##### 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, 2007
 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
 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 June 30, 2007 and December 31, 2006 (Unaudited)
    
    
    2Consolidated Statements of Income for the Three and Six Months Ended June 30, 2007
and 2006 (Unaudited)
    
    
    3Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2007 and
2006 (Unaudited)
    
    
    4Notes to Consolidated Financial Statements (Unaudited)
    
    
    5ITEM 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    16ITEM 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    30ITEM 4.
    
    Controls and Procedures
    
    
    30PART II. OTHER INFORMATIONITEM 1.
    
    Legal Proceedings
    
    
    31ITEM 1A.
    
    Risk Factors
    
    
    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 Instruments
  1




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PART I. FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements
 AIMCO PROPERTIES, L.P.
 
 CONSOLIDATED BALANCE SHEETS
 (In Thousands, Except Unit Data)
 June 30,
    
    
    December 31,2007
    
    
    2006(Unaudited)ASSETSReal estate:Land
    
    $
    2,608,316
    
    
    $
    2,384,926Buildings and improvements
    
    
    9,486,611
    
    
    
    9,301,769Total real estate
    
    
    12,094,927
    
    
    
    11,686,695Less accumulated depreciation
    
    
    (2,904,714
    )
    
    
    (2,777,850
    )Net real estate
    
    
    9,190,213
    
    
    
    8,908,845Cash and cash equivalents
    
    
    258,027
    
    
    
    229,824Restricted cash
    
    
    332,955
    
    
    
    346,552Accounts receivable
    
    
    76,347
    
    
    
    85,772Accounts receivable from affiliates
    
    
    33,680
    
    
    
    20,763Deferred financing costs
    
    
    73,136
    
    
    
    72,214Notes receivable from unconsolidated real estate partnerships
    
    
    43,106
    
    
    
    40,641Notes receivable from non-affiliates
    
    
    138,678
    
    
    
    139,352Notes receivable from Aimco
    
    
    14,388
    
    
    
    14,016Investment in unconsolidated real estate partnerships
    
    
    35,993
    
    
    
    37,869Other assets
    
    
    199,247
    
    
    
    202,686Deferred income tax assets, net
    
    
    5,139
    
    
    
    Assets held for sale
    
    
    12,420
    
    
    
    204,557Total assets
    
    $
    10,413,329
    
    
    $
    10,303,091LIABILITIES AND PARTNERS CAPITALProperty tax-exempt bond financing
    
    $
    949,692
    
    
    $
    926,952Property loans payable
    
    
    5,595,153
    
    
    
    5,198,010Term loans
    
    
    400,000
    
    
    
    400,000Credit facility
    
    
    154,000
    
    
    
    140,000Other borrowings
    
    
    59,786
    
    
    
    67,660Total indebtedness
    
    
    7,158,631
    
    
    
    6,732,622Accounts payable
    
    
    42,096
    
    
    
    54,972Accrued liabilities and other
    
    
    300,373
    
    
    
    409,991Deferred income
    
    
    150,326
    
    
    
    142,442Security deposits
    
    
    48,038
    
    
    
    43,325Deferred income tax liabilities, net
    
    
    
    
    
    
    4,379Liabilities related to assets held for sale
    
    
    8,546
    
    
    
    164,556Total liabilities
    
    
    7,708,010
    
    
    
    7,552,287Minority interest in consolidated real estate partnerships
    
    
    263,705
    
    
    
    213,202Partners capital:Preferred OP Units
    
    
    917,011
    
    
    
    902,755General Partner and Special Limited Partner
    
    
    1,180,897
    
    
    
    1,220,326Limited Partners
    
    
    369,866
    
    
    
    439,903High performance units
    
    
    (19,086
    )
    
    
    (18,308
    )Investment in Aimco Class A Common Stock
    
    
    (7,074
    )
    
    
    (7,074
    )Total partners capital
    
    
    2,441,614
    
    
    
    2,537,602Total liabilities and partners capital
    
    $
    10,413,329
    
    
    $
    10,303,091
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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 30,2007
    
    
    2006
    
    
    2007
    
    
    2006REVENUES:Rental and other property revenues
    
    $
    421,864
    
    
    $
    392,499
    
    
    $
    832,363
    
    
    $
    776,894Property management revenues, primarily from affiliates
    
    
    1,271
    
    
    
    3,592
    
    
    
    3,367
    
    
    
    6,622Activity fees and asset management revenues
    
    
    15,178
    
    
    
    12,133
    
    
    
    26,808
    
    
    
    21,673Total revenues
    
    
    438,313
    
    
    
    408,224
    
    
    
    862,538
    
    
    
    805,189OPERATING EXPENSES:Property operating expenses
    
    
    192,681
    
    
    
    173,506
    
    
    
    385,924
    
    
    
    353,571Property management expenses
    
    
    2,072
    
    
    
    2,151
    
    
    
    3,278
    
    
    
    2,643Activity and asset management expenses
    
    
    6,076
    
    
    
    4,946
    
    
    
    11,351
    
    
    
    9,134Depreciation and amortization
    
    
    121,807
    
    
    
    112,272
    
    
    
    244,195
    
    
    
    219,461General and administrative expenses
    
    
    24,606
    
    
    
    23,207
    
    
    
    46,683
    
    
    
    44,236Other expenses (income), net
    
    
    (4,272
    )
    
    
    1,615
    
    
    
    (2,266
    )
    
    
    1,994Total operating expenses
    
    
    342,970
    
    
    
    317,697
    
    
    
    689,165
    
    
    
    631,039Operating income
    
    
    95,343
    
    
    
    90,527
    
    
    
    173,373
    
    
    
    174,150Interest income
    
    
    9,429
    
    
    
    6,736
    
    
    
    19,182
    
    
    
    14,965Provision for losses on notes receivable, net
    
    
    (735
    )
    
    
    (502
    )
    
    
    (2,278
    )
    
    
    (764
    )Interest expense
    
    
    (104,875
    )
    
    
    (98,157
    )
    
    
    (209,615
    )
    
    
    (193,971
    )Deficit distributions to minority partners, net
    
    
    (2,028
    )
    
    
    (3,935
    )
    
    
    (3,221
    )
    
    
    (6,011
    )Equity in earnings (losses) of unconsolidated real estate partnerships
    
    
    930
    
    
    
    (574
    )
    
    
    (2,055
    )
    
    
    (2,436
    )Recoveries of (provision for) real estate impairment losses, net
    
    
    
    
    
    
    (15
    )
    
    
    
    
    
    
    971Gain on dispositions of unconsolidated real estate and other
    
    
    639
    
    
    
    1,059
    
    
    
    21,061
    
    
    
    10,757Loss before minority interests and discontinued operations
    
    
    (1,297
    )
    
    
    (4,861
    )
    
    
    (3,553
    )
    
    
    (2,339
    )Minority interest in consolidated real estate partnerships
    
    
    (223
    )
    
    
    1,513
    
    
    
    (6,145
    )
    
    
    6,615Income (loss) from continuing operations
    
    
    (1,520
    )
    
    
    (3,348
    )
    
    
    (9,698
    )
    
    
    4,276Income from discontinued operations, net
    
    
    23,186
    
    
    
    43,369
    
    
    
    59,362
    
    
    
    129,363Net income
    
    
    21,666
    
    
    
    40,021
    
    
    
    49,664
    
    
    
    133,639Net income attributable to preferred unitholders
    
    
    18,128
    
    
    
    21,940
    
    
    
    36,258
    
    
    
    48,913Net income attributable to common unitholders
    
    $
    3,538
    
    
    $
    18,081
    
    
    $
    13,406
    
    
    $
    84,726Earnings (loss) per common unit  basic:Loss from
continuing operations (net of preferred distributions)
    
    $
    (0.19
    )
    
    $
    (0.24
    )
    
    $
    (0.43
    )
    
    $
    (0.42
    )Income from discontinued operations
    
    
    0.22
    
    
    
    0.41
    
    
    
    0.56
    
    
    
    1.22Net income attributable to common unitholders
    
    $
    0.03
    
    
    $
    0.17
    
    
    $
    0.13
    
    
    $
    0.80Earnings (loss) per common unit  diluted:Loss from
continuing operations (net of preferred distributions)
    
    $
    (0.19
    )
    
    $
    (0.24
    )
    
    $
    (0.43
    )
    
    $
    (0.42
    )Income from discontinued operations
    
    
    0.22
    
    
    
    0.41
    
    
    
    0.56
    
    
    
    1.22Net income attributable to common unitholders
    
    $
    0.03
    
    
    $
    0.17
    
    
    $
    0.13
    
    
    $
    0.80Weighted average common units outstanding
    
    
    105,664
    
    
    
    106,291
    
    
    
    105,660
    
    
    
    105,896Weighted average common units and equivalents outstanding
    
    
    105,664
    
    
    
    106,291
    
    
    
    105,660
    
    
    
    105,896Distributions declared per common unit
    
    $
    0.60
    
    
    $
    0.60
    
    
    $
    0.60
    
    
    $
    0.60
  3




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AIMCO PROPERTIES, L.P.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands, Unaudited)
 Six MonthsEnded June 30,2007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    49,664
    
    
    $
    133,639Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    244,195
    
    
    
    219,461Discontinued operations
    
    
    (58,617
    )
    
    
    (139,518
    )Other adjustments
    
    
    (8,362
    )
    
    
    12,136Net changes in operating assets and operating liabilities
    
    
    (23,543
    )
    
    
    40,343Net cash provided by operating activities
    
    
    203,337
    
    
    
    266,061CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of real estate
    
    
    (174,991
    )
    
    
    (41,732
    )Capital expenditures
    
    
    (268,608
    )
    
    
    (236,203
    )Proceeds from dispositions of real estate
    
    
    259,631
    
    
    
    544,815Change in funds held in escrow from tax-free exchanges
    
    
    9,975
    
    
    
    Cash from newly consolidated properties
    
    
    
    
    
    
    22,432Purchases of general and limited partnership interests and other assets
    
    
    (17,541
    )
    
    
    (10,932
    )Originations of notes receivable from unconsolidated real estate partnerships
    
    
    (8,640
    )
    
    
    (7,820
    )Proceeds from repayment of notes receivable
    
    
    14,152
    
    
    
    5,318Distributions received from investments in unconsolidated real estate partnerships
    
    
    2,276
    
    
    
    11,774Other investing activities
    
    
    (2,756
    )
    
    
    (21,255
    )Net cash provided by (used in) investing activities
    
    
    (186,502
    )
    
    
    266,397CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from property loans
    
    
    791,330
    
    
    
    656,634Principal repayments on property loans
    
    
    (528,459
    )
    
    
    (599,870
    )Proceeds from tax exempt bonds
    
    
    82,350
    
    
    
    Principal repayments on tax-exempt bond financing
    
    
    (58,659
    )
    
    
    (31,690
    )Net borrowings (repayments) on term loans and revolving credit facility
    
    
    14,000
    
    
    
    (217,000
    )Proceeds from issuance of preferred units, net
    
    
    
    
    
    
    12,125Redemption of preferred units
    
    
    
    
    
    
    (113,250
    )Repayment of notes receivable originated from Aimco
    
    
    
    
    
    
    85,412Repurchases of common OP Units
    
    
    (136,603
    )
    
    
    Principal repayments received on notes due on common unit purchases
    
    
    1,605
    
    
    
    18,626Proceeds from Aimco Class A Common Stock option exercises
    
    
    53,232
    
    
    
    39,459Payment of distributions to minority interest
    
    
    (36,897
    )
    
    
    (43,515
    )Payment of distributions to General Partner and Special Limited Partner
    
    
    (116,825
    )
    
    
    (115,508
    )Payment of distributions to Limited Partners
    
    
    (9,383
    )
    
    
    (10,692
    )Payment of distributions on High Performance Units
    
    
    (2,855
    )
    
    
    (2,866
    )Payment of distributions to preferred units
    
    
    (36,462
    )
    
    
    (47,516
    )Other financing activities
    
    
    (5,006
    )
    
    
    (1,074
    )Net cash provided by (used in) financing activities
    
    
    11,368
    
    
    
    (370,725
    )NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    28,203
    
    
    
    161,733CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    229,824
    
    
    
    161,730CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    258,027
    
    
    $
    323,463
  4




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AIMCO PROPERTIES, L.P.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 (Unaudited)
 Note 1  Organization
     
    
    owned an equity interest in and consolidated 156,958 units in 676 properties (which we
refer to as consolidated), of which 156,240 units were also managed by us;
    
    owned an equity interest in and did not consolidate 11,741 units in 101 properties
(which we refer to as unconsolidated), of which 5,465 units were also managed by us; and
    
    provided services or managed, for third-party owners, 40,808 units in 439 properties,
primarily pursuant to long-term agreements (including 37,283 units in 399 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
   Adoption
of FIN 48
 Accounting for Uncertainty in Income Taxes  an Interpretation of FASB Statement No. 109
  6




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Use
of Estimates
   Accounting for the Impairment or Disposal of Long-Lived
Assets,
 Note 3  Commitments and Contingencies
 Commitments
   Tax
Credit Arrangements
  Legal
Matters
  Limited Partnerships
  7




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Environmental
  Conditional
Asset Retirement Obligations
 Mold
  FLSA Litigation
  8




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Note 4  Partners Capital
      9




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Note 5  Discontinued Operations and Assets Held for Sale
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Rental and other property revenues
    
    $
    6,413
    
    
    $
    32,280
    
    
    $
    18,499
    
    
    $
    77,110Property operating expenses
    
    
    (3,309
    )
    
    
    (16,459
    )
    
    
    (9,775
    )
    
    
    (40,132
    )Depreciation and amortization
    
    
    (1,598
    )
    
    
    (9,214
    )
    
    
    (4,711
    )
    
    
    (22,329
    )Other (expenses) income, net
    
    
    (269
    )
    
    
    (2,115
    )
    
    
    (1,089
    )
    
    
    (3,154
    )Operating income
    
    
    1,237
    
    
    
    4,492
    
    
    
    2,924
    
    
    
    11,495Interest income
    
    
    32
    
    
    
    224
    
    
    
    120
    
    
    
    537Interest expense
    
    
    (1,018
    )
    
    
    (6,898
    )
    
    
    (4,249
    )
    
    
    (16,530
    )Gain on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    22,852
    
    
    
    Minority interest in consolidated
real estate partnerships
    
    
    644
    
    
    
    1,392
    
    
    
    935
    
    
    
    2,888Income (loss) before gain on
dispositions of real estate,
impairment losses, deficit
distributions to minority partners
and income tax
    
    
    895
    
    
    
    (790
    )
    
    
    22,582
    
    
    
    (1,610
    )Gain on dispositions of real
estate, net of minority partners
interest
    
    
    24,273
    
    
    
    43,112
    
    
    
    39,906
    
    
    
    142,822Recovery of real estate impairment
losses (impairment losses)
    
    
    60
    
    
    
    195
    
    
    
    (783
    )
    
    
    (8
    )Recovery of deficit distributions
to minority partners
    
    
    555
    
    
    
    1,896
    
    
    
    418
    
    
    
    16,145Income tax arising from dispositions
    
    
    (2,597
    )
    
    
    (1,044
    )
    
    
    (2,761
    )
    
    
    (27,986
    )Income from discontinued operations
    
    $
    23,186
    
    
    $
    43,369
    
    
    $
    59,362
    
    
    $
    129,363
   10




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Note 6  Earnings per Unit
  Three Months Ended 
June 30,
    
    
Six Months Ended
June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Numerator:Income (loss) from continuing operations
    
    $
    (1,520
    )
    
    $
    (3,348
    )
    
    $
    (9,698
    )
    
    $
    4,276Less net income attributable to preferred unitholders
    
    
    (18,128
    )
    
    
    (21,940
    )
    
    
    (36,258
    )
    
    
    (48,913
    )Numerator for basic and diluted earnings per unit
 Loss from continuing operations
    
    $
    (19,648
    )
    
    $
    (25,288
    )
    
    $
    (45,956
    )
    
    $
    (44,637
    )Income from discontinued operations
    
    $
    23,186
    
    
    $
    43,369
    
    
    $
    59,362
    
    
    $
    129,363Net income
    
    $
    21,666
    
    
    $
    40,021
    
    
    $
    49,664
    
    
    $
    133,639Less net income attributable to preferred unitholders
    
    
    (18,128
    )
    
    
    (21,940
    )
    
    
    (36,258
    )
    
    
    (48,913
    )Numerator for basic and diluted earnings per unit
 Net income attributable to common unitholders
    
    $
    3,538
    
    
    $
    18,081
    
    
    $
    13,406
    
    
    $
    84,726Denominator:Denominator for basic earnings per unit  weighted
average number of common units outstanding:Common OP Units
    
    
    103,285
    
    
    
    103,912
    
    
    
    103,281
    
    
    
    103,517Class I HPUs
    
    
    2,379
    
    
    
    2,379
    
    
    
    2,379
    
    
    
    2,379Total common units
    
    
    105,664
    
    
    
    106,291
    
    
    
    105,660
    
    
    
    105,896Effect of dilutive securities:Dilutive potential common units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Denominator for diluted earnings per unit
    
    
    105,664
    
    
    
    106,291
    
    
    
    105,660
    
    
    
    105,896Earnings (loss) per common unit:Basic earnings (loss) per common unit:Loss from continuing operations (net of preferred
distributions)
    
    $
    (0.19
    )
    
    $
    (0.24
    )
    
    $
    (0.43
    )
    
    $
    (0.42
    )Income from discontinued operations
    
    
    0.22
    
    
    
    0.41
    
    
    
    0.56
    
    
    
    1.22Net income attributable to common unitholders
    
    $
    0.03
    
    
    $
    0.17
    
    
    $
    0.13
    
    
    $
    0.80Diluted earnings (loss) per common unit:Loss from continuing operations (net of preferred
distributions)
    
    $
    (0.19
    )
    
    $
    (0.24
    )
    
    $
    (0.43
    )
    
    $
    (0.42
    )Income from discontinued operations
    
    
    0.22
    
    
    
    0.41
    
    
    
    0.56
    
    
    
    1.22Net income attributable to common unitholders
    
    $
    0.03
    
    
    $
    0.17
    
    
    $
    0.13
    
    
    $
    0.80
  11




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##### Table of Contents



Note 7  Business Segments
   Disclosures about Segments of an Enterprise
and Related Information
 12




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues:Real estate segment
    
    $
    423,135
    
    
    $
    396,091
    
    
    $
    835,730
    
    
    $
    783,516Asset management and transactions segment:Gross revenues
    
    
    20,785
    
    
    
    12,661
    
    
    
    34,438
    
    
    
    22,758Elimination of intersegment revenues
    
    
    (5,607
    )
    
    
    (528
    )
    
    
    (7,630
    )
    
    
    (1,085
    )Net revenues after elimination
    
    
    15,178
    
    
    
    12,133
    
    
    
    26,808
    
    
    
    21,673Total revenues of reportable segments
    
    $
    438,313
    
    
    $
    408,224
    
    
    $
    862,538
    
    
    $
    805,189Net operating income:Real estate segment
    
    $
    201,193
    
    
    $
    187,465
    
    
    $
    388,513
    
    
    $
    362,535Asset management and transactions segment
    
    
    11,614
    
    
    
    7,775
    
    
    
    20,257
    
    
    
    18,965Total net operating income of reportable segments
    
    
    212,807
    
    
    
    195,240
    
    
    
    408,770
    
    
    
    381,500Income (expenses) generally excluded from
segment net operating income:Depreciation and amortization
    
    
    (121,807
    )
    
    
    (112,272
    )
    
    
    (244,195
    )
    
    
    (219,461
    )General and administrative expenses
    
    
    (24,606
    )
    
    
    (23,207
    )
    
    
    (46,683
    )
    
    
    (44,236
    )Other (expenses) income, net
    
    
    4,272
    
    
    
    (1,615
    )
    
    
    2,266
    
    
    
    (1,994
    )Interest income
    
    
    9,429
    
    
    
    6,736
    
    
    
    19,182
    
    
    
    14,965Provision for losses on notes receivable, net
    
    
    (735
    )
    
    
    (502
    )
    
    
    (2,278
    )
    
    
    (764
    )Interest expense
    
    
    (104,875
    )
    
    
    (98,157
    )
    
    
    (209,615
    )
    
    
    (193,971
    )Deficit distributions to minority partners
    
    
    (2,028
    )
    
    
    (3,935
    )
    
    
    (3,221
    )
    
    
    (6,011
    )Equity in earnings (losses) of unconsolidated
real estate partnerships
    
    
    930
    
    
    
    (574
    )
    
    
    (2,055
    )
    
    
    (2,436
    )Recoveries of (provision for) real estate
impairment losses, net
    
    
    
    
    
    
    (15
    )
    
    
    
    
    
    
    971Gain on dispositions of unconsolidated real
estate and other
    
    
    639
    
    
    
    1,059
    
    
    
    21,061
    
    
    
    10,757Minority interest
    
    
    (223
    )
    
    
    1,513
    
    
    
    (6,145
    )
    
    
    6,615Less portions of generally excluded items
included in segment net operating income:Other expenses (income), net
    
    
    (2,615
    )
    
    
    (96
    )
    
    
    3,690
    
    
    
    (2,131
    )Interest income
    
    
    (802
    )
    
    
    84
    
    
    
    (2,560
    )
    
    
    (54
    )Interest expense
    
    
    409
    
    
    
    
    
    
    
    409
    
    
    
    Gain on sale of non-depreciable real estate
assets
    
    
    
    
    
    
    (671
    )
    
    
    
    
    
    
    (6,371
    )Minority interest in consolidated real estate
operations
    
    
    31,007
    
    
    
    35,854
    
    
    
    57,502
    
    
    
    73,232Equity in unconsolidated real estate operations
    
    
    (3,322
    )
    
    
    (2,790
    )
    
    
    (5,826
    )
    
    
    (6,335
    )Income (loss) from continuing operations
    
    $
    (1,520
    )
    
    $
    (3,348
    )
    
    $
    (9,698
    )
    
    $
    4,276
  June 30,
    
    
    December 31,ASSETS:
    
    2007
    
    
    2006Total assets for reportable segments (1)
    
    $
    10,142,398
    
    
    $
    10,018,016Corporate and other assets
    
    
    270,931
    
    
    
    285,075Total consolidated assets
    
    $
    10,413,329
    
    
    $
    10,303,091
 
 (1)
    
    Total assets for reportable segments include assets associated with both the real
estate and asset management and transactions business segments. 13




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Note 8  Transactions Involving VMS National Properties Joint Venture
     Note 9  Asset Impairments
   14




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##### Table of Contents



Note 10  Real Estate Acquisitions
  Note 11  Recent Accounting Developments
 Fair
Value Measurements
 The
Fair Value Option for Financial Asset and Financial Liabilities
 15




---



##### 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 and redevelopments, our future financial performance, including our
ability to maintain current or meet projected occupancy levels, rent levels and same store results,
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 residents 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, our 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,
2006, 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 the Partnerships consolidated corporate subsidiaries and
consolidated real estate partnerships, collectively.
 Executive Overview
      16




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##### Table of Contents



Results of Operations
 Overview
 Three months ended June 30, 2007 compared to three months ended June 30, 2006
  
    
    a decrease in income from discontinued operations, primarily related to lower net gains
on sales of real estate;
    
    an increase in depreciation expense, reflecting depreciation on newly acquired
properties and recent capital projects; and
    
    an increase in interest expense, reflecting higher loan principal balances resulting
from refinancings and acquisitions.
  
    
    an increase in net operating income from property operations, which is attributable to
improved operating results of same store properties and the addition of net operating
income from acquired properties; and
    
    a net favorable change in other expenses (income), net and an increase in interest
income.
 Six months ended June 30, 2007 compared to six months ended June 30, 2006
  
    
    a decrease in income from discontinued operations, primarily related to lower net gains
on sales of real estate;
    
    an increase in depreciation expense, reflecting depreciation on newly acquired
properties and recent capital projects;
    
    a decrease in gains on sales of non-depreciable real estate;
    
    a net unfavorable change in allocations to minority interests of earnings and losses in
our consolidated real estate partnerships; and
    
    an increase in interest expense, reflecting higher loan principal balances resulting
from refinancings and acquisitions.
  
    
    an increase in net operating income from property operations, which is attributable to
improved operating results of same store properties and the addition of net operating
income from acquired properties;
    
    an increase in interest income resulting primarily from loans collateralized by
properties in West Harlem in New York City; and
    
    recognition of deferred debt extinguishment gains in connection with the refinancing of
certain mortgage loans that had been restructured in a 1997 bankruptcy settlement.
 17




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##### Table of Contents



Rental Property Operations
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Rental and other property revenues
    
    $
    421,864
    
    
    $
    392,499
    
    
    $
    832,363
    
    
    $
    776,894Property operating expenses
    
    
    192,681
    
    
    
    173,506
    
    
    
    385,924
    
    
    
    353,571Net operating income
    
    $
    229,183
    
    
    $
    218,993
    
    
    $
    446,439
    
    
    $
    423,323
   18




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##### Table of Contents



Consolidated Conventional Same Store Property Operating Results
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Consolidated same store revenues
    
    $
    300,949
    
    
    $
    284,833
    
    
    $
    583,743
    
    
    $
    554,660Consolidated same store property
operating expenses
    
    
    126,437
    
    
    
    117,685
    
    
    
    246,123
    
    
    
    233,653Consolidated same store net
operating income
    
    $
    174,512
    
    
    $
    167,148
    
    
    $
    337,620
    
    
    $
    321,007Consolidated
Same Store Measures:Properties
    
    
    375
    
    
    
    375
    
    
    
    373
    
    
    
    373Apartment units
    
    
    111,213
    
    
    
    111,213
    
    
    
    110,538
    
    
    
    110,538Average physical occupancy
    
    
    94.7
    %
    
    
    94.4
    %
    
    
    94.6
    %
    
    
    94.6
    %Average rent/unit/month
    
    
    $864
    
    
    
    $830
    
    
    
    $862
    
    
    
    $824
   Activity Fees and Asset Management
  19




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Activity fees and asset management revenues
    
    $
    15,178
    
    
    $
    12,133
    
    
    $
    26,808
    
    
    $
    21,673Activity and asset management expenses
    
    
    6,076
    
    
    
    4,946
    
    
    
    11,351
    
    
    
    9,134Net operating income from activity fees
and asset management
    
    $
    9,102
    
    
    $
    7,187
    
    
    $
    15,457
    
    
    $
    12,539
   Depreciation and Amortization
 Use of
Estimates
 Use of Estimates
 General and Administrative Expenses
   Other Expenses (Income), Net
   20




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Interest Income
    Interest Expense
   Gain on Dispositions of Unconsolidated Real Estate and Other
  21




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##### Table of Contents



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




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##### Table of Contents



Business Segment Operating Results
  Real Estate Segment
  Rental Property Operations
 Rental Property Operations
 Asset Management and Transaction Segment
  Activity Fees and Asset Management
 Activity Fees and
Asset Management
 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
   Funds From Operations
  24




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income attributable to common stockholders (1)
    
    $
    3,538
    
    
    $
    18,081
    
    
    $
    13,406
    
    
    $
    84,726Adjustments:Depreciation and amortization (2)
    
    
    121,807
    
    
    
    112,272
    
    
    
    244,195
    
    
    
    219,461Depreciation and amortization related to non-real estate
assets
    
    
    (4,866
    )
    
    
    (7,682
    )
    
    
    (11,480
    )
    
    
    (15,765
    )Depreciation of rental property related to minority
partners
interest and unconsolidated entities(3) (4)
    
    
    (4,434
    )
    
    
    (9,552
    )
    
    
    (18,049
    )
    
    
    (23,043
    )Gain on dispositions of unconsolidated real estate and other
    
    
    (639
    )
    
    
    (1,059
    )
    
    
    (21,061
    )
    
    
    (10,757
    )Gain on dispositions of non-depreciable assets and other
    
    
    
    
    
    
    671
    
    
    
    19,373
    
    
    
    6,371Deficit distributions to minority partners, net (5)
    
    
    2,028
    
    
    
    3,935
    
    
    
    3,221
    
    
    
    6,011Discontinued operations:Gain on dispositions of real estate, net of minority
partners interest (3)
    
    
    (24,273
    )
    
    
    (43,112
    )
    
    
    (39,906
    )
    
    
    (142,822
    )Depreciation of rental property, net of minority partners
interest (3) (4)
    
    
    1,152
    
    
    
    6,724
    
    
    
    (13,829
    )
    
    
    16,608Recovery of deficit distributions to minority partners,
net (5)
    
    
    (555
    )
    
    
    (1,896
    )
    
    
    (418
    )
    
    
    (16,145
    )Income tax arising from disposals
    
    
    2,597
    
    
    
    1,044
    
    
    
    2,761
    
    
    
    27,986Preferred OP Unit distributions
    
    
    18,128
    
    
    
    21,940
    
    
    
    36,258
    
    
    
    46,339Redemption related preferred OP Unit issuance costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,574Funds From Operations
    
    $
    114,483
    
    
    $
    101,366
    
    
    $
    214,471
    
    
    $
    201,544Preferred OP Unit distributions
    
    
    (18,128
    )
    
    
    (21,940
    )
    
    
    (36,258
    )
    
    
    (46,339
    )Redemption related preferred OP Unit issuance costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,574
    )Distributions on dilutive preferred securities
    
    
    58
    
    
    
    1,183
    
    
    
    58
    
    
    
    2,365Funds From Operations attributable to common
unitholders  diluted
    
    $
    96,413
    
    
    $
    80,609
    
    
    $
    178,271
    
    
    $
    154,996Weighted average number of common units, common
unit equivalents and dilutive preferred securities
outstanding:Common units and equivalents (6)
    
    
    108,891
    
    
    
    106,448
    
    
    
    109,296
    
    
    
    106,653Dilutive preferred securities
    
    
    
    
    
    
    3,508
    
    
    
    
    
    
    
    3,510Total
    
    
    108,891
    
    
    
    109,956
    
    
    
    109,296
    
    
    
    110,163
 
 Notes:(1)
    
    Represents the numerator for earnings per common unit (see Note 6 to the
consolidated financial statements in Item 1).(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)
    
    Adjustments related to minority partners share of depreciation of rental property
for the six months ended June 30, 2007 include the subtraction of $15.1 million and $17.8 million for continuing operations and
discontinued operations, respectively, related to the VMS debt extinguishment gains (see
Note 8 to the consolidated financial statements in Item 1). These subtractions are
required because we added back the minority partners share of depreciation related to
rental property in determining FFO in prior periods. Accordingly, the net effect of the
VMS debt extinguishment gains on our FFO for the six months ended June 30, 2007 was an
increase of $9.3 million. 25




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##### Table of Contents



(5)
    
    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.(6)
    
    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
  Investing Activities
   26




---



##### Table of Contents



Capital Expenditures
   27




---



##### Table of Contents



Our Share ofExpenditures
    
    
    Cost Per UnitCapital Replacements Detail:Building and grounds
    
    $
    18,206
    
    
    $
    138Turnover related
    
    
    20,971
    
    
    
    159Capitalized site payroll and indirect costs and other
    
    
    5,476
    
    
    
    41Our share of Capital Replacements
    
    $
    44,653
    
    
    $
    338Capital Replacements:Conventional
    
    $
    41,554
    
    
    $
    364Affordable
    
    
    3,099
    
    
    
    172Our share of Capital Replacements
    
    
    44,653
    
    
    $
    338Capital Improvements:Conventional
    
    
    38,634
    
    
    $
    339Affordable
    
    
    4,180
    
    
    
    232Our share of Capital Improvements
    
    
    42,814
    
    
    $
    324Casualties:Conventional
    
    
    6,820Affordable
    
    
    1,590Our share of casualties
    
    
    8,410Redevelopment:Active Conventional
    
    
    105,389Active tax credit projects
    
    
    10,637Pre-construction and other activities
    
    
    12,753Our share of redevelopment
    
    
    128,779Entitlements
    
    
    12,560Our share of total capital expenditures
    
    
    237,216Plus minority partners share of consolidated spending
    
    
    31,680Less our share of unconsolidated spending
    
    
    (288
    )Capital expenditures per consolidated statement of cash flows
    
    $
    268,608
   Financing Activities
  28




---



##### Table of Contents



Mortgage Debt
  Revolving Credit Facility and Term Loans
  Partners Capital Transactions
    Future Capital Needs
  29




---



##### 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
  30




---



##### 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
 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
    
    Plans or ProgramsPeriod
    
    Purchased
    
    per Unit
    
    or rograms
    
    (1)April 1  April 30, 2007
    
    
    671
    
    
    $
    57.67
    
    
    
    N/A
    
    
    
    N/AMay 1  May 31, 2007
    
    
    6,302
    
    
    $
    57.17
    
    
    
    N/A
    
    
    
    N/AJune 1  June 30, 2007
    
    
    477,957
    
    
    $
    52.36
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    484,930
    
    
    $
    52.43
    
    
    
    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
not publicly announced plans or programs of repurchase. Distribution Payments.
 31




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##### Table of Contents



ITEM 6. Exhibits
  EXHIBIT NO.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 andChief Financial Officer(duly authorized officer andprincipal financial officer)By:
    
    /s/ SCOTT W. FORDHAMScott W. FordhamSenior Vice President andChief Accounting Officer
  33




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##### Table of Contents



EXHIBIT INDEX
 EXHIBIT NO.
    
    DESCRIPTION31.1
    
    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