Use these links to rapidly review the documentAIMCO PROPERTIES, L.P. FORM 10-Q INDEX



SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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Form 10-Q

(Mark One)

|ý                                                             | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|------------------------------------------------------------- | ----------------------------------------------------------------------------------------
|FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004                
|OR                                                           
|o                                                             | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|FOR THE TRANSITION PERIOD
FROM                             TO

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Commission File Number 0-24497

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AIMCO Properties, L.P.(Exact name of registrant as specified in its charter)

|Delaware                                                       |  | 84-1275621                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of
Incorporation or organization) |  | (I.R.S. Employer
Identification No.)
|4582 South Ulster Street Parkway, Suite 1100
Denver, Colorado  |  | 80237                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

(303) 757-8101(Registrant's telephone number, including area code)

Not Applicable(Former name, former address, and former fiscal year, if changed since last report)

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past
90 days. Yes ý        No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the
Act). Yes ý        No o

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The
number of Partnership Common Units outstanding as of April 30, 2004: 102,821,803



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AIMCO PROPERTIES, L.P.        FORM 10-Q        INDEX



|                              |                                                                                                      |    | Page
|----------------------------- | ---------------------------------------------------------------------------------------------------- | -- | ----
|PART I. FINANCIAL INFORMATION
|ITEM 1.                       | Financial Statements                                                                                 |    |     
|                              | Consolidated Balance Sheets as of March 31, 2004 (unaudited) and December 31, 2003                   |    | 2   
|                              | Consolidated Statements of Income for the Three Months Ended March 31, 2004 and 2003 (unaudited)     |    | 3   
|                              | Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2004 and 2003 (unaudited) |    | 4   
|                              | Notes to Consolidated Financial Statements (unaudited)                                               |    | 5   
|ITEM 2.                       | Management's Discussion and Analysis of Financial Condition and Results of Operations                |    | 18  
|ITEM 3.                       | Quantitative and Qualitative Disclosures about Market Risk                                           |    | 31  
|ITEM 4.                       | Controls and Procedures                                                                              |    | 31  
|PART II. OTHER INFORMATION   
|ITEM 1.                       | Legal Proceedings                                                                                    |    | 32  
|ITEM 2.                       | Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities                     |    | 32  
|ITEM 5.                       | Other Information                                                                                    |    | 32  
|ITEM 6.                       | Exhibits and Reports on Form 8-K                                                                     |    | 33  
|Signatures                    |                                                                                                      | 34

1

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AIMCO PROPERTIES, L.P.        CONSOLIDATED BALANCE SHEETS  (In Thousands, Except Unit Data)

|                                                              |                                                | March 31, 2004                          |            | December 31, 2003 |           
|------------------------------------------------------------- | ---------------------------------------------- | --------------------------------------- | ---------- | ----------------- | ----------
|
|ASSETS                                                        |                                               
|Real estate:                                                  |                                                |                                         |            |                   |           
|                                                              | Land                                           |                                         | $          | 2,159,728         |           
|                                                              | Buildings and improvements                     |                                         |            | 8,707,914         |           
|                                                              |                                                |                                         |            |                   |           
|Total real estate                                             |                                                |                                         | 10,867,642 |                   |           
|                                                              | Less accumulated depreciation                  |                                         |            | (1,911,740        | )         
|                                                              |                                                |                                         |            |                   |           
|                                                              |                                                | Net real estate                         |            |                   | 8,955,902 
|                                                              |                                                |                                         |            |                   |           
|Cash and cash equivalents                                     |                                                |                                         | 88,465     |                   |           
|Restricted cash                                               |                                                |                                         | 278,598    |                   |           
|Accounts receivable                                           |                                                |                                         | 74,104     |                   |           
|Accounts receivable from affiliates                           |                                                |                                         | 58,989     |                   |           
|Deferred financing costs                                      |                                                |                                         | 74,433     |                   |           
|Notes receivable from unconsolidated real estate partnerships |                                                |                                         | 137,252    |                   |           
|Notes receivable from non-affiliates                          |                                                |                                         | 59,390     |                   |           
|Notes receivable from Aimco                                   |                                                |                                         | 12,112     |                   |           
|Investment in unconsolidated real estate partnerships         |                                                |                                         | 206,800    |                   |           
|Other assets                                                  |                                                |                                         | 357,517    |                   |           
|Assets held for sale                                          |                                                |                                         | 51,258     |                   |           
|                                                              |                                                |                                         |            |                   |           
|                                                              |                                                | Total assets                            |            | $                 | 10,354,820
|                                                              |                                                |                                         |            |                   |           
|LIABILITIES AND PARTNERS' CAPITAL                             |                                               
|Secured tax-exempt bond financing                             |                                                | $                                       | 1,236,328  |                   | $         
|Secured notes payable                                         |                                                |                                         | 4,558,010  |                   |           
|Mandatorily redeemable preferred securities                   |                                                |                                         | 15,119     |                   |           
|Term loans                                                    |                                                |                                         | 343,000    |                   |           
|Credit facility                                               |                                                |                                         | 127,500    |                   |           
|                                                              |                                                |                                         |            |                   |           
|                                                              |                                                | Total indebtedness                      |            |                   | 6,279,957 
|                                                              |                                                |                                         |            |                   |           
|Accounts payable                                              |                                                |                                         | 26,643     |                   |           
|Accrued liabilities and other                                 |                                                |                                         | 420,793    |                   |           
|Deferred income                                               |                                                |                                         | 33,106     |                   |           
|Security deposits                                             |                                                |                                         | 40,964     |                   |           
|Deferred income taxes payable                                 |                                                |                                         | 21,742     |                   |           
|Liabilities related to assets held for sale                   |                                                |                                         | 32,032     |                   |           
|                                                              |                                                |                                         |            |                   |           
|                                                              |                                                | Total liabilities                       |            |                   | 6,855,237 
|                                                              |                                                |                                         |            |                   |           
|Minority interest in consolidated real estate partnerships    |                                                |                                         | 209,863    |                   |           
|Partners' capital:                                            |                                                |                                         |            |                   |           
|                                                              | Preferred units                                |                                         |            | 1,146,983         |           
|                                                              | General Partner and Special Limited Partner    |                                         |            | 1,884,568         |           
|                                                              | Limited Partners                               |                                         |            | 277,504           |           
|                                                              | High performance units                         |                                         |            | (9,638            | )         
|                                                              | Less: Investment in Aimco Class A Common Stock |                                         |            | (9,697            | )         
|                                                              |                                                |                                         |            |                   |           
|                                                              |                                                | Total partners' capital                 |            |                   | 3,289,720 
|                                                              |                                                |                                         |            |                   |           
|                                                              |                                                | Total liabilities and partners' capital |            | $                 | 10,354,820
|                                                              |                                                |                                         |            |                   |           

See
notes to consolidated financial statements.

2

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AIMCO PROPERTIES, L.P.        CONSOLIDATED STATEMENTS OF INCOME  (In Thousands, Except Per Unit Data)  (Unaudited)

|                                                                                                                 |                                                                           | For the Three Months Ended March 31, |        
|---------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------- | ------------------------------------ | -------
|
|REVENUES:                                                                                                        |                                                                           |                                      |        
|Rental and other property revenues                                                                               |                                                                           | $                                    | 359,902
|Property management revenues, primarily from affiliates                                                          |                                                                           |                                      | 8,256  
|Activity fees and asset management revenues, primarily from affiliates                                           |                                                                           |                                      | 8,268  
|                                                                                                                 |                                                                           |                                      |        
|                                                                                                                 |                                                                           | Total revenues                       |        
|                                                                                                                 |                                                                           |                                      |        
|EXPENSES:                                                                                                        |                                                                           |                                      |        
|Property operating expenses                                                                                      |                                                                           |                                      | 165,753
|Property management expenses                                                                                     |                                                                           |                                      | 2,342  
|Activity and asset management expenses                                                                           |                                                                           |                                      | 2,311  
|Depreciation and amortization                                                                                    |                                                                           |                                      | 90,870 
|General and administrative expenses                                                                              |                                                                           |                                      | 18,632 
|Other expenses (income), net                                                                                     |                                                                           |                                      | (1,141 
|                                                                                                                 |                                                                           |                                      |        
|                                                                                                                 |                                                                           | Total expenses                       |        
|                                                                                                                 |                                                                           |                                      |        
|Operating income                                                                                                 |                                                                           |                                      | 97,659 
|Interest income                                                                                                  |                                                                           |                                      | 7,893  
|Recovery of (provision for) losses on notes receivable                                                           |                                                                           |                                      | 79     
|Interest expense                                                                                                 |                                                                           |                                      | (94,710
|Deficit distributions to minority partners                                                                       |                                                                           |                                      | (4,438 
|Equity in losses of unconsolidated real estate partnerships                                                      |                                                                           |                                      | (1,434 
|Net recovery of impairment loss on investment in unconsolidated real estate partnerships                         |                                                                           |                                      | 148    
|Loss on dispositions of real estate related to unconsolidated real estate partnerships                           |                                                                           |                                      | (17    
|                                                                                                                 |                                                                           |                                      |        
|Income before minority interest, discontinued operations and cumulative effect of change in accounting principle |                                                                           |                                      | 5,180  
|                                                                                                                 | Minority interest in consolidated real estate partnerships                |                                      |        
|                                                                                                                 |                                                                           |                                      |        
|Income from continuing operations                                                                                |                                                                           |                                      | 6,184  
|Income (loss) from discontinued operations, net                                                                  |                                                                           |                                      | 13,426 
|                                                                                                                 |                                                                           |                                      |        
|Income before cumulative effect of change in accounting principle                                                |                                                                           |                                      | 19,610 
|Cumulative effect of change in accounting principle                                                              |                                                                           |                                      | (3,957 
|                                                                                                                 |                                                                           |                                      |        
|Net income                                                                                                       |                                                                           |                                      | 15,653 
|Net income attributable to preferred unitholders                                                                 |                                                                           |                                      | 22,097 
|                                                                                                                 |                                                                           |                                      |        
|Net loss attributable to common unitholders                                                                      |                                                                           | $                                    | (6,444 
|                                                                                                                 |                                                                           |                                      |        
|Earnings (loss) per common unitbasic:                                                                           |                                                                           |                                      |        
|                                                                                                                 | Income (loss) from continuing operations (net of preferred distributions) |                                      | $      
|                                                                                                                 | Income (loss) from discontinued operations                                |                                      | $      
|                                                                                                                 | Cumulative effect of change in accounting principle                       |                                      | $      
|                                                                                                                 |                                                                           |                                      |        
|                                                                                                                 | Net loss attributable to common unitholders                               |                                      | $      
|                                                                                                                 |                                                                           |                                      |        
|Earnings (loss) per common unitdiluted:                                                                         |                                                                           |                                      |        
|                                                                                                                 | Income (loss) from continuing operations (net of preferred distributions) |                                      | $      
|                                                                                                                 | Income (loss) from discontinued operations                                |                                      | $      
|                                                                                                                 | Cumulative effect of change in accounting principle                       |                                      | $      
|                                                                                                                 |                                                                           |                                      |        
|                                                                                                                 | Net loss attributable to common unitholders                               |                                      | $      
|                                                                                                                 |                                                                           |                                      |        
|Weighted average common units outstanding                                                                        |                                                                           |                                      | 104,346
|                                                                                                                 |                                                                           |                                      |        
|Weighted average common units and equivalents outstanding                                                        |                                                                           |                                      | 104,346
|                                                                                                                 |                                                                           |                                      |        
|Distributions declared per common unit                                                                           |                                                                           | $                                    | 0.60   
|                                                                                                                 |                                                                           |                                      |        

See notes to consolidated financial statements.

3

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AIMCO PROPERTIES, L.P.        CONSOLIDATED STATEMENTS OF CASH FLOWS  (In Thousands)  (Unaudited)

|                                                                                                             |                                                                                                 | For the Three Months Ended March 31,                                                     |                                                                        
|------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------- | -----------------------------------------------------------------------
|
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                                        |                                                                                                 |                                                                                          |                                                                        
|                                                                                                             | Net income                                                                                      |                                                                                          | $                                                                      
|                                                                                                             |                                                                                                 |                                                                                          |                                                                        
|                                                                                                             | Adjustments to reconcile net income to net cash provided by operating activities:               |                                                                                          |                                                                        
|                                                                                                             |                                                                                                 | Depreciation and amortization                                                            |                                                                        
|                                                                                                             |                                                                                                 | Deficit distributions to minority partners                                               |                                                                        
|                                                                                                             |                                                                                                 | Equity in losses of unconsolidated real estate partnerships                              |                                                                        
|                                                                                                             |                                                                                                 | Loss on dispositions of real estate related to unconsolidated real estate partnerships   |                                                                        
|                                                                                                             |                                                                                                 | Net recovery of impairment loss on investment in unconsolidated real estate partnerships |                                                                        
|                                                                                                             |                                                                                                 | Cumulative effect of change in accounting principle                                      |                                                                        
|                                                                                                             |                                                                                                 | Minority interest in consolidated real estate partnerships                               |                                                                        
|                                                                                                             |                                                                                                 | Discontinued operations:                                                                 |                                                                        
|                                                                                                             |                                                                                                 |                                                                                          | Depreciation and amortization                                          
|                                                                                                             |                                                                                                 |                                                                                          | Deficit distributions to minority partners                             
|                                                                                                             |                                                                                                 |                                                                                          | Gain on dispositions of real estate, net of minority partners' interest
|                                                                                                             |                                                                                                 |                                                                                          | Impairment loss on real estate assets sold or held for sale            
|                                                                                                             |                                                                                                 |                                                                                          | Minority interest in consolidated real estate partnerships             
|                                                                                                             |                                                                                                 | Changes in operating assets and operating liabilities:                                   |                                                                        
|                                                                                                             |                                                                                                 |                                                                                          | Deferred income taxes                                                  
|                                                                                                             |                                                                                                 |                                                                                          | Accounts receivable                                                    
|                                                                                                             |                                                                                                 |                                                                                          | Accounts payable, accrued liabilities and other                        
|                                                                                                             |                                                                                                 |                                                                                          | Other assets                                                           
|                                                                                                             |                                                                                                 |                                                                                          | Other                                                                  
|                                                                                                             |                                                                                                 |                                                                                          |                                                                        
|                                                                                                             |                                                                                                 |                                                                                          |                                                                        
|                                                                                                             |                                                                                                 |                                                                                          |                                                                        
|                                                                                                             |                                                                                                 |                                                                                          |                                                                        
|                                                                                                             |                                                                                                 |                                                                                          |                                                                        
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                                        |                                                                                                 |                                                                                          |                                                                        
|                                                                                                             | Purchase of real estate                                                                         |                                                                                          |                                                                        
|                                                                                                             | Capital expenditures                                                                            |                                                                                          |                                                                        
|                                                                                                             | Purchase of non-real estate assets                                                              |                                                                                          |                                                                        
|                                                                                                             | Proceeds from dispositions of real estate                                                       |                                                                                          |                                                                        
|                                                                                                             | Funds held in escrow from tax free exchanges pending the purchase of real estate                |                                                                                          |                                                                        
|                                                                                                             | Cash from newly consolidated properties                                                         |                                                                                          |                                                                        
|                                                                                                             | Purchase of general and limited partnership interests and other assets                          |                                                                                          |                                                                        
|                                                                                                             | Originations of notes receivable primarily from unconsolidated real estate partnerships         |                                                                                          |                                                                        
|                                                                                                             | Proceeds from repayment of notes receivable                                                     |                                                                                          |                                                                        
|                                                                                                             | Cash paid in connection with merger/acquisition related costs                                   |                                                                                          |                                                                        
|                                                                                                             | Distributions received from Aimco                                                               |                                                                                          |                                                                        
|                                                                                                             | Distributions received from investments in unconsolidated real estate partnerships              |                                                                                          |                                                                        
|                                                                                                             |                                                                                                 |                                                                                          |                                                                        
|                                                                                                             |                                                                                                 |                                                                                          |                                                                        
|                                                                                                             |                                                                                                 |                                                                                          |                                                                        
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                                        |                                                                                                 |                                                                                          |                                                                        
|                                                                                                             | Proceeds from secured notes payable borrowings                                                  |                                                                                          |                                                                        
|                                                                                                             | Principal repayments on secured notes payable                                                   |                                                                                          |                                                                        
|                                                                                                             | Proceeds from tax-exempt bond financing                                                         |                                                                                          |                                                                        
|                                                                                                             | Principal repayments on tax-exempt bond financing                                               |                                                                                          |                                                                        
|                                                                                                             | Net borrowings on term loans and revolving credit facility                                      |                                                                                          |                                                                        
|                                                                                                             | Payment of loan costs                                                                           |                                                                                          |                                                                        
|                                                                                                             | Redemption of mandatorily redeemable preferred securities                                       |                                                                                          |                                                                        
|                                                                                                             | Proceeds from issuance of common units, High Performance Units and exercise of options/warrants |                                                                                          |                                                                        
|                                                                                                             | Proceeds from issuance of preferred units                                                       |                                                                                          |                                                                        
|                                                                                                             | Principal repayments received on notes due on common unit purchases                             |                                                                                          |                                                                        
|                                                                                                             | Repurchase and redemption of common units                                                       |                                                                                          |                                                                        
|                                                                                                             | Contributions from minority interest                                                            |                                                                                          |                                                                        
|                                                                                                             | Payment of distributions to minority interest                                                   |                                                                                          |                                                                        
|                                                                                                             | Payment of distributions to General Partner and Special Limited Partner                         |                                                                                          |                                                                        
|                                                                                                             | Payment of distributions to Limited Partners                                                    |                                                                                          |                                                                        
|                                                                                                             | Payment of distributions to high performance units                                              |                                                                                          |                                                                        
|                                                                                                             | Payment of preferred unit distributions                                                         |                                                                                          |                                                                        
|                                                                                                             |                                                                                                 |                                                                                          |                                                                        
|                                                                                                             |                                                                                                 |                                                                                          |                                                                        
|                                                                                                             |                                                                                                 |                                                                                          |                                                                        
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                                         |                                                                                                 |                                                                                          | (21,260                                                                
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                                             |                                                                                                 |                                                                                          | 97,613                                                                 
|NET CHANGE IN CASH AND CASH EQUIVALENTS INCLUDED WITHIN ASSETS HELD FOR SALE FROM BEGINNING TO END OF PERIOD |                                                                                                 |                                                                                          | 12,112                                                                 
|                                                                                                             |                                                                                                 |                                                                                          |                                                                        
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                                   |                                                                                                 | $                                                                                        | 88,465                                                                 
|                                                                                                             |                                                                                                 |                                                                                          |                                                                        

See notes to consolidated financial statements.

4

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AIMCO PROPERTIES, L.P.        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  March 31, 2004  (Unaudited)

NOTE 1Organization

AIMCO Properties, L.P., a Delaware limited partnership, or the Partnership, and together with its consolidated subsidiaries and other controlled entities, the
Company, was formed on May 16, 1994 to conduct the business of acquiring, redeveloping, leasing, and managing multifamily apartment properties. Our securities include Partnership Common Units,
or common OP Units, Partnership Preferred Units, or preferred OP Units, and High Performance Partnership Units, or High Performance Units, which are collectively referred to as "OP Units." Apartment
Investment and Management Company, or Aimco, is the owner of our general partner, AIMCO-GP, Inc., or the General Partner, and special limited partner,
AIMCO-LP, Inc., or the Special Limited Partner. The General Partner and Special Limited Partner hold common OP Units and are the primary holders of outstanding preferred OP Units.
"Limited Partners" refers to individuals or entities that are our limited partners, other than Aimco, the General Partner or the Special Limited Partner, and own common OP Units or preferred OP Units.
Generally, after holding the common OP Units for one year, the Limited Partners have the right to redeem their common OP Units for cash, subject to our prior right to acquire some or all of the common
OP Units tendered for redemption in exchange for shares of Aimco Class A Common Stock. Common OP Units redeemed for Aimco Class A Common Stock are generally on a
one-for-one basis (subject to antidilution adjustments). Preferred OP Units and High Performance Units may or may not be redeemable based on their respective terms, as provided
for in the Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P. as amended, or the Partnership Agreement.

We,
through our operating divisions and subsidiaries, hold substantially all of Aimco's assets and manage the daily operations of Aimco's business and assets. Aimco is required to
contribute all proceeds from offerings of its securities to us. In addition, substantially all of Aimco's assets must be owned through the Partnership; therefore, Aimco is generally required to
contribute all assets acquired to us. In exchange for the contribution of offering proceeds or assets, Aimco receives additional interests in us with similar terms (e.g., if Aimco contributes proceeds
of a preferred stock offering, Aimco (through the General Partner and Special Limited Partner) receives preferred OP Units with terms substantially similar to the preferred securities issued by
Aimco).

Aimco
frequently consummates transactions for our benefit. For legal, tax or other business reasons, Aimco may hold title or ownership of certain assets until they can be transferred to
us. However, we have a controlling financial interest in substantially all of Aimco's assets in the process of transfer to us.

As
of March 31, 2004, we:



At
March 31, 2004, we had outstanding 102,823,634 common OP Units, 43,446,641 preferred OP Units and 2,379,084 High Performance Units (includes only those units that have met the
required measurement benchmarks and are dilutivesee Note 6).

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. Except as

5

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the
context otherwise requires, "Aimco" refers to Aimco and Aimco's consolidated corporate subsidiaries and consolidated real estate partnerships, collectively.

NOTE 2Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and
disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2004 are not necessarily indicative of the results that may be expected for the year
ending December 31, 2004.

The
balance sheet at December 31, 2003 has been derived from the audited financial statements at that date but does not include all of the information and disclosures required by
generally accepted accounting principles for complete financial statements.

For
further information, refer to the financial statements and notes thereto included in AIMCO Properties, L.P.'s Annual Report on Form 10-K for the year ended
December 31, 2003. Certain 2003 financial statement amounts have been reclassified to conform to the 2004 presentation, including certain intercompany eliminations and the treatment of
discontinued operations.

The
accompanying consolidated financial statements include the accounts of the Partnership, its consolidated corporate subsidiaries and consolidated real estate partnerships. Pursuant to
a Management and Contribution Agreement between the Partnership and Aimco, we have acquired, in exchange for interests in the Partnership, the economic benefits of subsidiaries of Aimco in which we do
not have an interest, and Aimco has granted us a right of first refusal to acquire such subsidiaries' assets for no additional consideration. Pursuant to the agreement, Aimco has also granted us
certain rights with respect to assets of such subsidiaries. As used herein, and except where the context otherwise requires, "partnership" refers to a limited partnership or a limited liability
company and "partner" refers to a limited partner in a limited partnership or a member in a limited liability company. Interests held in consolidated real estate partnerships by limited partners other
than us are reflected as minority interest in consolidated real estate partnerships. All significant intercompany balances and transactions have been eliminated in consolidation. The assets of
consolidated real estate partnerships owned or controlled by Aimco or us generally are not available to pay creditors of Aimco or the Partnership.

We
reflect partners' interests in consolidated real estate partnerships as minority interest in consolidated real estate partnerships. Minority interest in consolidated real estate
partnerships represents the non-controlling partners' share of the underlying net assets of our consolidated real estate partnerships. When these consolidated real estate partnerships make
cash distributions to partners in excess of their minority interest balances, we record a charge equal to the minority partners' excess of distributions over their minority interest balances, even
though there is no economic effect or cost. We classify this charge in the consolidated statements of income as deficit distributions to minority partners. We allocate to minority partners losses
until such time as such losses exceed the minority partners' capital account balances, in which case, we recognize 100% of the losses when the partnership is in a deficit equity position, even though
we do not believe there will be an economic effect or cost. For the three months ended March 31, 2004 and 2003, approximately $1.3 million and $1.2 million, respectively, in
depreciation related net losses were charged to operations.

NOTE 3Acquisitions and Joint Ventures

On January 30, 2004, Aimco completed the acquisition of The Palazzo at Park La Brea, a mid-rise apartment community with 521 units, for
$162.9 million, which included $0.5 million in transaction costs. The Palazzo at Park La Brea is the second of three phases recently completed as part of the Park La Brea development.
Aimco paid approximately $69.7 million in cash and was required to repay existing construction loan financing of approximately $92.7 million. The repayment of existing mortgage
indebtedness was primarily funded through a non-recourse, long-term, variable rate, partially amortizing property note of $88.1 million, with an interest rate of 1.50%
over 30-day LIBOR.

6

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In
order to fund the acquisition of The Palazzo at Park La Brea, we loaned $69.7 million to Aimco in exchange for a note receivable, which we refer to as The Palazzo at Park La
Brea Note. The note bears interest at the rate of 5.25% per annum, with interest payments due on December 31 of each year, with all unpaid principal and interest due on December 31,
2014. Upon completion of the purchase, Aimco contributed the assets and liabilities of The Palazzo at Park La Brea to us in exchange for 2,787,111 Class Twelve Partnership Preferred Units, or the
Class Twelve Preferred Units. The Class Twelve Preferred Units pay distributions of $1.3125 per unit on December 31 of each year, with the first distribution being prorated from the date of
issuance. Aimco repaid The Palazzo at Park La Brea Note with the proceeds from the issuance of Class U Cumulative Preferred Stock (see Note 6).

Additionally,
we completed the acquisition of a three-property portfolio located in New York City, containing an aggregate of 75 units, for a total purchase price of
$17.8 million. The acquisition was primarily funded through non-recourse, long-term, fixed rate, partially amortizing property notes totaling $12.2 million, with
interest rates of 5.38%.

GE Joint Venture

On December 30, 2003 we entered into an equity financing with GE Real Estate in the form of a joint venture, which we refer to the as the GE JV. In
March 2004, we contributed to the GE JV interests in an additional four of our apartment properties with a total of 900 units, and GE Real Estate contributed cash of which we received
approximately $11.0 million before transaction costs and funding of reserves. The four apartment properties we contributed had an agreed upon transaction value of approximately
$36.0 million and mortgage debt of approximately $21.0 million that was assumed by the GE JV. We have a 25% managing member interest in the GE JV and GE Real Estate has a 75%
non-managing member interest. As a result of our control over day-to-day operations, we continue to consolidate the properties contributed to the GE JV in our
consolidated financial statements and did not recognize any gain as a result of this transaction. GE Real Estate's interest in these net assets through the GE JV is included in minority interest in
consolidated real estate partnerships.

NOTE 4Mandatorily Redeemable Preferred Securities

In April 2003, Aimco sold 4,000,000 shares of floating rate Class S Cumulative Redeemable Preferred Stock, or the Class S Preferred Stock,
through a private placement to an institutional investor. The proceeds were contributed to the Partnership in exchange for Class S Partnership Preferred Units, or the Class S Preferred
Units. On January 30, 2004, Aimco redeemed 1,015,228 shares of the Class S Preferred Stock at a redemption price of $24.625 per share. Additionally, on March 26, 2004, with
proceeds from the issuance of the Class U Cumulative Preferred Stock (see Note 6), Aimco redeemed the remaining 2,984,772 shares of the Class S Preferred Stock at a redemption
price of $24.75 per share. Concurrently with these redemptions, we redeemed for cash 1,015,228 and 2,984,772 Class S Preferred Units. In accordance with Statement of Financial Accounting
Standards No. 150,Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, or SFAS 150, for the
three months ended March 31, 2004, we recorded to interest expense approximately $0.8 million of distributions paid on the Class S Preferred Units and $0.4 million
resulting from a redemption value adjustment on February 1, 2004.

NOTE 5Commitments and Contingencies

Commitments

In connection with the March 11, 2002 acquisition of Casden Properties, Inc., or Casden, which included the merger of Casden into Aimco, and the
merger of a subsidiary of Aimco into another real estate investment trust affiliated with Casden, all of which we collectively refer to as the Casden Merger, we and Aimco have the following
commitments to:



7

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Guarantees

In the ordinary course of business, we provide various guarantees that are covered by the provisions of Financial Accounting Standards Board, or FASB,
Interpretation No. 45,Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others, or FIN 45. These guarantees include: (i) standby letters of credit, which we may provide to enhance credit or guarantee our performance under contractual
obligations; (ii) limited guarantees, which we may provide to certain of our lenders and that may require us to provide funds to maintain a required loan-to-value ratio;
and (iii) guarantees in connection with our syndication of historical and affordable housing tax credits, which we may provide to make available additional funding to cover operating cash flow
deficiencies, cover shortfalls related to the delivery of tax credits and cover financing shortfalls related to project development. These guarantees have varying expiration dates ranging from less
than one year to fourteen years. The fair value of these guarantees issued after December 31, 2002 (effective date under FIN 45), are not material to our financial statements.

Legal

In addition to the matters described below, we are a party to various legal actions and administrative proceedings arising in the ordinary course of business,
some of which are covered by liability insurance, and none of which we expect to have a material adverse effect on our consolidated financial condition or results of operations taken as a whole.



In
connection with our acquisitions of interests in real estate partnerships, we are sometimes subject to legal actions, including allegations that such activities may involve breaches
of fiduciary duties to the partners of such real estate partnerships or violations of the relevant partnership agreements.

We
may incur costs in connection with the defense or settlement of such litigation. We believe that we comply with our fiduciary obligations and relevant partnership agreements. Although
the outcome of any litigation is uncertain, we do not expect any such legal actions to have a material adverse affect on our consolidated financial condition or results of operations taken as a whole.

8

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Various
Federal, state and local laws subject property owners or operators to liability for management, and the costs of removal or remediation, of certain hazardous substances present
on a property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of the hazardous substances. The presence of,
or the failure to manage or remedy properly, hazardous substances may adversely affect occupancy at affected apartment communities and the ability to sell or finance affected properties. In addition
to the costs associated with investigation and remediation actions brought by government agencies, the presence of hazardous substances on a property could result in claims by private plaintiffs for
personal injury, disease, disability or other infirmities. Various laws also impose liability for the cost of removal, remediation or disposal of hazardous substances through a licensed disposal or
treatment facility. Anyone who arranges for the disposal or treatment of hazardous substances is potentially liable under such laws. These laws often impose liability whether or not the person
arranging for the disposal ever owned or operated the disposal facility. In connection with the ownership, operation and management of properties, we could potentially be liable for environmental
liabilities or costs associated with our properties or properties we acquire or manage in the future.

As
previously disclosed, Aimco has been named as a defendant in lawsuits that have alleged personal injury as a result of the presence of mold. In addition, we are aware of lawsuits
against owners and managers of multifamily properties asserting claims of personal injury and property damage caused by the presence of mold, some of which have resulted in substantial monetary
judgments or settlements. We have only limited insurance coverage for property damage loss claims arising from the presence of mold and for personal injury claims related to mold exposure.

We
have implemented a national policy and procedures to prevent or eliminate mold from our properties and believe that our measures will eliminate, or at least minimize, the effects that
mold could have on our residents. To date, we have not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions. Because the law regarding mold is
unsettled and subject to change we can make no assurance that liabilities resulting from the presence of or exposure to mold will not have a material adverse effect on our consolidated financial
condition or results of operations taken as a whole.



As
previously disclosed, Aimco and four of its affiliated partnerships are defendants in a lawsuit brought by the City Attorney for the City and County of San Francisco ("CCSF") alleging
violations of residential housing codes, unlawful business practices and unfair competition. The City Attorney asserts civil penalties from $500 to $1,000 per day for each affected unit, as well as
other statutory and equitable relief. Aimco has filed a cross-complaint against CCSF, its Department of Building Inspections ("DBI") and certain of its employees, alleging constitutional violations
arising out of its arbitrary and discriminatory application of its codes, and other tortious conduct. Effective May 3, 2004, Aimco and the four affiliated partnerships entered into a settlement
agreement with CCSF, DBI and certain DBI employees, subject to certain conditions subsequent that must be satisfied no later than November 1, 2004 in order for the settlement agreement to
become effective. The conditions subsequent include (a) approval by the Board of Supervisors of CCSF, (b) the negotiation by Aimco of a new Memorandum of Understanding with the U.S.
Department of Housing and Urban Development permitting Aimco to complete a renovation of the four properties in the Hunters Point area that were the subject of CCSF's lawsuit, (c) certain
repairs to nine apartment units, (d) an agreement between CCSF and Aimco and the four affiliated partnerships relative to improved public safety in the immediate vicinity of the properties, and
(e) an order from the Court staying the litigation until either the above conditions are satisfied or the settlement is terminated, which order was entered May 5, 2004. If the settlement
becomes effective, Aimco intends to complete a renovation of the properties. We do not believe that the ultimate outcome will have a material adverse effect on our consolidated financial condition or
results of operations taken as a whole.

As
previously disclosed, National Program Services, Inc. and Vito Gruppuso (collectively "NPS") were insurance agents who sold to Aimco property insurance issued by National Union
Fire Insurance Company of Pittsburgh, Pennsylvania ("National Union"). The financial failure of NPS resulted in defaults under two agreements by which NPS indemnified Aimco from losses relating to the
matters described below. As a result of

9

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such
defaults Aimco had a $16.7 million insurance-related receivable that was reduced to $6.7 million following Aimco's settlement with Lumbermens Mutual Casualty Company ("Lumbermens")
and an insurance agency. In addition, Aimco has pending litigation against National Union, First Capital Group, a New York based insurance wholesaler, NPS and other agents of National Union, for a
refund of at least $10 million of the prepaid premium plus other damages. The contingent liabilities arising from the NPS defaults also resulted in litigation against Aimco by
Cananwill, Inc. ("Cananwill"), a premium funding company, regarding an alleged balance due of $5.7 million on a premium finance agreement that funded premium payments made to National
Union. Aimco is also a plaintiff in litigation against Cananwill and Combined Specialty Insurance Company, formerly known as Virginia Surety Company, Inc., alleging Cananwill's conversion of
$1.6 million of unearned premium belonging to Aimco and misapplication of such funds to the alleged debt asserted in the lawsuit initiated by Cananwill. The previously disclosed litigation
brought by WestRMWest Risk Markets, Ltd. ("WestRM") against XL Reinsurance America, Inc. ("XL"), Greenwich Insurance Company ("Greenwich") and Lumbermens in
which Aimco has been made a third party defendant continues. Similarly, the previously disclosed litigation brought by Highlands Insurance Company ("Highlands") against Cananwill, XL, Greenwich and
Aimco also continues. In those cases where Aimco is a defendant, Aimco believes that it has meritorious defenses to assert, will vigorously defend itself against claims brought against them, and will
vigorously prosecute its own claims. Although the outcome of any claim or matter in litigation is uncertain, we do not believe that we will incur any material loss in connection with the
insurance-related receivable or that the ultimate outcome of these separate but related matters will have a material adverse effect on our consolidated financial condition or results of operations
taken as a whole.

As
previously disclosed, on August 8, 2003 we were served with a complaint in the United States District Court, District of Columbia alleging that we willfully violated the Fair
Labor Standards Act ("FLSA") by failing to pay maintenance workers overtime for all hours worked in excess of forty per week. On March 5, 2004, the plaintiffs filed an amended complaint also
naming NHP Management Company, an affiliate of ours. The complaint attempts to bring a collective action under the FLSA and seeks to certify state subclasses in California, Maryland, and the District
of Columbia. Specifically, the plaintiffs contend that we failed to compensate maintenance workers for time that they were required to be "on-call." Additionally, the complaint alleges
that we failed to comply with the FLSA in compensating maintenance workers for time that they worked in responding to a call while "on-call." We have filed an answer to the amended
complaint denying the substantive allegations. Discovery is currently underway. Although the outcome of any litigation is uncertain, we do not believe that the ultimate outcome will have a material
adverse effect on our consolidated financial condition or results of operations taken as a whole.

As
previously disclosed, the Central Regional Office of the United States Securities and Exchange Commission is conducting a formal investigation relating to certain matters. We believe
the areas of investigation include Aimco's miscalculated monthly net rental income figures in third quarter 2003, forecasted guidance, accounts payable, rent concessions, vendor rebates, and
capitalization of expenses and payroll. Aimco is cooperating fully. We do not believe that the ultimate outcome will have a material adverse effect on our consolidated financial condition or results
of operations taken as a whole.

NOTE 6Partners' Capital

Preferred OP Units

On March 24, 2004, Aimco sold 8,000,000 shares ($200.0 million) of 7.75% Class U Cumulative Preferred Stock, par value $0.01 per share, or
the Class U Preferred Stock, in a registered public offering generating net proceeds of approximately $193.7 million. Proceeds of $69.8 million were paid by Aimco to us to repay
The Palazzo at Park La Brea Note (see Note 3) and concurrently 2,787,111 Class Twelve Preferred Units were converted into 2,787,111 Class U Partnership Preferred Units, or the
Class U Preferred Units. The remaining net proceeds were contributed by Aimco to us in exchange for 5,212,889 Class U Preferred Units. We used approximately $74.0 million of the
net proceeds to redeem the floating rate Class S Preferred Units (see Note 4) and the remainder was applied to our revolving credit facility, with the intention of redeeming the 9.00%
Class P Partnership Preferred Units, or the Class P Preferred Units, on April 21, 2004 (see Note 13). The Class U Preferred Units have substantially the same terms
as the shares of Class U Preferred Stock. Holders of the Class U Preferred Stock are entitled to receive quarterly dividend payments of $0.484375 per share, equivalent to $1.9375 per
share on an annual basis, or 7.75% of the $25 per share liquidation preference, beginning on July 15, 2004. Class U Preferred Stock is senior to Aimco Class A Common Stock as to
dividends and liquidation. Upon any liquidation, dissolution

10

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or
winding up of Aimco, before payments of distributions by Aimco are made to any holders of Aimco Class A Common Stock or Common OP Units, the holders of the Class U Preferred Stock
and Class U Preferred Units are entitled to receive a liquidation preference of $25 per share/unit, plus accumulated, accrued and unpaid dividends. Each share of Class U Preferred Stock
is redeemable at Aimco's option beginning March 24, 2009 for cash in the amount of $25 per share, plus all accrued and unpaid dividends, if any, to the date fixed for redemption. Distributions
will be made on the Class U Preferred Units at the same time and in the same amount as dividends on the Class U Preferred Stock.

Common OP Units

We completed tender offers for limited partnership interests and acquisitions of individual properties resulting in the issuance of approximately 12,000 and
17,000 common OP Units for the three months ended March 31, 2004 and 2003, respectively.

During
the three months ended March 31, 2004 and 2003, approximately 3,000 and 5,000 common OP Units, respectively, were redeemed in exchange for cash and approximately 359,000
and 75,000 common OP Units, respectively, were redeemed in exchange for shares of Aimco Class A Common Stock.

On
February 18, 19 and 24, 2004, Aimco purchased on the open market 30,000, 60,000 and 20,000 shares of Aimco Class A Common Stock, respectively, at an average price per
share of approximately $32.03, $32.17 and $31.26, respectively. Concurrently, we purchased 30,000, 60,000, and 20,000 common OP Units from Aimco.

On
February 24, 2004, Aimco completed the purchase of 287,272 shares of Aimco Class A Common Stock from the representatives of the plaintiffs in the litigation known as In
re Real Estate Associates v. Casden et al, or the
REAL Litigation. Aimco paid in cash an aggregate of approximately $9.1 million to the representatives of the plaintiffs for the shares, or $31.60 per share. The plaintiffs received these shares
from Alan I. Casden on December 30, 2003 pursuant to the previously disclosed Stipulation of Settlement with the plaintiffs and their counsel relating to the REAL Litigation and the previously
disclosed Settlement Agreement with the prior shareholders of Casden Properties, Inc., National Partnership Investments Corp., or NAPICO, which Aimco acquired in the Casden Merger, and Aimco.
Concurrently, we purchased 287,272 common OP Units from Aimco.

Additionally,
in connection with the Settlement Agreement and the indemnification agreement we have with the Casden sellers, we have notes receivable from Alan I. Casden for an aggregate
total of $35 million. Pursuant to the Settlement Agreement and the indemnification agreement, these notes can be satisfied with an aggregate total of approximately 804,000 shares of Aimco
Class A Common Stock (including shares to cover interest that will accrue over the terms of the notes), which shares will be valued at $47 per share. In the event shares of Aimco Class A
Common Stock are used to satisfy these obligations, we will record contingent consideration to the extent the fair value of Aimco Class A Common Stock is less than $47 per share at that date.



At March 31, 2004, we had outstanding 4,398 Class V High Performance Partnership Units, or the Class V Units, for which the valuation period
began on January 1, 2002 and will end on December 31, 2004. Additionally, we had outstanding 5,000 Class VI High Performance Partnership Units, or the Class VI Units, for
which the valuation period began on January 1, 2003 and will end on December 31, 2005.

11

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At March 31, 2004, we did not meet the required measurement benchmarks for the Class V Units or Class VI Units. Therefore, as of March 31, 2004 such High Performance Units
have no dilutive effect.

NOTE 7Stock-Based Compensation

Aimco, from time to time, issues stock options. Upon exercise of the stock options, Aimco must contribute to us the proceeds received in exchange for the same
number of common OP Units as shares of Aimco Class A Common Stock issued in connection with the exercised stock options. Therefore, the following disclosures are made pertaining to Aimco's
stock options.

Effective
January 1, 2003, Aimco adopted the accounting provisions of Statement of Financial Accounting Standards No. 123,Accounting for
Stock-Based Compensation,or SFAS 123, as amended by Statement of Financial Accounting Standards No. 148,Accounting for Stock-Based
CompensationTransition and Disclosurean amendment of FASB Statement No. 123,or SFAS 148, and applied the prospective method set forth
in SFAS 148 with respect to the transition. Under this method, Aimco now applies the fair value recognition provisions of SFAS 123 to all employee awards granted, modified, or settled on
or after January 1, 2003, which has resulted in compensation expense being recorded based on the fair value of the stock options. Prior to January 1, 2003, Aimco followed Accounting
Principles Board Opinion No. 25,Accounting for Stock Issued to Employees, or APB 25, and related interpretations in accounting. Under APB 25,
because the exercise price of Aimco's employee stock options and warrants equaled the market price of the underlying stock on the date of grant, no compensation expense was recognized. For purposes of
the pro forma disclosures below, the estimated fair values for all awards made prior to January 1, 2003 are amortized over the respective vesting period for each such option and are shown as
expense as if SFAS 123 had been applied to all such awards.

The
following table illustrates the effect on net income (loss) and earnings (loss) per unit if the fair value based method had been applied to all outstanding and unvested awards in
each period presented. Our pro forma information for the three months ended March 31, 2004 and 2003 is as follows (in thousands, except per unit data):

|                                                                                                                |                         | For the Three Months Ended March 31, |       
|--------------------------------------------------------------------------------------------------------------- | ----------------------- | ------------------------------------ | ------
|
|Net loss attributable to common unitholders, as reported                                                        |                         | $                                    | (6,444
|Add stock-based employee compensation expense included in reported net income:                                  |                         |                                      |       
|                                                                                                                | Restricted stock awards |                                      |       
|                                                                                                                | Stock options           |                                      |       
|Deduct total stock-based employee compensation expense determined under fair value based method for all awards: |                         |                                      |       
|                                                                                                                | Restricted stock awards |                                      |       
|                                                                                                                | Stock options           |                                      |       
|                                                                                                                |                         |                                      |       
|Pro forma net loss attributable to common unitholders                                                           |                         | $                                    | (7,615
|                                                                                                                |                         |                                      |       
|Basic loss per common unit:                                                                                     |                         |                                      |       
|                                                                                                                | Reported                |                                      | $     
|                                                                                                                | Pro forma               |                                      | $     
|Diluted loss per common unit:                                                                                   |                         |                                      |       
|                                                                                                                | Reported                |                                      | $     
|                                                                                                                | Pro forma               |                                      | $     

The
effects of applying SFAS 123 in calculating pro forma income attributable to common unitholders and pro forma basic and diluted earnings per unit may not necessarily be
indicative of the effects of applying SFAS 123 to future years' earnings.

12

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NOTE 8Discontinued Operations and Assets Held for Sale

At March 31, 2004, we had seven properties with an aggregate of 1,175 units classified as held for sale. For the three months ended March 31, 2004
and 2003, we included the results of operations of these properties in discontinued operations. During the three months ended March 31, 2004, we sold ten properties with an aggregate of 2,418
units. For the three months ended March 31, 2004 and 2003, we also included in discontinued operations the results of operations of these ten properties before the sale and the related
gain/loss on sale. During the year ended December 31, 2003, we sold 72 properties with an aggregate of 18,291 units. For the three months ended March 31, 2003, we also included in
discontinued operations the results of operations of these 72 properties before the sale and the related gain/loss on sale.

The
following is a summary of the components of income (loss) from discontinued operations for the three months ended March 31, 2004 and 2003 (dollars in thousands):

|                                                                        |  | For the Three Months
Ended March 31, |       
|----------------------------------------------------------------------- |  | ------------------------------------ | ------
|
|Rental and other property revenues                                      |  | $                                    | 3,866 
|Property operating expense                                              |  |                                      | (2,918
|                                                                        |  |                                      |       
|Net operating income                                                    |  |                                      | 948   
|                                                                        |  |                                      |       
|Other (expenses) income, net                                            |  |                                      | (340  
|Depreciation and amortization                                           |  |                                      | (408  
|Interest expense                                                        |  |                                      | (1,018
|Interest income                                                         |  |                                      | 2     
|Minority interest in consolidated real estate partnerships              |  |                                      | 280   
|                                                                        |  |                                      |       
|Income (loss) from operations                                           |  |                                      | (536  
|Gain on dispositions of real estate, net of minority partners' interest |  |                                      | 11,360
|Impairment loss on real estate assets sold or held for sale             |  |                                      | (14   
|Recovery of deficit distributions to minority partners                  |  |                                      | 3,313 
|Income tax arising from disposals                                       |  |                                      | (697  
|                                                                        |  |                                      |       
|Income (loss) from discontinued operations                              |  | $                                    | 13,426
|                                                                        |  |                                      |       

We
are currently marketing for sale certain real estate properties that are inconsistent with our long-term investment strategy. We expect that all properties classified as
held for sale will sell within one year from the date classified as held for sale. Assets classified as held for sale of $51.3 million at March 31, 2004 include real estate with a net
book value of $39.6 million and restricted cash and other assets of $11.7 million. Liabilities related to assets classified as held for sale of $32.0 million at March 31,
2004 include mortgage debt of $27.7 million. Assets classified as held for sale of $129.5 million at December 31, 2003 include real estate net book value of $97.9 million,
represented by 17 properties with 3,593 units that were classified as assets held for sale during 2003 and 2004. Liabilities related to assets classified as held for sale of $74.4 million at
December 31, 2003 include mortgage debt of $68.0 million. The estimated proceeds, less anticipated costs to sell certain of these assets, were less than the net book value, and therefore
we recorded impairments of $0.01 million and $5.3 million for the three months ended March 31, 2004 and 2003, respectively. We are also marketing for sale properties other than
those described above, both consolidated and unconsolidated that are not accounted for as assets held for sale because they do not meet the criteria under SFAS 144.

13

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NOTE 9Earnings Per Unit

We calculate earnings per unit based on the weighted average number of common OP Units, common OP Unit equivalents and dilutive convertible securities outstanding
during the period. The following table illustrates the calculation of basic and diluted earnings per unit for the three months ended March 31, 2004 and 2003 (in thousands, except per unit
data):

|                                                                                                     |                                                                           | For the Three Months Ended March 31, |        
|---------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------- | ------------------------------------ | -------
|
|Numerator:                                                                                           |                                                                           |                                      |        
|Income from continuing operations                                                                    |                                                                           | $                                    | 6,184  
|Less net income attributable to preferred unitholders                                                |                                                                           |                                      | (22,097
|                                                                                                     |                                                                           |                                      |        
|Numerator for basic and diluted earnings per common unitIncome (loss) from continuing operations    |                                                                           | $                                    | (15,913
|                                                                                                     |                                                                           |                                      |        
|Income (loss) from discontinued operations                                                           |                                                                           | $                                    | 13,426 
|                                                                                                     |                                                                           |                                      |        
|Cumulative effect of change in accounting principle                                                  |                                                                           | $                                    | (3,957 
|                                                                                                     |                                                                           |                                      |        
|Net income                                                                                           |                                                                           | $                                    | 15,653 
|Less net income attributable to preferred unitholders                                                |                                                                           |                                      | (22,097
|                                                                                                     |                                                                           |                                      |        
|Numerator for basic and diluted earnings per common unitNet loss attributable to common unitholders |                                                                           | $                                    | (6,444 
|                                                                                                     |                                                                           |                                      |        
|Denominator:                                                                                         |                                                                           |                                      |        
|Denominator for basic earnings per common unitweighted average number of common units               |                                                                           |                                      | 104,346
|Effect of dilutive securities:                                                                       |                                                                           |                                      |        
|Dilutive potential common units                                                                      |                                                                           |                                      |       
|                                                                                                     |                                                                           |                                      |        
|Denominator for diluted earnings per common unit                                                     |                                                                           |                                      | 104,346
|                                                                                                     |                                                                           |                                      |        
|Earnings (loss) per common unit:                                                                     |                                                                           |                                      |        
|Basic earnings (loss) per common unit:                                                               |                                                                           |                                      |        
|                                                                                                     | Income (loss) from continuing operations (net of preferred distributions) |                                      | $      
|                                                                                                     | Income (loss) from discontinued operations                                |                                      | $      
|                                                                                                     | Cumulative effect of change in accounting principle                       |                                      | $      
|                                                                                                     |                                                                           |                                      |        
|                                                                                                     | Net loss attributable to common unitholders                               |                                      | $      
|                                                                                                     |                                                                           |                                      |        
|Diluted earnings (loss) per common unit:                                                             |                                                                           |                                      |        
|                                                                                                     | Income (loss) from continuing operations (net of preferred distributions) |                                      | $      
|                                                                                                     | Income (loss) from discontinued operations                                |                                      | $      
|                                                                                                     | Cumulative effect of change in accounting principle                       |                                      | $      
|                                                                                                     |                                                                           |                                      |        
|                                                                                                     | Net loss attributable to common unitholders                               |                                      | $      
|                                                                                                     |                                                                           |                                      |        

All
of our convertible preferred OP Units are anti-dilutive on an "as converted" basis, therefore, we deduct all of the distributions payable on the convertible preferred OP
Units to arrive at the numerator and no additional units are included in the denominator. We have excluded from diluted earnings per unit the common OP Unit equivalents related to approximately
11.7 million and 9.5 million of vested and unvested stock options, units issued for non-recourse notes receivable, and restricted stock awards for the three months ended
March 31, 2004 and 2003, respectively, because their effect would be anti-dilutive. For purposes of calculating diluted earnings per unit in accordance with Statement on Financial
Accounting Standards No. 128,Earnings per Share,we treat the unvested portion of restricted shares as common OP Unit equivalents.

14

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NOTE 10Business Segments

We have two reportable segments: real estate (owning and operating apartments) and investment management business (providing property management, syndication
based activities, and other services relating to the apartment business to third parties and affiliates). We own and operate properties throughout the United States and Puerto Rico that generate
rental and other property related income through the leasing of apartment units to a diverse base of residents. We separately evaluate the performance of each of our properties. However, because each
of our properties has similar economic characteristics, the properties have been aggregated into a single apartment communities, or real estate, segment. We consider disclosure of different components
of the multifamily housing business to be useful. All real estate revenues are from external customers and no real estate revenues are generated from transactions with other segments. No single
resident or related group of residents contributed 10% or more of total revenues during the three months ended March 31, 2004 and 2003. A significant portion of the revenues earned in the
investment management business are from transactions with affiliates in the real estate segment.

Statement
of Financial Accounting Standards No. 131,Disclosures about Segments of an Enterprise and Related Information, or
SFAS 131, requires that segment disclosures present the measure(s) used by the chief operating decision maker for purposes of assessing such segments' performance. Our chief operating decision
maker is comprised of several members of our executive management team who use several generally accepted industry financial measures to assess the performance of the business including net operating
income, free cash flow, funds from operations, and adjusted funds from operations. In 2004, the chief operating decision maker has emphasized net operating income as a key measurement of segment
profit or loss. Accordingly, we have disclosed net operating income for each of our segments below. Net operating income is defined as segment revenues (after the elimination of intersegment revenues)
less direct segment operating expenses. In 2003, we reported free cash flow as the primary basis for measurement of segment profit or loss. Certain reclassifications have been made to 2003 amounts to
conform to the 2004 presentation. These reclassifications primarily represent presentation changes related to discontinued operations resulting from the requirements of SFAS 144 and
intercompany eliminations.

The
following table presents revenues and net operating income for the three months ended March 31, 2004 and 2003, from these segments, and reconciles net operating income of
reportable segments to operating income as reported in the Consolidated Statements of Income (in thousands):

|                                                                                   |                                     | For the Three Months Ended March 31, |        
|---------------------------------------------------------------------------------- | ----------------------------------- | ------------------------------------ | -------
|
|Revenues:                                                                          |                                     |                                      |        
|                                                                                   | Real estate segment                 |                                      | $      
|                                                                                   | Investment management segment:      |                                      |        
|                                                                                   |                                     | Gross revenues                       |        
|                                                                                   |                                     | Elimination of intersegment revenues |        
|                                                                                   |                                     |                                      |        
|                                                                                   |                                     | Net revenues after elimination       |        
|                                                                                   |                                     |                                      |        
|Total revenues of reportable segments                                              |                                     | $                                    | 376,426
|                                                                                   |                                     |                                      |        
|Net operating income:                                                              |                                     |                                      |        
|                                                                                   | Real estate segment                 |                                      | $      
|                                                                                   | Investment management segment       |                                      |        
|                                                                                   |                                     |                                      |        
|Total net operating income of reportable segments                                  |                                     |                                      | 206,020
|Reconciliation of net operating income of reportable segments to operating income: |                                     |                                      |        
|                                                                                   | Depreciation and amortization       |                                      |        
|                                                                                   | General and administrative expenses |                                      |        
|                                                                                   | Other (expenses) income, net        |                                      |        
|                                                                                   |                                     |                                      |        
|Operating income                                                                   |                                     | $                                    | 97,659 
|                                                                                   |                                     |                                      |        

15

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|                                        |                           | March 31, 2004 |           | December 31, 2003
|--------------------------------------- | ------------------------- | -------------- | --------- | -----------------
|ASSETS (in thousands)                   |                           |                |           |                  
|Total assets for reportable segments(1) |                           | $              | 9,972,770 |                  
|Corporate and other assets              |                           |                | 382,050   |                  
|                                        |                           |                |           |                  
|                                        | Total consolidated assets |                | $         | 10,354,820       
|                                        |                           |                |           |                  

---

NOTE 11Recent Accounting Developments

FASB Interpretation No. 46

As of March 31, 2004, we adopted FASB Interpretation No. 46 (revised December 2003),Consolidation of Variable
Interest Entities,or FIN 46 and applied its requirements to all entities in which we hold a variable interest. FIN 46 addresses the consolidation by business enterprises of
variable interest entities. Generally, a variable interest entity, or VIE, is an entity with one or more of the following characteristics: (a) the total equity investment at risk is not
sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) as a group the holders of the equity investment at risk lack (i) the
ability to make decisions about an entity's activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive
the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests and substantially all of the entity's
activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. FIN 46 requires a VIE to be consolidated in the financial statements of the entity
that is determined to be the primary beneficiary of the VIE. The primary beneficiary generally is the entity that will receive a majority of the VIE's expected losses, receive a majority of the VIE's
expected residual returns, or both.

We
determined that we are the primary beneficiary of 27 previously unconsolidated and five previously consolidated VIEs. These VIEs consist of partnerships that are engaged, directly or
indirectly, in the ownership and management of 29 apartment properties with 3,478 units. The initial consolidation of the previously unconsolidated entities as of March 31, 2004 resulted in an
increase in our consolidated total assets (primarily real estate), liabilities (primarily indebtedness) and minority interest of approximately $113.5 million, $90.6 million and
$26.8 million, respectively. Substantially all of the assets of the consolidated VIEs are collateral for the VIE's obligations. The creditors of the consolidated VIEs do not have recourse to
our general credit. We recorded a charge of approximately $4.0 million for the cumulative effect on retained earnings resulting from the adoption of FIN 46 as of March 31, 2004. This
charge is attributable to our recognition of cumulative losses allocable to minority interests that would otherwise have resulted in minority interest deficits.

We
also determined that we hold variable interests in 70 VIEs for which we are not the primary beneficiary. Those VIEs consist primarily of partnerships that are engaged, directly or
indirectly, in the ownership and management of 77 apartment properties with 8,355 units. We are involved with those VIEs as a non-controlling equity holder, lender, management agent, or
through other contractual relationships. Our maximum exposure to loss as a result of our involvement with unconsolidated VIEs is limited to our recorded investments in and receivables from those VIEs
totaling $37.2 million at March 31, 2004. We may be subject to additional losses to the extent of any financial support that we voluntarily provide in the future.

We
do not expect that the ongoing effects of FIN 46 will be material to our consolidated financial condition or results of operations taken as a whole.

NOTE 12Related Party Notes Receivable

In exchange for the sale of certain real estate assets to Aimco in December 2000, we received notes receivable, which we refer to as the Notes, totaling
$10.1 million. The Notes bear interest at the rate of 5.7% per annum. Of the $10.1 million total, $7.6 million is due upon demand, and the remainder is due in scheduled
semi-annual payments with all unpaid principal and interest due on December 31, 2010. At March 31, 2004, the balance of the Notes totaled $12.1 million, which includes
accrued and unpaid interest.

16

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NOTE 13Subsequent Events

Redemption of the Class P Preferred Units

On April 21, 2004, Aimco redeemed for cash all 3,999,662 outstanding shares of its Class P Preferred Stock for a total redemption price of $25.0375
per share, which included a redemption price of $25 per share, or $100.0 million, and $0.0375 of accumulated and unpaid dividends through April 20, 2004. Prior to its redemption, the
holders of the Class P Preferred Stock were entitled to receive quarterly dividends of $0.5625 per share, equivalent to $2.25 per share on an annual basis, or 9% of the $25 per share
liquidation preference. Concurrently with this redemption, we redeemed 3,999,662 Class P Preferred Units.

Approval of Class VII High Performance Partnership Units

On April 30, 2004, Aimco stockholders approved the sale of up to 5,000 of our Class VII High Performance Partnership Units, or the Class VII
Units, to a limited liability company owned by a limited number of Aimco employees for an aggregate offering price of up to $915,000. The Class VII Units have identical characteristics to the
Class VI Units sold in 2003, except for a different three-year measurement period. The valuation period of the Class VII Units began on January 1, 2004 and will end on
December 31, 2006.

17

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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 including, without limitation: national and local economic conditions; the general level of interest rates; the terms of governmental regulations that affect us and interpretations of
those regulations; the competitive environment in which we operate; financing risks, including the risk that our cash flows from operations may be insufficient to meet required payments of principal
and interest; real estate risks, including variations of real estate values and the general economic climate in local markets and competition for tenants in such markets; acquisition and development
risks, including failure of such acquisitions to perform in accordance with projections; litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; and
possible environmental liabilities, including costs 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, 2003 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

We are engaged in the ownership, acquisition, management and redevelopment of apartment properties. Our property operations are characterized by diversification
of product, location and price point. As of March 31, 2004, we owned or managed a real estate portfolio of 1,605 apartment properties containing 283,030 units located in 47
states, the District of Columbia and Puerto Rico. Our primary sources of income and cash are rents associated with apartment leases.

The
key financial indicators that we use in managing our business and in evaluating our financial condition and operating performance are: Funds From Operations, or FFO, less spending
for Capital Replacements; same store property operating results; net operating income; net operating income less spending for Capital Replacements; financial coverage ratios; and leverage as shown on
our balance sheet. These terms are defined and described in the sections captioned "Funds From Operations" and "Capital Expenditures" below. The key macro-economic factors and
non-financial indicators that affect our financial condition and operating performance are: rates of job growth; unemployment rates; single-family and multifamily starts; and interest
rates.

Because
our operating results depend primarily on income from our properties, the supply and demand for apartments substantially influences our results. Additionally, the level of
expenses required to operate and maintain our properties and the pace and price at which we redevelop, acquire and dispose of our apartment properties can affect our operating results. Our cost of
capital is affected by the conditions in the capital and credit markets and the terms which we negotiate for our equity and debt financings.

We
have grown rapidly over the past decade, and during the past three years our growth has moderated. In the first quarter of 2004, the apartment industry continued to face a challenging
operating environmentunemployment, job growth at a pace slower than anticipated, low interest rates and an abundant supply of housing alternatives. In addition, we experienced greater
difficulty as compared to our peers because our property operating systems and structure were not as effective as our peers in meeting the challenges presented by the apartment markets.

18

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We
have adjusted our business strategies to compete successfully in challenging times and to be ready to maximize our opportunities as the economy improves. We are focused on improving
our conventional property operations, which are conducted through 15 regional operating centers, or ROCs. This structure provides us with the opportunity to keep decision-making close to the customers
we serve and the properties we maintain. We are focused on providing our ROCs with more resources and better systems and reducing employee turnover. We are standardizing numerous processes, including
such items as price setting and resident selection. Our focus on resident selection is designed to make our communities more desirable places to live and work, which will result in better financial
performance due to higher and more stable occupancy levels, increased pricing power and reduced costs.

In
first quarter 2004 we continued to address property operations and those efforts will continue throughout the remainder of 2004. In first quarter 2004 we focused on a number of areas
related to improving operations, including those related to resident selection, marketing, pricing, operating cost management and customer satisfaction. However, we still have a number of steps to
take to build revenue through increased occupancy with residents that meet our financial stability standards. In addition, we will continue to seek opportunities to reinvest in our properties through
redevelopment and to manage our portfolio through property sales and acquisitions.

The
following discussion and analysis of the results of our operations and financial condition should be read in conjunction with the financial statements.

Results of Operations

Overview

We recognized net income of $15.7 million and net loss attributable to common unitholders of $6.4 million for the three months ended
March 31, 2004, compared to net income of $25.1 million and net loss attributable to common unitholders of $0.2 million for the three months ended March 31, 2003, a
decrease of $9.4 million and $6.2 million, respectively. This decrease was principally due to:



These
decreases were partially offset by:



The
following paragraphs discuss these and other items affecting our results of operations in more detail.

Rental Property Operations

Our net income is primarily generated from the operations of our consolidated properties. The principal components within our total consolidated property
operations are: consolidated same store properties, which consist of all conventional properties that were owned, stabilized and consolidated for all periods presented; and other consolidated
entities, which include acquisition, newly consolidated, affordable and redevelopment properties.

19

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The
following table summarizes the overall performance of our consolidated properties for the three months ended March 31, 2004 and 2003 (in thousands):

Three Months Ended March 31,2004

2003Rental and other property revenues

$
359,902

$
351,398Property operating expenses


165,753


152,256Net operating income

$
194,149

$
199,142


For
the three months ended March 31, 2004, compared to the three months ended March 31, 2003, net operating income for our consolidated property operations decreased by
$5.0 million, or 2.5%. This decrease was principally due to a $9.8 million, or 5.4%, decrease in consolidated same store net operating income. See further discussion of same store
results under the heading "Conventional Same Store Property Operating Results." This decrease was offset by a $3.2 million increase related to operations of acquisition properties, which were
principally comprised of
The Palazzo at Park La Brea and a three-property portfolio purchased in first quarter 2004, as well as three properties purchased in 2003. The decrease was further offset by a $1.6 million
increase related to operations of newly consolidated properties, which are properties that had been previously unconsolidated and accounted for by the equity method (ten properties that were first
consolidated in 2003).

Conventional Same Store Property Operating Results

Same store operating results is a key indicator we use to assess the performance of our property operations and to understand the period over period operations of
a consistent portfolio of properties. We define "same store" properties as conventional properties in which our ownership interest exceeds 10% and the operations of which are stabilized for all
periods presented. To ensure comparability, the information for all periods shown is based on current period ownership. The following table summarizes the unaudited conventional rental property
operations on a "same store" basis (which is not in accordance with generally accepted accounting principles, or GAAP) and reconciles them to consolidated rental property operations (which is in
accordance with GAAP) described in the above comparative discussions (dollars in thousands):

Three Months Ended
March 31,2004

2003Our share of same store revenues

$
271,025

$
274,756Our share of same store expense


115,475


111,316Our share of same store net operating income

$
155,550

$
163,440Minority partners' share of same store net operating income


24,459


26,617Our share of unconsolidated same store net operating income


(6,198
)

(7,045
)Other consolidated entities


20,338


16,130Consolidated net operating income

$
194,149

$
199,142Same Store StatisticsProperties


576


576Apartment units


162,315


162,315Average physical occupancy


89.0
%

90.5
%Average rent collected/unit/month

$
725

$
730


For
the three months ended March 31, 2004, compared to the three months ended March 31, 2003, our share of same store net operating income decreased $7.9 million, or
4.8%. Revenues decreased $3.7 million, or 1.4%, primarily due to lower average rent (down $5 per unit), lower occupancy (down 1.5%), offset by higher utility reimbursements from residents and
decreased bad debt. Expenses increased by $4.2 million, or 3.7%, primarily due to: an increase of $4.4 million in compensation and benefit expense related to a new employee health plan,
increased

20

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staffing
levels and lower capitalized payroll related to lower capital spending; an increase of $1.6 million in utilities due to the increase in the cost of natural gas; and an increase of
$1.3 million in property hazard insurance due to increased casualty losses in the first quarter of 2004. These increases in expense were offset by a decrease of $1.9 million in turnover
costs in the first quarter of 2004 related to fewer new tenant move-ins; a decrease of $0.3 million in administrative and marketing due to lower temporary office help and resident
locater fees; and a decrease of $0.7 million in contract services and repairs and maintenance primarily driven by lower snow removal expense.

Property Management

We earn income from property management primarily from unconsolidated real estate partnerships for which we are the general partner. The income is primarily in
the form of fees generated through property management and other associated activities. Our revenue from property management decreases as we consolidate real estate partnerships and the income
generated is therefore eliminated in consolidation. We expect this trend to continue as we increase our ownership in more of these partnerships or otherwise determine that consolidation is required by
GAAP. Offsetting the revenue earned in property management are the direct expenses associated with property management.

The
following table summarizes the overall performance of our property management for the three months ended March 31, 2004 and 2003 (in thousands):

Three Months Ended March 31,2004

2003Property management revenues, primarily from affiliates

$
8,256

$
9,239Property management expenses


2,342


2,117Net operating income from property management

$
5,914

$
7,122


For
the three months ended March 31, 2004, compared to the three months ended March 31, 2003, property management income decreased by $1.2 million, or 17.0%. This
decrease was principally a result of the consolidation of additional real estate partnerships, which required elimination of the fee income associated with these entities.

Activity Fees and Asset Management

Activity fees are generated from transactional activity including dispositions, syndications, tax credit redevelopments and refinancings. These transactions occur
on varying timetables and thus the income generated may vary from period to period. Asset management income is from the financial management of properties, rather than management of
day-to-day property operations. Offsetting the revenue earned in activity fees and asset management are the direct expenses associated with these activities.

The
following table summarizes the overall performance of our activity fees and asset management for the three months ended March 31, 2004 and 2003 (in thousands):

Three Months Ended March 31,2004

2003Activity fees and asset management revenues, primarily from affiliates

$
8,268

$
5,788Activity and asset management expenses


2,311


1,835Net operating income from activity fees and asset management

$
5,957

$
3,953


For
the three months ended March 31, 2004, compared to the three months ended March 31, 2003, activity fees and asset management income increased by $2.0 million, or
50.7%. This increase was principally a result of $1.4 million, $1.3 million, and $1.2 million of increases related to refinancing, developer, and asset management fees,
respectively, due to a larger number of closed transactions in the first quarter of 2004 than in the first quarter of 2003. These increases were partially offset by a $1.5 million decrease
related to syndication fees.

21

---



Depreciation and Amortization

For the three months ended March 31, 2004, compared to the three months ended March 31, 2003, depreciation and amortization increased
$5.4 million, or 6.3%. This increase was principally due to $3.0 million of additional depreciation related to new capital spending on same store properties, as well as
$1.0 million and $1.5 million of additional depreciation related to the acquisition and newly consolidated properties, respectively.

General and Administrative Expenses

For the three months ended March 31, 2004, compared to the three months ended March 31, 2003, general and administrative expenses increased
$8.9 million, or 91.4%. This increase was principally due to a $3.9 million increase in compensation and benefit expense related to a new employee health plan, increased staffing levels
and accrued
variable compensation, approximately $3.0 million of higher consulting, legal and compliance costs and $1.0 million of benefit in the first quarter of 2003 related to forfeited deposits
on sales.

Other Expenses (Income), Net

Other expenses (income), net includes tax provision/benefit, risk management activities related to our unconsolidated partnerships and partnership expenses.

For
the three months ended March 31, 2004, compared to the three months ended March 31, 2003, other income decreased by $2.5 million, or 68.3%. This decrease was
principally due to a $5.9 million lower tax benefit recognized in 2004 as compared to 2003. In first quarter 2003, there was an $8.0 million tax benefit related to the reversal of an
income tax valuation reserve. This decrease was somewhat offset by an increase in risk operations due to better claim loss experience.

Interest Expense

For the three months ended March 31, 2004, compared to the three months ended March 31, 2003, interest expense, which includes the amortization of
deferred financing costs, increased $4.0 million, or 4.5%. This increase was principally related to a $3.6 million decrease in capitalized interest due to redevelopment properties being
placed in service and an increased amount of debt outstanding related to our acquisition and newly consolidated properties.

Minority Interest in Consolidated Real Estate Partnerships

For the three months ended March 31, 2004, compared to the three months ended March 31, 2003, minority interest in consolidated real estate
partnerships decreased $2.1 million. These decreases were principally a result of decreased earnings caused by lower property operating results than in the prior year offset by increases due to
the minority interest partners' share of our joint venture with GE Real Estate.

Discontinued Operations

For properties accounted for as held for sale under SFAS 144, the results of operations for properties sold during the period or designated as held for
sale at the end of the period are required to be classified as discontinued operations. The property-specific components of net earnings that are classified as discontinued operations include all
property-related revenues and operating expenses, depreciation expense recognized prior to the classification as held for sale, property-specific interest expense to the extent there is secured debt
on the property and the
associated minority interest. In addition, any impairments on assets held for sale, and the net gain on the eventual disposal of properties held for sale is reported as discontinued operations.

For
the three months ended March 31, 2004 and 2003, income from discontinued operations totaled $13.4 million compared to a loss of $0.6 million, respectively, which
includes loss from operations of $0.5 million and income from operations of $2.3 million, respectively. For the three months ended March 31, 2004, the loss from operations
included 17 properties that were sold or classified as held for sale during the first quarter of 2004. For

22

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the
three months ended March 31, 2003, the income from operations included 89 properties that were sold or classified as held for sale in the first quarter of 2004 and all of 2003. Due to
varying number of properties and the timing of sales, income (loss) from operations is not comparable year to year.

During
the three months ended March 31, 2004, we sold ten properties, resulting in a net gain on sale of approximately $10.7 million (which is net of $0.7 million of
related taxes). During the three months ended March 31, 2003, we sold nine properties, resulting in a net gain on sale of approximately $2.2 million (which is net of $1.3 million
of related taxes). Additionally, we recognized $5.3 million in impairments on assets sold or held for sale in the three months ended March 31, 2003.

Gains
(losses) on properties sold are determined on a property-by-property basis and are not comparable year over year due to individual property differences. We
considered the properties sold, as well as the properties classified as held for sale, to be inconsistent with our long-term investment strategy. See Note 8 of the consolidated
financial statements for more details on discontinued operations.

Cumulative Effect of Change in Accounting Principle

For the three months ended March 31, 2004, we recorded a $4.0 million cumulative effect of change in accounting principle related to the
implementation of FIN 46. This charge is attributable to our recognition of cumulative losses allocable to minority interest that would otherwise have resulted in minority interest deficits. See
Note 11 of the consolidated financial statements for further information.

Critical Accounting Policies and Estimates

We prepare our consolidated financial statements in accordance with GAAP, which requires us to make estimates and assumptions. We believe that the following
critical accounting policies involve our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Impairment of Long-Lived Assets

Real estate and other long-lived assets are recorded at cost, less accumulated depreciation, unless considered impaired. If events or circumstances
indicate that the carrying amount of a property may be impaired, we make an assessment of its recoverability by estimating the undiscounted future cash flows, excluding interest charges, of the
property. If the carrying amount exceeds the aggregate undiscounted future cash flows, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the
property.

Real
estate investments are subject to varying degrees of risk. Several factors may adversely affect the economic performance and value of our real estate investments. These factors
include:



Any
adverse changes in these factors could cause an impairment in our long-lived assets, including real estate, goodwill and investments in unconsolidated real estate
partnerships.

23

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Allowance for Losses on Notes Receivable

We estimate the collectibility of notes receivable by assessing the likelihood of ultimate realization of these receivables. We establish an allowance for losses
on notes receivable based on an evaluation of a variety of factors, such as: an amount that is adequate to absorb losses in the existing portfolio; an evaluation of the risk inherent in the portfolio,
including the current credit-worthiness of each borrower; the composition of the portfolio, including specific impaired notes receivable; current economic conditions; full realizable value or the fair
value of the underlying collateral; historical loss experience; our estimate of probable credit losses and other factors. During the three months ended March 31, 2004 and 2003, we identified
and recorded none and $0.7 million in losses on notes receivable, respectively. We will continue to monitor and assess these notes, and we may make changes in required reserves in the future
due to changes in the market environment.

Capitalized Costs

We capitalize direct and allocable indirect costs (including salaries, interest, real estate taxes and other costs) incurred in connection with redevelopment,
Capital Improvement and Capital Replacement activities. We charge to expense as incurred indirect costs that do not relate to the above activities, including general and administrative expenses. The
amounts capitalized depend on the volume and costs of such activities. Based on the level of capital spending during the three months ended March 31, 2004, if capital activities had increased
or decreased during the period by 10%, our income would have increased or decreased, respectively, by $1.1 million. See further discussion under the heading "Capital Expenditures."

24

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Funds From Operations

Funds From Operations, or FFO, is a non-GAAP financial measure that we believe, when considered with the financial data determined in accordance with
GAAP, is helpful to investors in understanding our performance because it captures features particular to real estate performance by recognizing that real estate generally appreciates over time or
maintains residual value to a much greater extent than do other depreciable assets such as machinery, computers or other personal property. The Board of Governors of the National Association of Real
Estate Investment Trusts, or NAREIT, defines FFO as net income (loss), computed in accordance with GAAP, excluding gains and losses from extraordinary items, cumulative effect of change in accounting
principle, gains on dispositions of depreciable real estate, gains on dispositions of real estate from discontinued operations, net of related income taxes, plus real estate related depreciation and
amortization (excluding amortization of financing costs), including depreciation for unconsolidated real estate partnerships, joint ventures and discontinued operations. We calculate FFO based on the
NAREIT definition, as further adjusted for amortization of intangibles and deficit distributions to minority partners. We calculate FFO (diluted) by subtracting redemption related preferred OP Unit
issuance costs and distributions on preferred OP Units, adding back distributions on dilutive preferred securities and adding back the interest expense on dilutive mandatorily redeemable convertible
preferred securities. FFO should not be considered an alternative to net income or net cash flows from operating activities, as calculated in accordance with GAAP, as an indication of our performance
or as a measure of liquidity. FFO is not necessarily indicative of cash available to fund future cash needs. In addition, although FFO is a measure used for comparability in assessing the performance
of real estate investment trusts, there can be no assurance that our basis for computing FFO is comparable with that of other real estate investment trusts. For the three months ended March 31,
2004 and 2003, our FFO is calculated as follows (amounts in thousands):

|                                                                                                                      |                                                                           | Three Months Ended March 31,                                               |        
|--------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------
|
|Net loss attributable to common unitholders(1)                                                                        |                                                                           | $                                                                          | (6,444 
|Adjustments:                                                                                                          |                                                                           |                                                                            |        
|                                                                                                                      | Depreciation and amortization                                             |                                                                            |        
|                                                                                                                      | Depreciation and amortization related to non-real estate assets           |                                                                            |        
|                                                                                                                      | Depreciation of rental property related to minority partners' interest(2) |                                                                            |        
|                                                                                                                      | Depreciation of rental property related to unconsolidated entities        |                                                                            |        
|                                                                                                                      | Loss on dispositions of real estate related to unconsolidated entities    |                                                                            |        
|                                                                                                                      | Deficit distributions to minority partners                                |                                                                            |        
|                                                                                                                      | Cumulative effect of change in accounting principle                       |                                                                            |        
|                                                                                                                      | Discontinued operations:                                                  |                                                                            |        
|                                                                                                                      |                                                                           | Depreciation of rental property, net of minority partners' interest(2)     |        
|                                                                                                                      |                                                                           | Gain on dispositions of real estate, net of minority partners' interest(2) |        
|                                                                                                                      |                                                                           | Recovery of deficit distributions to minority partners                     |        
|                                                                                                                      |                                                                           | Income tax arising from disposals                                          |        
|Preferred OP Unit distributions                                                                                       |                                                                           |                                                                            | 22,097 
|                                                                                                                      |                                                                           |                                                                            |        
|Funds From Operations                                                                                                 |                                                                           | $                                                                          | 91,833 
|Preferred OP Unit distributions                                                                                       |                                                                           |                                                                            | (22,097
|Distributions on dilutive preferred securities                                                                        |                                                                           |                                                                            | 890    
|Interest expense on mandatorily redeemable convertible preferred securities                                           |                                                                           |                                                                            |       
|                                                                                                                      |                                                                           |                                                                            |        
|Funds From Operations attributable to common unitholdersdiluted                                                      |                                                                           | $                                                                          | 70,626 
|                                                                                                                      |                                                                           |                                                                            |        
|Weighted average number of common OP Units, common OP Unit equivalents and dilutive preferred securities outstanding: |                                                                           |                                                                            |        
|                                                                                                                      | Common OP Units and equivalents(3)                                        |                                                                            |        
|                                                                                                                      | Dilutive preferred securities                                             |                                                                            |        
|                                                                                                                      |                                                                           |                                                                            |        
|                                                                                                                      |                                                                           | Total                                                                      |        
|                                                                                                                      |                                                                           |                                                                            |        
|Cash flow provided by operating activities                                                                            |                                                                           | $                                                                          | 41,582 
|Cash flow (used in) provided by investing activities                                                                  |                                                                           |                                                                            | (77,828
|Cash flow provided by (used in) financing activities                                                                  |                                                                           |                                                                            | 14,986 

---

Notes:

25

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Liquidity and Capital Resources

Liquidity is the ability to meet present and future financial obligations either through the sale or maturity of existing assets or by the acquisition of
additional funds through working capital management. Both the coordination of asset and liability maturities and effective working capital management are important to the maintenance of liquidity. Our
primary source of liquidity is cash flow from our operations. Additional sources are proceeds from property sales and proceeds from refinancings of existing mortgage loans and borrowings under new
mortgage loans.

Our
principal uses for liquidity include normal operating activities, payments of principal and interest on outstanding debt, capital expenditures, distributions paid to unitholders and
distributions paid to partners, and
acquisitions of, and investments in, properties. We use our cash provided by operating activities to meet short-term liquidity needs. In the event that the cash provided by operating
activities no longer covers our short-term liquidity demands, we have additional means, such as short-term borrowing availability, proceeds from property sales and
refinancings, to help us meet our short-term liquidity demands. We use the Revolver (described below) for general corporate purposes and to fund investments on an interim basis. We expect
to meet our long-term liquidity requirements, such as debt maturities and property acquisitions, through long-term borrowings, both secured and unsecured, the issuance of debt
or equity securities (including OP Units), the sale of properties and cash generated from operations.

At
March 31, 2004, we had $92.7 million in cash and cash equivalents (including $4.2 million of cash and cash equivalents that is included within Assets Held for
Sale), a decrease of $21.3 million from December 31, 2003. At March 31, 2004, we had $281.4 million of restricted cash (including $2.8 million of restricted cash
that is included within Assets Held for Sale), primarily consisting of reserves and escrows held by lenders for bond sinking funds, capital expenditures, property taxes and insurance. In addition,
cash, cash equivalents and restricted cash are held by partnerships that are not presented on a consolidated basis. The following discussion relates to changes in cash due to operating, investing and
financing activities, which are presented in our Consolidated Statements of Cash Flows.

Operating Activities

For the three months ended March 31, 2004, our net cash provided by operating activities of $41.6 million was primarily due to operating income from
our consolidated properties, which is determined by rental rates, occupancy levels and operating expenses related to our portfolio of properties. This was a decrease of $81.1 million as
compared to the three months ended March 31, 2003, driven by lower property operating results and changes in operating assets and liabilities. These changes primarily related to an increase in
restricted cash related to certain operating escrows, a decrease in accrued liabilities in relation to payment of accrued property taxes and interest, and an increase in our prepaid insurance accounts
as a result of premiums paid. We intend for our net cash from operating activities to fund distributions paid to unitholders.

Investing Activities

For the three months ended March 31, 2004, our net cash used in investing activities of $77.8 million was primarily related to the acquisitions of
The Palazzo at Park La Brea and a three-property portfolio in New York, as well as investments in our existing real estate assets through capital spending (see further discussion on capital
expenditures under the heading "Capital Expenditures"). These uses were offset by proceeds received from sales of properties.

Although
we hold all of our properties for investment, we sell properties when they do not meet our investment criteria or are located in areas that we believe do not justify our
continued investment, in both cases, as compared to alternative uses for our capital. In the three months ended March 31, 2004, we sold ten consolidated properties and eleven unconsolidated
properties. These properties were sold for an aggregate sales price of $128.9 million. The consolidated

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properties
generated proceeds, after payment of transaction costs, of $83.4 million. Our share of the total net proceeds from the sale of the 21 properties, after repayment of existing debt,
payment of transaction costs and distributions to limited partners, was $46.1 million. These proceeds were used to repay a portion of our outstanding short-term indebtedness and for
other corporate purposes.

We
are currently marketing for sale certain real estate properties that are inconsistent with our long-term investment strategy. Proceeds from 2004 dispositions are expected
to be slightly below the levels of 2003, and we plan to use such proceeds to reduce debt, fund capital expenditures on existing assets, fund property and partnership acquisitions, and for other
operating needs and corporate purposes.

Financing Activities

For the three months ended March 31, 2004, net cash provided by financing activities of $15.0 million primarily related to proceeds from the
issuance of Class U Partnership Preferred Units and proceeds from mortgage refinancings. These were offset by payments on our secured notes payable, payment of our distributions, repurchases of
common OP Units and redemptions of mandatorily redeemable preferred securities (see notes to the consolidated financial statements for further details on these activities).



During
the three months ended March 31, 2004, we refinanced or closed mortgage loans on ten consolidated properties generating $77.3 million of proceeds from borrowings
with a weighted average interest rate of 4.86%. Our share of the net proceeds after repayment of existing debt, payment of transaction costs and distributions to limited partners, was
$16.3 million. In addition, we closed mortgage loans on seven unconsolidated properties, with a weighted average interest rate of 3.85%, for net proceeds of $20.4 million, which proceeds
are included in our distributions received from investments in unconsolidated real estate partnerships, within investing activities. Our total net proceeds from these loans of $36.7 million
were used to repay existing short-term debt and for other corporate purposes. In 2004 we intend to continue to refinance mortgage debt to generate proceeds in amounts exceeding our
scheduled amortizations and maturities.

During
the three months ended March 31, 2004, we closed mortgage loans totaling $100.3 million, with a weighted average interest rate of 2.94%, to finance the two
acquisitions that we completed in the first quarter.



We
have an outstanding revolving credit facility, which we refer to as the Revolver, with a syndicate of financial institutions having aggregate lending commitments of
$445 million. At March 31, 2004, the Revolver had an outstanding principal balance of $127.5 million and an interest rate of 3.98% based on weighted average LIBOR contracts
outstanding with various maturities plus 2.85%. The Revolver matures in July 2005. The amount available under the Revolver at March 31, 2004 was $294.5 million (after giving
effect to $23.0 million outstanding for undrawn letters of credit issued under the Revolver). The maximum amount available for borrowing under the Revolver fluctuates based on established
criteria defined therein and is typically the $445 million that has been syndicated.

In
May 2003, we borrowed $250 million through a syndicated term loan, which we refer to as the Term Loan. The Term Loan matures in May 2008 and is repayable at our
option at any time without penalty. At March 31, 2004, the Term Loan had an outstanding principal balance of $250 million and an interest rate of 3.86% (based on a designated LIBOR rate
plus 2.85%). All financial covenant requirements of the Term Loan are the same as the Revolver and the term loan we entered into with a syndicate of financial institutions in connection with the
Casden Merger in March 2002, which we refer to as the Casden Loan. At March 31, 2004, the Casden Loan had an outstanding principal balance of $93.0 million and an interest rate of
3.95% (based on a designated LIBOR rate plus 2.85%). The Casden Loan matures in March 2005. At March 31, 2004, we were in compliance with all of our covenant requirements.

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Capital Expenditures

Effective January 1, 2004, all capital spending is classified as either Capital Replacements, which we refer to as CR, Capital Improvements, which we refer
to as CI, or redevelopment. These categories replace our prior capital spending categoriescapital replacements, capital enhancements, redevelopment, initial capital expenditures, and
disposition capital expenditures. We believe the new classifications will be simpler to apply, allow more discrete differentiation between categories, facilitate sound economic decisions, and assist
investors and analysts in better understanding our capital spending.

Non-redevelopment
capitalizable expenditures are apportioned between CR and CI based on the useful life of the capital item under consideration and the period we have owned
the property (i.e., the portion that was consumed during our ownership of the item represents CR; the portion of the item that was consumed prior to our ownership represents CI).

For
the three months ended March 31, 2004, we spent a total of $12.2 million on Capital Replacements. These are expenditures that do not increase the value, profitability
or useful life of an asset from its original purchase
condition, but represent the share of expenditures that are deemed to replace the consumed portion of acquired capital assets. For the three months ended March 31, 2004, we spent a total of
$9.3 million and $14.1 million, respectively, on Capital Improvements and redevelopment. CI expenditures represent all non-redevelopment capital expenditures that are made to
enhance the value, profitability or useful life of an asset from its original purchase condition, and redevelopment expenditures represent expenditures that substantially upgrade the property.

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The
table below details our share of actual spending, on both consolidated and unconsolidated real estate partnerships, for CR, CI and redevelopment for the three months ended
March 31, 2004 on a per unit and total dollar basis (based on approximately 162,000 ownership equivalent units), and reconciles it to our Consolidated Statement of Cash Flows for the same
period (in thousands, except per unit amounts).

|                                                        |                                                                    | Actual Cost |        | Cost Per Unit
|------------------------------------------------------- | ------------------------------------------------------------------ | ----------- | ------ | -------------
|
|Capital Replacements:                                   |                                                                    |             |        |              
|Building interiors                                      |                                                                    | $           | 3,092  |              
|                                                        | Includes: hot water heaters, kitchen/bath, computers, submetering  |             |        |              
|Building exteriors                                      |                                                                    |             | 1,352  |              
|                                                        | Includes: roofs, exterior painting, electrical, plumbing           |             |        |              
|Landscaping and grounds                                 |                                                                    |             | 782    |              
|                                                        | Includes: parking lot improvements, pool improvements              |             |        |              
|Turnover related                                        |                                                                    |             | 4,317  |              
|                                                        | Includes: carpet, vinyl, tile, appliance, and fixture replacements |             |        |              
|Capitalized payroll and other indirect costs            |                                                                    |             | 2,657  |              
|                                                        |                                                                    |             |        |              
|Total our share of Capital Replacements                 |                                                                    | $           | 12,200 |              
|                                                        |                                                                    |             |        |              
|Capital Improvements:                                   |                                                                    |             |        |              
|                                                        | Conventional                                                       |             |        | 6,847        
|                                                        | Affordable                                                         |             |        | 2,493        
|                                                        |                                                                    |             |        |              
|Total our share of Capital Improvements                 |                                                                    | $           | 9,340  |              
|                                                        |                                                                    |             |        |              
|Redevelopment:                                          |                                                                    |             |        |              
|                                                        | Conventional                                                       |             |        | 10,743       
|                                                        | Affordable                                                         |             |        | 3,368        
|                                                        |                                                                    |             |        |              
|Total our share of redevelopment                        |                                                                    | $           | 14,111 |              
|                                                        |                                                                    |             |        |              
|Total our share of Capital Expenditures                 |                                                                    | $           | 35,651 |              
|                                                        | Plus minority partners' share of consolidated spending             |             |        | 4,905        
|                                                        | Less our share of unconsolidated spending                          |             |        | (2,520       
|                                                        |                                                                    |             |        |              
|Total spending per Consolidated Statement of Cash Flows |                                                                    | $           | 38,036 |              
|                                                        |                                                                    |             |        |              

We
funded all of the above capital expenditures with cash provided by operating activities, working capital, and borrowings under the Revolver.

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Contractual Obligations

This table summarizes information regarding contractual obligations and commitments as of March 31, 2004 (amounts in thousands):

|                                            |  | Total |           | Less than
one year |   | 1 - 3
years |  | 3 - 5
years |           | More than
5 years
|------------------------------------------- |  | ----- | --------- | ------------------ | - | ----------- |  | ----------- | --------- | -----------------
|Scheduled long-term debt maturities         |  | $     | 5,794,338 |                    | $ | 159,702     |  | $           | 851,853   |                  
|Secured credit facility and term loans      |  |       | 470,500   |                    |   |            |  |             | 220,500   |                  
|Mandatorily redeemable preferred securities |  |       | 15,119    |                    |   |            |  |             |          |                  
|Leases for space occupied                   |  |       | 24,281    |                    |   | 4,218       |  |             | 10,119    |                  
|Development fee payments(1)                 |  |       | 30,000    |                    |   | 7,500       |  |             | 20,000    |                  
|                                            |  |       |           |                    |   |             |  |             |           |                  
|Total                                       |  | $     | 6,334,238 |                    | $ | 171,420     |  | $           | 1,102,472 |                  
|                                            |  |       |           |                    |   |             |  |             |           |                  

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Additionally,
in connection with the Casden Merger, we are committed to purchase two properties for minimum consideration of approximately $400 million, provide a
stand-by facility of $64.5 million in debt financing associated with development, and invest up to $50 million for a 20% limited liability company interest in Casden
Properties, LLC. See Note 5 of the consolidated financial statements for detailed information on these commitments.

Future Capital Needs

In addition to the items set forth in "Contractual Obligations" above, we expect to fund any future acquisitions, redevelopment and Capital Improvements
principally with proceeds from property sales (including 1031 exchange proceeds), short-term borrowings, debt and equity financings and operating cash flows. In 2004, we plan to commence
as many as 40 redevelopments with average spending per project in the $2 million to $10 million range.

Off-Balance Sheet Arrangements

We own general and limited partner interests in unconsolidated real estate partnerships, which interests were acquired through portfolio acquisitions, direct
purchases and separate offers to other limited partners. Our total ownership interests in these unconsolidated real estate partnerships ranges from 1% to 50%. However, based on the provisions of the
related partnership agreements, which grant varying degrees of control, we are not deemed to have control of these partnerships sufficient to require or permit consolidation for accounting purposes.
The requirement or ability to consolidate a real estate partnership is governed by FIN 46 (see Note 11 of the consolidated financial statements). There are no lines of credit, side agreements,
or any other derivative financial instruments related to or between our unconsolidated real estate partnerships and us and no material exposure to financial guarantees (see Note 5 of the
consolidated financial statements). Accordingly, our maximum risk of loss related to these unconsolidated real estate partnerships is limited to the aggregate carrying amount of our investment in the
unconsolidated real estate partnerships and any outstanding notes receivable as reported in our consolidated financial statements.

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ITEM 3.Quantitative and Qualitative Disclosures about Market Risk

Our primary market risk exposure relates to changes in interest rates. We are not subject to any foreign currency exchange rate risk or commodity price risk, or
any other material market rate or price risks. We use predominantly long-term, fixed-rate and self-amortizing non-recourse mortgage debt in order to
avoid the refunding and repricing risks of short-term borrowings. We use short-term debt financing and working capital primarily to fund short-term uses and
acquisitions and generally expect to refinance such borrowings with cash from operating activities, property sales proceeds, long-term debt or equity financings.

We
had $1,615.9 million of floating rate debt outstanding at March 31, 2004. Of the total floating rate debt, the major components were floating rate tax-exempt
bond financing ($812.2 million), floating rate secured notes ($333.2 million), the revolving credit facility ($127.5 million), and the term loans ($343.0 million). Based on
this level of debt, an increase in interest rates of 1% would result in our income and cash flows being reduced by $16.2 million on an annual basis. Historically, changes in
tax-exempt interest rates have been at a ratio less than 1:1 with changes in taxable interest rates. Floating rate tax-exempt bond financing is benchmarked against the BMA
Index, which since 1981 has averaged 54.0% of the 10-year Treasury Yield. If this relationship continues, an increase in interest rates of 1% (0.54% in tax-exempt interest
rates) would result in our income and cash flows being reduced by $12.4 million on an annual basis. At March 31, 2004, we had $4,649.0 million of fixed-rate debt
outstanding. As of March 31, 2003, based on our level of floating rate debt of $1,476.0 million, an increase in interest rates of 1% would have resulted in our income and cash flows
being reduced by $14.8 million on an annual basis. The potential reduction of income and cash flows due to an increase in interest rates increased $1.4 million for 2004 compared to 2003,
as a result of the additional debt related to our acquisitions and newly consolidated properties.

We
believe that the fair value of our floating rate secured tax-exempt bond debt and floating rate secured long-term debt as of March 31, 2004 approximate
their carrying values.

ITEM 4.Controls and Procedures

The Partnership's management, with the participation of the chief executive officer and chief financial officer of the General Partner, who are the equivalent of
the Partnership's chief executive officer and the chief financial officer, respectively, has evaluated the effectiveness of our disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on
such evaluation, the chief executive officer and chief financial officer of the General Partner, who are the equivalent of the Partnership's chief executive officer and the chief financial officer,
respectively, have concluded that, as of the end of such period, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, the
information required to be disclosed in the reports that we file or submit under the Exchange Act.

In
addition, there have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)) under the Exchange
Act) during first quarter 2004 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1.Legal Proceedings

See Note 5 in the consolidated financial statements in this Form 10-Q for information regarding legal proceedings, which information is
incorporated by reference in this Item 1.

ITEM 2.Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

We completed tender offers for limited partnership interests and acquisitions of individual properties resulting in the issuance of approximately 12,000 common OP
Units for the three months ended March 31, 2004.

All
of the foregoing issuances were made in private placement transactions exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended.

ITEM 5.Other Information

On April 21, 2004, Aimco redeemed for cash all 3,999,662 outstanding shares of its 9% Class P Convertible Cumulative Preferred Stock for a total
redemption price of $25.0375 per share, which included a redemption price of $25 per share, or $100.0 million, and $0.0375 of accumulated and unpaid dividends through April 20, 2004.
Concurrently, we redeemed all 3,999,662 of the Class P Partnership Preferred Units.

Effective
May 3, 2004, Aimco entered into a settlement agreement related to the litigation with the City and County of San Francisco, its Department of Building Inspectors and
certain employees of that department. In order for the settlement agreement to become effective, certain conditions subsequent must be satisfied. See Note 5 of the consolidated financial
statements for more information.

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ITEM 6. Exhibits and Reports on Form 8-K



|EXHIBIT NO. |  |                                                                                                                                                                                                                                                                
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1        |  | Thirty-ninth amendment to Third Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P. (exhibit 10.1 to Aimco's Quarterly Report on Form 10-Q for the quarterly period ended March 31,
 2004 is incorporated herein by this reference)
|31.1        |  | Certification of the equivalent of the chief executive officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                             
|31.2        |  | Certification of the equivalent of the chief financial officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                             
|32.1        |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                         
|32.2        |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                         
|99.1        |  | Agreement re: disclosure of long-term debt instruments                                                                                                                                                                                                         



None

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AIMCO PROPERTIES, L.P.        SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

| |  | AIMCO PROPERTIES, L.P.
| |  | ----------------------
| |  | By:                   
| |  |                       
| |  | By:                   
| |  |                       
| |  | By:                   

Date: May 10, 2004

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