    
    
    $
    830,126
    
    
    $
    677,223Property management revenues, primarily from affiliates
    
    
    3,592
    
    
    
    5,926
    
    
    
    6,622
    
    
    
    12,590Activity fees and asset management revenues, primarily from affiliates
    
    
    12,133
    
    
    
    6,680
    
    
    
    21,673
    
    
    
    14,697Total revenues
    
    
    434,959
    
    
    
    357,265
    
    
    
    858,421
    
    
    
    704,510EXPENSES:Property operating expenses
    
    
    190,485
    
    
    
    160,707
    
    
    
    388,540
    
    
    
    321,552Property management expenses
    
    
    2,151
    
    
    
    1,829
    
    
    
    2,643
    
    
    
    3,745Activity and asset management expenses
    
    
    3,239
    
    
    
    2,305
    
    
    
    5,671
    
    
    
    4,913Depreciation and amortization
    
    
    116,412
    
    
    
    95,923
    
    
    
    228,236
    
    
    
    187,612General and administrative expenses
    
    
    24,805
    
    
    
    21,723
    
    
    
    47,508
    
    
    
    42,567Other expenses (income), net
    
    
    2,279
    
    
    
    (999
    )
    
    
    2,874
    
    
    
    (1,754
    )Total expenses
    
    
    339,371
    
    
    
    281,488
    
    
    
    675,472
    
    
    
    558,635Operating income
    
    
    95,588
    
    
    
    75,777
    
    
    
    182,949
    
    
    
    145,875Interest income
    
    
    6,899
    
    
    
    8,642
    
    
    
    15,289
    
    
    
    16,612Recovery of (provision for) losses on notes receivable
    
    
    (502
    )
    
    
    (34
    )
    
    
    (764
    )
    
    
    1,558Interest expense
    
    
    (103,518
    )
    
    
    (86,328
    )
    
    
    (204,289
    )
    
    
    (169,364
    )Deficit distributions to minority partners, net
    
    
    (4,096
    )
    
    
    (1,654
    )
    
    
    (6,282
    )
    
    
    (3,047
    )Equity in losses of unconsolidated real estate partnerships
    
    
    (574
    )
    
    
    (418
    )
    
    
    (2,436
    )
    
    
    (1,319
    )Recovery of (impairment losses) related to real estate partnerships
    
    
    (15
    )
    
    
    (275
    )
    
    
    971
    
    
    
    (531
    )Gain on dispositions of real estate related to unconsolidated entities
and other
    
    
    4,060
    
    
    
    3,154
    
    
    
    13,756
    
    
    
    5,161Loss before minority interest and discontinued operations
    
    
    (2,158
    )
    
    
    (1,136
    )
    
    
    (806
    )
    
    
    (5,055
    )Minority interest in consolidated real estate partnerships
    
    
    (360
    )
    
    
    985
    
    
    
    5,697
    
    
    
    3,559Income (loss) from continuing operations
    
    
    (2,518
    )
    
    
    (151
    )
    
    
    4,891
    
    
    
    (1,496
    )Income from discontinued operations, net
    
    
    42,539
    
    
    
    31,516
    
    
    
    128,748
    
    
    
    34,849Net income
    
    
    40,021
    
    
    
    31,365
    
    
    
    133,639
    
    
    
    33,353Net income attributable to preferred unitholders
    
    
    21,940
    
    
    
    24,627
    
    
    
    48,913
    
    
    
    49,701Net income (loss) attributable to common unitholders
    
    $
    18,081
    
    
    $
    6,738
    
    
    $
    84,726
    
    
    $
    (16,348
    )Earnings (loss) per common unit  basic:Loss from continuing operations (net of preferred distributions)
    
    $
    (0.23
    )
    
    $
    (0.24
    )
    
    $
    (0.42
    )
    
    $
    (0.49
    )Income from discontinued operations
    
    
    0.40
    
    
    
    0.30
    
    
    
    1.22
    
    
    
    0.33Net income (loss) attributable to common unitholders
    
    $
    0.17
    
    
    $
    0.06
    
    
    $
    0.80
    
    
    $
    (0.16
    )Earnings (loss) per common unit  diluted:Loss from continuing operations (net of preferred distributions)
    
    $
    (0.23
    )
    
    $
    (0.24
    )
    
    $
    (0.42
    )
    
    $
    (0.49
    )Income from discontinued operations
    
    
    0.40
    
    
    
    0.30
    
    
    
    1.22
    
    
    
    0.33Net income (loss) attributable to common unitholders
    
    $
    0.17
    
    
    $
    0.06
    
    
    $
    0.80
    
    
    $
    (0.16
    )Weighted average common units outstanding
    
    
    106,291
    
    
    
    104,550
    
    
    
    105,896
    
    
    
    104,412Weighted average common units and equivalents outstanding
    
    
    106,291
    
    
    
    104,550
    
    
    
    105,896
    
    
    
    104,412Distributions declared per common unit
    
    $
    0.60
    
    
    $
    0.60
    
    
    $
    1.20
    
    
    $
    1.20
  3




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AIMCO PROPERTIES, L.P.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In Thousands, Unaudited)
 Six MonthsEnded June 30,2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    133,639
    
    
    $
    33,353Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    228,236
    
    
    
    187,612Discontinued operations
    
    
    (154,222
    )
    
    
    (14,753
    )Other adjustments
    
    
    18,065
    
    
    
    (5,171
    )Net changes in operating assets and operating liabilities
    
    
    40,343
    
    
    
    (18,668
    )Net cash provided by operating activities
    
    
    266,061
    
    
    
    182,373CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of real estate
    
    
    (41,732
    )
    
    
    (158,584
    )Capital expenditures
    
    
    (236,203
    )
    
    
    (201,401
    )Proceeds from dispositions of real estate
    
    
    544,815
    
    
    
    140,160Cash from newly consolidated properties
    
    
    22,432
    
    
    
    1,623Purchases of non-real estate related corporate assets
    
    
    (3,697
    )
    
    
    (7,218
    )Purchases of general and limited partnership interests and other assets
    
    
    (10,932
    )
    
    
    (61,547
    )Originations of notes receivable from unconsolidated real estate partnerships
    
    
    (7,820
    )
    
    
    (15,125
    )Proceeds from repayment of notes receivable
    
    
    5,318
    
    
    
    13,043Distributions received from investments in unconsolidated real estate partnerships
    
    
    11,774
    
    
    
    34,051Other investing activities
    
    
    (17,558
    )
    
    
    361Net cash provided by (used in) investing activities
    
    
    266,397
    
    
    
    (254,637
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from property loans
    
    
    656,634
    
    
    
    328,543Principal repayments on property loans
    
    
    (599,870
    )
    
    
    (191,093
    )Principal repayments on tax-exempt bond financing
    
    
    (31,690
    )
    
    
    (26,740
    )Net borrowings (repayments) on term loans and revolving credit facility
    
    
    (217,000
    )
    
    
    305,900Redemption of mandatorily redeemable preferred securities
    
    
    
    
    
    
    (15,019
    )Proceeds from issuance of preferred units, net
    
    
    12,125
    
    
    
    Redemption of preferred units
    
    
    (113,250
    )
    
    
    (31,250
    )Proceeds from Class A Common Stock option exercises
    
    
    39,459
    
    
    
    1,186Originations of notes receivable from Aimco
    
    
    
    
    
    
    (85,412
    )Repayment of notes receivable originated from Aimco
    
    
    85,412
    
    
    
    Principal repayments received on notes due on common unit purchases
    
    
    18,626
    
    
    
    8,557Contributions from minority interest
    
    
    11,529
    
    
    
    17,403Payment of distributions to minority interest
    
    
    (43,515
    )
    
    
    (14,181
    )Payment of distributions to General Partner and Special Limited Partner
    
    
    (115,508
    )
    
    
    (113,423
    )Payment of distributions to Limited Partners
    
    
    (10,692
    )
    
    
    (11,087
    )Payment of distributions to High Performance Units
    
    
    (2,866
    )
    
    
    (2,856
    )Payment of distributions to preferred units
    
    
    (47,516
    )
    
    
    (47,074
    )Other financing activities
    
    
    (12,603
    )
    
    
    (7,754
    )Net cash provided by (used in) financing activities
    
    
    (370,725
    )
    
    
    115,700NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    161,733
    
    
    
    43,436CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    161,730
    
    
    
    105,343CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    323,463
    
    
    $
    148,779
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AIMCO PROPERTIES, L.P.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2006
(Unaudited)
 Note 1  Organization
     
    
    owned an equity interest in and consolidated 169,267 units in 731 properties (which we
refer to as consolidated), of which 169,217 units were also managed by us;
    
    owned an equity interest in and did not consolidate 14,834 units in 110 properties
(which we refer to as unconsolidated), of which 8,706 units were also managed by us; and
    
    provided services or managed, for third-party owners, 46,337 units in 479 properties,
primarily pursuant to long-term agreements (including 39,751 units in 425 properties for
which we provide asset management services only, and not also property management
services), 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
 Adoption of EITF 04-5
 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
 6




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Increase(decrease)Real estate, net
    
    $
    665,793Accounts and notes receivable from affiliates
    
    
    (150,057
    )Investment in unconsolidated real estate partnerships
    
    
    (64,419
    )All other assets
    
    
    122,545Total assets
    
    $
    573,862Total indebtedness
    
    $
    521,711All other liabilities
    
    
    81,950Minority interest in consolidated real estate partnerships
    
    
    53,258Partners capital
    
    
    (83,057
    )Total liabilities and partners capital
    
    $
    573,862
  Three Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30, 2006
    
    
    June 30, 2006Revenues
    
    $
    40,546
    
    
    $
    81,506Operating expenses
    
    
    29,135
    
    
    
    58,367Operating income
    
    
    11,411
    
    
    
    23,139Interest expense
    
    
    (10,693
    )
    
    
    (24,896
    )Interest income
    
    
    870
    
    
    
    1,737Income (loss) before minority interest
    
    $
    1,588
    
    
    $
    (20
    )
  Stock-Based Compensation
   7




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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
 Share-Based Payment
  8




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Six Months Ended June 30,2006
    
    
    2005Weighted average fair value of options
granted during the period
    
    $
    5.23
    
    
    $
    3.57Assumptions:Risk-free interest rate
    
    
    4.58
    %
    
    
    4.10
    %Expected dividend yield
    
    
    5.58
    %
    
    
    6.31
    %Expected volatility
    
    
    20.15
    %
    
    
    19.00
    %Weighted average expected life of options
    
    6.5 years
    
    5.0 years
  Weighted
    
    
    Weighted
    
    
    AggregateAverage
    
    
    Average
    
    
    IntrinsicOptions
    
    
    Exercise
    
    
    Contractual
    
    
    Value(thousands)
    
    
    Price
    
    
    Term
    
    
    (thousands)Outstanding at January 1, 2006
    
    
    11,054
    
    
    $
    38.78Granted
    
    
    647
    
    
    
    43.01Exercised
    
    
    (1,068
    )
    
    
    36.92Forfeited
    
    
    (294
    )
    
    
    37.39Outstanding at June 30, 2006
    
    
    10,339
    
    
    $
    39.23
    
    
    4.7 years
    
    $
    47,840Exercisable at June 30, 2006
    
    
    8,184
    
    
    $
    39.32
    
    
    3.8 years
    
    $
    37,685
   Six Months EndedJune 30, 2006WeightedAverageShares
    
    
    Grant-Date(thousands)
    
    
    Fair ValueUnvested at January 1, 2006
    
    
    882
    
    
    $
    35.07Granted
    
    
    452
    
    
    
    43.20Vested
    
    
    (229
    )
    
    
    34.26Forfeited
    
    
    (141
    )
    
    
    33.15Unvested at June 30, 2006
    
    
    964
    
    
    $
    39.11
 9




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Three Months Ended
    
    
    Six Months EndedJune 30, 2005
    
    
    June 30, 2005Net income (loss) attributable to common unitholders, as reported
    
    $
    6,737
    
    
    $
    (16,348
    )Add stock-based employee compensation expense included in
reported net income:Restricted stock awards
    
    
    2,227
    
    
    
    4,082Stock options
    
    
    470
    
    
    
    923Deduct total stock-based employee compensation expense
determined under fair value based method for all awards:Restricted stock awards
    
    
    (2,227
    )
    
    
    (4,082
    )Stock options
    
    
    (882
    )
    
    
    (1,755
    )Pro forma net income (loss) attributable to common unitholders
    
    $
    6,325
    
    
    $
    (17,180
    )Basic earnings (loss) per common unit:Reported
    
    $
    0.06
    
    
    $
    (0.16
    )Pro forma
    
    $
    0.06
    
    
    $
    (0.17
    )Diluted earnings (loss) per common unit:Reported
    
    $
    0.06
    
    
    $
    (0.16
    )Pro forma
    
    $
    0.06
    
    
    $
    (0.17
    )
 Use of Estimates
  Accounting for the Impairment or Disposal of
Long-Lived Assets,
 10




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Note 3  Commitments and Contingencies
 Commitments
   Tax Credit Syndication
  Legal Matters
      Conditional
Asset Retirement Obligations
 11




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12




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Note 4  Partners Capital
 Preferred OP Units
        Common OP Units
  13




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Stock-Based
Compensation
  High Performance Units
    14




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Note 5  Discontinued Operations and Assets Held for Sale
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Rental and other property revenues
    
    $
    5,546
    
    
    $
    45,467
    
    
    $
    23,876
    
    
    $
    93,074Property operating expense
    
    
    (3,116
    )
    
    
    (23,533
    )
    
    
    (12,900
    )
    
    
    (48,127
    )Depreciation and amortization
    
    
    (1,438
    )
    
    
    (12,021
    )
    
    
    (5,815
    )
    
    
    (24,969
    )Other (expenses) income, net
    
    
    (1,634
    )
    
    
    (302
    )
    
    
    (2,657
    )
    
    
    (549
    )Operating income
    
    
    (642
    )
    
    
    9,611
    
    
    
    2,504
    
    
    
    19,429Interest income
    
    
    62
    
    
    
    109
    
    
    
    215
    
    
    
    259Interest expense
    
    
    (1,464
    )
    
    
    (11,309
    )
    
    
    (6,021
    )
    
    
    (23,346
    )Minority interest in consolidated real estate
Partnerships
    
    
    729
    
    
    
    738
    
    
    
    1,058
    
    
    
    1,693Loss before gain on dispositions of real estate,
impairment losses, deficit distributions to
minority
partners, income tax
    
    
    (1,315
    )
    
    
    (851
    )
    
    
    (2,244
    )
    
    
    (1,965
    )Gain on dispositions of real estate, net of
minority partners interest
    
    
    42,646
    
    
    
    29,719
    
    
    
    142,571
    
    
    
    36,680Recovery of impairment losses (impairment losses)
on real estate assets sold or held for sale
    
    
    195
    
    
    
    (231
    )
    
    
    (8
    )
    
    
    (2,186
    )Recovery of deficit distributions to minority
partners
    
    
    2,057
    
    
    
    4,084
    
    
    
    16,415
    
    
    
    3,539Income tax arising from dispositions
    
    
    (1,044
    )
    
    
    (1,205
    )
    
    
    (27,986
    )
    
    
    (1,219
    )Income from discontinued operations
    
    $
    42,539
    
    
    $
    31,516
    
    
    $
    128,748
    
    
    $
    34,849
  15




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##### Table of Contents



Note 6  Earnings per Unit
  Three Months Ended June 30,
    
    
    Six Months EndedJune 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Numerator:Income (loss) from continuing operations
    
    $
    (2,518
    )
    
    $
    (151
    )
    
    $
    4,891
    
    
    $
    (1,496
    )Less net income attributable to preferred unitholders
    
    
    (21,940
    )
    
    
    (24,627
    )
    
    
    (48,913
    )
    
    
    (49,701
    )Numerator for basic and diluted earnings per share
 Loss from continuing operations
    
    $
    (24,458
    )
    
    $
    (24,778
    )
    
    $
    (44,022
    )
    
    $
    (51,197
    )Income from discontinued operations
    
    $
    42,539
    
    
    $
    31,516
    
    
    $
    128,748
    
    
    $
    34,849Net income
    
    $
    40,021
    
    
    $
    31,365
    
    
    $
    133,639
    
    
    $
    33,353Less net income attributable to preferred unitholders
    
    
    (21,940
    )
    
    
    (24,627
    )
    
    
    (48,913
    )
    
    
    (49,701
    )Numerator for basic and diluted earnings per unit
 Net income (loss) attributable to common
unitholders
    
    $
    18,081
    
    
    $
    6,738
    
    
    $
    84,726
    
    
    $
    (16,348
    )Denominator:Denominator for basic earnings per unit  weighted
average number of common units outstanding
    
    
    106,291
    
    
    
    104,550
    
    
    
    105,896
    
    
    
    104,412Effect of dilutive securities:Dilutive potential common units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Denominator for diluted earnings per unit
    
    
    106,291
    
    
    
    104,550
    
    
    
    105,896
    
    
    
    104,412Earnings (loss) per common unit:Basic earnings (loss) per common unit:Loss from continuing operations (net of preferred
distributions)
    
    $
    (0.23
    )
    
    $
    (0.24
    )
    
    $
    (0.42
    )
    
    $
    (0.49
    )Income from discontinued operations
    
    
    0.40
    
    
    
    0.30
    
    
    
    1.22
    
    
    
    0.33Net income (loss) attributable to common unitholders
    
    $
    0.17
    
    
    $
    0.06
    
    
    $
    0.80
    
    
    $
    (0.16
    )Diluted earnings (loss) per common unit:Loss from continuing operations (net of preferred
distributions)
    
    $
    (0.23
    )
    
    $
    (0.24
    )
    
    $
    (0.42
    )
    
    $
    (0.49
    )Income from discontinued operations
    
    
    0.40
    
    
    
    0.30
    
    
    
    1.22
    
    
    
    0.33Net income (loss) attributable to common unitholders
    
    $
    0.17
    
    
    $
    0.06
    
    
    $
    0.80
    
    
    $
    (0.16
    )
  16




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##### Table of Contents



Note 7  Business Segments
  Disclosures about Segments of an
Enterprise and Related Information
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues:Real estate segment
    
    $
    419,234
    
    
    $
    344,659
    
    
    $
    830,126
    
    
    $
    677,223Investment management segment:Gross revenues
    
    
    40,901
    
    
    
    32,543
    
    
    
    76,381
    
    
    
    67,057Elimination of intersegment revenues
    
    
    (25,176
    )
    
    
    (19,937
    )
    
    
    (48,086
    )
    
    
    (39,770
    )Net revenues after elimination
    
    
    15,725
    
    
    
    12,606
    
    
    
    28,295
    
    
    
    27,287Total revenues of reportable segments
    
    $
    434,959
    
    
    $
    357,265
    
    
    $
    858,421
    
    
    $
    704,510Net operating income:Real estate segment
    
    $
    228,749
    
    
    $
    183,952
    
    
    $
    441,586
    
    
    $
    355,671Investment management segment
    
    
    10,335
    
    
    
    8,472
    
    
    
    19,981
    
    
    
    18,629Total net operating income of
reportable segments
    
    
    239,084
    
    
    
    192,424
    
    
    
    461,567
    
    
    
    374,300Reconciliation of net operating income
of reportable segments to operating
income:Depreciation and amortization
    
    
    (116,412
    )
    
    
    (95,923
    )
    
    
    (228,236
    )
    
    
    (187,612
    )General and administrative expenses
    
    
    (24,805
    )
    
    
    (21,723
    )
    
    
    (47,508
    )
    
    
    (42,567
    )Other (expenses) income, net
    
    
    (2,279
    )
    
    
    999
    
    
    
    (2,874
    )
    
    
    1,754Operating income
    
    $
    95,588
    
    
    $
    75,777
    
    
    $
    182,949
    
    
    $
    145,875
 June 30,
    
    
    December 31,2006
    
    
    2005ASSETS:Total assets for reportable segments (1)
    
    $
    10,046,984
    
    
    $
    9,656,348Corporate and other assets
    
    
    358,367
    
    
    
    375,410Total consolidated assets
    
    $
    10,405,351
    
    
    $
    10,031,758
 
 (1)
    
    Total assets for reportable segments include assets associated with both the real
estate and investment management business segments. 17




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Note 8  Recent Accounting Developments
 Accounting for Uncertainty in Income Taxes
 Note 9  Subsequent Events
  18




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##### Table of Contents



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: natural disasters such as hurricanes; national and local economic
conditions; the general level of interest rates; energy costs; 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 our 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,
2005, 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
      19




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##### Table of Contents



Results of Operations
 Overview
 Three months ended June 30, 2006 compared to three months ended June 30, 2005
  
    
    an increase in income from discontinued operations, primarily related to larger net
gains on sales of real estate;
    
    an increase in net operating income from property operations, which is primarily
attributable to operations of newly consolidated properties and improved operating
results of same store properties; and
    
    an increase in net operating income from activity fees and asset management.
  Six months ended June 30, 2006 compared to six months ended June 30, 2005
  
    
    an increase in income from discontinued operations, primarily related to larger net
gains on sales of real estate;
    
    an increase in net operating income from property operations, which is primarily
attributable to operations of newly consolidated properties and improved operating
results of same store properties; and
    
    an increase in net gain on sale of real estate related to unconsolidated entities and
other, primarily related to first quarter 2006 gains on sale of land and other
non-depreciable assets.
   Rental Property Operations
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Rental and other property revenues
    
    $
    419,234
    
    
    $
    344,659
    
    
    $
    830,126
    
    
    $
    677,223Property operating expenses
    
    
    190,485
    
    
    
    160,707
    
    
    
    388,540
    
    
    
    321,552Net operating income
    
    $
    228,749
    
    
    $
    183,952
    
    
    $
    441,586
    
    
    $
    355,671
 20




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##### Table of Contents



Conventional Consolidated Same Store Property Operating Results
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Consolidated same store revenues
    
    $
    289,354
    
    
    $
    267,757
    
    
    $
    572,171
    
    
    $
    528,461Consolidated same store property
operating expenses
    
    
    122,892
    
    
    
    118,616
    
    
    
    248,975
    
    
    
    235,666Consolidated same store net operating
income
    
    
    166,462
    
    
    
    149,141
    
    
    
    323,196
    
    
    
    292,795Adjustments to reconcile same store net
operating income to real estate segment
net operating income (1)
    
    
    62,287
    
    
    
    34,811
    
    
    
    118,390
    
    
    
    62,876Real estate segment net operating income
    
    $
    228,749
    
    
    $
    183,952
    
    
    $
    441,586
    
    
    $
    355,671Consolidated Same Store StatisticsProperties
    
    
    400
    
    
    
    400
    
    
    
    398
    
    
    
    398Apartment units
    
    
    117,517
    
    
    
    117,517
    
    
    
    117,171
    
    
    
    117,171Average physical occupancy
    
    
    94.3
    %
    
    
    91.1
    %
    
    
    94.5
    %
    
    
    91.1
    %Average rent/unit/month
    
    $
    797
    
    
    $
    771
    
    
    $
    791
    
    
    $
    768
 
 (1)
    
    Reflects property revenues and property operating expenses related to consolidated
properties other than same store properties (e.g., affordable, acquisition and
redevelopment properties) and casualty gains and losses. 21




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##### Table of Contents



Property Management
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Property management revenues, primarily from affiliates
    
    $
    3,592
    
    
    $
    5,926
    
    
    $
    6,622
    
    
    $
    12,590Property management expenses
    
    
    2,151
    
    
    
    1,829
    
    
    
    2,643
    
    
    
    3,745Net operating income from property management
    
    $
    1,441
    
    
    $
    4,097
    
    
    $
    3,979
    
    
    $
    8,845
  Activity Fees and Asset Management
  22




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Activity fees and asset management
revenues, primarily from affiliates
    
    $
    12,133
    
    
    $
    6,680
    
    
    $
    21,673
    
    
    $
    14,697Activity and asset management expenses
    
    
    3,239
    
    
    
    2,305
    
    
    
    5,671
    
    
    
    4,913Net operating income from activity
fees and asset management
    
    $
    8,894
    
    
    $
    4,375
    
    
    $
    16,002
    
    
    $
    9,784
    Depreciation and Amortization
 Use of Estimates
 Use of Estimates
 General and Administrative Expenses
  23




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##### Table of Contents



Other Expenses (Income), Net
    Interest Income
    Interest Expense
   24




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##### Table of Contents



Gain on Dispositions of Real Estate Related to Unconsolidated Entities and Other
   Minority Interest in Consolidated Real Estate Partnerships
    Income from Discontinued Operations, Net
     25




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##### Table of Contents



Critical Accounting Policies and Estimates
  Impairment of Long-Lived Assets
   
    
    the general economic climate;
    
    competition from other apartment communities and other housing options;
    
    local conditions, such as loss of jobs 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
   26




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##### Table of Contents



Allowance for Losses on Notes Receivable
   Capitalized Costs
   27




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##### Table of Contents



Funds From Operations
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net income (loss) attributable to common unitholders (1)
    
    $
    18,081
    
    
    $
    6,738
    
    
    $
    84,726
    
    
    $
    (16,348
    )Adjustments:Depreciation and amortization (2)
    
    
    116,412
    
    
    
    95,923
    
    
    
    228,236
    
    
    
    187,612Depreciation and amortization related to non-real estate assets
    
    
    (4,538
    )
    
    
    (4,524
    )
    
    
    (9,268
    )
    
    
    (8,315
    )Depreciation of rental property related to minority partners
interest (3)
    
    
    (9,724
    )
    
    
    (9,022
    )
    
    
    (25,217
    )
    
    
    (18,069
    )Depreciation of rental property related to unconsolidated
entities
    
    
    1,186
    
    
    
    4,631
    
    
    
    1,854
    
    
    
    10,589Gain on dispositions of real estate related to unconsolidated
entities and other
    
    
    (4,060
    )
    
    
    (3,154
    )
    
    
    (13,756
    )
    
    
    (5,161
    )Gain on dispositions of non-depreciable assets
    
    
    671
    
    
    
    118
    
    
    
    6,371
    
    
    
    793Deficit distributions to minority partners, net (4)
    
    
    4,096
    
    
    
    1,654
    
    
    
    6,282
    
    
    
    3,047Discontinued operations:Gain on dispositions of real estate, net of minority partners
interest (3)
    
    
    (42,646
    )
    
    
    (29,719
    )
    
    
    (142,571
    )
    
    
    (36,680
    )Depreciation of rental property, net of minority partners
interest (3)
    
    
    961
    
    
    
    10,323
    
    
    
    4,403
    
    
    
    21,428Recovery of deficit distributions to minority partners, net (4)
    
    
    (2,057
    )
    
    
    (4,084
    )
    
    
    (16,415
    )
    
    
    (3,539
    )Income tax arising from disposals
    
    
    1,044
    
    
    
    1,206
    
    
    
    27,986
    
    
    
    1,219Preferred OP Unit distributions
    
    
    21,940
    
    
    
    24,627
    
    
    
    46,339
    
    
    
    48,578Redemption related preferred Op Unit issuance costs
    
    
    
    
    
    
    
    
    
    
    2,574
    
    
    
    1,123Funds From Operations
    
    $
    101,366
    
    
    $
    94,717
    
    
    $
    201,544
    
    
    $
    186,277Preferred OP Unit distributions
    
    
    (21,940
    )
    
    
    (24,627
    )
    
    
    (46,339
    )
    
    
    (48,578
    )Redemption related preferred OP Unit issuance costs
    
    
    
    
    
    
    
    
    
    
    (2,574
    )
    
    
    (1,123
    )Distributions on dilutive preferred securities
    
    
    1,183
    
    
    
    1,191
    
    
    
    2,365
    
    
    
    1,625Funds From Operations attributable to common unitholders
- diluted
    
    $
    80,609
    
    
    $
    71,281
    
    
    $
    154,996
    
    
    $
    138,201Weighted average number of common units, common unit
equivalents and dilutive preferred securities outstanding:Common units and equivalents (5)
    
    
    106,448
    
    
    
    105,078
    
    
    
    106,653
    
    
    
    104,843Dilutive preferred securities
    
    
    3,508
    
    
    
    3,527
    
    
    
    3,510
    
    
    
    2,401Total
    
    
    109,956
    
    
    
    108,605
    
    
    
    110,163
    
    
    
    107,244
 28




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##### Table of Contents



Notes: (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 unit equivalents that are dilutive for FFO.
 Liquidity and Capital Resources
    Operating Activities
  29




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##### Table of Contents



Investing Activities
       30




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##### Table of Contents



Actual Cost
    
    
    Cost Per UnitCapital Replacements Detail:Building and grounds
    
    $
    13,693
    
    
    $
    99Turnover related
    
    
    17,263
    
    
    
    125Capitalized site payroll and indirect costs
    
    
    6,569
    
    
    
    48Our share of Capital Replacements
    
    $
    37,525
    
    
    $
    272Capital Replacements:Conventional
    
    $
    34,409
    
    
    $
    280Affordable
    
    
    3,116
    
    
    
    207Our share of Capital Replacements
    
    
    37,525
    
    
    $
    272Capital Improvements:Conventional
    
    
    42,024
    
    
    $
    342Affordable
    
    
    9,259
    
    
    
    616Our share of Capital Improvements
    
    
    51,283
    
    
    $
    372Casualties:Conventional
    
    
    19,470Affordable
    
    
    741Our share of casualties
    
    
    20,211Redevelopment:Conventional
    
    
    64,915Affordable
    
    
    3,626Our share of redevelopment
    
    
    68,541Our share of capital expenditures
    
    
    177,560Plus minority partners share of consolidated spending
    
    
    60,147Less our share of unconsolidated spending
    
    
    (1,504
    )Capital expenditures per consolidated statement of cash flows
    
    $
    236,203
   Financing Activities
    31




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Preferred OP Units
   Future Capital Needs
  32




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##### Table of Contents



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
  33




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. Legal Proceedings
  
 ITEM 1A. Risk Factors
  
 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
 (a) Unregistered Sales of Equity Securities.
    Repurchases of Equity Securities.
 Maximum NumberTotal Number of
    
    of Units thatAverage
    
    Units Purchased as
    
    May Yet BeTotal
    
    Price
    
    Part of Publicly
    
    Purchased Under theNumber
    
    Paid
    
    Announced Plans or
    
    Plans or ProgramsFiscal period
    
    of Units Purchased
    
    per Unit
    
    Programs
    
    (1) (in millions)April 1  April 30, 2006
    
    
    10,227
    
    
    
    46.77
    
    
    
    N/A
    
    
    
    N/AMay 1  May 31, 2006
    
    
    16,735
    
    
    
    44.88
    
    
    
    N/A
    
    
    
    N/AJune 1  June 30, 2006
    
    
    1,298
    
    
    
    43.53
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    28,260
    
    
    
    45.50
    
    
    
    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.
 34




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##### Table of Contents



ITEM 6. Exhibits
   10.1
    
    Forty-Eighth 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, 2006, is
incorporated herein by this reference)10.2
    
    Forty-Ninth Amendment to the Third Amended and Restated Agreement of
Limited Partnership of AIMCO Properties, L.P. (Exhibit 10.1 to AIMCO
Properties, L.P.s Current Report on Form 8-K dated June 29, 2006, is
incorporated herein by this reference)31.1
    
    Certification of 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 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 Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification 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
 35




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##### Table of Contents



AIMCO PROPERTIES, L.P.
 
 SIGNATURES
  AIMCO PROPERTIES, L.P.By: AIMCO GP, Inc., its general partnerBy:
    
    /s/ THOMAS M. HERZOGThomas M. HerzogExecutive Vice President andChief Financial Officer(duly authorized officer andprincipal financial officer)By:
    
    /s/ ROBERT Y. WALKER, IVRobert Y. Walker, IVExecutive Vice President andChief Accounting Officer
  36




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##### Table of Contents



Exhibit Index
  10.1
    
    Forty-Eighth 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, 2006, is
incorporated herein by this reference)10.2
    
    Forty-Ninth Amendment to the Third Amended and Restated Agreement of
Limited Partnership of AIMCO Properties, L.P. (Exhibit 10.1 to AIMCO
Properties, L.P.s Current Report on Form 8-K dated June 29, 2006, is
incorporated herein by this reference)31.1
    
    Certification of 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 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 Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification 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
 37