##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 0-24497
 
 AIMCO Properties, L.P.
  Delaware
    
    84-1275621(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)4582 South Ulster Street Parkway, Suite 1100Denver, Colorado
    
    80237(Address of principal executive offices)
    
    (Zip Code)
 (303) 757-8101
 Not Applicable
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



AIMCO PROPERTIES, L.P.
 TABLE OF CONTENTS
 FORM 10-Q
 PagePART I. FINANCIAL INFORMATIONITEM 1.Financial StatementsCondensed Consolidated Balance Sheets as of June 30, 2008 and December 31, 2007 (Unaudited)
    
    
    2Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2008 and 2007 (Unaudited)
    
    
    3Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2008 and 2007 (Unaudited)
    
    
    4Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    5ITEM 2.Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20ITEM 3.Quantitative and Qualitative Disclosures About Market Risk
    
    
    36ITEM 4.Controls and Procedures
    
    
    36PART II. OTHER INFORMATIONITEM 1A.Risk Factors
    
    
    37ITEM 2.Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    37ITEM 6.Exhibits
    
    
    38Signatures
    
    
    39Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2Exhibit 99.1
   1




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PART I. FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements
 AIMCO PROPERTIES, L.P.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands)
 (Unaudited)
 June 30,
    
    
    December 31,2008
    
    
    2007ASSETSReal estate:Buildings and improvements
    
    $
    9,275,563
    
    
    $
    8,944,353Land
    
    
    2,551,108
    
    
    
    2,542,322Total real estate
    
    
    11,826,671
    
    
    
    11,486,675Less accumulated depreciation
    
    
    (2,961,642
    )
    
    
    (2,746,898
    )Net real estate
    
    
    8,865,029
    
    
    
    8,739,777Cash and cash equivalents
    
    
    330,163
    
    
    
    210,461Restricted cash
    
    
    316,892
    
    
    
    316,233Accounts receivable, net
    
    
    78,439
    
    
    
    71,463Accounts receivable from affiliates, net
    
    
    32,420
    
    
    
    34,958Deferred financing costs, net
    
    
    68,768
    
    
    
    74,166Notes receivable from unconsolidated real estate partnerships, net
    
    
    31,869
    
    
    
    35,186Notes receivable from non-affiliates, net
    
    
    147,635
    
    
    
    143,054Notes receivable from Aimco
    
    
    15,156
    
    
    
    14,765Investment in unconsolidated real estate partnerships
    
    
    105,257
    
    
    
    116,086Other assets
    
    
    192,777
    
    
    
    207,783Deferred income tax assets, net
    
    
    11,059
    
    
    
    14,426Assets held for sale
    
    
    145,670
    
    
    
    642,239Total assets
    
    $
    10,341,134
    
    
    $
    10,620,597LIABILITIES AND PARTNERS CAPITALProperty tax-exempt bond financing
    
    $
    910,300
    
    
    $
    901,985Property loans payable
    
    
    5,809,951
    
    
    
    5,563,703Term loans
    
    
    475,000
    
    
    
    475,000Credit facility
    
    
    145,000
    
    
    
    Other borrowings
    
    
    87,839
    
    
    
    75,057Total indebtedness
    
    
    7,428,090
    
    
    
    7,015,745Accounts payable
    
    
    30,931
    
    
    
    56,792Accrued liabilities and other
    
    
    366,197
    
    
    
    449,485Deferred income
    
    
    205,494
    
    
    
    201,498Security deposits
    
    
    48,450
    
    
    
    45,622Liabilities related to assets held for sale
    
    
    113,723
    
    
    
    532,645Total liabilities
    
    
    8,192,885
    
    
    
    8,301,787Minority interest in consolidated real estate partnerships
    
    
    416,872
    
    
    
    442,804Commitments and contingencies (Note 5)Partners capitalPreferred units
    
    
    803,761
    
    
    
    803,593General Partner and Special Limited Partner
    
    
    713,721
    
    
    
    853,615Limited Partners
    
    
    244,068
    
    
    
    253,652High Performance Units
    
    
    (24,496
    )
    
    
    (28,703
    )Investment in Aimco Class A Common Stock
    
    
    (5,677
    )
    
    
    (6,151
    )Total partners capital
    
    
    1,731,377
    
    
    
    1,876,006Total liabilities and partners capital
    
    $
    10,341,134
    
    
    $
    10,620,597
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AIMCO PROPERTIES, L.P.
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (In thousands, except per unit data)
 (Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007REVENUES:Rental and other property revenues
    
    $
    384,191
    
    
    $
    372,289
    
    
    $
    768,354
    
    
    $
    734,645Property management revenues, primarily from affiliates
    
    
    1,415
    
    
    
    1,271
    
    
    
    3,519
    
    
    
    3,367Asset management and tax credit revenues
    
    
    38,175
    
    
    
    15,178
    
    
    
    51,027
    
    
    
    26,808Total revenues
    
    
    423,781
    
    
    
    388,738
    
    
    
    822,900
    
    
    
    764,820OPERATING EXPENSES:Property operating expenses
    
    
    174,158
    
    
    
    168,992
    
    
    
    361,441
    
    
    
    336,618Property management expenses
    
    
    1,187
    
    
    
    2,452
    
    
    
    2,457
    
    
    
    3,935Investment management expenses
    
    
    5,728
    
    
    
    5,521
    
    
    
    10,017
    
    
    
    9,987Depreciation and amortization
    
    
    120,692
    
    
    
    110,743
    
    
    
    239,086
    
    
    
    221,923General and administrative expenses
    
    
    27,064
    
    
    
    24,024
    
    
    
    48,488
    
    
    
    46,100Other expenses (income), net
    
    
    5,459
    
    
    
    (3,128
    )
    
    
    10,297
    
    
    
    (379
    )Total operating expenses
    
    
    334,288
    
    
    
    308,604
    
    
    
    671,786
    
    
    
    618,184Operating income
    
    
    89,493
    
    
    
    80,134
    
    
    
    151,114
    
    
    
    146,636Interest income
    
    
    914
    
    
    
    10,294
    
    
    
    9,506
    
    
    
    20,526Provision for losses on notes receivable, net
    
    
    (534
    )
    
    
    (735
    )
    
    
    (1,693
    )
    
    
    (2,278
    )Interest expense
    
    
    (102,365
    )
    
    
    (95,578
    )
    
    
    (203,677
    )
    
    
    (190,586
    )Deficit distributions to minority partners, net
    
    
    (1,265
    )
    
    
    (1,554
    )
    
    
    (5,276
    )
    
    
    (2,482
    )Equity in (losses) earnings of unconsolidated real estate partnerships
    
    
    (843
    )
    
    
    930
    
    
    
    (1,872
    )
    
    
    (2,055
    )Provision for real estate impairment losses
    
    
    (2,518
    )
    
    
    
    
    
    
    (2,518
    )
    
    
    Gain on dispositions of unconsolidated real estate and other
    
    
    139
    
    
    
    602
    
    
    
    129
    
    
    
    21,068Loss before minority interests and discontinued operations
    
    
    (16,979
    )
    
    
    (5,907
    )
    
    
    (54,287
    )
    
    
    (9,171
    )Minority interest in consolidated real estate partnerships
    
    
    (2,364
    )
    
    
    (43
    )
    
    
    4,579
    
    
    
    (3,756
    )Loss from continuing operations
    
    
    (19,343
    )
    
    
    (5,950
    )
    
    
    (49,708
    )
    
    
    (12,927
    )Income from discontinued operations, net
    
    
    303,918
    
    
    
    27,616
    
    
    
    307,608
    
    
    
    62,591Net income
    
    
    284,575
    
    
    
    21,666
    
    
    
    257,900
    
    
    
    49,664Net income attributable to preferred unitholders
    
    
    15,595
    
    
    
    18,128
    
    
    
    31,585
    
    
    
    36,258Net income attributable to common unitholders
    
    $
    268,980
    
    
    $
    3,538
    
    
    $
    226,315
    
    
    $
    13,406Earnings (loss) per common unit  basic:Loss from continuing operations (net of preferred distributions)
    
    $
    (0.36
    )
    
    $
    (0.22
    )
    
    $
    (0.82
    )
    
    $
    (0.45
    )Income from discontinued operations
    
    
    3.12
    
    
    
    0.25
    
    
    
    3.11
    
    
    
    0.57Net income attributable to common unitholders
    
    $
    2.76
    
    
    $
    0.03
    
    
    $
    2.29
    
    
    $
    0.12Earnings (loss) per common unit  diluted:Loss from continuing operations (net of preferred distributions)
    
    $
    (0.36
    )
    
    $
    (0.22
    )
    
    $
    (0.82
    )
    
    $
    (0.45
    )Income from discontinued operations
    
    
    3.12
    
    
    
    0.25
    
    
    
    3.11
    
    
    
    0.57Net income attributable to common unitholders
    
    $
    2.76
    
    
    $
    0.03
    
    
    $
    2.29
    
    
    $
    0.12Weighted average common units outstanding
    
    
    97,350
    
    
    
    110,185
    
    
    
    98,995
    
    
    
    110,290Weighted average common units and equivalents outstanding
    
    
    97,350
    
    
    
    110,185
    
    
    
    98,995
    
    
    
    110,290Distributions declared per common unit
    
    $
    0.60
    
    
    $
    0.57
    
    
    $
    0.60
    
    
    $
    0.57
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AIMCO PROPERTIES, L.P.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
 Six MonthsEnded June 30,2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    257,900
    
    
    $
    49,664Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    239,086
    
    
    
    221,923Discontinued operations
    
    
    (303,077
    )
    
    
    (32,600
    )Other adjustments
    
    
    34,385
    
    
    
    (22,806
    )Net changes in operating assets and operating liabilities
    
    
    12,339
    
    
    
    (23,543
    )Net cash provided by operating activities
    
    
    240,633
    
    
    
    192,638CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of real estate
    
    
    (56,534
    )
    
    
    (174,991
    )Capital expenditures
    
    
    (307,378
    )
    
    
    (268,608
    )Proceeds from dispositions of real estate
    
    
    856,932
    
    
    
    259,631Change in funds held in escrow from tax-free exchanges
    
    
    345
    
    
    
    9,975Purchases of partnership interests and other assets
    
    
    (20,131
    )
    
    
    (25,451
    )Originations of notes receivable from unconsolidated real estate partnerships
    
    
    (4,864
    )
    
    
    (8,640
    )Proceeds from repayment of notes receivable
    
    
    5,044
    
    
    
    14,152Distributions from investments in unconsolidated real estate partnerships
    
    
    474
    
    
    
    2,045Other investing activities
    
    
    310
    
    
    
    5,154Net cash provided by (used in) investing activities
    
    
    474,198
    
    
    
    (186,733
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from property loans
    
    
    455,523
    
    
    
    791,330Principal repayments on property loans
    
    
    (600,683
    )
    
    
    (528,459
    )Proceeds from tax exempt bond financing
    
    
    21,200
    
    
    
    82,350Principal repayments on tax-exempt bond financing
    
    
    (32,495
    )
    
    
    (58,659
    )Net borrowings on revolving credit facility
    
    
    145,000
    
    
    
    14,000Repurchases of common OP units
    
    
    (352,306
    )
    
    
    (136,603
    )Proceeds from Aimco Class A Common Stock option exercises
    
    
    440
    
    
    
    53,232Payment of distributions to minority interest
    
    
    (108,282
    )
    
    
    (116,594
    )Payment of distributions to General Partner and Special Limited Partner
    
    
    (76,169
    )
    
    
    (32,198
    )Payment of distributions to Limited Partners
    
    
    (22,384
    )
    
    
    (4,653
    )Payment of distributions on High Performance Units
    
    
    (7,399
    )
    
    
    (1,455
    )Payment of distributions on preferred units
    
    
    (31,605
    )
    
    
    (36,592
    )Other financing activities
    
    
    14,031
    
    
    
    (3,401
    )Net cash (used in) provided by financing activities
    
    
    (595,129
    )
    
    
    22,298NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    119,702
    
    
    
    28,203CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    210,461
    
    
    
    229,824CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    330,163
    
    
    $
    258,027
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AIMCO PROPERTIES, L.P.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 (Unaudited)
 Note 1  Organization
     
    
    owned an equity interest in and consolidated 140,750 units in 614 properties (which we
refer to as consolidated), of which 139,259 units were also managed by us;
    
    owned an equity interest in and did not consolidate 10,662 units in 91 properties (which
we refer to as unconsolidated), of which 5,009 units were also managed by us; and
    
    provided services for or managed 37,260 units in 409 properties, primarily pursuant to
long-term agreements (including 34,038 units in 374 properties for which we provide asset
management services only, and not also property management services). In certain cases we
may indirectly own generally less than one percent of the operations of such properties
through a partnership syndication or other fund.
   5




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Note 2  Basis of Presentation
   Principles of Consolidation
     6




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Use of Estimates
   Accounting for the Impairment or Disposal of Long-Lived
Assets,
   Income Taxes
   7




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Adoption of SFAS 157
 Fair Value Measurements Effective Date of FASB Statement No. 157
 Basis of Fair Value Measurement (Valuation Hierarchy)
  Level 1 
    
    Unadjusted quoted prices for identical and unrestricted assets or
liabilities in active marketsLevel 2 
    
    Quoted prices for similar assets and liabilities in active markets,
and inputs that are observable for the asset or liability, either
directly or indirectly, for substantially the full term of the
financial instrumentLevel 3 
    
    Unobservable inputs that are significant to the fair value measurement
   Fair Value Measurement
    
    Valuation MethodologiesNotes receivable
    
    We assess the collectibility of notes
receivable on a periodic basis, which
assessment consists primarily of an
evaluation of cash flow projections
of the borrower to determine whether
estimated cash flows are sufficient
to repay principal and interest in
accordance with the contractual terms
of the note. We recognize
impairments on notes receivable when
it is probable that principal and
interest will not be received in
accordance with the contractual terms
of the loan. The amount of the
impairment to be recognized generally
is based on the fair value of the
real estate, the collateral for the
loan, which represents the primary
source of loan repayment. The fair
value of the collateral, such as real
estate or interests in real estate
partnerships, is estimated through
income and market valuation
approaches using information such as
broker estimates, purchase prices for
recent transactions on comparable
assets and net operating income
capitalization analyses using
observable and unobservable inputs
such as capitalization rates, asset
quality grading, geographic location
analysis, and local supply and demand
observations.Total rate of return swaps
    
    Our total rate of return swaps have
contractually-defined termination
values generally equal to the
difference between the fair value and
the counterpartys purchased value of
the underlying borrowings. Upon
termination, we are required to pay
the counterparty the difference if
the fair value is less than the
purchased value, and the counterparty
is required to pay us the difference
if the fair value is greater than the
purchased value. The underlying
borrowings are generally callable, at
our option, at face value prior to
maturity and with no prepayment
penalty. Due to our control of the
call features in the underlying
borrowings, we believe the inherent
value of any differential between the
fixed and variable cash payments due
under the swaps would be
significantly discounted by a market
participant willing to purchase or
assume any rights and obligations
under these contracts.
  8




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Fair Value Measurement
    
    Valuation MethodologiesTotal rate of return swaps
(continued)
    
    The swaps are generally
cross-collateralized with other swap
contracts with the same counterparty
and do not allow transfer or
assignment, thus there is no
alternate or secondary market for
these instruments. Accordingly, our
assumptions of the fair value that a
willing market participant would
assign in valuing these instruments
are based on a hypothetical market in
which the highest and best use of
these contracts is in-use in
combination with the related
borrowings, similar to how we utilize
the contracts.
Based on these assumptions, we
believe the termination value, or
exit value, of the swaps approximates
the fair value that would be assigned
by a willing market participant. We
calculate the termination value using
a market approach by reference to
estimates of the fair value of the
underlying borrowings, which are
discussed below, and an evaluation of
potential changes in the credit
quality of the counterparties to
these arrangements. We compare our
estimates of fair value of the swaps
and related borrowings to valuations
provided by the counterparties on a
quarterly basis.Our method for calculating fair value
of the swaps generally results in
changes in fair value equal to the
changes in fair value of the related
borrowings. We believe these
instruments are highly effective in
offsetting the changes in fair value
of the borrowings during the hedging
period.Changes in fair value of
borrowings subject to total rate
of return swaps
    
    We recognize changes in the fair
value of certain borrowings subject
to total rate of return swaps, which
we have designated as fair value
hedges in accordance with Statement
of Financial Accounting Standards No.
133, Accounting for Derivative
Instruments and Hedging Activities,
or SFAS 133.We estimate the fair value of debt
instruments using an income and
market approach, including comparison
of the contractual terms to
observable and unobservable inputs
such as market interest rate risk
spreads, collateral quality and
loan-to-value ratios on similarly
encumbered assets within our
portfolio. These borrowings are
collateralized and non-recourse to
us; therefore, we believe changes in
our credit rating will not materially
affect a market participants
estimate of the borrowings fair
value.
   Assets (Liabilities)Total rate of return swaps
    
    $
    (15,929
    )Cumulative reduction of carrying amount of debt instruments
subject to total rate of return swaps
    
    $
    15,929
  9




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Changes in Level 3 Fair Value Measurements
  Unrealized
    
    
    Realized gainsFair value at
    
    
    Gains (Losses)
    
    
    (losses)
    
    
    Fair valueDecember 31,
    
    
    included in
    
    
    included in
    
    
    at June 30,2007
    
    
    earnings (1)
    
    
    earnings (2)
    
    
    2008Total rate of return swaps
    
    $
    (9,420
    )
    
    $
    (6,509
    )(3)
    
    $
    
    
    
    $
    (15,929
    )Changes in fair value of
debt instruments subject
to total rate of return
swaps
    
    
    9,420
    
    
    
    6,509
    (3)
    
    
    
    
    
    
    15,929Total
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 (1)
    
    Unrealized gains (losses) relate to periodic revaluations of fair value and have not
resulted from the settlement of a swap position.(2)
    
    For total rate of return swaps, realized gains (losses) occur upon the settlement,
resulting from the repayment of the underlying borrowings or the early termination of the
swap, and include any net amounts paid or received upon such settlement.(3)
    
    Included in interest expense in the accompanying condensed consolidated statements of
income. Adoption of SFAS 159
 The
Fair Value Option for Financial Asset and Financial Liabilities
 Note
3  Real Estate Acquisitions and Dispositions
 Real Estate Acquisitions
   10




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Real Estate Dispositions (Discontinued Operations)
  June 30,
    
    
    December 31,2008
    
    
    2007Real estate, net
    
    $
    142,674
    
    
    $
    633,212Other assets
    
    
    2,996
    
    
    
    9,027Assets held for sale
    
    $
    145,670
    
    
    $
    642,239Property debt
    
    $
    112,588
    
    
    $
    527,653Other liabilities
    
    
    1,135
    
    
    
    4,992Liabilities related to assets held for sale
    
    $
    113,723
    
    
    $
    532,645
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Rental and other property revenues
    
    $
    36,207
    
    
    $
    54,288
    
    
    $
    76,661
    
    
    $
    113,452Property operating expenses
    
    
    (19,606
    )
    
    
    (25,774
    )
    
    
    (40,214
    )
    
    
    (56,990
    )Depreciation and amortization
    
    
    (5,884
    )
    
    
    (12,662
    )
    
    
    (15,939
    )
    
    
    (26,985
    )Other expenses, net
    
    
    (2,271
    )
    
    
    (651
    )
    
    
    (2,498
    )
    
    
    (1,885
    )Operating income
    
    
    8,446
    
    
    
    15,201
    
    
    
    18,010
    
    
    
    27,592Interest income
    
    
    39
    
    
    
    367
    
    
    
    340
    
    
    
    782Interest expense
    
    
    (5,383
    )
    
    
    (9,842
    )
    
    
    (12,695
    )
    
    
    (22,607
    )Gain on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,852Minority interest in consolidated real estate
partnerships
    
    
    257
    
    
    
    35
    
    
    
    174
    
    
    
    (2,064
    )Income before gain on dispositions of real
estate, impairment losses, deficit
distributions to minority partners, income
tax and minority interest in Aimco Operating
Partnership
    
    
    3,359
    
    
    
    5,761
    
    
    
    5,829
    
    
    
    26,555Gain on dispositions of real estate, net of
minority partners interest
    
    
    314,025
    
    
    
    24,311
    
    
    
    315,350
    
    
    
    39,901Real estate impairment (losses) recoveries, net
    
    
    (4,018
    )
    
    
    60
    
    
    
    (4,018
    )
    
    
    (783
    )Recovery of deficit distributions (deficit
distributions) to minority partners
    
    
    7,701
    
    
    
    81
    
    
    
    7,510
    
    
    
    (321
    )Income tax arising from dispositions
    
    
    (17,149
    )
    
    
    (2,597
    )
    
    
    (17,063
    )
    
    
    (2,761
    )Income from discontinued operations, net
    
    $
    303,918
    
    
    $
    27,616
    
    
    $
    307,608
    
    
    $
    62,591
  11




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##### Table of Contents



Note 4  Other Significant Transactions
 Common Stock Repurchases
  Transactions Involving VMS National Properties Joint Venture
    12




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##### Table of Contents



Note 5  Commitments and Contingencies
 Commitments
   Tax Credit Arrangements
  Legal Matters
  Limited Partnerships
  Environmental
   13




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##### Table of Contents



Conditional
Asset Retirement Obligations
 Mold
  FLSA Litigation As previously disclosed, we and NHP Management Company (NHPMN), our subsidiary, were defendants in a lawsuit,
filed as a collective action in August 2003 in the United States District Court for the District of Columbia, alleging
that they willfully violated the Fair Labor Standards Act (FLSA) by failing to pay maintenance workers overtime for
time worked in excess of 40 hours per week (overtime claims). The plaintiffs also contended that we and NHPMN failed
to compensate maintenance workers for time that they were required to be on-call (on-call claims). In March 2007,
the court in the District of Columbia decertified the collective action. In July 2007, plaintiffs counsel filed
individual cases in Federal court in 22 different jurisdictions. In the second quarter 2008, we settled the overtime
cases involving 652 plaintiffs and established a framework for resolving the 88 remaining on-call claims and the
attorneys fees claimed by plaintiffs counsel. As a result, the lawsuits asserted in the 22 Federal courts will be
dismissed.  14




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##### Table of Contents



Note 6  Earnings per Unit
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Numerator:Loss from continuing operations
    
    $
    (19,343
    )
    
    $
    (5,950
    )
    
    $
    (49,708
    )
    
    $
    (12,927
    )Less net income attributable to preferred unitholders
    
    
    (15,595
    )
    
    
    (18,128
    )
    
    
    (31,585
    )
    
    
    (36,258
    )Numerator for basic and diluted earnings per unit
 Loss from continuing operations (net of income
attributable to preferred unitholders)
    
    $
    (34,938
    )
    
    $
    (24,078
    )
    
    $
    (81,293
    )
    
    $
    (49,185
    )Income from discontinued operations
    
    $
    303,918
    
    
    $
    27,616
    
    
    $
    307,608
    
    
    $
    62,591Net income
    
    $
    284,575
    
    
    $
    21,666
    
    
    $
    257,900
    
    
    $
    49,664Less net income attributable to preferred unitholders
    
    
    (15,595
    )
    
    
    (18,128
    )
    
    
    (31,585
    )
    
    
    (36,258
    )Numerator for basic and diluted earnings per unit
 Net income attributable to common unitholders
    
    $
    268,980
    
    
    $
    3,538
    
    
    $
    226,315
    
    
    $
    13,406Denominator:Denominator for basic earnings per unit  weighted
average number of common units outstanding:Common OP Units
    
    
    94,971
    
    
    
    107,806
    
    
    
    96,616
    
    
    
    107,911Class I HPUs
    
    
    2,379
    
    
    
    2,379
    
    
    
    2,379
    
    
    
    2,379Total common units
    
    
    97,350
    
    
    
    110,185
    
    
    
    98,995
    
    
    
    110,290Effect of dilutive securities:Dilutive potential common units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Denominator for diluted earnings per unit
    
    
    97,350
    
    
    
    110,185
    
    
    
    98,995
    
    
    
    110,290Earnings (loss) per common unit:Basic earnings (loss) per common unit:Loss from continuing operations (net of income
attributable to preferred unitholders)
    
    $
    (0.36
    )
    
    $
    (0.22
    )
    
    $
    (0.82
    )
    
    $
    (0.45
    )Income from discontinued operations
    
    
    3.12
    
    
    
    0.25
    
    
    
    3.11
    
    
    
    0.57Net income attributable to common unitholders
    
    $
    2.76
    
    
    $
    0.03
    
    
    $
    2.29
    
    
    $
    0.12Diluted earnings (loss) per common unit:Loss from continuing operations (net of income
attributable to preferred unitholders)
    
    $
    (0.36
    )
    
    $
    (0.22
    )
    
    $
    (0.82
    )
    
    $
    (0.45
    )Income from discontinued operations
    
    
    3.12
    
    
    
    0.25
    
    
    
    3.11
    
    
    
    0.57Net income attributable to common unitholders
    
    $
    2.76
    
    
    $
    0.03
    
    
    $
    2.29
    
    
    $
    0.12
    15




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##### Table of Contents



Note 7  Recent Accounting Developments
 Business Combinations  a replacement of FASB Statement No. 141
 Noncontrolling Interests in Consolidated Financial Statements  an amendment of ARB No. 51
 Disclosures about Derivative Instruments and Hedging Activities  an amendment of FASB Statement
No. 133
 Determining Whether Instruments Granted in
Share-Based Payment Transactions are Participating Securities
  16




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##### Table of Contents



Note 8  Business Segments
 Disclosures about Segments of an
Enterprise and Related Information
  Real Estate Segment
  Investment Management Segment
   Investment
    
    
    CorporateReal Estate
    
    
    Management
    
    
    (Not AllocatedSegment
    
    
    Segment
    
    
    to Segments)
    
    
    TotalThree Months Ended June 30, 2008:Rental and other property revenues
    
    $
    384,191
    
    
    $
    
    
    
    $
    
    
    
    $
    384,191Property management revenues, primarily
from affiliates
    
    
    1,415
    
    
    
    
    
    
    
    
    
    
    
    1,415Asset management and tax credit revenues
    
    
    
    
    
    
    38,175
    
    
    
    
    
    
    
    38,175Total revenues
    
    
    385,606
    
    
    
    38,175
    
    
    
    
    
    
    
    423,781Property operating expenses
    
    
    174,158
    
    
    
    
    
    
    
    
    
    
    
    174,158Property management expenses
    
    
    1,187
    
    
    
    
    
    
    
    
    
    
    
    1,187Investment management expenses
    
    
    
    
    
    
    5,728
    
    
    
    
    
    
    
    5,728Depreciation and amortization (1)
    
    
    
    
    
    
    
    
    
    
    120,692
    
    
    
    120,692General and administrative expenses
    
    
    
    
    
    
    
    
    
    
    27,064
    
    
    
    27,064Other expenses, net
    
    
    
    
    
    
    
    
    
    
    5,459
    
    
    
    5,459Total operating expenses
    
    
    175,345
    
    
    
    5,728
    
    
    
    153,215
    
    
    
    334,228Net operating income (loss)
    
    
    210,261
    
    
    
    32,447
    
    
    
    (153,215
    )
    
    
    89,493Other items included in continuing
operations (2)
    
    
    
    
    
    
    (1,185
    )
    
    
    (107,651
    )
    
    
    (108,836
    )Income (loss) from continuing operations
    
    $
    210,261
    
    
    $
    31,262
    
    
    $
    (260,866
    )
    
    $
    (19,343
    )
  17




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##### Table of Contents



Investment
    
    
    CorporateReal Estate
    
    
    Management
    
    
    (Not AllocatedSegment
    
    
    Segment
    
    
    to Segments)
    
    
    TotalThree Months Ended June 30, 2007:Rental and other property revenues
    
    $
    372,289
    
    
    $
    
    
    
    $
    
    
    
    $
    372,289Property management revenues, primarily
from affiliates
    
    
    1,271
    
    
    
    
    
    
    
    
    
    
    
    1,271Asset management and tax credit revenues
    
    
    
    
    
    
    15,178
    
    
    
    
    
    
    
    15,178Total revenues
    
    
    373,560
    
    
    
    15,178
    
    
    
    
    
    
    
    388,738Property operating expenses
    
    
    168,992
    
    
    
    
    
    
    
    
    
    
    
    168,992Property management expenses
    
    
    2,452
    
    
    
    
    
    
    
    
    
    
    
    2,452Investment management expenses
    
    
    
    
    
    
    5,521
    
    
    
    
    
    
    
    5,521Depreciation and amortization (1)
    
    
    
    
    
    
    
    
    
    
    110,743
    
    
    
    110,743General and administrative expenses
    
    
    
    
    
    
    
    
    
    
    24,024
    
    
    
    24,024Other income, net
    
    
    
    
    
    
    
    
    
    
    (3,128
    )
    
    
    (3,128
    )Total operating expenses
    
    
    171,444
    
    
    
    5,521
    
    
    
    131,639
    
    
    
    308,604Net operating income (loss)
    
    
    202,116
    
    
    
    9,657
    
    
    
    (131,639
    )
    
    
    80,134Other items included in continuing
operations (2)
    
    
    
    
    
    
    2,512
    
    
    
    (88,596
    )
    
    
    (86,084
    )Income (loss) from continuing operations
    
    $
    202,116
    
    
    $
    12,169
    
    
    $
    (220,235
    )
    
    $
    (5,950
    )
 Investment
    
    
    CorporateReal Estate
    
    
    Management
    
    
    (Not AllocatedSegment
    
    
    Segment
    
    
    to Segments)
    
    
    TotalSix Months Ended June 30, 2008:Rental and other property revenues
    
    $
    768,354
    
    
    $
    
    
    
    $
    
    
    
    $
    768,354Property management revenues, primarily
from affiliates
    
    
    3,519
    
    
    
    
    
    
    
    
    
    
    
    3,519Asset management and tax credit revenues
    
    
    
    
    
    
    51,027
    
    
    
    
    
    
    
    51,027Total revenues
    
    
    771,873
    
    
    
    51,027
    
    
    
    
    
    
    
    822,900Property operating expenses
    
    
    361,441
    
    
    
    
    
    
    
    
    
    
    
    361,441Property management expenses
    
    
    2,457
    
    
    
    
    
    
    
    
    
    
    
    2,457Investment management expenses
    
    
    
    
    
    
    10,017
    
    
    
    
    
    
    
    10,017Depreciation and amortization (1)
    
    
    
    
    
    
    
    
    
    
    239,086
    
    
    
    239,086General and administrative expenses
    
    
    
    
    
    
    
    
    
    
    48,488
    
    
    
    48,488Other expenses, net
    
    
    
    
    
    
    
    
    
    
    10,297
    
    
    
    10,297Total operating expenses
    
    
    363,898
    
    
    
    10,017
    
    
    
    297,871
    
    
    
    671,786Net operating income (loss)
    
    
    407,975
    
    
    
    41,010
    
    
    
    (297,871
    )
    
    
    151,114Other items included in continuing
operations (2)
    
    
    
    
    
    
    1,814
    
    
    
    (202,636
    )
    
    
    (200,822
    )Income (loss) from continuing operations
    
    $
    407,975
    
    
    $
    42,824
    
    
    $
    (500,507
    )
    
    $
    (49,708
    )
  18




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##### Table of Contents



Investment
    
    
    CorporateReal Estate
    
    
    Management
    
    
    (Not AllocatedSegment
    
    
    Segment
    
    
    to Segments)
    
    
    TotalSix Months Ended June 30, 2007:Rental and other property revenues
    
    $
    734,645
    
    
    $
    
    
    
    $
    
    
    
    $
    734,645Property management revenues, primarily
from affiliates
    
    
    3,367
    
    
    
    
    
    
    
    
    
    
    
    3,367Asset management and tax credit revenues
    
    
    
    
    
    
    26,808
    
    
    
    
    
    
    
    26,808Total revenues
    
    
    738,012
    
    
    
    26,808
    
    
    
    
    
    
    
    764,820Property operating expenses
    
    
    336,618
    
    
    
    
    
    
    
    
    
    
    
    336,618Property management expenses
    
    
    3,935
    
    
    
    
    
    
    
    
    
    
    
    3,935Investment management expenses
    
    
    
    
    
    
    9,987
    
    
    
    
    
    
    
    9,987Depreciation and amortization (1)
    
    
    
    
    
    
    
    
    
    
    221,923
    
    
    
    221,923General and administrative expenses
    
    
    
    
    
    
    
    
    
    
    46,100
    
    
    
    46,100Other income, net
    
    
    
    
    
    
    
    
    
    
    (379
    )
    
    
    (379
    )Total operating expenses
    
    
    340,553
    
    
    
    9,987
    
    
    
    267,644
    
    
    
    618,184Net operating income (loss)
    
    
    397,459
    
    
    
    16,821
    
    
    
    (267,644
    )
    
    
    146,636Other items included in continuing
operations (2)
    
    
    
    
    
    
    4,800
    
    
    
    (164,363
    )
    
    
    (159,563
    )Income (loss) from continuing operations
    
    $
    397,459
    
    
    $
    21,621
    
    
    $
    (432,007
    )
    
    $
    (12,927
    )
 (1)
    
    Our chief operating decision maker assesses the performance of real estate using, among other
measures, net operating income, excluding depreciation and amortization. Accordingly, we do
not allocate depreciation and amortization to the real estate segment.(2)
    
    Other items in continuing operations for the investment management segment include accretion
income recognized on discounted notes receivable and other income items associated with
transactional activities. Other items in continuing operations not allocated to segments
include: (i) interest income and expense; (ii) recoveries of, or provisions for, losses on
notes receivable and impairment of real estate, net; (iii) deficit distributions to minority
partners; (iv) equity in losses of unconsolidated real estate partnerships; (v) gains on
dispositions of unconsolidated real estate and other; and (vi) minority interests. Note 9  Subsequent Events Between
July 1, 2008 and July 31, 2008, Aimco repurchased 2,902,900 shares of its Class A Common Stock for cash
totaling $100.0 million, or an average price of $34.45 per share (including commissions). Concurrently, we repurchased
an equal number of common OP Units from Aimco. On July 18, 2008, we declared a special cash distribution of $3.00 per unit payable on August 29, 2008, to holders
of record of common OP Units and High Performance Units on July 28, 2008. The special distribution, totaling
approximately $285.5 million will be paid on 95,151,333 common OP Units and High Performance Units, including
85,619,144 common OP Units held by Aimco. We plan to distribute to Aimco common OP Units equal to the number of shares
issued pursuant to Aimcos corresponding special dividend (discussed below), in addition to approximately $51.3 million
in cash. Holders of common OP Units other than Aimco and holders of High Performance Units will receive the special
distribution entirely in cash, which totals $28.6 million. Unit and per unit amounts disclosed in the accompanying
condensed consolidated financial statements and notes thereto have not been retroactively adjusted for the effect of
units to be issued pursuant to this special distribution as the number of units is not presently determinable. Such
retroactive adjustments will be reflected in consolidated financial
statements prepared subsequent to the payment
date. Also on July 18, 2008, Aimcos board of directors declared a corresponding special dividend of $3.00 per share
payable on August 29, 2008, to holders of record of Aimco Class A Common Stock on July 28, 2008. A portion of the
special dividend in the amount of $0.60 per share represents payment of the regular dividend for the quarter ended June
30, 2008, and a portion in the amount of $2.40 per share represents an additional dividend associated with actual and
projected taxable gains from property dispositions in 2008. Aimco stockholders have the option to elect to receive
payment of the special dividend in cash or shares, except that the aggregate amount of cash payable to all stockholders
in the special dividend is limited to approximately $51.3 million plus cash paid in lieu of fractional shares. The
special dividend, totaling approximately $256.8 million, will be paid on 85,619,144 shares issued and outstanding on
the record date, which includes 436,479 shares held by us and our consolidated subsidiaries. Aimco expects to pay
approximately $205.5 million of the special dividend through the issuance of shares of Common Stock, which will be
determined based on the average closing price of Aimcos Class A Common Stock on August 21 and 22, 2008.  19




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##### Table of Contents



ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward Looking Statements
 The Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements in certain circumstances. Certain information included in this Report
contains or may contain information that is forward-looking, including, without limitation,
statements regarding the effect of acquisitions and redevelopments, our future financial
performance, including our ability to maintain current or meet projected occupancy, rent levels and
same store results, and the effect of government regulations. Actual results may differ materially
from those described in the forward-looking statements and, in addition, will be affected by a
variety of risks and factors that are beyond our control including, without limitation: natural
disasters and severe weather such as hurricanes; national and local economic conditions; the
general level of interest rates; energy costs; the terms of governmental regulations that affect us
and interpretations of those regulations; the competitive environment in which we operate;
financing risks, including the risk that our cash flows from operations may be insufficient to meet
required payments of principal and interest; real estate risks, including fluctuations in real
estate values and the general economic climate in local markets and competition for residents in
such markets; insurance risks; acquisition and development risks, including failure of such
acquisitions to perform in accordance with projections; the timing of acquisitions and
dispositions; litigation, including costs associated with prosecuting or defending claims and any
adverse outcomes; and possible environmental liabilities, including costs, fines or penalties that
may be incurred due to necessary remediation of contamination of properties presently owned or
previously owned by us. In addition, Aimcos current and continuing qualification as a real estate
investment trust involves the application of highly technical and complex provisions of the
Internal Revenue Code and depends on its ability to meet the various requirements imposed by the
Internal Revenue Code, through actual operating results, distribution levels and diversity of stock
ownership. Readers should carefully review our financial statements and the notes thereto, as well
as the section entitled Risk Factors described in Item 1A of our Annual Report on Form 10-K for
the year ended December 31, 2007, 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
      20




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##### Table of Contents



Results of Operations
 Overview
 Three months ended June 30, 2008 compared to three months ended June 30, 2007
  
    
    an increase in income from discontinued operations, primarily related to higher net
gains on sales of real estate;
    
    an increase in asset management and tax credit revenues, which is attributed to
increases in promote income resulting from asset disposition activities; and
    
    an increase in net operating income from property operations, which is attributable to
improved operating results of same store properties.
  
    
    an increase in interest expense, reflecting higher loan principal balances resulting
from refinancings, offset by a reduction in interest rates; and
    
    a decrease in interest income, primarily related to an adjustment of accretion of
discounted notes receivable and lower interest rates.
 Six months ended June 30, 2008 compared to six months ended June 30, 2007
  
    
    an increase in income from discontinued operations, primarily related to higher net
gains on sales of real estate;
    
    an increase in asset management and tax credit revenues, which is attributed to
increases in promote income resulting from asset disposition activities;
    
    an increase in net operating income from property operations, which is attributable to
improved operating results of same store properties; and
    
    changes in the effects of minority interests in our consolidated real estate
partnerships.
  21




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##### Table of Contents




    
    an increase in interest expense, reflecting higher loan principal balances resulting
from refinancings, offset by a reduction in interest rates;
    
    a decrease in interest income, primarily related to an adjustment of accretion of
discounted notes receivable and lower interest rates; and
    
    the recognition in 2007 of deferred debt extinguishment gains in connection with the
refinancing of certain mortgage loans that had been restructured in a 1997 bankruptcy
settlement.
  Business Segment Operating Results
  Real Estate Segment
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Real estate segment revenues:Rental and other property revenues
    
    $
    384,191
    
    
    $
    372,289
    
    
    $
    768,354
    
    
    $
    734,645Property management revenues,
primarily from affiliates
    
    
    1,415
    
    
    
    1,271
    
    
    
    3,519
    
    
    
    3,367385,606
    
    
    
    373,560
    
    
    
    771,873
    
    
    
    738,012Real estate segment expenses:Property operating expenses
    
    
    174,158
    
    
    
    168,992
    
    
    
    361,441
    
    
    
    336,618Property management expenses
    
    
    1,187
    
    
    
    2,452
    
    
    
    2,457
    
    
    
    3,935175,345
    
    
    
    171,444
    
    
    
    363,898
    
    
    
    340,553Real estate segment net operating
income
    
    $
    210,261
    
    
    $
    202,116
    
    
    $
    407,975
    
    
    $
    397,459
  22




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##### Table of Contents



Consolidated Conventional Same Store Property Operating Results
  Three Months Ended June 30,2008
    
    
    2007
    
    
    ChangeConsolidated same store revenues
    
    $
    256,529
    
    
    $
    252,331
    
    
    
    1.7
    %Consolidated same store expenses
    
    
    101,863
    
    
    
    103,506
    
    
    
    -1.6
    %Same store net operating income
    
    
    154,666
    
    
    
    148,825
    
    
    
    3.9
    %Reconciling items (1)
    
    
    55,595
    
    
    
    53,291
    
    
    
    4.3
    %Real estate segment net operating income
    
    $
    210,261
    
    
    $
    202,116
    
    
    
    4.0
    %Same store operating statistics:Properties
    
    
    301
    
    
    
    301Apartment units
    
    
    89,868
    
    
    
    89,868Average physical occupancy
    
    
    94.8
    %
    
    
    94.7
    %
    
    
    0.1
    %Average rent/unit/month
    
    $
    919
    
    
    $
    899
    
    
    
    2.2
    %
 (1)
    
    Reflects property revenues and property operating expenses related to
consolidated properties other than same store properties (e.g., affordable,
acquisition, redevelopment and newly consolidated properties) and casualty gains
and losses.  Six Months Ended June 30,2008
    
    
    2007
    
    
    ChangeConsolidated same store revenues
    
    $
    509,463
    
    
    $
    496,352
    
    
    
    2.6
    %Consolidated same store expenses
    
    
    205,668
    
    
    
    203,619
    
    
    
    1.0
    %Same store net operating income
    
    
    303,795
    
    
    
    292,733
    
    
    
    3.8
    %Reconciling items (1)
    
    
    104,180
    
    
    
    104,726
    
    
    
    -0.5
    %Real estate segment net operating income
    
    $
    407,975
    
    
    $
    397,459
    
    
    
    2.6
    %Same store operating statistics:Properties
    
    
    299
    
    
    
    299Apartment units
    
    
    89,375
    
    
    
    89,375Average physical occupancy
    
    
    94.8
    %
    
    
    94.6
    %
    
    
    0.2
    %Average rent/unit/month
    
    $
    917
    
    
    $
    895
    
    
    
    2.5
    %
 (1)
    
    Reflects property revenues and property operating expenses related to
consolidated properties other than same store properties (e.g., affordable,
acquisition, redevelopment and newly consolidated properties) and casualty gains
and losses.  Investment Management Segment
   23




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##### Table of Contents



Three Months Ended,
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Asset management and tax credit revenues
    
    $
    38,175
    
    
    $
    15,178
    
    
    $
    51,027
    
    
    $
    26,808Investment management expenses
    
    
    5,728
    
    
    
    5,521
    
    
    
    10,017
    
    
    
    9,987Investment segment net operating income (1)
    
    $
    32,447
    
    
    $
    9,657
    
    
    $
    41,010
    
    
    $
    16,821
 (1)
    
    Excludes certain items of income and expense, which are
included in other expenses (income), net, interest expense, interest
income and gain (loss) on dispositions of unconsolidated real estate
and other in our consolidated statements of income.   Other Operating Expenses (Income)
 Depreciation and Amortization
 Use of Estimates
 Use of Estimates
 General and Administrative Expenses
    24




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##### Table of Contents



Other Expenses (Income), Net
  Use of Estimates
 Use of Estimates
 Interest Income
    Interest Expense
    25




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##### Table of Contents



Deficit Distributions to Minority Partners
    Provision for Real Estate Impairment Losses
   Gain on Dispositions of Unconsolidated Real Estate and Other
   Minority Interest in Consolidated Real Estate Partnerships
     26




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##### Table of Contents



Income from Discontinued Operations, Net
       Critical Accounting Policies and Estimates
  Impairment of Long-Lived Assets
   27




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##### Table of Contents




    
    the general economic climate;
    
    competition from other apartment communities and other housing options;
    
    local conditions, such as loss of jobs or an increase in the supply of apartments, that
might adversely affect apartment occupancy or rental rates;
    
    changes in governmental regulations and the related cost of compliance;
    
    increases in operating costs (including real estate taxes) due to inflation and other
factors, which may not be offset by increased rents;
    
    changes in tax laws and housing laws, including the enactment of rent control laws or
other laws regulating multifamily housing;
    
    changes in market capitalization rates; and
    
    the relative illiquidity of such investments.
  Notes Receivable and Interest Income Recognition
    28




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Allowance for Losses on Notes Receivable
   Capitalized Costs
   Funds From Operations
   29




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income attributable to common unitholders (1)
    
    $
    268,980
    
    
    $
    3,538
    
    
    $
    226,315
    
    
    $
    13,406Adjustments:Depreciation and amortization
    
    
    120,692
    
    
    
    110,743
    
    
    
    239,086
    
    
    
    221,923Depreciation and amortization related to non-real estate
assets
    
    
    (5,027
    )
    
    
    (4,795
    )
    
    
    (8,927
    )
    
    
    (11,353
    )Depreciation of rental property related to minority
partners
interest and unconsolidated entities(2) (3)
    
    
    (3,989
    )
    
    
    (1,808
    )
    
    
    (14,048
    )
    
    
    (13,752
    )Gain on dispositions of unconsolidated real estate and other
    
    
    (139
    )
    
    
    (602
    )
    
    
    (129
    )
    
    
    (21,068
    )Gain on dispositions of non-depreciable assets and debt
extinguishment gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,373Deficit distributions to minority partners, net (4)
    
    
    1,265
    
    
    
    1,554
    
    
    
    5,276
    
    
    
    2,482Discontinued operations:Gain on dispositions of real estate, net of minority
partners interest (2)
    
    
    (314,025
    )
    
    
    (24,311
    )
    
    
    (315,350
    )
    
    
    (39,901
    )Depreciation of rental property, net of minority partners
interest (2) (3)
    
    
    5,233
    
    
    
    9,520
    
    
    
    13,936
    
    
    
    4,021Deficit distributions (recovery of deficit
distributions) to minority partners (4)
    
    
    (7,701
    )
    
    
    (81
    )
    
    
    (7,510
    )
    
    
    321Income tax arising from disposals
    
    
    17,149
    
    
    
    2,597
    
    
    
    17,063
    
    
    
    2,761Preferred OP Unit distributions
    
    
    15,595
    
    
    
    18,128
    
    
    
    31,585
    
    
    
    36,258Funds From Operations
    
    $
    98,033
    
    
    $
    114,483
    
    
    $
    187,297
    
    
    $
    214,471Preferred OP Unit distributions
    
    
    (15,595
    )
    
    
    (18,128
    )
    
    
    (31,585
    )
    
    
    (36,258
    )Distributions on dilutive preferred securities
    
    
    1,759
    
    
    
    58
    
    
    
    3,092
    
    
    
    58Funds From Operations attributable to common
unitholders  diluted
    
    $
    84,197
    
    
    $
    96,413
    
    
    $
    158,804
    
    
    $
    178,271Weighted average number of common units, common
unit equivalents and dilutive preferred securities
outstanding (5) (6):Common units and equivalents
    
    
    97,846
    
    
    
    113,461
    
    
    
    99,390
    
    
    
    114,016Dilutive preferred securities
    
    
    2,332
    
    
    
    76
    
    
    
    2,117
    
    
    
    38Total
    
    
    100,178
    
    
    
    113,537
    
    
    
    101,507
    
    
    
    114,054
  (1)
    
    Represents the numerator for earnings per common unit, calculated in accordance with
GAAP (see Note 6 to the condensed consolidated financial statements in Item 1).(2)
    
    Minority partners interest means minority interest in our consolidated real estate
partnerships.(3)
    
    Adjustments related to minority partners share of depreciation of rental property for
the six months ended June 30, 2007, include the subtraction of $15.1 million and $17.8
million for continuing operations and discontinued operations, respectively, related to the
VMS debt extinguishment gains (see Note 4 to the condensed consolidated financial
statements in Item 1). These subtractions are required because we added back the minority
partners share of
depreciation related to rental property in determining FFO in prior periods. Accordingly,
the net effect of the VMS debt extinguishment gains on our FFO for the six months ended June
30, 2007, was an increase of $9.3 million.(4)
    
    In accordance with GAAP, deficit distributions to minority partners are charges
recognized in our income statement when cash is distributed to a non-controlling partner in
a consolidated real estate partnership in excess of the positive balance in such partners
capital account, which is classified as minority interest on our balance sheet. We record
these charges for GAAP purposes even though there is no economic effect or cost. Deficit
distributions to minority partners occur when the fair value of the underlying real estate
exceeds its depreciated net book value because the underlying real estate has appreciated
or maintained its value. As a result, the recognition of expense for deficit distributions
to minority partners represents, in substance, either (a) our recognition of depreciation
previously allocated to the non-controlling partner or (b) a payment related to the
non-controlling partners share of real estate appreciation. Based on White Paper guidance
that requires real estate depreciation and gains to be excluded from FFO, we add back
deficit distributions and subtract related recoveries in our reconciliation of net income
to FFO.(5)
    
    Represents the denominator for earnings per common unit  diluted, calculated in
accordance with GAAP, plus additional common unit equivalents that are dilutive for FFO.(6)
    
    Weighted average common units, common unit equivalents and dilutive preferred
securities amounts for the periods presented have been retroactively adjusted for the
effect of 4,573,735 common OP Units issued to Aimco pursuant to the special distribution
discussed in Note 1 to the condensed consolidated financial statements in Item 1.  30




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##### Table of Contents



Liquidity and Capital Resources
    Operating Activities
  Investing Activities
     31




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##### Table of Contents



Capital Expenditures
     32




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##### Table of Contents



Aimcos
    
    
    PerShare of
    
    
    EffectiveExpenditures
    
    
    UnitCapital Replacements Detail:Building and grounds
    
    $
    14,636
    
    
    $
    113Turnover related
    
    
    23,604
    
    
    
    181Capitalized site payroll and indirect costs
    
    
    7,076
    
    
    
    54Our share of Capital Replacements
    
    $
    45,316
    
    
    $
    348Capital Replacements:Conventional
    
    $
    42,413
    
    
    $
    375Affordable
    
    
    2,903
    
    
    $
    171Our share of Capital Replacements
    
    
    45,316
    
    
    $
    348Capital Improvements:Conventional
    
    
    49,739
    
    
    $
    440Affordable
    
    
    5,598
    
    
    $
    331Our share of Capital Improvements
    
    
    55,337
    
    
    $
    425Casualties:Conventional
    
    
    5,491Affordable
    
    
    1,256Our share of casualties
    
    
    6,747Redevelopment:Conventional projects
    
    
    127,110Tax credit projects
    
    
    37,730Our share of redevelopment
    
    
    164,840Entitlement
    
    
    11,393Our share of capital expenditures
    
    
    283,633Plus minority partners share of consolidated spending
    
    
    24,144Less our share of unconsolidated spending
    
    
    (399
    )Total capital expenditures per condensed consolidated
statement of cash flows
    
    $
    307,378
   Financing Activities
  Mortgage Debt
   33




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##### Table of Contents



Fair Value Measurements
  Accounting for
Derivative Instruments and Hedging Activities
 Fair Value Measurements
     34




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##### Table of Contents



Credit Facility
    Partners Capital Transactions
     35




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##### Table of Contents



Future Capital Needs
  
 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
    
 ITEM 4. Controls and Procedures
 Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
   36




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1A. Risk Factors
  
 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
 Repurchases of Equity Securities.
 Maximum NumberTotal Number of
    
    
    of Units thatTotal
    
    
    Average
    
    
    Units Purchased as
    
    
    May Yet BeNumber
    
    
    Price
    
    
    Part of Publicly
    
    
    Purchased Under theof Units
    
    
    Paid
    
    
    Announced Plans
    
    
    Plans or ProgramsPeriod
    
    Purchased
    
    
    per Unit
    
    
    or Programs (1)
    
    
    (2)April 1  April 30, 2008
    
    
    1,646,307
    
    
    $
    38.46
    
    
    
    N/A
    
    
    
    N/AMay 1  May 31, 2008
    
    
    2,162,273
    
    
    $
    39.26
    
    
    
    N/A
    
    
    
    N/AJune 1  June 30, 2008
    
    
    132,267
    
    
    $
    38.79
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    3,940,847
    
    
    $
    38.91
 (1)
    
    The terms of our Partnership Agreement do not provide for a maximum number of units
that may be repurchased, and other than the express terms of our Partnership Agreement, we
have no publicly announced plans or programs of repurchase. However, whenever Aimco
repurchases its Class A Common Stock, it is expected that Aimco will fund the repurchase
with a concurrent repurchase by us of common OP Units held by Aimco at a price per unit
that is equal to the price per share paid for the Class A Common Stock.(2)
    
    Aimcos board of directors has, from time to time, authorized Aimco to repurchase
shares of Class A Common Stock. As of June 30, 2008, Aimco was authorized to repurchase
approximately 28.2 million additional shares. This authorization has no expiration date.
These repurchases may be made from time to time in the open market or in privately
negotiated transactions. Distribution Payments.
  37




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##### Table of Contents



ITEM 6. Exhibits
  EXHIBIT NO.31.1
    
    
    Certification of Chief Executive Officer pursuant to Securities
Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    
    Certification of Chief Financial Officer pursuant to Securities
Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 200299.1
    
    
    Agreement Regarding
Disclosure of Long-Term Debt Instruments
  38




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##### Table of Contents



AIMCO PROPERTIES, L.P.
 
 SIGNATURES
  AIMCO PROPERTIES, L.P.By:
    AIMCO-GP, Inc., its general partnerBy:
    /s/ THOMAS M. HERZOGThomas M. HerzogExecutive Vice President and Chief Financial Officer
(duly authorized officer and principal financial officer)By:
    /s/ PAUL BELDINPaul BeldinSenior Vice President and Chief Accounting Officer   39




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##### Table of Contents



Exhibit Index
 EXHIBIT NO.
    
    EXHIBIT TITLE31.1
    
    
    Certification of Chief Executive Officer pursuant to Securities
Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    
    Certification of Chief Financial Officer pursuant to Securities
Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 200299.1
    
    
    Agreement Regarding
Disclosure of Long-Term Debt Instruments