##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, DC 20549


FORM 10-K


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the fiscal year ended December 31, 2004                                                 
|OR        
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|           |  | For the transition period
    from           to           .                                 

Commission File Number 1-10272


Archstone-Smith Operating Trust


(Exact name of Registrant as Specified in Its Charter)


|                                                                   |  |                                      
|------------------------------------------------------------------ |  | -------------------------------------
|MARYLAND                                                           |  | 74-6056896                           
|(State or other jurisdiction of
    incorporation or organization) |  | (IRS employer
    identification no.)

9200 E. Panorama Circle, Suite 400


Englewood, Colorado 80112


(Address of principal executive offices and zip code)


(303) 708-5959


(Registrants telephone number, including area code)


Securities registered pursuant to Section 12(b) of the
Act: None


Securities registered pursuant to Section 12(g) of the
Act:


Class A-1 Common Units


(Title of Class)


þ o


o


þ o






DOCUMENTS INCORPORATED BY REFERENCE












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|                                                           |  |                                                                                           |  |                                                                      |    |      |    | 
|---------------------------------------------------------- |  | ----------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------- | -- | ---- | -- | 
|                                                           |  | Item                                                                                      |  | Description                                                          |    | Page |   
|                                                           |  |                                                                                           |  |                                                                      |    |      |   
|PART I                                                    
|                                                           |  |                                                                                           |  | Glossary                                                             |    |      | 3  | 
|1.                                                         |  | Business                                                                                  |  |                                                                      | 7  |     
|                                                           |  |                                                                                           |  | The Company                                                          |    |      | 8  | 
|                                                           |  |                                                                                           |  | Officers of the Operating Trust                                      |    |      | 13 | 
|                                                           |  |                                                                                           |  | Employees                                                            |    |      | 14 | 
|                                                           |  |                                                                                           |  | Insurance                                                            |    |      | 14 | 
|                                                           |  |                                                                                           |  | Risk Factors                                                         |    |      | 15 | 
|2.                                                         |  | Properties                                                                                |  |                                                                      | 19 |     
|                                                           |  |                                                                                           |  | Geographic Distribution                                              |    |      | 19 | 
|                                                           |  |                                                                                           |  | Real Estate Portfolio                                                |    |      | 20 | 
|3.                                                         |  | Legal Proceedings                                                                         |  |                                                                      | 22 |     
|4.                                                         |  | Submission of Matters to a Vote of Security
    Holders                                   |  |                                                                      | 23 |     
|PART II                                                   
|5.                                                         |  | Market for the Registrants Common
    Equity and Related Stockholder Matters             |  |                                                                      | 23 |     
|6.                                                         |  | Selected Financial Data                                                                   |  |                                                                      | 26 |     
|7.                                                         |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations |  |                                                                      | 28 |     
|                                                           |  |                                                                                           |  | Results of Operations                                                |    |      | 28 | 
|                                                           |  |                                                                                           |  | Liquidity and Capital Resources                                      |    |      | 37 | 
|                                                           |  |                                                                                           |  | Litigation and Contingencies                                         |    |      | 41 | 
|                                                           |  |                                                                                           |  | Critical Accounting Policies                                         |    |      | 41 | 
|                                                           |  |                                                                                           |  | Off Balance Sheet Arrangements                                       |    |      | 43 | 
|                                                           |  |                                                                                           |  | Contractual Commitments                                              |    |      | 44 | 
|                                                           |  |                                                                                           |  | Related Party Transactions                                           |    |      | 45 | 
|                                                           |  |                                                                                           |  | New Accounting Pronouncements                                        |    |      | 45 | 
|7A.                                                        |  | Quantitative and Qualitative Disclosures
    About Market Risk                            |  |                                                                      | 46 |     
|8.                                                         |  | Financial Statements and Supplementary
    Data                                           |  |                                                                      | 49 |     
|9.                                                         |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure  |  |                                                                      | 50 |     
|9A.                                                        |  | Controls and Procedures                                                                   |  |                                                                      | 50 |     
|                                                           |  |                                                                                           |  | Managements Report on Internal
    Control Over Financial Reporting |    |      | 50 | 
|                                                           |  |                                                                                           |  | PART III                                                             |    |      |    | 
|10.                                                        |  | Trustees and Executive Officers of the
    Registrant                                     |  |                                                                      | 51 |     
|11.                                                        |  | Executive Compensation                                                                    |  |                                                                      | 51 |     
|12.                                                        |  | Security Ownership of Certain Beneficial
    Owners and Management                        |  |                                                                      | 51 |     
|13.                                                        |  | Certain Relationships and Related
    Transactions                                        |  |                                                                      | 52 |     
|14.                                                        |  | Principal Accounting Fees and Services                                                    |  |                                                                      | 52 |     
|                                                           |  |                                                                                           |  | PART IV                                                              |    |      |    | 
|15.                                                        |  | Exhibits, Financial Statement Schedules                                                   |  |                                                                      | 54 |     
|Amended and Restated Credit Agreement                     
|Computation of Ratio of Earnings to Fixed Charges         
|Computation of Ratio of Earnings to Combined Fixed Charges
|Consent of Independent Registered Public Accounting Firm  
|Subsidiaries                                              
|Certification of CEO Pursuant to Section 302              
|Certification of CFO Pursuant to Section 302              
|Certification of CEO Pursuant to Section 906              
|Certification of CFO Pursuant to Section 906              



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GLOSSARY




|                                         |  |                                                                                                                                                                                                                                                                                                                                                                            
|---------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Abbreviation, Acronym or Defined Term    |  | Definition/Description                                                                                                                                                                                                                                                                                                                                                     
|                                         |  |                                                                                                                                                                                                                                                                                                                                                                            
|A-1 Common Unitholders                   |  | Holders of A-1 Common Units.                                                                                                                                                                                                                                                                                                                                               
|A-1 Common Units                         |  | Operating Trust Class A-1 Common Units of beneficial
    interest, which are redeemable for cash, or at the option of
    Archstone-Smith, A-2 Common Units. A-1 Common Units are the only
    common units of the Operating Trust not held by Archstone-Smith
    and represent a minority interest of 10.9% in the Operating
    Trust at December 31, 2004.             
|A-2 Common Units                         |  | Class A-2 common units of beneficial interest.
    Archstone-Smith is the sole holder of A-2 Common Units, which
    represent approximately an 89.1% interest in the Operating Trust
    at December 31, 2004.                                                                                                                                                            
|Ameriton                                 |  | AMERITON Properties Incorporated, which is a taxable REIT
    subsidiary that engages in the opportunistic acquisition,
    development and eventual disposition of real estate with a
    shorter-term investment horizon.                                                                                                                                                
|Annual Report                            |  | This Annual Report on Form 10-K filed with the Securities and
    Exchange Commission for the fiscal year ended December 31,
    2004.                                                                                                                                                                                                                                     
|Archstone-Smith                          |  | Archstone-Smith Trust, sole holder of the A-2 Common Units and
    sole trustee.                                                                                                                                                                                                                                                                                           
|Board                                    |  | Collectively, refers to Archstone-Smiths Board of Trustees
    or to Archstone-Smith, our sole trustee, unless the context
    otherwise requires.                                                                                                                                                                                                                        
|Class B Common Units                     |  | Operating Trust Common Units of beneficial interest issued in
    connection with contributions of property between dividend
    distribution dates; they are entitled to receive a pro-rata
    distribution with respect to the quarter in which the property
    is contributed and, after that distribution date, they
    automatically convert into A-1 Common Units.
|Common Share(s)                          |  | Archstone-Smith common shares of beneficial interest, par value
    $0.01 per share.                                                                                                                                                                                                                                                                                       
|Common Unit(s)                           |  | For periods prior to the Smith Merger and reorganization into an
    UPREIT, Archstones common shares of beneficial interest
    are referred to as Common Units.                                                                                                                                                                                                         
|Consolidated Engineering Services or CES |  | Consolidated Engineering Services, Inc. was a taxable REIT
    subsidiary in the business of delivering mission critical
    facilities management services for corporate, government and
    institutional customers. CES was sold to a third party in
    December 2002 for $178 million.                                                                                
|Convertible Preferred Units              |  | Collectively, the Series A, H, J, K and L Preferred Units.                                                                                                                                                                                                                                                                                                                 
|Declaration of Trust                     |  | The Operating Trusts Amended and Restated Declaration of
    Trust as filed with the State of Maryland on October 26,
    2001, as amended and supplemented.                                                                                                                                                                                                              

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|                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Abbreviation, Acronym or Defined Term |  | Definition/Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|DEU                                   |  | Dividend Equivalent Unit; an amount credited to certain options
    and RSUs under Archstone-Smiths long-term incentive
    plan.                                                                                                                                                                                                                                                                                                                                                                                                               
|Distributions                         |  | Refers to dividends paid by Archstone on either Archstone common
    or preferred shares of beneficial interest paid prior to the
    UPREIT reorganization and Smith Merger. Subsequent to the Smith
    Merger, refers to distributions paid on Operating Trust Common
    Units or Preferred Units.                                                                                                                                                                                                                                            
|FASB                                  |  | Financial Accounting Standards Board.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|GAAP                                  |  | Generally accepted accounting principles in the United States.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Independent Trustees                  |  | Members of the Board with no employment relationship.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|In Planning                           |  | Parcels of land owned or Under Control, which are in the
    development planning process, upon which construction of
    apartments is expected to commence within 36 months.                                                                                                                                                                                                                                                                                                                                                                    
|IRR                                   |  | Internal Rate of Return, calculated as the cash rate of return
    generated over the investment holding period on invested capital.                                                                                                                                                                                                                                                                                                                                                                                                              
|Lease-Up                              |  | The phase during which newly constructed apartment units are
    being leased for the first time, but prior to the community
    becoming Stabilized.                                                                                                                                                                                                                                                                                                                                                                                             
|LIBOR                                 |  | London Interbank Offered Rate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Long-Term Unsecured Debt              |  | Collectively, the Operating Trusts long-term unsecured
    senior notes payable and tax-exempt unsecured bonds.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|NAREIT                                |  | National Association of Real Estate Investment Trusts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Net Operating Income or NOI           |  | Represents rental revenues less rental expenses and real estate
    taxes. We rely on NOI for purposes of making decisions about
    resource allocations and assessing segment performance. We also
    believe NOI is a valuable means of comparing period-to-period
    property performance. See a reconciliation of NOI to Earnings
    from Operations in this Annual Report under the caption
    Item 7. Managements Discussion and Analysis of
    Financial Condition and Results of Operations 
    Apartment Community Operations.
|NYSE                                  |  | New York Stock Exchange.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Operating Trust                       |  | Archstone-Smith Operating Trust.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Perpetual Preferred Units             |  | Collectively, the Series B, C, D, I and M Preferred Units.
    These units are not convertible, but are redeemable at the
    option of Archstone-Smith after certain future dates.                                                                                                                                                                                                                                                                                                                                                               
|Preferred Units                       |  | Collectively, the Series A, B, C, D, H, I, J, K, L and
    M Preferred Units.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|REIT                                  |  | Real estate investment trust.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Restricted Share Unit or RSU          |  | A unit representing an interest in one Common Unit, subject to
    certain vesting provisions, through our long-term incentive plan.                                                                                                                                                                                                                                                                                                                                                                                                              

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|                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Abbreviation, Acronym or Defined Term |  | Definition/Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Same-Store                            |  | Term used to refer to a group of operating communities that had
    attained stabilization and were fully operating during the
    entire time two periods are being compared. Excludes communities
    which were not eligible for inclusion due to (i) recent
    acquisition or development, (ii) major redevelopment, or
    (iii) a significant number of non- operational units
    (fires, floods, etc.). Also excludes the Ameriton properties due
    to their short-term holding periods.
|Series A Preferred Units              |  | Operating Trust Series A Cumulative Preferred Units of
    Beneficial Interest, par value $0.01 per unit, which were
    redeemed in full in November 2003.                                                                                                                                                                                                                                                                                                                                        
|Series B Preferred Units              |  | Operating Trust Series B Cumulative Perpetual Preferred
    Units of Beneficial Interest, par value $0.01 per unit,
    which were redeemed in full in May 2001.                                                                                                                                                                                                                                                                                                                                   
|Series C Preferred Units              |  | Operating Trust Series C Cumulative Perpetual Preferred
    Units of Beneficial Interest, par value $0.01 per unit,
    which were redeemed in full in August 2002.                                                                                                                                                                                                                                                                                                                                
|Series D Preferred Units              |  | Operating Trust Series D Cumulative Perpetual Preferred
    Units of Beneficial Interest, par value $0.01 per unit,
    which were redeemed in full in August 2004.                                                                                                                                                                                                                                                                                                                                
|Series E Perpetual Preferred Units    |  | 8.375% Cumulative Perpetual Preferred Units. 520,000 units
    were redeemed in August 2004 and 400,000 Units were redeemed in
    November 2004.                                                                                                                                                                                                                                                                                                                                                  
|Series F Perpetual Preferred Units    |  | 8.125% Cumulative Perpetual Preferred Units, which were redeemed
    in full in September 2004, redeemable in March 2005.                                                                                                                                                                                                                                                                                                                                                                          
|Series G Perpetual Preferred Units    |  | 8.625% Cumulative Perpetual Preferred Units.                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Series H Preferred Units              |  | Operating Trust Series H Cumulative Convertible Perpetual
    Preferred Units of Beneficial Interest, par value $0.01 per
    unit, which were converted into Common Units in full in May 2003.                                                                                                                                                                                                                                                                                                    
|Series I Preferred Units              |  | Operating Trust Series I Cumulative Perpetual Preferred
    Units of Beneficial Interest, par value $100,000 per unit,
    redeemable in February 2028.                                                                                                                                                                                                                                                                                                                                            
|Series J Preferred Units              |  | Operating Trust Series J Cumulative Convertible Perpetual
    Preferred Units of Beneficial Interest, par value $0.01 per
    unit, which were converted into Common Units in full in July
    2002.                                                                                                                                                                                                                                                                                               
|Series K Preferred Units              |  | Operating Trust Series K Cumulative Convertible Perpetual
    Preferred Units of Beneficial Interest, par value $0.01 per
    unit, which were converted into Common Units in September 2004.                                                                                                                                                                                                                                                                                                      
|Series L Preferred Units              |  | Operating Trust Series L Cumulative Convertible Perpetual
    Preferred Units of Beneficial Interest, par value $0.01 per
    unit, which were converted into Common Units in December 2004.                                                                                                                                                                                                                                                                                                       
|Series M Preferred Unit               |  | Operating Trust Series M Preferred Unit of Beneficial
    Interest, par value $0.01 per unit.                                                                                                                                                                                                                                                                                                                                                                                                      
|Service Businesses                    |  | Collectively, Consolidated Engineering Services and Smith
    Management Construction. Both of these taxable REIT subsidiaries
    were acquired in the Smith Merger and subsequently sold by the
    Operating Trust.                                                                                                                                                                                                                                                                             

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|                                      |  |                                                                                                                                                                                                                                                                                                               
|------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Abbreviation, Acronym or Defined Term |  | Definition/Description                                                                                                                                                                                                                                                                                        
|                                      |  |                                                                                                                                                                                                                                                                                                               
|Smith Management Construction or SMC  |  | Smith Management Construction Incorporated was a taxable REIT
    subsidiary in the business of providing construction management
    and building maintenance services. SMC was sold to members of
    its senior management in February 2003.                                                               
|Smith Merger                          |  | The series of merger transactions in October 2001 whereby
    Archstone-Smith merged with Smith Residential and Archstone
    Communities Trust merged with Smith Partnership.                                                                                                                                
|Smith Partnership                     |  | Charles E. Smith Residential Realty, L.P.                                                                                                                                                                                                                                                                     
|Smith Residential                     |  | Charles E. Smith Residential Realty, Inc.                                                                                                                                                                                                                                                                     
|SFAS                                  |  | Statement of Financial Accounting Standards.                                                                                                                                                                                                                                                                  
|Stabilized or Stabilization           |  | The classification assigned to an apartment community that has
    achieved 93% occupancy, and for which development, new
    management and new marketing programs (or development and
    marketing in the case of a newly developed community) have been
    completed.                                    
|Total Expected Investment             |  | For development communities, represents the total expected
    investment at completion; for operating communities, represents
    the total expected investment plus planned capital expenditures.                                                                                                           
|Trustees                              |  | Members of the Board of Trustees of Archstone-Smith.                                                                                                                                                                                                                                                          
|Under Control                         |  | Land parcels we do not own, yet has an exclusive right (through
    contingent contract or letter of intent) during a contractually
    agreed upon time period to acquire for the future development of
    apartment communities, subject to approval of contingencies
    during the due diligence process.
|UPREIT                                |  | Umbrella Partnership Real Estate Investment Trust.                                                                                                                                                                                                                                                            

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Forward-Looking Statements


Certain statements in this Annual Report that are not
historical facts are forward-looking statements as
that term is defined under the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are based
on our current expectations, beliefs, assumptions, estimates and
projections about the industry and markets in which we operate.
Words such as expects, anticipates,
intends, plans, believes,
seeks, estimates and variations of such
words and similar expressions are intended to identify such
forward-looking statements. Information concerning expected
investment balances, expected funding sources, planned
investments, forecasted dates and revenue and expense growth
assumptions are examples of forward-looking statements. These
statements are not guarantees of future performance and involve
certain risks, uncertainties and assumptions, which are
difficult to predict and many of which are beyond our control.
Therefore, actual outcomes and results may differ materially
from what is expressed, forecasted or implied in such
forward-looking statements. We undertake no obligation to update
publicly any forward-looking statements, whether as a result of
new information, future events or otherwise, except as required
by applicable law.


Our operating results depend primarily on income from
apartment communities, which is substantially influenced by
supply and demand for apartment units, operating expense levels,
property level operations and the pace and price at which we
develop, acquire or dispose of apartment communities. Capital
and credit market conditions, which affect our cost of capital,
also influence operating results. See Risk Factors
in Item 1 of this Annual Report for a complete discussion
of the various risk factors that could affect our future
performance.





PART I







|        |         
|------- | --------
|Item 1. | Business

tm




|                                   |        |  |      |       |  
|---------------------------------- | ------ |  | ---- | ----- | -
|Washington, D.C. Metropolitan Area |        |  | 39.4 | %    
|Southern California                |        |  | 18.9 |      
|San Francisco Bay Area, California |        |  | 8.2  |      
|Chicago, Illinois                  |        |  | 6.1  |      
|New York City Metropolitan Area    |        |  | 4.9  |      
|Boston, Massachusetts              |        |  | 4.7  |      
|Southeast Florida                  |        |  | 4.7  |      
|Seattle, Washington                |        |  | 3.1  |      
|Other                              |        |  | 10.0 |      
|                                   |        |  |     
|                                   | Total: |  |      | 100.0 | %
|                                   |        |  |     

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The Company








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Maximizing the performance of our apartment communities by
    (i) generating long-term sustainable growth in operating
    cash flow, (ii) recruiting, training and retaining people
    who we believe are the best in the apartment business,
    (iii) strengthening our operating platform,
    (iv) leveraging the equity of our brands,
    (v) investing in technology that improves our core business
    and (vi) solidifying our reputation for innovative,
    operational leadership;
|
| |  | Acquiring, developing and operating apartments in markets
    characterized by: (i) protected locations with limited land
    on which to build new housing; (ii) expensive single-family
    home prices; and (iii) a strong, diversified economic base
    with good employment growth potential; and                                                                                                                                                                                           
|
| |  | The selective sale of apartment communities, which allows us to
    continually upgrade our portfolio by using proceeds to fund
    investments with higher anticipated growth prospects in
    outstanding locations in our eight core markets.                                                                                                                                                                                                                                                  

2004 Accomplishments




| |                                             
| | --------------------------------------------
| | Attractive Shareholder Returns and Dividends



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We produced a total unitholder return (TSR) of 48.8% in 2004.
    The Companys 2004 TSR exceeded the S&P 500 Index
    and the National Real Estate Investment Trusts (NAREIT)
    Apartment Index by 3,791 and 1,407 basis points,
    respectively.                                                                                                                                                                                                                                                                         
|
| |  | We paid a one-time special distribution of $1.00 per common
    unit to all common unitholders of record on December 23,
    2004. The $1.00 per unit was in addition to the
    Companys annual common unit distribution of $1.72 per
    share in 2004. The special distribution resulted primarily from
    the fourth quarter sale of approximately $596 million of
    non-core assets to condominium converters at an average
    capitalization rate below 4%, which created substantial value
    for our unitholders.
|
| |  | We also increased our 2005 annualized common unit distribution
    level to $1.73, or $0.4325 per quarter, up from $1.72. This
    marks our 15th consecutive annual common unit distribution
    increase and a total increase of 170% since 1991. Our first
    quarter 2005 common unit distribution paid in February
    represented our 118th consecutive quarterly payment.                                                                                                                                              



| |            
| | -----------
| | Recognition



| |   |                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | On December 17, 2004, Archstone-Smith was added to the
    Standard & Poors 500 Index (S&P 500), which has
    been a long-term corporate goal.           
|
| |  | We were recognized as one of Americas Most Admired
    Companies by Fortunemagazine in 2004, ranking as the
    number-one apartment company on the list.
|
| |  | Forbesmagazine ranked Archstone-Smith at 956 on the
    Forbes 2000 List, the magazines comprehensive
    ranking of the worlds largest corporations.   



| |                                     
| | ------------------------------------
| | Operations and Investment Highlights



| |   |                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Operating Trusts Same-Store reported NOI in 2004 is
    approximately the same as it was in 2001, in spite of our peer
    group average being down approximately 9% for that same time
    period.

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We accelerated the implementation of MRI, a web-based,
    customer-centric property management system that automates
    virtually all of our daily on-site leasing and reporting tasks.
    Developed with our input by Intuit Real Estate Solutions
    (NASDAQ: INTU), MRI allows our site teams to better track
    customer service requests, manage customer records and execute
    leases more efficiently  which we believe enhances
    our customers experience with us. MRI is operational in
    201 communities as of February 14, 2005, with full
    portfolio implementation anticipated by mid-2005.
|
| |  | We introduced resident-only web sites, which allow customers
    24/7 access to us to complete new leases, pay rent online,
    submit and track service requests, view and update account
    information and more.                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | In 2004, we acquired $866.2 million of assets, excluding
    Ameriton, representing 3,753 units, and completed the
    development of $182.6 million of assets, representing
    678 units in our core markets. Approximately 90% of our
    portfolio is now concentrated in our core markets.                                                                                                                                                                                                                                                                                                                          
|
| |  | We completed the disposition of $1.4 billion of non-core
    assets, excluding Ameriton, representing 9,430 units,
    generating GAAP gains of $372.2 million and an average
    unleveraged internal rate of return (IRR) of 13.8%.                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Ameriton, our wholly owned subsidiary that utilizes our
    development, acquisition and operating expertise to capitalize
    on short-term real estate investment opportunities, completed
    the sale of $360 million of assets in 2004, generating GAAP
    pre-tax gains of $65.1 million and an average unleveraged
    pre-tax IRR of 36.6%.                                                                                                                                                                                                                                                                     

Customer-focused Operations




Powerful brands. tm tm


Core Process Standardization.




Investing in technology.




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Investing in our associates.








Investment Strategy


Protected markets.


Capital recycling program.




10



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##### Table of Contents





Development and redevelopment.




Ameriton Properties Incorporated.


Conservative Balance Sheet Management










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|           |       |       |         |                   |                   |  |      |      |  
|---------- | ----- | ----- | ------- | ----------------- | ----------------- |  | ---- | ---- | -
|           |       |       |         | % of Total Market |                  
|Year       |       | Total |         |                   | Capitalization(1) | 
|           |       |       |         |                   |                   | 
|2005       |       | $     | 313.7   |                   |                   |  | 2.5  | %   
|2006       |       |       | 295.5   |                   |                   |  | 2.3  | %   
|2007       |       |       | 542.5   |                   |                   |  | 4.3  | %   
|2008       |       |       | 456.6   |                   |                   |  | 3.6  | %   
|2009       |       |       | 454.6   |                   |                   |  | 3.6  | %   
|Thereafter |       |       | 2,067.7 |                   |                   |  | 16.2 | %   
|           |       |       |         |                   |                   | 
|           | Total |       | $       | 4,130.6           |                   |  |      | 32.4 | %
|           |       |       |         |                   |                   | 






|    |                                                                                                                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Total market capitalization as of December 31, 2004,
    represents the market capitalization based on the closing share
    price on the last trading day of the period for publicly traded
    securities and the liquidation value for private securities as
    well as the book value of total debt for Archstone-Smith.

Consistent dividend growth.


Management




12



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##### Table of Contents






Officers of the Operating Trust




| |                                       
| | --------------------------------------
| | Senior Officers of the Operating Trust



|                        |  |                                                                  
|----------------------- |  | -----------------------------------------------------------------
|Name                    |  | Title                                                            
|                        |  |                                                                  
|R. Scot Sellers         |  | Chairman and Chief Executive Officer                             
|J. Lindsay Freeman      |  | Chief Operating Officer                                          
|Charles E. Mueller, Jr. |  | Chief Financial Officer                                          
|Alfred G. Neely         |  | Chief Development Officer and President of the High-Rise Division
|Dana K. Hamilton        |  | Executive Vice President  National Operations                   
|Caroline Brower         |  | General Counsel and Secretary                                    
|Daniel E. Amedro        |  | Senior Vice President and Chief Information Officer              
|Mark A. Schumacher      |  | Senior Vice President and Chief Accounting Officer               



| |                               
| | ------------------------------
| | Biographies of Senior Officers

R. Scot Sellers  48


J. Lindsay Freeman  59


Charles E. Mueller, Jr.  41


Alfred G. Neely  59


13



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##### Table of Contents





Dana K. Hamilton  36


Caroline Brower  56


Daniel E. Amedro  48 Spirit,


Mark A. Schumacher  46





Employees







Insurance




14



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##### Table of Contents



Competition




Available Information and Code of Ethics


http://www.archstonesmith.com.





Risk Factors




We have restrictions on the
sale of certain properties.




We depend on our key
personnel.




Debt financing could
adversely affect our performance.




15



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##### Table of Contents











Archstone-Smith may not have
access to equity capital.




We could be subject to acts
of terrorism.




We are subject to risks
inherent in ownership of real estate.




We are subject to risks
inherent in real estate development.




16



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##### Table of Contents



Real estate investments are
relatively illiquid and we may not be able to sell properties
when appropriate.




Compliance with
environmental regulations may be costly.




Costs associated with
moisture infiltration and resulting mold remediation may be
costly.




Changes in laws may result
in increased cost.




Archstone-Smiths
failure to qualify as a REIT would have adverse
consequences.




We intend to qualify as a
partnership, but we cannot guarantee we will qualify.




17



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##### Table of Contents





We are subject to losses
that may not be covered by insurance.




We have a concentration of
investments in certain markets.






| |                                                  
| | -------------------------------------------------
| | Our business is subject to extensive competition.



18



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##### Table of Contents








|        |           
|------- | ----------
|Item 2. | Properties




Geographic Distribution




|                                   |       |  |      |      |  
|---------------------------------- | ----- |  | ---- | ---- | -
|Washington, D.C. Metropolitan Area |       |  | 39.4 | %   
|Southern California                |       |  | 18.9 |     
|San Francisco Bay Area, California |       |  | 8.2  |     
|Chicago, Illinois                  |       |  | 6.1  |     
|New York City Metropolitan Area    |       |  | 4.9  |     
|Boston, Massachusetts              |       |  | 4.7  |     
|Southeast Florida                  |       |  | 4.7  |     
|Seattle, Washington                |       |  | 3.1  |     
|                                   |       |  |     
|                                   | Total |  |      | 90.0 | %
|                                   |       |  |     



|                 |                                    |                        |                   |      |      |       |   |      |      |       |   |      |      |       |  
|---------------- | ---------------------------------- | ---------------------- | ----------------- | ---- | ---- | ----- | - | ---- | ---- | ----- | - | ---- | ---- | ----- | -
|                 |                                    | Total Portfolio(1)(2)  |                  
|                 |                                    |                        |                  
|                 |                                    | 2004                   |                   |      | 2003 |       |   | 2002 |     
|                 |                                    |                        |                   |      |      |       |   |      |     
|Core Markets     |                                    |                        |                   |      |      |       |   |      |      |       |   |     
|                 | Washington, D.C. Metropolitan Area |                        |                   | 39.4 | %    |       |   | 40.0 | %    |       |   | 35.1 | %   
|                 | Southern California                |                        |                   | 18.9 |      |       |   | 15.2 |      |       |   | 13.2 |     
|                 | San Francisco Bay Area, California |                        |                   | 8.2  |      |       |   | 9.8  |      |       |   | 9.0  |     
|                 | Chicago, Illinois                  |                        |                   | 6.1  |      |       |   | 7.6  |      |       |   | 8.5  |     
|                 | New York City Metropolitan Area    |                        |                   | 4.9  |      |       |   | 2.5  |      |       |   | 2.2  |     
|                 | Boston, Massachusetts              |                        |                   | 4.7  |      |       |   | 5.0  |      |       |   | 5.2  |     
|                 | Southeast Florida                  |                        |                   | 4.7  |      |       |   | 4.2  |      |       |   | 6.6  |     
|                 | Seattle, Washington                |                        |                   | 3.1  |      |       |   | 3.3  |      |       |   | 3.4  |     
|                 |                                    |                        |                   |      |      |       |   |      |     
|                 |                                    | Total Core Markets     |                   |      | 90.0 | %     |   |      | 87.6 | %     |   |      | 83.2 | %    
|                 |                                    |                        |                   |      |      |       |   |      |     
|Non-Core Markets |                                    |                        |                   |      |      |       |   |      |      |       |   |     
|                 | Atlanta, Georgia                   |                        |                   | 2.3  | %    |       |   | 2.5  | %    |       |   | 3.1  | %   
|                 | Denver, Colorado                   |                        |                   | 1.9  |      |       |   | 2.2  |      |       |   | 2.4  |     
|                 | Houston, Texas                     |                        |                   | 1.5  |      |       |   | 1.4  |      |       |   | 1.0  |     
|                 | Raleigh, North Carolina            |                        |                   | 1.1  |      |       |   | 1.1  |      |       |   | 1.4  |     
|                 | Other                              |                        |                   | 3.2  |      |       |   | 5.2  |      |       |   | 8.9  |     
|                 |                                    |                        |                   |      |      |       |   |      |     
|                 |                                    | Total Non-Core Markets |                   |      | 10.0 | %     |   |      | 12.4 | %     |   |      | 16.8 | %    
|                 |                                    |                        |                   |      |      |       |   |      |     
|                 |                                    |                        | Total All Markets |      |      | 100.0 | % |      |      | 100.0 | % |      |      | 100.0 | %
|                 |                                    |                        |                   |      |      |       |   |      |     






|    |                                                                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Based on NOI for the fourth quarter of each calendar year,
    excluding NOI from communities disposed of during the period.
    See Item 7 under the caption Apartment Community
    Operationsfor a discussion on why we believe NOI is a
    meaningful measure and a reconciliation of NOI to Earnings from
    Operations.
|   
|(2) | Excludes all Ameriton properties.                                                                                                                                                                                                                                                                                                

19



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##### Table of Contents






Real Estate Portfolio




|                                 |                                    |                                    |                                                   |    |           |           |  |            |        |        |            |           |           |           |  |      |      |      |  
|-------------------------------- | ---------------------------------- | ---------------------------------- | ------------------------------------------------- | -- | --------- | --------- |  | ---------- | ------ | ------ | ---------- | --------- | --------- | --------- |  | ---- | ---- | ---- | -
|                                 |                                    |                                    |                                                   |    |           | Operating |  |            |       
|                                 |                                    | Number of                          |                                                   |    | Number of |           |  | Trust      |        |        | Percentage |          
|                                 |                                    | Communities                        |                                                   |    | Units     |           |  | Investment |        |        | Leased(1)  |          
|                                 |                                    |                                    |                                                   |    |           |           |  |            |        |        |            |          
|OPERATING APARTMENT COMMUNITIES: |                                    |                                    |                                                   |    |           |           |  |            |        |        |            |           |           |           |  |     
|Garden Communities:              |                                    |                                    |                                                   |    |           |           |  |            |        |        |            |           |           |           |  |     
|                                 | Atlanta, Georgia                   |                                    |                                                   | 8  |           |           |  | 2,459      |        |        | $          | 203,824   |           |           |  | 97.2 | %   
|                                 | Austin, Texas                      |                                    |                                                   | 2  |           |           |  | 714        |        |        |            | 34,698    |           |           |  | 95.5 | %   
|                                 | Boston, Massachusetts              |                                    |                                                   | 5  |           |           |  | 1,204      |        |        |            | 207,428   |           |           |  | 98.1 | %   
|                                 | Chicago, Illinois                  |                                    |                                                   | 4  |           |           |  | 1,313      |        |        |            | 144,975   |           |           |  | 94.8 | %   
|                                 | Dallas, Texas                      |                                    |                                                   | 4  |           |           |  | 930        |        |        |            | 48,537    |           |           |  | 96.8 | %   
|                                 | Denver, Colorado                   |                                    |                                                   | 6  |           |           |  | 1,949      |        |        |            | 167,129   |           |           |  | 95.8 | %   
|                                 | Houston, Texas                     |                                    |                                                   | 2  |           |           |  | 1,408      |        |        |            | 74,894    |           |           |  | 94.8 | %   
|                                 | Inland Empire, California          |                                    |                                                   | 4  |           |           |  | 1,594      |        |        |            | 98,242    |           |           |  | 95.2 | %   
|                                 | Los Angeles County, California     |                                    |                                                   | 14 |           |           |  | 4,162      |        |        |            | 810,623   |           |           |  | 86.9 | %   
|                                 | Orange County, California          |                                    |                                                   | 7  |           |           |  | 1,647      |        |        |            | 181,064   |           |           |  | 97.7 | %   
|                                 | Orlando, Florida                   |                                    |                                                   | 1  |           |           |  | 312        |        |        |            | 21,706    |           |           |  | 98.7 | %   
|                                 | Phoenix, Arizona                   |                                    |                                                   | 2  |           |           |  | 876        |        |        |            | 53,880    |           |           |  | 96.5 | %   
|                                 | Portland, Oregon                   |                                    |                                                   | 1  |           |           |  | 228        |        |        |            | 13,757    |           |           |  | 95.2 | %   
|                                 | Raleigh, North Carolina            |                                    |                                                   | 5  |           |           |  | 1,324      |        |        |            | 97,760    |           |           |  | 97.3 | %   
|                                 | San Diego, California              |                                    |                                                   | 7  |           |           |  | 2,559      |        |        |            | 293,040   |           |           |  | 98.0 | %   
|                                 | San Francisco Bay Area, California |                                    |                                                   | 12 |           |           |  | 4,735      |        |        |            | 637,703   |           |           |  | 95.9 | %   
|                                 | Seattle, Washington                |                                    |                                                   | 7  |           |           |  | 2,808      |        |        |            | 236,583   |           |           |  | 94.9 | %   
|                                 | Southeast Florida                  |                                    |                                                   | 9  |           |           |  | 3,038      |        |        |            | 374,569   |           |           |  | 95.7 | %   
|                                 | Stamford, Connecticut              |                                    |                                                   | 1  |           |           |  | 160        |        |        |            | 36,487    |           |           |  | 97.5 | %   
|                                 | Washington, D.C. Metropolitan Area |                                    |                                                   | 19 |           |           |  | 8,019      |        |        |            | 1,026,128 |           |           |  | 97.7 | %   
|                                 | West Coast Florida                 |                                    |                                                   | 3  |           |           |  | 746        |        |        |            | 44,373    |           |           |  | 97.7 | %   
|                                 | Ventura County, California         |                                    |                                                   | 1  |           |           |  | 400        |        |        |            | 33,175    |           |           |  | 96.3 | %   
|                                 |                                    |                                    |                                                   |    |           |           |  |            |        |        |            |          
|                                 |                                    | Garden Community Subtotal/ Average |                                                   |    | 124       |           |  |            | 42,585 |        |            | $         | 4,840,575 |           |  |      | 95.7 | %   
|                                 |                                    |                                    |                                                   |    |           |           |  |            |        |        |            |          
|High-Rise Properties:            |                                    |                                    |                                                   |    |           |           |  |            |        |        |            |           |           |           |  |     
|                                 | Boston, Massachusetts              |                                    |                                                   | 3  |           |           |  | 693        |        |        | $          | 178,939   |           |           |  | 98.3 | %   
|                                 | Chicago, Illinois                  |                                    |                                                   | 5  |           |           |  | 3,025      |        |        |            | 516,756   |           |           |  | 93.8 | %   
|                                 | New York City Metropolitan Area    |                                    |                                                   | 3  |           |           |  | 1,062      |        |        |            | 460,182   |           |           |  | 97.6 | %   
|                                 | Southeast Florida                  |                                    |                                                   | 1  |           |           |  | 240        |        |        |            | 27,989    |           |           |  | 93.3 | %   
|                                 | Washington, D.C. Metropolitan Area |                                    |                                                   | 31 |           |           |  | 10,881     |        |        |            | 1,994,217 |           |           |  | 96.1 | %   
|                                 |                                    |                                    |                                                   |    |           |           |  |            |        |        |            |          
|                                 |                                    | High-Rise Subtotal/ Average        |                                                   |    | 43        |           |  |            | 15,901 |        |            | $         | 3,178,083 |           |  |      | 95.8 | %   
|                                 |                                    |                                    |                                                   |    |           |           |  |            |        |        |            |          
|                                 |                                    |                                    | Operating Apartment Communities Subtotal/ Average |    |           | 167       |  |            |        | 58,486 |            |           | $         | 8,018,658 |  |      |      | 95.7 | %
|                                 |                                    |                                    |                                                   |    |           |           |  |            |        |        |            |          

20



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|                                                |                                    |                                                                         |                                                            |                                                        |           |           |     |            |       |       |            |         |         |         |           |      |     |     |  | 
|----------------------------------------------- | ---------------------------------- | ----------------------------------------------------------------------- | ---------------------------------------------------------- | ------------------------------------------------------ | --------- | --------- | --- | ---------- | ----- | ----- | ---------- | ------- | ------- | ------- | --------- | ---- | --- | --- |  | 
|                                                |                                    |                                                                         |                                                            |                                                        |           | Operating |     |            |      
|                                                |                                    | Number of                                                               |                                                            |                                                        | Number of |           |     | Trust      |       |       | Percentage |        
|                                                |                                    | Communities                                                             |                                                            |                                                        | Units     |           |     | Investment |       |       | Leased(1)  |        
|                                                |                                    |                                                                         |                                                            |                                                        |           |           |     |            |       |       |            |        
|APARTMENT COMMUNITIES UNDER CONSTRUCTION:       |                                    |                                                                         |                                                            |                                                        |           |           |     |            |       |       |            |         |         |         |           |     
|Garden Communities:                             |                                    |                                                                         |                                                            |                                                        |           |           |     |            |       |       |            |         |         |         |           |     
|                                                | Boston, Massachusetts              |                                                                         |                                                            | 1                                                      |           |           |     | 134        |       |       | $          | 40,292  |         |         |           | 53.0 | %  
|                                                | Long Island, New York              |                                                                         |                                                            | 1                                                      |           |           |     | 396        |       |       |            | 58,462  |         |         |           | N/A  |    
|                                                | Los Angeles County, California     |                                                                         |                                                            | 3                                                      |           |           |     | 1,002      |       |       |            | 143,989 |         |         |           | N/A  |    
|                                                | San Diego, California              |                                                                         |                                                            | 1                                                      |           |           |     | 451        |       |       |            | 73,206  |         |         |           | 72.1 | %  
|                                                | Ventura County, California         |                                                                         |                                                            | 1                                                      |           |           |     | 316        |       |       |            | 47,266  |         |         |           | 38.0 | %  
|                                                |                                    |                                                                         |                                                            |                                                        |           |           |     |            |       |       |            |        
|                                                |                                    | Garden Community Subtotal/ Average                                      |                                                            |                                                        | 7         |           |     |            | 2,299 |       |            | $       | 363,215 |         |           |      | N/A |    
|                                                |                                    |                                                                         |                                                            |                                                        |           |           |     |            |       |       |            |        
|High-Rise Properties:                           |                                    |                                                                         |                                                            |                                                        |           |           |     |            |       |       |            |         |         |         |           |     
|                                                | Boston, Massachusetts              |                                                                         |                                                            | 1                                                      |           |           |     | 420        |       |       | $          | 56,936  |         |         |           | N/A  |    
|                                                | Washington, D.C. Metropolitan Area |                                                                         |                                                            | 2                                                      |           |           |     | 518        |       |       |            | 79,088  |         |         |           | N/A  |    
|                                                |                                    |                                                                         |                                                            |                                                        |           |           |     |            |       |       |            |        
|                                                |                                    | High Rise Property Subtotal/ Average                                    |                                                            |                                                        | 3         |           |     |            | 938   |       |            | $       | 136,024 |         |           |      | N/A |    
|                                                |                                    |                                                                         |                                                            |                                                        |           |           |     |            |       |       |            |        
|                                                |                                    |                                                                         | Apartment Communities Under Construction Subtotal/ Average |                                                        |           | 10        |     |            |       | 3,237 |            |         | $       | 499,239 |           |      |     | N/A | 
|                                                |                                    |                                                                         |                                                            |                                                        |           |           |     |            |       |       |            |        
|APARTMENT COMMUNITIES IN PLANNING AND OWNED(2): |                                    |                                                                         |                                                            |                                                        |           |           |     |            |       |       |            |         |         |         |           |     
|Garden Communities:                             |                                    |                                                                         | 2                                                          |                                                        |           |           | 484 |            |       | $     | 16,701     |         |         |         |           |     
|High-Rise Communities:                          |                                    |                                                                         | 2                                                          |                                                        |           |           | 767 |            |       | $     | 35,121     |         |         |         |           |     
|                                                |                                    |                                                                         |                                                            |                                                        |           |           |     |            |       |       |            |        
|                                                |                                    | Total Apartment Communities In Planning and Owned Subtotal/
    Average |                                                            |                                                        | 4         |           |     |            | 1,251 |       |            | $       | 51,822  |         |           |      |     |    
|                                                |                                    |                                                                         |                                                            |                                                        |           |           |     |            |       |       |            |        
|                                                |                                    |                                                                         |                                                            | Total Apartment Communities Owned at December 31, 2004 |           |           | 181 |            |       |       | 62,974     |         |         | $       | 8,569,719 |      |     |     |  | 
|                                                |                                    |                                                                         |                                                            |                                                        |           |           |     |            |       |       |            |        
|OTHER REAL ESTATE ASSETS(3)                     |                                    |                                                                         |                                                            |                                                        |           |           |    |            |       |       | 69,409     |         |         |         |           |     
|                                                |                                    |                                                                         |                                                            |                                                        |           |           |     |            |       |       |            |        
|AMERITON PORTFOLIO:                             |                                    |                                                                         |                                                            |                                                        |           |           |     |            |       |       |            |         |         |         |           |     
|                                                |                                    | Operating Apartment Communities                                         |                                                            |                                                        | 10        |           |     |            | 3,189 |       |            |         | 358,431 |         |           |      |     |    
|                                                |                                    | Apartment Communities Under Construction                                |                                                            |                                                        | 4         |           |     |            | 1,307 |       |            |         | 157,918 |         |           |      |     |    
|                                                |                                    | Apartment Communities In Planning and Owned and Other                   |                                                            |                                                        | 6         |           |     |            | 1,702 |       |            |         | 65,561  |         |           |      |     |    
|                                                |                                    |                                                                         |                                                            |                                                        |           |           |     |            |       |       |            |        
|                                                |                                    |                                                                         |                                                            | Subtotal/ Average                                      |           |           | 20  |            |       |       | 6,198      |         |         |         | 581,910   |      |     |     |  | 
|                                                |                                    |                                                                         |                                                            |                                                        |           |           |     |            |       |       |            |        
|                                                |                                    |                                                                         |                                                            | Total Real Estate Owned at December 31, 2004           |           |           | 201 |            |       |       | 69,172     |         |         | $       | 9,221,038 |      |     |     |  | 
|                                                |                                    |                                                                         |                                                            |                                                        |           |           |     |            |       |       |            |        






|    |                                                                                                                                                                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents the percentage leased as of December 31, 2004.
    For communities in Lease-Up, the percentage leased is based on
    leased units divided by total number of units in the community
    (completed and under construction) as of December 31, 2004.
    A N/ A indicates markets with communities under
    construction where Lease-Up has not yet commenced.
|   
|(2) | As of December 31, 2004, we had one investment representing
    713 units classified as In Planning and Under Control. Our
    actual investment in these communities was $1.5 million,
    which is reflected in the Other assets caption of
    our Balance Sheet.                                                                                                      
|   
|(3) | Includes land that is not In Planning and other real estate
    assets.                                                                                                                                                                                                                                                                                                     

21



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Item 3.     Legal
Proceedings




Henriques, et al. v. Archstone-Smith Operating Trust,
et al.


Santos, et al. v. Archstone-Smith Operating Trust,
et al. Henriques


Bercovits et al., v. Archstone-Smith Operating
Trust, et al. Semidey,
et al., v. Archstone-Smith Operating Trust,
et al. and Sullivan, et al., v. Archstone-Smith
Operating Trust, et al Henriques


Equal Rights Center, et al. v. Archstone-Smith Trust,
et al.




22



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##### Table of Contents








|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders






PART II







|        |                                                                              
|------- | -----------------------------------------------------------------------------
|Item 5. | Market for the Registrants Common Equity and Related
    Stockholder Matters



|                    |                 |       |   |      |      |  |   |      |      |  |   |      |      | 
|------------------- | --------------- | ----- | - | ---- | ---- |  | - | ---- | ---- |  | - | ---- | ---- | 
|                    |                 | 2004  |   |      | 2003 |  |   | 2002 |     
|                    |                 |       |   |      |      |  |   |      |     
|Per Common Unit(1): |                 |       |   |      |      |  |   |      |      |  |   |     
|                    | Ordinary income |       | $ | 1.24 |      |  | $ | 0.77 |      |  | $ | 1.33 |     
|                    | Capital gains   |       |   | 1.48 |      |  |   | 0.94 |      |  |   | 0.37 |     
|                    |                 |       |   |      |      |  |   |      |     
|                    |                 | Total |   | $    | 2.72 |  |   | $    | 1.71 |  |   | $    | 1.70 | 
|                    |                 |       |   |      |      |  |   |      |     



|                                            |                 |       |   |      |   |  |      |      |      |  |   |      |      | 
|------------------------------------------- | --------------- | ----- | - | ---- | - |  | ---- | ---- | ---- |  | - | ---- | ---- | 
|                                            |                 | 2004  |   | 2003 |   |  | 2002 |     
|                                            |                 |       |   |      |   |  |      |     
|Per Series A Convertible Preferred Unit(2): |                 |       |   |      |   |  |      |      |      |  |   |     
|                                            | Ordinary income |       | $ |     |   |  | $    | 0.95 |      |  | $ | 1.79 |     
|                                            | Capital gains   |       |   |     |   |  |      | 1.16 |      |  |   | 0.50 |     
|                                            |                 |       |   |      |   |  |      |      |     
|                                            |                 | Total |   | $    |  |  |      | $    | 2.11 |  |   | $    | 2.29 | 
|                                            |                 |       |   |      |   |  |      |      |     

|                                |                 |       |   |      |   |  |      |   |   |  |   |      |      | 
|------------------------------- | --------------- | ----- | - | ---- | - |  | ---- | - | - |  | - | ---- | ---- | 
|                                |                 | 2004  |   | 2003 |   |  | 2002 |  
|                                |                 |       |   |      |   |  |      |  
|Per Series C Preferred Unit(3): |                 |       |   |      |   |  |      |   |   |  |   |     
|                                | Ordinary income |       | $ |     |   |  | $    |  |   |  | $ | 1.08 |     
|                                | Capital gains   |       |   |     |   |  |      |  |   |  |   | 0.30 |     
|                                |                 |       |   |      |   |  |      |   |  
|                                |                 | Total |   | $    |  |  |      | $ |  |  |   | $    | 1.38 | 
|                                |                 |       |   |      |   |  |      |   |  

|                                |                 |       |   |      |      |  |   |      |      |  |   |      |      | 
|------------------------------- | --------------- | ----- | - | ---- | ---- |  | - | ---- | ---- |  | - | ---- | ---- | 
|                                |                 | 2004  |   |      | 2003 |  |   | 2002 |     
|                                |                 |       |   |      |      |  |   |      |     
|Per Series D Preferred Unit(4): |                 |       |   |      |      |  |   |      |      |  |   |     
|                                | Ordinary income |       | $ | 0.60 |      |  | $ | 0.99 |      |  | $ | 1.71 |     
|                                | Capital gains   |       |   | 0.71 |      |  |   | 1.20 |      |  |   | 0.48 |     
|                                |                 |       |   |      |      |  |   |      |     
|                                |                 | Total |   | $    | 1.31 |  |   | $    | 2.19 |  |   | $    | 2.19 | 
|                                |                 |       |   |      |      |  |   |      |     

|                                      |                 |       |   |      |      |  |   |      |      |  |   |      |      | 
|------------------------------------- | --------------- | ----- | - | ---- | ---- |  | - | ---- | ---- |  | - | ---- | ---- | 
|                                      |                 | 2004  |   |      | 2003 |  |   | 2002 |     
|                                      |                 |       |   |      |      |  |   |      |     
|Per Series H, K, L Preferred Unit(5): |                 |       |   |      |      |  |   |      |      |  |   |     
|                                      | Ordinary income |       | $ | 1.55 |      |  | $ | 1.52 |      |  | $ | 2.62 |     
|                                      | Capital gains   |       |   | 1.85 |      |  |   | 1.86 |      |  |   | 0.74 |     
|                                      |                 |       |   |      |      |  |   |      |     
|                                      |                 | Total |   | $    | 3.40 |  |   | $    | 3.38 |  |   | $    | 3.36 | 
|                                      |                 |       |   |      |      |  |   |      |     

23



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|                                |                 |       |   |          |          |  |   |          |          |  |   |          |          | 
|------------------------------- | --------------- | ----- | - | -------- | -------- |  | - | -------- | -------- |  | - | -------- | -------- | 
|                                |                 | 2004  |   |          | 2003     |  |   | 2002     |         
|                                |                 |       |   |          |          |  |   |          |         
|Per Series I Preferred Unit(6): |                 |       |   |          |          |  |   |          |          |  |   |         
|                                | Ordinary income |       | $ | 3,501.00 |          |  | $ | 3,447.00 |          |  | $ | 5,982.46 |         
|                                | Capital gains   |       |   | 4,159.00 |          |  |   | 4,213.00 |          |  |   | 1,677.54 |         
|                                |                 |       |   |          |          |  |   |          |         
|                                |                 | Total |   | $        | 7,660.00 |  |   | $        | 7,660.00 |  |   | $        | 7,660.00 | 
|                                |                 |       |   |          |          |  |   |          |         

|                                |                 |       |   |      |   |  |      |   |   |  |   |      |      | 
|------------------------------- | --------------- | ----- | - | ---- | - |  | ---- | - | - |  | - | ---- | ---- | 
|                                |                 | 2004  |   | 2003 |   |  | 2002 |  
|                                |                 |       |   |      |   |  |      |  
|Per Series J Preferred Unit(7): |                 |       |   |      |   |  |      |   |   |  |   |     
|                                | Ordinary income |       | $ |     |   |  | $    |  |   |  | $ | 1.34 |     
|                                | Capital gains   |       |   |     |   |  |      |  |   |  |   | 0.37 |     
|                                |                 |       |   |      |   |  |      |   |  
|                                |                 | Total |   | $    |  |  |      | $ |  |  |   | $    | 1.71 | 
|                                |                 |       |   |      |   |  |      |   |  






|    |                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes a $1.00 per unit special dividend paid to our
    unitholders of record on December 23, 2004.                                                                                                                                                                                                                                                                                                       
|   
|(2) | The Series A Preferred Units were redeemed during October
    2003.                                                                                                                                                                                                                                                                                                                                          
|   
|(3) | The Series C Preferred Units were redeemed in full plus
    accrued distributions during August 2002.                                                                                                                                                                                                                                                                                                        
|   
|(4) | The Series D Preferred Units were redeemed in full plus
    accrued distributions during August 2004.                                                                                                                                                                                                                                                                                                        
|   
|(5) | The Series H, K and L Preferred Units were converted into
    Common Units during May 2003, September 2004 and December 2004,
    respectively. The distribution paid on the Series H, K and
    L Preferred Units prior to conversion was $1.27 per share,
    $2.55 per share and $3.40 per share, respectively. The
    taxability of which is proportionate to the amounts listed in
    the table above.
|   
|(6) | The Series I Preferred Units have a par value of
    $100,000 per share.                                                                                                                                                                                                                                                                                                                                     
|   
|(7) | The Series J Preferred Units were converted into Common
    Units during July 2002.                                                                                                                                                                                                                                                                                                                          







24



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|                   |  |                 |           |  |                    |                     |       |                  |                     |  |                      |  |  |  |   | 
|------------------ |  | --------------- | --------- |  | ------------------ | ------------------- | ----- | ---------------- | ------------------- |  | -------------------- |  |  |  | - | 
|                   |  |                 |           |  |                    | Total Number of     |       |                  | Maximum Approximate | 
|                   |  |                 |           |  |                    | Shares Purchased as |       |                  | Dollar Value That   | 
|                   |  | Number of Units |           |  | Average Price Paid |                     |       | Part of Publicly |                     |  | May Yet Be Purchased | 
|Period             |  | Purchased       |           |  | per Unit           |                     |       | Announced Plan   |                     |  | Under the Plan       | 
|                   |  |                 |           |  |                    |                     |       |                  |                     |  |                      | 
|1/1/04  1/31/04   |  |                 | 536,684   |  |                    | $                   | 29.35 |                  |                     |  |                     |  |  |  |  | 
|2/1/04  2/29/04   |  |                 | 108,729   |  |                    |                     | 28.00 |                  |                     |  |                     |  |  |  |  | 
|3/1/04  3/31/04   |  |                 | 10,296    |  |                    |                     | 27.35 |                  |                     |  |                     |  |  |  |  | 
|4/1/04  4/30/04   |  |                 | 21,461    |  |                    |                     | 28.71 |                  |                     |  |                     |  |  |  |  | 
|5/1/04  5/31/04   |  |                 | 1,015,788 |  |                    |                     | 28.55 |                  |                     |  |                     |  |  |  |  | 
|6/1/04  6/30/04   |  |                 | 24,059    |  |                    |                     | 29.00 |                  |                     |  |                     |  |  |  |  | 
|7/1/04  7/31/04   |  |                 | 530,791   |  |                    |                     | 30.38 |                  |                     |  |                     |  |  |  |  | 
|8/1/04  8/31/04   |  |                 | 2,000     |  |                    |                     | 30.11 |                  |                     |  |                     |  |  |  |  | 
|9/1/04  9/30/04   |  |                 | 42,538    |  |                    |                     | 31.12 |                  |                     |  |                     |  |  |  |  | 
|10/1/04  10/31/04 |  |                 | 147,313   |  |                    |                     | 33.14 |                  |                     |  |                     |  |  |  |  | 
|11/1/04  11/30/04 |  |                 | 15,554    |  |                    |                     | 35.92 |                  |                     |  |                     |  |  |  |  | 
|12/1/04  12/31/04 |  |                 |          |  |                    |                     |      |                  |                     |  |                     |  |  |  |  | 
|                   |  |                 |           |  |                    |                     |       |                  |                     |  |                      | 
|Total              |  |                 | 2,455,213 |  |                    |                     |       |                  |                     |  |                     |  |  |  |   | 
|                   |  |                 |           |  |                    |                     |       |                  |                     |  |                      | 

25



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|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data



|                                                                        |                                          |                          |         |          |      |   |         |          |  |   |         |          |  |      |         |         |  |   |         |         | 
|----------------------------------------------------------------------- | ---------------------------------------- | ------------------------ | ------- | -------- | ---- | - | ------- | -------- |  | - | ------- | -------- |  | ---- | ------- | ------- |  | - | ------- | ------- | 
|                                                                        |                                          | Years Ended December 31, |        
|                                                                        |                                          |                          |        
|                                                                        |                                          | 2004                     |         |          | 2003 |   |         | 2002     |  |   | 2001    |          |  | 2000 |        
|                                                                        |                                          |                          |         |          |      |   |         |          |  |   |         |          |  |      |        
|Operations Summary(1)(2):                                               |                                          |                          |         |          |      |   |         |          |  |   |         |          |  |      |         |         |  |   |         |        
|Total revenues(3)                                                       |                                          | $                        | 873,329 |          |      | $ | 783,672 |          |  | $ | 754,339 |          |  | $    | 426,530 |         |  | $ | 465,476 |        
|Property operating expenses (rental expenses and real estate
    taxes) |                                          |                          | 301,649 |          |      |   | 257,429 |          |  |   | 255,542 |          |  |      | 119,968 |         |  |   | 134,569 |        
|Net Operating Income(4)                                                 |                                          |                          | 552,472 |          |      |   | 506,909 |          |  |   | 489,335 |          |  |      | 294,657 |         |  |   | 299,949 |        
|Depreciation on real estate investments                                 |                                          |                          | 203,183 |          |      |   | 162,723 |          |  |   | 148,588 |          |  |      | 83,961  |         |  |   | 99,620  |        
|Interest expense                                                        |                                          |                          | 175,249 |          |      |   | 160,871 |          |  |   | 149,538 |          |  |      | 63,409  |         |  |   | 90,860  |        
|General and administrative expense                                      |                                          |                          | 55,479  |          |      |   | 49,838  |          |  |   | 45,710  |          |  |      | 27,434  |         |  |   | 24,303  |        
|Earnings from operations                                                |                                          |                          | 131,797 |          |      |   | 116,932 |          |  |   | 137,947 |          |  |      | 100,078 |         |  |   | 101,887 |        
|Gains on dispositions of depreciated real estate, net(5)                |                                          |                          |        |          |      |   |        |          |  |   | 35,950  |          |  |      | 108,748 |         |  |   | 101,251 |        
|Income from unconsolidated entities                                     |                                          |                          | 17,902  |          |      |   | 5,745   |          |  |   | 53,602  |          |  |      | 10,998  |         |  |   | (449    | )      
|Net earnings from discontinued operations(6)                            |                                          |                          | 434,302 |          |      |   | 371,514 |          |  |   | 134,441 |          |  |      | 53,572  |         |  |   | 66,163  |        
|Preferred Unit distributions                                            |                                          |                          | 16,254  |          |      |   | 26,153  |          |  |   | 34,309  |          |  |      | 25,877  |         |  |   | 25,340  |        
|Net earnings attributable to Common Units:                              |                                          |                          |         |          |      |   |         |          |  |   |         |          |  |      |         |         |  |   |         |        
|                                                                        |  Basic                                  |                          |         | 596,369  |      |   |         | 468,038  |  |   |         | 322,416  |  |      |         | 239,697 |  |   |         | 236,045 | 
|                                                                        |  Diluted                                |                          |         | 600,124  |      |   |         | 480,910  |  |   |         | 322,416  |  |      |         | 250,917 |  |   |         | 244,625 | 
|Common Share distributions                                              |                                          |                          | 603,553 |          |      |   | 365,009 |          |  |   | 344,590 |          |  |      | 221,196 |         |  |   | 201,257 |        
|Per Unit Data:                                                          |                                          |                          |         |          |      |   |         |          |  |   |         |          |  |      |         |         |  |   |         |        
|Net earnings attributable to Common Units:                              |                                          |                          |         |          |      |   |         |          |  |   |         |          |  |      |         |         |  |   |         |        
|                                                                        |  Basic                                  |                          | $       | 2.71     |      |   | $       | 2.20     |  |   | $       | 1.59     |  |      | $       | 1.78    |  |   | $       | 1.79    | 
|                                                                        |  Diluted                                |                          |         | 2.69     |      |   |         | 2.18     |  |   |         | 1.58     |  |      |         | 1.77    |  |   |         | 1.78    | 
|Common Unit cash distributions paid(7)                                  |                                          |                          | 2.72    |          |      |   | 1.71    |          |  |   | 1.70    |          |  |      | 1.64    |         |  |   | 1.54    |        
|Cash distributions paid per Unit:                                       |                                          |                          |         |          |      |   |         |          |  |   |         |          |  |      |         |         |  |   |         |        
|                                                                        | Series A Preferred Unit(8)               |                          |         |         |      |   |         | 2.11     |  |   |         | 2.29     |  |      |         | 2.21    |  |   |         | 2.07    | 
|                                                                        | Series B Preferred Unit(9)               |                          |         |         |      |   |         |         |  |   |         |         |  |      |         | 0.79    |  |   |         | 2.25    | 
|                                                                        | Series C Preferred Unit(10)              |                          |         |         |      |   |         |         |  |   |         | 1.38     |  |      |         | 2.16    |  |   |         | 2.16    | 
|                                                                        | Series D Preferred Unit(11)              |                          |         | 1.31     |      |   |         | 2.19     |  |   |         | 2.19     |  |      |         | 2.19    |  |   |         | 2.19    | 
|                                                                        | Series E Preferred Unit(12)              |                          |         | 2.09     |      |   |         | 2.09     |  |   |         | 0.70     |  |      |         |        |  |   |         |        | 
|                                                                        | Series F Preferred Unit(12)              |                          |         | 1.50     |      |   |         | 2.03     |  |   |         | 0.68     |  |      |         |        |  |   |         |        | 
|                                                                        | Series G Preferred Unit(12)              |                          |         | 2.16     |      |   |         | 2.16     |  |   |         | 0.72     |  |      |         |        |  |   |         |        | 
|                                                                        | Series H, J, K and L Preferred Units(13) |                          |         |         |      |   |         | 3.38     |  |   |         | 3.36     |  |      |         |        |  |   |         |        | 
|                                                                        | Series I Preferred Unit(13)(14)          |                          |         | 7,660.00 |      |   |         | 7,660.00 |  |   |         | 7,660.00 |  |      |         |        |  |   |         |        | 
|Weighted average Common Units outstanding:                              |                                          |                          |         |          |      |   |         |          |  |   |         |          |  |      |         |         |  |   |         |        
|                                                                        |  Basic                                  |                          |         | 220,053  |      |   |         | 212,288  |  |   |         | 202,781  |  |      |         | 134,589 |  |   |         | 131,874 | 
|                                                                        |  Diluted                                |                          |         | 223,187  |      |   |         | 220,758  |  |   |         | 203,804  |  |      |         | 142,090 |  |   |         | 137,730 | 

26



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| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Includes Ameriton for all years presented.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | (2) | Net earnings from discontinued operations have been reclassified
    for all years presented.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | (3) | Annual revenues inclusive of discontinued operations for 2004,
    2003, 2002, 2001 and 2000 were $987 million,
    $1.0 billion, $1.0 billion, $737 million and
    $732 million, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | (4) | Defined as rental revenues less rental expenses and real estate
    taxes. We believe that net earnings attributable to Common Units
    and NOI are the most relevant measures of our operating
    performance and allow investors to evaluate our business against
    our industry peers and against all publicly traded companies as
    a whole. We rely on NOI for purposes of making decisions about
    resource allocations and assessing segment performance. We also
    believe NOI is a valuable means of comparing period-to-period
    property performance. See Item 7 of this Annual Report
    under the caption Apartment Community Operationsfor a reconciliation of NOI to Earnings from Operations.
|
| | (5) | Gains on the disposition of real estate investments classified
    as held for sale after January 1, 2002 are included in
    discontinued operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | (6) | Represents property-specific components of net earnings and
    gains/losses on the disposition of real estate classified as
    held for sale subsequent to January 1, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | (7) | Includes a $1.00 per share special distribution issued to
    our Common Unitholders in December 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | (8) | The Series A Preferred Units were called for redemption
    during October 2003; of the 2.9 million Preferred Units
    outstanding, 2.8 million were converted to Common Units and
    the remaining were redeemed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | (9) | All of the outstanding Series B Preferred Units were
    redeemed on May 2001. During 2001, cash distributions of
    $0.79 per share were paid for the period prior to the
    redemption.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 



|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | All of the outstanding Series C Preferred Units were
    redeemed at liquidation value plus accrued distributions in
    August 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    
|(11) | All of the outstanding Series D Preferred Units were
    redeemed at liquidation value plus accrued distributions in
    August 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    
|(12) | In August 2002, the DownREIT Perpetual Preferred Units were
    converted into Operating Trust Perpetual Preferred Units.
    The Company redeemed the Series F Preferred Units in
    September 2004, 520,000 of the Series E Preferred Units in
    August 2004 and 400,000 of the Series E Preferred Units in
    November 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    
|(13) | The Series L Preferred Units were converted into Common
    Units during December 2004 and the distribution paid during 2004
    prior to conversion was $3.40 per share. In September 2004,
    the Series K Preferred Units were converted into Common
    Units and the distribution paid during 2004 prior to conversion
    was $2.55 per share. The Series H Preferred Units were
    converted into Common Units during May 2003 and the distribution
    paid during 2003 prior to conversion was $1.27 per share.
    In July 2002, Series J Preferred Units were converted into
    Common Units. During the fourth quarter 2001, we paid
    approximately $5.8 million of distributions on the
    Series H, I, J, K and L Preferred Units that were
    declared by Smith Residential prior to the Smith Merger.
|    
|(14) | Series I Preferred Units have a par value of
    $100,000 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

27



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|                                                         |  |                          |           |  |      |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|-------------------------------------------------------- |  | ------------------------ | --------- |  | ---- | - | --------- | ---- |  | - | --------- |  |  | ---- | --------- |  |  | - | --------- | 
|                                                         |  | Years Ended December 31, |          
|                                                         |  |                          |          
|                                                         |  | 2004                     |           |  | 2003 |   |           | 2002 |  |   | 2001      |  |  | 2000 |          
|                                                         |  |                          |           |  |      |   |           |      |  |   |           |  |  |      |          
|Financial Position:                                      |  |                          |           |  |      |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Real estate owned, at cost                               |  | $                        | 8,958,195 |  |      | $ | 8,783,349 |      |  | $ | 9,132,183 |  |  | $    | 8,565,787 |  |  | $ | 5,267,554 | 
|Real estate held for sale(1)                             |  |                          | 262,843   |  |      |   | 215,831   |      |  |   | 165,552   |  |  |      | 46,426    |  |  |   | 46,046    | 
|Investments in and advances to unconsolidated entities   |  |                          | 111,481   |  |      |   | 86,367    |      |  |   | 116,594   |  |  |      | 240,719   |  |  |   | 64,993    | 
|Total assets                                             |  |                          | 9,066,044 |  |      |   | 8,921,695 |      |  |   | 9,096,026 |  |  |      | 8,700,722 |  |  |   | 5,117,459 | 
|Unsecured credit facilities                              |  |                          | 19,000    |  |      |   | 103,790   |      |  |   | 365,578   |  |  |      | 188,589   |  |  |   | 193,719   | 
|Long-Term Unsecured Debt                                 |  |                          | 2,099,132 |  |      |   | 1,871,965 |      |  |   | 1,776,103 |  |  |      | 1,333,890 |  |  |   | 1,401,262 | 
|Total liabilities                                        |  |                          | 4,474,768 |  |      |   | 4,184,592 |      |  |   | 4,704,299 |  |  |      | 4,305,117 |  |  |   | 2,767,774 | 
|Other Common Unitholders interest (at redemption value) |  |                          | 885,400   |  |      |   | 707,924   |      |  |   | 579,598   |  |  |      | 669,502   |  |  |   |          | 
|Preferred Units                                          |  |                          | 69,522    |  |      |   | 210,120   |      |  |   | 355,221   |  |  |      | 374,114   |  |  |   | 286,856   | 
|Total unitholders equity                                |  |                          | 3,703,826 |  |      |   | 4,017,669 |      |  |   | 3,799,141 |  |  |      | 3,631,518 |  |  |   | 2,251,606 | 
|Number of Common Units outstanding                       |  |                          | 222,694   |  |      |   | 220,063   |      |  |   | 205,328   |  |  |      | 199,973   |  |  |   | 122,838   | 

|                                      |                      |                          |   |          |      |  |   |          |   |  |      |          |   |      |   |          |   |  |   |          |  
|------------------------------------- | -------------------- | ------------------------ | - | -------- | ---- |  | - | -------- | - |  | ---- | -------- | - | ---- | - | -------- | - |  | - | -------- | -
|                                      |                      | Years Ended December 31, |  
|                                      |                      |                          |  
|                                      |                      | 2004                     |   |          | 2003 |  |   | 2002     |   |  | 2001 |          |   | 2000 |  
|                                      |                      |                          |   |          |      |  |   |          |   |  |      |          |   |      |  
|Other Data:                           |                      |                          |   |          |      |  |   |          |   |  |      |          |   |      |   |          |   |  |   |         
|Net cash flows provided by (used in): |                      |                          |   |          |      |  |   |          |   |  |      |          |   |      |   |          |   |  |   |         
|                                      | Operating activities |                          | $ | 369,772  |      |  | $ | 343,696  |   |  | $    | 392,043  |   |      | $ | 332,153  |   |  | $ | 322,077  |  
|                                      | Investing activities |                          |   | 552,388  |      |  |   | 428,166  |   |  |      | (137,401 | ) |      |   | 387,694  |   |  |   | 71,789   |  
|                                      | Financing activities |                          |   | (724,135 | )    |  |   | (779,478 | ) |  |      | (248,823 | ) |      |   | (721,897 | ) |  |   | (394,861 | )






|    |                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------
|(1) | Previous years have been restated to include assets that were
    classified as sold or held for sale as of December 31, 2004.






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations



| |            
| | -----------
| | The Company






Results of Operations




| |                  
| | -----------------
| | Executive Summary





28



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| |         
| | --------
| | Overview







| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Increased revenues partially offset by a corresponding increase
    in operating expenses associated with $1.1 billion and
    $508.9 million in asset acquisitions, inclusive of
    Ameriton, that occurred during 2004 and 2003, respectively;                                                                                                                                                                                                                                                        
|
| |  | Increased income from the continued lease-up of new development
    projects;                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | A $92.8 million increase in gains from the sale of
    operating communities, which includes gains from the sale of
    assets by Ameriton;                                                                                                                                                                                                                                                                                                                                                              
|
| |  | A $29.9 million decrease in other expenses primarily due to
    lower moisture infiltration and resulting mold-related expenses
    recognized during 2004;                                                                                                                                                                                                                                                                                                                                              
|
| |  | Non-operating income of $28.2 million, from the sale and
    settlement of forward contracts on marketable equity securities
    resulting in a gain of $24.9 million, and the disposition
    of our property management business, resulting in a
    $3.3 million gain, during 2004;                                                                                                                                                                                                                   
|
| |  | A $12.2 million increase in income from unconsolidated
    entities, primarily related to the recognition of
    $3.2 million of contingent proceeds associated with the
    expiration of certain indemnifications from the sale of CES,
    which was sold in 2002, and $13.9 million of gains from the
    sale of joint venture operating assets during 2004 compared to
    $7.4 million of gains in 2003; and,                                                                                     
|
| |  | A $10.1 million reduction in Preferred Unit distributions
    due to the conversion of Series A and H Preferred Units
    during 2003, the redemption of Series D Preferred Units in
    August 2004, the conversion of Series K Preferred Units in
    September 2004 and the early conversion of Series L
    Preferred Units in December 2004. These conversions and the
    redemption also eliminated the impact of the related Preferred
    Unit distributions on our fixed charge coverage ratio.

29



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A 3.7% increase in Same-Store expenses during 2004 as compared
    to 2003 primarily due to increases in personnel costs and real
    estate taxes at both our garden and high-rise properties (our
    Same-Store population excludes Ameriton properties, as they are
    acquired or developed to achieve short-term opportunistic gains,
    and therefore, the average holding period is typically much
    shorter than the holding period of assets operated by the REIT);
|
| |  | The loss of rental revenues and a corresponding decrease in
    rental expenses due to $1.8 billion and $1.6 billion
    in dispositions, including Ameriton, during 2004 and 2003,
    respectively; and,                                                                                                                                                                                                                                                                       
|
| |  | A $4.7 million charge, net of anticipated insurance
    recoveries, associated with damage from hurricanes in Florida.                                                                                                                                                                                                                                                                                                                                                           





| |   |                                                                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Higher gains in 2003 of $353.6 million as compared to
    $139.6 million during 2002, associated with an increase in
    the dispositions of depreciated real estate assets;                                                                                                                     
|
| |  | Lower interest expense associated with lower debt extinguishment
    costs and lower debt balances during 2003 and a reduction in
    interest rates on floating rate debt and refinanced debt;                                                                                                  
|
| |  | A reduction in Preferred Unit distributions during 2003 due to
    the conversion of Series A and Series H Preferred
    Units into Common Units in 2003 and the conversion of
    Series J Preferred Units into Common Units and the
    redemption of Series A Preferred Units during 2002; and
|
| |  | Increased rental revenue and corresponding increase in rental
    expense due to the acquisition of operating communities and the
    continued lease-up and stabilization of development communities.                                                                                           





| |   |                                                                                                                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A decline in rental revenue from our Same-Store portfolio of
    1.4% for the twelve months ended December 31, 2003 as
    compared to the same period in 2002, primarily due to a decline
    in potential effective rent per unit and a decrease in average
    occupancy;
|
| |  | The loss of rental revenue and a corresponding decrease in
    rental expense due to $1.6 billion and $602.1 million
    in dispositions during the twelve months ended December 31,
    2003 and 2002, respectively; and                                                   
|
| |  | An increase of $24.8 million in expenses associated with
    moisture infiltration and resulting mold during 2003 as compared
    to 2002.                                                                                                                                  

30



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##### Table of Contents





| |                               
| | ------------------------------
| | Apartment Community Operations



|                         |                                         |                          |         |          |      |   |         |          |   |   |         |          |  
|------------------------ | --------------------------------------- | ------------------------ | ------- | -------- | ---- | - | ------- | -------- | - | - | ------- | -------- | -
|                         |                                         | Years Ended December 31, |        
|                         |                                         |                          |        
|                         |                                         | 2004                     |         |          | 2003 |   |         | 2002     |  
|                         |                                         |                          |         |          |      |   |         |          |  
|Net operating income     |                                         | $                        | 552,472 |          |      | $ | 506,909 |          |   | $ | 489,335 |         
|                         | Other income                            |                          |         | 19,208   |      |   |         | 19,334   |   |   |         | 9,462    |  
|                         | Depreciation of real estate investments |                          |         | (203,183 | )    |   |         | (162,723 | ) |   |         | (148,588 | )
|                         | Interest expense                        |                          |         | (175,249 | )    |   |         | (160,871 | ) |   |         | (149,538 | )
|                         | General and administrative expenses     |                          |         | (55,479  | )    |   |         | (49,838  | ) |   |         | (45,710  | )
|                         | Other expense                           |                          |         | (5,972   | )    |   |         | (35,879  | ) |   |         | (17,014  | )
|                         |                                         |                          |         |          |      |   |         |          |  
|Earnings from operations |                                         | $                        | 131,797 |          |      | $ | 116,932 |          |   | $ | 137,947 |         
|                         |                                         |                          |         |          |      |   |         |          |  



|                                                            |                            |                          |         |         |      |   |         |         |  |   |         |         | 
|----------------------------------------------------------- | -------------------------- | ------------------------ | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                                            |                            | Years Ended December 31, |        
|                                                            |                            |                          |        
|                                                            |                            | 2004                     |         |         | 2003 |   |         | 2002    | 
|                                                            |                            |                          |         |         |      |   |         |         | 
|Rental revenues:                                            |                            |                          |         |         |      |   |         |         |  |   |         |        
|                                                            | Garden communities         |                          | $       | 526,271 |      |   | $       | 465,368 |  |   | $       | 458,538 | 
|                                                            | High-rise properties       |                          |         | 303,073 |      |   |         | 284,640 |  |   |         | 273,494 | 
|                                                            | Ameriton                   |                          |         | 21,501  |      |   |         | 11,053  |  |   |         | 7,742   | 
|                                                            | Non-multifamily            |                          |         | 3,276   |      |   |         | 3,277   |  |   |         | 5,103   | 
|                                                            |                            |                          |         |         |      |   |         |         | 
|                                                            | Total revenues             |                          |         | 854,121 |      |   |         | 764,338 |  |   |         | 744,877 | 
|                                                            |                            |                          |         |         |      |   |         |         | 
|Operating expenses (rental expenses and real estate taxes): |                            |                          |         |         |      |   |         |         |  |   |         |        
|                                                            | Garden communities         |                          |         | 181,060 |      |   |         | 150,278 |  |   |         | 150,073 | 
|                                                            | High-rise properties       |                          |         | 108,879 |      |   |         | 101,568 |  |   |         | 100,272 | 
|                                                            | Ameriton                   |                          |         | 11,242  |      |   |         | 4,920   |  |   |         | 3,838   | 
|                                                            | Non-multifamily            |                          |         | 468     |      |   |         | 663     |  |   |         | 1,359   | 
|                                                            |                            |                          |         |         |      |   |         |         | 
|                                                            | Total operating expenses   |                          |         | 301,649 |      |   |         | 257,429 |  |   |         | 255,542 | 
|                                                            |                            |                          |         |         |      |   |         |         | 
|Net operating income:                                       |                            |                          |         |         |      |   |         |         |  |   |         |        
|                                                            | Garden communities         |                          |         | 345,211 |      |   |         | 315,090 |  |   |         | 308,465 | 
|                                                            | High-rise properties       |                          |         | 194,195 |      |   |         | 183,072 |  |   |         | 173,222 | 
|                                                            | Ameriton                   |                          |         | 10,259  |      |   |         | 6,133   |  |   |         | 3,904   | 
|                                                            | Non-multifamily            |                          |         | 2,807   |      |   |         | 2,614   |  |   |         | 3,744   | 
|                                                            |                            |                          |         |         |      |   |         |         | 
|                                                            | Total net operating income |                          |         | 552,472 |      |   |         | 506,909 |  |   |         | 489,335 | 
|                                                            |                            |                          |         |         |      |   |         |         | 
|NOI classified as discontinued operations                   |                            |                          | 61,494  |         |      |   | 128,664 |         |  |   | 199,953 |        
|                                                            |                            |                          |         |         |      |   |         |         | 
|NOI including discontinued operations                       |                            | $                        | 613,966 |         |      | $ | 635,573 |         |  | $ | 689,288 |        
|                                                            |                            |                          |         |         |      |   |         |         | 

31



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|                                        |                      |                          |  |      |      |  |  |      |   |  |  |      |  
|--------------------------------------- | -------------------- | ------------------------ |  | ---- | ---- |  |  | ---- | - |  |  | ---- | -
|                                        |                      | Years Ended December 31, | 
|                                        |                      |                          | 
|                                        |                      | 2004                     |  |      | 2003 |  |  | 2002 |  
|                                        |                      |                          |  |      |      |  |  |      |  
|Operating margin (NOI/rental revenues): |                      |                          |  |      |      |  |  |      |   |  |  |     
|                                        | Garden communities   |                          |  | 65.6 | %    |  |  | 67.7 | % |  |  | 67.3 | %
|                                        | High-rise properties |                          |  | 64.1 | %    |  |  | 64.3 | % |  |  | 63.3 | %
|Average occupancy during period:        |                      |                          |  |      |      |  |  |      |   |  |  |     
|                                        | Garden communities   |                          |  | 94.7 | %    |  |  | 95.0 | % |  |  | 95.0 | %
|                                        | High-rise properties |                          |  | 95.2 | %    |  |  | 93.2 | % |  |  | 93.8 | %



|     |           |            |  |      |            |  |  |            |    |  |  |      |   
|---- | --------- | ---------- |  | ---- | ---------- |  |  | ---------- | -- |  |  | ---- | --
|     |           | Same-Store |  |      | Same-Store |  |  | Same-Store |   
|     |           | Revenue    |  |      | Expense    |  |  | NOI        |   
|     |           | Growth/    |  |      | Growth/    |  |  | Growth/    |   
|     |           | (Decline)  |  |      | (Decline)  |  |  | (Decline)  |   
|     |           |            |  |      |            |  |  |            |   
|2004 |           |            |  |      |            |  |  |            |    |  |  |     
|     | Garden    |            |  | 0.0  | %          |  |  | 4.6        | %  |  |  | (2.1 | %)
|     | High-Rise |            |  | 0.4  | %          |  |  | 2.3        | %  |  |  | (0.6 | %)
|     | Total     |            |  | 0.2  | %          |  |  | 3.7        | %  |  |  | (1.6 | %)
|2003 |           |            |  |      |            |  |  |            |    |  |  |     
|     | Garden    |            |  | (2.4 | )%         |  |  | (2.0       | )% |  |  | (2.6 | %)
|     | High-Rise |            |  | 0.3  | %          |  |  | (1.0       | )% |  |  | 1.0  | % 
|     | Total     |            |  | (1.4 | )%         |  |  | (1.6       | )% |  |  | (1.3 | %)



| |                           
| | --------------------------
| | 2004 vs. 2003 NOI Analysis













| |   |                                                                                                                                                                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The loss of NOI from the disposition of $1.8 billion and
    $1.6 billion in operating assets, including Ameriton,
    during 2004 and 2003, respectively;                                                                                                                                                          
|
| |  | A decline in Same-Store NOI of 2.1% at our garden communities
    primarily due to 4.6% higher Same-Store expenses in 2004
    compared to 2003 resulting from higher property taxes and site
    and regional personnel costs. Garden rental revenues were flat
    in 2004, due principally to improvements in the

32



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | Washington D.C. metropolitan area and Southern California
    markets offset by continuing weakness in the Bay Area and
    Atlanta; and,                                                                                                                                                                                                                                                                     
|
| |  | A decline in Same-Store NOI of 0.6% for our high-rise properties
    primarily due to increased personnel costs and increased
    property taxes. These expense increases were partially offset by
    0.4% higher revenues due to continued improvements in the
    Washington D.C. metropolitan market where we have the majority
    of our high-rise properties offset by ongoing weakness in
    Chicago.





| |                           
| | --------------------------
| | 2003 vs. 2002 NOI Analysis













| |   |                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The loss of NOI from the disposition of $1.6 billion and
    $602.1 million in operating assets, including Ameriton,
    during 2003 and 2002, respectively; and                                                        
|
| |  | A decline in Same-Store NOI of 2.6% for our garden communities
    primarily due to a decrease in revenues in the Bay Area, Seattle
    and Atlanta markets, which were impacted by challenging economic
    conditions.





| |             
| | ------------
| | Other Income



33



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##### Table of Contents







| |                     
| | --------------------
| | Depreciation Expense









| |                 
| | ----------------
| | Interest Expense









| |                                    
| | -----------------------------------
| | General and Administrative Expenses



34



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| |               
| | --------------
| | Other Expenses







| |                                    
| | -----------------------------------
| | Income from Unconsolidated Entities







| |                           
| | --------------------------
| | Other Non-Operating Income





| |                             
| | ----------------------------
| | Preferred Unit Distributions





35



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##### Table of Contents





| |                        
| | -----------------------
| | Discontinued Operations







|                                                                                       |                               |                          |         |         |      |   |         |         |  |   |          |         | 
|-------------------------------------------------------------------------------------- | ----------------------------- | ------------------------ | ------- | ------- | ---- | - | ------- | ------- |  | - | -------- | ------- | 
|                                                                                       |                               | Years Ended December 31, |        
|                                                                                       |                               |                          |        
|                                                                                       |                               | 2004                     |         |         | 2003 |   |         | 2002    | 
|                                                                                       |                               |                          |         |         |      |   |         |         | 
|Rental revenue                                                                         |                               | $                        | 113,933 |         |      | $ | 242,287 |         |  | $ | 340,897  |        
|Rental expenses                                                                        |                               |                          | (39,656 | )       |      |   | (85,012 | )       |  |   | (107,088 | )      
|Real estate taxes                                                                      |                               |                          | (12,783 | )       |      |   | (28,611 | )       |  |   | (33,856  | )      
|Depreciation on real estate investments                                                |                               |                          | (16,806 | )       |      |   | (40,633 | )       |  |   | (58,037  | )      
|Interest expense(1)                                                                    |                               |                          | (33,503 | )       |      |   | (51,195 | )       |  |   | (92,651  | )      
|Income Taxes from taxable REIT subsidiaries                                            |                               |                          | (21,567 | )       |      |   | (12,206 | )       |  |   | (10,455  | )      
|Provision for possible loss on real estate investment                                  |                               |                          |        |         |      |   | (3,714  | )       |  |   | (2,611   | )      
|Debt extinguishment costs related to dispositions                                      |                               |                          | (1,763  | )       |      |   | (3,002  | )       |  |   | (5,412   | )      
|Gain from the disposition of REIT real estate investments, net                         |                               |                          | 372,217 |         |      |   | 310,901 |         |  |   | 72,934   |        
|Gain from the dispositions of taxable REIT subsidiary real
    estate investments, net |                               |                          | 74,230  |         |      |   | 42,699  |         |  |   | 30,720   |        
|                                                                                       |                               |                          |         |         |      |   |         |         | 
|                                                                                       | Total discontinued operations |                          | $       | 434,302 |      |   | $       | 371,514 |  |   | $        | 134,441 | 
|                                                                                       |                               |                          |         |         |      |   |         |         | 






|    |                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The portion of interest expense included in discontinued
    operations that is allocated to properties based on the
    Companys leverage ratio was $23.2 million,
    $32.7 million and $61.2 million for 2004, 2003 and
    2002, respectively.





36



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##### Table of Contents








Liquidity and Capital Resources






| |                     
| | --------------------
| | Operating Activities







| |                                   
| | ----------------------------------
| | Investing and Financing Activities









37



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##### Table of Contents







| |   |                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Issued $10.8, $47.6 and $8.7 million of A-1 Common Units as
    partial consideration for properties acquired during 2004, 2003
    and 2002, respectively;                                                                    
|
| |  | Issued $4.5 million of A-2 Common Units as partial
    consideration for real estate during 2004.                                                                                                                              
|
| |  | Holders of Series K Preferred Units and Series L
    Preferred Units converted $25.0 million each of their units
    into Common Shares during 2004;                                                                           
|
| |  | Holders of Series H Preferred Units converted
    $71.5 million of their units into Common Shares during 2003;                                                                                                                 
|
| |  | Redeemed $47.9 million, $25.5 million and
    $41.7 million A-1 Common Units for Common Shares during
    2004, 2003 and 2002, respectively;                                                                                   
|
| |  | Holders of Series J Preferred Units converted
    $25 million of their units into Common Shares during 2002;                                                                                                                   
|
| |  | Recorded an accrual related to moisture infiltration and
    resulting mold remediation for $36.1 million and
    $11.3 million at one of our high-rise properties in
    Southeast Florida during 2003 and 2002, respectively;
|
| |  | Assumed mortgage debt of $113.6 million, $55.4 million
    and $195.6 million during 2004, 2003 and 2002,
    respectively, in connection with the acquisition of apartment
    communities;                                   
|
| |  | Holders of Series A Preferred Units converted
    $71.9 million and $5.7 million of their units into
    Common Shares during 2003 and 2002, respectively.                                                                     



| |                                                                
| | ---------------------------------------------------------------
| | Scheduled Debt Maturities and Interest Payment
    Requirements







38



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##### Table of Contents













| |                                     
| | ------------------------------------
| | Unitholder Distribution Requirements



|                           |                                          |                                          |   |          |       |  |   |         |         | 
|-------------------------- | ---------------------------------------- | ---------------------------------------- | - | -------- | ----- |  | - | ------- | ------- | 
|                           |                                          | Per Share                                |   |          | Total | 
|                           |                                          |                                          |   |          |       | 
|Common Unit distributions: |                                          |                                          |   |          |       |  |   |        
|                           | Common Units(1)                          |                                          | $ | 1.73     |       |  | $ | 345,625 |        
|                           | A-1 Common Unit distributions(1)         |                                          |   | 1.73     |       |  |   | 39,993  |        
|                           | Series E Preferred Unit distributions(2) |                                          |   | 0.20     |       |  |   | 40      |        
|                           | Series G Preferred Unit distributions(2) |                                          |   | 0.38     |       |  |   | 228     |        
|                           | Series I Preferred Unit distributions(3) |                                          |   | 7,660.00 |       |  |   | 3,830   |        
|                           |                                          |                                          |   |          |       | 
|                           |                                          | Total dividend/distribution requirements |   |          |       |  |   | $       | 389,716 | 
|                           |                                          |                                          |   |          |       | 






|    |                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Future distributions on Common Units are contingent upon
    approval by the Archstone-Smith Board of Trustees.                               
|   
|(2) | Distributions are prorated as we plan to redeem the remaining
    Series E and G Preferred Units in February and March 2005,
    respectively.
|   
|(3) | Series I Preferred Units have a par value of
    $100,000 per unit.                                                                           



| |                                        
| | ---------------------------------------
| | Unit Repurchase and Redemption Activity





| |   |                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In May 2003, the Series H Preferred Units were converted
    into Common Units.                                                                                                                                                                              
|
| |  | In October 2003, we called the Series A Preferred Units for
    redemption. Of the 2.9 million Series A Convertible
    Preferred Units outstanding, 2.8 million were converted to
    Common Units and the remaining were redeemed for cash and
    retired.
|
| |  | In September 2004, the Series K Preferred Units were
    converted into Common Units.                                                                                                                                                                        
|
| |  | In August 2004, the Series D Preferred Units were redeemed
    in full plus accrued distributions.                                                                                                                                                           
|
| |  | In December 2004, the Series L Preferred Units were
    converted into Common Units.                                                                                                                                                                         

39



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##### Table of Contents







| |                    
| | -------------------
| | Planned Investments



|                                          |       |                     |       |        |               |   |         |           |  |   |         |         | 
|----------------------------------------- | ----- | ------------------- | ----- | ------ | ------------- | - | ------- | --------- |  | - | ------- | ------- | 
|                                          |       | Planned Investments |      
|                                          |       |                     |      
|                                          |       | Units               |       |        | Discretionary |   |         | Committed | 
|                                          |       |                     |       |        |               |   |         |           | 
|Communities under redevelopment           |       |                     | 1,535 |        |               | $ | 2,756   |           |  | $ | 27,485  |        
|Communities under construction            |       |                     | 4,894 |        |               |   |        |           |  |   | 458,453 |        
|Communities In Planning and owned         |       |                     | 2,953 |        |               |   | 485,889 |           |  |   |        |        
|Communities In Planning and Under Control |       |                     | 713   |        |               |   | 101,349 |           |  |   |        |        
|Community acquisitions under contract     |       |                     | 348   |        |               |   | 43,152  |           |  |   |        |        
|                                          |       |                     |       |        |               |   |         |           | 
|                                          | Total |                     |       | 10,443 |               |   | $       | 633,146   |  |   | $       | 485,938 | 
|                                          |       |                     |       |        |               |   |         |           | 







| |                
| | ---------------
| | Funding Sources







40



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##### Table of Contents










Litigation and Contingencies

















Critical Accounting Policies




41



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##### Table of Contents







| |                             
| | ----------------------------
| | Internal Cost Capitalization







| |                         
| | ------------------------
| | Valuation of Real Estate







42



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##### Table of Contents





| |                                           
| | ------------------------------------------
| | Capital Expenditures and Depreciable Lives









| |              
| | -------------
| | Pursuit Costs








Off Balance Sheet Arrangements






43



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##### Table of Contents












Contractual Commitments




|                                           |       |      |       |          |      |   |          |         |  |           |       |         |  |       |         |         |  |   |         |         | 
|------------------------------------------ | ----- | ---- | ----- | -------- | ---- | - | -------- | ------- |  | --------- | ----- | ------- |  | ----- | ------- | ------- |  | - | ------- | ------- | 
|                                           |       |      |       | 2006 and |      |   | 2008 and |         |  | 2010 thru |       |         | 
|                                           |       | 2005 |       |          | 2007 |   |          | 2009    |  |           | 2096  |         |  | Total |        
|                                           |       |      |       |          |      |   |          |         |  |           |       |         |  |       |        
|Scheduled long-term debt maturities        |       | $    | 313.7 |          |      | $ | 838.0    |         |  | $         | 911.2 |         |  | $     | 2,067.7 |         |  | $ | 4,130.6 |        
|Unsecured credit facilities(1)             |       |      |      |          |      |   | 19.0     |         |  |           |      |         |  |       |        |         |  |   | 19.0    |        
|Interest on indebtedness                   |       |      | 238.6 |          |      |   | 413.4    |         |  |           | 311.3 |         |  |       | 275.9   |         |  |   | 1,239.2 |        
|Development and redevelopment expenditures |       |      | 380.2 |          |      |   | 105.7    |         |  |           |      |         |  |       |        |         |  |   | 485.9   |        
|Performance bond guarantees(2)             |       |      | 18.9  |          |      |   | 0.7      |         |  |           |      |         |  |       | 2.4     |         |  |   | 22.0    |        
|Lease commitments and other(3)             |       |      | 34.0  |          |      |   | 18.5     |         |  |           | 13.3  |         |  |       | 347.2   |         |  |   | 413.0   |        
|                                           |       |      |       |          |      |   |          |         |  |           |       |         |  |       |        
|                                           | Total |      | $     | 985.4    |      |   | $        | 1,395.3 |  |           | $     | 1,235.8 |  |       | $       | 2,693.2 |  |   | $       | 6,309.7 | 
|                                           |       |      |       |          |      |   |          |         |  |           |       |         |  |       |        






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The $600 million unsecured facility matures December 2007,
    with a one-year extension option available at our discretion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(2) | The Operating Trust, our subsidiaries and investees have not
    been required to perform on these guarantees, nor do we
    anticipate being required to perform on such guarantees. Since
    we believe that our risk of loss under these contingencies is
    remote, no accrual for potential loss has been made in the
    accompanying financial statements. We are still obligated for
    certain performance bond guarantees for SMC subsequent to their
    sale, but there are recourse provisions available to us to
    recover any potential future payments from the new owners of SMC.
|   
|(3) | Lease commitments relate principally to ground lease payments as
    of December 31, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

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Related Party Transactions

















New Accounting Pronouncements


Inventory Costs an amendment of ARB No. 43,
Chapter 4


Accounting for Real Estate Time-Sharing Transactions an
amendment of FASB Statements No. 66 and 67 Accounting for
Sales of Real Estate Accounting for Real Estate
Time-Sharing Transactions. Accounting for Costs and Initial
Rental Operations of Real Estate Projects


Exchanges of Non-monetary Assets an amendment of APB
No. 29 Accounting for Non-monetary
Transactions


45



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Share-Based Payment Accounting for
Stock-Based Compensation Accounting for Stock Issued to
Employees.


Participating Securities and the Two 
Class Method under FASB Statement No. 128, Earnings
per Share


The Effect of Contingently Convertible Instruments on
Diluted Earnings Per Share


Applying the Conditions in Paragraph 42 of FASB
Statement No. 144, Accounting for Impairment or Disposal of
Long-Lived Assets, in Determining Whether to Report Discontinued
Operations


The Meaning of Other-Than-Temporary Impairment and Its
Application to Certain Investments







|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market
    Risk



| |                  
| | -----------------
| | Stock Investments



46



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| |                                 
| | --------------------------------
| | Interest Rate Hedging Activities









47



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|                   |                            |                         |              |         |            |              |  |                |           |           |   |        |        |       | 
|------------------ | -------------------------- | ----------------------- | ------------ | ------- | ---------- | ------------ |  | -------------- | --------- | --------- | - | ------ | ------ | ----- | 
|                   |                            |                         |              |         |            | Carrying and | 
|                   |                            | Notional                |              |         | Maturity   |              |  | Estimated Fair |          
|                   |                            | Amount                  |              |         | Date Range |              |  | Value          |          
|                   |                            |                         |              |         |            |              |  |                |          
|Cash flow hedges:  |                            |                         |              |         |            |              |  |                |           |           |   |       
|                   | Interest rate caps         |                         | $            | 109,008 |            |              |  | 2005-2007      |           |           | $ | 8      |       
|                   | Interest rate swaps        |                         |              | 150,000 |            |              |  | 2006           |           |           |   | (3,556 | )     
|                   |                            |                         |              |         |            |              |  |                |          
|                   |                            | Total cash flow hedges  |              | $       | 259,008    |              |  |                | 2005-2007 |           |   | $      | (3,548 | )    
|                   |                            |                         |              |         |            |              |  |                |          
|Fair value hedges: |                            |                         |              |         |            |              |  |                |           |           |   |       
|                   | Interest rate swaps        |                         | $            | 75,055  |            |              |  | 2008           |           |           | $ | 4,470  |       
|                   | Total rate of return swaps |                         |              | 77,006  |            |              |  | 2006-2007      |           |           |   | 8,593  |       
|                   |                            |                         |              |         |            |              |  |                |          
|                   |                            | Total fair value hedges |              | $       | 152,061    |              |  |                | 2005-2008 |           |   | $      | 13,063 |      
|                   |                            |                         |              |         |            |              |  |                |          
|                   |                            |                         | Total hedges |         | $          | 411,069      |  |                |           | 2005-2008 |   |        | $      | 9,515 | 
|                   |                            |                         |              |         |            |              |  |                |          





| |                                     
| | ------------------------------------
| | Equity Securities Hedging Activities





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| |                                    
| | -----------------------------------
| | Interest Rate Sensitive Liabilities





|                                     |                              |                                  |                                  |        |         |     |   |      |         |     |      |   |         |       |   |           |            |     |   |         |         |     |          |   |         |     |   |        |           |     |   |        |           |   | 
|------------------------------------ | ---------------------------- | -------------------------------- | -------------------------------- | ------ | ------- | --- | - | ---- | ------- | --- | ---- | - | ------- | ----- | - | --------- | ---------- | --- | - | ------- | ------- | --- | -------- | - | ------- | --- | - | ------ | --------- | --- | - | ------ | --------- | - | 
|                                     |                              |                                  |                                  |        |         |     |   |      |         |     |      |   |         |       |   | Estimated |           
|                                     |                              |                                  |                                  |        |         |     |   |      |         |     |      |   |         | Total |   |           | Fair       |    
|                                     |                              | 2005                             |                                  |        | 2006    |     |   | 2007 |         |     | 2008 |   |         | 2009  |   |           | Thereafter |     |   | Balance |         |     | Value(1) |  
|                                     |                              |                                  |                                  |        |         |     |   |      |         |     |      |   |         |       |   |           |            |     |   |         |         |     |          |  
|Interest rate sensitive liabilities: |                              |                                  |                                  |        |         |     |   |      |         |     |      |   |         |       |   |           |            |     |   |         |         |     |          |   |         |     |   |        |           |     |   |       
|                                     | Unsecured credit facilities: |                                  | $                                | 19,000 |         |     | $ |     |         |     | $    |  |         |       | $ |          |            |     | $ |        |         |     | $        |  |         |     | $ | 19,000 |           |     | $ | 19,000 |          
|                                     |                              | Average nominal interest rate(2) |                                  |        | 2.6     | %   |   |      |        |     |      |   |        |       |   |           |           |     |   |         |        |     |          |   |        |     |   |        | 2.6       | %   |   |        |          |  
|                                     | Long-Term Unsecured Debt:    |                                  |                                  |        |         |     |   |      |         |     |      |   |         |       |   |           |            |     |   |         |         |     |          |   |         |     |   |        |           |     |   |        |          
|                                     |                              | Fixed rate                       |                                  | $      | 251,250 |     |   | $    | 51,250  |     |      | $ | 386,250 |       |   | $         | 311,250    |     |   | $       | 82,277  |     |          | $ | 937,330 |     |   | $      | 2,019,607 |     |   | $      | 2,183,254 |  
|                                     |                              |                                  | Average nominal interest rate(2) |        |         | 8.2 | % |      |         | 7.4 | %    |   |         | 5.4   | % |           |            | 4.0 | % |         |         | 7.6 | %        |   |         | 6.9 | % |        |           | 6.4 | % |        |           |  | 
|                                     |                              | Variable rate(3)                 |                                  | $      |        |     |   | $    |        |     |      | $ |        |       |   | $         | 22,412     |     |   | $       |        |     |          | $ | 57,113  |     |   | $      | 79,525    |     |   | $      | 79,525    |  
|                                     |                              |                                  | Average nominal interest rate(2) |        |         |     |   |      |         |     |      |   |         |       |   |           |            | 2.1 | % |         |         |     |          |   |         | 2.1 | % |        |           | 2.1 | % |        |           |  | 
|                                     | Mortgages payable:           |                                  |                                  |        |         |     |   |      |         |     |      |   |         |       |   |           |            |     |   |         |         |     |          |   |         |     |   |        |           |     |   |        |          
|                                     |                              | Fixed rate debt                  |                                  | $      | 18,051  |     |   | $    | 240,330 |     |      | $ | 122,216 |       |   | $         | 119,409    |     |   | $       | 368,512 |     |          | $ | 591,490 |     |   | $      | 1,460,008 |     |   | $      | 1,521,939 |  
|                                     |                              |                                  | Average nominal interest rate(2) |        |         | 6.1 | % |      |         | 6.0 | %    |   |         | 5.6   | % |           |            | 6.2 | % |         |         | 6.8 | %        |   |         | 6.6 | % |        |           | 6.4 | % |        |           |  | 
|                                     |                              | Variable rate debt               |                                  | $      | 44,442  |     |   | $    | 3,873   |     |      | $ | 34,056  |       |   | $         | 3,541      |     |   | $       | 3,830   |     |          | $ | 481,755 |     |   | $      | 571,497   |     |   | $      | 571,497   |  
|                                     |                              |                                  | Average nominal interest rate(2) |        |         | 4.2 | % |      |         | 2.0 | %    |   |         | 2.7   | % |           |            | 2.0 | % |         |         | 1.9 | %        |   |         | 2.0 | % |        |           | 2.2 | % |        |           |  | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The estimated fair value for each of the liabilities listed was
    calculated by discounting the actual principal payment stream at
    prevailing interest rates (obtained from third party financial
    institutions) currently available on debt instruments with
    similar terms and features.                                                                                                                                                                                                                                                                                                    
|   
|(2) | Reflects the weighted average nominal interest rate on the
    liabilities outstanding during each period, giving effect to
    principal payments and final maturities during each period, if
    any. The nominal rates for variable rate mortgages payable have
    been held constant during each period presented based on the
    actual variable rates as of December 31, 2004. The weighted
    average effective interest rate on the unsecured credit
    facilities, Long- Term Unsecured Debt and mortgages payable was
    2.62%, 6.23% and 5.24%, respectively, as of December 31,
    2004.
|   
|(3) | Represents unsecured tax-exempt bonds.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    






|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data



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|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures








| |                                                                     
| | --------------------------------------------------------------------
| | Managements Report on Internal Control Over
    Financial Reporting





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##### Table of Contents






PART III







|         |                                                  
|-------- | -------------------------------------------------
|Item 10. | Trustees and Executive Officers of the Registrant










|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation








|         |                                                                   
|-------- | ------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management



|                                                                                  |  |                    |           |     |                   |  |      |  
|--------------------------------------------------------------------------------- |  | ------------------ | --------- | --- | ----------------- |  | ---- | -
|                                                                                  |  | Number of A-1      |           |     |                  
|                                                                                  |  | Common Units       |           |     | Percentage of All | 
|Name of Beneficial Owner                                                          |  | Beneficially Owned |           |     | A-1 Common Units  | 
|                                                                                  |  |                    |           |     |                   | 
|Robert P. Kogod                                                                   |  |                    | 2,522,094 | (1) |                   |  | 10.9 | %
|R. Scot Sellers                                                                   |  |                    |          |     |                   |  |     |  
|Robert H. Smith                                                                   |  |                    | 2,607,801 | (1) |                   |  | 11.3 | %
|J. Lindsay Freeman                                                                |  |                    |          |     |                   |  |     |  
|Dana K. Hamilton                                                                  |  |                    |          |     |                   |  |     |  
|Charles E. Mueller, Jr.                                                           |  |                    |          |     |                   |  |     |  
|James D. Rosenberg                                                                |  |                    |          |     |                   |  |     |  
|All Operating Trust trustees and executive officers as a group
    (7 persons)(2) |  |                    | 2,800,127 | (1) |                   |  | 12.4 | %






|    |                                                                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes for each of Messrs. Smith and Kogod beneficial
    ownership of Common Shares which are issuable upon conversion of
    Class A-1 Common Units as follows: Mr. Smith,
    2,418,655 and Mr. Kogod, 2,398,510. Mr. Smith has
    shared voting and shared dispositive power with respect to
    2,418,655 of such

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | Class A-1 Common Units. Of the 2,418,655 Class A-1
    Common Units for which Mr. Smith shares voting power and
    dispositive power, 88,887 are owned by Mr. Smiths
    spouse and 2,329,768 are owned by CESM, Inc., of which
    Mr. Smith is a director and the vice president, secretary
    and treasurer. Mr. Kogod has shared voting and shared
    dispositive power with respect to 2,398,510 of such
    Class A-1 Common Units. Of the 2,398,510 Class A-1
    Common Units for which Mr. Kogod shares voting power and
    dispositive power, 68,742 are owned by Mr. Kogods
    spouse and 2,329,768 are owned by Charles E. Smith
    Management, Inc., of which Mr. Kogod is a director and the
    president. The Class A-1 Common Units that are owned by
    CESM, Inc. are reported twice, once as beneficially owned by
    Mr. Smith and again as beneficially owned by
    Mr. Kogod, but are only counted once in the calculation of
    beneficial ownership of our Trustees and executive officers as a
    group.
|   
|(2) | Archstone-Smith is the sole trustee of the Operating Trust and
    owned 89.1% of the Operating Trust via A-2 Common Units as
    of December 31, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        






|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accounting Fees and Services

PROPOSAL 3  RATIFICATION OF RELATIONSHIP WITH
PUBLIC ACCOUNTANTS






|                      |  |                     |           |  |      |   |           | 
|--------------------- |  | ------------------- | --------- |  | ---- | - | --------- | 
|                      |  | For the Years Ended |          
|                      |  | December 31,        |          
|                      |  |                     |          
|                      |  | 2004                |           |  | 2003 |  
|                      |  |                     |           |  |      |  
|Audit Fees(1)         |  | $                   | 1,597,000 |  |      | $ | 888,750   | 
|Audit-Related Fees(2) |  |                     | 202,500   |  |      |   | 186,800   | 
|Tax Fees(3)           |  |                     | 219,650   |  |      |   | 281,949   | 
|All Other Fees(4)     |  |                     |          |  |      |   |          | 
|                      |  |                     |           |  |      |  
|TOTAL                 |  | $                   | 2,019,150 |  |      | $ | 1,357,499 | 
|                      |  |                     |           |  |      |  






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Audit Fees are the aggregate fees billed by KPMG LLP
    for professional services rendered for the audit of the
    Operating Trusts annual financial statements for the years
    ended December 31, 2004 and December 31, 2003 and the
    reviews of the financial statements included in the Operating
    Trusts quarterly reports on Form 10-Q during 2004 and
    2003. Audit Fees also includes amounts billed for
    registration statements filed in 2003 and 2004 and related
    comfort letters and consent. These fees include fees billed in
    connection with KPMG LLPs analysis of the effectiveness of
    our internal controls.

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|    |                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Audit-related fees include fees billed for assurance
    and related services that are reasonably related to the
    performance of the audit and not included in the audit
    fees described above, including audits of joint ventures
    and unconsolidated and consolidated subsidiaries.
|   
|(3) | Tax Fees are fees billed by KPMG LLP in either
    2004 or 2003 for tax services, including tax compliance, tax
    advice or tax planning.                                                                                                                                                     
|   
|(4) | All Other Fees are fees billed by KPMG LLP in
    2004 or 2003 that are not included in the above classifications.                                                                                                                                                                              

Pre-Approval Process




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##### Table of Contents






PART IV







|         |                                        
|-------- | ---------------------------------------
|Item 15. | Exhibits, Financial Statement Schedules





| |                                       
| | --------------------------------------
| | (a) Financial Statements and Schedule:





| |                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------
| | See Index to Financial Statements and Schedule on page 55
    of this report, which is incorporated herein by reference.





| |                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | See Schedule III on page 97 of this report, which is
    incorporated herein by reference.                                                                       
|
| | See Schedule IV on page 99 of this report, which is
    incorporated herein by reference.                                                                        
|
| | All other schedules have been omitted since the required
    information is presented in the financial statements and the
    related notes or is not applicable.





| |                                                                                                 
| | ------------------------------------------------------------------------------------------------
| | See Index to Exhibits on page 101 of this report, which is
    incorporated herein by reference.





| |                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Exhibits required by Item 601 of Registration S-K
    are listed in the Index to Exhibits on page 101 of this
    Annual Report, which is incorporated herein by reference.

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##### Table of Contents



INDEX TO FINANCIAL STATEMENTS AND SCHEDULE


|                                                                                                                                                                                   |  |      |     | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                                                                                                   |  | Page |    
|                                                                                                                                                                                   |  |      |    
|Reports of Independent Registered Public
    Accounting Firm                                                                                                                       |  |      | 56  | 
|Consolidated Balance Sheets as of
    December 31, 2004 and 2003                                                                                                                   |  |      | 58  | 
|Consolidated Statements of Earnings for the
    years ended December 31, 2004, 2003 and 2002                                                                                       |  |      | 59  | 
|Consolidated Statements of
    Unitholders Equity, Other Common Unitholders
    Interest and Comprehensive Income(Loss) for the years ended
    December 31, 2004, 2003 and 2002 |  |      | 60  | 
|Consolidated Statements of Cash Flows for
    the years ended December 31, 2004, 2003 and 2002                                                                                     |  |      | 61  | 
|Notes to Consolidated Financial
    Statements                                                                                                                                     |  |      | 62  | 
|Independent Auditors Report on
    Financial Statement Schedule                                                                                                                   |  |      | 96  | 
|Schedule III  Real Estate
    and Accumulated Depreciation as of December 31, 2004                                                                                                |  |      | 97  | 
|Schedule IV  Mortgage Loans
    on Real Estate as of December 31, 2004                                                                                                            |  |      | 99  | 
|Signatures                                                                                                                                                                         |  |      | 100 | 
|Index to Exhibits                                                                                                                                                                  |  |      | 101 | 

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##### Table of Contents






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM












Consolidation of
Variable Interest Entities


.




| |             
| | ------------
| | /s/ KPMG LLP





56



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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM






.








.


.




| |             
| | ------------
| | /s/ KPMG LLP





57



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##### Table of Contents



ARCHSTONE-SMITH OPERATING TRUST





CONSOLIDATED BALANCE SHEETS


(In thousands, except unit data)


|                                                                                                                          |                                                                                                                |                                           |           |           |           |   |           |           |           | 
|------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------- | ----------------------------------------- | --------- | --------- | --------- | - | --------- | --------- | --------- | 
|                                                                                                                          |                                                                                                                | December 31,                              |          
|                                                                                                                          |                                                                                                                |                                           |          
|                                                                                                                          |                                                                                                                | 2004                                      |           |           | 2003      |  
|                                                                                                                          |                                                                                                                |                                           |           |           |           |  
|ASSETS                                                                                                                   
|Real estate                                                                                                               |                                                                                                                | $                                         | 8,958,195 |           |           | $ | 8,783,349 |          
|Real estate  held for sale                                                                                               |                                                                                                                |                                           | 262,843   |           |           |   | 215,831   |          
|Less accumulated depreciation                                                                                             |                                                                                                                |                                           | 763,542   |           |           |   | 648,982   |          
|                                                                                                                          |                                                                                                                |                                           |           |           |           |  
|                                                                                                                          |                                                                                                                |                                           | 8,457,496 |           |           |   | 8,350,198 |          
|Investments in and advances to unconsolidated entities                                                                    |                                                                                                                |                                           | 111,481   |           |           |   | 86,367    |          
|                                                                                                                          |                                                                                                                |                                           |           |           |           |  
|                                                                                                                          |                                                                                                                | Net investments                           |           |           | 8,568,977 |   |           |           | 8,436,565 | 
|Cash and cash equivalents                                                                                                 |                                                                                                                |                                           | 203,255   |           |           |   | 5,230     |          
|Restricted cash in tax-deferred exchange escrow                                                                           |                                                                                                                |                                           | 120,095   |           |           |   | 180,920   |          
|Other assets                                                                                                              |                                                                                                                |                                           | 173,717   |           |           |   | 298,980   |          
|                                                                                                                          |                                                                                                                |                                           |           |           |           |  
|                                                                                                                          |                                                                                                                | Total assets                              |           | $         | 9,066,044 |   |           | $         | 8,921,695 | 
|                                                                                                                          |                                                                                                                |                                           |           |           |           |  
|LIABILITIES AND UNITHOLDERS EQUITY                                                                                      
|Liabilities:                                                                                                              |                                                                                                                |                                           |           |           |           |   |           |          
|                                                                                                                          | Unsecured credit facilities                                                                                    |                                           | $         | 19,000    |           |   | $         | 103,790   |          
|                                                                                                                          | Long-Term Unsecured Debt                                                                                       |                                           |           | 2,099,132 |           |   |           | 1,871,965 |          
|                                                                                                                          | Mortgages payable                                                                                              |                                           |           | 1,970,889 |           |   |           | 1,866,252 |          
|                                                                                                                          | Mortgages payable  held for sale                                                                              |                                           |           | 60,616    |           |   |           | 61,373    |          
|                                                                                                                          | Accounts payable                                                                                               |                                           |           | 52,052    |           |   |           | 27,086    |          
|                                                                                                                          | Accrued expenses and other liabilities                                                                         |                                           |           | 273,079   |           |   |           | 254,126   |          
|                                                                                                                          |                                                                                                                |                                           |           |           |           |  
|                                                                                                                          |                                                                                                                | Total liabilities                         |           |           | 4,474,768 |   |           |           | 4,184,592 | 
|                                                                                                                          |                                                                                                                |                                           |           |           |           |  
|Minority interest                                                                                                         |                                                                                                                |                                           | 2,050     |           |           |   | 11,510    |          
|                                                                                                                          |                                                                                                                |                                           |           |           |           |  
|Other common unitholders interest, at redemption value
    (A-1 Common Units: 23,117,498 in 2004 and 25,301,069 in 2003) |                                                                                                                |                                           | 885,400   |           |           |   | 707,924   |          
|                                                                                                                          |                                                                                                                |                                           |           |           |           |  
|Unitholders equity:                                                                                                      |                                                                                                                |                                           |           |           |           |   |           |          
|                                                                                                                          | Convertible Preferred Units                                                                                    |                                           |           |          |           |   |           | 50,000    |          
|                                                                                                                          | Perpetual Preferred Units                                                                                      |                                           |           | 69,522    |           |   |           | 160,120   |          
|                                                                                                                          | Common unitholders equity (A-2 Common Units:
    199,577,459 units in 2004 and 194,762,263 units in
    2003) |                                           |           | 3,638,729 |           |   |           | 3,793,314 |          
|                                                                                                                          | Accumulated other comprehensive earnings (loss)                                                                |                                           |           | (4,425    | )         |   |           | 14,235    |          
|                                                                                                                          |                                                                                                                |                                           |           |           |           |  
|                                                                                                                          |                                                                                                                | Total unitholders equity                 |           |           | 3,703,826 |   |           |           | 4,017,669 | 
|                                                                                                                          |                                                                                                                |                                           |           |           |           |  
|                                                                                                                          |                                                                                                                | Total liabilities and unitholders equity |           | $         | 9,066,044 |   |           | $         | 8,921,695 | 
|                                                                                                                          |                                                                                                                |                                           |           |           |           |  



58



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##### Table of Contents



ARCHSTONE-SMITH OPERATING TRUST





CONSOLIDATED STATEMENTS OF EARNINGS


(In thousands, except per share amounts)


|                                                  |                                                       |                          |         |         |      |   |         |         |   |   |         |         |  
|------------------------------------------------- | ----------------------------------------------------- | ------------------------ | ------- | ------- | ---- | - | ------- | ------- | - | - | ------- | ------- | -
|                                                  |                                                       | Years Ended December 31, |        
|                                                  |                                                       |                          |        
|                                                  |                                                       | 2004                     |         |         | 2003 |   |         | 2002    |  
|                                                  |                                                       |                          |         |         |      |   |         |         |  
|Revenues:                                         |                                                       |                          |         |         |      |   |         |         |   |   |         |        
|                                                  | Rental revenues                                       |                          | $       | 854,121 |      |   | $       | 764,338 |   |   | $       | 744,877 |  
|                                                  | Other income                                          |                          |         | 19,208  |      |   |         | 19,334  |   |   |         | 9,462   |  
|                                                  |                                                       |                          |         |         |      |   |         |         |  
|                                                  |                                                       |                          | 873,329 |         |      |   | 783,672 |         |   |   | 754,339 |        
|                                                  |                                                       |                          |         |         |      |   |         |         |  
|Expenses:                                         |                                                       |                          |         |         |      |   |         |         |   |   |         |        
|                                                  | Rental expenses                                       |                          |         | 219,717 |      |   |         | 189,691 |   |   |         | 189,099 |  
|                                                  | Real estate taxes                                     |                          |         | 81,932  |      |   |         | 67,738  |   |   |         | 66,443  |  
|                                                  | Depreciation on real estate investments               |                          |         | 203,183 |      |   |         | 162,723 |   |   |         | 148,588 |  
|                                                  | Interest expense                                      |                          |         | 175,249 |      |   |         | 160,871 |   |   |         | 149,538 |  
|                                                  | General and administrative expenses                   |                          |         | 55,479  |      |   |         | 49,838  |   |   |         | 45,710  |  
|                                                  | Other expenses                                        |                          |         | 5,972   |      |   |         | 35,879  |   |   |         | 17,014  |  
|                                                  |                                                       |                          |         |         |      |   |         |         |  
|                                                  |                                                       |                          | 741,532 |         |      |   | 666,740 |         |   |   | 616,392 |        
|                                                  |                                                       |                          |         |         |      |   |         |         |  
|Earnings from operations                          |                                                       |                          | 131,797 |         |      |   | 116,932 |         |   |   | 137,947 |        
|                                                  | Minority interest                                     |                          |         | 460     |      |   |         |        |   |   |         | (5,215  | )
|                                                  | Gains on dispositions of depreciated real estate, net |                          |         |        |      |   |         |        |   |   |         | 35,950  |  
|                                                  | Income from unconsolidated entities                   |                          |         | 17,902  |      |   |         | 5,745   |   |   |         | 53,602  |  
|                                                  | Other non-operating income                            |                          |         | 28,162  |      |   |         |        |   |   |         |        |  
|                                                  |                                                       |                          |         |         |      |   |         |         |  
|Net earnings before discontinued operations       |                                                       |                          | 178,321 |         |      |   | 122,677 |         |   |   | 222,284 |        
|                                                  | Net earnings from discontinued operations             |                          |         | 434,302 |      |   |         | 371,514 |   |   |         | 134,441 |  
|                                                  |                                                       |                          |         |         |      |   |         |         |  
|Net earnings                                      |                                                       |                          | 612,623 |         |      |   | 494,191 |         |   |   | 356,725 |        
|                                                  | Preferred Unit Distributions                          |                          |         | (16,254 | )    |   |         | (26,153 | ) |   |         | (34,309 | )
|                                                  |                                                       |                          |         |         |      |   |         |         |  
|Net earnings attributable to Common Units  Basic |                                                       | $                        | 596,369 |         |      | $ | 468,038 |         |   | $ | 322,416 |        
|                                                  |                                                       |                          |         |         |      |   |         |         |  
|Weighted average Common Units outstanding:        |                                                       |                          |         |         |      |   |         |         |   |   |         |        
|                                                  | Basic                                                 |                          |         | 220,053 |      |   |         | 212,288 |   |   |         | 202,781 |  
|                                                  |                                                       |                          |         |         |      |   |         |         |  
|                                                  | Diluted                                               |                          |         | 223,187 |      |   |         | 220,758 |   |   |         | 203,804 |  
|                                                  |                                                       |                          |         |         |      |   |         |         |  
|Net earnings per Common Unit  Basic:             |                                                       |                          |         |         |      |   |         |         |   |   |         |        
|                                                  | Net earnings before discontinued operations           |                          | $       | 0.74    |      |   | $       | 0.45    |   |   | $       | 0.93    |  
|                                                  | Discontinued operations, net                          |                          |         | 1.97    |      |   |         | 1.75    |   |   |         | 0.66    |  
|                                                  |                                                       |                          |         |         |      |   |         |         |  
|                                                  | Net earnings                                          |                          | $       | 2.71    |      |   | $       | 2.20    |   |   | $       | 1.59    |  
|                                                  |                                                       |                          |         |         |      |   |         |         |  
|Net earnings per Common Unit  Diluted:           |                                                       |                          |         |         |      |   |         |         |   |   |         |        
|                                                  | Net earnings before discontinued operations           |                          | $       | 0.73    |      |   | $       | 0.44    |   |   | $       | 0.92    |  
|                                                  | Discontinued operations, net                          |                          |         | 1.96    |      |   |         | 1.74    |   |   |         | 0.66    |  
|                                                  |                                                       |                          |         |         |      |   |         |         |  
|                                                  | Net earnings                                          |                          | $       | 2.69    |      |   | $       | 2.18    |   |   | $       | 1.58    |  
|                                                  |                                                       |                          |         |         |      |   |         |         |  
|Distributions paid per Common Unit                |                                                       | $                        | 2.72    |         |      | $ | 1.71    |         |   | $ | 1.70    |        
|                                                  |                                                       |                          |         |         |      |   |         |         |  



59



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##### Table of Contents



ARCHSTONE-SMITH OPERATING TRUST





CONSOLIDATED STATEMENTS OF UNITHOLDERS EQUITY, OTHER
COMMON


UNITHOLDERS INTEREST AND COMPREHENSIVE INCOME


Years Ended December 31, 2004, 2003 and 2002


(In thousands)


|                              |                                                          |                                               |         |          |             |   |         |              |   |             |               |          |         |              |         |   |              |   |           |          |         |   |         |         |        |   |           |          |         |  
|----------------------------- | -------------------------------------------------------- | --------------------------------------------- | ------- | -------- | ----------- | - | ------- | ------------ | - | ----------- | ------------- | -------- | ------- | ------------ | ------- | - | ------------ | - | --------- | -------- | ------- | - | ------- | ------- | ------ | - | --------- | -------- | ------- | -
|                              |                                                          | Convertible                                   |         |          | Perpetual   |   |         |              |   |             |               |          |         |              |         |  
|                              |                                                          | Preferred                                     |         |          | Preferred   |   |         |              |   | Accumulated |               |          |         |              |         |   |             
|                              |                                                          | Units at                                      |         |          | Units at    |   |         |              |   | Other       |               |          |         |              | Other   |   |              |  
|                              |                                                          | Aggregate                                     |         |          | Aggregate   |   |         | Common       |   |             | Comprehensive |          |         | Total        |         |   | Common       |   |           |         
|                              |                                                          | Liquidation                                   |         |          | Liquidation |   |         | Unitholders |   |             | Earnings      |          |         | Unitholders |         |   | Unitholders |   |           |         
|                              |                                                          | Preference                                    |         |          | Preference  |   |         | Equity       |   |             | (Loss)        |          |         | Equity       |         |   | Interest     |   |           | Total    |        
|                              |                                                          |                                               |         |          |             |   |         |              |   |             |               |          |         |              |         |   |              |   |           |          |        
|Balances at December 31, 2002 |                                                          | $                                             | 225,351 |          |             | $ | 148,763 |              |   | $           | 3,263,035     |          |         | $            | (5,517  | ) |              | $ | 3,631,632 |          |         | $ | 669,388 |         |        | $ | 4,301,020 |         
|                              | Comprehensive income:                                    |                                               |         |          |             |   |         |              |   |             |               |          |         |              |         |   |              |   |           |          |         |   |         |         |        |   |           |          |        
|                              |                                                          | Net earnings                                  |         |          |            |   |         |              |  |             |               |          | 314,815 |              |         |   |             |   |           |          | 314,815 |   |         |         | 41,910 |   |           |          | 356,725 |  
|                              |                                                          | Change in fair value of cash flow hedges      |         |          |            |   |         |              |  |             |               |          |        |              |         |   | (7,554       | ) |           |          | (7,554  | ) |         |         |       |   |           |          | (7,554  | )
|                              |                                                          | Change in fair value of marketable securities |         |          |            |   |         |              |  |             |               |          |        |              |         |   | 732          |   |           |          | 732     |   |         |         |       |   |           |          | 732     |  
|                              |                                                          |                                               |         |          |             |   |         |              |   |             |               |          |         |              |         |   |              |   |           |          |        
|                              | Comprehensive income attributable to Common Units        |                                               |         |          |             |   |         |              |   |             |               |          |         |              |         |   |              |   |           |          |         |   |         |         |        |   |           | 349,903  |        
|                              |                                                          |                                               |         |          |             |   |         |              |   |             |               |          |         |              |         |   |              |   |           |          |        
|                              | Preferred Unit distribution                              |                                               |         |         |             |   |         |             |   |             |               | (34,309  | )       |              |         |  |              |   |           | (34,309  | )       |   |         |        |        |   |           | (34,309  | )      
|                              | UPREIT Preferred Unit distribution                       |                                               |         |         |             |   |         |             |   |             |               | 1,839    |         |              |         |  |              |   |           | 1,839    |         |   |         | (1,839  | )      |   |           |         |        
|                              | Common Unit distributions                                |                                               |         |         |             |   |         |             |   |             |               | (306,189 | )       |              |         |  |              |   |           | (306,189 | )       |   |         | (41,782 | )      |   |           | (347,971 | )      
|                              | A-1 Common Units converted into A-2 Common Units         |                                               |         |         |             |   |         |             |   |             |               | 41,723   |         |              |         |  |              |   |           | 41,723   |         |   |         | (41,723 | )      |   |           |         |        
|                              | Conversion of Preferred Units into Common Units          |                                               |         | (30,680  | )           |   |         |             |   |             |               | 30,680   |         |              |         |  |              |   |           |         |         |   |         |        |        |   |           |         |        
|                              | Conversion of DownREIT Perpetual Preferred Units         |                                               |         |         |             |   |         | 73,180       |   |             |               |         |         |              |         |  |              |   |           | 73,180   |         |   |         |        |        |   |           | 73,180   |        
|                              | Common Unit repurchases                                  |                                               |         |         |             |   |         |             |   |             |               | (15,362  | )       |              |         |  |              |   |           | (15,362  | )       |   |         |        |        |   |           | (15,362  | )      
|                              | Preferred Unit repurchases                               |                                               |         |         |             |   |         | (49,393      | ) |             |               | (11      | )       |              |         |  |              |   |           | (49,404  | )       |   |         |        |        |   |           | (49,404  | )      
|                              | Proceeds from Distribution Reinvestment Plan (DRIP)      |                                               |         |         |             |   |         |             |   |             |               | 45,471   |         |              |         |  |              |   |           | 45,471   |         |   |         |        |        |   |           | 45,471   |        
|                              | Adjustment to redemption value                           |                                               |         |         |             |   |         |             |   |             |               | 67,499   |         |              |         |  |              |   |           | 67,499   |         |   |         | (67,499 | )      |   |           |         |        
|                              | Other, net                                               |                                               |         |         |             |   |         | (12,000      | ) |             |               | 47,068   |         |              |         |  |              |   |           | 35,068   |         |   |         | 21,143  |        |   |           | 56,211   |        
|                              |                                                          |                                               |         |          |             |   |         |              |   |             |               |          |         |              |         |   |              |   |           |          |        
|Balances at December 31, 2003 |                                                          |                                               | 194,671 |          |             |   | 160,550 |              |   |             | 3,456,259     |          |         |              | (12,339 | ) |              |   | 3,799,141 |          |         |   | 579,598 |         |        |   | 4,378,739 |         
|                              | Comprehensive income:                                    |                                               |         |          |             |   |         |              |   |             |               |          |         |              |         |   |              |   |           |          |         |   |         |         |        |   |           |          |        
|                              |                                                          | Net earnings                                  |         |          |            |   |         |              |  |             |               |          | 433,657 |              |         |   |             |   |           |          | 433,657 |   |         |         | 60,534 |   |           |          | 494,191 |  
|                              |                                                          | Change in fair value of cash flow hedges      |         |          |            |   |         |              |  |             |               |          |        |              |         |   | 3,439        |   |           |          | 3,439   |   |         |         |       |   |           |          | 3,439   |  
|                              |                                                          | Change in fair value of marketable securities |         |          |            |   |         |              |  |             |               |          |        |              |         |   | 23,135       |   |           |          | 23,135  |   |         |         |       |   |           |          | 23,135  |  
|                              |                                                          |                                               |         |          |             |   |         |              |   |             |               |          |         |              |         |   |              |   |           |          |        
|                              | Comprehensive income attributable to Common Units        |                                               |         |          |             |   |         |              |   |             |               |          |         |              |         |   |              |   |           |          |         |   |         |         |        |   |           | 520,765  |        
|                              |                                                          |                                               |         |          |             |   |         |              |   |             |               |          |         |              |         |   |              |   |           |          |        
|                              | Preferred Unit distribution                              |                                               |         |         |             |   |         |             |   |             |               | (26,153  | )       |              |         |  |              |   |           | (26,153  | )       |   |         |        |        |   |           | (26,153  | )      
|                              | UPREIT Preferred Unit Distribution                       |                                               |         |         |             |   |         |             |   |             |               | 5,156    |         |              |         |  |              |   |           | 5,156    |         |   |         | (5,156  | )      |   |           |         |        
|                              | Common Unit distributions                                |                                               |         |         |             |   |         |             |   |             |               | (245,460 | )       |              |         |  |              |   |           | (245,460 | )       |   |         | (31,575 | )      |   |           | (277,035 | )      
|                              | A-1 Common Units converted into A-2 Common Units         |                                               |         |         |             |   |         |             |   |             |               | 25,534   |         |              |         |  |              |   |           | 25,534   |         |   |         | (25,534 | )      |   |           |         |        
|                              | Conversion of Preferred Units into Common Units          |                                               |         | (143,416 | )           |   |         |             |   |             |               | 143,416  |         |              |         |  |              |   |           |         |         |   |         |        |        |   |           |         |        
|                              | Common Unit repurchases                                  |                                               |         |         |             |   |         |             |   |             |               | (13,163  | )       |              |         |  |              |   |           | (13,163  | )       |   |         |        |        |   |           | (13,163  | )      
|                              | Preferred Unit repurchases                               |                                               |         | (1,255   | )           |   |         | (430         | ) |             |               | (196     | )       |              |         |  |              |   |           | (1,881   | )       |   |         |        |        |   |           | (1,881   | )      
|                              | Exercise of Options                                      |                                               |         |         |             |   |         |             |   |             |               | 43,420   |         |              |         |  |              |   |           | 43,420   |         |   |         |        |        |   |           | 43,420   |        
|                              | Proceeds from Distribution Reinvestment Plan (DRIP)      |                                               |         |         |             |   |         |             |   |             |               | 48,126   |         |              |         |  |              |   |           | 48,126   |         |   |         |        |        |   |           | 48,126   |        
|                              | Issuance of A-1 Common Units                             |                                               |         |         |             |   |         |             |   |             |               |         |         |              |         |  |              |   |           | -       |         |   |         | 47,575  |        |   |           | 47,575   |        
|                              | Adjustment to redemption value                           |                                               |         |         |             |   |         |             |   |             |               | (112,337 | )       |              |         |  |              |   |           | (112,337 | )       |   |         | 112,337 |        |   |           |         |        
|                              | Other, net                                               |                                               |         |          |             |   |         |             |   |             |               | 35,055   |         |              |         |  |              |   |           | 35,055   |         |   |         | (29,855 | )      |   |           | 5,200    |        
|                              |                                                          |                                               |         |          |             |   |         |              |   |             |               |          |         |              |         |   |              |   |           |          |        
|Balances at December 31, 2003 |                                                          | $                                             | 50,000  |          |             | $ | 160,120 |              |   | $           | 3,793,314     |          |         | $            | 14,235  |   |              | $ | 4,017,669 |          |         | $ | 707,924 |         |        | $ | 4,725,593 |         
|                              |                                                          |                                               |         |          |             |   |         |              |   |             |               |          |         |              |         |   |              |   |           |          |        
|                              | Comprehensive income:                                    |                                               |         |          |             |   |         |              |   |             |               |          |         |              |         |   |              |   |           |          |         |   |         |         |        |   |           |          |        
|                              |                                                          | Net earnings                                  |         |          |            |   |         |              |  |             |               |          | 542,342 |              |         |   |             |   |           |          | 542,342 |   |         |         | 70,281 |   |           |          | 612,623 |  
|                              |                                                          | Change in fair value of cash flow hedges      |         |          |            |   |         |              |  |             |               |          |        |              |         |   | 3,750        |   |           |          | 3,750   |   |         |         |       |   |           |          | 3,750   |  
|                              |                                                          | Change in fair value of marketable securities |         |          |            |   |         |              |  |             |               |          |        |              |         |   | (22,410      | ) |           |          | (22,410 | ) |         |         |       |   |           |          | (22,410 | )
|                              |                                                          |                                               |         |          |             |   |         |              |   |             |               |          |         |              |         |   |              |   |           |          |        
|                              | Comprehensive income attributable to Common Units        |                                               |         |          |             |   |         |              |   |             |               |          |         |              |         |   |              |   |           |          |         |   |         |         |        |   |           | 593,963  |        
|                              |                                                          |                                               |         |          |             |   |         |              |   |             |               |          |         |              |         |   |              |   |           |          |        
|                              | Preferred Unit distribution                              |                                               |         |         |             |   |         |             |   |             |               | (16,254  | )       |              |         |  |              |   |           | (16,254  | )       |   |         | 1,726   |        |   |           | (14,528  | )      
|                              | Common Unit distributions                                |                                               |         |         |             |   |         |             |   |             |               | (539,116 | )       |              |         |  |              |   |           | (539,116 | )       |   |         | (64,437 | )      |   |           | (603,553 | )      
|                              | A-1 Common Units converted into A-2 Common Units         |                                               |         |         |             |   |         |             |   |             |               | 47,949   |         |              |         |  |              |   |           | 47,949   |         |   |         | (47,949 | )      |   |           |         |        
|                              | A-2 Common Unit repurchases                              |                                               |         |         |             |   |         |             |   |             |               | (95,668  | )       |              |         |  |              |   |           | (95,668  | )       |   |         |        |        |   |           | (95,668  | )      
|                              | Conversion of Preferred Units into Common Units          |                                               |         | (50,000  | )           |   |         |             |   |             |               | 50,000   |         |              |         |  |              |   |           |         |         |   |         |        |        |   |           |         |        
|                              | Preferred Unit repurchases                               |                                               |         |         |             |   |         | (90,598      | ) |             |               |         |         |              |         |  |              |   |           | (90,598  | )       |   |         |        |        |   |           | (90,598  | )      
|                              | Exercise of Options                                      |                                               |         |         |             |   |         |             |   |             |               | 61,467   |         |              |         |  |              |   |           | 61,467   |         |   |         |        |        |   |           | 61,467   |        
|                              | Issuance of A-1 Common Units in exchange for real estate |                                               |         |         |             |   |         |             |   |             |               |         |         |              |         |  |              |   |           |         |         |   |         | 10,788  |        |   |           | 10,788   |        
|                              | Issuance of A-2 Common Units in exchange for real estate |                                               |         |         |             |   |         |             |   |             |               | 4,502    |         |              |         |  |              |   |           | 4,502    |         |   |         |        |        |   |           | 4,502    |        
|                              | Adjustment to redemption value                           |                                               |         |         |             |   |         |             |   |             |               | (207,067 | )       |              |         |  |              |   |           | (207,067 | )       |   |         | 207,067 |        |   |           |         |        
|                              | Other, net                                               |                                               |         |         |             |   |         |             |   |             |               | (2,740   | )       |              |         |  |              |   |           | (2,740   | )       |   |         |        |        |   |           | (2,740   | )      
|                              |                                                          |                                               |         |          |             |   |         |              |   |             |               |          |         |              |         |   |              |   |           |          |        
|Balances at December 31, 2004 |                                                          | $                                             |        |          |             | $ | 69,522  |              |   | $           | 3,638,729     |          |         | $            | (4,425  | ) |              | $ | 3,703,826 |          |         | $ | 885,400 |         |        | $ | 4,589,226 |         
|                              |                                                          |                                               |         |          |             |   |         |              |   |             |               |          |         |              |         |   |              |   |           |          |        



60



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##### Table of Contents



ARCHSTONE-SMITH OPERATING TRUST





CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)


|                                                 |                                                                                              |                                                                                        |         |            |          |   |        |           |          |   |        |          |          |  
|------------------------------------------------ | -------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------- | ------- | ---------- | -------- | - | ------ | --------- | -------- | - | ------ | -------- | -------- | -
|                                                 |                                                                                              | Years Ended December 31,                                                               |        
|                                                 |                                                                                              |                                                                                        |        
|                                                 |                                                                                              | 2004                                                                                   |         |            | 2003     |   |        | 2002      |         
|                                                 |                                                                                              |                                                                                        |         |            |          |   |        |           |         
|Operating activities:                            |                                                                                              |                                                                                        |         |            |          |   |        |           |          |   |        |         
|                                                 | Net earnings                                                                                 |                                                                                        | $       | 612,623    |          |   | $      | 494,191   |          |   | $      | 356,725  |         
|                                                 | Adjustments to reconcile net earnings to net cash flow provided
    by operating activities: |                                                                                        |         |            |          |   |        |           |          |   |        |          |         
|                                                 |                                                                                              | Depreciation and amortization                                                          |         |            | 227,000  |   |        |           | 210,427  |   |        |          | 212,178  |  
|                                                 |                                                                                              | Gains on dispositions of depreciated real estate, net                                  |         |            | (446,447 | ) |        |           | (353,600 | ) |        |          | (139,604 | )
|                                                 |                                                                                              | Gains on the sale of marketable equity securities and property
    management business |         |            | (28,162  | ) |        |           |         |   |        |          |         |  
|                                                 |                                                                                              | Provisions for possible loss on investments                                            |         |            |         |   |        |           | 3,714    |   |        |          | 2,611    |  
|                                                 |                                                                                              | Minority interest                                                                      |         |            | (460     | ) |        |           |         |   |        |          | 4,871    |  
|                                                 |                                                                                              | Income from unconsolidated entities                                                    |         |            | (17,902  | ) |        |           | (5,745   | ) |        |          | (53,602  | )
|                                                 | Change in other assets                                                                       |                                                                                        |         | 526        |          |   |        | 19,441    |          |   |        | (25,597  | )       
|                                                 | Change in accounts payable, accrued expenses and other
    liabilities                       |                                                                                        |         | 32,113     |          |   |        | (18,583   | )        |   |        | 40,462   |         
|                                                 | Other, net                                                                                   |                                                                                        |         | (9,519     | )        |   |        | (6,149    | )        |   |        | (6,001   | )       
|                                                 |                                                                                              |                                                                                        |         |            |          |   |        |           |         
|                                                 |                                                                                              | Net cash flow provided by operating activities                                         |         |            | 369,772  |   |        |           | 343,696  |   |        |          | 392,043  |  
|                                                 |                                                                                              |                                                                                        |         |            |          |   |        |           |         
|Investing activities:                            |                                                                                              |                                                                                        |         |            |          |   |        |           |          |   |        |         
|                                                 | Real estate investments                                                                      |                                                                                        |         | (1,423,549 | )        |   |        | (932,777  | )        |   |        | (910,544 | )       
|                                                 | Change in investments in and advances to unconsolidated
    entities, net                    |                                                                                        |         | 2,473      |          |   |        | 35,972    |          |   |        | 177,727  |         
|                                                 | Proceeds from dispositions, net of closing costs                                             |                                                                                        |         | 1,816,272  |          |   |        | 1,563,556 |          |   |        | 579,451  |         
|                                                 | Change in tax-deferred exchange escrow                                                       |                                                                                        |         | 60,825     |          |   |        | (180,920  | )        |   |        | 120,421  |         
|                                                 | Other, net                                                                                   |                                                                                        |         | 96,367     |          |   |        | (57,665   | )        |   |        | (104,456 | )       
|                                                 |                                                                                              |                                                                                        |         |            |          |   |        |           |         
|                                                 |                                                                                              | Net cash flow provided by (used in) investing activities                               |         |            | 552,388  |   |        |           | 428,166  |   |        |          | (137,401 | )
|                                                 |                                                                                              |                                                                                        |         |            |          |   |        |           |         
|Financing activities:                            |                                                                                              |                                                                                        |         |            |          |   |        |           |          |   |        |         
|                                                 | Proceeds from Long-Term Unsecured Debt                                                       |                                                                                        |         | 297,052    |          |   |        | 247,225   |          |   |        | 530,774  |         
|                                                 | Payments on Long-Term Unsecured Debt                                                         |                                                                                        |         | (72,950    | )        |   |        | (171,250  | )        |   |        | (97,500  | )       
|                                                 | Principal prepayment of mortgages payable, including prepayment
    penalties                |                                                                                        |         | (159,558   | )        |   |        | (343,368  | )        |   |        | (705,103 | )       
|                                                 | Regularly scheduled principal payments on mortgages payable                                  |                                                                                        |         | (11,512    | )        |   |        | (11,934   | )        |   |        | (11,761  | )       
|                                                 | Proceeds from mortgage notes payable                                                         |                                                                                        |         | 51,656     |          |   |        | 76,017    |          |   |        | 247,797  |         
|                                                 | Proceeds from (payments on) unsecured credit facilities, net                                 |                                                                                        |         | (84,790    | )        |   |        | (261,788  | )        |   |        | 176,989  |         
|                                                 | Proceeds from Common Units issued under DRIP and employee stock
    options                  |                                                                                        |         | 61,467     |          |   |        | 91,546    |          |   |        | 69,772   |         
|                                                 | Repurchase of Common Units and Preferred Units                                               |                                                                                        |         | (146,954   | )        |   |        | (15,044   | )        |   |        | (64,776  | )       
|                                                 | Repurchase of Series E and F Perpetual Preferred Units                                       |                                                                                        |         | (42,712    | )        |   |        |          |          |   |        |         |         
|                                                 | Redemption of Perpetual Preferred Units                                                      |                                                                                        |         |           |          |   |        |          |          |   |        | (12,000  | )       
|                                                 | Cash distributions paid on Common Units                                                      |                                                                                        |         | (603,553   | )        |   |        | (365,009  | )        |   |        | (344,590 | )       
|                                                 | Cash distributions paid on Preferred Units                                                   |                                                                                        |         | (14,527    | )        |   |        | (28,371   | )        |   |        | (34,351  | )       
|                                                 | Cash distributions paid to minority interests                                                |                                                                                        |         |           |          |   |        |          |          |   |        | (5,165   | )       
|                                                 | Other, net                                                                                   |                                                                                        |         | 2,246      |          |   |        | 2,498     |          |   |        | 1,091    |         
|                                                 |                                                                                              |                                                                                        |         |            |          |   |        |           |         
|                                                 |                                                                                              | Net cash flow used in financing activities                                             |         |            | (724,135 | ) |        |           | (779,478 | ) |        |          | (248,823 | )
|                                                 |                                                                                              |                                                                                        |         |            |          |   |        |           |         
|Net change in cash and cash equivalents          |                                                                                              |                                                                                        | 198,025 |            |          |   | (7,616 | )         |          |   | 5,819  |         
|Cash and cash equivalents at beginning of period |                                                                                              |                                                                                        | 5,230   |            |          |   | 12,846 |           |          |   | 7,027  |         
|                                                 |                                                                                              |                                                                                        |         |            |          |   |        |           |         
|Cash and cash equivalents at end of period       |                                                                                              | $                                                                                      | 203,255 |            |          | $ | 5,230  |           |          | $ | 12,846 |         
|                                                 |                                                                                              |                                                                                        |         |            |          |   |        |           |         





61



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ARCHSTONE-SMITH OPERATING TRUST





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2004, 2003 and 2002


(The glossary included in this Annual Report is hereby
incorporated by reference)




|    |                                                                           
|--- | --------------------------------------------------------------------------
|(1) | Description of Business and Summary of Significant Accounting
    Policies



| |         
| | --------
| | Business





| |                            
| | ---------------------------
| | Principles of Consolidation



Consolidation of Variable Interest Entities




| |                 
| | ----------------
| | Use of Estimates





| |                        
| | -----------------------
| | Discontinued Operations

Accounting for Impairment or Disposal of Long-Lived
Assets,


62



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##### Table of Contents



ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                          
| | -------------------------
| | Cash and Cash Equivalents





| |                                                             
| | ------------------------------------------------------------
| | Restricted Cash in Tax-Deferred Exchange and Bond
    Escrow





| |                                            
| | -------------------------------------------
| | Marketable Securities and Other Investments





| |                             
| | ----------------------------
| | Real Estate and Depreciation









63



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##### Table of Contents



ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                         |  |            
|---------------------------------------- |  | -----------
|Buildings and related land improvements  |  | 15-40 years
|Furniture, fixtures, equipment and other |  | 5-10 years 
|Intangible value of lease agreements     |  | 6-12 months



| |         
| | --------
| | Interest







| |                        
| | -----------------------
| | Cost of Raising Capital





| |                                                 
| | ------------------------------------------------
| | Moisture Infiltration and Mold Remediation Costs





| |                                                 
| | ------------------------------------------------
| | Interest Rate Contracts/ Forward Sales Contracts

Amendment of Statement 133
on Derivative Instruments and Hedging Activities


64



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##### Table of Contents



ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                             
| | ----------------------------
| | Revenue and Gain Recognition





| |                
| | ---------------
| | Rental Expenses





| |           
| | ----------
| | Legal Fees





| |                         
| | ------------------------
| | Stock-Based Compensation

Accounting for Stock-Based
Compensation, Accounting for Stock Issued to Employees,


65



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##### Table of Contents



ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                                                                    |                       |                          |         |         |      |   |         |         |  |   |         |         | 
|------------------------------------------------------------------------------------------------------------------- | --------------------- | ------------------------ | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                                                                                                    |                       | Years Ended December 31, |        
|                                                                                                                    |                       |                          |        
|                                                                                                                    |                       | 2004                     |         |         | 2003 |   |         | 2002    | 
|                                                                                                                    |                       |                          |         |         |      |   |         |         | 
|Net earnings attributable to Common Units  Basic                                                                   |                       | $                        | 596,369 |         |      | $ | 468,038 |         |  | $ | 322,416 |        
|Add: Stock-based employee compensation expense included in
    reported net earnings                                |                       |                          | 297     |         |      |   |        |         |  |   |        |        
|Deduct: Total stock-based employee compensation expense
    determined under fair value based method for all awards |                       |                          | (2,059  | )       |      |   | (1,982  | )       |  |   | (2,094  | )      
|                                                                                                                    |                       |                          |         |         |      |   |         |         | 
|Pro forma net earnings attributable to Common Units                                                                |                       |                          |         |         |      |   |         |         |  |   |         |        
|                                                                                                                    | Basic                 |                          | $       | 594,607 |      |   | $       | 466,056 |  |   | $       | 320,322 | 
|                                                                                                                    |                       |                          |         |         |      |   |         |         | 
|Net earnings per Common Unit:                                                                                       |                       |                          |         |         |      |   |         |         |  |   |         |        
|                                                                                                                    | Basic  as reported   |                          | $       | 2.71    |      |   | $       | 2.20    |  |   | $       | 1.59    | 
|                                                                                                                    |                       |                          |         |         |      |   |         |         | 
|                                                                                                                    | Basic  pro forma     |                          | $       | 2.70    |      |   | $       | 2.20    |  |   | $       | 1.58    | 
|                                                                                                                    |                       |                          |         |         |      |   |         |         | 
|                                                                                                                    | Diluted  as reported |                          | $       | 2.69    |      |   | $       | 2.18    |  |   | $       | 1.58    | 
|                                                                                                                    |                       |                          |         |         |      |   |         |         | 
|                                                                                                                    | Diluted  pro forma   |                          | $       | 2.68    |      |   | $       | 2.17    |  |   | $       | 1.57    | 
|                                                                                                                    |                       |                          |         |         |      |   |         |         | 



|                                         |  |      |            |   |      |  |            |      |  |  |            |  
|---------------------------------------- |  | ---- | ---------- | - | ---- |  | ---------- | ---- |  |  | ---------- | -
|                                         |  | 2004 |            |   | 2003 |  |            | 2002 | 
|                                         |  |      |            |   |      |  |            |      | 
|Weighted average risk-free interest rate |  |      | 3.77       | % |      |  | 3.48       | %    |  |  | 3.54       | %
|Weighted average dividend yield          |  |      | 5.63       | % |      |  | 6.92       | %    |  |  | 6.74       | %
|Weighted average volatility              |  |      | 21.97      | % |      |  | 15.33      | %    |  |  | 19.58      | %
|Weighted average expected option life    |  |      | 5.0  years |   |      |  | 5.0  years |      |  |  | 5.0  years |  



| |             
| | ------------
| | Income Taxes







| |                     
| | --------------------
| | Comprehensive Income

 Interest Rate Contracts/
Forward Sale Contracts


66



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##### Table of Contents



ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                    |  |            |         |   |           |   |             |                 |  |   |         |  
|--------------------------------------------------- |  | ---------- | ------- | - | --------- | - | ----------- | --------------- |  | - | ------- | -
|                                                    |  | Net        |         |   |           |   |            
|                                                    |  | Unrealized |         |   |           |   | Accumulated |                
|                                                    |  | Gains on   |         |   |           |   | Other       |                
|                                                    |  | Marketable |         |   | Cash Flow |   |             | Comprehensive   | 
|                                                    |  | Securities |         |   | Hedges    |   |             | Earnings/(Loss) | 
|                                                    |  |            |         |   |           |   |             |                 | 
|Balance at December 31, 2003                        |  | $          | 23,808  |   |           | $ | (9,573      | )               |  | $ | 14,235  |  
|Change in fair value of cash flow hedges            |  |            |        |   |           |   | 6,098       |                 |  |   | 6,098   |  
|Change in fair value of long-term debt hedges       |  |            |        |   |           |   | (2,348      | )               |  |   | (2,348  | )
|Mark to market for marketable equity securities     |  |            | 1,372   |   |           |   |            |                 |  |   | 1,372   |  
|Reclassification adjustments for realized net gains |  |            | (23,782 | ) |           |   |            |                 |  |   | (23,782 | )
|                                                    |  |            |         |   |           |   |             |                 | 
|Balance at December 31, 2004                        |  | $          | 1,398   |   |           | $ | (5,823      | )               |  | $ | (4,425  | )
|                                                    |  |            |         |   |           |   |             |                 | 



| |              
| | -------------
| | Per Unit Data



|                                                                                             |                                                         |                          |         |       |      |   |         |        |  |   |         |       | 
|-------------------------------------------------------------------------------------------- | ------------------------------------------------------- | ------------------------ | ------- | ----- | ---- | - | ------- | ------ |  | - | ------- | ----- | 
|                                                                                             |                                                         | Years Ended December 31, |        
|                                                                                             |                                                         |                          |        
|                                                                                             |                                                         | 2004                     |         |       | 2003 |   |         | 2002   | 
|                                                                                             |                                                         |                          |         |       |      |   |         |        | 
|Reconciliation of numerator between basic and diluted net
    earnings per Common Unit(1):   |                                                         |                          |         |       |      |   |         |        |  |   |         |      
|Net earnings attributable to Common Units  Basic                                            |                                                         | $                        | 596,369 |       |      | $ | 468,038 |        |  | $ | 322,416 |      
|                                                                                             | Distributions on Convertible Preferred Units            |                          |         | 3,755 |      |   |         | 12,872 |  |   |         |      | 
|                                                                                             |                                                         |                          |         |       |      |   |         |        | 
|Net earnings attributable to Common Units  Diluted(2)                                       |                                                         | $                        | 600,124 |       |      | $ | 480,910 |        |  | $ | 322,416 |      
|                                                                                             |                                                         |                          |         |       |      |   |         |        | 
|Reconciliation of denominator between basic and diluted net
    earnings per Common Unit(1): |                                                         |                          |         |       |      |   |         |        |  |   |         |      
|Weighted average number of Common Units outstanding 
    Basic                              |                                                         |                          | 220,053 |       |      |   | 212,288 |        |  |   | 202,781 |      
|                                                                                             | Assumed conversion of Preferred Units into Common Units |                          |         | 2,182 |      |   |         | 7,972  |  |   |         |      | 
|                                                                                             | Incremental options and warrants                        |                          |         | 952   |      |   |         | 498    |  |   |         | 1,023 | 
|                                                                                             |                                                         |                          |         |       |      |   |         |        | 
|Weighted average number of Common Units outstanding 
    Diluted                            |                                                         |                          | 223,187 |       |      |   | 220,758 |        |  |   | 203,804 |      
|                                                                                             |                                                         |                          |         |       |      |   |         |        | 






|    |                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------
|(1) | Excludes the impact of 13.1 million convertible equity
    securities during 2002 as they were anti-dilutive.



| |                          
| | -------------------------
| | Market Concentration Risk



67



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##### Table of Contents



ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                            
| | ---------------------------
| | Preferred Share Redemptions

The Effect on the Calculation of Earnings per Share for
the Redemption or Induced Conversion of Preferred
Stock.




| |                  
| | -----------------
| | Reclassifications





| |                              
| | -----------------------------
| | New Accounting Pronouncements

Inventory Costs an amendment of ARB No. 43,
Chapter 4


Accounting for Real Estate Time-Sharing Transactions an
amendment of FASB Statements No. 66 and 67 Accounting for
Sales of Real Estate Accounting for Real Estate
Time-Sharing Transactions. Accounting for Costs and Initial
Rental Operations of Real Estate Projects


Exchanges of Non-monetary Assets an amendment of APB
No. 29. Accounting for Non-monetary
Transactions


Share-Based Payment Accounting for
Stock-Based Compensation, Accounting for Stock Issued to
Employees


68



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##### Table of Contents



ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Participating Securities and the Two-Class Method
under FASB Statement No. 128, Earnings per Share


The Effect of Contingently Convertible Instruments on
Diluted Earnings Per Share


Applying the Conditions in Paragraph 42 of FASB
Statement No. 144, Accounting for Impairment or Disposal of
Long-Lived Assets, in Determining Whether to Report Discontinued
Operations


The Meaning of Other-Than-Temporary
Impairment and Its Application to Certain Investments


69



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ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(2)     Real Estate




| |                           
| | --------------------------
| | Investments in Real Estate



|                                       |                                             |                   |   |           |           |  |  |            |        |  |          |           |           |  |  |        |        | 
|-------------------------------------- | ------------------------------------------- | ----------------- | - | --------- | --------- |  |  | ---------- | ------ |  | -------- | --------- | --------- |  |  | ------ | ------ | 
|                                       |                                             | December 31,      |  
|                                       |                                             |                   |  
|                                       |                                             | 2004              |   |           | 2003      | 
|                                       |                                             |                   |   |           |           | 
|                                       |                                             | Investment        |   |           | Units(1)  |  |  | Investment |        |  | Units(1) |          
|                                       |                                             |                   |   |           |           |  |  |            |        |  |          |          
|Operating Trust apartment communities: |                                             |                   |   |           |           |  |  |            |        |  |          |           |           |  |  |       
|                                       | Operating communities                       |                   | $ | 8,018,658 |           |  |  | 58,486     |        |  | $        | 8,067,075 |           |  |  | 63,848 |       
|                                       | Communities under construction              |                   |   | 499,239   |           |  |  | 3,237      |        |  |          | 301,634   |           |  |  | 2,607  |       
|                                       | Development communities In Planning:        |                   |   |           |           |  |  |            |        |  |          |           |           |  |  |        |       
|                                       |                                             | Owned             |   |           | 51,822    |  |  |            | 1,251  |  |          |           | 95,911    |  |  |        | 2,633  | 
|                                       |                                             | Under control(2)  |   |           |          |  |  |            | 593    |  |          |           |          |  |  |        | 112    | 
|                                       |                                             |                   |   |           |           |  |  |            |        |  |          |          
|                                       | Total development communities In Planning   |                   |   | 51,822    |           |  |  | 1,844      |        |  |          | 95,911    |           |  |  | 2,745  |       
|                                       |                                             |                   |   |           |           |  |  |            |        |  |          |          
|                                       | Total Operating Trust apartment communities |                   |   | 8,569,719 |           |  |  | 63,567     |        |  |          | 8,464,620 |           |  |  | 69,200 |       
|                                       | Ameriton apartment communities              |                   |   | 581,910   |           |  |  | 6,198      |        |  |          | 494,338   |           |  |  | 5,646  |       
|                                       | Other                                       |                   |   | 69,409    |           |  |  |            |        |  |          | 40,222    |           |  |  |        |       
|                                       |                                             |                   |   |           |           |  |  |            |        |  |          |          
|                                       |                                             | Total real estate |   | $         | 9,221,038 |  |  |            | 69,765 |  |          | $         | 8,999,180 |  |  |        | 74,846 | 
|                                       |                                             |                   |   |           |           |  |  |            |        |  |          |          






|    |                                                                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Unit information is based on managements estimates and has
    not been audited or reviewed by our independent auditors.                                                                                                                                  
|   
|(2) | Our investment as of December 31, 2004 and
    December 31, 2003 for development communities Under Control
    was $1.5 million and $1.1 million, respectively, and
    are reflected in the Other assets caption of our
    Consolidated Balance Sheets.



| |                     
| | --------------------
| | Capital Expenditures









70



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ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                       |                                                       |                                  |           |            |         |   |           |            |          |  
|---------------------- | ----------------------------------------------------- | -------------------------------- | --------- | ---------- | ------- | - | --------- | ---------- | -------- | -
|                       |                                                       | Years Ended December 31,         |          
|                       |                                                       |                                  |          
|                       |                                                       | 2004                             |           |            | 2003    |  
|                       |                                                       |                                  |           |            |         |  
|Balance at January 1   |                                                       | $                                | 8,999,180 |            |         | $ | 9,297,735 |           
|                      
|                       | Acquisition-related expenditures                      |                                  |           | 1,080,639  |         |   |           | 573,768    |         
|                       | Redevelopment expenditures                            |                                  |           | 40,999     |         |   |           | 69,649     |         
|                       | Recurring capital expenditures                        |                                  |           | 50,147     |         |   |           | 48,960     |         
|                       | Development expenditures, excluding land acquisitions |                                  |           | 333,782    |         |   |           | 91,430     |         
|                       | Acquisition and improvement of land for development   |                                  |           | 175,470    |         |   |           | 125,581    |         
|                       | Dispositions                                          |                                  |           | (1,460,046 | )       |   |           | (1,209,956 | )       
|                       | Provision for possible loss on investments            |                                  |           |           |         |   |           | (3,714     | )       
|                       |                                                       |                                  |           |            |         |  
|                       |                                                       | Net apartment community activity |           |            | 220,991 |   |           |            | (304,282 | )
|                       | Change in other real estate assets                    |                                  |           | 867        |         |   |           | 5,727      |         
|                       |                                                       |                                  |           |            |         |  
|Balance at December 31 |                                                       | $                                | 9,221,038 |            |         | $ | 8,999,180 |           
|                       |                                                       |                                  |           |            |         |  



(3)     Discontinued Operations






71



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##### Table of Contents



ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                                       |                               |                          |         |         |      |   |         |         |  |   |          |         | 
|-------------------------------------------------------------------------------------- | ----------------------------- | ------------------------ | ------- | ------- | ---- | - | ------- | ------- |  | - | -------- | ------- | 
|                                                                                       |                               | Years Ended December 31, |        
|                                                                                       |                               |                          |        
|                                                                                       |                               | 2004                     |         |         | 2003 |   |         | 2002    | 
|                                                                                       |                               |                          |         |         |      |   |         |         | 
|Rental revenue                                                                         |                               | $                        | 113,933 |         |      | $ | 242,287 |         |  | $ | 340,897  |        
|Rental expenses                                                                        |                               |                          | (39,656 | )       |      |   | (85,012 | )       |  |   | (107,088 | )      
|Real estate taxes                                                                      |                               |                          | (12,783 | )       |      |   | (28,611 | )       |  |   | (33,856  | )      
|Depreciation on real estate investments                                                |                               |                          | (16,806 | )       |      |   | (40,633 | )       |  |   | (58,037  | )      
|Interest expense(1)                                                                    |                               |                          | (33,503 | )       |      |   | (51,195 | )       |  |   | (92,651  | )      
|Income taxes from taxable REIT subsidiaries                                            |                               |                          | (21,567 | )       |      |   | (12,206 | )       |  |   | (10,455  | )      
|Provision for possible loss on real estate investment                                  |                               |                          |        |         |      |   | (3,714  | )       |  |   | (2,611   | )      
|Debt extinguishment costs related to dispositions                                      |                               |                          | (1,763  | )       |      |   | (3,002  | )       |  |   | (5,412   | )      
|Gain from the disposition of REIT real estate investments, net                         |                               |                          | 372,217 |         |      |   | 310,901 |         |  |   | 72,934   |        
|Gain from the dispositions of taxable REIT subsidiary real
    estate investments, net |                               |                          | 74,230  |         |      |   | 42,699  |         |  |   | 30,720   |        
|                                                                                       |                               |                          |         |         |      |   |         |         | 
|                                                                                       | Total discontinued operations |                          | $       | 434,302 |      |   | $       | 371,514 |  |   | $        | 134,441 | 
|                                                                                       |                               |                          |         |         |      |   |         |         | 






|    |                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The portion of interest expense included in discontinued
    operations that is allocated to properties based on the
    Companys leverage ratio was $23.2 million,
    $32.7 million and $61.2 million for 2004, 2003 and
    2002, respectively.



(4)     Investments in and Advances
to Unconsolidated Entities




| |                                          
| | -----------------------------------------
| | Sale of Consolidated Engineering Services





| |                                            
| | -------------------------------------------
| | Sale of Smith Management Construction, Inc.



72



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ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                              
| | -----------------------------
| | Archstone Management Services





| |                           
| | --------------------------
| | Real Estate Joint Ventures

Accounting for Investments in Real Estate
Ventures


73



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ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                              
| | -----------------------------
| | Summary Financial Information



|                                |                                               |                                      |   |           |           |  |   |           |           | 
|------------------------------- | --------------------------------------------- | ------------------------------------ | - | --------- | --------- |  | - | --------- | --------- | 
|                                |                                               | 2004                                 |   |           | 2003      | 
|                                |                                               |                                      |   |           |           | 
|Assets:                         |                                               |                                      |   |           |           |  |   |          
|                                | Real estate                                   |                                      | $ | 1,115,563 |           |  | $ | 1,283,904 |          
|                                | Other assets                                  |                                      |   | 52,394    |           |  |   | 29,577    |          
|                                |                                               |                                      |   |           |           | 
|                                |                                               | Total assets                         |   | $         | 1,167,957 |  |   | $         | 1,313,481 | 
|                                |                                               |                                      |   |           |           | 
|Liabilities and owners equity: |                                               |                                      |   |           |           |  |   |          
|                                | Inter-company debt payable to Operating Trust |                                      | $ | 4,124     |           |  | $ | 2,779     |          
|                                | Mortgages payable                             |                                      |   | 777,924   |           |  |   | 913,142   |          
|                                | Other liabilities                             |                                      |   | 24,254    |           |  |   | 20,804    |          
|                                |                                               |                                      |   |           |           | 
|                                |                                               | Total liabilities                    |   |           | 806,302   |  |   |           | 936,725   | 
|                                |                                               |                                      |   |           |           | 
|                                | Owners equity                                |                                      |   | 361,655   |           |  |   | 376,756   |          
|                                |                                               |                                      |   |           |           | 
|                                |                                               | Total liabilities and owners equity |   | $         | 1,167,957 |  |   | $         | 1,313,481 | 
|                                |                                               |                                      |   |           |           | 



|                                  |              |      |   |         |      |  |   |         |   |  |   |         |  
|--------------------------------- | ------------ | ---- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                  |              | 2004 |   |         | 2003 |  |   | 2002    |  
|                                  |              |      |   |         |      |  |   |         |  
|Operating Trust Joint Ventures(1) |              |      |   |         |      |  |   |         |   |  |   |        
|                                  | Revenues     |      | $ | 140,390 |      |  | $ | 145,567 |   |  | $ | 145,061 |  
|                                  | Net Earnings |      |   | 29,559  |      |  |   | 7,726   |   |  |   | 16,118  |  
|Ameriton Joint Ventures           |              |      |   |         |      |  |   |         |   |  |   |        
|                                  | Revenues     |      | $ | 5,950   |      |  | $ | 11,549  |   |  | $ | 9,977   |  
|                                  | Net Earnings |      |   | (713    | )    |  |   | (4,569  | ) |  |   | (1,716  | )
|Service Businesses                |              |      |   |         |      |  |   |         |   |  |   |        
|                                  | Revenues     |      | $ |        |      |  | $ |        |   |  | $ | 432,193 |  
|                                  | Net Earnings |      |   |        |      |  |   |        |   |  |   | 5,227   |  
|Total                             |              |      |   |         |      |  |   |         |   |  |   |        
|                                  | Revenues     |      | $ | 146,340 |      |  | $ | 157,116 |   |  | $ | 587,231 |  
|                                  |              |      |   |         |      |  |   |         |  
|                                  | Net Earnings |      | $ | 28,846  |      |  | $ | 3,157   |   |  | $ | 19,629  |  
|                                  |              |      |   |         |      |  |   |         |  






|    |                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes $32.4 million, $0 and $2.6 million of gains
    associated with the disposition of Joint Ventures during 2004,
    2003 and 2002, respectively.



74



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ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|    |           
|--- | ----------
|(5) | Borrowings



| |                            
| | ---------------------------
| | Unsecured Credit Facilities





|                                                  |  |              |         |   |      |   |         |  
|------------------------------------------------- |  | ------------ | ------- | - | ---- | - | ------- | -
|                                                  |  | Years Ended  |        
|                                                  |  | December 31, |        
|                                                  |  |              |        
|                                                  |  | 2004         |         |   | 2003 |  
|                                                  |  |              |         |   |      |  
|Total unsecured revolving credit facility         |  | $            | 600,000 |   |      | $ | 600,000 |  
|Borrowings outstanding at December 31             |  | $            | 19,000  |   |      | $ | 97,000  |  
|Outstanding letters of credit under this facility |  | $            | 13,983  |   |      | $ | 1,050   |  
|Weighted average daily borrowings                 |  | $            | 81,317  |   |      | $ | 231,354 |  
|Maximum borrowings outstanding during the period  |  | $            | 375,000 |   |      | $ | 511,500 |  
|Weighted average daily nominal interest rate      |  |              | 1.58    | % |      |   | 1.95    | %
|Weighted average daily effective interest rate    |  |              | 2.62    | % |      |   | 2.55    | %





| |                         
| | ------------------------
| | Long-Term Unsecured Debt



75



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ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|                                 |               |         |     |           |          |  |            |              |   |            |              |           |         |                |           |           |  |  |      |     | 
|-------------------------------- | ------------- | ------- | --- | --------- | -------- |  | ---------- | ------------ | - | ---------- | ------------ | --------- | ------- | -------------- | --------- | --------- |  |  | ---- | --- | 
|                                 |               |         |     | Effective |          |  | Balance at |              |   | Balance at |              |           | Average |               
|                                 |               | Coupon  |     |           | Interest |  |            | December 31, |   |            | December 31, |           |         | Remaining Life |          
|Type of Debt                     |               | Rate(1) |     |           | Rate(2)  |  |            | 2004         |   |            | 2003         |           |         | (Years)        |          
|                                 |               |         |     |           |          |  |            |              |   |            |              |           |         |                |          
|Long-term unsecured senior notes |               |         | 6.2 | %         |          |  | 6.4        | %            |   | $          | 2,019,607    |           |         | $              | 1,771,167 |           |  |  | 5.3  |    
|Unsecured tax-exempt bonds       |               |         | 1.8 | %         |          |  | 2.1        | %            |   |            | 79,525       |           |         |                | 100,798   |           |  |  | 18.6 |    
|                                 |               |         |     |           |          |  |            |              |   |            |              |           |         |                |          
|                                 | Total/average |         |     | 6.1       | %        |  |            | 6.2          | % |            | $            | 2,099,132 |         |                | $         | 1,871,965 |  |  |      | 5.8 | 
|                                 |               |         |     |           |          |  |            |              |   |            |              |           |         |                |          






|    |                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------
|(1) | Represents a fixed rate for the long-term unsecured notes and a
    variable rate for the unsecured tax-exempt bonds.      
|   
|(2) | Includes the effect of fair value hedges, loan cost amortization
    and other ongoing fees and expenses, where applicable.





| |                  
| | -----------------
| | Mortgages Payable

Scheduled
Debt Maturities


76



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ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                            |                        |                                         |                |           |              |           |   |           |           |           |  |     |     |     |  
|--------------------------- | ---------------------- | --------------------------------------- | -------------- | --------- | ------------ | --------- | - | --------- | --------- | --------- |  | --- | --- | --- | -
|                            |                        | Outstanding Balance at(1)               |                |           |             
|                            |                        |                                         |                |           | Effective    |          
|                            |                        | December 31,                            |                |           | December 31, |           |   | Interest  |          
|                            |                        | 2004                                    |                |           | 2003         |           |   | Rate(2)   |          
|                            |                        |                                         |                |           |              |           |   |           |          
|Secured floating rate debt: |                        |                                         |                |           |              |           |   |           |           |           |  |    
|                            | Tax-exempt debt        |                                         | $              | 508,923   |              |           | $ | 317,351   |           |           |  | 2.0 | %  
|                            | Construction loans     |                                         |                | 40,868    |              |           |   | 56,129    |           |           |  | 4.4 | %  
|                            | Conventional mortgages |                                         |                | 21,705    |              |           |   | 21,705    |           |           |  | 3.0 | %  
|                            |                        |                                         |                |           |              |           |   |           |          
|                            |                        |                                         | Total Floating |           |              | 571,496   |   |           |           | 395,185   |  |     |     | 2.2 | %
|                            |                        |                                         |                |           |              |           |   |           |          
|Secured fixed rate debt:    |                        |                                         |                |           |              |           |   |           |           |           |  |    
|                            | Conventional mortgages |                                         |                | 1,439,558 |              |           |   | 1,511,277 |           |           |  | 6.5 | %  
|                            | Other secured debt     |                                         |                | 20,451    |              |           |   | 21,163    |           |           |  | 3.6 | %  
|                            |                        |                                         |                |           |              |           |   |           |          
|                            |                        |                                         | Total Fixed    |           |              | 1,460,009 |   |           |           | 1,532,440 |  |     |     | 6.4 | %
|                            |                        |                                         |                |           |              |           |   |           |          
|                            |                        | Total debt outstanding at end of period |                | $         | 2,031,505    |           |   | $         | 1,927,625 |           |  |     | 5.2 | %  
|                            |                        |                                         |                |           |              |           |   |           |          






|    |                                                                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes a net fair market value adjustment recorded in
    connection with the Smith Merger of $48.4 million and
    $58.5 million at December 31, 2004 and 2003,
    respectively. This amount is amortized into interest expense
    over the life of the underlying debt.
|   
|(2) | Includes the effect of fair value hedges, credit enhancement
    fees, the amortization of fair market value purchase adjustment,
    and other related costs, where applicable.                                                                                             



|                       |                                                       |      |           |          |      |   |           |          |  
|---------------------- | ----------------------------------------------------- | ---- | --------- | -------- | ---- | - | --------- | -------- | -
|                       |                                                       | 2004 |           |          | 2003 |  
|                       |                                                       |      |           |          |      |  
|Balance at January 1   |                                                       | $    | 1,927,625 |          |      | $ | 2,179,997 |         
|                       | Issuance of new mortgages                             |      |           | 51,656   |      |   |           | 76,017   |  
|                       | Mortgage assumptions related to property acquisitions |      |           | 113,585  |      |   |           | 55,362   |  
|                       | Proceeds from construction loans                      |      |           | 118,000  |      |   |           |         |  
|                       | Regularly scheduled principal amortization            |      |           | (11,512  | )    |   |           | (11,934  | )
|                       | Prepayments, final maturities and other               |      |           | (167,849 | )    |   |           | (371,817 | )
|                       |                                                       |      |           |          |      |  
|Balance at December 31 |                                                       | $    | 2,031,505 |          |      | $ | 1,927,625 |         
|                       |                                                       |      |           |          |      |  

77



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ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                          
| | -------------------------
| | Scheduled Debt Maturities



|              |       |                          |         |         |                   |   |           |              |  |   |            |         |  |       |         |           |  |   |           |           | 
|------------- | ----- | ------------------------ | ------- | ------- | ----------------- | - | --------- | ------------ |  | - | ---------- | ------- |  | ----- | ------- | --------- |  | - | --------- | --------- | 
|              |       | Long Term Unsecured Debt |         |         | Mortgages Payable |   |           |             
|              |       |                          |         |         |                   |   |           |             
|              |       | Regularly                |         |         |                   |   | Regularly |              |  |   |            |        
|              |       | Scheduled                |         |         | Final             |   |           | Scheduled    |  |   | Final      |         |  |      
|              |       | Principal                |         |         | Maturities        |   |           | Principal    |  |   | Maturities |         |  |      
|              |       | Amortization             |         |         | and Other         |   |           | Amortization |  |   | and Other  |         |  | Total |        
|              |       |                          |         |         |                   |   |           |              |  |   |            |         |  |       |        
|2005          |       | $                        | 31,250  |         |                   | $ | 220,000   |              |  | $ | 11,804     |         |  | $     | 50,689  |           |  | $ | 313,743   |          
|2006          |       |                          | 31,250  |         |                   |   | 20,000    |              |  |   | 10,752     |         |  |       | 233,451 |           |  |   | 295,453   |          
|2007          |       |                          | 31,250  |         |                   |   | 355,000   |              |  |   | 11,352     |         |  |       | 144,920 |           |  |   | 542,522   |          
|2008          |       |                          | 31,250  |         |                   |   | 302,412   |              |  |   | 12,660     |         |  |       | 110,290 |           |  |   | 456,612   |          
|2009          |       |                          | 51,250  |         |                   |   | 31,027    |              |  |   | 10,272     |         |  |       | 362,070 |           |  |   | 454,619   |          
|Thereafter(1) |       |                          | 346,250 |         |                   |   | 648,193   |              |  |   | 245,045    |         |  |       | 828,200 |           |  |   | 2,067,688 |          
|              |       |                          |         |         |                   |   |           |              |  |   |            |         |  |       |        
|              | Total |                          | $       | 522,500 |                   |   | $         | 1,576,632    |  |   | $          | 301,885 |  |       | $       | 1,729,620 |  |   | $         | 4,130,637 | 
|              |       |                          |         |         |                   |   |           |              |  |   |            |         |  |       |        






|    |                                                                                             
|--- | --------------------------------------------------------------------------------------------
|(1) | The average annual principal payments due from 2010 to 2024 are
    $117.9 million per year.



| |      
| | -----
| | Other





|    |                             
|--- | ----------------------------
|(6) | Distributions to Unitholders



78



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##### Table of Contents



ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                              |  |      |          |  |      |   |          |      |  |   |          | 
|----------------------------- |  | ---- | -------- |  | ---- | - | -------- | ---- |  | - | -------- | 
|                              |  | 2004 |          |  | 2003 |   |          | 2002 | 
|                              |  |      |          |  |      |   |          |      | 
|Common Units and A-1 Units(1) |  | $    | 2.72     |  |      | $ | 1.71     |      |  | $ | 1.70     | 
|Series A Preferred Units(2)   |  |      |         |  |      |   | 2.11     |      |  |   | 2.29     | 
|Series C Preferred Units(3)   |  |      |         |  |      |   |         |      |  |   | 1.38     | 
|Series D Preferred Units(4)   |  |      | 1.31     |  |      |   | 2.19     |      |  |   | 2.19     | 
|Series E Preferred Units(5)   |  |      | 2.09     |  |      |   | 2.09     |      |  |   | 0.70     | 
|Series F Preferred Units(5)   |  |      | 1.50     |  |      |   | 2.03     |      |  |   | 0.68     | 
|Series G Preferred Units(5)   |  |      | 2.16     |  |      |   | 2.16     |      |  |   | 0.72     | 
|Series H Preferred Units(6)   |  |      |         |  |      |   | 1.27     |      |  |   | 3.36     | 
|Series I Preferred Units(7)   |  |      | 7,660.00 |  |      |   | 7,660.00 |      |  |   | 7,660.00 | 
|Series J Preferred Units(8)   |  |      |         |  |      |   |         |      |  |   | 1.71     | 
|Series K Preferred Units(9)   |  |      | 2.55     |  |      |   | 3.38     |      |  |   | 3.36     | 
|Series L Preferred Units(10)  |  |      | 3.40     |  |      |   | 3.38     |      |  |   | 3.36     | 






| |     |                                                                                                                                                                                                                                                                                                                                    
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Includes a $1.00 per unit special distribution issued to
    our Common Unitholders in December 2004.                                                                                                                                                                                                                              
|
| | (2) | The Series A Preferred Units were called for redemption
    during the fourth quarter of 2003; of the 2.9 million
    Preferred Units outstanding, 2.8 million were converted to
    Common Units and the remaining were redeemed.                                                                                                 
|
| | (3) | The Series C Preferred Units were redeemed at liquidation
    value, plus accrued and unpaid distributions, in August 2002.                                                                                                                                                                                                        
|
| | (4) | The Series D Preferred Units were redeemed in August 2004.                                                                                                                                                                                                                                                                         
|
| | (5) | In August 2002, the DownREIT Perpetual Preferred Units were
    converted into Operating Trust Perpetual Preferred Units.
    The Company redeemed the Series F Preferred Units in
    September 2004, 520,000 of the Series E Preferred Units in
    August 2004 and 400,000 of the Series E Preferred Units in
    November 2004.
|
| | (6) | The Series H Preferred Units were converted into Common
    Units in May 2003.                                                                                                                                                                                                                                                     
|
| | (7) | The Series I Preferred Units have a par value of $100,000.                                                                                                                                                                                                                                                                         
|
| | (8) | The Series J Preferred Units were converted into Common
    Units in July 2002.                                                                                                                                                                                                                                                    
|
| | (9) | The Series K Preferred Units were converted into Common
    Units in September 2004.                                                                                                                                                                                                                                               



|     |                                                                                  
|---- | ---------------------------------------------------------------------------------
|(10) | The Series L Preferred Units were converted to Common Units
    in December 2004.



|    |                    
|--- | -------------------
|(7) | Unitholders Equity



| |                 
| | ----------------
| | A-1 Common Units





79



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##### Table of Contents



ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                             
| | ----------------------------
| | Units of Beneficial Interest





| |                                          
| | -----------------------------------------
| | Preferred Unit Redemption and Conversions





| |                                     
| | ------------------------------------
| | Common Unit Repurchase and Issuances





| |                
| | ---------------
| | Preferred Units



|                                                                                                                      |  |            |          |  |            |  |       |             |  |  |              |  |  |      |      |      |  |   |   |  |  |   |        | 
|--------------------------------------------------------------------------------------------------------------------- |  | ---------- | -------- |  | ---------- |  | ----- | ----------- |  |  | ------------ |  |  | ---- | ---- | ---- |  | - | - |  |  | - | ------ | 
|                                                                                                                      |  |            |          |  |            |  |       | Annual      |  |  |             
|                                                                                                                      |  |            |          |  |            |  |       | Dividend    |  |  | December 31, | 
|                                                                                                                      |  | Redemption |          |  | Conversion |  |       | Liquidation |  |  | Rate Per     |  |  |      |     
|Description                                                                                                           |  | Date       |          |  | Ratio      |  |       | value       |  |  | Unit         |  |  | 2004 |      | 2003 | 
|                                                                                                                      |  |            |          |  |            |  |       |             |  |  |              |  |  |      |      |      | 
|Series K Preferred Units; 0 Units issued and outstanding at
    December 31, 2004 and 666,667 at December 31, 2003(1) |  |            | 9/20/04  |  |            |  | 1.975 |             |  |  | 37.50        |  |  |      | 3.38 |      |  |   |  |  |  |   | 25,000 | 
|Series L Preferred Units; 0 Units issued and outstanding at
    December 31, 2004 and 641,026 at December 31, 2003(2) |  |            | 12/21/04 |  |            |  | 1.975 |             |  |  | 39.00        |  |  |      | 3.38 |      |  |   |  |  |  |   | 25,000 | 
|                                                                                                                      |  |            |          |  |            |  |       |             |  |  |              |  |  |      |      |      |  |  
|                                                                                                                      |  |            |          |  |            |  |       |             |  |  |              |  |  |      |      |      |  | $ |  |  |  | $ | 50,000 | 
|                                                                                                                      |  |            |          |  |            |  |       |             |  |  |              |  |  |      |      |      |  |  






|    |                                                                                     
|--- | ------------------------------------------------------------------------------------
|(1) | The Series K Preferred Units were converted into Common
    Units in September 2004.
|   
|(2) | The Series L Preferred Units were converted into Common
    Units in December 2004. 

80



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##### Table of Contents



ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                                                                                    |  |            |          |  |             |          |         |             |              |   |       |  |  |      |        |  |  |   |         | 
|----------------------------------------------------------------------------------------------------------------------------------- |  | ---------- | -------- |  | ----------- | -------- | ------- | ----------- | ------------ | - | ----- |  |  | ---- | ------ |  |  | - | ------- | 
|                                                                                                                                    |  |            |          |  |             | Annual   |         |             |             
|                                                                                                                                    |  |            |          |  |             | Dividend |         |             | December 31, |  
|                                                                                                                                    |  | Redemption |          |  | Liquidation |          |         | Rate Per    |              |   |       | 
|Description                                                                                                                         |  | Date(1)    |          |  | Value       |          |         | Unit        |              |   | 2004  |  |  | 2003 |       
|                                                                                                                                    |  |            |          |  |             |          |         |             |              |   |       |  |  |      |       
|                                                                                                                                    |  |            |          |  |             |          |         | (Amounts in |             
|                                                                                                                                    |  |            |          |  |             |          |         | Thousands)  |             
|Series D Preferred Units; 0 and 1,957,606 units issued
    and outstanding at December 31, 2004 and 2003,
    respectively(1)       |  |            | 08/06/04 |  |             |          | 25.00   |             |              | $ | 2.19  |  |  | $    |       |  |  | $ | 48,940  | 
|Series E Preferred Units; 200,000 and 1,120,000 units
    issued and outstanding at December 31, 2004 and 2003,
    respectively(2) |  |            | 02/04/05 |  |             |          | 25.00   |             |              |   | 2.09  |  |  |      | 4,929  |  |  |   | 27,123  | 
|Series F Preferred Units; 0 and 800,000 units issued
    and outstanding at December 31, 2004 and 2003,
    respectively(2)         |  |            | 09/27/04 |  |             |          | 25.00   |             |              |   | 2.03  |  |  |      |       |  |  |   | 19,464  | 
|Series G Preferred Units; 600,000 units issued and
    outstanding at December 31, 2004 and 2003, respectively(2)                   |  |            | 03/03/05 |  |             |          | 25.00   |             |              |   | 2.16  |  |  |      | 14,593 |  |  |   | 14,593  | 
|Series I Preferred Units; 500 units issued and
    outstanding at December 31, 2004 and 2003, respectively(3)                       |  |            | 02/01/28 |  |             |          | 100,000 |             |              |   | 7,660 |  |  |      | 50,000 |  |  |   | 50,000  | 
|                                                                                                                                    |  |            |          |  |             |          |         |             |              |   |       |  |  |      |       
|                                                                                                                                    |  |            |          |  |             |          |         |             |              |   |       |  |  | $    | 69,522 |  |  | $ | 160,120 | 
|                                                                                                                                    |  |            |          |  |             |          |         |             |              |   |       |  |  |      |       






|    |                                                                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The Series D Preferred Shares were redeemed in August 2004.                                                                                                                                                                                                                                                                              
|   
|(2) | In August 2002, 3,000,000 DownREIT Perpetual Preferred Units
    were converted into Operating Trust Perpetual Preferred
    Units. The Company redeemed the Series F Preferred Units in
    September 2004, 520,000 of the Series E Preferred Units in
    August 2004 and 400,000 of the Series E Preferred Units in
    November 2004.
|   
|(3) | Series I Preferred Units may be redeemed for cash at our
    option, in whole or in part, at a redemption price equal to the
    liquidation price per share, plus accrued and unpaid
    distributions, if any, on or after the redemption dates
    indicated.                                                                         







| |                                              
| | ---------------------------------------------
| | Dividend Reinvestment and Share Purchase Plan



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ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |              
| | -------------
| | Series M Unit





|    |              
|--- | -------------
|(8) | Benefit Plans







| |                                  
| | ---------------------------------
| | Share Options and Trustee Options

1 3






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ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                               |       |           |           |                 |       |   |              |              |                  |   |           |       |  |                  |           |  |  |  |            |  | 
|-------------------------------------------------------------- | ----- | --------- | --------- | --------------- | ----- | - | ------------ | ------------ | ---------------- | - | --------- | ----- |  | ---------------- | --------- |  |  |  | ---------- |  | 
|                                                               |       |           |           | Exercise Prices |       |   |              |              | Weighted-Average |  
|                                                               |       | Number of |           |                 |       |   |              | Expiration   |                  |   | Remaining |      
|                                                               |       | Options   |           |                 | Range |   |              | Average      |                  |   | Date      |       |  | Contractual Life |          
|                                                               |       |           |           |                 |       |   |              |              |                  |   |           |       |  |                  |          
|Matching options under the 1997 employee unit purchase program |       |           | 72,086    |                 |       | $ | 21.49-$21.86 |              |                  | $ | 21.50     |       |  |                  | 2007      |  |  |  | 2.69 years | 
|Options with DEUs                                              |       |           | 862,569   |                 |       |   | 19.00- 22.66 |              |                  |   | 20.48     |       |  |                  | 2007-2009 |  |  |  | 4.07 years | 
|Options without DEUs                                           |       |           | 2,818,401 |                 |       |   | 21.34- 29.33 |              |                  |   | 24.45     |       |  |                  | 2007-2014 |  |  |  | 7.47 years | 
|Independent Trustees                                           |       |           | 61,250    |                 |       |   | 22.56- 23.95 |              |                  |   | 23.14     |       |  |                  | 2009-2011 |  |  |  | 5.51 years | 
|Exchanged options                                              |       |           | 66,920    |                 |       |   | 14.68- 22.58 |              |                  |   | 19.93     |       |  |                  | 2007-2011 |  |  |  | 5.47 years | 
|                                                               |       |           |           |                 |       |   |              |              |                  |   |           |       |  |                  |          
|                                                               | Total |           |           | 3,881,226       |       |   | $            | 14.68-$29.33 |                  |   | $         | 23.41 |  |                  |           |  |  |  |            |  | 
|                                                               |       |           |           |                 |       |   |              |              |                  |   |           |       |  |                  |          



|                                      |           |           |           |            |                |   |           |             |  |  |           |  | 
|------------------------------------- | --------- | --------- | --------- | ---------- | -------------- | - | --------- | ----------- |  |  | --------- |  | 
|                                      |           |           |           | Weighted   |                |   | Number of |            
|                                      |           | Number of |           |            | Average        |   |           | Options     | 
|                                      |           | Options   |           |            | Exercise Price |   |           | Exercisable | 
|                                      |           |           |           |            |                |   |           |             | 
|Balance/ Average at December 31, 2001 |           |           | 8,107,628 |            |                | $ | 21.33     |             |  |  | 5,131,390 | 
|                                      |           |           |           |            |                |   |           |             | 
|                                      | Granted   |           |           | 2,680,143  |                |   |           | 24.15       |  |  |           |  | 
|                                      | Exercised |           |           | (1,210,890 | )              |   |           | 26.28       |  |  |           |  | 
|                                      | Forfeited |           |           | (340,519   | )              |   |           | 23.94       |  |  |           |  | 
|                                      |           |           |           |            |                |   |           |             | 
|Balance/ Average at December 31, 2002 |           |           | 9,236,362 |            |                | $ | 22.44     |             |  |  | 5,314,210 | 
|                                      |           |           |           |            |                |   |           |             | 
|                                      | Granted   |           |           | 15,823     |                |   |           | 22.42       |  |  |           |  | 
|                                      | Exercised |           |           | (2,101,605 | )              |   |           | 19.58       |  |  |           |  | 
|                                      | Forfeited |           |           | (762,838   | )              |   |           | 24.38       |  |  |           |  | 
|                                      |           |           |           |            |                |   |           |             | 
|Balance/ Average at December 31, 2003 |           |           | 6,387,742 |            |                | $ | 23.15     |             |  |  | 4,546,725 | 
|                                      |           |           |           |            |                |   |           |             | 
|                                      | Granted   |           |           | 647,825    |                |   |           | 26.83       |  |  |           |  | 
|                                      | Exercised |           |           | (3,002,193 | )              |   |           | 22.85       |  |  |           |  | 
|                                      | Forfeited |           |           | (152,148   | )              |   |           | 25.45       |  |  |           |  | 
|                                      |           |           |           |            |                |   |           |             | 
|Balance/ Average at December 31, 2004 |           |           | 3,881,226 |            |                | $ | 23.41     |             |  |  | 2,891,895 | 
|                                      |           |           |           |            |                |   |           |             | 



| |                             
| | ----------------------------
| | Restricted Share Unit Awards





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ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                          
| | -------------------------
| | Dividend Equivalent Units









| |                                                            
| | -----------------------------------------------------------
| | 401(k) Plan and Nonqualified Deferred Compensation
    Plan





| |                                          
| | -----------------------------------------
| | Deferral of Fees by Non-Employee Trustees



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ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                 
| | --------------------------------
| | Special Long-Term Incentive Plan







|    |                                             
|--- | --------------------------------------------
|(9) | Financial Instruments and Hedging Activities



| |                                    
| | -----------------------------------
| | Fair Value of Financial Instruments



|                         |                             |                              |   |           |                              |  |   |           |  |  |            |           |  |  |   |           | 
|------------------------ | --------------------------- | ---------------------------- | - | --------- | ---------------------------- |  | - | --------- |  |  | ---------- | --------- |  |  | - | --------- | 
|                         |                             | Balance at December 31, 2004 |   |           | Balance at December 31, 2003 | 
|                         |                             |                              |   |           |                              | 
|                         |                             | Carrying                     |   |           | Estimated                    |  |   | Carrying  |  |  | Estimated  |          
|                         |                             | Amounts                      |   |           | Fair Value                   |  |   | Amounts   |  |  | Fair Value |          
|                         |                             |                              |   |           |                              |  |   |           |  |  |            |          
|Borrowings:              |                             |                              |   |           |                              |  |   |           |  |  |            |           |  |  |   |          
|                         | Unsecured credit facilities |                              | $ | 19,000    |                              |  | $ | 19,000    |  |  | $          | 103,790   |  |  | $ | 103,790   | 
|                         | Long-Term Unsecured Debt    |                              |   | 2,099,132 |                              |  |   | 2,262,778 |  |  |            | 1,871,695 |  |  |   | 2,043,289 | 
|                         | Mortgages payable           |                              |   | 2,031,505 |                              |  |   | 2,093,436 |  |  |            | 1,927,625 |  |  |   | 2,032,872 | 
|Interest rate contracts: |                             |                              |   |           |                              |  |   |           |  |  |            |           |  |  |   |          
|                         | Interest rate swaps         |                              | $ | 10,209    |                              |  | $ | 10,209    |  |  | $          | 2,765     |  |  | $ | 2,765     | 
|                         | Interest rate caps          |                              |   |          |                              |  |   |          |  |  |            |          |  |  |   |          | 
|Forward Contracts:       |                             |                              |   |           |                              |  |   |           |  |  |            |           |  |  |   |          
|                         | Forward sales agreements    |                              | $ |          |                              |  | $ |          |  |  | $          | 250       |  |  | $ | 250       | 



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ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                                 
| | --------------------------------
| | Interest Rate Hedging Activities









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ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                   |                            |                         |              |         |            |              |  |                |           |           |   |        |        |       | 
|------------------ | -------------------------- | ----------------------- | ------------ | ------- | ---------- | ------------ |  | -------------- | --------- | --------- | - | ------ | ------ | ----- | 
|                   |                            |                         |              |         |            | Carrying and | 
|                   |                            | Notional                |              |         | Maturity   |              |  | Estimated Fair |          
|                   |                            | Amount                  |              |         | Date Range |              |  | Value          |          
|                   |                            |                         |              |         |            |              |  |                |          
|Cash flow hedges:  |                            |                         |              |         |            |              |  |                |           |           |   |       
|                   | Interest rate caps         |                         | $            | 109,008 |            |              |  | 2005-2007      |           |           | $ | 8      |       
|                   | Interest rate swaps        |                         |              | 150,000 |            |              |  | 2006           |           |           |   | (3,556 | )     
|                   |                            |                         |              |         |            |              |  |                |          
|                   |                            | Total cash flow hedges  |              | $       | 259,008    |              |  |                | 2005-2007 |           |   | $      | (3,548 | )    
|                   |                            |                         |              |         |            |              |  |                |          
|Fair value hedges: |                            |                         |              |         |            |              |  |                |           |           |   |       
|                   | Interest rate swaps        |                         | $            | 75,055  |            |              |  | 2008           |           |           | $ | 4,470  |       
|                   | Total rate of return swaps |                         |              | 77,006  |            |              |  | 2006-2007      |           |           |   | 8,593  |       
|                   |                            |                         |              |         |            |              |  |                |          
|                   |                            | Total fair value hedges |              | $       | 152,061    |              |  |                | 2005-2008 |           |   | $      | 13,063 |      
|                   |                            |                         |              |         |            |              |  |                |          
|                   |                            |                         | Total hedges |         | $          | 411,069      |  |                |           | 2005-2008 |   |        | $      | 9,515 | 
|                   |                            |                         |              |         |            |              |  |                |          





| |                                     
| | ------------------------------------
| | Equity Securities Hedging Activities





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ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|     |                                  
|---- | ---------------------------------
|(10) | Selected Quarterly Financial Data



|      |                                                    |                                         |   |         |            |   |   |         |      |  |          |         |      |          |   |         |      |  |   |         |      |  
|----- | -------------------------------------------------- | --------------------------------------- | - | ------- | ---------- | - | - | ------- | ---- |  | -------- | ------- | ---- | -------- | - | ------- | ---- |  | - | ------- | ---- | -
|      |                                                    | (Unaudited)                             |   |         |           
|      |                                                    | Three Months Ended                      |   |         |           
|      |                                                    |                                         |   |         | Year Ended |  
|      |                                                    | 3-31(1)                                 |   |         | 6-30(1)    |   |   | 9-30(1) |      |  | 12-31(1) |         |      | 12-31(1) |  
|      |                                                    |                                         |   |         |            |   |   |         |      |  |          |         |      |          |  
|2004: |                                                    |                                         |   |         |            |   |   |         |      |  |          |         |      |          |   |         |      |  |   |        
|      | Total revenues                                     |                                         | $ | 204,859 |            |   | $ | 215,013 |      |  | $        | 222,484 |      |          | $ | 230,973 |      |  | $ | 873,329 |     
|      |                                                    |                                         |   |         |            |   |   |         |      |  |          |         |      |          |  
|      | Earnings from operations                           |                                         |   | 37,325  |            |   |   | 38,826  |      |  |          | 28,814  |      |          |   | 26,832  |      |  |   | 131,797 |     
|      | Income from unconsolidated entities                |                                         |   | 5,276   |            |   |   | 7,354   |      |  |          | 5,485   |      |          |   | (213    | )    |  |   | 17,902  |     
|      | Other non-operating income                         |                                         |   | 10,510  |            |   |   | 9,951   |      |  |          | 7,701   |      |          |   |        |      |  |   | 28,162  |     
|      | Less minority interest:                            |                                         |   |         |            |   |   |         |      |  |          |         |      |          |   |         |      |  |   |         |     
|      |                                                    | Convertible operating partnership units |   |         | (352       | ) |   |         |     |  |          |         | (108 | )        |   |         |     |  |   |         | (460 | )
|      | Plus: net earnings from discontinued operations    |                                         |   | 60,499  |            |   |   | 34,940  |      |  |          | 117,515 |      |          |   | 221,348 |      |  |   | 434,302 |     
|      | Less Preferred Share distributions                 |                                         |   | 4,447   |            |   |   | 4,459   |      |  |          | 5,706   |      |          |   | 1,642   |      |  |   | 16,254  |     
|      |                                                    |                                         |   |         |            |   |   |         |      |  |          |         |      |          |  
|      | Net earnings attributable to Common Units   Basic |                                         | $ | 109,515 |            |   | $ | 86,612  |      |  | $        | 153,917 |      |          | $ | 246,325 |      |  | $ | 596,369 |     
|      |                                                    |                                         |   |         |            |   |   |         |      |  |          |         |      |          |  
|      | Net earnings per Common Unit:                      |                                         |   |         |            |   |   |         |      |  |          |         |      |          |   |         |      |  |   |         |     
|      |                                                    | Basic                                   |   | $       | 0.50       |   |   | $       | 0.39 |  |          | $       | 0.70 |          |   | $       | 1.12 |  |   | $       | 2.71 |  
|      |                                                    |                                         |   |         |            |   |   |         |      |  |          |         |      |          |  
|      |                                                    | Diluted                                 |   | $       | 0.49       |   |   | $       | 0.39 |  |          | $       | 0.70 |          |   | $       | 1.11 |  |   | $       | 2.69 |  
|      |                                                    |                                         |   |         |            |   |   |         |      |  |          |         |      |          |  
|2003: |                                                    |                                         |   |         |            |   |   |         |      |  |          |         |      |          |   |         |      |  |   |        
|      | Total revenues                                     |                                         | $ | 193,362 |            |   | $ | 194,443 |      |  | $        | 196,683 |      |          | $ | 199,184 |      |  | $ | 783,672 |     
|      |                                                    |                                         |   |         |            |   |   |         |      |  |          |         |      |          |  
|      | Earnings from operations                           |                                         |   | 33,889  |            |   |   | 16,330  |      |  |          | 33,811  |      |          |   | 32,902  |      |  |   | 116,932 |     
|      | Income from unconsolidated entities                |                                         |   | 455     |            |   |   | (1,161  | )    |  |          | 1,714   |      |          |   | 4,737   |      |  |   | 5,745   |     
|      | Less minority interest:                            |                                         |   |         |            |   |   |         |      |  |          |         |      |          |   |         |      |  |   |         |     
|      |                                                    | Convertible operating partnership units |   |         |           |   |   |         |     |  |          |         |     |          |   |         |     |  |   |         |     |  
|      | Plus net earnings from discontinued operations     |                                         |   | 63,442  |            |   |   | 59,316  |      |  |          | 142,192 |      |          |   | 106,564 |      |  |   | 371,514 |     
|      | Less Preferred Unit distributions                  |                                         |   | 8,358   |            |   |   | 7,251   |      |  |          | 6,128   |      |          |   | 4,416   |      |  |   | 26,153  |     
|      |                                                    |                                         |   |         |            |   |   |         |      |  |          |         |      |          |  
|      | Net earnings attributable to Common Units   Basic |                                         | $ | 89,428  |            |   | $ | 67,234  |      |  | $        | 171,589 |      |          | $ | 139,787 |      |  | $ | 468,038 |     
|      |                                                    |                                         |   |         |            |   |   |         |      |  |          |         |      |          |  
|      | Net earnings per Common Share:                     |                                         |   |         |            |   |   |         |      |  |          |         |      |          |   |         |      |  |   |         |     
|      |                                                    | Basic                                   |   | $       | 0.43       |   |   | $       | 0.32 |  |          | $       | 0.80 |          |   | $       | 0.64 |  |   | $       | 2.20 |  
|      |                                                    |                                         |   |         |            |   |   |         |      |  |          |         |      |          |  
|      |                                                    | Diluted                                 |   | $       | 0.43       |   |   | $       | 0.32 |  |          | $       | 0.79 |          |   | $       | 0.63 |  |   | $       | 2.18 |  
|      |                                                    |                                         |   |         |            |   |   |         |      |  |          |         |      |          |  






|    |                                                                                                
|--- | -----------------------------------------------------------------------------------------------
|(1) | Net earnings from discontinued operations have been reclassified
    for all periods presented.



|     |             
|---- | ------------
|(11) | Segment Data



88



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ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                                   |                 |                          |                                         |   |         |         |       |      |         |         |       |   |         |         | 
|-------------------------------------------------- | --------------- | ------------------------ | --------------------------------------- | - | ------- | ------- | ----- | ---- | ------- | ------- | ----- | - | ------- | ------- | 
|                                                   |                 | Years Ended December 31, |                                        
|                                                   |                 |                          |                                        
|                                                   |                 | 2004                     |                                         |   | 2003    |         |       | 2002 |        
|                                                   |                 |                          |                                         |   |         |         |       |      |        
|Reportable apartment communities segment revenues: |                 |                          |                                         |   |         |         |       |      |         |         |       |  
|                                                   | Same-Store:     |                          |                                         |   |         |         |       |      |         |         |       |   |        
|                                                   |                 | Garden communities       |                                         | $ | 421,196 |         |       | $    | 421,259 |         |       | $ | 429,556 |        
|                                                   |                 | High-rise properties     |                                         |   | 255,279 |         |       |      | 254,151 |         |       |   | 253,229 |        
|                                                   | Non Same-Store: |                          |                                         |   |         |         |       |      |         |         |       |   |        
|                                                   |                 | Garden communities       |                                         |   | 105,075 |         |       |      | 44,109  |         |       |   | 28,982  |        
|                                                   |                 | High-rise properties     |                                         |   | 47,794  |         |       |      | 30,489  |         |       |   | 20,265  |        
|                                                   |                 | Ameriton(1)              |                                         |   | 21,501  |         |       |      | 11,053  |         |       |   | 7,742   |        
|Other non-reportable operating segment revenues    |                 |                          | 3,276                                   |   |         |         | 3,277 |      |         |         | 5,103 |  
|                                                   |                 |                          |                                         |   |         |         |       |      |        
|                                                   |                 |                          | Total segment and consolidated revenues |   | $       | 854,121 |       |      | $       | 764,338 |       |   | $       | 744,877 | 
|                                                   |                 |                          |                                         |   |         |         |       |      |        

|                                              |                 |                                         |                                       |   |          |         |       |      |          |         |       |   |          |         | 
|--------------------------------------------- | --------------- | --------------------------------------- | ------------------------------------- | - | -------- | ------- | ----- | ---- | -------- | ------- | ----- | - | -------- | ------- | 
|                                              |                 | Years Ended December 31,                |                                      
|                                              |                 |                                         |                                      
|                                              |                 | 2004                                    |                                       |   | 2003     |         |       | 2002 |         
|                                              |                 |                                         |                                       |   |          |         |       |      |         
|Reportable apartment communities segment NOI: |                 |                                         |                                       |   |          |         |       |      |          |         |       |  
|                                              | Same-Store:     |                                         |                                       |   |          |         |       |      |          |         |       |   |         
|                                              |                 | Garden communities                      |                                       | $ | 278,638  |         |       | $    | 284,819  |         |       | $ | 290,709  |        
|                                              |                 | High-rise properties                    |                                       |   | 161,066  |         |       |      | 161,922  |         |       |   | 159,890  |        
|                                              | Non Same-Store: |                                         |                                       |   |          |         |       |      |          |         |       |   |         
|                                              |                 | Garden communities                      |                                       |   | 66,573   |         |       |      | 30,271   |         |       |   | 17,756   |        
|                                              |                 | High-rise properties                    |                                       |   | 33,129   |         |       |      | 21,150   |         |       |   | 13,332   |        
|                                              |                 | Ameriton(1)                             |                                       |   | 10,259   |         |       |      | 6,133    |         |       |   | 3,904    |        
|Other non-reportable operating segment NOI    |                 |                                         | 2,807                                 |   |          |         | 2,614 |      |          |         | 3,744 |  
|                                              |                 |                                         |                                       |   |          |         |       |      |         
|                                              |                 |                                         | Total segment NOI                     |   |          | 552,472 |       |      |          | 506,909 |       |   |          | 489,335 | 
|                                              |                 |                                         |                                       |   |          |         |       |      |         
|Reconciling items:                            |                 |                                         |                                       |   |          |         |       |      |          |         |       |  
|                                              |                 | Other income                            |                                       |   | 19,208   |         |       |      | 19,334   |         |       |   | 9,462    |        
|                                              |                 | Depreciation on real estate investments |                                       |   | (203,183 | )       |       |      | (162,723 | )       |       |   | (148,588 | )      
|                                              |                 | Interest expense                        |                                       |   | (175,249 | )       |       |      | (160,871 | )       |       |   | (149,538 | )      
|                                              |                 | General and administrative expenses     |                                       |   | (55,479  | )       |       |      | (49,838  | )       |       |   | (45,710  | )      
|                                              |                 | Other expenses                          |                                       |   | (5,972   | )       |       |      | (35,879  | )       |       |   | (17,014  | )      
|                                              |                 |                                         |                                       |   |          |         |       |      |         
|                                              |                 |                                         | Consolidated earnings from operations |   | $        | 131,797 |       |      | $        | 116,932 |       |   | $        | 137,947 | 
|                                              |                 |                                         |                                       |   |          |         |       |      |         

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ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)







|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | While rental revenue and NOI are the primary measures we use to
    evaluate the performance of our assets, management also utilizes
    gains from the disposition of real estate when evaluating the
    performance of Ameriton as its primary focus is the
    opportunistic acquisition, development and eventual disposition
    of real estate with a short term investment horizon. During
    2004, 2003 and 2002, pre-tax gains from the disposition of
    Ameriton real estate were $65.1 million, $42.7 million
    and $30.7 million, respectively. These gains are classified
    within discontinued operations. Ameriton assets are excluded
    from our Same-Store population as they are acquired or developed
    to achieve short-term opportunistic gains, and therefore, the
    average holding period is typically much shorter than the
    holding period of assets operated by the REIT.

|                                                 |                 |                                                       |                           |                      |           |           |           |   |           |           |           |  |  |  |  | 
|------------------------------------------------ | --------------- | ----------------------------------------------------- | ------------------------- | -------------------- | --------- | --------- | --------- | - | --------- | --------- | --------- |  |  |  |  | 
|                                                 |                 | Year Ended December 31,                               |                           |                      |          
|                                                 |                 |                                                       |                           |                      |          
|                                                 |                 | 2004                                                  |                           |                      | 2003      |           |           |  
|                                                 |                 |                                                       |                           |                      |           |           |           |  
|Reportable operating communities segment assets: |                 |                                                       |                           |                      |           |           |           |   |           |           |           | 
|                                                 | Same-Store:     |                                                       |                           |                      |           |           |           |   |           |           |           |  | 
|                                                 |                 | Garden communities                                    |                           | $                    | 3,021,343 |           |           | $ | 3,080,488 |           |           |  |  | 
|                                                 |                 | High-rise properties                                  |                           |                      | 2,521,725 |           |           |   | 2,547,861 |           |           |  |  | 
|                                                 | Non Same-Store: |                                                       |                           |                      |           |           |           |   |           |           |           |  | 
|                                                 |                 | Garden communities                                    |                           |                      | 1,602,955 |           |           |   | 1,224,675 |           |           |  |  | 
|                                                 |                 | High-rise properties                                  |                           |                      | 548,956   |           |           |   | 817,129   |           |           |  |  | 
|                                                 |                 | Ameriton                                              |                           |                      | 434,946   |           |           |   | 472,743   |           |           |  |  | 
|Other non-reportable operating segment assets    |                 |                                                       | 82,537                    |                      |           |           | 57,960    |   |           |           |           | 
|                                                 |                 |                                                       |                           |                      |           |           |           |   |          
|                                                 |                 |                                                       | Total segment assets      |                      |           | 8,212,462 |           |   |           | 8,200,856 |           |  |  |  | 
|                                                 |                 |                                                       | Real estate held for sale |                      |           | 245,034   |           |   |           | 149,342   |           |  |  |  | 
|                                                 |                 |                                                       |                           |                      |           |           |           |   |          
|                                                 |                 |                                                       |                           | Total segment assets |           |           | 8,457,496 |   |           |           | 8,350,198 |  |  |  |  | 
|                                                 |                 |                                                       |                           |                      |           |           |           |   |          
|Reconciling items:                               |                 |                                                       |                           |                      |           |           |           |   |           |           |           | 
|                                                 |                 | Investment in and advances to unconsolidated entities |                           |                      | 111,481   |           |           |   | 86,367    |           |           |  |  | 
|                                                 |                 | Cash and cash equivalents                             |                           |                      | 203,255   |           |           |   | 5,230     |           |           |  |  | 
|                                                 |                 | Restricted cash in tax-deferred exchange escrow       |                           |                      | 120,095   |           |           |   | 180,920   |           |           |  |  | 
|                                                 |                 | Other assets                                          |                           |                      | 173,717   |           |           |   | 298,980   |           |           |  |  | 
|                                                 |                 |                                                       |                           |                      |           |           |           |   |          
|                                                 |                 |                                                       | Consolidated total assets |                      | $         | 9,066,044 |           |   | $         | 8,921,695 |           |  |  |  | 
|                                                 |                 |                                                       |                           |                      |           |           |           |   |          





|     |             
|---- | ------------
|(12) | Income Taxes



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ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                        |                                              |                                 |         |         |      |   |         |          |   |   |         |         |  
|--------------------------------------- | -------------------------------------------- | ------------------------------- | ------- | ------- | ---- | - | ------- | -------- | - | - | ------- | ------- | -
|                                        |                                              | For the Year Ended December 31, |        
|                                        |                                              |                                 |        
|                                        |                                              | 2004                            |         |         | 2003 |   |         | 2002     |  
|                                        |                                              |                                 |         |         |      |   |         |          |  
|                                        |                                              | (estimated)                     |        
|GAAP net earnings                       |                                              | $                               | 612,623 |         |      | $ | 494,191 |          |   | $ | 356,725 |        
|Book to tax differences:                |                                              |                                 |         |         |      |   |         |          |   |   |         |        
|                                        | Gain on sale of CES(1)                       |                                 |         |         |      |   |         |         |   |   |         | (43,623 | )
|                                        | Depreciation and amortization(2)             |                                 |         | 9,971   |      |   |         | (1,513   | ) |   |         | (22,348 | )
|                                        | Gain or loss from capital transactions(3)    |                                 |         | (67,609 | )    |   |         | (124,390 | ) |   |         | (25,685 | )
|                                        | Deferred compensation and gain contingencies |                                 |         | 3,177   |      |   |         | 859      |   |   |         | 17,323  |  
|                                        | Merger expenses                              |                                 |         |        |      |   |         |         |   |   |         |        |  
|                                        | Other, net                                   |                                 |         | (9,254  | )    |   |         | 11,704   |   |   |         | 3,400   |  
|                                        |                                              |                                 |         |         |      |   |         |          |  
|Taxable income, including capital gains |                                              | $                               | 548,908 |         |      | $ | 380,851 |          |   | $ | 285,792 |        
|                                        |                                              |                                 |         |         |      |   |         |          |  






|    |                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In December 2002, CES was sold to a third party. See Note 4
    for details.                                                                                                                                                                                                                                                                                                              
|   
|(2) | We use accelerated depreciable lives for tax purposes. This
    change resulted in higher depreciation expense on newly acquired
    assets for tax purposes relative to GAAP. This was partially
    offset by the Smith Merger in 2001 as GAAP depreciation expense
    for the Smith assets was based on fair value and tax
    depreciation was based on a lower historical tax basis.



|                                       |                     |                                 |         |         |      |   |         |         |  |   |         |         | 
|-------------------------------------- | ------------------- | ------------------------------- | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                       |                     | For the Year Ended December 31, |        
|                                       |                     |                                 |        
|                                       |                     | 2004                            |         |         | 2003 |   |         | 2002    | 
|                                       |                     |                                 |         |         |      |   |         |         | 
|Distributions to Archstone-Smith Trust |                     | $                               | 545,586 |         |      | $ | 340,819 |         |  | $ | 334,316 |        
|Distributions to unitholders           |                     |                                 | 68,311  |         |      |   | 47,489  |         |  |   | 45,165  |        
|                                       |                     |                                 |         |         |      |   |         |         | 
|                                       | Total Distributions |                                 | $       | 613,897 |      |   | $       | 388,308 |  |   | $       | 379,481 | 
|                                       |                     |                                 |         |         |      |   |         |         | 






|    |                                                                
|--- | ---------------------------------------------------------------
|(1) | Includes distribution of all ordinary income and capital gains.



|                 |  |                                 |     |   |      |  |     |      |  |  |     |  
|---------------- |  | ------------------------------- | --- | - | ---- |  | --- | ---- |  |  | --- | -
|                 |  | For the Year Ended December 31, |    
|                 |  |                                 |    
|                 |  | 2004                            |     |   | 2003 |  |     | 2002 | 
|                 |  |                                 |     |   |      |  |     |      | 
|Ordinary income  |  |                                 | 46  | % |      |  | 45  | %    |  |  | 78  | %
|Capital gains(1) |  |                                 | 54  | % |      |  | 55  | %    |  |  | 22  | %
|                 |  |                                 |     |   |      |  |     |      | 
|                 |  |                                 | 100 | % |      |  | 100 | %    |  |  | 100 | %
|                 |  |                                 |     |   |      |  |     |      | 






|    |                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------
|(1) | Includes 22.8%, 6.2% and 22.0% of unrecaptured section 1250
    gains in 2004, 2003, and 2002, respectively.

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ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                             |  |                                 |        |   |      |   |        |      |  |   |        | 
|---------------------------- |  | ------------------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | 
|                             |  | For the Year Ended December 31, |       
|                             |  |                                 |       
|                             |  | 2004                            |        |   | 2003 |   |        | 2002 | 
|                             |  |                                 |        |   |      |   |        |      | 
|Income tax expense (benefit) |  |                                 |        |   |      |   |        |      |  |   |        | 
|Current                      |  | $                               | 20,119 |   |      | $ | 16,645 |      |  | $ | 11,046 | 
|Deferred                     |  |                                 | (1,314 | ) |      |   | (873   | )    |  |   | 1,375  | 
|                             |  |                                 |        |   |      |   |        |      | 
|                             |  |                                 | 18,805 |   |      |   | 15,772 |      |  |   | 12,421 | 
|                             |  |                                 |        |   |      |   |        |      | 



|                                                              |  |                                 |        |  |      |   |        |      |  |   |        | 
|------------------------------------------------------------- |  | ------------------------------- | ------ |  | ---- | - | ------ | ---- |  | - | ------ | 
|                                                              |  | For the Year Ended December 31, |       
|                                                              |  |                                 |       
|                                                              |  | 2004                            |        |  | 2003 |   |        | 2002 | 
|                                                              |  |                                 |        |  |      |   |        |      | 
|Computed expected tax expense                                 |  | $                               | 17,801 |  |      | $ | 15,016 |      |  | $ | 11,238 | 
|Increase in income taxes resulting from state taxes and other |  |                                 | 1,004  |  |      |   | 756    |      |  |   | 1,183  | 
|                                                              |  |                                 |        |  |      |   |        |      | 
|                                                              |  |                                 | 18,805 |  |      |   | 15,772 |      |  |   | 12,421 | 
|                                                              |  |                                 |        |  |      |   |        |      | 



|                          |                                                   |                                    |   |       |       |  |   |       |       |  
|------------------------- | ------------------------------------------------- | ---------------------------------- | - | ----- | ----- |  | - | ----- | ----- | -
|                          |                                                   | Year Ended                         |  
|                          |                                                   | December 31,                       |  
|                          |                                                   |                                    |  
|                          |                                                   | 2004                               |   |       | 2003  | 
|                          |                                                   |                                    |   |       |       | 
|Deferred tax assets:      |                                                   |                                    |   |       |       |  |   |      
|                          | Earnings from unconsolidated real estate entities |                                    | $ |      |       |  | $ | 476   |      
|                          | Deferred compensation                             |                                    |   | 2,920 |       |  |   | 22    |      
|                          | Reserves                                          |                                    |   | 378   |       |  |   | 524   |      
|                          | Other                                             |                                    |   | 125   |       |  |   | 88    |      
|                          |                                                   |                                    |   |       |       | 
|                          |                                                   | Deferred tax assets                |   |       | 3,423 |  |   |       | 1,110 |  
|Deferred tax liabilities: |                                                   |                                    |   |       |       |  |   |      
|                          | Real estate, principally due to depreciation      |                                    |   | 351   |       |  |   | 1,517 |      
|                          | Earnings from unconsolidated real estate entities |                                    |   | 2,164 |       |  |   |      |      
|                          |                                                   |                                    |   |       |       | 
|                          |                                                   | Deferred tax liabilities           |   |       | 2,515 |  |   |       | 1,517 |  
|                          |                                                   |                                    |   |       |       | 
|                          |                                                   | Net deferred tax asset (liability) |   | $     | 908   |  |   | $     | (407  | )
|                          |                                                   |                                    |   |       |       | 



|     |                              
|---- | -----------------------------
|(13) | Commitments and Contingencies



| |            
| | -----------
| | Commitments



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ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                       |       |   |         |         | 
|---------------------- | ----- | - | ------- | ------- | 
|2005                   |       | $ | 4,117   |        
|2006                   |       |   | 4,128   |        
|2007                   |       |   | 4,167   |        
|2008                   |       |   | 4,179   |        
|2009                   |       |   | 4,220   |        
|Thereafter (2010-2095) |       |   | 344,095 |        
|                       |       |   |        
|                       | Total |   | $       | 364,906 | 
|                       |       |   |        





| |                                
| | -------------------------------
| | Guarantees and Indemnifications









| |                             
| | ----------------------------
| | Litigation and Contingencies





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ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)














|     |                                   
|---- | ----------------------------------
|(14) | Supplemental Cash Flow Information





| |   |                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Issued $10.8, $47.6 and $8.7 million of A-1 Common Units as
    partial consideration for properties acquired during 2004, 2003
    and 2002, respectively;                                                                    
|
| |  | Issued $4.5 million of A-2 Common Units as partial
    consideration for real estate during 2004.                                                                                                                              
|
| |  | Holders of Series K Preferred Units and Series L
    Preferred Units converted $25.0 million each of their units
    into Common Shares during 2004;                                                                           
|
| |  | Holders of Series H Preferred Units converted
    $71.5 million of their units into Common Units during 2003;                                                                                                                  
|
| |  | Redeemed $47.9 million, $25.5 million and
    $41.7 million A-1 Common Units for Common Shares during
    2004, 2003 and 2002, respectively;                                                                                   
|
| |  | Holders of Series J Preferred Units converted
    $25 million of their units into Common Shares during 2002;                                                                                                                   
|
| |  | Recorded an accrual related to moisture infiltration and
    resulting mold remediation for $36.1 million and
    $11.3 million at one of our high-rise properties in
    Southeast Florida during 2003 and 2002, respectively;

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ARCHSTONE-SMITH OPERATING TRUST


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |   |                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Assumed mortgage debt of $113.6 million, $55.4 million
    and $195.6 million during 2004, 2003 and 2002,
    respectively, in connection with the acquisition of apartment
    communities;
|
| |  | Holders of Series A Preferred Units converted
    $71.9 million and $5.7 million of their units into
    Common Shares during 2003 and 2002, respectively.                                  



|     |                           
|---- | --------------------------
|(15) | Related Party Transactions

Related Party Transactions
















|     |                  
|---- | -----------------
|(16) | Subsequent Events





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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


ON SUPPLEMENTARY INFORMATION










Consolidation of
Variable Interest Entities




| |             
| | ------------
| | /s/ KPMG LLP





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ARCHSTONE-SMITH OPERATING TRUST





SCHEDULE III


REAL ESTATE AND ACCUMULATED DEPRECIATION


December 31, 2004


(Dollar amounts in thousands)


|                                                                   |                                    |       |        |        |         |                       |           |         |             |  |              |               |  |             |           |           |  |  |           |         | 
|------------------------------------------------------------------ | ---------------------------------- | ----- | ------ | ------ | ------- | --------------------- | --------- | ------- | ----------- |  | ------------ | ------------- |  | ----------- | --------- | --------- |  |  | --------- | ------- | 
|                                                                   |                                    |       |        |        |         | Initial Cost to       |           |         |            
|                                                                   |                                    |       |        |        |         | Archstone-Smith Trust |           |         | Costs       | 
|                                                                   |                                    |       |        |        |         |                       |           |         | Capitalized | 
|                                                                   |                                    |       |        | Encum- |         |                       |           |         | Buildings & |  |              | Subsequent to | 
|                                                                   |                                    | Units |        |        | brances |                       |           | Land    |             |  | Improvements |               |  | Acquisition |          
|                                                                   |                                    |       |        |        |         |                       |           |         |             |  |              |               |  |             |          
|Apartment Communities:                                             |                                    |       |        |        |         |                       |           |         |             |  |              |               |  |             |           |           |  |  |           |        
|Garden Communities:                                                |                                    |       |        |        |         |                       |           |         |             |  |              |               |  |             |           |           |  |  |           |        
|                                                                   | Atlanta, Georgia                   |       |        | 2,459  |         |                       |           | 43,157  |             |  |              | 26,308        |  |             |           | 149,077   |  |  |           | 28,439  | 
|                                                                   | Austin, Texas                      |       |        | 1,446  |         |                       |           | 10,980  |             |  |              | 6,828         |  |             |           | 26,791    |  |  |           | 55,626  | 
|                                                                   | Boston, Massachusetts              |       |        | 1,338  |         |                       |           | 163,035 |             |  |              | 68,664        |  |             |           | 49,330    |  |  |           | 129,726 | 
|                                                                   | Chicago, Illinois                  |       |        | 1,313  |         |                       |           | 41,022  |             |  |              | 85,603        |  |             |           | 50,545    |  |  |           | 8,827   | 
|                                                                   | Dallas, Texas                      |       |        | 1,364  |         |                       |           |        |             |  |              | 9,906         |  |             |           | 52,375    |  |  |           | 19,556  | 
|                                                                   | Denver, Colorado                   |       |        | 2,299  |         |                       |           | 8,500   |             |  |              | 22,646        |  |             |           | 78,313    |  |  |           | 103,328 | 
|                                                                   | Houston, Texas                     |       |        | 1,783  |         |                       |           | 33,233  |             |  |              | 16,393        |  |             |           | 32,786    |  |  |           | 68,643  | 
|                                                                   | Inland Empire, California          |       |        | 1,594  |         |                       |           | 16,659  |             |  |              | 12,663        |  |             |           | 71,771    |  |  |           | 13,810  | 
|                                                                   | Long Island, New York              |       |        | 396    |         |                       |           | 78,000  |             |  |              |              |  |             |           |          |  |  |           | 58,462  | 
|                                                                   | Los Angeles, California            |       |        | 5,476  |         |                       |           | 100,532 |             |  |              | 243,986       |  |             |           | 348,589   |  |  |           | 404,613 | 
|                                                                   | Orange County, California          |       |        | 1,647  |         |                       |           | 30,690  |             |  |              | 25,612        |  |             |           | 46,134    |  |  |           | 109,318 | 
|                                                                   | Orlando, Florida                   |       |        | 312    |         |                       |           |        |             |  |              | 3,110         |  |             |           | 17,620    |  |  |           | 976     | 
|                                                                   | Phoenix, Arizona                   |       |        | 876    |         |                       |           |        |             |  |              | 7,202         |  |             |           | 93        |  |  |           | 46,585  | 
|                                                                   | Portland, Oregon                   |       |        | 228    |         |                       |           |        |             |  |              | 851           |  |             |           |          |  |  |           | 12,906  | 
|                                                                   | Raleigh, North Carolina            |       |        | 1,324  |         |                       |           | 13,588  |             |  |              | 13,499        |  |             |           | 76,490    |  |  |           | 7,771   | 
|                                                                   | San Diego, California              |       |        | 3,406  |         |                       |           | 90,036  |             |  |              | 51,413        |  |             |           | 115,328   |  |  |           | 242,192 | 
|                                                                   | San Francisco, California          |       |        | 5,100  |         |                       |           | 82,376  |             |  |              | 175,641       |  |             |           | 267,152   |  |  |           | 255,726 | 
|                                                                   | Seattle, Washington                |       |        | 3,208  |         |                       |           | 60,528  |             |  |              | 49,491        |  |             |           | 132,368   |  |  |           | 105,549 | 
|                                                                   | Southeast, Florida                 |       |        | 3,342  |         |                       |           | 10,758  |             |  |              | 95,286        |  |             |           | 273,155   |  |  |           | 42,343  | 
|                                                                   | Stamford, Connecticut              |       |        | 160    |         |                       |           |        |             |  |              | 5,775         |  |             |           | 1,225     |  |  |           | 29,487  | 
|                                                                   | Ventura County, California         |       |        | 716    |         |                       |           |        |             |  |              | 12,095        |  |             |           | 31,024    |  |  |           | 37,323  | 
|                                                                   | Washington, D.C. Metropolitan Area |       |        | 8,847  |         |                       |           | 186,093 |             |  |              | 236,228       |  |             |           | 506,050   |  |  |           | 399,149 | 
|                                                                   | West Coast, Florida                |       |        | 746    |         |                       |           |        |             |  |              | 5,430         |  |             |           | 30,766    |  |  |           | 8,177   | 
|                                                                   |                                    |       |        |        |         |                       |           |         |             |  |              |               |  |             |          
|Garden Communities Total                                           |                                    |       | 49,380 |        |         |                       | 969,187   |         |             |  | 1,174,630    |               |  |             | 2,356,982 |           |  |  | 2,188,532 |        
|                                                                   |                                    |       |        |        |         |                       |           |         |             |  |              |               |  |             |          
|High-Rise Properties:                                              |                                    |       |        |        |         |                       |           |         |             |  |              |               |  |             |           |           |  |  |           |        
|                                                                   | Boston, Massachusetts              |       |        | 1,113  |         |                       |           | 60,692  |             |  |              | 41,345        |  |             |           | 121,881   |  |  |           | 72,647  | 
|                                                                   | Chicago, Illinois                  |       |        | 3,025  |         |                       |           | 130,142 |             |  |              | 118,828       |  |             |           | 373,044   |  |  |           | 24,884  | 
|                                                                   | Southeast Florida                  |       |        | 240    |         |                       |           | 17,775  |             |  |              |              |  |             |           | 26,515    |  |  |           | 1,474   | 
|                                                                   | NYC Metropolitan Area              |       |        | 1,062  |         |                       |           | 197,302 |             |  |              | 84,522        |  |             |           | 181,256   |  |  |           | 194,404 | 
|                                                                   | Washington, D.C. Metropolitan Area |       |        | 11,399 |         |                       |           | 656,403 |             |  |              | 511,659       |  |             |           | 1,191,546 |  |  |           | 370,099 | 
|                                                                   |                                    |       |        |        |         |                       |           |         |             |  |              |               |  |             |          
|High-Rise Properties Total                                         |                                    |       | 16,839 |        |         |                       | 1,062,314 |         |             |  | 756,354      |               |  |             | 1,894,242 |           |  |  | 663,508   |        
|                                                                   |                                    |       |        |        |         |                       |           |         |             |  |              |               |  |             |          
|Total Apartment Communities  Operating and Under
    Construction |                                    |       | 66,219 |        |         |                       | 2,031,501 |         |             |  | 1,930,984    |               |  |             | 4,251,224 |           |  |  | 2,852,040 |        
|                                                                   |                                    |       |        |        |         |                       |           |         |             |  |              |               |  |             |          
|Other:                                                             |                                    |       |        |        |         |                       |           |         |             |  |              |               |  |             |           |           |  |  |           |        
|Development communities In Planning and Owned                      |                                    |       | 2,953  |        |         |                       |           |         |             |  |              |               |  |             |           |           |  |  |           |        
|Hotel, retail and other assets                                     |                                    |       |        |        |         |                       |           |         |             |  |              |               |  |             |           |           |  |  |           |        
|Total real estate assets                                           |                                    |       | 69,172 |        |         |                       |           |         |             |  |              |               |  |             |           |           |  |  |           |        

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                                   |                                    |                                           |           |             |              |  |           |           |             |  |              |              |  |      |          |          |               |  |  |           |  |  |  |           | 
|------------------------------------------------------------------ | ---------------------------------- | ----------------------------------------- | --------- | ----------- | ------------ |  | --------- | --------- | ----------- |  | ------------ | ------------ |  | ---- | -------- | -------- | ------------- |  |  | --------- |  |  |  | --------- | 
|                                                                   |                                    | Gross Amount at Which Carried at Year End |           |             |              |  |           |           |            
|                                                                   |                                    |                                           |           |             |              |  |           |           |            
|                                                                   |                                    |                                           |           | Buildings & |              |  |           |           | Accumulated |  |              | Construction |  |      |         
|                                                                   |                                    | Land                                      |           |             | Improvements |  |           | Totals    |             |  | Depreciation |              |  | Year |          |          | Year Acquired | 
|                                                                   |                                    |                                           |           |             |              |  |           |           |             |  |              |              |  |      |          |          |               | 
|Apartment Communities:                                             |                                    |                                           |           |             |              |  |           |           |             |  |              |              |  |      |          |          |               |  |  |           |  |  |  |          
|Garden Communities:                                                |                                    |                                           |           |             |              |  |           |           |             |  |              |              |  |      |          |          |               |  |  |           |  |  |  |          
|                                                                   | Atlanta, Georgia                   |                                           |           | 35,674      |              |  |           | 168,150   |             |  |              | 203,824      |  |      |          | (43,525  | )             |  |  | 1978-1999 |  |  |  | 1998-2001 | 
|                                                                   | Austin, Texas                      |                                           |           | 15,312      |              |  |           | 73,933    |             |  |              | 89,245       |  |      |          | (13,624  | )             |  |  | 1979-1996 |  |  |  | 1993      | 
|                                                                   | Boston, Massachusetts              |                                           |           | 36,349      |              |  |           | 211,371   |             |  |              | 247,720      |  |      |          | (25,672  | )             |  |  | 1975-2002 |  |  |  | 1999-2002 | 
|                                                                   | Chicago, Illinois                  |                                           |           | 26,723      |              |  |           | 118,252   |             |  |              | 144,975      |  |      |          | (21,201  | )             |  |  | 1968-1988 |  |  |  | 1999-2001 | 
|                                                                   | Dallas, Texas                      |                                           |           | 11,150      |              |  |           | 70,687    |             |  |              | 81,837       |  |      |          | (13,212  | )             |  |  | 1983-2000 |  |  |  | 1993-2004 | 
|                                                                   | Denver, Colorado                   |                                           |           | 25,024      |              |  |           | 179,263   |             |  |              | 204,287      |  |      |          | (25,143  | )             |  |  | 1981-2002 |  |  |  | 1992-2004 | 
|                                                                   | Houston, Texas                     |                                           |           | 11,205      |              |  |           | 106,617   |             |  |              | 117,822      |  |      |          | (18,227  | )             |  |  | 1972-2003 |  |  |  | 1994-2004 | 
|                                                                   | Inland Empire, California          |                                           |           | 14,464      |              |  |           | 83,780    |             |  |              | 98,244       |  |      |          | (19,900  | )             |  |  | 1980-1990 |  |  |  | 1995-2004 | 
|                                                                   | Long Island, New York              |                                           |           |            |              |  |           | 58,462    |             |  |              | 58,462       |  |      |          |         |               |  |  | 2003-2004 |  |  |  | 2001      | 
|                                                                   | Los Angeles, California            |                                           |           | 195,963     |              |  |           | 801,225   |             |  |              | 997,188      |  |      |          | (28,427  | )             |  |  | 1973-2004 |  |  |  | 1998-2004 | 
|                                                                   | Orange County, California          |                                           |           | 26,379      |              |  |           | 154,685   |             |  |              | 181,064      |  |      |          | (27,389  | )             |  |  | 1986-2002 |  |  |  | 1996-1999 | 
|                                                                   | Orlando, Florida                   |                                           |           | 3,740       |              |  |           | 17,966    |             |  |              | 21,706       |  |      |          | (4,614   | )             |  |  | 1988      |  |  |  | 1998      | 
|                                                                   | Phoenix, Arizona                   |                                           |           | 8,476       |              |  |           | 45,404    |             |  |              | 53,880       |  |      |          | (11,052  | )             |  |  | 1980-2001 |  |  |  | 1993-1997 | 
|                                                                   | Portland, Oregon                   |                                           |           | 3,256       |              |  |           | 10,501    |             |  |              | 13,757       |  |      |          | (3,093   | )             |  |  | 1985-1998 |  |  |  | 1995-1996 | 
|                                                                   | Raleigh, North Carolina            |                                           |           | 14,871      |              |  |           | 82,889    |             |  |              | 97,760       |  |      |          | (22,590  | )             |  |  | 1985-1999 |  |  |  | 1998      | 
|                                                                   | San Diego, California              |                                           |           | 57,345      |              |  |           | 351,588   |             |  |              | 408,933      |  |      |          | (40,798  | )             |  |  | 1985-2001 |  |  |  | 1996-1998 | 
|                                                                   | San Francisco, California          |                                           |           | 128,346     |              |  |           | 570,173   |             |  |              | 698,519      |  |      |          | (91,028  | )             |  |  | 1965-2002 |  |  |  | 1995-2000 | 
|                                                                   | Seattle, Washington                |                                           |           | 58,307      |              |  |           | 229,101   |             |  |              | 287,408      |  |      |          | (43,601  | )             |  |  | 1986-2002 |  |  |  | 1995-2004 | 
|                                                                   | Southeast, Florida                 |                                           |           | 100,171     |              |  |           | 310,613   |             |  |              | 410,784      |  |      |          | (14,797  | )             |  |  | 1986-2004 |  |  |  | 1998-2004 | 
|                                                                   | Stamford, Connecticut              |                                           |           | 6,312       |              |  |           | 30,175    |             |  |              | 36,487       |  |      |          | (1,927   | )             |  |  | 2000-2002 |  |  |  | 2000      | 
|                                                                   | Ventura County, California         |                                           |           | 12,474      |              |  |           | 67,968    |             |  |              | 80,442       |  |      |          | (5,816   | )             |  |  | 1985-2002 |  |  |  | 1997-2004 | 
|                                                                   | Washington, D.C. Metropolitan Area |                                           |           | 205,543     |              |  |           | 935,884   |             |  |              | 1,141,427    |  |      |          | (78,232  | )             |  |  | 1941-2002 |  |  |  | 1998-2002 | 
|                                                                   | West Coast, Florida                |                                           |           | 5,783       |              |  |           | 38,590    |             |  |              | 44,373       |  |      |          | (9,787   | )             |  |  | 1982-1988 |  |  |  | 1998      | 
|                                                                   |                                    |                                           |           |             |              |  |           |           |             |  |              |              |  |      |          |          |               | 
|Garden Communities Total                                           |                                    |                                           | 1,002,867 |             |              |  | 4,717,277 |           |             |  | 5,720,144    |              |  |      | (563,655 | )        |               |  |  |           |  |  |  |          
|                                                                   |                                    |                                           |           |             |              |  |           |           |             |  |              |              |  |      |          |          |               | 
|High-Rise Properties:                                              |                                    |                                           |           |             |              |  |           |           |             |  |              |              |  |      |          |          |               |  |  |           |  |  |  |          
|                                                                   | Boston, Massachusetts              |                                           |           | 41,730      |              |  |           | 194,143   |             |  |              | 235,873      |  |      |          | (12,610  | )             |  |  | 1986-1998 |  |  |  | 2001      | 
|                                                                   | Chicago, Illinois                  |                                           |           | 80,003      |              |  |           | 436,753   |             |  |              | 516,756      |  |      |          | (39,546  | )             |  |  | 1969-2002 |  |  |  | 2001      | 
|                                                                   | Southeast Florida                  |                                           |           | 189         |              |  |           | 27,800    |             |  |              | 27,989       |  |      |          | (2,574   | )             |  |  | 1964-2000 |  |  |  | 2001      | 
|                                                                   | NYC Metropolitan Area              |                                           |           | 149,452     |              |  |           | 310,730   |             |  |              | 460,182      |  |      |          | (12,849  | )             |  |  | 2000-2002 |  |  |  | 2002-2004 | 
|                                                                   | Washington, D.C. Metropolitan Area |                                           |           | 551,025     |              |  |           | 1,522,279 |             |  |              | 2,073,304    |  |      |          | (125,927 | )             |  |  | 1923-2003 |  |  |  | 2001-2004 | 
|                                                                   |                                    |                                           |           |             |              |  |           |           |             |  |              |              |  |      |          |          |               | 
|High-Rise Properties Total                                         |                                    |                                           | 822,399   |             |              |  | 2,491,705 |           |             |  | 3,314,104    |              |  |      | (193,506 | )        |               |  |  |           |  |  |  |          
|                                                                   |                                    |                                           |           |             |              |  |           |           |             |  |              |              |  |      |          |          |               | 
|Total Apartment Communities  Operating and Under
    Construction |                                    |                                           | 1,825,266 |             |              |  | 7,208,982 |           |             |  | 9,034,248    |              |  |      | (757,161 | )        |               |  |  |           |  |  |  |          
|                                                                   |                                    |                                           |           |             |              |  |           |           |             |  |              |              |  |      |          |          |               | 
|Other:                                                             |                                    |                                           |           |             |              |  |           |           |             |  |              |              |  |      |          |          |               |  |  |           |  |  |  |          
|Development communities In Planning and Owned                      |                                    |                                           |           |             |              |  |           |           |             |  | 136,593      |              |  |      |          |          |               |  |  |           |  |  |  |          
|Hotel, retail and other assets                                     |                                    |                                           |           |             |              |  |           |           |             |  | 50,197       |              |  |      | (6,381   | )        |               |  |  |           |  |  |  |          
|                                                                   |                                    |                                           |           |             |              |  |           |           |             |  |              |              |  |      |          |          |               | 
|Total real estate assets                                           |                                    |                                           |           |             |              |  |           |           |             |  | 9,221,038    |              |  |      | (763,542 | )        |               |  |  |           |  |  |  |          
|                                                                   |                                    |                                           |           |             |              |  |           |           |             |  |              |              |  |      |          |          |               | 

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SCHEDULE III




|                                 |                                                          |                         |           |            |      |   |           |            |   |   |           |          |  
|-------------------------------- | -------------------------------------------------------- | ----------------------- | --------- | ---------- | ---- | - | --------- | ---------- | - | - | --------- | -------- | -
|                                 |                                                          | Year Ended December 31, |          
|                                 |                                                          |                         |          
|Carrying Amounts                 |                                                          | 2004                    |           |            | 2003 |   |           | 2002       |  
|                                 |                                                          |                         |           |            |      |   |           |            |  
|Balance at January 1             |                                                          | $                       | 8,999,180 |            |      | $ | 9,297,735 |            |   | $ | 8,612,213 |         
|                                 |                                                          |                         |           |            |      |   |           |            |  
|Apartment communities:           |                                                          |                         |           |            |      |   |           |            |   |   |           |         
|                                 | Apartment properties acquired in the Smith Merger        |                         |           |           |      |   |           |           |   |   |           | 31,877   |  
|                                 | Acquisition-related expenditures                         |                         |           | 1,080,639  |      |   |           | 573,768    |   |   |           | 539,652  |  
|                                 | Redevelopment expenditures                               |                         |           | 40,999     |      |   |           | 69,649     |   |   |           | 152,428  |  
|                                 | Recurring capital expenditures                           |                         |           | 50,147     |      |   |           | 48,960     |   |   |           | 40,683   |  
|                                 | Development expenditures, excluding land acquisitions    |                         |           | 333,782    |      |   |           | 91,430     |   |   |           | 247,044  |  
|                                 | Acquisition and improvement of land for development      |                         |           | 175,470    |      |   |           | 125,581    |   |   |           | 107,727  |  
|                                 | Dispositions                                             |                         |           | (1,460,046 | )    |   |           | (1,209,956 | ) |   |           | (439,847 | )
|                                 | Provision for possible loss on investments               |                         |           |           |      |   |           | (3,714     | ) |   |           | (2,611   | )
|                                 |                                                          |                         |           |            |      |   |           |            |  
|Net apartment community activity |                                                          | $                       | 220,991   |            |      | $ | (304,282  | )          |   | $ | 676,953   |         
|                                 |                                                          |                         |           |            |      |   |           |            |  
|Other:                           |                                                          |                         |           |            |      |   |           |            |   |   |           |         
|                                 | Disposition of retail asset acquired in the Smith Merger |                         |           |           |      |   |           |           |   |   |           | (5,990   | )
|                                 | Change in other real estate assets                       |                         |           | 867        |      |   |           | 5,727      |   |   |           | 14,559   |  
|                                 |                                                          |                         |           |            |      |   |           |            |  
|Net other activity               |                                                          |                         | 867       |            |      |   | 5,727     |            |   |   | 8,569     |         
|                                 |                                                          |                         |           |            |      |   |           |            |  
|Balance at December 31           |                                                          | $                       | 9,221,038 |            |      | $ | 8,999,180 |            |   | $ | 9,297,735 |         
|                                 |                                                          |                         |           |            |      |   |           |            |  

|                                                     |  |                         |         |   |      |   |          |      |  |   |         |  
|---------------------------------------------------- |  | ----------------------- | ------- | - | ---- | - | -------- | ---- |  | - | ------- | -
|                                                     |  | Year Ended December 31, |        
|                                                     |  |                         |        
|Accumulated Depreciation                             |  | 2004                    |         |   | 2003 |   |          | 2002 | 
|                                                     |  |                         |         |   |      |   |          |      | 
|Balance at January 1                                 |  | $                       | 648,982 |   |      | $ | 578,855  |      |  | $ | 412,894 |  
|Depreciation for the year(1)                         |  |                         | 203,639 |   |      |   | 200,356  |      |  |   | 206,625 |  
|Accumulated depreciation on real estate dispositions |  |                         | (89,079 | ) |      |   | (130,229 | )    |  |   | (40,563 | )
|Other                                                |  |                         |        |   |      |   |         |      |  |   | (101    | )
|                                                     |  |                         |         |   |      |   |          |      | 
|Balance at December 31                               |  | $                       | 763,542 |   |      | $ | 648,982  |      |  | $ | 578,855 |  
|                                                     |  |                         |         |   |      |   |          |      | 






|    |                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Depreciation is net of $16.4 million and $3.0 million
    for our intangible asset related to the value of leases in place
    for real estate assets acquired in 2004 and 2003, respectively.

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SCHEDULE IV


Archstone-Smith Operating Trust


Mortgage Loans on Real Estate


12/31/04


(Dollar amounts in thousands)


|                            |  |                |  |          |      |       |         |      |            |  |             |           |     |           |    |                |             |              |  |            |       |  |  |   |       |  |  |  |   | 
|--------------------------- |  | -------------- |  | -------- | ---- | ----- | ------- | ---- | ---------- |  | ----------- | --------- | --- | --------- | -- | -------------- | ----------- | ------------ |  | ---------- | ----- |  |  | - | ----- |  |  |  | - | 
|                            |  |                |  |          |      |       |         |      |            |  |             |           |     |           |    | Principal      |            
|                            |  |                |  |          |      |       |         |      |            |  |             |           |     |           |    | Amount of Loan |            
|                            |  |                |  |          |      |       |         |      |            |  |             |           |     | Carrying  |    |                | Subject to  |             
|                            |  |                |  |          |      | Final |         |      | Periodic   |  |             |           |     | Face      |    |                | Amount      |              |  | Delinquent |      
|                            |  |                |  | Maturity |      |       | Payment |      |            |  |             | Amount of |     |           | of |                |             | Principal or | 
|Description                 |  | Interest Rate  |  |          | Date |       |         | Term |            |  | Prior Liens |           |     | Mortgages |    |                | Mortgages   |              |  | Interest   |      
|                            |  |                |  |          |      |       |         |      |            |  |             |           |     |           |    |                |             |              |  |            |      
|Mezzanine Construction Loan |  | Condominium CA |  |          | 18%  |       |         |      | 11/28/2006 |  |             |           | (1) |           |    |                | Senior Loan |              |  | $          | 9,900 |  |  | $ | 8,729 |  |  |  |  | 

|                       |                          |      |       |       |      |   |   |   | 
|---------------------- | ------------------------ | ---- | ----- | ----- | ---- | - | - | - | 
|                       |                          | 2004 |       |       | 2003
|                       |                          |      |       |       |     
|Balance at January 1   |                          |      |      |       |      |   |  |  
|                       | New Mortgage Loans       |      | $     | 8,650 |      |   | $ |  | 
|                       | Other(2)                 |      |       | 79    |      |   |   |  | 
|                       | Collections of Principal |      |       |      |      |   |   |  | 
|                       |                          |      |       |       |      |  
|Balance at December 31 |                          | $    | 8,729 |       |      | $ |  |  
|                       |                          |      |       |       |      |  






|    |                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Outstanding principal plus accrued and unpaid interest is due on
    the maturity date. Partial prepayment is required to the extent
    the borrower receives proceeds from the sale of constructed
    units in accordance with contracted terms.
|   
|(2) | A portion of the accrued interest amount is added to the
    principal amount on a monthly basis.                                                                                                                                                  

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##### Table of Contents



ARCHSTONE-SMITH OPERATING TRUST





SIGNATURES






| |                                    
| | -----------------------------------
| | Archstone-Smith Operating
    Trust



| |     |                    
| | --- | -------------------
| | By: | /s/ R. Scot Sellers

| |                          
| | -------------------------
| |                          
| | R. Scot Sellers          
| | Chairman of the Board and
| | Chief Executive Officer  



|                                                           |  |                                                                                        |  |                   |  |                  
|---------------------------------------------------------- |  | -------------------------------------------------------------------------------------- |  | ----------------- |  | -----------------
|Signature                                                  |  | Title                                                                                  |  | Date             
|                                                           |  |                                                                                        |  |                  
|                                                          
|/s/ R. Scot SellersR.
    Scot Sellers                     |  | Chief Executive Officer (principal executive officer)                                  |  | February 28, 2005
|                                                          
|/s/ Charles E. Mueller,
    Jr.Charles
    E. Mueller, Jr. |  | Executive Vice President and Chief Financial Officer (principal
    financial officer) |  | February 28, 2005
|                                                          
|/s/ Mark A. SchumacherMark
    A. Schumacher               |  | Senior Vice President and Chief Accounting Officer (principal
    accounting officer)  |  | February 28, 2005
|                                                          
|Archstone-Smith Operating
    Trust                        |  |                                                                                        |  |                  
|By:                                                        |  | /s/ R. Scot SellersChief
    Executive Officer                                         |  | Trustee           |  | February 28, 2005

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##### Table of Contents






INDEX TO EXHIBITS




|       |    |     |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------ | -- | --- | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |    |     | Description
|       |    |     |            
|       | 3  | .1  |             | Amended and Restated Declaration of Trust of Archstone-Smith
    Operating Trust (incorporated by reference to Exhibit 4.3
    to the Archstone-Smith Trusts Current Report on
    Form 8-K filed with the SEC on November 1, 2001)                                                                                                                                                                                                                                                                                          
|       | 3  | .2  |             | Amended and Restated Bylaws of Archstone-Smith Operating Trust
    (incorporated by reference to Exhibit 4.4 to the
    Archstone-Smith Trusts Current Report on Form 8-K
    filed with the SEC on November 1, 2001)                                                                                                                                                                                                                                                                                                        
|       | 3  | .3  |             | Articles Supplementary for Series E Cumulative Redeemable
    Preferred Units of Beneficial Interest of Archstone-Smith
    Operating Trust (incorporated by reference to Exhibit 10.1
    of Archstone-Smiths Quarterly Report on Form 10-Q for
    the Quarter Ended September 30, 2002)                                                                                                                                                                                                                                   
|       | 3  | .4  |             | Articles Supplementary for Series F Cumulative Redeemable
    Preferred Units of Beneficial Interest of Archstone-Smith
    Operating Trust (incorporated by reference to Exhibit 10.2
    of Archstone-Smiths Quarterly Report on Form 10-Q for
    the Quarter Ended September 30, 2002)                                                                                                                                                                                                                                   
|       | 3  | .5  |             | Articles Supplementary for Series G Cumulative Redeemable
    Preferred Units of Beneficial Interest of Archstone-Smith
    Operating Trust (incorporated by reference to Exhibit 10.3
    of Archstone-Smiths Quarterly Report on Form 10-Q for
    the Quarter Ended September 30, 2002)                                                                                                                                                                                                                                   
|       | 3  | .6  |             | Articles Supplementary for Series M Preferred Unit of
    Beneficial Interest of Archstone-Smith Operating Trust
    (incorporated by reference to Exhibit 3.1 to the
    Archstone-Smith Trusts Current Report on Form 8-K
    filed with the SEC on December 16, 2004)                                                                                                                                                                                                                                                     
|       | 4  | .1  |             | Indenture, dated as of February 1, 1994, between
    Archstone-Smith Operating Trust (formerly Archstone Communities
    Trust) and Morgan Guaranty Trust Company of New York, as Trustee
    relating to Archstone-Smith Operating Trusts (formerly
    Archstone Communities Trust) unsecured senior debt securities
    (incorporated by reference to Exhibit 4.2 to
    Archstone-Smith Operating Trusts (formerly Archstone
    Communities Trust) Annual Report on Form 10-K for the year
    ended December 31, 1993)
|       | 4  | .2  |             | First Supplemental Indenture, dated February 2, 1994, among
    Archstone-Smith Operating Trust (formerly Archstone Communities
    Trust), Morgan Guaranty Trust Company of New York and State
    Street Bank and Trust Company, as successor Trustee
    (incorporated by reference to Exhibit 4.3 to
    Archstone-Smith Operating Trusts (formerly Archstone
    Communities Trust) Current Report on Form 8-K dated
    July 19, 1994)                                                                                 
|       | 4  | .3  |             | Indenture, dated as of August 14, 1997, between Security
    Capital Atlantic Incorporated and State Street Bank and Trust
    Company, as Trustee (incorporated by reference to
    Exhibit 4.8 to Security Capital Atlantic
    Incorporateds Registration Statement on Form S-11
    (File No. 333-30747))                                                                                                                                                                                                                
|       | 4  | .5  |             | Form of Archstone-Smith Trust common share ownership certificate
    (incorporated by reference to Exhibit 3.3 to
    Archstone-Smith Trusts Registration Statement on
    Form S-4 (File No. 333-63734))                                                                                                                                                                                                                                                                                                                    
|       | 4  | .10 |             | Form of Archstone-Smith Trust share certificate for
    Series I Preferred Units (incorporated by reference to
    Exhibit 3.8 to Archstone-Smith Trusts Registration
    Statement on Form S-4 (File No. 333-63734))                                                                                                                                                                                                                                                                                                        
|       | 10 | .1  |             | Amended and Restated Declaration of Trust of Archstone-Smith
    Trust (incorporated by reference to Exhibit 4.1 to the
    Archstone-Smith Trusts Current Report of Form 8-K
    filed with the SEC on November 1, 2001)                                                                                                                                                                                                                                                                                                    
|       | 10 | .2  |             | Amended and Restated Bylaws of Archstone-Smith Trust
    (incorporated by reference to Exhibit 4.2 to the
    Archstone-Smith Trusts Current Report on Form 8-K
    filed with the SEC on November 1, 2001)                                                                                                                                                                                                                                                                                                                  
|       | 10 | .8  |             | Archstone-Smith Trust 2001 Long-Term Incentive Plan
    (incorporated by reference to Exhibit 10.14 to
    Archstone-Smith Trusts Registration Statement on
    Form S-4 (File No. 333-63734))                                                                                                                                                                                                                                                                                                                               
|       | 10 | .9  |             | Archstone-Smith Deferred Compensation Plan (incorporated by
    reference to Exhibit 10.5 to Archstone-Smiths Annual
    Report on Form 10-K for the year ended December 31,
    2001)                                                                                                                                                                                                                                                                                                                                       

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##### Table of Contents



INDEX TO EXHIBITS  (Continued)


|       |    |     |             |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------ | -- | --- | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |    |     | Description
|       |    |     |            
|       | 10 | .10 |             | Amendment to Archstone-Smith Trust 2001 Long-Term Incentive Plan
    (incorporated by reference to Exhibit 10.1 of
    Archstone-Smith Trusts Annual Report on Form 10-Q for
    the Quarter Ended June 30, 2004)                                                                                                                                                                                                                  
|       | 10 | .11 |             | Form of Non-Qualified Share Option Agreement for Archstone-Smith
    Trust 2001 Long-Term Incentive Plan (incorporated by reference
    to Exhibit 10.1 of Archstone-Smith Trusts Annual
    Report on Form 10-Q for the Quarter Ended
    September 30, 2004)                                                                                                                                                                     
|       | 10 | .12 |             | Form of Restricted Share Unit Agreement for Archstone-Smith
    Trust 2001 Long-Term Incentive Plan (incorporated by reference
    to Exhibit 10.1 of Archstone-Smith Trusts Annual Report on
    Form 10-Q for the Quarter Ended September 30, 2004)                                                                                                                                                                              
|       | 10 | .13 |             | Form of Restricted Share Unit Agreement for Archstone-Smith
    Trust Equity Plan for Outside Trustees (incorporated by
    reference to Exhibit 10.1 of Archstone-Smith Trusts
    Annual Report on Form 10-Q for the Quarter Ended
    September 30, 2004)                                                                                                                                                                       
|       | 10 | .14 |             | Form of Indemnification Agreement entered into between
    Archstone-Smith Trust and each of its officers and Trustees
    (incorporated by reference to Exhibit 10.6 to
    Archstone-Smith Trusts Annual Report on From 10K for the
    year ended December 31, 2003)                                                                                                                                                            
|       | 10 | .15 |             | Form of Change in Control Agreement between Archstone-Smith
    Trust and certain of its officers (incorporated by reference to
    Exhibit 10.7 to Archstone-Smiths Annual Report on
    Form 10-K for the year ended December 31, 2002)                                                                                                                                                                                          
|       | 10 | .16 |             | Amended and Restated Credit Agreement, dated as of
    December 13, 2004, by and among Archstone-Smith Operating
    Trust, as borrower, and Archstone-Smith Trust as parent, and
    J.P. Morgan Chase Bank, as administrative agent, and Bank of
    America, N.A., and Wells Fargo Bank, N.A., as syndication
    agents, and Suntrust Bank and Commerzbank A.G., New York and
    Grand Cayman Branches, as documentation agents
|       | 10 | .17 |             | Archstone Dividend Reinvestment and Share Purchase Plan
    (incorporated by reference to the prospectus contained in
    Archstone-Smith Trusts Registration Statement on
    Form S-3 (No. 333-44639-01))                                                                                                                                                                                                                        
|       | 10 | .18 |             | Shareholders Agreement, dated as of October 31, 2001,
    by and among Archstone-Smith Trust, Archstone-Smith Operating
    Trust, Robert H. Smith and Robert P. Kogod (incorporated by
    reference to Exhibit 10.1 to Archstone-Smith Trusts
    Current Report on Form 8-K filed with the SEC on
    November 1, 2001)                                                                                                        
|       | 10 | .19 |             | Noncompetition Agreement by and among Charles E. Smith
    Residential Realty, Inc., Charles E. Smith Residential Realty
    L.P. and Robert P. Kogod and Robert H. Smith (incorporated by
    reference to Exhibit 10.1 of Charles E. Smith Residential
    Realty, Inc.s Annual Report on Form 10-K for the year
    ended December 31, 1994)                                                                                    
|       | 10 | .20 |             | Registration Rights and Lock-up Agreement (incorporated by
    reference to Exhibit 10.2 of Charles E. Smith Residential
    Realty, Inc.s Annual Report on Form 10-K for the year
    ended December 31, 1994)                                                                                                                                                                                                                    
|       | 10 | .21 |             | License Agreement between Charles E. Smith Management, Inc. and
    Charles E. Smith Residential Realty, Inc. (incorporated by
    reference to Exhibit 10.35 of Charles E. Smith Residential
    Realty, Inc.s Annual Report on Form 10-K for the year
    ended December 31, 1994)                                                                                                                                               
|       | 10 | .22 |             | License Agreement between Charles E. Smith Management, Inc. and
    Charles E. Smith Residential Realty L.P. (incorporated by
    reference to Exhibit 10.36 of Charles E. Smith Residential
    Realty, Inc.s Annual Report on Form 10-K for the year
    ended December 31, 1994)                                                                                                                                                
|       | 12 | .1  |             | Computation of Ratio of Earnings to Fixed Charges                                                                                                                                                                                                                                                                                                                                                                                   
|       | 12 | .2  |             | Computation of Ratio of Earnings to Combined Fixed Charges and
    Preferred Share Dividends                                                                                                                                                                                                                                                                                                                                        
|       | 15 | .1  |             | Consent of Independent Registered Public Accounting Firm                                                                                                                                                                                                                                                                                                                                                                            
|       | 21 |     |             | Subsidiaries of Archstone-Smith Operating Trust                                                                                                                                                                                                                                                                                                                                                                                     
|       | 31 | .1  |             | Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                              
|       | 31 | .2  |             | Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                              
|       | 32 | .1  |             | Certification of Chief Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                              

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##### Table of Contents



INDEX TO EXHIBITS  (Continued)


|       |    |    |             |                                                                                                                                                                                                                        
|------ | -- | -- | ----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |    |    | Description
|       |    |    |            
|       | 32 | .2 |             | Certification of Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                 
|       | 99 | .1 |             | Corporate Governance Guidelines (incorporated by reference to
    Exhibit 99.1 of Archstone-Smiths Quarterly Report on
    Form 10-Q for the Quarter Ended September 30, 2003)                                        
|       | 99 | .3 |             | Audit Committee Charter (incorporated by reference to
    Exhibit 99.3 of Archstone-Smiths Quarterly Report on
    Form 10-Q for the Quarter Ended September 30, 2003)                                                
|       | 99 | .4 |             | Management Development and Executive Compensation Committee
    Charter (incorporated by reference to Exhibit 99.4 of
    Archstone-Smiths Quarterly Report on Form 10-Q for
    the Quarter Ended September 30, 2003)
|       | 99 | .5 |             | Nominating and Corporate Governance Committee Charter
    (incorporated by reference to Exhibit 99.5 of
    Archstone-Smiths Quarterly Report on Form 10-Q for
    the Quarter Ended September 30, 2003)              

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