**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                                | Condensed Financial Statements                                       
|                                      |                                                                      
|                                      | Consolidated Balance Sheets as of                                    
|                                      | September 30, 2002 and December 31, 2001                             
|                                      |                                                                      
|                                      | Consolidated Statements of Operations for the three and nine         
|                                      | months ended September 30, 2002 and 2001                             
|                                      |                                                                      
|                                      | Consolidated Statement of Shareholders' Equity for the three and nine
|                                      | months ended September 30, 2002                                      
|                                      |                                                                      
|                                      | Consolidated Statements of Cash Flows for the three and nine         
|                                      | months ended September 30, 2002 and 2001                             
|                                      |                                                                      
|                                      | Notes to Financial Statements                                        
|                                      |                                                                      
|ITEM 2                                | Management's Discussion and Analysis of Financial                    
|                                      | Condition and Results of Operations                                  
|                                      |                                                                      
|ITEM 3                                | Quantitative and Qualitative Disclosure About Market Risk            
|                                      |                                                                      
|ITEM 4                                | Controls and Procedures                                              
|                                      |                                                                      
|**PART II**  -  **OTHER INFORMATION** |                                                                      
|                                      |                                                                      
|ITEM 1                                | Legal Proceedings                                                    
|                                      |                                                                      
|ITEM 2                                | Changes in Securities                                                
|                                      |                                                                      
|ITEM 3                                | Defaults Upon Senior Securities                                      
|                                      |                                                                      
|ITEM 4                                | Submission of Matters to a Vote of Security Holders                  
|                                      |                                                                      
|ITEM 5                                | Other Information                                                    
|                                      |                                                                      
|ITEM 6                                | Exhibits and Reports on Form 8-K                                     
|                                      |                                                                      
|**SIGNATURES**                        | 34                                                                   

**ASSOCIATED ESTATES REALTY CORPORATION**

**CONSOLIDATED BALANCE SHEETS**

**(UNAUDITED)**

|                                                                    |               |             
|------------------------------------------------------------------- | ------------- | ------------
|                                                                    | September 30, | December 31,
|                                                                    | 2002          | 2001        
|(In thousands, except share amounts)                                |               |             
|**ASSETS**                                                          |               |             
|Real estate assets                                                  |               |             
|Land                                                                | $   89,539    | $   90,965  
|Buildings and improvements                                          | 792,483       | 789,775     
|Furniture and fixtures                                              | 33,469        | 33,091      
|                                                                    | 915,491       | 913,831     
|Less:  accumulated depreciation                                     | (227,009)     | (208,039)   
|                                                                    | 688,482       | 705,792     
|Construction in progress                                            | 13,643        | 10,287      
|Real estate, net                                                    | 702,125       | 716,079     
|Properties held for sale                                            | -             | 4,105       
|Cash and cash equivalents                                           | 1,640         | 3,164       
|Restricted cash                                                     | 19,545        | 22,237      
|Accounts and notes receivable                                       |               |             
|Rents                                                               | 820           | 937         
|Affiliates and joint ventures                                       | 6,298         | 6,195       
|Other                                                               | 2,597         | 4,188       
|Investments in joint ventures, net                                  | 10,662        | 2,230       
|Goodwill                                                            | 1,725         | 1,725       
|Intangible and other assets, net                                    | 17,601        | 13,974      
|                                                                    | $ 763,013     | $ 774,834   
|**LIABILITIES AND SHAREHOLDERS' EQUITY**                            |               |             
|Secured debt                                                        | $ 557,360     | $ 551,964   
|Unsecured debt                                                      | 105           | 105         
|Total indebtedness                                                  | 557,465       | 552,069     
|Accounts payable and accrued expenses                               | 24,529        | 21,073      
|Dividends payable                                                   | 4,870         | 4,855       
|Resident security deposits                                          | 4,214         | 4,161       
|Funds held on behalf of managed properties                          |               |             
|Affiliates and joint ventures                                       | 3,854         | 5,449       
|Other                                                               | 1,842         | 1,761       
|Accrued interest                                                    | 2,634         | 2,879       
|Total liabilities                                                   | 599,408       | 592,247     
|                                                                    |               |             
|Operating partnership minority interest                             | 6,291         | 10,591      
|                                                                    |               |             
|Commitments and contingencies                                       | -             | -           
|Shareholders' equity                                                |               |             
|Preferred shares, Class A cumulative, without par value;            |               |             
|3,000,000 authorized; 225,000 issued and outstanding                | 56,250        | 56,250      
|Common shares, without par value, $.10 stated value; 50,000,000     |               |             
|authorized; 22,995,763 issued and 19,474,832 and 19,421,406 out-    |               |             
|standing at September  30, 2002 and December 31, 2001, respectively | 2,300         | 2,300       
|Paid-in capital                                                     | 278,933       | 279,023     
|Accumulated distributions in excess of accumulated net income       | (148,250)     | (132,844)   
|Accumulated other comprehensive income (loss)                       | -             | (45)        
|Less: Treasury shares, at cost, 3,520,931 and 3,574,358 shares      |               |             
|at September 30, 2002 and December 31, 2001, respectively           | (31,919)      | (32,688)    
|Total shareholders' equity                                          | 157,314       | 171,996     
|                                                                    | $ 763,013     | $ 774,834   





**ASSOCIATED ESTATES REALTY CORPORATION**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

**(UNAUDITED)**

|                                                                  | For the three months ended | For the nine months ended
|----------------------------------------------------------------- | -------------------------- | -------------------------
|                                                                  | September 30,              | September 30,            
|(In thousands, except per share amounts)                          | 2002                       | 2001                     
|Revenues                                                          |                            |                          
|Rental                                                            | $ 35,397                   | $ 35,114                 
|Property management fees and reimbursements                       | 4,280                      | 5,028                    
|Asset management fees                                             | 716                        | 749                      
|Painting services                                                 | 593                        | 699                      
|Other                                                             | 899                        | 902                      
|Total revenues                                                    | 41,885                     | 42,492                   
|Expenses                                                          |                            |                          
|Property operating and maintenance                                | 17,672                     | 16,113                   
|Depreciation and amortization                                     | 8,958                      | 8,428                    
|Direct property management expenses                               | 3,159                      | 3,752                    
|Painting services                                                 | 549                        | 601                      
|General and administrative                                        | 3,746                      | 3,427                    
|Interest expense                                                  | 10,325                     | 10,537                   
|Total expenses                                                    | 44,409                     | 42,858                   
|(Loss) income before gain on disposition of properties and land,  |                            |                          
|equity in net (loss) income of joint ventures, minority interest, |                            |                          
|income from discontinued operations and extraordinary item        | (2,524)                    | (366)                    
|Gain on disposition of properties and land                        | -                          | 2,694                    
|Equity in net (loss) income of joint ventures                     | (423)                      | 99                       
|Minority interest in operating partnership                        | (74)                       | (121)                    
|(Loss) income before income from discontinued                     |                            |                          
|operations and extraordinary item                                 | (3,021)                    | 2,306                    
|Income from discontinued operations:                              |                            |                          
|Operating income                                                  | 6                          | 100                      
|Gains on disposition of properties                                | 955                        | -                        
|Income from discontinued operations                               | 961                        | 100                      
|Extraordinary item - early extinguishment of debt                 | -                          | -                        
|**Net (loss) income**                                             | $ (2,060)                  | $   2,406                
|**Net (loss) income applicable to common shares**                 | $ (3,431)                  | $   1,035                
|                                                                  |                            |                          
|**Earnings per common share - basic:**                            |                            |                          
|(Loss) income before income from discontinued operations          |                            |                          
|and extraordinary item applicable to common shares                | $     (.23)                | $       .05              
|Income from discontinued operations                               | .05                        | -                        
|Extraordinary item                                                | -                          | -                        
|Net (loss) income applicable to common shares                     | $     (.18)                | $       .05              
|                                                                  |                            |                          
|**Earnings per common share - diluted:**                          |                            |                          
|(Loss) income before income from discontinued operations          |                            |                          
|and extraordinary item applicable to common shares                | $     (.23)                | $       .05              
|Income from discontinued operations                               | .05                        | -                        
|Extraordinary item                                                | -                          | -                        
|Net (loss) income applicable to common shares                     | $     (.18)                | $       .05              
|**Dividends declared per common share**                           | $      .25                 | $       .25              
|                                                                  |                            |                          
|**Weighted average number of common**                             |                            |                          
|**shares outstanding	- basic**                                    | 19,364                     | 19,430                   
|**- diluted**                                                     | 19,364                     | 19,714                   





**ASSOCIATED ESTATES REALTY CORPORATION**

**CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY**

**(UNAUDITED)**

|                                               |           |            |                        |           | Accumulated   |               |           
|---------------------------------------------- | --------- | ---------- | ---------------------- | --------- | ------------- | ------------- | ----------
|                                               |           | Class A    |                        |           | Distributions | Accumulated   |           
|                                               |           | Cumulative | Common                 |           | In Excess Of  | Other         | Treasury  
|                                               |           | Preferred  | Shares                 | Paid-In   | Accumulated   | Comprehensive | Shares    
|(In thousands, except share amounts)           | Total     | Shares     | (at $.10 stated value) | Capital   | Net Income    | (Loss) Income | (at cost) 
|                                               |           |            |                        |           |               |               |           
|Balance, December 31, 2001                     | $ 171,996 | $ 56,250   | $ 2,300                | $ 279,023 | $ (132,844)   | $(45)         | $ (32,688)
|Net income                                     | 3,345     | -          | -                      | -         | 3,345         | -             | -         
|Other comprehensive income:                    |           |            |                        |           |               |               |           
|Company's portion of the unrealized            |           |            |                        |           |               |               |           
|income on a derivative instrument held         |           |            |                        |           |               |               |           
|at a joint venture property                    | 45        | -          | -                      | -         | -             | 45            | -         
|Total comprehensive income                     | 3,390     | -          | -                      | -         | 3,345         | 45            | -         
|Issuance of 36,985 restricted common shares    |           |            |                        |           |               |               |           
|from treasury shares                           | 368       | -          | -                      | (58)      | -             | -             | 426       
|Forfeiture of 24,730 restricted common         |           |            |                        |           |               |               |           
|shares to treasury                             | (256)     | -          | -                      | (111)     | -             | -             | (145)     
|Deferred compensation                          | 241       | -          | -                      | 241       | -             | -             | -         
|Issuance of 56,588 shares from treasury shares | 445       | -          | -                      | (194)     | -             | -             | 639       
|Purchase of 14,867 treasury shares             | (151)     | -          | -                      | -         | -             | -             | (151)     
|Reclassify distribution                        | -         | -          | -                      | 32        | (32)          | -             | -         
|Common share dividends declared                | (14,606)  | -          | -                      | -         | (14,606)      | -             | -         
|Preferred share dividends declared             | (4,113)   | -          | -                      | -         | (4,113)       | -             | -         
|Balance, September 30, 2002                    | $ 157,314 | $ 56,250   | $ 2,300                | $ 278,933 | $(148,250)    | $  -          | $ (31,919)





**ASSOCIATED ESTATES REALTY CORPORATION**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30,**

**(UNAUDITED)**

|                                                                        | 2002     | 2001    
|----------------------------------------------------------------------- | -------- | --------
|(In thousands)                                                          |          |         
|Cash flow from operating activities:                                    |          |         
|Net income                                                              | $  3,345 | $  4,827
|Adjustments to reconcile net income to net                              |          |         
|cash provided by operating activities:                                  |          |         
|Depreciation and amortization                                           | 26,125   | 25,459  
|Loss on fixed asset replacements write-off                              | 230      | 435     
|Loss on extinguishment of debt                                          | 76       | -       
|Gain on disposition of properties                                       | (9,051)  | (6,038) 
|Minority interest in operating partnership                              | 299      | 362     
|Equity in net loss of joint ventures                                    | 1,053    | 336     
|Earnings distributed from joint ventures                                | 139      | 217     
|Net change in assets and liabilities:                                   |          |         
|- Accounts and notes receivable                                         | 1,302    | (329)   
|- Accounts and notes receivable of affiliates and joint ventures        | 304      | 156     
|- Accounts payable and accrued expenses                                 | 450      | (49)    
|- Other operating assets and liabilities                                | (3,085)  | (1,962) 
|- Restricted cash                                                       | (4,525)  | (809)   
|- Funds held for non-owned managed properties                           | 81       | 158     
|- Funds held for non-owned managed properties of affiliates             |          |         
|and joint ventures                                                      | (1,595)  | 1,906   
|Total adjustments                                                       | 11,803   | 19,842  
|Net cash flow provided by operations                                    | 15,148   | 24,669  
|                                                                        |          |         
|Cash flow from investing activities:                                    |          |         
|Real estate and fixed asset additions acquired or developed             | (11,064) | (11,374)
|Net proceeds received from sale of properties and land                  | 24,456   | 4,799   
|Contributions to joint ventures                                         | (767)    | (4,931) 
|Net cash flow provided by (used for) investing activities               | 12,625   | (11,506)
|Cash flow from financing activities:                                    |          |         
|Principal payments on secured debt                                      | (29,590) | (4,218) 
|Proceeds from secured debt                                              | 11,089   | 4,200   
|Principal payment on medium term notes                                  | -        | (604)   
|Line of credit borrowings                                               | 40,500   | 32,600  
|Line of credit repayments                                               | (33,000) | (25,600)
|Common share dividends paid and operating partnership distributions     | (14,591) | (14,551)
|Preferred share dividends paid                                          | (4,113)  | (4,114) 
|Treasury shares transactions - net                                      | 408      | -       
|Net cash flow used for financing activities                             | (29,297) | (12,287)
|(Decrease) increase in cash and cash equivalents                        | (1,524)  | 876     
|Cash and cash equivalents, beginning of period                          | 3,164    | 566     
|Cash and cash equivalents, end of period                                | $  1,640 | $  1,442
|                                                                        |          |         
|Supplemental disclosure of cash flow information:                       |          |         
|Dividends declared but not paid                                         | $  4,870 | $  4,858
|Land contributed to joint venture                                       | 1,250    | -       
|Assumption of debt by purchaser of properties                           | -        | 25,316  
|Assumption of debt in connection with the joint venture transaction     | 28,770   | -       
|Relinquishment of debt in connection with the joint venture transaction | 13,878   | -       
|Adjustment for purchase of minority interest                            | 2,396    | 536     
|Cash paid for interest (excluding capitalized interest)                 | 30,138   | 31,882  





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

**NOTES TO FINANCIAL STATEMENTS**



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

**Business**

Associated Estates Realty Corporation (the "Company") is a self-administered and self-managed
real estate investment trust ("REIT") which specializes in multifamily property management, advisory,
development, acquisition, disposition, operation and ownership activities.  MIG II Realty Advisors, Inc.
("MIG"), an affiliate of the Company, is a registered investment advisor and serves as a real estate advisor
to large pension funds.  The Company owns four taxable REIT subsidiaries which provide management and
other services for the Company and third parties, collectively the ("Service Companies").

The Company owns or manages 111 apartment communities in twelve states consisting of 25,267
units.  The Company owns, either directly or through subsidiaries, and holds ownership interests in 81 of
those apartment communities containing 18,406 units in ten states.  Thirteen of those owned or partially
owned apartment communities, consisting of 1,354 units, are affordable housing communities.  The
Company has under construction, development or in lease-up three apartment communities consisting of
approximately 1,085 units.  The Company or one of its subsidiaries also manages or serves as asset
manger for 30 communities, consisting of 7,047 units and seven commercial properties containing in excess
of 1.1 million square feet, which are owned by large pension funds, non profit organizations or affiliated third
party owners.

**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 normally 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, 2001.

**Recent Accounting Pronouncements**

In June 2001, the Financial Accounting Standards Board ("FASB") approved Statements of Financial
Accounting Standards No. 142 "Goodwill and Other Intangible Assets" which for the Company became
effective  January 1, 2002.  Under SFAS No. 142, amortization of goodwill, including goodwill recorded in
past business combinations, was discontinued effective with the adoption of this standard, January 1, 2002.
The Company reviewed goodwill and the intangible assets for impairment as of September 30, 2002, and
wrote down the intangible assets $312,000 (see Note 7 for further information).

In August 2001, the FASB issued SFAS No. 143 "Accounting for Asset Retirement Obligations"
which addresses financial accounting and reporting for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs.  This Statement requires that the fair value of
a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable
estimate of the fair value can be made.  The associated asset retirement costs are capitalized as part of the
carrying amount of the long-lived asset.  This Statement will be effective January 1, 2003.  The Company
is currently assessing, but has not yet determined the impact of SFAS No. 143 on its financial position or
results of operations.

In October 2001, the FASB issued SFAS No. 144 "Accounting for the Impairment or Disposal of
Long-Lived Assets."  This Statement supersedes SFAS No. 121 and requires that long-lived assets that are
to be disposed of by sale be measured at the lower of book value or fair value less costs to sell.  SFAS No.
144 retains the fundamental provisions of SFAS No. 121 for (a) recognition and measurement of the
impairment of long-lived assets to be held and used, and (b) measurement of long-lived assets to be
disposed of by sale, but broadens the definition of what constitutes a discontinued operation and how the
results of a discontinued operation are to be measured and presented.  The Company has adopted this
Statement  effective January 1, 2002.  Gates Mills III, a  66.67% owned joint venture property sold on April
19, 2002,  Americana Apartments sold on April 24, 2002, and Jennings Commons, a 50-unit Affordable
Housing property located in Northeast Ohio sold on July 29, 2002 are included in discontinued operations
(See Note 3 for further information).

In April 2002, the FASB issued SFAS No. 145 "Rescission of FAS Nos. 4, 44, and 64, Amendment
of SFAS No. 13, and Technical Corrections."  This Statement rescinds SFAS No. 4, "Reporting Gains and
Losses from Extinguishment of Debt", and an amendment of that Statement, SFAS No. 64,
"Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements."  This Statement amends SFAS No.
13, "Accounting for Leases." This Statement also amends other existing authoritative pronouncements to
make various technical corrections, clarify meanings or describe their applicability under changed conditions.
This statement will be effective for the Company's fiscal year ending December 31, 2003.  With the
rescission of SFAS No. 4, effective January 1, 2003, the Company will no longer record gains or losses from
the early extinguishment of debt as extraordinary items but will record them as a component of the
Company's continuing operations.

In July 2002, the FASB issued SFAS No. 146 "Accounting for Costs Associated with Exit or Disposal
Activities."  This statement nullifies EITF Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)."  The principal difference between Statement 146 and Issue 94-3 relates to Statement No.
146's requirements for recognition of a liability for a cost associated with an exit or disposal activity.  Under
Issue 94-3, a liability for an exit cost was recognized at the date of an entity's commitment to an exit plan.
In Statement No. 146, the FASB concluded that an entity's commitment to a plan, by itself, does not create
an obligation that meets the definition of a liability.  Statement No. 146 therefore requires that a cost
associated with an exit or disposal activity be recognized when the liability is incurred.  This statement also
establishes that fair value is the objective for initial measurement of the liability.  The provisions of this
statement are effective for exit or disposal activities that are initiated after December 31, 2002.

**Property Management**

In accordance with EITF 01-14, "Income Statement Characterization of Reimbursements Received
for 'Out-of-Pocket' Expenses Incurred", effective January 1, 2002, the Company recharacterized as revenues
certain reimbursements received for expenses incurred in connection with the management of properties
for third parties, joint ventures and other affiliates.  Previously, the Company netted reimbursements against
the expenses.  Effective January 1, 2002, the Company is reporting these reimbursements as revenues and
the reimbursed expenditures as direct property management expenses as the Company is the primary
obligor with respect to salaries and benefits relating to employees who work at these properties.  The
presentation for 2001 has been recharacterized on the same basis.

**Impairment of Long-Lived Assets**

The preparation of the financial statements are subject to estimates made by management.  When
there is an impairment indicator, the Company determines whether a real estate asset is impaired.  In
performing this analysis, the Company determines the range of potential alternatives and assigns a
probability of the various alternatives under consideration by management.  Should the alternatives
considered or the probability of the occurrence thereof change, an impairment may result which could
materially impact the results of operations of the Company.

**Reclassifications**

Certain reclassifications have been made to the 2001 financial statements to conform to the 2002
presentation.

**2.	DEVELOPMENT OF MULTIFAMILY PROPERTIES**

Construction in progress, including the cost of land, for the development of multifamily properties
was $13.6 million and $10.3 million at September 30, 2002 and December 31, 2001, respectively.  The
Company capitalizes interest costs on funds used in construction, real estate taxes and insurance from the
commencement of development activity through the time the property is available for leasing.  Capitalized
interest, real estate taxes and insurance aggregated approximately $884,000 and $788,000 during the nine
month periods ended September 30, 2002 and 2001, respectively.

On May 8, 2002, the Company entered into a joint venture agreement to develop a 288-unit
multifamily apartment community located in Orlando, Florida.  The Company contributed land of $1.3 million
in exchange for a 24.0% interest in this joint venture.

******3.	SALE OF PROPERTIES**

On January 18, 2002, the Company completed the sale of Muirwood Village at London located in
Central Ohio.  The buyer purchased the property for net cash proceeds of $3.8 million which resulted in the
Company recording a gain of $255,000.  Since this property was held for sale as of December 31, 2001, the
financial results are excluded from the discontinued operations presentation.

On April 19, 2002, the Company and its joint venture partners completed the exchange of five
Market Rate properties located in Northeast Ohio.  Under the terms of the agreement, the Company became
the 100% fee owner of three of the properties, the Americana Apartments (738 units) which was
subsequently sold (see below), College Towers (458 units) and the Watergate Apartments (949 units).  The
Company relinquished its 66.67% ownership interest in Gates Mills III (320 units) and its 33.34% ownership
interest in Gates Mills Towers (757 units).  There was no gain or loss recorded in connection with this
transaction as the exchange was not the culmination of the earnings process.  Prior to the exchange,
financial results for Gates Mills III were consolidated.  As a result, the operating income for Gates Mills III,
included in income from discontinued operations, totaled $6,000 and $6,000 for the three and nine months
ended September 30, 2002, respectively, and $64,000 and $55,000 for the three and nine months ended
September 30, 2001, respectively.

On April 24, 2002, the Company completed the sale of the Americana Apartments.  The buyer
purchased the property for a sales price of $18.5 million.  The Company paid off the existing debt of $11.6
million and received net cash proceeds of $6.2 million resulting in a gain of $7.9 million.  This gain is
included in income from discontinued operations.  Additionally, the operating results of $(5,000) and
$(32,000) for the three and nine months ended September 30, 2002 are also included in income from
discontinued operations.

On July 29, 2002, the Company completed the sale of Jennings Commons, a 50-unit Affordable
Housing property located in Northeast Ohio.  The buyer purchased the property for a sales price of $1.9
million, resulting in a gain of $976,000.  This gain is included in income from discontinued operations.  The
operating results of $(1,000) and $87,000 for the three and nine months ended September 30, 2002 and
$36,000 and $131,000 for the three and nine months ended September 30, 2001 are also included in
income from discontinued operations.

**4.	PROPERTIES HELD FOR SALE**

The Company generally classifies properties as "Properties 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 and accordingly, the property is not identified as held
for sale until the closing actually occurs.   At September 30, 2002, no properties were classified in the
Consolidated Balance Sheets as "Properties held for sale."  At December 31, 2001, the Company had
contracts to sell one Market Rate property and one Affordable Housing property, which were presented in
the Consolidated Balance Sheets as "Properties held for sale."  The Market Rate property was subsequently
sold on January 18, 2002 (see Note 3 for further information).  The contract on the Affordable Housing
property has been canceled and the property has been reclassified to "Real estate assets" as it is no longer
considered "Property held for sale", since management does not believe it will be sold within the next year.
Upon reclassification, the Company recorded the previously unrecognized depreciation of approximately
$49,000.

**5.	DEBT**

**Conventional**

On February 1, 2002, the Company completed the refinancing of $10.9 million of maturing debt.
The new loan requires monthly principal and interest payments through the maturity date of January 1, 2005.
The interest rate is equal to the prime rate or under certain conditions at a rate of LIBOR plus 2.0%.  The
Company is currently paying interest at a rate of LIBOR plus 2.0% (3.56% at September 30, 2002).

In 2000, the Company obtained a $14.0 million first mortgage loan encumbering a property owned
by a subsidiary.  The loan provided for disbursement in two installments.  The first installment of $9.8 million
was disbursed in September 2000.  The balance of $4.2 million was disbursed  in March 2001.  The loan
requires monthly interest-only payments at the rate of 7.76% through October 15, 2002 when payments of
principal and interest are required through the maturity date of October 15, 2005.

**Federal Insured Mortgage Debt**

On June 27, 2002, the Company prepaid a $2.7 million HUD insured mortgage.  The Company
incurred a prepayment penalty and wrote off unamortized costs totaling $76,000 in connection with this
prepayment.  The $76,000 is shown as "Extraordinary item - early extinguishment of debt" in the Company's
financial statements.

******Lines of Credit**

On September 30, 2002, $11.0 million was outstanding under a $20.0 million secured line of credit.
Borrowings under this line of credit are currently restricted to an amount not to exceed $12.6 million and
bear interest at a rate of LIBOR plus 1.5% (3.31% at September 30,  2002).  At December 31, 2001, there
were $3.5 million of borrowings outstanding under this line of credit.  Additionally, in connection with a
second secured line of credit, on April 19, 2002, the Company entered into an Amended and Restated Line
of Credit Agreement, which extended the maturity of its $12.0 million line of credit from December 31, 2002
to December 31, 2003 and increased the maximum amount of such facility from $12.0 million to $14.0
million.  This credit facility may also be utilized for derivative and letter of credit transactions; however, the
transactions reduce the amount of borrowings otherwise available under the line of credit.  As of September
30, 2002, letters of credit totaling $4.2 million (see Note 15 for further information) and a $1.6 million credit
risk sublimit relative to derivative transactions limit the amount available under this line of credit to $8.2
million.  There were no borrowings outstanding under this line at September 30, 2002 or at December 31,
2001.

**6.	FINANCIAL INSTRUMENTS: DERIVATIVES AND HEDGING**

In the normal course of business, the Company is exposed to the effect of interest rate changes.
The Company limits these risks by following established risk management policies and procedures including
the use of derivatives.  For interest rate exposures, derivatives are used primarily to manage the cost of
borrowing obligations.

The Company does not use derivatives for trading or speculative purposes.  Further, the Company
has a policy of only entering into contracts with major financial institutions based upon their credit ratings
and other factors.  When viewed in conjunction with the underlying and offsetting exposure that the
derivatives are designed to hedge, the Company has not sustained a material loss from those instruments
nor does it anticipate any material adverse effect on its net income or financial position in the future from
the use of derivatives.

The following table summarizes the notional value, carrying value and fair value of the existing
derivative financial instruments as of September 30, 2002.  The notional value at September 30, 2002
provides an indication of the extent of the Company's involvement in these instruments at that time, but does
not represent exposure to credit or interest market risks.

|                              | As of September 30, 2002
|----------------------------- | ------------------------
|(In thousands)                | Notional Value          
|                              |                         
|Interest Rate Swap-fair value | $14,000                 
|Interest Rate Swap-fair value | 17,200                  

On September 30, 2002, the fair value hedges were reported at their fair values in other assets of
$1.3 million.  Hedges that are designated as fair value hedges mitigate risk on changes in the fair value of
fixed-rate debt.  The unrealized gains/losses in the fair value of these hedges are reported in earnings with
an offsetting adjustment through earnings to the carrying value of the hedged debt.  Adjustments to the
carrying value of the hedged debt shall be amortized to earnings beginning no later than when the hedged
debt ceases to be adjusted for changes in its fair value attributable to the interest rate risk being hedged.

**7.**	**GOODWILL AND OTHER INTANGIBLE ASSETS**

In June 1998, the Company merged with MIG Realty Advisors, Inc. and, as a result, recorded
goodwill and an intangible asset subject to amortization.  The intangible asset represents asset advisory and
property management contracts.  The asset advisory and property management contracts are attributed to
properties owned by pension fund clients and are generally terminable upon 30 days notice.  The intangible
asset and goodwill have been allocated fully to the Management and Service Operations Segment.

Effective October 1, 2002, the advisory and management responsibilities for 11 properties owned
by one of the Company's clients were transferred by the client to another advisor.  In connection with this
transfer, the Company wrote off the related asset and management portion of the intangible asset in the
amount of $312,000.  This write off is included in the "Depreciation and amortization" expense on the
Company's Consolidated Statement of Operations.

Information on the goodwill and intangible asset is as follows:

**Intangible Asset Subject to Amortization**

|                                   | (In thousands)
|---------------------------------- | --------------
|Gross carrying amount              | $ 4,780       
|Less: Accumulated amortization     | 4,029         
|Less: Impairment write off in 2002 | 312           
|Balance as of September 30, 2002   | $    439      

|                                               |           
|---------------------------------------------- | ----------
|Estimated amortization expense (in thousands): |           
|                                               |           
|For the fourth quarter 2002                    | $       72
|For the year ended December 31, 2003           | 288       
|For the year ended December 31, 2004           | 79        

**Goodwill**

The carrying amount of goodwill at September 30, 2002 was $1.7 million.  In connection with the
loss of advisory and management responsibilities for 11 properties, as described above, the Company
reviewed its recorded amount of Goodwill for impairment.  The Company used the discounted value of
expected future cash flows to determine the fair value of the Goodwill.  Based on its analysis, the Company
determined that the Goodwill was not impaired.  Therefore, there were no changes to the carrying amount
of Goodwill during the nine months ended September 30, 2002.

**Adoption of FAS 142**

The following table presents what reported net (loss) income and earnings per share amounts would
have been in all periods presented exclusive of amortization expense recognized in those periods related
to Goodwill that is no longer being amortized.

|                                                       | For the three months | For the nine months
|------------------------------------------------------ | -------------------- | -------------------
|                                                       | ended September 30,  | ended September 30,
|(In thousands except per share data)                   | 2002                 | 2001               
|                                                       |                      |                    
|Net (loss) income applicable to common shares before   |                      |                    
|extraordinary item                                     | $ (3,431)            | $ 1,035            
|Add back goodwill amortization                         | -                    | 77                 
|Adjusted net (loss) income applicable to common shares |                      |                    
|before extraordinary item                              | (3,431)              | 1,112              
|Extraordinary item                                     | -                    | -                  
|Adjusted net (loss) income applicable to common shares | $ (3,431)            | $ 1,112            
|                                                       |                      |                    
|**Earnings Per Common Share - Basic:**                 |                      |                    
|Net (loss) income applicable to common shares before   |                      |                    
|extraordinary item                                     | $     (.18)          | $     .05          
|Goodwill amortization                                  | -                    | .01                
|Adjusted net (loss) income applicable to common shares |                      |                    
|before extraordinary item                              | (.18)                | .06                
|Extraordinary item                                     | -                    | -                  
|Adjusted net (loss) income applicable to common shares | $     (.18)          | $     .06          
|                                                       |                      |                    
|**Earnings Per Common Share - Diluted:**               |                      |                    
|Net (loss) income applicable to common shares before   |                      |                    
|extraordinary item                                     | $     (.18)          | $     .05          
|Goodwill amortization                                  | -                    | .01                
|Adjusted net (loss) income applicable to common shares |                      |                    
|before extraordinary item                              | (.18)                | .06                
|Extraordinary item                                     | -                    | -                  
|Adjusted net (loss) income applicable to common shares | $     (.18)          | $     .06          
|                                                       |                      |                    
|Weighted average number of common shares outstanding   |                      |                    
|- basic                                                | 19,364               | 19,430             
|- diluted                                              | 19,364               | 19,714             

******8.	Operating Partnership Minority Interest**

In May and June 2002, 80,000 of the OP Units were purchased for cash in the amount of $820,000
which represented an average value of $10.25 per unit.  These units had a recorded amount of $1.8 million
when issued.  The difference of the cash paid and the recorded amount was $956,000 which reduced the
recorded amount of the underlying real estate.

In July and August 2002, 110,000 of the OP Units were purchased for cash in the amount of $1.1
million which represented an average value of $9.77 per unit.  These units had a recorded amount of $2.5
million when issued.  The difference of the cash paid and the recorded amount was $1.4 million which
reduced the recorded amount of the underlying real estate.

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

**Management and Other Services**

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.

Summarized affiliate and joint venture transaction activity is as follows:

|                                            | For the three months | For the nine months
|------------------------------------------- | -------------------- | -------------------
|                                            | ended September 30,  | ended September 30,
|(In thousands)                              | 2002                 | 2001               
|                                            |                      |                    
|Property management fee and other           |                      |                    
|miscellaneous service revenues	- affiliates | $  406               | $   366            
|- joint ventures                            | 45                   | 243                
|Painting service revenues	- affiliates      | 201                  | 125                
|- joint ventures                            | 122                  | 298                
|Expenses incurred on behalf                 |                      |                    
|of and reimbursed by (1)	- affiliates       | 959                  | 959                
|- joint ventures                            | 125                  | 761                
|Interest income 	- affiliates               | 30                   | 41                 
|Interest expense	- affiliates               | (18)                 | (23)               
|- joint ventures                            | (1)                  | (4)                

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

Property management fees and other miscellaneous receivables due from affiliates and joint venture
properties aggregated $2.7 million and $2.5 million at September 30, 2002 and December 31, 2001,
respectively.  Other miscellaneous payables due to affiliates and joint venture properties aggregated zero
and $109,000 at September 30, 2002 and December 31, 2001, respectively.

***Advances to Affiliates and Joint Ventures***

In the normal course of business, the Company has advanced funds on behalf of affiliates and joint
ventures.  Funds advanced to affiliates and joint ventures aggregated $72,000 and $206,000 at September
30, 2002, respectively, and $44,000 and $296,000 at December 31, 2001, respectively, and represented
funds not yet repaid to the Company.  The Company also holds funds for the benefit of affiliates and joint
ventures which in the aggregate amounted to $3.4 million and $500,000 at September 30, 2002,
respectively, and $3.8  million and $1.5 million at December 31, 2001, respectively.

*******Notes Receivable***

At September 30, 2002 and December 31, 2001, two notes of equal amounts were receivable from
the Company's Chief Executive Officer aggregating $3.3 million (included in "Accounts and notes
receivables-affiliates and joint ventures").  One of the notes is partially secured by 150,000 of the Company's
common shares; the other note is unsecured.  For the nine months ended September 30, 2002 and 2001,
the interest rates charged on these notes were approximately 3.6% and 7.0%, respectively.  The Company
recognized interest income of $91,000 and $165,000 for the nine months ended September 30, 2002 and
2001, respectively, relating to these notes.  On February 27, 2002, the Company's Board of Directors
extended the maturity date for these two notes from May 1, 2002 to May 1, 2005.

***Professional Services Agreement***

Effective July 1, 2002, the Company entered into a professional services agreement with Gelber &
Associates Corporation ("Gelber") in which a brother-in-law of the Company's Chief Executive Officer is a
principal.  Under the agreement, Gelber will consult with the Company on the purchase of natural gas.
Gelber will receive a service fee of $3,000 plus 30.0% of any savings, as defined in the agreement, realized
by the Company.  The Company has paid Gelber $13,000 as of September 30, 2002.

**10.	SHARES**

On February 28, 2002, the Company granted 36,985 of restricted shares to executives of the
Company under the annual incentive plan.  These awards were made from the Company's 2001 Equity
Incentive Plan pursuant to which grants are made solely from treasury shares.  The Company's policy on
the reissuance of treasury shares is to account for the issuance on the First-In First-Out method.  At
September 30, 2002, the Company held 3,520,931 treasury shares at a cost of $31.9 million.

**11.	GENERAL AND ADMINISTRATIVE EXPENSES**

The Company recorded $655,000 in connection with the restructuring of the advisory business,
including personnel severance costs and the consolidation of the accounting and reporting functions of 18
management personnel and other support personnel as general and administrative expenses in the quarter
ended September 30, 2002.  As of September 30, 2002, $327,000 of this amount has been paid.

**12.	EARNINGS PER SHARE**

Earnings per share ("EPS") has been computed pursuant to the provisions of SFAS No. 128. The
following table provides a reconciliation of both the net (loss) income and the number of common shares
used in the computation of basic EPS, utilizing the weighted average number of common shares outstanding
without regard to dilutive potential common shares and diluted EPS, which includes all such shares, as
applicable.

|                                                         | For the three months | For the nine months
|-------------------------------------------------------- | -------------------- | -------------------
|                                                         | ended September 30,  | ended September 30,
|(In thousands, except per share amounts)                 |                      |                    
|                                                         | 2002                 | 2001               
|**Earnings:**                                            |                      |                    
|(Loss) income before extraordinary item and income       |                      |                    
|from discontinued operations                             | $ (3,021)            | $ 2,306            
|Extraordinary item                                       | -                    | -                  
|Income from discontinued operations                      | 961                  | 100                
|Net (loss) income                                        | (2,060)              | 2,406              
|Less: Preferred share dividends                          | 1,371                | 1,371              
|Net (loss) income applicable to common shares            | $ (3,431)            | $ 1,035            
|                                                         |                      |                    
|**Number of Shares:**                                    |                      |                    
|Basic-average shares outstanding                         | 19,364               | 19,430             
|Diluted-average shares outstanding                       | 19,364               | 19,714             
|                                                         |                      |                    
|**Earnings Per Common Share - Basic:**                   |                      |                    
|(Loss) income before extraordinary item and income       |                      |                    
|from discontinued operations applicable to common shares | $     (.23)          | $     .05          
|Extraordinary item                                       | -                    | -                  
|Income from discontinued operations                      | .05                  | -                  
|Net (loss) income applicable to common shares            | $     (.18)          | $     .05          
|                                                         |                      |                    
|**Earnings Per Common Share - Diluted:**                 |                      |                    
|(Loss) income before extraordinary item and income       |                      |                    
|from discontinued operations                             | $     (.23)          | $     .05          
|Extraordinary item                                       | -                    | -                  
|Income from discontinued operations                      | .05                  | -                  
|Net (loss) income applicable to common shares            | $     (.18)          | $      .05         

Options to purchase 2.4 million and 3.1 million common shares were outstanding at September 30,
2002 and 2001, respectively.  Approximately 81,700 and 261,800 common share equivalents were excluded
from the dilutive calculation under the treasury stock method as these shares are considered antidilutive due
to the net loss before income from discontinued operations incurred for the three months and the nine
months ended September 30, 2002.

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

**13.	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.  The Market Rate Multifamily 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 Acquired, Market Rate and Affordable Housing properties which 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."  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 for the Acquisition/Disposition, Market Rate and
Affordable Housing segments and deducting service companies' expense, which is included within the
general and administrative expenses in the Consolidated Statements of Operations, direct property
management expenses and painting service expenses from total revenues for the Management and Service
Operations segment.  NOI should not be considered as an alternative to net income (determined in
accordance with GAAP), as an indicator of the Company's financial performance,  cash flow from operating
activities (determined in accordance with GAAP) or 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 and nine months ended September 30, 2002
and 2001 is as follows:

|                                     | For the three months ended September 30, 2002
|------------------------------------ | ---------------------------------------------
|                                     |                                              
|                                     | Acquisition/                                 
|(In thousands)                       | Disposition                                  
|                                     |                                              
|Total segment revenues               | $  1,966                                     
|Elimination of intersegment revenues | -                                            
|Consolidated revenues                | 1,966                                        
|                                     |                                              
|Equity in net loss of joint ventures | (336)                                        
|                                     |                                              
|*NOI                                 | 717                                          
|                                     |                                              
|Total assets                         | $ 43,974                                     

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

|                                     | For the nine months ended September 30, 2002
|------------------------------------ | --------------------------------------------
|                                     |                                             
|                                     | Acquisition/                                
|(In thousands)                       | Disposition                                 
|                                     |                                             
|Total segment revenues               | $   6,137                                   
|Elimination of intersegment revenues | (2)                                         
|Consolidated revenues                | 6,135                                       
|                                     |                                             
|Equity in net loss of joint ventures | (746)                                       
|                                     |                                             
|*NOI                                 | 2,919                                       
|                                     |                                             
|Total assets                         | $ 43,974                                    



|                                              | For the three months ended September 30, 2001
|--------------------------------------------- | ---------------------------------------------
|                                              |                                              
|                                              | Acquisition/                                 
|(In thousands)                                | Disposition                                  
|                                              |                                              
|Total segment revenues                        | $     733                                    
|Elimination of intersegment revenues          | -                                            
|Consolidated revenues                         | 733                                          
|                                              |                                              
|Equity in net (loss) income of joint ventures | (61)                                         
|                                              |                                              
|*NOI                                          | 272                                          
|                                              |                                              
|Total assets                                  | $45,863                                      

|                                     | For the nine months ended September 30, 2001
|------------------------------------ | --------------------------------------------
|                                     |                                             
|                                     | Acquisition/                                
|(In thousands)                       | Disposition                                 
|                                     |                                             
|Total segment revenues               | $   6,881                                   
|Elimination of intersegment revenues | -                                           
|Consolidated revenues                | 6,881                                       
|                                     |                                             
|Equity in net loss of joint ventures | (72)                                        
|                                     |                                             
|*NOI                                 | 3,402                                       
|                                     |                                             
|Total assets                         | $ 45,863                                    

*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 income for the three and nine months
ended September 30, 2002 and 2001 is as follows:

|                                                  | For the three months | For the nine months
|------------------------------------------------- | -------------------- | -------------------
|                                                  | ended September 30,  | ended September 30,
|(In thousands)                                    | 2002                 | 2001               
|                                                  |                      |                    
|Total NOI for reportable segments                 | $ 18,547             | $ 20,506           
|Depreciation and amortization                     | (8,958)              | (8,428)            
|General and administrative expense                |                      |                    
|(excluding service companies' expense)            | (1,788)              | (1,907)            
|Interest expense                                  | (10,325)             | (10,537)           
|Gain on disposition of properties and land        | -                    | 2,694              
|Equity in net (loss) income of joint ventures     | (423)                | 99                 
|Minority interest in operating partnership        | (74)                 | (121)              
|Extraordinary item - early extinguishment of debt | -                    | -                  
|Income from discontinued operations               | 961                  | 100                
|Consolidated net (loss) income                    | $  (2,060)           | $   2,406          

******14.	CONTINGENCIES**

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 in performing the work because of the owner's breach of the construction contract.
FDI has not specified the amount of its damages, which it claims is yet to be determined; however, the
Company believes that its claim may exceed $3.0 million based on certain information which the Company
has obtained.  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 and the Company have 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.  The MOD
acquired this project in 1998 as part of the Company's acquisition of MIG Realty Advisors 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 August 28, 2001, Helene Fien filed a complaint in the Court of Common Pleas, Cuyahoga
County, Ohio against the Company, its CEO, Jeffrey I. Friedman, AEC Management Company (a
corporation that merged with the Company at the time of the IPO in 1993) and Associated Estates
Corporation (a non-affiliated company).  The complaint alleges fraud, breach of fiduciary duty and
conversion against each of the defendants and a RICO claim against the individual defendant in connection
with various minority interests (5% or less) in pre IPO entities allegedly held by Mrs. Fien's deceased
husband at the time of his death in 1985.  The Complaint demands compensatory damages in the amount
of $10.0 million plus punitive damages, attorneys' fees, interests and costs.  The litigation is in a preliminary
stage.  The Company believes it has meritorious defenses and intends to vigorously defend this claim, but
cannot predict the final outcome of this dispute.

The Company is also subject to other legal proceedings and claims which arise in the ordinary
course of its business.  Although occasional adverse decisions (or settlements) may occur, the Company
believes that the final disposition of any such pending matters will not have a material adverse effect on the
financial position or results of operations of the Company.

**15.	GUARANTIES**

In connection with the refinancing of the Watergate Apartments, a 949-unit multifamily community
located in Euclid, Ohio, the Company has guaranteed completion of certain improvements totaling
approximately $7.0 million.  This obligation is secured by a $3.5 million letter of credit.  Also, the Company
provided a $407,000 performance bond to the City of Boynton Beach, Florida, which guarantees
performance by a Company subsidiary of certain improvements in connection with the Company's proposed
Boynton Beach development.  Furthermore, the Company has guaranteed the payment of a $30.0 million
construction loan in connection with Idlewylde Apartments Phase II, a 535-unit multifamily community
located in Atlanta, Georgia which is being developed by the Company and its pension fund joint venture
partner.  This loan matures December 10, 2003 with two one-year options to extend.  The Company has
guaranteed the payment of a $15.8 million construction loan in connection with the development of Courtney
Chase Apartments, a 288-unit multifamily community located in Orlando, Florida which is being developed
by the Company and its pension fund joint venture partner.  This loan matures June 1, 2005, with an option
to extend the maturity for two additional years.  The Company also has guaranty obligations under a
$220,000 letter of credit for purposes of guaranteeing certain equity contributions required by the
construction lender in connection with Berkley Manor, a 252-unit multifamily community located in Cranberry
Township, Pennsylvania, which is being developed by the Company and its joint venture partner.

**16.	SUBSEQUENT EVENTS**

**Dividends Declared and Paid**

On September 30, 2002, the Company declared a dividend of $0.25 per common share which was
paid on November 1, 2002 to shareholders of record on October 15, 2002.

**Operating Partnership Minority Interest**

In October 2002, 110,000 of the OP units were purchased for cash in the amount of $936,000 which
represented an average value of $8.51 per unit.  These units had a recorded amount of $2.6 million when
issued.  The difference of the cash paid and the recorded amount was $1.6 million which reduced the
recorded amount of the underlying real estate.

**ASSOCIATED ESTATES REALTY CORPORATION**

**MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL**

**CONDITION AND RESULTS OF OPERATIONS.**

The following discussion should be read in conjunction with the financial statements and notes
thereto included in Part I, Item 1 of this Report on Form 10-Q.  Historical results and percentage
relationships set forth in the Consolidated Statements of Operations contained in the financial statements,
including trends which might appear, should not be taken as indicative of future operations.  This discussion
may also 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.  These forward-looking statements are intended to be covered by the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.  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 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 apartments and change in market rental rates;

increases in property and liability insurance costs;

changes in government regulations affecting the Affordable Housing properties;

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, additional staffing, and real estate tax valuation reassessments;

changes in market conditions that may limit or prevent the Company from acquiring properties
or selling properties identified for disposition, which may impede the Company's ability to
continue to diversify its portfolio; and

risks of construction, including cost overruns, contractor defaults and contractor delays.

**Liquidity and Capital Resources**

The Company anticipates that it will meet its liquidity requirements for the current year generally
through net cash provided by operations, secured borrowings (primarily through the use of the Company's
two lines of credit, which had $9.8 million available at September 30, 2002), property sales proceeds and
possible issuance of debt or equity securities.  The Company believes that these sources will be sufficient
to meet its working capital, capital expenditures and scheduled debt repayment needs as well as funding
payment of its dividends in accordance with REIT requirements.

The Company anticipates the following material commitments for capital expenditures for the
balance of 2002.

$2.4 million for recurring capital expenditures.  This includes replacement of worn carpet and
appliances and property common area parking lots, roofs and similar matters in accordance with
the Company's current property expenditure plan.  This commitment is expected to be funded
largely from cash flow from operating activities.

$1.9 million for investment/revenue enhancing expenditures.  This commitment is expected to
be funded largely from borrowings on the Company's lines of credit.

$613,000 for non-recurring capital expenditures.  This commitment is expected to be funded
largely from borrowings on the Company's line of credit.



Significant sources and uses of cash for the nine months ended September 30, 2002 and 2001 are
summarized as follows, in thousands:

*Cash Sources (Uses):*

|                                      | For the nine months 
|------------------------------------- | --------------------
|                                      | ended September  30,
|(In thousands)                        | 2002                
|                                      |                     
|Net cash from operating activities    | $ 15,148            
|Real estate and fixed asset additions | (11,064)            
|Net proceeds from sales of properties | 24,456              
|Contributions to joint ventures       | (767)               
|(Decreases) increases in debt-net     | (11,001)            
|Cash dividends paid                   | (18,704)            
|Treasury share transactions           | 408                 
|Cash (decrease) increase              | $  (1,524)          

*Cash flow from operating activity:*  Net cash provided by operating activities decreased $9.6 million
from $24.7 million to $15.1 million for the nine months ended September 30, 2002 when compared with the
nine months ended September 30, 2001.  This decrease was primarily due to the net activity of the following
items:

(i)	For the nine months ended September 30, 2002, the net loss before the gain on disposition
of properties and land, the extraordinary item and income from discontinued operations was
$5.6 million compared to a net loss of $1.4 million for the nine months ended September
30, 2001, a decline of $4.2 million.  This decline was primarily due to a decrease of $4.2
million in total revenues.  As explained in greater detail under Results of Operations, the
primary reason for the decrease in total revenues was due to a decrease of $2.4 million in
rental revenues from the sale of seven properties in 2001 and one property in 2002 and a
decline of $1.7 million in the market rate rental revenues primarily due to lower occupancy
and increased concessions.  Additionally, property management fees and reimbursements
declined $891,000 due to less third party properties under management.

(ii)	For 2002, accounts and notes receivable and accounts and notes receivable of affiliates
and joint ventures decreased $1.6 million, while for 2001 they increased $173,000.  This
results in an increase of $1.8 million to funds provided by operations when comparing the
two periods.  The most significant  receipt during the 2002 nine months was the
reimbursement of approximately $738,000 for funds previously advanced with regards to
a property the Company managed. This reimbursement was the result of a settlement
between the Company and the owners.

(iii)	For 2002, other operating assets and liabilities increased $3.1 million, while for 2001 they
increased $2.0 million, resulting in a decrease to cash flow provided by operations of $1.1
million.  The primary increase was a $1.3 million increase in prepaid insurance as the
Company's insurance premiums increased approximately 80.0%.

(iv)	For 2002, restricted cash increased $4.5 million while for 2001 restricted cash increased
$809,000 resulting in a decrease to funds provided by operations of $3.7 million when
comparing the two periods.  This change was primarily due to the Company depositing $6.2
million from the sale of the Americana Apartments into an escrow account for the potential
purchase of a similar property.  Additionally, escrows for real estate, insurance, replacement
reserves and other escrows were $2.0 million lower in 2002 than 2001.

(v)	For 2002, funds held for non-owned managed properties and non-owned managed
properties of affiliates and joint ventures decreased $1.5 million.  For 2001, they increased
$2.1 million.  This results in a decrease of $3.6 million (or a source of cash) when
comparing the two periods.  This decrease was primary due to the reimbursement of funds
previously advanced on the joint venture properties which were included in the exchange
of properties in April 2002.

Net cash flows provided by investing activities of $12.6 million for the nine months ended September
30, 2002 were primarily the net result of $11.1 million used for the development of multifamily real estate,
and other capital expenditures, net of $24.4 million of net proceeds from the sale of three operating
properties.

Net cash flows used for financing activities of $29.3 million for the nine months ended September
30, 2002 were primarily used to pay dividends on the Company's common and preferred shares and to pay
principal payments on secured debt and net borrowings on the Company's line of credit.

On June 27, 2002, the Company prepaid a $2.7 million HUD insured mortgage loan.  The loan had
an annual interest rate of 7.5%.  The Company used funds borrowed on its line of credit (see below) that
at September  30, 2002 had an interest rate of 3.31% to repay the mortgage loan.  During the remainder of
2002 and 2003, approximately $1.5 million and $6.2 million, respectively, of principal amortization payments
on secured debt are required.

At September 30, 2002, the Company had $11.0 million outstanding under a $20.0 million secured
line of credit.  This line of credit matures in July 2003.  Borrowings under this line of credit are currently
restricted up to an amount of $12.6 million.  Borrowings under this line of credit bear interest at a rate of
LIBOR plus 1.5% or approximately 3.43% at September 30, 2002.  There were $3.5 million of borrowings
outstanding under this line of credit at December 31, 2001.  Additionally, the Company also has a $14.0
million line of credit which matures December 31, 2003.  The Company's borrowings under this line of credit
bear interest at either the prime rate or LIBOR plus 2.0% at the Borrower's option.  There were no
borrowings outstanding at either September 30, 2002 or December 31, 2001; however, the amount currently
available under this line of credit is limited to $8.2 million because of outstanding letters of credit and a credit
risk sublimit relative to derivative transactions.

The Company has guaranteed completion of certain improvements totaling $7.0 million in
connection with the refinancing of the Watergate Apartments, a 949-unit multifamily community located in
Euclid, Ohio.  This obligation is secured by a $3.5 million letter of credit.  Also, the Company provided a
$407,000 performance bond to the City of Boynton Beach, Florida, which guarantees performance by a
Company subsidiary of certain improvements in connection with the Company's proposed Boynton Beach
development.  Furthermore, the Company has guaranteed the payment of a $30.0 million construction loan
in connection with the Idlewylde Apartments Phase II, a 535-unit multifamily community located in Atlanta,
Georgia which is being developed by the Company and its pension fund joint venture partner.  This loan
matures December 10, 2003 with two one-year conditional options to extend.  The Company guaranteed
the payment of a $15.8 million construction loan in connection with the development of Courtney Chase
Apartments, a 288-unit multifamily community located in Orlando, Florida which is being developed by the
Company and its pension fund joint venture partner.  This loan matures June 1, 2005 with a conditional
option to extend the maturity for two additional years.  The Company also has guaranty obligations under
a $220,000 letter of credit for purposes of guaranteeing certain equity contributions required by the
construction lender in connection with Berkley Manor, a 252-unit multifamily community located in Cranberry
Township, Pennsylvania, which the Company and its joint venture partner are developing.

As provided in the AERC HP Investors Limited Partnership Agreement ("DownREIT Partnership"),
the Company, as general partner, has guaranteed the obligation of the DownREIT Partnership to redeem
OP units held by the limited partners.  The DownREIT Partnership was formed in 1998 in connection with
the MIG merger transactions.  Under the terms of the DownREIT Partnership Agreement, the DownREIT
Partnership is obligated to redeem OP units for common shares or cash, at the Company's discretion, at a
price per OP unit equal to the 20 day trailing price of the Company's common shares for the immediate 20
day period preceding a limited partner's redemption notice.  Redemption requests by limited partners have
accelerated over the past year and the Company anticipates this trend will continue.  After giving effect to
the transactions described in the following paragraphs, the remaining number of OP units will be 163,056
units having a carrying value of $3.7 million.  Through October 31, 2002, 300,000 OP units have been
redeemed.  These transactions had the effect of increasing the Company's interest in the DownREIT
Partnership from 85.0% to 95.0%.  These redemption transactions are more fully described in the following
paragraphs.

In May and June 2002, 80,000 of the OP units were exchanged for cash in the amount of $820,000
which represented an average value of $10.25 per unit.  These units had a recorded amount of $1.8 million
when issued.  The difference of the cash paid and the recorded amount was $956,000 which reduced the
recorded amount of the underlying real estate.

In July and August 2002, 110,000 of the OP units were purchased for cash in the amount of
$1,085,000 which represented an average value of $9.77 per unit.  These units had a recorded amount of
$2.5 million when issued.  The difference of the cash paid and the recorded amount was $1.4 million which
reduced the recorded amount of the underlying real estate.

In October 2002, 110,000 of the OP units were purchased for cash in the amount of $936,000 which
represented an average value of $8.51 per unit.  These units had a recorded amount of $2.6 million when
issued.  The difference of the cash paid and the recorded amount was $1.6 million which reduced the
recorded amount of the underlying real estate.

**Insurance**

The September 11, 2001 terrorist attack on New York's World Trade Center and its aftermath has
created a number of uncertainties for the Company concerning the management of its insurance risks.  The
Company renewed its blanket insurance policy for the period April 1, 2002 to March 31, 2003 at greater cost
with less protection.  The Company is not alone in facing these dilemmas.  Since September 11, insurance
costs have risen dramatically across the industry, many insurers have significantly reduced their capacity
positions and many others have refused to insure against acts of terrorism.

Accordingly, for the current year the Company is facing an approximately 80.0% increase in
insurance premiums coupled with reduced insurance protection.  When the Company renewed its current
property insurance policy, the Company was unable to obtain quotes for terrorism insurance at any price.
In August 2002, the Company was successful in obtaining $25.0 million of insurance protection for terrorist-related risks for the Company's owned and managed portfolio,  which was approved by the Company's
major lenders.

Insurance coverage issues are a matter of concern not only for the Company and its shareholders,
but also the Company's lenders, who may assert their own concerns over increased risk exposure brought
about by reduced insurance coverage.  The Company believes that its current insurance coverage is
representative of what is commercially available and reasonably acceptable in today's often chaotic
insurance environment. The potential exists for disputes between the Company and certain of its lenders
concerning insurance coverage issues.

**Acquisitions/Dispositions Multifamily Properties**

The Company is strategically marketing seven Market Rate properties for disposition; one is located
in Georgia, one in Arizona and five in Ohio.  The Company intends to use the proceeds from any such sales
to acquire other properties.  The following is a summary of acquisition and disposition transactions
completed so far this year.

*Acquisitions:*  On April 19, 2002, the Company and its joint venture partners completed the exchange
of five Market Rate properties located in Northeast Ohio.  Under the terms of the agreement, the Company
became the 100% fee owner of three of the properties, the Americana Apartments (738 units) which was
subsequently sold (see Dispositions below), College Towers (458 units) and the Watergate Apartments (949
units).  The Company relinquished its 66.67% ownership interest in Gates Mills III (320 units) and its 33.34%
ownership interest in Gates Mills Towers (757 units).  There was no gain or loss recorded in connection with
this transaction as the exchange was not the culmination of the earning process.

*Dispositions:*  On January 18, 2002, the Company completed the sale of Muirwood Village at
London, a property located in Central Ohio.  The buyer purchased the property for net cash proceeds of $3.8
million and the Company recorded a gain of $255,000.

On April 24, 2002, the Company completed the sale of Americana Apartments, which is located in
Northeast Ohio.  The buyer purchased the property for a sales price of $18.5 million.  The Company paid
off the existing debt of $11.6 million and received net cash proceeds of $6.2 million which resulted in the
Company recording a gain of $7.9 million.

On July 29, 2002, the Company completed the sale of Jennings Commons, a 50-unit Affordable
Housing property located in Northeast Ohio.  The buyer purchased the property for a sales price of $1.9
million.  The sale resulted in a gain of $976,000.

**Development Multifamily Properties**

For the nine months ended September 30, 2002, two joint venture partnerships in which the
Company is a 49.0% partner, completed the construction and commenced leasing the final 112 units of the
scheduled 252 units at Berkley Manor (140 units were completed during 2001) and 352 units of the
scheduled 535 units for Idlewylde-Phase II (80 units were completed during 2001 making a total of 432 now
available for leasing).

On May 8, 2002, the Company entered into a joint venture agreement to develop a 288-unit
multifamily Market Rate property located in Orlando, Florida.  The Company contributed land of $1.3 million
in exchange for a 24.0% interest in this joint venture..

The following schedule describes units currently under construction or in development:

|                                               |                   | Additional | Anticipated
|---------------------------------------------- | ----------------- | ---------- | -----------
|Property                                       | Location          | Units      | Completion 
|Boynton Beach-Land                             | Boynton Beach, FL | TBD(1)     | TBD(1)     
|Courtney Chase (24.0% owned Joint Venture)     | Orlando, FL       | 288        | 2003       
|Idlewylde-Phase II (49.0% owned Joint Venture) | Atlanta, GA       | 103(2)     | 2003       
|                                               |                   | 391        |            

(1)  To be determined

(2)  Represents the number of units still under construction.  Idlewylde-Phase II will contain 535 units when the construction of this 	    property is completed.

**Management and Service Operations**

MIG's investment advisory business was significantly impacted by a decision of a major MIG client
to transfer its investment advisory contact with MIG to another advisor.  Under that agreement, the Company
and MIG had provided property and asset management services for eleven client owned properties, which
generated approximately $2.1 million in annual fees.  The contribution of MIG's investment advisory
business to the Company's annual overall revenues are expected to decrease because of the transferred
contract from approximately 3.5% to approximately 2.5%.  It is anticipated that the advisory business'
contribution to the Company's NOI should remain constant at approximately 2.0% to 2.5%.  Additionally, the
Company has committed to a restructuring plan and recorded a charge of $655,000 primarily related to
severance benefits.  Furthermore, the Company wrote off the related asset and management portion of the
intangible asset in the amount of $312,000.  See Note 7 of the Notes to the Financial Statements presented
in Part I, Item 1 of this report on Form 10-Q.

*Management Contract Cancellation:*  During 2002, the Company's management contracts
associated with the following properties were terminated or transferred by the client:

|                            |            |                                           | Approximate        | Approximate     
|--------------------------- | ---------- | ----------------------------------------- | ------------------ | ----------------
|Effective                   |            | Management                                | Management         | Annualized Loss 
|Date of                     | Management | Contract                                  | Fees Earned        | of Management   
|Termination                 | Company    | Canceled/Transferred                      | Earned During 2002 | Fees During 2002
|                            |            |                                           | (In thousands)    
|**Market Rate Properties:** |            |                                          
|4/19/02                     | AERC       | Gates Mills Towers (33.33% joint venture) | $ 59               | $ 128           
|4/19/02                     | AERC       | Americana (33.33% joint venture)          | 42                 | 79 (1)          
|4/19/02                     | AERC       | Watergate (33.33% joint venture)          | 87                 | 187 (1)         
|4/19/02                     | AERC       | College Towers (50.0% joint venture)      | 34                 | 81 (1)          
|                            |            |                                           |                   
|**Advisory Properties:**    |            |                                           |                   
|3/01/02                     | AERC       | Advised Asset                             | 27                 | 134             
|3/29/02                     | AERC       | Advised Asset                             | 52                 | 260             
|9/25/02                     | AERC       | Advised Asset                             | 46                 | 15              
|10/1/02                     | AERC       | Eleven Advised Assets                     | 1,588              | 529             
|10/29/02                    | AERC       | Advised Asset                             | 129                | 43              

(1)  In connection with the April 19, 2002 transaction, the Company became the 100% owner of these

three properties and as such, no longer will report management fee income for them.

Additionally, the Company anticipates that a management contract with an advisory client generating
management fees of approximately $76,000 in 2002 may be canceled during 2002 primarily because of a
proposed sale of the underlying property.

**Same Store Market Rate Multifamily Properties**

The Company's Market Rate Multifamily Properties continue to be impacted by declines in market
fundamentals and increased operating costs in most of the markets in which the Company operates.  During
the quarter ended September 30, 2002, Market Rate total revenues were down 2.8%, and total property
operating expenses increased 4.5%, resulting in an 8.8% decline in NOI compared with the third quarter a
year ago.  Management expects that total rental revenues for the fourth quarter to decline approximately
1.0% from the third quarter.  These declines are expected to be offset by seasonal declines in operating
expenses, resulting in fourth quarter 2002 NOI approximately 1.5% greater than the third quarter.

**Dividends**

On September 30, 2002, the Company declared a dividend of $0.25 per common share which was
paid on November 1, 2002 to shareholders of record on October 15, 2002.  On August 8, 2002, the
Company declared a dividend of $0.60938 per depository share on the Company's Class A Cumulative
Preferred Shares which was paid on September 16, 2002 to shareholders of record on September 3,  2002.

***RESULTS OF OPERATIONS***

*********Comparison of the quarter and nine months ended September 30, 2002 to the quarter and nine
months ended September 30, 2001*****

In the following discussion of the comparison of the quarter and nine months ended September 30,
2002 to the quarter and nine months ended September 30, 2001, Market Rate properties refers to the Same
Store Market Rate property portfolio.  Market Rate properties represents 61 wholly owned properties.
Acquired/Disposed properties represents two properties recently acquired and properties that have been
disposed.  Affordable Housing represents 12 properties subject to HUD regulations.

The Company uses NOI as a measure of the performance of its properties.  NOI is determined by
deducting property operating and maintenance expenses from revenues for the Acquisition/Disposition,
Market Rate and Affordable Housing segments and deducting service companies' expense which is included
within the general and administrative expense in the Consolidated Statement of Income, direct property
management expenses and painting service expense from total revenues for the Management and Service
Operations segment.  For the nine months ended September 30, 2002, NOI was $57.3 million, a decrease
of $4.8 million when compared to the NOI of $62.1 million for the nine months ended September 30, 2001.
The NOI for each of the four segments of the Company for the nine months ended September 30, 2002 and
2001 was: Acquisition/Disposition $2.9 million and $3.4 million, Market Rate $49.2 million and $52.1 million,
Affordable Housing $3.9 million and $3.9 million and Management and Service Operations $1.2 million and
$2.7 million, respectively.  The components of NOI together with an explanation of the variances are
described as follows:

Overall, total revenues decreased $607,000 or 1.4% and $4.2 million or 3.3% and total expenses
increased $1.5 million or 3.4% and decreased $580,000 or 0.5% when comparing the quarter and nine
months ended September 30, 2002 to the quarter and nine months ended September 30, 2001, respectively.
Net income applicable to common shares after deduction for the dividends on the Company's preferred
shares decreased $4.4 million or 431.5% for the quarter and $1.4 million or 207.7% for the nine months.

*Rental Revenues:*  Rental revenues increased $283,000 or 0.8% for the quarter and decreased $2.4
million or 2.3% for the nine months.  The Acquisition/Disposition properties rental revenues increased $1.2
million or 168.2% for the quarter and decreased $746,000 or 10.8% for the nine months.  For both periods,
the variances were primarily the net result of the two properties acquired in the joint venture exchange in
April 2002 which contributed $1.9 million for the quarter and $3.4 million for the nine months in 2002 net of
the sale of five properties during 2001 and one property during 2002 which contributed $704,000 for the
quarter and $4.4 million for the nine months ended September 30, 2001.  Rental revenues for the Market
Rate properties decreased $933,000 or 2.8% for the quarter and $1.8 million or 1.9% for the nine months.
The average rental rate per unit was $814 for the 2002 quarter compared to $798 for the 2001 quarter and
$810 for the nine months of 2002 compared to $789 for the nine months of 2001.  During these periods the
economic occupancies were 85.5% for the 2002 quarter compared to 89.5% for the 2001 quarter and 85.9%
for the nine months of 2002 compared to 89.1% for the nine months of 2001.

*Other Revenues:* Other income decreased $890,000 or 11.0% when comparing the two quarters
and $1.8 million or 7.8% when comparing the two nine month periods.  The decrease when comparing the
two quarters was primarily due to lower property management fees due to the loss of two management
contracts in March 2002 as a result of sales.  In addition to this decrease, the nine month period for 2001
included a $363,000 supervisory fee earned upon the sale of a non-owned Affordable Housing property and
lower painting services revenues (2001 revenues included a large contract for a major project at one of the
joint venture properties while there was no comparable contract in 2002).  All of this activity was in the
Management and Services Companies segment.

*Property Operating and Maintenance Expenses:* Property operating and maintenance expenses
increased $1.6 million or 9.7% when comparing the two quarters, and $929,000 or 1.9% when comparing
the two nine month periods.  These expenses for the Acquisition/Disposition properties increased $500,000
for the quarter and decreased $705,000 for the nine months.  Both variances were primarily the net result
of increases of $1.3 million for the quarter and $3.2 million for the nine months of expense for Properties
Acquired net of decreases of $800,000 for the quarter and $3.9 million for the nine months for  properties
disposed.  For the Market Rate properties, these expenses increased $659,000 for the quarter and $1.1
million for the nine months.  For the quarter and nine months, the increase was primarily due to higher
personnel costs and insurance expense.  The higher personnel costs were primarily due to annual raises
and increased benefit costs, primarily health insurance.  The insurance expense increase was the result of
an approximately 80.0% increase in the insurance premiums for the policy years that began April 2002 and
July 2002.

*Other expenses:* The Company allocates general and administrative expenses to its four segments
as follows:  Based on an internal cost analysis, an amount equal to 85.0% of the Management and Service
Companies' revenues is classified as Service Companies' expense ($2.0 million for the quarter 2002, $1.5
million for the quarter 2001, $5.0 million for nine months 2002 and $4.7 million for nine months 2001), the
balance of the general and administrative expenses is allocated to the other three segments on a per unit
basis (number of units in the segment divided by the total units in the portfolio).  Since the general and
administrative expenses are allocated as described above, the Company believes that a comparative
analysis of the total expenses is more meaningful than by segment.  General and administrative expenses
increased $319,000 for the quarter and decreased $159,000 for the nine months.  As previously referenced
under the discussion of Management and Service Operations, the Company recorded $655,000 of
restructuring costs in the quarter ended September 30, 2002.  Without these costs, general and
administrative expenses would have decreased $336,000 for the quarter and $814,000 for the nine months.
For both the quarter and the nine months, these decreases were due to reduced personnel costs and
reduction in professional fees.  Additionally, the nine months decrease also included the reversal of a legal
reserve which had been established for legal matters subsequently settled during 2002.

Interest expense decreased $212,000 or 2.0% for the quarter and $1.6 million or 4.9% for the nine
months.  Interest expense for the Acquired/Disposed properties increased $138,000 for the quarter and
decreased $902,000 for the nine months.  Since the Company capitalizes interest on funds used in
construction, the related reduction of interest expense is recorded in the Acquisition/Disposition properties
segment as this is the segment to which development properties are classified.  For the quarter, capitalized
interest was $62,000 lower and for the nine months, it was $57,000 higher.  Additionally, four of the seven
properties sold during 2001 were secured by mortgages and, as such, recorded interest expense.  One of
the newly acquired properties secures a mortgage and as such, records interest expense.  For the Market
Rate properties, interest expense decreased $292,000 for the quarter and $644,000 for the nine months,
primarily as a result of lower outstanding balances as the majority of the first mortgages secured by Market
Rate properties require monthly principal amortization payments.

***Equity in net loss of joint ventures*****

For the quarter ended September 30, 2002, the combined equity in net loss of joint ventures
increased $522,000 when compared to the quarter ended September 30, 2001.  For the nine months ended
September 30, 2002, the combined equity in net loss of joint ventures increased $717,000 compared to the
nine months ended September 30, 2001.  The increased loss was primarily due to the addition of the
operations for units completed at two development properties.  The Company is a 49.0% joint venture
partner in both of these properties.  As of September 30, 2002, one of these properties had all of its 252
units available to lease and the other property had 432 of its 535 units available to lease.  It should be noted
that the properties involved in the joint venture transaction contributed to the equity in net loss of joint
ventures as follows:  $7,000 for the quarter ended September 30, 2002 compared to net income of $220,000
for the quarter ended September 30, 2001 and a net loss of $40,000 for the nine months ended September
30, 2002 compared to a net loss of $81,000 for the nine months ended September 30, 2001.

The following table presents the historical statements of operations of the Company's beneficial
interest in the operations of the joint ventures for the nine months ended September 30, 2002 and 2001.

|                                                 | For the three months | For the nine months
|------------------------------------------------ | -------------------- | -------------------
|                                                 | ended September 30,  | ended September 30,
|(In thousands)                                   | 2002                 | 2001               
|                                                 |                      |                    
|Beneficial interests in joint venture operations |                      |                    
|Rental revenue                                   | $   866              | $1,999             
|Cost of operations                               | 580                  | 1,176              
|                                                 | 286                  | 823                
|Interest income                                  | 2                    | 3                  
|Interest expense                                 | (360)                | (476)              
|Depreciation                                     | (335)                | (247)              
|Amortization                                     | (14)                 | (4)                
|Extraordinary item - extinguishment of debt      | (2)                  | -                  
|Net (loss) income                                | $  (423)             | $     99           

**Inflation**

Management's belief is that the effects of inflation would be minimal on the operational performance
of its portfolio primarily due to the high correlation between inflation and housing costs combined with the
short term nature, typically one year, of the leases.  The Company also faces limited exposure to interest
rate fluctuations due to its high proportion of fixed rate financing.

****

**CONTINGENCIES**

For a discussion of contingencies, see Note 14 of the Notes to the Financial Statements presented
in Part I, Item 1 of this report on Form 10-Q.

**HISTORICAL FUNDS FROM OPERATIONS AND DISTRIBUTABLE CASH FLOW**

Industry analysts generally consider Funds From Operations ("FFO") to be an appropriate measure
of the performance of an equity REIT.  The Company defines FFO as the inclusion of all operating results
applicable to common shareholders, both recurring and non-recurring, except those defined as
"extraordinary items" under generally accepted accounting principles ("GAAP"), adjusted for depreciation
on real estate assets,  amortization of intangible assets and gains and losses from the disposition of
properties.  Adjustments for joint ventures are calculated to reflect FFO on the same basis.  FFO does not
represent cash generated from operating activities in accordance with GAAP and is not necessarily
indicative of cash available to fund cash needs and should not be considered an alternative to net income
as an indicator of the Company's operating performance or as an alternative to cash flow as a measure of
liquidity.  Funds Available for Distribution ("FAD") is calculated as FFO less recurring capital expenditures
funded by operations, depreciation on other assets and amortization of deferred financing fees.  The
Company believes that in order to facilitate a clear understanding of the consolidated historical operating
results of the Company, FFO and FAD should be presented in conjunction with net income as presented
in the consolidated financial statements and data included elsewhere in this report.  Certain other real estate
companies may define FFO in a different manner.

FFO and FAD for the three and nine month periods ended September 30, 2002 and 2001 are
summarized in the following table:

|                                                   | For the three months | For the nine months
|-------------------------------------------------- | -------------------- | -------------------
|                                                   | ended September 30,  | ended September 30,
|                                                   | 2002                 | 2001               
|(In thousands)                                     |                      |                    
|                                                   |                      |                    
|Net (loss) income applicable to common shares      | $ (3,431)            | $  1,035           
|                                                   |                      |                    
|Depreciation on real estate assets                 | 8,303                | 7,910              
|Amortization of intangible assets                  | 384                  | 289                
|Gain on sale of properties and extraordinary items | (953)                | (2,694)            
|**Funds From Operations**                          | 4,303                | 6,540              
|                                                   |                      |                    
|Depreciation - other assets                        | 606                  | 538                
|Amortization of deferred financing fees            | 314                  | 308                
|Fixed asset additions                              | (2,831)              | (3,007)            
|**Funds Available for Distribution**               | $   2,392            | $  4,379           
|                                                   |                      |                    
|**Weighted average shares	- Basic**                | 19,364               | 19,430             
|**- Diluted**                                      | 19,364               | 19,714             

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

The Company is exposed to interest rate changes associated with variable rate debt as well as
refinancing risk on our 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 our interest rate sensitive assets and liabilities.  Also see Note 6 of the
Notes to the Financial Statements presented in Part I, Item 1 of this Report on Form 10-Q for information
concerning the Company's current derivative financial instruments.  As of September 30, 2002, the fair
market value of the Company's debt has increased approximately $74.3 million or 13.1% primarily as a
result of a decrease in interest rates since December 31, 2001.

**ITEM 4.  CONTROLS AND PROCEDURES**

We maintain disclosure controls and procedures that are designed to ensure that information required
to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms, and that such information
is accumulated and communicated to our Chief Executive Officer and Chief Financial Officer, as appropriate,
to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls
and procedures, management recognized that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control objectives, and
management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures. Also, we have investments in certain unconsolidated entities. As we do not
control these entities, our disclosure controls with respect to such entities are necessarily substantially more
limited than those we maintain with respect to our consolidated subsidiaries.

Our Chief Executive Officer and Chief Financial Officer have within 90 days of the filing date of this
quarterly report, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules
13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended) and have determined that
such disclosure controls and procedures are adequate.  There have been no significant changes in our
internal controls or in other factors that could significantly affect our internal controls since the date of
evaluation.  We do not believe any significant deficiencies or material weaknesses exist in our internal
controls.  Accordingly, no corrective actions have been taken.



**ITEM 1.	LEGAL PROCEEDINGS**

Except as provided below, there are no material pending legal proceedings to which the Company
or any of its subsidiaries or service companies is a party or of which any of their properties is subject that
is required to be reported pursuant to Item 103 of Regulation S-K.

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 in performing the work because of the owner's breach of the construction contract.
FDI has not specified the amount of its damages, which it claims is yet to be determined; however, the
Company believes that its claim may exceed $3.0 million based on certain information which the Company
has obtained.  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 and the Company have 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.  The MOD
acquired this project in 1998 as part of the Company's acquisition of MIG Realty Advisors 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.

On August 28, 2001, Helene Fien filed a complaint in the Court of Common Pleas, Cuyahoga
County, Ohio against the Company, its CEO, Jeffrey I. Friedman, AEC Management Company (a
corporation that merged with the Company at the time of the IPO in 1993) and Associated Estates
Corporation (a non-affiliated company).  The complaint alleges fraud, breach of fiduciary duty and
conversion against each of the defendants and a RICO claim against the individual defendant in connection
with various minority interests (5% or less) in pre IPO entities allegedly held by Mrs. Fien's deceased
husband at the time of his death in 1985.  The Complaint demands compensatory damages in the amount
of $10.0 million plus punitive damages, attorneys' fees, interests and costs.

******ITEM 2.	CHANGES IN SECURITIES**

****None

**ITEM 3.	DEFAULTS UPON SENIOR SECURITIES**

None

**ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

None

**ITEM 5.	OTHER INFORMATION**

None

**ITEM 6.	EXHIBITS AND REPORTS ON FORM 8-K**

(a)	Exhibits

|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | **Filed herewith or**                                                            
|---------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | **incorporated**                                                                 
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | **herein by**                                                                    
|**Number** | **Title**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | **reference**                                                                    
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|2.01       | Second Amended and Restated Agreement and Plan of Merger by  and
among the Company, MIG Realty Advisors, Inc.  ("MIGRA")  and the
MIGRA stockholders dated as of March 30, 1998.                                                                                                                                                                                                                                                                                                                                                                      |  | Exhibit 2.01 to Form 8-K filed March 31, 1998.                                   
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|3.1        | Second Amended and Restated Articles of Incorporation of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | Exhibit 3.1 to Form
S-11 filed June 30,
1994 (File No. 33-80950 as amended)      
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|3.2        | 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 Stock Certificate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | Exhibit 3.1 to Form S-11 filed September 2,
1993 (File No. 33-68276 as amended). 
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|4.2        | Form of Indemnification Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | Exhibit 4.2 to Form S-11 filed September 2,
1993 (File No. 33-68276 as amended). 
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|4.3        | Promissory Note dated October 23, 1991 from Triangle Properties Limited
Partnership, et. al., in favor of PFL Life Insurance Company; Open End
Mortgage from Triangle Properties Limited Partnership I, et. al., in favor of
PFL Life Insurance Company (The Registrant undertakes to provide
additional long-term loan documents upon request).                                                                                                                                                                                                      |  | Exhibit 4.3 to Form S-11 filed September 2,
1993 (File No. 33-68276 as amended). 
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|4.4        | Promissory Note dated February 28, 1994 in the amount of $25 million.
Open-End Mortgage Deed and Security Agreement from AERC to
National City Bank (Westchester Townhouse); Open-End Mortgage Deed
and Security Agreement from AERC to National City Bank (Bay Club);
Open-End Mortgage Deed and Security Agreement from Winchester II
Apartments, Inc. to National City Bank (Winchester II Apartments); and
Open-End Mortgage Deed and Security Agreement from Portage Towers
Apartments, Inc. to  National City Bank (Portage Towers Apartments). |  | Exhibit 4.4 to Form  10-K filed March 31, 1993.                                  
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|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.                                  
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|4.6        | Indenture dated as of March 31, 1995 between Associated Estates Realty
Corporation and National City Bank.                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | Exhibit 4.6 to Form 10-Q filed May 11, 1995.                                     
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|4.9        | Form of Medium-Term Note-Fixed Rate-Senior Security.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | Exhibit 4(I) to Form S-3
filed December 7, 1995
(File No. 33-80169) as
amended.  
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|4.10       | Form of Preferred Share Certificate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | Exhibit 4.1 to Form 8-K
filed July 12, 1995.                                     
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|4.11       | Form of Deposit Agreement and Depositary Receipt.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | Exhibit 4.2 to Form 8-K
filed July 12, 1995.                                     
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|4.13       | Amended and Restated Loan Agreement between Associated Estates
Realty Corporation and National City Bank.                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | Exhibit 4.13 to Form
10-Q filed November
13, 2001.                               
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|4.13a      | 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.                                
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|4.13b      | 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.                                
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|4.14       | 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.                                  
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10         | Associated Estates Realty Corporation Directors' Deferred Compensation
Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | Exhibit 10 to Form 10-Q filed November 14,
1996.                                 
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.1       | Registration Rights Agreement among the Company and certain holders
of the Company's Common Shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | Exhibit 10.1 to Form S-11 filed September 2,
1993 (File No. 33-68276 as amended).
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.2       | Stock Option Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | Exhibit 10.2 to Form S-11 filed September 2,
1993 (File No. 33-68276 as amended).
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.3       | Amended and Restated Employment Agreement between the Company
and Jeffrey I. Friedman.                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | Exhibit 10.1 to Form
10-Q filed May 13,
1996.                                    
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.4       | Equity-Based Incentive Compensation Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | Exhibit 10.4 to Form
10-K filed March 29,
1995.                                  
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.5       | Long-Term Incentive Compensation Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | Exhibit 10.5 to Form
10-K filed March 29,
1995.                                  
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.6       | Lease Agreement dated November 29, 1990 between Royal American
Management Corporation and Airport Partners Limited Partnership.                                                                                                                                                                                                                                                                                                                                                                                                                       |  | Exhibit 10.6 to Form
10-K filed March 29,
1995.                                  
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.7       | Sublease dated February 28, 1994 between the Company as Sublessee,
and Progressive Casualty Insurance Company, as Sublessor.                                                                                                                                                                                                                                                                                                                                                                                                                          |  | Exhibit 10.7 to Form
10-K filed March 29,
1995.                                  
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.8       | Assignment and Assumption Agreement dated May 17, 1994 between the
Company, as Assignee, and Airport Partners Limited Partnership, as
Assignor.                                                                                                                                                                                                                                                                                                                                                                                                       |  | Exhibit 10.8 to Form
10-K filed March 29,
1995.                                  
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.9       | 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.                                  
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.10      | Pledge Agreement dated May 23, 1997 between Jeffrey I. Friedman and
the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | Exhibit 10.01 to Form
10-Q filed August 8,
1997.                                 
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.11      | 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.                                 
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.12      | 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.                                 
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.13      | Stock Purchase Agreements between the Company and Jeffrey I.
Friedman dated October 25, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | Exhibit 10.13 to Form
10-K filed March 13,
2002.                                 
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.14      | 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.                                 
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.15      | Agreement dated March 11, 1999 by and among the Company and The
Milstein Affiliates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | Exhibit 10.15 to Form
10-Q filed May 17,
1999.                                   
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.16      | Agreement dated March 11, 1999 by and among the Company and The
Milstein Affiliates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | Exhibit 10.16 to Form
10-Q filed May 17,
1999.                                   
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.17      | Separation Agreement and Release between the Company and Lou Vogt
dated August 20, 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | Exhibit 10.17 to Form
10-Q filed herewith.                                       
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.19      | Amended and Restated Confidentiality and Noncompete Agreement
dated January 26, 2000 by and between the Company and James A.
Cote'.                                                                                                                                                                                                                                                                                                                                                                                                                   |  | Exhibit 10.19 to Form
10-K filed March 15,
2000.                                 
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.19a     | Consulting Agreement between James A. Cote' and the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | Exhibit 10.19a to Form
10-K filed March 13,
2001.                                
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.20      | Agreement dated October 11, 1999 by and among the Company and
certain of the former holders (the "MIGRA Stockholders") of the issued
and outstanding shares of common stock of MIG Realty Advisors, Inc.
("MIGRA").                                                                                                                                                                                                                                                                                                                                   |  | Exhibit 10.20 to Form
10-K filed March 15,
2000.                                 
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.20a     | Settlement and Release Agreement dated November 30, 2001 by and
among the Company and certain of the former MIGRA Shareholders.                                                                                                                                                                                                                                                                                                                                                                                                                       |  | Exhibit 10.20a to Form
10-K filed March 13,
2002.                                
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.21      | Swap Agreement dated February 16, 2000 by and among the Company
and National City Bank.                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | Exhibit 10.21 to Form
10-Q filed May 10,
2000.                                   
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.22      | Year 2000 Equity Incentive Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | Exhibit 10.22 to Form
10-Q filed May 15,
2001.                                   
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|18.1       | Letter regarding change in accounting principles.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | Exhibit 18.1 to Form
10-Q filed May 17,
1999.                                    
|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  



(b)	Reports on Form 8-K.

A Current Report on Form 8-K dated August 13, 2002 was filed on August 13, 2002.

**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
|----------------- | -------------------------------------
|                  |                                      
|                  |                                      
|November 13, 2002 | /s/ Lou Fatica                       
|(Date)            | Lou Fatica, Vice President,          
|                  | Chief Financial Officer and Treasurer



I, Jeffrey I. Friedman, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Associated Estates Realty Corporation;

2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this
quarterly report;

3.	Based on my knowledge, the financial statements and other financial information included in this
quarterly report, fairly present in all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.	The registrant's other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:

a)	designed such disclosure controls and procedures to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this quarterly report is being prepared;

b)	evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date
within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c)	presented in this quarterly report our conclusions about the effectiveness of the disclosure
controls and procedures based on our evaluation as of the Evaluation Date;

5.	The registrant's other certifying officers and I have disclosed, based on our most recent evaluation,
to the registrant's auditors and the audit committee of registrant's board of directors (or persons
performing  the equivalent function):

a)	all significant deficiencies in the design or operation of internal controls which could adversely
affect the registrant's ability to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in internal controls; and

b)	any fraud, whether or not material, that involves management or other employee who have a
significant role in the registrant's internal controls; and

6.	The registrant's other certifying officers and I have indicated in this quarterly report whether or not
there were significant changes in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.

Date:	November 13, 2002					/s/ Jeffrey I. Friedman

Jeffrey I. Friedman,

Chief Executive Office



I, Lou Fatica, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Associated Estates Realty Corporation;

2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this
quarterly report;

3.	Based on my knowledge, the financial statements and other financial information included in this
quarterly report, fairly present in all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.	The registrant's other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:

a)	designed such disclosure controls and procedures to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this quarterly report is being prepared;

b)	evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date
within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c)	presented in this quarterly report our conclusions about the effectiveness of the disclosure
controls and procedures based on our evaluation as of the Evaluation Date;

5.	The registrant's other certifying officers and I have disclosed, based on our most recent evaluation,
to the registrant's auditors and the audit committee of registrant's board of directors (or persons
performing  the equivalent function):

a)	all significant deficiencies in the design or operation of internal controls which could adversely
affect the registrant's ability to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in internal controls; and

b)	any fraud, whether or not material, that involves management or other employee who have a
significant role in the registrant's internal controls; and

6.	The registrant's other certifying officers and I have indicated in this quarterly report whether or not
there were significant changes in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.

Date:	November 13, 2002					/s/ Lou Fatica

Lou Fatica, Chief Financial Officer