##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 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
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



AIMCO PROPERTIES, L.P.
 TABLE OF CONTENTS
 FORM 10-Q
 PagePART I. FINANCIAL INFORMATIONITEM 1.Financial StatementsConsolidated Balance Sheets as of March 31, 2008 and December 31, 2007 (Unaudited)
    
    
    2Consolidated Statements of Income for the Three Months Ended March 31, 2008 and 2007
(Unaudited)
    
    
    3Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2008 and
2007 (Unaudited)
    
    
    4Notes to Consolidated Financial Statements (Unaudited)
    
    
    5ITEM 2.Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18ITEM 3.Quantitative and Qualitative Disclosures About Market Risk
    
    
    31ITEM 4.Controls and Procedures
    
    
    31PART II. OTHER INFORMATIONITEM 1.Legal Proceedings
    
    
    32ITEM 1A.Risk Factors
    
    
    32ITEM 2.Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    32ITEM 6.Exhibits
    
    
    33Signatures
    
    
    34Exhibit 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.
 
 CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 March 31,
    
    
    December 31,2008
    
    
    2007ASSETSReal estate:Buildings and improvements
    
    $
    9,740,883
    
    
    $
    9,589,478Land
    
    
    2,642,050
    
    
    
    2,642,521Total real estate
    
    
    12,382,933
    
    
    
    12,231,999Less accumulated depreciation
    
    
    (3,096,960
    )
    
    
    (2,978,468
    )Net real estate
    
    
    9,285,973
    
    
    
    9,253,531Cash and cash equivalents
    
    
    163,083
    
    
    
    210,461Restricted cash
    
    
    302,015
    
    
    
    318,371Accounts receivable, net
    
    
    71,938
    
    
    
    71,463Accounts receivable from affiliates, net
    
    
    35,072
    
    
    
    34,958Deferred financing costs
    
    
    73,589
    
    
    
    78,984Notes receivable from unconsolidated real estate partnerships, net
    
    
    35,441
    
    
    
    35,186Notes receivable from non-affiliates, net
    
    
    144,977
    
    
    
    143,054Notes receivable from Aimco
    
    
    14,961
    
    
    
    14,765Investment in unconsolidated real estate partnerships
    
    
    119,851
    
    
    
    116,086Other assets
    
    
    205,107
    
    
    
    207,783Deferred income tax assets, net
    
    
    15,256
    
    
    
    14,426Assets held for sale
    
    
    98,761
    
    
    
    121,529Total assets
    
    $
    10,566,024
    
    
    $
    10,620,597LIABILITIES AND PARTNERS CAPITALProperty tax-exempt bond financing
    
    $
    942,316
    
    
    $
    941,555Property loans payable
    
    
    6,070,356
    
    
    
    5,966,240Term loans
    
    
    475,000
    
    
    
    475,000Credit facility
    
    
    218,800
    
    
    
    Other borrowings
    
    
    74,492
    
    
    
    75,057Total indebtedness
    
    
    7,780,964
    
    
    
    7,457,852Accounts payable
    
    
    31,775
    
    
    
    56,792Accrued liabilities and other
    
    
    333,929
    
    
    
    449,485Deferred income
    
    
    201,966
    
    
    
    202,289Security deposits
    
    
    50,600
    
    
    
    48,876Liabilities related to assets held for sale
    
    
    72,544
    
    
    
    86,493Total liabilities
    
    
    8,471,778
    
    
    
    8,301,787Minority interest in consolidated real estate partnerships
    
    
    425,388
    
    
    
    442,804Commitments and contingencies (Note 5)PARTNERS CAPITALPreferred units
    
    
    803,640
    
    
    
    803,593General Partner and Special Limited Partner
    
    
    643,169
    
    
    
    853,615Limited Partners
    
    
    257,583
    
    
    
    253,652High Performance Units
    
    
    (29,615
    )
    
    
    (28,703
    )Investment in Aimco Class A Common Stock
    
    
    (5,919
    )
    
    
    (6,151
    )Total partners capital
    
    
    1,668,858
    
    
    
    1,876,006Total liabilities and partners capital
    
    $
    10,566,024
    
    
    $
    10,620,597
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AIMCO PROPERTIES, L.P.
 
 CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per unit data)
(Unaudited)
 Three Months EndedMarch 31,2008
    
    
    2007REVENUES:Rental and other property revenues
    
    $
    417,646
    
    
    $
    394,348Property management revenues, primarily from affiliates
    
    
    2,104
    
    
    
    2,096Asset management and tax credit revenues
    
    
    12,852
    
    
    
    11,630Total revenues
    
    
    432,602
    
    
    
    408,074OPERATING EXPENSES:Property operating expenses
    
    
    204,485
    
    
    
    184,978Property management expenses
    
    
    1,271
    
    
    
    1,483Investment management expenses
    
    
    4,289
    
    
    
    4,466Depreciation and amortization
    
    
    126,524
    
    
    
    118,525General and administrative expenses
    
    
    21,424
    
    
    
    22,077Other expenses, net
    
    
    5,061
    
    
    
    2,970Total operating expenses
    
    
    363,054
    
    
    
    334,499Operating income
    
    
    69,548
    
    
    
    73,575Interest income
    
    
    8,779
    
    
    
    10,339Provision for losses on notes receivable
    
    
    (1,159
    )
    
    
    (1,543
    )Interest expense
    
    
    (107,436
    )
    
    
    (101,548
    )Deficit distributions to minority partners
    
    
    (4,148
    )
    
    
    (1,097
    )Equity in losses of unconsolidated real estate partnerships
    
    
    (1,029
    )
    
    
    (2,986
    )Gain (loss) on dispositions of unconsolidated real estate and other
    
    
    (44
    )
    
    
    20,462Loss before minority interests and discontinued operations
    
    
    (35,489
    )
    
    
    (2,798
    )Minority interest in consolidated real estate partnerships
    
    
    6,970
    
    
    
    (3,768
    )Loss from continuing operations
    
    
    (28,519
    )
    
    
    (6,566
    )Income from discontinued operations, net
    
    
    1,844
    
    
    
    34,564Net (loss) income
    
    
    (26,675
    )
    
    
    27,998Net income attributable to preferred unitholders
    
    
    15,990
    
    
    
    18,130Net (loss) income attributable to common unitholders
    
    $
    (42,665
    )
    
    $
    9,868Earnings (loss) per common unit  basic:Loss from continuing operations (net of preferred distributions)
    
    $
    (0.44
    )
    
    $
    (0.22
    )Income from discontinued operations
    
    
    0.02
    
    
    
    0.31Net (loss) income attributable to common unitholders
    
    $
    (0.42
    )
    
    $
    0.09Earnings (loss) per common unit  diluted:Loss from continuing operations (net of preferred distributions)
    
    $
    (0.44
    )
    
    $
    (0.22
    )Income from discontinued operations
    
    
    0.02
    
    
    
    0.31Net (loss) income attributable to common unitholders
    
    $
    (0.42
    )
    
    $
    0.09Weighted average common units outstanding
    
    
    100,643
    
    
    
    110,395Weighted average common units and equivalents outstanding
    
    
    100,643
    
    
    
    110,395Distributions declared per common unit
    
    $
    0.00
    
    
    $
    0.00
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AIMCO PROPERTIES, L.P.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Three Months EndedMarch 31,2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIES:Net (loss) income
    
    $
    (26,675
    )
    
    $
    27,998Adjustments to reconcile net (loss) income to net cash provided by operating activities:Depreciation and amortization
    
    
    126,524
    
    
    
    118,525Discontinued operations
    
    
    981
    
    
    
    (28,393
    )Other adjustments
    
    
    3,445
    
    
    
    (22,358
    )Net changes in operating assets and operating liabilities
    
    
    (50,024
    )
    
    
    (15,010
    )Net cash provided by operating activities
    
    
    54,251
    
    
    
    80,762CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of real estate
    
    
    
    
    
    
    (77,095
    )Capital expenditures
    
    
    (150,823
    )
    
    
    (121,306
    )Proceeds from dispositions of real estate
    
    
    33,351
    
    
    
    64,540Change in funds held in escrow from tax-free exchanges
    
    
    345
    
    
    
    25,710Purchases of partnership interests and other assets
    
    
    (8,413
    )
    
    
    (14,120
    )Originations of notes receivable from unconsolidated real estate partnerships
    
    
    (3,497
    )
    
    
    (4,322
    )Proceeds from repayment of notes receivable
    
    
    4,880
    
    
    
    13,244Distributions from investments in unconsolidated real estate partnerships
    
    
    232
    
    
    
    3,864Other investing activities
    
    
    10,623
    
    
    
    (623
    )Net cash used in investing activities
    
    
    (113,302
    )
    
    
    (110,108
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from property loans
    
    
    213,321
    
    
    
    460,552Principal repayments on property loans
    
    
    (136,197
    )
    
    
    (222,084
    )Proceeds from tax exempt bond financing
    
    
    21,200
    
    
    
    42,675Principal repayments on tax-exempt bond financing
    
    
    (1,228
    )
    
    
    (31,935
    )Net borrowings (repayments) on revolving credit facility
    
    
    218,800
    
    
    
    (10,000
    )Repurchases of common OP units
    
    
    (199,370
    )
    
    
    (111,612
    )Proceeds from Aimco Class A Common Stock option exercises
    
    
    316
    
    
    
    52,507Payment of distributions to minority interest
    
    
    (54,887
    )
    
    
    (58,388
    )Payment of distributions to General Partner and Special Limited Partner
    
    
    (16,402
    )
    
    
    (11,164
    )Payment of distributions to Limited Partners
    
    
    (18,021
    )
    
    
    (4,653
    )Payment of distributions on High Performance Units
    
    
    (5,972
    )
    
    
    (1,455
    )Payment of distributions to preferred units
    
    
    (16,131
    )
    
    
    (20,243
    )Other financing activities
    
    
    6,244
    
    
    
    (27,518
    )Net cash provided by financing activities
    
    
    11,673
    
    
    
    56,682NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    (47,378
    )
    
    
    27,336CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    210,461
    
    
    
    229,824CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    163,083
    
    
    $
    257,160
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AIMCO PROPERTIES, L.P.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2008
(Unaudited)
 Note 1  Organization
     
    
    owned an equity interest in and consolidated 153,515 units in 655 properties (which we
refer to as consolidated), of which 151,928 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 38,160 units in 417 properties, primarily pursuant to
long-term agreements (including 34,932 units in 381 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.
 Note 7).
  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
  Adoption of SFAS 157
 Fair Value Measurements Effective Date of FASB Statement No. 157
  7




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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 ValueMeasurement
    
    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 ValueMeasurement
    
    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
    
    $
    (22,960
    )Cumulative reduction of carrying amount of debt instruments
subject to total rate of return swaps
    
    $
    22,960
  9




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Changes in Level 3 Fair Value Measurements
  Unrealized
    
    
    Realized gainsFair value at
    
    
    Gains (Losses)
    
    
    (losses)
    
    
    Fair value atDecember 31,
    
    
    included in
    
    
    included in
    
    
    March 31,2007
    
    
    earnings (1)
    
    
    earnings (2)
    
    
    2008Total rate of return swaps
    
    $
    (9,420
    )
    
    $
    (13,540
    )(3)
    
    $
    
    
    
    $
    (22,960
    )Changes in fair value of
debt instruments subject
to total rate of return
swaps
    
    
    9,420
    
    
    
    13,540
    (3)
    
    
    
    
    
    
    22,960Total
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 (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 consolidated statement 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)
  March 31,
    
    
    December 31,2008
    
    
    2007Real estate, net
    
    $
    97,135
    
    
    $
    119,457Other assets
    
    
    1,626
    
    
    
    2,072Assets held for sale
    
    $
    98,761
    
    
    $
    121,529Property debt
    
    $
    71,716
    
    
    $
    85,547Other liabilities
    
    
    828
    
    
    
    946Liabilities related to assets held for sale
    
    $
    72,544
    
    
    $
    86,493
   Three Months EndedMarch 31,2008
    
    
    2007Rental and other property revenues
    
    $
    6,970
    
    
    $
    27,172Property operating expenses
    
    
    (3,405
    )
    
    
    (13,864
    )Depreciation and amortization
    
    
    (1,925
    )
    
    
    (6,978
    )Other expenses, net
    
    
    (5
    )
    
    
    (1,013
    )Operating income
    
    
    1,635
    
    
    
    5,317Interest income
    
    
    118
    
    
    
    307Interest expense
    
    
    (1,188
    )
    
    
    (6,225
    )Gain on extinguishment of debt
    
    
    
    
    
    
    22,852Minority interest in consolidated real estate partnerships
    
    
    (110
    )
    
    
    (2,043
    )Income before gain on dispositions, impairments, deficit
distributions, income taxes and minority interest in Aimco Operating
Partnership
    
    
    455
    
    
    
    20,208Gain on dispositions of real estate, net of minority partners interest
    
    
    1,359
    
    
    
    15,595Real estate impairment losses, net
    
    
    
    
    
    
    (843
    )Deficit distributions to minority partners
    
    
    (56
    )
    
    
    (232
    )Income tax arising from disposals
    
    
    86
    
    
    
    (164
    )Income from discontinued operations, net
    
    $
    1,844
    
    
    $
    34,564
  Note 4  Other Significant Transactions
 Common Stock Repurchases
   11




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Transactions Involving VMS National Properties Joint Venture
   Note 5  Commitments and Contingencies
 Commitments
   Tax Credit Arrangements
  Legal Matters
   12




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Limited Partnerships
  Environmental
  Conditional
Asset Retirement Obligations
 Mold
  Note 6  Business Segments
 Disclosures about Segments of an
Enterprise and Related Information
   13




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Real Estate Segment
  Investment Management Segment
   Investment
    
    
    CorporateReal Estate
    
    
    Management
    
    
    (Not AllocatedSegment
    
    
    Segment
    
    
    to Segments)
    
    
    TotalThree Months Ended March 31, 2008:Rental and other property revenues
    
    $
    417,646
    
    
    $
    
    
    
    $
    
    
    
    $
    417,646Property management revenues, primarily
from affiliates
    
    
    2,104
    
    
    
    
    
    
    
    
    
    
    
    2,104Asset management and tax credit revenues
    
    
    
    
    
    
    12,852
    
    
    
    
    
    
    
    12,852Total revenues
    
    
    419,750
    
    
    
    12,852
    
    
    
    
    
    
    
    432,602Property operating expenses
    
    
    204,485
    
    
    
    
    
    
    
    
    
    
    
    204,485Property management expenses
    
    
    1,271
    
    
    
    
    
    
    
    
    
    
    
    1,271Investment management expenses
    
    
    
    
    
    
    4,289
    
    
    
    
    
    
    
    4,289Depreciation and amortization (1)
    
    
    
    
    
    
    
    
    
    
    126,524
    
    
    
    126,524General and administrative expenses
    
    
    
    
    
    
    
    
    
    
    21,424
    
    
    
    21,424Other expenses, net
    
    
    
    
    
    
    
    
    
    
    5,061
    
    
    
    5,061Total operating expenses
    
    
    205,756
    
    
    
    4,289
    
    
    
    153,009
    
    
    
    363,054Net operating income (loss)
    
    
    213,994
    
    
    
    8,563
    
    
    
    (153,009
    )
    
    
    69,548Other items included in continuing
operations (2)
    
    
    
    
    
    
    2,999
    
    
    
    (101,066
    )
    
    
    (98,067
    )Income (loss) from continuing operations
    
    $
    213,994
    
    
    $
    11,562
    
    
    $
    (254,075
    )
    
    $
    (28,519
    )
  14




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##### Table of Contents



Investment
    
    
    CorporateReal Estate
    
    
    Management
    
    
    (Not AllocatedSegment
    
    
    Segment
    
    
    to Segments)
    
    
    TotalThree Months Ended March 31, 2007:Rental and other property revenues
    
    $
    394,348
    
    
    $
    
    
    
    $
    
    
    
    $
    394,348Property management revenues, primarily
from affiliates
    
    
    2,096
    
    
    
    
    
    
    
    
    
    
    
    2,096Asset management and tax credit revenues
    
    
    
    
    
    
    11,630
    
    
    
    
    
    
    
    11,630Total revenues
    
    
    396,444
    
    
    
    11,630
    
    
    
    
    
    
    
    408,074Property operating expenses
    
    
    184,978
    
    
    
    
    
    
    
    
    
    
    
    184,978Property management expenses
    
    
    1,483
    
    
    
    
    
    
    
    
    
    
    
    1,483Investment management expenses
    
    
    
    
    
    
    4,466
    
    
    
    
    
    
    
    4,466Depreciation and amortization (1)
    
    
    
    
    
    
    
    
    
    
    118,525
    
    
    
    118,525General and administrative expenses
    
    
    
    
    
    
    
    
    
    
    22,077
    
    
    
    22,077Other expenses, net
    
    
    
    
    
    
    
    
    
    
    2,970
    
    
    
    2,970Total operating expenses
    
    
    186,461
    
    
    
    4,466
    
    
    
    143,572
    
    
    
    334,499Net operating income (loss)
    
    
    209,983
    
    
    
    7,164
    
    
    
    (143,572
    )
    
    
    73,575Other items included in continuing
operations (2)
    
    
    
    
    
    
    2,288
    
    
    
    (82,429
    )
    
    
    (80,141
    )Income (loss) from continuing operations
    
    $
    209,983
    
    
    $
    9,452
    
    
    $
    (226,001
    )
    
    $
    (6,566
    )
 (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 real estate segment 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. 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.  15




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##### Table of Contents



Note 7  Earnings per Unit
  Three Months EndedMarch 31,2008
    
    
    2007Numerator:Loss from continuing operations
    
    $
    (28,519
    )
    
    $
    (6,566
    )Less net income attributable to preferred unitholders
    
    
    (15,990
    )
    
    
    (18,130
    )Numerator for basic and diluted earnings per unit
 Loss from continuing operations (net of income
attributable to preferred unitholders)
    
    $
    (44,509
    )
    
    $
    (24,696
    )Income from discontinued operations
    
    $
    1,844
    
    
    $
    34,564Net (loss) income
    
    $
    (26,675
    )
    
    $
    27,998Less net income attributable to preferred unitholders
    
    
    (15,990
    )
    
    
    (18,130
    )Numerator for basic and diluted earnings per unit
 Net (loss) income attributable to common unitholders
    
    $
    (42,665
    )
    
    $
    9,868Denominator:Denominator for basic earnings per unit  weighted
average number of common units outstanding:Common OP Units
    
    
    98,264
    
    
    
    108,016Class I HPUs
    
    
    2,379
    
    
    
    2,379Total common units
    
    
    100,643
    
    
    
    110,395Effect of dilutive securities:Dilutive potential common units
    
    
    
    
    
    
    Denominator for diluted earnings per unit
    
    
    100,643
    
    
    
    110,395Earnings (loss) per common share:Basic earnings (loss) per common unit:Loss from continuing operations (net of income
attributable to preferred unitholders)
    
    $
    (0.44
    )
    
    $
    (0.22
    )Income from discontinued operations
    
    
    0.02
    
    
    
    0.31Net (loss) income attributable to common unitholders
    
    $
    (0.42
    )
    
    $
    0.09Diluted earnings (loss) per common unit:Loss from continuing operations (net of income
attributable to preferred unitholders)
    
    $
    (0.44
    )
    
    $
    (0.22
    )Income from discontinued operations
    
    
    0.02
    
    
    
    0.31Net (loss) income attributable to common unitholders
    
    $
    (0.42
    )
    
    $
    0.09
    16




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##### Table of Contents



Note 8  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
 Note 9  Subsequent Events
   17




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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
      18




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##### Table of Contents



Results of Operations
 Overview
 Three months ended March 31, 2008 compared to three months ended March 31, 2007
  
    
    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;
    
    a decrease in income from discontinued operations, primarily related to lower net gains
on sales of real estate; and
    
    an increase in interest expense, reflecting higher loan principal balances resulting
from refinancings and acquisitions, offset by a reduction in interest rates.
   Business Segment Operating Results
  Real Estate Segment
   19




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##### Table of Contents



Three Months EndedMarch 31,2008
    
    
    2007Real estate segment revenues:Rental and other property revenues
    
    $
    417,646
    
    
    $
    394,348Property management revenues, primarily from
affiliates
    
    
    2,104
    
    
    
    2,096419,750
    
    
    
    396,444Real estate segment expenses:Property operating expenses
    
    
    204,485
    
    
    
    184,978Property management expenses
    
    
    1,271
    
    
    
    1,483205,756
    
    
    
    186,461Real estate segment net operating income
    
    $
    213,994
    
    
    $
    209,983
 Consolidated Conventional Same Store Property Operating Results
  Three Months EndedMarch 31,2008
    
    
    2007
    
    
    ChangeConsolidated same store revenues
    
    $
    288,503
    
    
    $
    278,108
    
    
    
    3.7
    %Consolidated same store expenses
    
    
    120,937
    
    
    
    116,514
    
    
    
    3.8
    %Same store net operating income
    
    
    167,566
    
    
    
    161,594
    
    
    
    3.7
    %Reconciling items (1)
    
    
    46,428
    
    
    
    48,389
    
    
    
    -4.1
    %Real estate segment net operating income
    
    $
    213,994
    
    
    $
    209,983
    
    
    
    1.9
    %Same store operating statistics:Properties
    
    
    348
    
    
    
    348Apartment units
    
    
    103,721
    
    
    
    103,721Average physical occupancy
    
    
    94.8
    %
    
    
    94.4
    %
    
    
    0.4
    %Average rent/unit/month
    
    $
    894
    
    
    $
    872
    
    
    
    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
    20




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##### Table of Contents



Three Months EndedMarch 31,2008
    
    
    2007Asset management and tax credit revenues
    
    $
    12,852
    
    
    $
    11,630Investment management expenses
    
    
    4,289
    
    
    
    4,466Investment segment net operating income (1)
    
    $
    8,563
    
    
    $
    7,164
 (1)
    
    Excludes certain items of income and expense, which are
included in other expenses, 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
 General and Administrative Expenses
  Other Expenses, Net
   Interest Income
   21




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##### Table of Contents



Interest Expense
  Deficit Distributions to Minority Partners
   Gain (Loss) on Dispositions of Unconsolidated Real Estate and Other
   Minority Interest in Consolidated Real Estate Partnerships
   Income from Discontinued Operations, Net
   22




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##### Table of Contents



Critical Accounting Policies and Estimates
  Impairment of Long-Lived Assets
     
    
    the general economic climate;
    
    competition from other apartment communities and other housing options;
    
    local conditions, such as loss of jobs or an increase in the supply of apartments, that
might adversely affect apartment occupancy or rental rates;
    
    changes in governmental regulations and the related cost of compliance;
    
    increases in operating costs (including real estate taxes) due to inflation and other
factors, which may not be offset by increased rents;
    
    changes in tax laws and housing laws, including the enactment of rent control laws or
other laws regulating multifamily housing;
    
    changes in market capitalization rates; and
    
    the relative illiquidity of such investments.
  23




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##### Table of Contents



Notes Receivable and Interest Income Recognition
    Allowance for Losses on Notes Receivable
   Capitalized Costs
   24




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##### Table of Contents



Funds From Operations
   Three Months EndedMarch 31,2008
    
    
    2007Net (loss) income attributable to common unitholders (1)
    
    $
    (42,665
    )
    
    $
    9,868Adjustments:Depreciation and amortization (2)
    
    
    126,524
    
    
    
    118,525Depreciation and amortization related to non-real estate assets
    
    
    (3,949
    )
    
    
    (6,595
    )Depreciation of rental property related to minority partners and
unconsolidated entities (3) (4)
    
    
    (11,040
    )
    
    
    (13,043
    )Loss (gain) on dispositions of unconsolidated real estate and other
    
    
    44
    
    
    
    (20,462
    )Gain on dispositions of non-depreciable assets and debt extinguishment gain
    
    
    
    
    
    
    19,373Deficit distributions to minority partners (5)
    
    
    4,148
    
    
    
    1,097Discontinued operations:Gain on dispositions of real estate, net of minority partners interest (3)
    
    
    (1,359
    )
    
    
    (15,595
    )Depreciation of rental property, net of minority partners interest (3) (4)
    
    
    1,605
    
    
    
    (11,706
    )Deficit distributions to minority partners (5)
    
    
    56
    
    
    
    232Income tax arising from disposals
    
    
    (86
    )
    
    
    164Preferred OP Unit distributions
    
    
    15,990
    
    
    
    18,130Funds From Operations
    
    $
    89,268
    
    
    $
    99,988Preferred OP Unit distributions
    
    
    (15,990
    )
    
    
    (18,130
    )Distributions on dilutive preferred securities
    
    
    1,333
    
    
    
    Funds
From Operations attributable to common unitholders  diluted
    
    $
    74,611
    
    
    $
    81,858Weighted average number of common units, common unit equivalents and dilutive
preferred securities outstanding (7):Common units and equivalents (6)
    
    
    100,937
    
    
    
    114,574Dilutive preferred securities
    
    
    1,901
    
    
    
    Total
    
    
    102,838
    
    
    
    114,574
 Notes:(1)
    
    Represents the numerator for earnings per common unit, calculated in accordance with
GAAP (see Note 7 to the consolidated financial statements in Item 1).(2)
    
    Includes amortization of management contracts where we are the general partner. Such
management contracts were established in certain instances where we acquired a general
partner interest in either a consolidated or an unconsolidated partnership. Because the
recoverability of these management contracts depends primarily on the operations of the
real estate owned by the limited partnerships, we believe it is consistent with the White
Paper to add
back such amortization, as the White Paper directs the add-back of amortization of assets
uniquely significant to the real estate industry.  25




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##### Table of Contents



(3)
    
    Minority partners interest means minority interest in our consolidated real estate
partnerships.(4)
    
    Adjustments related to minority partners share of depreciation of rental property for
the three months ended March 31, 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 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 three months ended
March 31, 2007, was an increase of $9.3 million.(5)
    
    In accordance with GAAP, deficit distributions to minority partners are charges
recognized in our income statement when cash is distributed to a non-controlling partner in
a consolidated real estate partnership in excess of the positive balance in such partners
capital account, which is classified as minority interest on our balance sheet. We record
these charges for GAAP purposes even though there is no economic effect or cost. Deficit
distributions to minority partners occur when the fair value of the underlying real estate
exceeds its depreciated net book value because the underlying real estate has appreciated
or maintained its value. As a result, the recognition of expense for deficit distributions
to minority partners represents, in substance, either (a) our recognition of depreciation
previously allocated to the non-controlling partner or (b) a payment related to the
non-controlling partners share of real estate appreciation. Based on White Paper guidance
that requires real estate depreciation and gains to be excluded from FFO, we add back
deficit distributions and subtract related recoveries in our reconciliation of net income
to FFO.(6)
    
    Represents the denominator for earnings per common unit  diluted, calculated in
accordance with GAAP, plus additional common unit equivalents that are dilutive for FFO.(7)
    
    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 consolidated financial statements in Item 1. Liquidity and Capital Resources
    Operating Activities
   26




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##### Table of Contents



Investing Activities
    Capital Expenditures
    27




---



##### Table of Contents



Aimcos
    
    
    PerShare of
    
    
    EffectiveExpenditures
    
    
    UnitCapital Replacements Detail:Building and grounds
    
    $
    6,334
    
    
    $
    49Turnover related
    
    
    11,129
    
    
    
    86Capitalized site payroll and indirect costs
    
    
    3,895
    
    
    
    30Our share of Capital Replacements
    
    $
    21,358
    
    
    $
    165Capital Replacements:Conventional
    
    $
    20,183
    
    
    $
    179Affordable
    
    
    1,175
    
    
    $
    70Our share of Capital Replacements
    
    
    21,358
    
    
    $
    165Capital Improvements:Conventional
    
    
    24,455
    
    
    $
    217Affordable
    
    
    1,617
    
    
    $
    96Our share of Capital Improvements
    
    
    26,072
    
    
    $
    201Casualties:Conventional
    
    
    2,681Affordable
    
    
    619Our share of casualties
    
    
    3,300Redevelopment:Conventional projects
    
    
    64,244Tax credit projects
    
    
    17,735Our share of redevelopment
    
    
    81,979Entitlement
    
    
    6,198Our share of capital expenditures
    
    
    138,907Plus minority partners share of consolidated spending
    
    
    12,106Less our share of unconsolidated spending
    
    
    (190
    )Total capital expenditures per consolidated statement of cash flows
    
    $
    150,823
   Financing Activities
   28




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##### Table of Contents



Mortgage Debt
  Fair Value Measurements
  Accounting for
Derivative Instruments and Hedging Activities
 Fair Value Measurements
      29




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##### Table of Contents



Credit Facility
    Partners Capital Transactions
      30




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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
   31




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. Legal Proceedings
  
 ITEM 1A. Risk Factors
  
 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
 Repurchases of Equity Securities.
 Maximum NumberTotal Number of
    
    
    of  Units thatTotal
    
    
    Average
    
    
    Units Purchased as
    
    
    May Yet BeNumber
    
    
    Price
    
    
    Part of Publicly
    
    
    Purchased Underof Units
    
    
    Paid
    
    
    Announced Plans
    
    

the PlansPeriod
    
    Purchased
    
    
    per Unit
    
    
    or Programs (1)
    
    

or Programs (1) (2)January 1  January 31, 2008
    
    
    4,537,900
    
    
    $
    33.33
    
    
    
    N/A
    
    
    
    N/AFebruary 1  February 29, 2008
    
    
    546,518
    
    
    
    36.60
    
    
    
    N/A
    
    
    
    N/AMarch 1  March 31, 2008
    
    
    1,738
    
    
    
    36.64
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    5,086,156
    
    
    $
    33.68
 (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. On January 29, 2008, Aimcos board of directors increased
the number of shares authorized for repurchase by 25.0 million shares. As of March 31,
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.
  32




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##### Table of Contents



ITEM 6. Exhibits
  EXHIBIT NO.31.1
    
    Certification of Chief Executive Officer pursuant to Securities
Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to Securities
Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 200299.1
    
    Agreement re: disclosure of long-term debt instruments
  33




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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)   34




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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 re: disclosure of long-term debt instruments