**Form 10-Q**

















**Associated Estates Realty Corporation**



|Ohio                                     | 34-1747603             
|---------------------------------------- | -----------------------
|(State or other jurisdiction of          | (I.R.S. Employer       
|incorporation or organization)           | Identification

Number)
|                                         |                        
|                                         |                        
|5025 Swetland Court, Richmond Hts., Ohio | 44143-1467             
|(Address of principal executive offices) | (Zip Code)             





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













**INDEX**

|**PART I  -  FINANCIAL INFORMATION**  | Page                                                        
|------------------------------------- | ------------------------------------------------------------
|                                      |                                                             
|ITEM 1                                | Consolidated Financial Statements (Unaudited)               
|                                      |                                                             
|                                      | Consolidated Balance Sheets as of                           
|                                      | March 31, 2005 and December 31, 2004                        
|                                      |                                                             
|                                      | Consolidated Statements of Operations for the three         
|                                      | month periods ended March 31, 2005 and 2004                 
|                                      |                                                             
|                                      | Consolidated Statement of Shareholders' Equity for the three
|                                      | month period ended March 31, 2005                           
|                                      |                                                             
|                                      | Consolidated Statements of Cash Flows for the three         
|                                      | month periods ended March 31, 2005 and 2004                 
|                                      |                                                             
|                                      | Notes to Consolidated Financial Statements                  
|                                      |                                                             
|ITEM 2                                | Management's Discussion and Analysis of Financial           
|                                      | Condition and Results of Operations                         
|                                      |                                                             
|ITEM 3                                | Quantitative and Qualitative Disclosures About Market Risk  
|                                      |                                                             
|ITEM 4                                | Controls and Procedures                                     
|                                      |                                                             
|**PART II**  -  **OTHER INFORMATION** |                                                             
|                                      |                                                             
|ITEM 1                                | Legal Proceedings                                           
|                                      |                                                             
|ITEM 2                                | Unregistered Sales of Equity Securities and Use of Proceeds 
|                                      |                                                             
|ITEM 6                                | Exhibits                                                    
|                                      |                                                             
|**SIGNATURES**                        | 28                                                          

*****Index*********

**PART I.  FINANCIAL INFORMATION**

**ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

******ASSOCIATED ESTATES REALTY CORPORATION**

**CONSOLIDATED BALANCE SHEETS**

**(UNAUDITED)**

|                                                                          | March 31, | December 31,
|------------------------------------------------------------------------- | --------- | ------------
|                                                                          | 2005      | 2004        
|(In thousands, except share amounts)                                      |           |             
|**ASSETS**                                                                |           |             
|Real estate assets                                                        |           |             
|Land                                                                      | $	98,390  | $	94,378    
|Buildings and improvements                                                | 843,495   | 830,380     
|Furniture and fixtures                                                    | 32,356    | 31,862      
|                                                                          | 974,241   | 956,620     
|Less:  accumulated depreciation                                           | (288,483) | (293,182)   
|                                                                          | 685,758   | 663,438     
|Construction in progress                                                  | 1,876     | 1,830       
|Real estate associated with property held for sale, net                   | 10,412    | -           
|Real estate, net                                                          | 698,046   | 665,268     
|Cash and cash equivalents                                                 | 2,555     | 59,734      
|Restricted cash                                                           | 10,072    | 10,740      
|Accounts and notes receivable, net                                        |           |             
|Rents                                                                     | 723       | 771         
|Affiliates and joint ventures                                             | 5,020     | 5,057       
|Other                                                                     | 5,051     | 2,956       
|Investments in joint ventures, net                                        | 5,988     | 6,240       
|Goodwill                                                                  | 1,725     | 1,725       
|Intangible and other assets, net                                          | 12,827    | 10,941      
|Other assets associated with property held for sale, net                  | 174       | -           
|**Total assets**                                                          | $	742,181 | $	763,432   
|**LIABILITIES AND SHAREHOLDERS' EQUITY**                                  |           |             
|Mortgage notes  payable                                                   | $	553,013 | $	547,279   
|Mortgage notes payable associated with property held for sale             | 16,100    | -           
|Lines of credit borrowings                                                | 7,100     | 10,000      
|Unsecured debt                                                            | 25,780    | -           
|Total debt                                                                | 601,993   | 557,279     
|Accounts payable and accrued expenses                                     | 23,562    | 25,445      
|Dividends payable                                                         | 3,351     | 3,661       
|Resident security deposits                                                | 4,525     | 4,516       
|Funds held on behalf of managed properties                                |           |             
|Affiliates and joint ventures                                             | 2,195     | 2,334       
|Other                                                                     | 1,106     | 1,741       
|Accrued interest                                                          | 2,831     | 2,694       
|Other liabilities associated with property held for sale                  | 727       | -           
|Commitments and contingencies (Note 10)                                   | -         | -           
|**Total liabilities**                                                     | 640,290   | 597,670     
|                                                                          |           |             
|Operating partnership minority interest                                   | 2,172     | 2,172       
|Shareholders' equity                                                      |           |             
|Preferred shares, without par value; 9,000,000 shares authorized:         |           |             
|9.75% Class A cumulative redeemable, $250 per share liquidation           |           |             
|preference, 225,000 issued and outstanding at December 31, 2004           | -         | 56,250      
|8.70% Class B Series II cumulative redeemable, $250 per share liquidation |           |             
|preference, 232,000 issued and outstanding                                | 58,000    | 58,000      
|Common shares, without par value, $.10 stated value; 41,000,000           |           |             
|authorized; 22,995,763 issued and 19,713,431 and 19,653,187 out-          |           |             
|standing at March 31, 2005 and December 31, 2004, respectively            | 2,300     | 2,300       
|Paid-in capital                                                           | 279,016   | 277,117     
|Accumulated distributions in excess of accumulated net income             | (210,473) | (200,277)   
|Less: Treasury shares, at cost, 3,282,332 and 3,342,576 shares            |           |             
|at March 31, 2005 and December 31, 2004, respectively                     | (29,124)  | (29,800)    
|**Total shareholders' equity**                                            | 99,719    | 163,590     
|**Total liabilities and shareholders' equity**                            | $	742,181 | $	763,432   





*****Index***ASSOCIATED ESTATES REALTY CORPORATION**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

**(UNAUDITED)**

|                                                                     | For the three months ended
|-------------------------------------------------------------------- | --------------------------
|                                                                     | March 31,                 
|(In thousands, except per share amounts)                             | 2005                      
|Revenues                                                             |                           
|Rental                                                               | $	33,215                  
|Property management fees and reimbursements                          | 2,515                     
|Asset management fees                                                | 82                        
|Asset disposition fees                                               | -                         
|Painting services                                                    | 96                        
|Other                                                                | 1,368                     
|Total revenues                                                       | 37,276                    
|Expenses                                                             |                           
|Property operating and maintenance                                   | 17,128                    
|Depreciation and amortization                                        | 8,591                     
|Direct property management and service companies expenses            | 2,843                     
|Painting services                                                    | 120                       
|General and administrative                                           | 2,050                     
|Total expenses                                                       | 30,732                    
|Operating income                                                     | 6,544                     
|Interest income                                                      | 113                       
|Interest expense                                                     | (10,153)                  
|(Loss) income before equity in net loss of joint ventures,           |                           
|minority interest and income from discontinued operations            | (3,496)                   
|Equity in net loss of joint ventures                                 | (265)                     
|Minority interest in operating partnership                           | (16)                      
|(Loss) income from continuing operations                             | (3,777)                   
|Income from discontinued operations:                                 |                           
|Operating income                                                     | 443                       
|Gain on disposition of properties, net                               | -                         
|Income from discontinued operations                                  | 443                       
|**Net (loss) income**                                                | (3,334)                   
|Preferred share dividends                                            | (1,346)                   
|Original issuance costs related to redemption of preferred shares    | (2,163)                   
|**Net (loss) income applicable to common shares**                    | $	(6,843)                 
|                                                                     |                           
|**Earnings per common share - basic:**                               |                           
|(Loss) income from continuing operations applicable to common shares | $	(.37)                   
|Income from discontinued operations                                  | .02                       
|Net (loss) income applicable to common shares                        | $	(.35)                   
|                                                                     |                           
|**Earnings per common share - diluted:**                             |                           
|(Loss) income from continuing operations applicable to common shares | $	(.37)                   
|Income from discontinued operations                                  | .02                       
|Net (loss) income applicable to common shares                        | $	(.35)                   
|                                                                     |                           
|**Dividends declared per common share**                              | $	.17                     
|                                                                     |                           
|**Weighted average number of common shares outstanding	-	basic**     | 19,579                    
|**- 	diluted**                                                       | 19,579                    





*****Index***ASSOCIATED ESTATES REALTY CORPORATION**

**CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY**

**(UNAUDITED)**

|                                                |           | Class A    | Class B    |               |                       |               | Accumulated |           
|----------------------------------------------- | --------- | ---------- | ---------- | ------------- | --------------------- | ------------- | ----------- | ----------
|                                                |           | Cumulative | Cumulative |               |                       | Distributions |            
|                                                |           | Redeemable | Redeemable | Common Shares | Total Paid-in Capital | In Excess Of  | Treasury   
|                                                |           | Preferred  | Preferred  | (at $.10      | Paid-In               | Unearned      | Accumulated | Shares    
|(In thousands, except share amounts)            | Total     | Shares     | Shares     | stated value) | Capital               | Compensation  | Net Income  | (at cost) 
|                                                |           |            |            |               |                       |               |             |           
|Balance, December 31, 2004                      | $	163,590 | $	56,250   | $	58,000   | $	2,300       | $	277,596             | $	(479)       | $	(200,277) | $	(29,800)
|Comprehensive (loss) income - net (loss) income | (3,334)   | -          | -          | -             | -                     | -             | (3,334)     | -         
|Amortization of unearned compensation           | 71        | -          | -          | -             | -                     | 71            | -           | -         
|Forfeiture of 1,027 restricted common shares    | (3)       | -          | -          | -             | 3                     | 5             | -           | (11)      
|Issuance of 31,412 restricted common            |           |            |            |               |                       |               |             |           
|shares from treasury shares                     | 106       | -          | -          | -             | (39)                  | (205)         | -           | 350       
|Purchase of 3,941 treasury shares               | (39)      | -          | -          | -             | -                     | -             | -           | (39)      
|Issuance of 33,800 common shares for stock      |           |            |            |               |                       |               |             |           
|option exercises from treasury shares           | 277       | -          | -          | -             | (99)                  | -             | -           | 376       
|Redemption of Class A Cumulative Redeemable     |           |            |            |               |                       |               |             |           
|Preferred Shares                                | (56,250)  | (56,250)   | -          | -             | 2,163                 | -             | (2,163)     | -         
|Common share dividends                          | (3,353)   | -          | -          | -             | -                     | -             | (3,353)     | -         
|Preferred share dividends                       | (1,346)   | -          | -          | -             | -                     | -             | (1,346)     | -         
|Balance, March 31, 2005                         | $	 99,719 | $	-        | $	58,000   | $	2,300       | $	279,624             | $	(608)       | $	(210,473) | $	(29,124)





*****Index***ASSOCIATED ESTATES REALTY CORPORATION**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**FOR THE THREE MONTH PERIODS ENDED MARCH 31,**

**(UNAUDITED)**

|                                                                                         | 2005      | 2004     
|---------------------------------------------------------------------------------------- | --------- | ---------
|(In thousands)                                                                           |           |          
|Cash flow from operating activities:                                                     |           |          
|Net (loss) income                                                                        | $	(3,334) | $	(1,065)
|Adjustments to reconcile net (loss) income to net cash provided by operating activities: |           |          
|Depreciation and amortization                                                            | 8,796     | 8,231    
|Loss on fixed asset replacements write-off                                               | 23        | 63       
|Discount received related to early extinguishment of debt                                | (330)     | -        
|Minority interest in operating partnership                                               | 16        | 16       
|Equity in net loss of joint ventures                                                     | 265       | 258      
|Earnings distributed from joint ventures                                                 | -         | 147      
|Net change in assets and liabilities:                                                    |           |          
|- Accounts and notes receivable                                                          | (2,131)   | (266)    
|- Accounts and notes receivable of affiliates and joint ventures                         | 37        | (725)    
|- Accounts payable and accrued expenses                                                  | (1,190)   | (783)    
|- Other operating assets and liabilities                                                 | 636       | 515      
|- Restricted cash                                                                        | 667       | 502      
|- Funds held for non-owned managed properties                                            | (627)     | 1,993    
|- Funds held for non-owned managed properties of affiliates                              |           |          
|and joint ventures                                                                       | (140)     | 443      
|Total adjustments                                                                        | 6,022     | 10,394   
|Net cash flow provided by operations                                                     | 2,688     | 9,329    
|Cash flow from investing activities:                                                     |           |          
|Property acquisition expenditures                                                        | (41,669)  | -        
|Recurring fixed asset additions                                                          | (946)     | (1,170)  
|Investment/revenue enhancing and/or non-recurring fixed asset additions                  | (92)      | (1,515)  
|Net cash flow used for investing activities                                              | (42,707)  | (2,685)  
|Cash flow from financing activities:                                                     |           |          
|Principal payments on mortgage notes                                                     | (32,976)  | (1,616)  
|Proceeds from mortgage notes obtained                                                    | 55,140    | -        
|Proceeds from issuance of unsecured trust preferred securities                           | 25,780    | -        
|Payment of debt procurement costs                                                        | (1,158)   | -        
|Line of credit borrowings                                                                | 25,700    | 15,000   
|Line of credit repayments                                                                | (28,600)  | (16,000) 
|Redemption of Class A preferred shares                                                   | (56,250)  | -        
|Common share dividends paid                                                              | (3,341)   | (3,314)  
|Preferred share dividends paid                                                           | (1,666)   | (1,371)  
|Operating partnership distributions paid                                                 | (16)      | (16)     
|Issuance of treasury shares related to exercise of stock options                         | 277       | 871      
|Other (purchase) issue of treasury shares - net                                          | (50)      | (71)     
|Net cash flow used for financing activities                                              | (17,160)  | (6,517)  
|(Decrease) increase in cash and cash equivalents                                         | (57,179)  | 127      
|Cash and cash equivalents, beginning of period                                           | 59,734    | 2,212    
|Cash and cash equivalents, end of period                                                 | $	2,555   | $	2,339  
|Supplemental disclosure of cash flow information:                                        |           |          
|Dividends declared but not paid                                                          | $	3,351   | $	3,335  
|Cash paid for interest                                                                   | 9,857     | 9,818    
|Fixed asset replacement and other write-offs                                             | 316       | 1,389    
|Discount received related to early extinguishment of debt                                | 330       | -        
|Reclassification of original issuance costs related to redemption of preferred shares    | 2,163     | -        





*****Index*******ASSOCIATED ESTATES REALTY CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**



**1.**	**BASIS OF PRESENTATION AND ACCOUNTING POLICIES**

**Business**

Associated Estates Realty Corporation (the "Company") is a self-administered and self-managed
equity real estate investment trust ("REIT") which specializes in multifamily property management, advisory,
development, acquisition, disposition, operation and ownership activities.  The Company and its affiliates
receive certain property and asset management fees, acquisition, disposition and incentive fees,
consultation fees, and mortgage servicing fees.  MIG II Realty Advisors, Inc. ("MIG"), a subsidiary of the
Company, is a registered investment advisor and serves as a real estate advisor to pension funds.  The
Company owns three taxable REIT subsidiaries that provide management and other services for the
Company and third parties.  These corporations are referred to herein as "Service Companies."

As of March 31, 2005, the Company owns or property manages 110 apartment communities in
twelve states consisting of 23,973 units.  The Company owns, either directly or through subsidiaries, or holds
ownership interests in 77 of the 110 apartment communities containing 18,170 units in ten states.  Thirteen
of those owned or partially owned apartment communities, consisting of 1,354 units, are Affordable Housing
communities.  The Company, or one of its subsidiaries, also property manages 33 communities consisting
of 5,803 units.  Additionally, the Company asset manages a 186-unit apartment community and one
commercial property containing approximately 145,000 square feet.  Effective April 1, 2005, the Company
commenced management of four additional Affordable Housing properties located in Ohio containing 434
units for a third party owner.

**Basis of Presentation**

The accompanying unaudited financial statements have been prepared by the Company's
management in accordance with generally accepted accounting principles ("GAAP") for interim financial
information and applicable rules and regulations of the Securities and Exchange Commission.  Accordingly,
they do not include all of the information and footnotes required by GAAP for complete financial statements.
In the opinion of management, all adjustments (consisting only of normal and recurring adjustments)
considered necessary for a fair presentation have been included.  The reported results of operations are not
necessarily indicative of the results that may be expected for the full year.  These financial statements
should be read in conjunction with the audited financial statements and accompanying notes in the
Company's Annual Report on Form 10-K for the year ended December 31, 2004.

**Stock Based Employee Compensation**

The Company uses the intrinsic value method in accordance with the Accounting Principles Board
Opinion No. 25 ("APB No. 25") to account for stock-based employee compensation arrangements.  Under
this method, the Company does not recognize compensation cost for stock options when the option exercise
price equals or exceeds the market value of the common shares on the date of the grant.  Restricted stock
grants are recorded initially as a reduction to shareholders' equity and recognized as compensation expense
over the vesting periods based upon the market value on the date of the grant.  The amount of
compensation recorded as a reduction to shareholders' equity related to restricted stock grants was
$608,000 and $479,000 at March 31, 2005 and December 31, 2004, respectively.  If the fair value method
had been applied to the stock option grants as prescribed by Statement of Financial Accounting Standard
("SFAS") No. 123, "Accounting for Stock-Based Compensation," the fair values of the options granted at the
grant dates would be recognized as compensation expense over the vesting periods, and the Company's
net (loss) income and earnings per share for the periods ended March 31, 2005 and 2004 would have been
as follows:

|                                                        | For the three months
|------------------------------------------------------- | --------------------
|                                                        | ended March 31,     
|(In thousands, except per share data)                   | 2005                
|                                                        |                     
|Net (loss) income                                       | $	(3,334)           
|Total stock compensation cost recognized                | 71                  
|Total stock compensation cost had SFAS 123 been adopted | (121)               
|Proforma net (loss) income had SFAS 123 been adopted    | $	(3,384)           
|                                                        |                     
|Net (loss) income applicable to common shares:         
|Net (loss) income as reported                           | $	(6,843)           
|Total stock compensation cost recognized                | 71                  
|Total stock compensation cost had SFAS 123 been adopted | (121)               
|Pro forma net (loss) income had SFAS 123 been adopted   | $	(6,893)           
|                                                       
|(Loss) income per common share - Basic                 
|Net (loss) income as reported                           | $	(.35)             
|Total stock compensation cost recognized                | -                   
|Total stock compensation cost had SFAS 123 been adopted | -                   
|Pro forma net (loss) income had SFAS 123 been adopted   | $	(.35)             
|                                                        |                     
|(Loss) income per common share - Diluted                |                     
|Net (loss) income as reported                           | $	(.35)             
|Total stock compensation cost recognized                | -                   
|Total stock compensation cost had SFAS 123 been adopted | -                   
|Pro forma net (loss) income had SFAS 123 been adopted   | $	(.35)             

**Recent Accounting Pronouncements**

In October 1995, the FASB issued Statement of Financial Accounting Standards No. 123
"Accounting for Stock Based Compensation" ("SFAS 123").  In December 2004, the FASB issued a revision
of SFAS 123 which superceded the October 1995 issuance.  This Statement also supercedes APB Opinion
No. 25, "Accounting for Stock Issued to Employees", and its related implementation guidance.  This
Statement established standards for the accounting for transactions in which an entity exchanges its equity
instruments for goods or services.  It also addresses transactions in which an entity incurs liabilities in
exchange for goods or services that are based on the fair value of the entity's equity instruments or that may
be settled by the issuance of those equity instruments.  This Statement focuses primarily on accounting for
transactions in which an entity obtains employee services in share-based payment transactions.  It does not
change the accounting guidance for share-based payment transactions with parties other than employees
provided in Statement 123 as originally issued.  In April 2005, The Securities and Exchange Commission
adopted a rule which amended the compliance dates for this Statement.  Accordingly, the Company will
adopt this standard effective January 1, 2006.  The Company is required to apply the provisions of this
Statement using a modified version of prospective application.  Under that transition method, compensation
cost is recognized on or after the effective date for the portion of outstanding awards for which the requisite
service has not been rendered, based on the grant-date fair value of those awards calculated under SFAS
123 as originally issued.  These grant-date fair values had been included in the pro forma disclosures in the
notes to the financial statements for periods prior to the effective date.  Additionally, compensation cost will
be recognized on all awards granted on or after the effective date over the related service period.  The
Company may elect to apply a modified version of retrospective application under which financial statements
for periods prior to the effective date are adjusted on a basis consistent with the pro forma disclosures
previously required for those periods.  The Company expects that, upon adoption, it will not elect to adjust
its financial statements for periods prior to the effective date.  As a result of the adoption of this Statement,
the Company expects to recognize compensation expense of approximately $70,000 for the year ended
December 31, 2006 related to awards outstanding as of March 31, 2005.

**Classification of Fixed Asset Additions**

The Company considers recurring fixed asset additions to a property to be capital expenditures
made to replace worn out assets to maintain the property's value.  The Company considers
investment/revenue enhancing and/or non-recurring fixed assets to be capital expenditures if such
improvements increase the value of the property and/or enable the Company to increase rents.  The
Company considers acquisition and development fixed asset additions to be for the purchase of, or
construction of, new properties to be added to the Company's portfolio.

**Reclassifications**

Certain reclassifications have been made to the 2004 financial statements to conform to the 2005
presentation.

**2.	ACQUISITION OF PROPERTIES**

On March 9, 2005 the Company acquired a 316-unit multifamily community located in Florida.  The
purchase was funded primarily by a first mortgage note on the acquired property and a first mortgage note
on a previously unencumbered Market-Rate property (See Note 4 for further information concerning these
mortgage notes).

**3.	SALE OF PROPERTIES**

The Company reports, as discontinued operations, the results of operations and gain/loss related
to the sale of real estate assets in accordance with SFAS 144, "Accounting for the Impairment or Disposal
of Long-Lived Assets."  Real estate assets that are classified as held for sale are also reported as
discontinued operations.  The Company generally classifies properties as held for sale when all significant
contingencies surrounding the closing have been resolved.  In most transactions, these contingencies are
not satisfied until the actual closing of the transaction.  Interest expense included in discontinued operations
is limited to interest on mortgage debt specifically associated with properties sold or classified as held for
sale.

The Company had classified one property as held for sale at March 31, 2005.  The major classes
of assets and liabilities related to this property have been reclassified as such in the accompanying
Consolidated Balance Sheet at March 31, 2005.  The operating results for this property are included in
"Discontinued operations" in the accompanying Consolidated Statements of Operations for the three months
ended March 31, 2005 and 2004.  Additionally, the Company had classified one property as held for sale
at March 31, 2004.  The operating results for this property are included in discontinued operations for the
three months ended March 31, 2004.  This property was sold in May 2004.

The following chart summarizes "Income from discontinued operations" for the three months ended
March 31, 2005 and 2004:

|                                                | For the three months
|----------------------------------------------- | --------------------
|                                                | ended March 31,     
|                                                | 2005                
|(In thousands)                                  |                     
|Total property revenues                         | $	973               
|Total revenues                                  | 973                 
|                                                |                     
|Property operating and maintenance expense      | 476                 
|Real estate asset depreciation and amortization | 205                 
|Interest expense, net (1)                       | (151)               
|Total expenses                                  | 530                 
|                                                |                     
|Operating income                                | 443                 
|Gain on disposition of properties               | -                   
|**Income from discontinued operations**         | $	443               

(1)2005 includes a $330,000 discount received as a result of prepaying a loan.  (See Note 4).

**4.	DEBT**

**Mortgage Notes Payable**

On February 1, 2005, the Company repaid $10.7 million in variable rate debt and prepaid $5.3
million in zero percent UDAG financing, both of which had been secured by a Market-Rate property.  Of the
$16.0 million that was repaid, $10.7 million matured on February 1, 2005, $3.1 million would have matured
on April 1, 2005 and $2.2 million would have matured on June 1, 2006.  The $2.2 million, that would have
matured on June 1, 2006, was paid off at a discount of $330,000 that was recorded as a reduction to interest
expense.  The Company funded the repayment by obtaining a new loan on the same property in the amount
of $16.1 million.  The Company has the right to elect LIBOR plus 2.0% or the Prime Loan Rate as the
interest rate from time to time on the new loan.  This loan matures on February 1, 2007.  The Company has
two one-year options to extend this loan, each of which is conditioned upon achieving a satisfactory debt
service coverage ratio at the property.

On March 9, 2005, the Company obtained two conventional mortgage loans in connection with the
purchase of a property in Florida.  One loan, secured by a property in Northeast Ohio, is in the amount of
$9.9 million and matures in March 2006.  The other loan, secured by the acquired Florida property,  is in the
amount of $29.1 million and matures in March 2007.  The Company has the right to elect LIBOR plus 2.0%
or the Prime Loan Rate as the interest rate from time to time in effect on both of these loans.

On March 21, 2005, the Company repaid a $15.6 million variable rate loan which had been secured
by a property in Florida.

**Lines of Credit**

The Company has a $15.0 million secured line of credit with a maturity date of July 31, 2006.  There
were borrowings of $7.1 million and $10.0 million outstanding on this line of credit at March 31, 2005 and
December 31, 2004, respectively.  Borrowings under this line of credit bear interest at the rate of LIBOR plus
1.5%.

The Company also has a $14.0 million line of credit.  There were no regular borrowings outstanding
under this line at March 31, 2005 or December 31, 2004.  Approximately $1.6 million of this line of credit is
reserved exclusively for derivative transactions.  The remaining $12.4 million is available for regular
borrowings and letter of credit transactions.  Letters of credit issued against this line totaled $184,000 at
March 31, 2005 and December 31, 2004.  Borrowings under this line of credit bear interest at either the
prime rate or LIBOR plus 2.0% at the Borrower's option. This line matures on December 31, 2005.

**Unsecured Debt**

On March 15, 2005, AERC Delaware Trust (the "Trust"), a newly formed wholly owned subsidiary,
sold trust preferred securities for an aggregate amount of $25.8 million.  The Company owns all of the
common securities of the Trust.  The Trust used the proceeds to purchase the Company's junior
subordinated note due March 30, 2035, which represents all of the Trust's assets.  The terms of the trust
preferred securities are substantially the same as the terms of the junior subordinated note.  Interest on the
junior subordinate note is payable at a fixed rate equal to 7.92% per annum through the interest rate
payment date in March 2015 and thereafter at a variable rate equal to LIBOR plus 3.25% per annum.  The
Company may redeem the junior subordinated note at par at any time on and after March 30, 2010.  To the
extent the Company redeems the junior subordinated note, the Trust is required to redeem a corresponding
amount of trust preferred securities.

**5.**	**GOODWILL AND OTHER INTANGIBLE ASSETS**

**Goodwill**



*MIG Realty Advisors, Inc.*  In June 1998, the Company recorded goodwill in connection with the MIG
Realty Advisors, Inc. merger.  The goodwill was allocated fully to the Management and Service Operations
Segment.

The Company completed its annual review of goodwill during the three months ended March 31,
2005.  In performing this analysis, the Company uses a multiple of revenues to the range of potential
alternatives and assigns a probability of the various alternatives under consideration by management.
Based on its analysis, the Company determined that goodwill was not impaired as of March 31, 2005.  There
were no changes to the carrying amount of goodwill during the three months ended March 31, 2005.  Should
the estimates used to determine alternatives or the probabilities of the occurrence thereof change, an
impairment may result which could materially impact the results of operations of the Company for the period
in which it is recorded.

**Intangible Assets**

*Property Acquisitions*.  In accordance with SFAS 141, "Business Combinations", the Company
allocates a portion of the total purchase price of a property acquisition to any intangible assets identified,
such as in-place leases and tenant relationships.  The intangible assets are amortized over the remaining
lease terms or estimated life of the tenant relationship, which is approximately twelve to sixteen months.
Due to the short term nature of residential leases, the Company believes that existing lease rates
approximate market rates, and therefore, no allocation is made for above/below market leases.

In connection with the March 2005 property acquisition discussed in Note 2, the Company recorded
intangible assets in the amount of $975,000 related to in place leases, which will be amortized over thirteen
months, and $282,000 related to tenant relationships, which will be amortized over sixteen months. These
intangible assets have been fully allocated to the Acquisition/Disposition segment.

**6.**	**TRANSACTIONS WITH AFFILIATES AND JOINT VENTURES**

The Company provides management and other services to (and is reimbursed for certain expenses
incurred on behalf of) certain non-owned properties in which the Company's Chief Executive Officer and/or
other related parties have varying ownership interests.  The entities which own these properties, as well as
other related parties, are referred to as "affiliates."  The Company or one of its subsidiaries or Service
Companies also provides similar services to joint venture properties.

In the normal course of business, the Company has advanced funds on behalf of affiliates and joint
ventures and holds funds for the benefit of affiliates and joint ventures.

The Company held two notes of equal amounts payable by its Chief Executive Officer ("CEO")
aggregating $3.4 million, both of which matured May 1, 2005.  One of the notes was partially secured by
150,000 of the Company's common shares; the other note was unsecured.  For the three months ended
March 31, 2005 and 2004, the interest rate payable on these notes was approximately 4.4% and 3.1%,
respectively.  These notes were paid in full on April 25, 2005.

Merit Painting Services ("Merit"), a subsidiary of the Company, was retained by JAS Construction,
Inc. ("JAS") under subcontracts for the performance of certain rehabilitation work at seven properties owned
by an unrelated party.  Work under these contracts was completed in late 2004.  JAS is owned by a son of
the Company's CEO.  During the three months ended March 31, 2005 and 2004, $28,000 and $1.8 million,
respectively, of revenue in connection with these contracts and other JAS work was reported in painting
services revenues in the Company's Consolidated Statements of Operations.

Summarized affiliate and joint venture transaction activity was as follows:

|                                      | For the three months
|------------------------------------- | --------------------
|                                      | ended March 31,     
|(In thousands)                        | 2005                
|                                      |                     
|Property management fee and other     |                     
|miscellaneous service revenues        | $	 207              
|                                      |                     
|Painting service revenues             | 58                  
|                                      |                     
|Expenses incurred on behalf           |                     
|of and reimbursed by (1)              | 336                 
|                                      |                     
|Interest income on notes due from CEO | 37                  

(1)*Primarily payroll and employee benefits, reimbursed at cost.*

|                                                                  | March 31,           | December 31,
|----------------------------------------------------------------- | ------------------- | ------------
|(In thousands)                                                    | 2005                | 2004        
|                                                                  |                     |             
|Accounts and notes receivable from affiliates and joint ventures: |                     |             
|Notes and interest receivable from CEO                            | $	3,367             | $	3,365     
|Funds advanced                                                    | 626                 | 573         
|JAS Construction, Inc.                                            | -                   | 407         
|Property management fees, insurance and                           |                     |             
|miscellaneous receivables                                         | 1,027               | 712         
|Total due from affiliates and joint ventures                      | $	5,020             | $	5,057     
|                                                                  |                     |             
|Funds held on behalf of affiliates and joint ventures             | $	            2,195 | $	2,334     

**7.	SHARES**

During the three months ended March 31, 2005, the Company issued 31,412 restricted common
shares from treasury shares which vest in equal increments over three years from the date of grant.  The
Company's policy on the reissuance of treasury shares is to account for the issuance on the first-in first-out
method.  At March 31, 2005, the Company held 3,282,332 treasury shares at a cost of $29.1 million.

**8.	EARNINGS PER SHARE**

Earnings per share ("EPS") has been computed pursuant to the provisions of SFAS No. 128,
"Earnings per Share."  There were 1.9 million and 1.8 million options to purchase common shares
outstanding at March 31, 2005 and 2004, respectively.  None of the options were included in the calculation
of diluted earnings per share for the periods presented as their inclusion would be antidilutive to the net loss
applicable to common shares from continuing operations.

The exchange of operating partnership minority interests into common shares was also not included
in the computation of diluted EPS because the Company plans to settle these OP units in cash.



**9.	INTERIM SEGMENT REPORTING**

The Company has four reportable segments: (1) Acquisition/Disposition Multifamily Properties; (2)
Same Store Market-Rate ("Market-Rate") Multifamily Properties; (3) Affordable Housing Multifamily
Properties; and (4) Management and Service Operations.  The Company has identified these segments
based upon how management makes decisions regarding resource allocation and performance
assessment. The Acquisition/Disposition properties represent acquired or developed properties which have
not yet reached stabilization (the Company considers a property stabilized when its occupancy rate reaches
93.0% or one year following the purchase or delivery of the final units, whichever occurs first), and properties
that have been sold or are classified as held for sale in accordance with SFAS 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets."  The Market-Rate properties are same store conventional
multifamily residential apartments.  The Affordable Housing properties are multifamily properties for which
the rents are subsidized and certain aspects of the operations are regulated by HUD pursuant to Section
8 of the National Housing Act of 1937.  The Management and Service Operations provide management and
advisory services to the Acquisition/Disposition, Market-Rate and Affordable Housing properties that are
owned by the Company, as well as to clients and properties not owned by the Company.  All of the
Company's segments are located in the United States.

The accounting policies of the reportable segments are the same as those described in the "Basis
of Presentation and Significant Accounting Policies" in the Company's Annual Report on Form 10-K for the
year ended December 31, 2004.  The Company evaluates the performance of its reportable segments
based on Net Operating Income ("NOI").  NOI is determined by deducting property operating and
maintenance expenses from total revenues (including interest income) for the Acquisition/Disposition
(excluding amounts classified as discontinued operations), Market-Rate and Affordable Housing segments
and deducting direct property management and service companies expenses and painting services
expenses from total revenues for the Management and Service Operations segment.  The Company
considers NOI to be an appropriate supplemental measure of its performance because it reflects the
operating performance of its real estate portfolio and management and service companies at the property
and management and service company level and is used to assess regional property level performance.
NOI should not be considered (i) as an alternative to net income (determined in accordance with GAAP),
(ii) as an indicator of the Company's financial performance, (iii) as cash flow from operating activities
(determined in accordance with GAAP) or (iv) as a measure of the Company's liquidity; nor is it necessarily
indicative of sufficient cash flow to fund all of the Company's needs.  Certain other real estate companies
may define NOI in a different manner.

Information on the Company's segments for the three months ended March 31, 2005 and 2004 is
as follows:

|                                     | For the three months ended March 31, 2005
|------------------------------------ | -----------------------------------------
|                                     |                                          
|                                     | Acquisition/                             
|(In thousands)                       | Disposition                              
|                                     |                                          
|Total segment revenues               | $	1,037                                  
|Elimination of intersegment revenues | -                                        
|Consolidated revenues                | 1,037                                    
|                                     |                                          
|Equity in net loss of joint ventures | -                                        
|                                     |                                          
|Income from discontinued operations  | 443                                      
|                                     |                                          
|*NOI                                 | 633                                      
|                                     |                                          
|Total assets                         | $	76,437                                 

*Intersegment revenues and expenses have been eliminated in the computation of NOI for each of the segments.

|                                     | For the three months ended March 31, 2004
|------------------------------------ | -----------------------------------------
|                                     |                                          
|                                     | Acquisition/                             
|(In thousands)                       | Disposition                              
|                                     |                                          
|Total segment revenues               | $	 -                                     
|Elimination of intersegment revenues | -                                        
|Consolidated revenues                | -                                        
|                                     |                                          
|Equity in net income (loss)          |                                          
|of joint ventures                    | 7                                        
|                                     |                                          
|Income from discontinued operations  | 489                                      
|                                     |                                          
|*NOI                                 | -                                        
|                                     |                                          
|Total assets                         | $	11,873                                 

*Intersegment revenues and expenses have been eliminated in the computation of NOI for each of the segments.

A reconciliation of total segment NOI to total consolidated net (loss) income for the three months
ended March 31, 2005 and 2004 is as follows:

|                                           | For the three months
|------------------------------------------ | --------------------
|                                           | ended March 31,     
|(In thousands)                             | 2005                
|                                           |                     
|Total NOI for reportable segments          | $	 17,298           
|Depreciation and amortization              | (8,591)             
|General and administrative expense         | (2,050)             
|Interest expense                           | (10,153)            
|Equity in net loss of joint ventures       | (265)               
|Minority interest in operating partnership | (16)                
|Income from discontinued operations        | 443                 
|Consolidated net (loss) income             | $	(3,334)           

**10.	CONTINGENCIES**

***Legal Proceedings*****

The Company is subject to legal proceedings, lawsuits and other claims, including proceedings by
government authorities (collectively "Litigation").  Litigation is subject to uncertainties and outcomes are
difficult to predict.  Consequently, the Company is unable to estimate ultimate aggregate monetary liability
or financial impact with respect to the Litigation matters described in the following paragraphs as of March
31, 2005 and no accruals have been made for these matters.  The Company believes that other Litigation
will not have a material adverse impact on the Company after final disposition.  However, because of the
uncertainties of litigation, one or more lawsuits could ultimately result in a material obligation.

***Pending Lawsuits*****

On August 10, 2001, Fluor Daniel, Inc. ("FDI") filed a Demand For Arbitration with the American
Arbitration Association ("AAA") arising out of construction services provided by FDI to MIG/Orlando
Development, LTD ("MOD"), an affiliate of the Company, pursuant to a construction contract between FDI
and MOD for the construction of a 460-unit apartment community located in Orlando, Florida.  FDI claims
that it suffered damages of $1.6 million in performing the work because of the owner's breach of the
construction contract.  Both MOD and the Company were named as party defendants in this litigation;
however, during 2002, the Company was dismissed as a party to this litigation.  MOD filed a counterclaim
with the AAA against FDI seeking liquidated damages of $1.9 million arising out of FDI's failure to complete
the project in a timely manner as required by the terms of the construction contract.  MOD acquired this
project in 1998 as part of the Company's acquisition of MIGRA from a group that included persons who were
officers and directors of the Company, which group could have a material interest adverse to the Company
because of indemnification obligations owing to the Company in connection with this litigation.  The
arbitration proceedings in this matter have been temporarily stayed pending a renewed mediation effort.
Should such mediation efforts fail, the Company intends to vigorously defend this claim and pursue its
counterclaim, but cannot predict the final outcome of this dispute.

On or about April 14, 2002, Melanie and Kyle Kopp commenced an action against the Company in
the Franklin County, Ohio Court of Common Pleas seeking undetermined damages, injunctive relief and
class action certification.  This case arose out of the Company's Suredeposit program.  This program allows
cash short prospective residents to purchase a bond in lieu of paying a security deposit.  The bond serves
as a fund to pay those resident obligations that would otherwise have been funded by the security deposit.
Plaintiffs allege that the non-refundable premium paid for the bond is a disguised form of security deposit,
which is otherwise required to be refundable in accordance with Ohio's Landlord-Tenant Act.  Plaintiffs
further allege that certain pet deposits and other nonrefundable deposits required by the Company are
similarly security deposits that must be refundable in accordance with Ohio's Landlord-Tenant Act.  On or
about January 15, 2004, the plaintiffs filed a motion for class certification.  The Company subsequently filed
a motion for summary judgment.  Both motions are pending before the Court.  The Company intends to
vigorously defend itself against these claims.

On or about May 21, 2004, the Ohio Civil Rights Commission filed a lawsuit against a subsidiary of
the Company in the Portage County, Ohio Court of Common Pleas.  The complaint alleges violations of
handicap design laws in connection with the development of the Village of Western Reserve property
located in Streetsboro, Ohio.  The complaint seeks injunctive relief, damages and attorneys fees.  On
February 25, 2005, the Company reached a tentative settlement with the plaintiff in this litigation, the results
of which did not have a material impact on the results of operations for the three months ended March 31,
2005.

***Government Investigations***

On or about August 7, 2002, the Maryland Attorney General served the Company with a subpoena
seeking information concerning certain of the Company's leasing practices in connection with the Company's
Maryland properties.  The subpoena seeks extensive information going back a number of years, including
information about the Company's Suredeposit programs and certain non-refundable deposits.  The
Company understands that other landlords operating in Maryland have been served with similar subpoenas.
Presently, the Maryland Attorney General has not asserted any claims against the Company, however, the
Company is aware of at least one instance where the Maryland Attorney General brought an action against
another landlord operating multifamily properties in Maryland alleging that such landlord was engaging in
leasing practices contrary to applicable law.  The Company is attempting to cooperate with the Maryland
Attorney General.

On or about December  22, 2003, the Montgomery County, Maryland Office of Landlord Tenant
Affairs commenced an investigation into possible violations of state and county Landlord-Tenant laws
involving two properties operated by the Company located in Montgomery County, Maryland.  The matters
being investigated are for the most part the same leasing practices being investigated by the Maryland
Attorney General.  The Company is attempting to cooperate with the County.

**11.	GUARANTEES**

The Company has guaranteed the payment of 50.0% of the  balance or approximately $12.4 million
at March 31, 2005, of the loan in connection with Idlewylde Apartments Phase II, a 535-unit multifamily
community located in Atlanta, Georgia, which was developed by the Company and its pension fund joint
venture partner.  This loan matures December 10, 2005.  The Company has recorded no liability in relation
to this guarantee at March 31, 2005.  In addition, the Company routinely guarantees mortgage debt of its
wholly owned subsidiaries.

**12.	SUBSEQUENT EVENTS**

***Dividends Declared***

On May 2, 2005, the Company paid a dividend of $0.17 per common share, which was declared on
March 30, 2005 to shareholders of record on April 15, 2005.

***Notes Receivable***

On April 25, 2005, the Company's Chief Executive Officer repaid two notes of equal amounts
aggregating $3.4 million which matured on May 1, 2005.

*Index*****

**ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.**

The following discussion should be read in conjunction with the consolidated financial statements
and notes thereto included in Part I, Item 1 of this report on Form 10-Q.  This discussion may contain
forward-looking statements based on current judgments and current knowledge of management, which are
subject to certain risks, trends and uncertainties that could cause actual results to vary from those projected.
Accordingly, readers are cautioned not to place undue reliance on forward-looking statements which speak
only as of the dates of the document.  These forward-looking statements are intended to be covered by the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  The words "expects",
"projects", "believes", "plans", "anticipates," and similar expressions are intended to identify forward-looking
statements.  Investors are cautioned that the Company's forward-looking statements involve risks and
uncertainty, including without limitation the following:

changes in economic conditions in the markets in which the Company owns and manages
properties, including interest rates, the overall level of economic activity, the availability of
consumer credit and mortgage financing, unemployment rates and other factors;

risks of a lessening of demand for the multifamily units owned or managed by the Company;

competition from other available multifamily units and change in market rental rates;

increases in property and liability insurance costs;

changes in government regulations affecting the Affordable Housing properties and other
properties operated by the Company;

changes in or termination of contracts relating to third party management and advisory
business;

inability to renew current Housing Assistance Payment ("HAP") contracts at existing rents;

weather and other conditions that might adversely affect operating expenses;

expenditures that cannot be anticipated such as utility rate and usage increases, unanticipated
repairs, and real estate tax valuation reassessments or millage rate increases;

inability of the Company to achieve anticipated reductions in operating expenses and increases
in revenues;

the results of litigation filed or to be filed against the Company;

risks related to the Company's joint ventures;

risks of personal injury claims and property damage related to mold claims because of
diminished insurance coverage;

risks associated with property acquisitions such as environmental liabilities, among others;

changes in market conditions that may limit or prevent the Company from acquiring or selling
properties; and

risks related to the perception of residents and prospective residents as to the attractiveness,
convenience and safety of the Company's properties or the neighborhoods in which they are
located.

**Overview**.  The Company is engaged primarily in the ownership and operation of multifamily
residential units.  Additionally, the Company and its subsidiaries provide asset and property management
services to third party owners of multifamily residential units for which the Company is paid fees.
Approximately 89.0% of the Company's consolidated revenues were generated from the leasing of the
owned residential units for the three months ended March 31, 2005.  Approximately 90.0% of the revenues
generated by the owned properties during the three months ended March 31, 2005 are related to Market-Rate properties.  The operating performance of the properties and cash flows from operations, particularly
the Market-Rate properties, have been impacted by low mortgage rates, which have resulted in an increase
in home purchases by existing and potential apartment residents and the overall weak economy and related
unemployment rates in many of the Company's principal markets.

The Company's total rental revenue collections are impacted by a combination of rental rates, rent
concessions and occupancy levels, which the Company attempts to adjust from time to time in order to
maintain projected revenues.  Indicators that the Company uses in measuring these factors include average
economic occupancy, physical occupancy and net collected rent.  These indicators are more fully described
in the Results of Operations comparison.

**2005 Expectations.** The Company expects its 2005 performance to be driven by improvements
in the Market-Rate  portfolio.  Although the Midwest markets have been slower to recover than originally
expected, the Company continues to expect to increase net collected rents by 2.0% in its Midwest portfolio
and 4.0% or better in all its other portfolios located outside the Midwest.  The Company expects property
operating margins to increase 1.0% for the year 2005 as compared to 2004.  In the first quarter of 2005,
operating expenses were negatively impacted by increased utility costs and  an exceptionally cold winter.
The Company believes that these higher than expected expenses are seasonal and not reflective of the
Company's full year expectations.

Offsetting expected net operating income increases are anticipated declines in asset and property
management fees, disposition fees, the net contribution from the Company's painting subsidiary and interest
expense.  Asset and property management fee and disposition fee reductions are attributable to the loss
of certain advisory properties previously under management and associated disposition fees earned during
2004.  The net contribution from the Company's painting subsidiary is expected to be approximately $1.3
million less than 2004.  Painting operations have returned to a more normalized contribution as a result of
certain contracts that were completed in 2004.  Interest expense increases are the result of anticipated rising
interest rates and its impact on the Company's floating rate debt and the issuance of the trust preferred
securities in the first quarter.  The Company plans to ultimately use the proceeds from the trust preferred
securities to acquire properties.  Furthermore, the Company plans to continue to execute its strategy of
reducing its presence in the Midwest, selling properties in markets where it will not be growing or selling in
markets where market conditions are such that the reinvestment of cash proceeds derived from a sale are
expected to provide significantly greater return on equity and an increase in cash flow.  Although the timing
of any sales and acquisitions can influence our results, the Company does not expect this 2005 activity to
materially change these results.

**LIQUIDITY AND CAPITAL RESOURCES**

**Cash Flows and Liquidity**.   Significant sources and uses of cash in the three months ended March
31, 2005 and 2004, are summarized as follows:

Cash Sources (Uses):

|                                          | For the three months
|----------------------------------------- | --------------------
|                                          | ended March 31,     
|(In thousands)                            | 2005                
|                                          |                     
|Net cash provided by operating activities | $	2,688             
|Net real estate and fixed asset activity  | (42,707)            
|Increases (decreases) in debt - net       | 45,044              
|Payment of debt procurement costs         | (1,158)             
|Redemption of preferred shares            | (56,250)            
|Cash dividends and operating partnership  |                     
|distributions paid                        | (5,023)             
|Exercise of stock options                 | 277                 
|Net cash from other financing activities  | (50)                
|Cash (decrease) increase                  | $	(57,179)          

The Company's primary sources of liquidity are cash flow provided by operations and short term
borrowings on its lines of credit.  The decrease in cash provided by operations in 2005 compared to 2004
was primarily due to changes in accounts receivable and accounts payable balances, in addition to
increased property operating and maintenance expenses.  Property operating and maintenance expenses
are expected to increase approximately 2.0% across the portfolio for 2005 when compared to 2004.

The Company obtained cash from the following additional sources during 2005:

$55.1 million in mortgage notes obtained;

$25.8 million in unsecured debt obtained through issuance of trust preferred securities; and

$277,000 in proceeds related to stock option exercises.

The Company utilized cash for the following purposes during 2005:



$56.3 million to redeem Class A preferred shares (from the funds received in December 2004
through the offering of Class B preferred shares);

$42.7 million in acquisition, recurring and investment capital additions;

$33.0 million reduction in mortgage notes;

$5.0 million in dividends and distributions paid;

$2.9 million reduction in line of credit borrowings; and

$1.2 million in debt procurement costs paid.

At March 31, 2005, the Company had a total of $7.1 million outstanding on its two secured lines of
credit, and outstanding letters of credit of $184,000 leaving $20.1 million available for additional borrowings.
The amount available for borrowing on the $15.0 million line of credit is based upon the operating
performance for the previous twelve months of the property that secures this line of credit.  At March 31,
2005, the entire $15 million was available for borrowing, less the $7.1 million outstanding balance.

In April 2005, the Company's Chief Executive Officer repaid two notes totaling $3.4 million, which
were scheduled to mature May 1, 2005.

In October 2005, $13.7 million in variable rate mortgage notes will mature.  The Company
anticipates that it will be able to replace these notes with similar debt upon maturity.

The Company anticipates commitments of approximately $13.2 million for recurring, investment/
revenue enhancing and non-recurring capital expenditures for the remainder of 2005.  These commitments
are expected to be funded from cash flow provided by operating activities and borrowings on the Company's
lines of credit.

On March 30, 2005, the Company declared a dividend of $0.17 per common share which was paid
on May 2, 2005 to shareholders of record on April 15, 2005.  The Company anticipates that it will continue
paying quarterly dividends and that it will sustain its current dividend rate for the remainder of 2005.

Any future multifamily property acquisitions or developments would be financed with the most
appropriate sources of capital, which may include the assumption of mortgage indebtedness, bank and other
institutional borrowings, the exchange of properties, undistributed earnings, secured or unsecured debt
financings, or the issuance of shares or units exchangeable into common shares.  The Company intends
to reinvest the net proceeds from any future sales of operating properties in newly acquired properties.

The Company anticipates that it will meet its liquidity requirements for the remainder of 2005
generally through its net cash provided by operations.  The Company believes that if net cash provided by
operations is below projections, other sources, such as secured borrowings (primarily the lines of credit),
unsecured borrowings and property sales' proceeds are available and should be sufficient to meet operating
requirements, capital additions, mortgage amortization payments and the payment of dividends in
accordance with REIT requirements.

**Guarantees.**  The Company has guaranteed the payment of 50.0% of the  balance or approximately
$12.4 million at March 31, 2005, of the loan in connection with Idlewylde Apartments Phase II, a 535-unit
multifamily community located in Atlanta, Georgia which was developed by the Company and its pension
fund joint venture partner.  This loan matures December 10, 2005.  The Company has recorded no liability
in relation to this guarantee at March 31, 2005.  In addition, the Company routinely guarantees mortgage
debt of its wholly owned subsidiaries.

**Off-Balance Sheet Investments and Financing Commitments.**  At March 31, 2005, the Company
had investments in two joint ventures that own a total of three multifamily apartment communities.  The
operations of these properties are similar to the operations of the Company's wholly owned portfolio.  These
investments enable the Company to exercise influence over the operations of the properties and share in
their profits, while earning additional fee income.  The Company accounts for its investments in
unconsolidated joint ventures under the equity method of accounting as the Company exercises influence,
but does not control these entities.  These investments are initially recorded at cost as investments in joint
ventures and subsequently adjusted for equity in earnings and cash contributions and distributions.

The Company has one guarantee obligation related to its joint ventures, which was previously
discussed under Guarantees.  Additionally, all of the joint ventures were encumbered by debt at March 31,
2005.  The Company's proportionate share of this debt was $22.4 million.  Two of these mortgage notes
mature in 2005, of which the Company's proportionate share is $20.3 million.  These notes are secured by
two properties located in Atlanta, Georgia.  The Company and its joint venture partner intend to refinance
the notes with a single note and operate the properties as a single property.

***Acquisitions.***On March 9, 2005, the Company acquired a 316-unit multifamily community located
in Florida.  The purchase was funded primarily by a $29.1 million first mortgage note on the acquired
property and funds provided by a $9.9 million first mortgage note on a Market-Rate property that was
previously unencumbered.

**Dispositions.**  The Company has classified one property as held for sale at March 31, 2005.  The
Company tested this property under SFAS 144 and determined that the property is not impaired.  The sale
of this property is anticipated to occur during the third quarter of 2005.  The results of operations for this
property are included in "Income from discontinued operations" for all periods presented.

The Company has also entered into contracts to sell an Affordable Housing property located in
Northeast Ohio and a Market-Rate property located in Phoenix, Arizona.

**Management and Service Operations.**  The Company had previously been notified by two of its
advised clients that they intended to sell certain properties that are managed by the Company.  At March
31, 2005, all but two of these properties had been sold.  The sale date for the two remaining properties is
uncertain at this time as the Company will attempt to close the sale of such assets when market conditions
are optimal.  Upon the sale of these assets, the Company will no longer receive the property and asset
management fee revenue associated with them.  For the three months ended March 31, 2005, the Company
recorded fees of $103,000 in connection with these two properties.  The Company expects to receive a
disposition fee upon the completion of the sale of one of these properties.

Effective April 1, 2005, the Company entered into property management contracts for four additional
Affordable Housing properties with a total of 434 units located in Ohio owned by an unrelated third party.
The Company anticipates a total of approximately $180,000 in annual fee revenue related to these
properties.

In February 2005, the Company entered into property management contracts for two properties
totaling 200 units located in Florida owned by an unrelated third party.  The Company anticipates a total of
approximately $56,000 in annual fee revenue related to these properties.

***RESULTS OF OPERATIONS***

***Comparison of the three months ended March 31, 2005 to the three months ended March 31, 2004*****

In the following discussion, Market-Rate properties refers to the Same Store Market-Rate property
portfolio.  Market-Rate properties represent 59 wholly owned properties.  Affordable Housing represents 12
properties subject to HUD regulations.  Acquired/Disposed properties represent the properties acquired in
July 2004 and March 2005 as well as the property classified as held for sale.

Overall, the net loss from continuing operations increased $2.2 million in 2005.  This increase was
primarily attributable to an increase in property operating and maintenance expenses, a decrease in the net
of painting services revenue less related painting services expenses, an increase in depreciation and
amortization expenses and a decrease in asset management and asset disposition fees.  These were
partially offset by an increase in rental revenues during 2005.

The following chart reflects the amount and percentage change in line items that are relevant to the
changes in overall operating performance when comparing the three months ended March 31,  2005 to the
three  months ended March 31, 2004:

|                                             | Increase (decrease)
|-------------------------------------------- | -------------------
|                                             | when comparing the 
|                                             | three months ended 
|                                             | March 31, 2005 to  
|                                             | March 31, 2004     
|(Amounts in thousands)                       |                    
|Rental revenue                               | $	 734             
|Property management fees and reimbursements  | (457)              
|Asset management fees                        | (192)              
|Asset disposition fees                       | (233)              
|Painting services revenues                   | (1,778)            
|Other revenues                               | 320                
|Property operating and maintenance expenses: |                    
|Repairs and maintenance                      | 322                
|Real estate taxes and insurance              | 391                
|Utilities                                    | 380                
|Personnel                                    | 335                
|Property operating and maintenance expenses  | 1,388              
|Depreciation and amortization                | 577                
|Painting services expenses                   | (1,322)            
|Interest expense                             | 273                
|                                             |                    
|**Total revenues**                           | **(1,606)**        
|**Total expenses**                           | **408**            
|**(Loss) income from continuing operations** | **(2,223)**        

*Rental Revenues*.  Rental revenue collections are impacted by a combination of rental rates, rent
concessions and occupancy levels.  The Company measures these factors using indicators such as average
economic occupancy (potential rent less vacancies and concessions divided by potential rent), physical
occupancy (number of units occupied divided by total number of units at the end of the period), and average
monthly net collected rent per unit (gross potential rents less vacancies and concessions divided by total
number of units).  This information is presented in the following table for the three months ended March 31,
2005 and 2004:

|                       | For the three months ended March 31, 2005
|---------------------- | -----------------------------------------
|                       | Average                                  
|                       | Economic                                 
|                       | Occupancy                                
|                       |                                          
|Acquisition Properties | 90.1%                                    
|Market-Rate            | 81.6%                                    
|Affordable Housing     | 99.6%                                    

|                       | For the three months ended March 31, 2004
|---------------------- | -----------------------------------------
|                       | Average                                  
|                       | Economic                                 
|                       | Occupancy                                
|                       |                                          
|Acquisition Properties | N/A                                      
|Market-Rate            | 85.4%                                    
|Affordable Housing     | 98.8%                                    

Rental revenue increased $734,000 during 2005 primarily as a result of contributions of
approximately $1.0 million by the property acquired in July 2004 and the property acquired in March 2005.
These contributions were partially offset by a decrease of approximately $308,000 from the Market-Rate
segment.  The decrease in the Market-Rate segment was primarily a result of increased concessions of
$250,000 in 2005 in an effort to maintain physical occupancy.

*Fees.*  The management and service operations recognized a reduction in property management
fees and reimbursements, asset management fees and asset disposition fees in 2005 compared to 2004.
The decrease in asset management fees was due to the reduction in the number of properties that the
Company asset manages for clients.  During 2004, four managed properties were sold, one property was
transferred to another advisor, and the Company purchased its joint venture partners' share of one property.
As a result, there were no fees earned in 2005 related to these properties.  Asset disposition fees were
recognized in 2004 related to the sale of two of these properties.  There were no disposition fees recognized
in 2005.  The reduction in property management fees and reimbursements was primarily due to a decrease
in payroll reimbursements from third  party managed properties.  This reduction had no impact to the net loss
from continuing operations as these reimbursements are also included in direct property management
expenses.

*Painting Services Revenues and Expenses.*  Painting services revenues and expense both
decreased during 2005 primarily as a result of the completion in 2004 of rehabilitation contracts that were
entered into by the Company's subsidiary, Merit Painting Services.

*Other revenue.*  In 2004, the Company began including a refuse reimbursement program in tenant
leases.  The Company recognized $273,000 related to this program during the three months ended March
31, 2005.  There was no revenue related to this program recognized during the same period in 2004.  The
Company anticipates that this revenue will increase during the second and third quarters of 2005 as new
leases are signed, and level off in the fourth quarter and thereafter.

*Property Operating and Maintenance Expenses.*  Property operating and maintenance expenses
increased during 2005 primarily as a result of increases in real estate tax expense, utilities expense,
personnel expense, and repair and maintenance expense.  Real estate taxes increased primarily due to an
increase in estimated taxes and a decrease in prior year tax refunds in 2005 compared to 2004.  Utilities
increased primarily due to increased consumption and cost per unit of natural gas in 2005 compared to
2004.  The increase in personnel expense was primarily due to salary increases and benefit costs.  Repairs
and maintenance expenses increased during 2005 primarily due to increases in unit painting costs and snow
removal.

*****Index*****

*Depreciation and Amortization Expenses.*  Depreciation and amortization expenses increased during
2005 primarily as a result of the acquisition of one property in July 2004 and one property in March 2005,
and the completion of major renovation work at one of the Company's properties in late 2004.

*Interest expense.*Interest expense increased in 2005 primarily as a result of $270,000 in interest
expense on debt related to the two acquired properties (acquired in March 2005 and July 2004).

*Equity in Net Loss of Joint Ventures.*  The following table presents the historical statements of
operations of the Company's beneficial interest in the operations of the joint ventures for the three months
ended March 31, 2005 and 2004:

|                                                 | For the three months
|------------------------------------------------ | --------------------
|                                                 | ended March 31,     
|(In thousands)                                   | 2005                
|                                                 |                     
|Beneficial interests in joint venture operations |                     
|Rental revenue                                   | $	858               
|Cost of operations                               | 513                 
|                                                 | 345                 
|Interest income                                  | -                   
|Interest expense                                 | (311)               
|Depreciation                                     | (291)               
|Amortization                                     | (8)                 
|Loss from continuing operations                  | (265)               
|Income from discontinued operations              | -                   
|Net (loss) income                                | $	(265)             

It should be noted that 2004 includes the results of a property in which the Company was a 24.0%
partner.  The Company purchased the 100% interest in this property in July 2004; therefore, the results are
included in the Company's Consolidated Financial Statements in 2005.

*Income from Discontinued Operations.*  Included in discontinued operations for the three months
ended March 31, 2005 and 2004, is the operating results of a property which was classified as held for sale
at March 31, 2005.  Additionally, the Company had classified one property as held for sale at March 31,
2004.  The operating results for this property are included in discontinued operations for the three months
ended March 31, 2004.  This property was sold in May 2004.  For further details on "Income from
discontinued operations," see Note 3 of the Notes to Consolidated Financial Statements presented in Part
I, Item 1 of this report on Form 10-Q.

**CONTINGENCIES**

For a discussion of contingencies, see Note 10 of the Notes to Consolidated Financial Statements
presented in Part I, Item 1 of this report on Form 10-Q.

******ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

The Company is exposed to interest rate changes associated with variable rate debt as well as
refinancing risk on its fixed-rate debt.  The Company's involvement with derivative financial instruments is
limited and management does not expect to use such instruments for trading or other speculative purposes.
The Company occasionally uses derivative instruments to manage their exposure to interest rates.  See the
Company's Form 10-K "Item 7A Qualitative and Quantitative Disclosures About Market  Risk" for a more
complete discussion of its interest rate sensitive assets and liabilities.  As of March 31, 2005, the fair market
value of the Company's fixed rate debt increased approximately $24.3 million or 4.8%, primarily as a result
of an increase in fixed rate debt which was partially offset by a reduction to the fair market value of existing
fixed rate debt related to an increase in interest rates since December 31, 2004.

*****Index*****

**ITEM 4.  CONTROLS AND PROCEDURES**

*Disclosure Controls and Procedures.*  The Company has evaluated the design and operation of its
disclosure controls and procedures to determine whether they are effective in ensuring that the disclosure
of required information is timely made in accordance with the Securities Exchange Act of 1934 ("Exchange
Act") and the rules and forms of the Securities and Exchange Commission.  This evaluation was made under
the supervision and with the participation of management, including the Company's Chief Executive Officer
("CEO") and Chief Financial Officer ("CFO") as of the end of the period covered by this report on Form 10-Q.
The CEO and CFO have concluded, based on their review, that the Company's disclosure controls and
procedures, as defined in Exchange Act Rules 13a-15(e) and 15d-15(e), are effective to ensure that
information required to be disclosed by the Company in reports that it files under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in Securities and Exchange
Commission rules and forms.

*Changes in Internal Control over Financial Reporting.*There were no changes in the Company's
internal control over financial reporting during the first quarter of 2005 that materially affected or are
reasonably likely to materially affect internal control over financial reporting.**

The Company believes that because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.

*****Index*****

**PART II.	OTHER INFORMATION**

**ITEM 1.	LEGAL PROCEEDINGS**

For information related to legal proceedings, see Note 10 of the Notes to Consolidated Financial
Statements presented in Part I, Item 1 of this Report on Form 10-Q.

**ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

|Issuer Purchases of Equity Securities For the Three Months Ended March 31, 2005
|-------------------------------------------------------------------------------
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Period                                                                         
|                                                                               
|January 1 through                                                              
|January 31                                                                     
|February 1 through                                                             
|February 28                                                                    
|March 1 through                                                                
|March 31                                                                       
|Total                                                                          

The Company does not currently have an authorization in effect from the Board of Directors to
purchase its common shares on the open market.  The Company does, however, have a policy which allows
employees to pay their portion of the payroll taxes related to restricted share vesting by surrendering shares
to the Company equal in value on the day of vesting to the amount of taxes due.  Such shares were the only
shares purchased by the Company during the three months ended March 31, 2005.

**ITEM 6.	EXHIBITS**



|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | **Filed herewith or**                                                            
|---------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | **incorporated**                                                                 
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | **herein by**                                                                    
|**Number** | **Title**                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | **reference**                                                                    
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|3.1        | Amendment to Second Amended and Restated Articles of Incorporation                                                                                                                                                                                                                                                                                                                                                                                                                      |  | Exhibit 3.1 to Form 8-K
filed December 8, 2004.                                  
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|3.2        | Second Amended and Restated Articles of Incorporation, as amended of the
Company.                                                                                                                                                                                                                                                                                                                                                                                                       |  | Exhibit 3.2 to Form 8-K
filed December 8, 2004.                                  
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|3.3        | Code of Regulations of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | Exhibit 3.2 to Form
S-11 filed June 30,
1994 (File No. 33-80950
as amended).     
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|4.1        | Specimen Common Share Certificate.                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | Exhibit 3.1 to Form S-11 filed September 2,
1993 (File No. 33-68276
as amended). 
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|4.2        | Specimen 8.70% Class B Series II Cumulative Redeemable Preferred Shares                                                                                                                                                                                                                                                                                                                                                                                                                 |  | Exhibit 4.3 to Form 8-A
filed December 8, 2004.                                  
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|4.3        | Deposit Agreement by and among Associated Estates Realty Corporation and
National City Bank and Depositary Receipts                                                                                                                                                                                                                                                                                                                                                                     |  | Exhibit 4.5 to Form 8-A
filed December 8, 2004                                   
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|4.4        | Form of Indemnification Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | Exhibit 4.2 to Form S-11 filed September 2,
1993 (File No. 33-68276
as amended). 
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|4.5        | Form of Promissory Note and Form of Mortgage and Security Agreement
dated May 10, 1999 from AERC to The Chase Manhattan Bank.                                                                                                                                                                                                                                                                                                                                                           |  | Exhibit 4.5 to Form 10-Q filed August 13, 1999.                                  
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|4.5a       | Form of Promissory Note and Form of Mortgage and Security Agreement
dated September 10, 1999 from AERC to The Chase Manhattan Bank.                                                                                                                                                                                                                                                                                                                                                     |  | Exhibit 4.5a to Form 10-Q filed November 12,
1999.                               
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|4.5b       | Form of Promissory Note and Form of Mortgage and Security Agreement

dated November 18, 1999 from AERC to The Chase Manhattan Bank.                                                                                                                                                                                                                                                                                                                                                     |  | Exhibit 4.5b to Form 10-K filed March 15, 2000.                                  
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|4.7        | Specimen Class A Preferred Share Certificate.                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | Exhibit 4.1 to Form 8-K
filed July 12, 1995.                                     
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|4.8        | Class A Preferred Share Deposit Agreement and Depositary Receipt.                                                                                                                                                                                                                                                                                                                                                                                                                       |  | Exhibit 4.2 to Form 8-K
filed July 12, 1995.                                     
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|4.9        | Second Amended and Restated Loan Agreement dated April 19, 2002
between Associated Estates Realty Corporation and National City Bank.                                                                                                                                                                                                                                                                                                                                                   |  | Exhibit 4.13a to Form
10-Q filed August 13,
2002.                                
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|4.9a       | First Amendment to Second Amended and Restated Loan Agreement dated
May 14, 2002 between Associated Estates Realty Corporation and National
City Bank.                                                                                                                                                                                                                                                                                                                                  |  | Exhibit 4.13b to Form
10-Q filed August 13,
2002.                                
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|4.9b       | Second Amendment to Second Amended and Restated Loan Agreement
dated April 17, 2003 between Associated Estates Realty Corporation and
National City Bank.                                                                                                                                                                                                                                                                                                                               |  | Exhibit 4.13c to Form
10-Q filed August 1,
2003.                                 
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|4.9c       | Third Amendment to Second Amended and Restated Loan Agreement dated
July 15, 2003 between Associated Estates Realty Corporation and National
City Bank.                                                                                                                                                                                                                                                                                                                                 |  | Exhibit 4.13d to Form
10-Q filed November
20, 2003.                              
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|4.9d       | Fourth Amendment to Second Amended and Restated Loan Agreement dated
September 7, 2004 between Associated Estates Realty Corporation and
National City Bank.                                                                                                                                                                                                                                                                                                                            |  | Exhibit 4.13e to Form
10-Q filed November 2,
2004.                               
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|4.10       | Guaranty Agreement dated November 28, 2000 from Associated Estates
Realty Corporation to Southtrust Bank.                                                                                                                                                                                                                                                                                                                                                                               |  | Exhibit 4.14 to Form 10-K filed March 13, 2001.                                  
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|4.11       | Loan Agreement dated July 22, 2003 between The Huntington National Bank
and MIG/Orlando Development, Ltd.                                                                                                                                                                                                                                                                                                                                                                               |  | Exhibit 4.15 to Form 10-Q filed November 20,
2003.                               
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|           | Certain of the Registrant's assets are subject to mortgage obligations each of
which individually relates to indebtedness totaling less than 10.0% of the total
assets of the Registrant.  The Registrant hereby agrees to furnish a copy of
such agreements to the Commission upon its request.                                                                                                                                                                                        |  |                                                                                  
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|           | The Registrant issued unsecured debt in the form of Trust Preferred
Securities on March 15, 2005 in a private placement in an amount less than
10.0% of the total assets of the Registrant.  The Registrant hereby agrees to
furnish a copy of the Purchase Agreement dated March 15, 2005 between
Associated Estates Realty Corporation, AERC Delaware Trust and Taberna
Preferred Funding 1, Ltd. and a specimen Preferred Securities Certificate to
the Commission upon its request. |  |                                                                                  
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|10         | Associated Estates Realty Corporation Directors' Deferred Compensation
Plan.                                                                                                                                                                                                                                                                                                                                                                                                            |  | Exhibit 10 to Form 10-Q
filed November 14,
1996.                                 
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|10.1       | Stock Option Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | Exhibit 10.2 to Form S-11 filed September 2,
1993 (File No. 33-68276
as amended).
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|10.2       | Amended and Restated Employment Agreement between the Company and
Jeffrey I. Friedman.                                                                                                                                                                                                                                                                                                                                                                                                  |  | Exhibit 10.1 to Form 10-Q filed May 13, 1996.                                    
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|10.3       | Equity-Based Incentive Compensation Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | Exhibit 10.4 to Form 10-K filed March 29, 1995.                                  
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|10.4       | Form of Restricted Agreement dated by and among the Company and Its
Independent Directors.                                                                                                                                                                                                                                                                                                                                                                                              |  | Exhibit 10.9 to Form 10-K filed March 28, 1996.                                  
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|10.5       | Pledge Agreement dated May 23, 1997 between Jeffrey I. Friedman and the
Company.                                                                                                                                                                                                                                                                                                                                                                                                        |  | Exhibit 10.01 to Form
10-Q filed August 8,
1997.                                 
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|10.6       | Secured Promissory Note dated May 23, 1997 in the amount of $1,671,000
executed by Jeffrey I. Friedman in favor of the Company.                                                                                                                                                                                                                                                                                                                                                         |  | Exhibit 10.02 to Form
10-Q filed August 8,
1997.                                 
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|10.7       | Unsecured Promissory Note dated May 23, 1997 in the amount of $1,671,000
executed by Jeffrey I. Friedman in favor of the Company.                                                                                                                                                                                                                                                                                                                                                       |  | Exhibit 10.03 to Form
10-Q filed August 8,
1997.                                 
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|10.8       | Form of Share Option Agreement by and among the Company and Its
Independent Directors.                                                                                                                                                                                                                                                                                                                                                                                                  |  | Exhibit 10.14 to Form
10-K filed March 30,
1993.                                 
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|10.9       | Partnership Interests Purchase Agreement dated July 17, 2004 by and among
Jeffrey I. Friedman and JIFCO, an Ohio Corporation  and Winchester, Inc., an
Ohio Corporation                                                                                                                                                                                                                                                                                                                 |  | Exhibit 10.21 to Form
10-K filed February 25,
2005.                              
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|10.10      | Year 2000 Equity Incentive Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | Exhibit 10.22 to Form
10-Q filed May 15,
2001.                                   
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|31         | Certification of Chief Executive Officer Pursuant  to Section 302 of the
Sarbanes Oxley Act                                                                                                                                                                                                                                                                                                                                                                                             |  | Exhibit 31 to Form 10-Q
filed herewith.                                          
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|31.1       | Certification of Chief Financial Officer Pursuant to Section 302 of the

Sarbanes Oxley Act.                                                                                                                                                                                                                                                                                                                                                                                            |  | Exhibit 31.1 to Form 10-Q filed herewith.                                        
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                  
|32         | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to
Section 906 of the Sarbanes Oxley Act                                                                                                                                                                                                                                                                                                                                                                  |  | Exhibit 32 to Form 10-Q
filed herewith.                                          

*********Index*****

**SIGNATURES**

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

|            | ASSOCIATED ESTATES REALTY CORPORATION
|----------- | -------------------------------------
|            |                                      
|            |                                      
|May 4, 2005 | /s/ Lou Fatica                       
|(Date)      | Lou Fatica, Vice President,          
|            | Chief Financial Officer and Treasurer