##### 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 March 31, 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
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
 o 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 March 31, 2006 (Unaudited) and December 31, 2005
    
    
    2Consolidated Statements of Income for the Three Months Ended March 31, 2006 and 2005 (Unaudited)
    
    
    3Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2006 and 2005 (Unaudited)
    
    
    4Notes to Consolidated Financial Statements (Unaudited)
    
    
    5ITEM 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17ITEM 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    30ITEM 4.
    
    Controls and Procedures
    
    
    30PART II. OTHER INFORMATIONITEM 1.
    
    Legal Proceedings
    
    
    31ITEM 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    31ITEM 6.
    
    Exhibits
    
    
    32Signatures
    
    
    
    
    33Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification Pursuant to Section 906Certification Pursuant to Section 906Agreement Re: Disclosure of Long-Term Debt Instruments
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PART I. FINANCIAL INFORMATION
 ITEM 1. Financial Statements
 AIMCO PROPERTIES, L.P.
 
 CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Unit Data)
 March 31, 2006
    
    
    December 31, 2005(Unaudited)ASSETSReal estate:Land
    
    $
    2,356,444
    
    
    $
    2,277,385Buildings and improvements
    
    
    9,668,850
    
    
    
    8,533,651Total real estate
    
    
    12,025,294
    
    
    
    10,811,036Less accumulated depreciation
    
    
    (2,769,086
    )
    
    
    (2,173,846
    )Net real estate
    
    
    9,256,208
    
    
    
    8,637,190Cash and cash equivalents
    
    
    224,327
    
    
    
    161,730Restricted cash
    
    
    355,175
    
    
    
    284,424Accounts receivable
    
    
    61,319
    
    
    
    57,479Accounts receivable from affiliates
    
    
    21,953
    
    
    
    43,070Deferred financing costs
    
    
    76,242
    
    
    
    65,981Notes receivable from unconsolidated real estate partnerships
    
    
    39,832
    
    
    
    177,218Notes receivable from non-affiliates
    
    
    52,847
    
    
    
    23,760Notes receivable from Aimco
    
    
    13,476
    
    
    
    13,299Investment in unconsolidated real estate partnerships
    
    
    58,423
    
    
    
    166,668Other assets
    
    
    214,002
    
    
    
    216,789Deferred income tax assets, net
    
    
    
    
    
    
    9,835Assets held for sale
    
    
    4,752
    
    
    
    171,907Total assets
    
    $
    10,378,556
    
    
    $
    10,029,350LIABILITIES AND PARTNERS CAPITALProperty tax-exempt bond financing
    
    $
    1,057,066
    
    
    $
    1,050,509Property loans payable
    
    
    5,155,218
    
    
    
    4,523,905Term loans
    
    
    400,000
    
    
    
    400,000Credit facility
    
    
    42,000
    
    
    
    217,000Total indebtedness
    
    
    6,654,284
    
    
    
    6,191,414Accounts payable
    
    
    28,201
    
    
    
    34,381Accrued liabilities and other
    
    
    384,516
    
    
    
    421,225Deferred income
    
    
    99,213
    
    
    
    46,996Security deposits
    
    
    42,914
    
    
    
    38,269Deferred income tax liabilities, net
    
    
    9,432
    
    
    
    Liabilities related to assets held for sale
    
    
    5,779
    
    
    
    132,955Total liabilities
    
    
    7,224,339
    
    
    
    6,865,240Minority interest in consolidated real estate partnerships
    
    
    276,655
    
    
    
    218,708Partners capital:Preferred units
    
    
    1,073,810
    
    
    
    1,183,620General Partner and Special Limited Partner
    
    
    1,542,712
    
    
    
    1,570,046Limited Partners
    
    
    370,895
    
    
    
    301,452High performance units
    
    
    (16,677
    )
    
    
    (16,307
    )Investment in Aimco Class A Common Stock
    
    
    (7,766
    )
    
    
    (7,997
    )Notes receivable from Aimco
    
    
    (85,412
    )
    
    
    (85,412
    )Total partners capital
    
    
    2,877,562
    
    
    
    2,945,402Total liabilities and partners capital
    
    $
    10,378,556
    
    
    $
    10,029,350
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AIMCO PROPERTIES, L.P.
 
 CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Unit Data)
(Unaudited)
 Three MonthsEnded March 31,2006
    
    
    2005REVENUES:Rental and other property revenues
    
    $
    417,488
    
    
    $
    337,864Property management revenues, primarily from affiliates
    
    
    3,030
    
    
    
    6,664Activity fees and asset management revenues, primarily from affiliates
    
    
    9,539
    
    
    
    8,017Total revenues
    
    
    430,057
    
    
    
    352,545EXPENSES:Property operating expenses
    
    
    200,858
    
    
    
    163,746Property management expenses
    
    
    492
    
    
    
    1,916Activity and asset management expenses
    
    
    2,432
    
    
    
    2,608Depreciation and amortization
    
    
    113,940
    
    
    
    93,277General and administrative expenses
    
    
    22,702
    
    
    
    20,851Other expenses (income), net
    
    
    666
    
    
    
    (633
    )Total expenses
    
    
    341,090
    
    
    
    281,765Operating income
    
    
    88,967
    
    
    
    70,780Interest income
    
    
    8,433
    
    
    
    7,977Recovery of (provision for) losses on notes receivable
    
    
    (262
    )
    
    
    1,592Interest expense
    
    
    (102,275
    )
    
    
    (84,351
    )Deficit distributions to minority partners, net
    
    
    (2,251
    )
    
    
    (1,406
    )Equity in losses of unconsolidated real estate partnerships
    
    
    (1,863
    )
    
    
    (902
    )Impairment losses related to real estate partnerships
    
    
    (71
    )
    
    
    (256
    )Gain on dispositions of real estate related to unconsolidated entities
and other
    
    
    9,696
    
    
    
    1,994Loss before minority interest and discontinued operations
    
    
    374
    
    
    
    (4,572
    )Minority interest in consolidated real estate partnerships
    
    
    6,314
    
    
    
    3,143Income (loss) from continuing operations
    
    
    6,688
    
    
    
    (1,429
    )Income from discontinued operations, net
    
    
    86,930
    
    
    
    3,416Net income
    
    
    93,618
    
    
    
    1,987Net income attributable to preferred unitholders
    
    
    26,973
    
    
    
    25,074Net income (loss) attributable to common unitholders
    
    $
    66,645
    
    
    $
    (23,087
    )Earnings (loss) per common unit  basic:Loss from continuing operations (net of preferred distributions)
    
    $
    (0.19
    )
    
    $
    (0.25
    )Income from discontinued operations
    
    
    0.82
    
    
    
    0.03Net income (loss) attributable to common unitholders
    
    $
    0.63
    
    
    $
    (0.22
    )Earnings (loss) per common unit  diluted:Loss from continuing operations (net of preferred distributions)
    
    $
    (0.19
    )
    
    $
    (0.25
    )Income from discontinued operations
    
    
    0.82
    
    
    
    0.03Net income (loss) attributable to common unitholders
    
    $
    0.63
    
    
    $
    (0.22
    )Weighted average common units outstanding
    
    
    105,501
    
    
    
    104,273Weighted average common units and equivalents outstanding
    
    
    105,501
    
    
    
    104,273Distributions declared per common unit
    
    $
    0.60
    
    
    $
    0.60
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AIMCO PROPERTIES, L.P.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands, Unaudited)
 Three MonthsEnded March 31,2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    93,618
    
    
    $
    1,987Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    113,940
    
    
    
    93,277Discontinued operations
    
    
    (113,014
    )
    
    
    6,487Other adjustments
    
    
    10,225
    
    
    
    1,227Net changes in operating assets and operating liabilities
    
    
    8,278
    
    
    
    137Net cash provided by operating activities
    
    
    113,047
    
    
    
    103,115CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of real estate
    
    
    
    
    
    
    (143,363
    )Capital expenditures
    
    
    (112,603
    )
    
    
    (90,779
    )Proceeds from dispositions of real estate
    
    
    382,741
    
    
    
    20,889Cash from newly consolidated properties
    
    
    22,432
    
    
    
    1,067Purchases of non-real estate related corporate assets
    
    
    (1,826
    )
    
    
    (1,705
    )Purchases of general and limited partnership interests and other assets
    
    
    (5,170
    )
    
    
    (33,500
    )Originations of notes receivable from unconsolidated real estate partnerships
    
    
    (209
    )
    
    
    (5,810
    )Proceeds from repayment of notes receivable
    
    
    1,662
    
    
    
    5,346Distributions received from investments in unconsolidated real estate partnerships
    
    
    4,740
    
    
    
    23,988Other investing activities
    
    
    (69
    )
    
    
    1,508Net cash provided by (used in) investing activities
    
    
    291,698
    
    
    
    (222,359
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from property loans
    
    
    361,073
    
    
    
    227,200Principal repayments on property loans
    
    
    (339,275
    )
    
    
    (60,491
    )Principal repayments on tax-exempt bond financing
    
    
    (18,610
    )
    
    
    (23,531
    )Net borrowings (repayments) on term loans and revolving credit facility
    
    
    (175,000
    )
    
    
    207,300Redemption of mandatorily redeemable preferred securities
    
    
    
    
    
    
    (15,019
    )Redemption of preferred units
    
    
    (113,250
    )
    
    
    (31,250
    )Origination of note receivable from Aimco
    
    
    
    
    
    
    (85,412
    )Proceeds from Class A Common Stock option exercises
    
    
    38,867
    
    
    
    451Principal repayments received on notes due on common unit purchases
    
    
    16,450
    
    
    
    3,989Other financing activities
    
    
    (4,971
    )
    
    
    (4,557
    )Contributions from minority interest
    
    
    2,305
    
    
    
    5,859Payment of distributions to minority interest
    
    
    (19,648
    )
    
    
    (3,994
    )Payment of distributions to General Partner and Special Limited Partner
    
    
    (57,491
    )
    
    
    (56,749
    )Payment of distributions to Limited Partners
    
    
    (5,572
    )
    
    
    (5,723
    )Payment of distributions to High Performance Units
    
    
    (1,439
    )
    
    
    (1,427
    )Payment of distributions to preferred units
    
    
    (25,587
    )
    
    
    (23,116
    )Net cash provided by (used in) financing activities
    
    
    (342,148
    )
    
    
    133,530NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    62,597
    
    
    
    14,286CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    161,730
    
    
    
    105,343CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    224,327
    
    
    $
    119,629
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AIMCO PROPERTIES, L.P.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2006
(Unaudited)
 Note 1  Organization
     
    
    owned an equity interest in and consolidated 172,313 units in 748 properties (which we
refer to as consolidated), of which 172,042 units were also managed by us;
    
    owned an equity interest in and did not consolidate 14,913 units in 111 properties
(which we refer to as unconsolidated), of which 8,797 units were also managed by us; and
    
    provided services or managed, for third-party owners, 46,672 units in 478 properties,
primarily pursuant to long-term agreements (including 41,065 units in 427 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
  Revenues
    
    $
    42,574Operating expenses
    
    
    30,579Operating income
    
    
    11,995Interest expense
    
    
    (11,177
    )Interest income
    
    
    896Income before minority interest
    
    $
    1,714
  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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Three Months Ended2006
    
    
    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
    
    
    636
    
    
    
    42.95Exercised
    
    
    (1,049
    )
    
    
    36.93Forfeited
    
    
    (70
    )
    
    
    44.06Outstanding at March 31, 2006
    
    
    10,571
    
    
    $
    39.14
    
    
    5.0 years
    
    $
    82,685Exercisable at March 31, 2006
    
    
    8,192
    
    
    $
    39.32
    
    
    4.1 years
    
    $
    62,823
   WeightedAverageShares
    
    
    Grant-Date(thousands)
    
    
    Fair ValueUnvested at January 1, 2006
    
    
    882
    
    
    $
    35.07Granted
    
    
    402
    
    
    
    42.94Vested
    
    
    (94
    )
    
    
    37.91Forfeited
    
    
    (30
    )
    
    
    30.34Unvested at March 31, 2006
    
    
    1,160
    
    
    $
    37.66
   9




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Three MonthsEndedMarch 31, 2005Net loss attributable to common unitholders, as reported
    
    $
    (23,087
    )Add stock-based employee compensation expense included in
reported net income:Restricted stock awards
    
    
    1,855Stock options
    
    
    453Deduct total stock-based employee compensation expense
determined under fair value based method for all awards:Restricted stock awards
    
    
    (1,855
    )Stock options
    
    
    (872
    )Pro forma net loss attributable to common unitholders
    
    $
    (23,506
    )Basic loss per common unit:Reported
    
    $
    (0.22
    )Pro forma
    
    $
    (0.23
    )Diluted loss per common unit:Reported
    
    $
    (0.22
    )Pro forma
    
    $
    (0.23
    )
 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
      11




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Conditional
Asset Retirement Obligations
          12




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




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High Performance Units
   Note 5  Discontinued Operations and Assets Held for Sale
   Three Months EndedMarch 31,2006
    
    
    2005Rental and other property revenues
    
    $
    11,735
    
    
    $
    42,307Property operating expense
    
    
    (6,981
    )
    
    
    (21,694
    )Depreciation and amortization
    
    
    (2,261
    )
    
    
    (11,359
    )Other (expenses) income, net
    
    
    (952
    )
    
    
    (116
    )Operating income
    
    
    1,541
    
    
    
    9,138Interest income
    
    
    111
    
    
    
    140Interest expense
    
    
    (3,054
    )
    
    
    (10,721
    )Minority interest in consolidated real estate
partnerships
    
    
    71
    
    
    
    385Loss before gain on dispositions of real estate,
impairment losses, deficit distributions to minority
partners, and income tax
    
    
    (1,331
    )
    
    
    (1,058
    )Gain on dispositions of real estate, net of
minority partners interest
    
    
    99,925
    
    
    
    6,974Recovery of impairment losses (impairment losses)
on real estate assets sold or held for sale
    
    
    855
    
    
    
    (1,956
    )Recovery of deficit distributions (deficit
distributions)
to minority partners, net
    
    
    14,424
    
    
    
    (531
    )Income tax arising from dispositions
    
    
    (26,943
    )
    
    
    (13
    )Income from discontinued operations
    
    $
    86,930
    
    
    $
    3,416
  14




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Note 6  Earnings per Unit
  Three Months EndedMarch 31,2006
    
    
    2005Numerator:Income (loss) from continuing operations
    
    $
    6,688
    
    
    $
    (1,429
    )Less net income attributable to preferred unitholders
    
    
    (26,973
    )
    
    
    (25,074
    )Numerator for basic and diluted earnings per unit
  Loss from continuing operations
    
    $
    (20,285
    )
    
    $
    (26,503
    )Income from discontinued operations
    
    $
    86,930
    
    
    $
    3,416Net income
    
    $
    93,618
    
    
    $
    1,987Less net income attributable to preferred unitholders
    
    
    (26,973
    )
    
    
    (25,074
    )Numerator for basic and diluted earnings per unit
 Net income (loss) attributable to common
unitholders
    
    $
    66,645
    
    
    $
    (23,087
    )Denominator:Denominator for basic earnings per unit  weighted
average number of common units outstanding
    
    
    105,501
    
    
    
    104,273Effect of dilutive securities:Dilutive potential common units
    
    
    
    
    
    
    Denominator for diluted earnings per unit
    
    
    105,501
    
    
    
    104,273Earnings (loss) per common unit:Basic earnings (loss) per common unit:Loss from continuing operations (net of preferred
distributions)
    
    $
    (0.19
    )
    
    $
    (0.25
    )Income from discontinued operations
    
    
    0.82
    
    
    
    0.03Net income (loss) attributable to common unitholders
    
    $
    0.63
    
    
    $
    (0.22
    )Diluted earnings (loss) per common unit:Loss from continuing operations (net of preferred
distributions)
    
    $
    (0.19
    )
    
    $
    (0.25
    )Income from discontinued operations
    
    
    0.82
    
    
    
    0.03Net income (loss) attributable to common unitholders
    
    $
    0.63
    
    
    $
    (0.22
    )
  15




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Note 7  Business Segments
  Disclosures about Segments of an
Enterprise and Related Information
  Three Months EndedMarch 31,2006
    
    
    2005Revenues:Real estate segment
    
    $
    417,488
    
    
    $
    337,864Investment management segment:Gross revenues
    
    
    35,479
    
    
    
    34,514Elimination of intersegment revenues
    
    
    (22,910
    )
    
    
    (19,833
    )Net revenues after elimination
    
    
    12,569
    
    
    
    14,681Total revenues of reportable segments
    
    $
    430,057
    
    
    $
    352,545Net operating income:Real estate segment
    
    $
    216,630
    
    
    $
    174,118Investment management segment
    
    
    9,645
    
    
    
    10,157Total net operating income of reportable segments
    
    
    226,275
    
    
    
    184,275Reconciliation of net operating income of
reportable
segments to operating income:Depreciation and amortization
    
    
    (113,940
    )
    
    
    (93,277
    )General and administrative expenses
    
    
    (22,702
    )
    
    
    (20,851
    )Other (expenses) income, net
    
    
    (666
    )
    
    
    633Operating income
    
    $
    88,967
    
    
    $
    70,780
 March 31,
    
    
    December 31,ASSETS:
    
    2006
    
    
    2005Total assets for reportable segments (1)
    
    $
    10,093,480
    
    
    $
    9,643,620Corporate and other assets
    
    
    285,076
    
    
    
    385,730Total consolidated assets
    
    $
    10,378,556
    
    
    $
    10,029,350
 
 (1)
    
    Total assets for reportable segments include assets associated with both the real
estate and investment management business segments. 16




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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: 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 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,
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
      17




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##### Table of Contents



Results of Operations
 Overview
  
    
    an increase in income from discontinued operations, primarily related to larger net
gains on sales of real estate;
    
    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; and
    
    an increase in net operating income associated with property operations, which is
primarily attributable to increases related to newly consolidated and same store
properties.
 These increases were partially offset by higher depreciation and amortization and interest
expense.
 Rental Property Operations
   Three Months EndedMarch 31,2006
    
    
    2005Rental and other property revenues
    
    $
    417,488
    
    
    $
    337,864Property operating expenses
    
    
    200,858
    
    
    
    163,746Net operating income
    
    $
    216,630
    
    
    $
    174,118
   18




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##### Table of Contents



Three Months EndedMarch 31,2006
    
    
    2005
    
    
    ChangeConsolidated same store revenues
    
    $
    293,462
    
    
    $
    270,985
    
    
    
    8.3
    %Consolidated same store property operating expenses
    
    
    130,396
    
    
    
    121,677
    
    
    
    7.2
    %Consolidated same store net operating income
    
    
    163,066
    
    
    
    149,308
    
    
    
    9.2
    %Adjustments to reconcile same store net operating
income
to real estate segment net operating income (1)
    
    
    53,564
    
    
    
    24,810
    
    
    
    115.9
    %Real estate segment net operating income
    
    $
    216,630
    
    
    $
    174,118
    
    
    
    24.4
    %Consolidated Same Store StatisticsProperties
    
    
    410
    
    
    
    410Apartment units
    
    
    121,158
    
    
    
    121,158Average physical occupancy
    
    
    94.6
    %
    
    
    90.4
    %
    
    
    4.2
    %Average rent/unit/month
    
    $
    790
    
    
    $
    766
    
    
    
    3.1
    %
 
 (1)
    
    Reflects property revenues and property operating expenses related to consolidated
properties other than same store properties (e.g., affordable, acquisition and
redevelopment properties).  Property Management
   Three Months EndedMarch 31,2006
    
    
    2005Property management revenues, primarily from
affiliates
    
    $
    3,030
    
    
    $
    6,664Property management expenses
    
    
    492
    
    
    
    1,916Net operating income from property management
    
    $
    2,538
    
    
    $
    4,748
 19




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Activity Fees and Asset Management
   Three Months EndedMarch 31,2006
    
    
    2005Activity fees and asset management revenues, primarily from
affiliates
    
    $
    9,539
    
    
    $
    8,017Activity and asset management expenses
    
    
    2,432
    
    
    
    2,608Net operating income from activity fees and asset management
    
    $
    7,107
    
    
    $
    5,409
   Depreciation and Amortization
 Use of Estimates
 20




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General and Administrative Expenses
  Other Expenses (Income), Net
   Interest Income
   Interest Expense
  Gain on Dispositions of Real Estate Related to Unconsolidated Entities and Other
    21




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Minority Interest in Consolidated Real Estate Partnerships
  Income from Discontinued Operations, Net
     22




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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
    23




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Allowance for Losses on Notes Receivable
   Capitalized Costs
   24




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##### Table of Contents



Funds From Operations
   Three MonthsEnded March 31,2006
    
    
    2005Net income (loss) attributable to common unitholders (1)
    
    $
    66,645
    
    
    $
    (23,087
    )Adjustments:Depreciation and amortization (2)
    
    
    113,940
    
    
    
    93,277Depreciation and amortization related to non-real estate assets
    
    
    (4,730
    )
    
    
    (3,791
    )Depreciation of rental property related to minority partners
interest (3)
    
    
    (16,161
    )
    
    
    (9,516
    )Depreciation of rental property related to unconsolidated
entities
    
    
    668
    
    
    
    5,958Gain on dispositions of real estate related to unconsolidated
entities and other
    
    
    (9,696
    )
    
    
    (1,994
    )Gain on dispositions of non-depreciable assets
    
    
    5,700
    
    
    
    675Deficit distributions to minority partners, net (4)
    
    
    2,251
    
    
    
    1,406Discontinued operations:Gain on dispositions of real estate, net of minority partners
interest (3)
    
    
    (99,925
    )
    
    
    (6,974
    )Depreciation of rental property, net of minority partners
interest (3)
    
    
    1,994
    
    
    
    9,987Deficit distributions (recovery of deficit distributions) to
minority partners, net (4)
    
    
    (14,424
    )
    
    
    531Income tax arising from disposals
    
    
    26,943
    
    
    
    13Preferred OP Unit distributions
    
    
    24,399
    
    
    
    23,951Redemption related preferred OP Unit issuance costs
    
    
    2,574
    
    
    
    1,123Funds From Operations
    
    $
    100,178
    
    
    $
    91,559Preferred OP Unit distributions
    
    
    (24,399
    )
    
    
    (23,951
    )Redemption related preferred OP Unit issuance costs
    
    
    (2,574
    )
    
    
    (1,123
    )Distributions on dilutive preferred securities
    
    
    1,183
    
    
    
    434Funds From Operations attributable to common unitholders
- diluted
    
    $
    74,388
    
    
    $
    66,919Weighted average number of common units, common unit
equivalents and dilutive preferred securities outstanding:Common units and equivalents (5)
    
    
    106,857
    
    
    
    104,607Dilutive preferred securities
    
    
    3,512
    
    
    
    1,276Total
    
    
    110,369
    
    
    
    105,883
 25




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(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
  26




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Investing Activities
       27




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Actual Cost
    
    
    Cost Per UnitCapital Replacements Detail:Building and grounds
    
    $
    4,874
    
    
    $
    35Turnover related
    
    
    8,284
    
    
    
    60Capitalized site payroll and indirect costs
    
    
    3,062
    
    
    
    22Our share of Capital Replacements
    
    $
    16,220
    
    
    $
    117Capital Replacements:Conventional
    
    $
    14,682
    
    
    $
    119Affordable
    
    
    1,538
    
    
    
    101Our share of Capital Replacements
    
    
    16,220
    
    
    $
    117Capital Improvements:Conventional
    
    
    17,814
    
    
    $
    144Affordable
    
    
    3,937
    
    
    
    257Our share of Capital Improvements
    
    
    21,751
    
    
    $
    156Casualties:Conventional
    
    
    12,096Affordable
    
    
    457Our share of casualties
    
    
    12,553Redevelopment:Conventional
    
    
    29,782Affordable
    
    
    1,099Our share of redevelopment
    
    
    30,881Our share of capital expenditures
    
    
    81,405Plus minority partners share of consolidated spending
    
    
    31,885Less our share of unconsolidated spending
    
    
    (687
    )Capital expenditures per consolidated statement of cash flows
    
    $
    112,603
   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
 Repurchases of Equity Securities.
 Maximum NumberTotal Number of
    
    
    of Units thatTotal
    
    
    Average
    
    
    Units Purchased as
    
    
    May Yet BeNumber
    
    
    Price
    
    
    Part of Publicly
    
    
    Purchased Under theof Units
    
    
    Paid
    
    
    Announced Plans or
    
    
    Plans or Programs (1)Fiscal period
    
    Purchased
    
    
    per Unit
    
    
    Programs
    
    
    (in millions)January 1  January 31, 2006
    
    
    1,376
    
    
    $
    42.36
    
    
    
    n/a
    
    
    
    n/aFebruary 1  February 28, 2006
    
    
    14,798
    
    
    
    44.24
    
    
    
    n/a
    
    
    
    n/aMarch 1  March 31, 2006
    
    
    6,679
    
    
    
    46.23
    
    
    
    n/a
    
    
    
    n/aTotal
    
    
    22,853
    
    
    $
    44.71
    
    
    
    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
    
    Second Amendment to Senior Secured Credit Agreement, dated as of
March 22, 2006, by and among Apartment Investment and Management
Company, AIMCO Properties, L.P., and AIMCO/Bethesda Holdings, Inc.,
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, filed March 27, 2006 (dated March 22,
2006) is incorporated herein by 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
 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/ THOMAS M. HERZOGThomas M. HerzogExecutive Vice President and
Chief Financial Officer
(duly authorized officer and
principal financial officer)By:
    /s/ ROBERT Y. WALKER, IVRobert Y. Walker, IVSenior Vice President and
Chief Accounting Officer  33




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##### Table of Contents



Exhibit Index
 EXHIBIT NO.
    
    DESCRIPTION10.1
    
    Second Amendment to Senior Secured Credit Agreement, dated as of
March 22, 2006, by and among Apartment Investment and Management
Company, AIMCO Properties, L.P., and AIMCO/Bethesda Holdings, Inc.,
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, filed March 27, 2006 (dated March 22,
2006) is incorporated herein by 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
 34