**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                        
|                                      | March 31, 2001 and December 31, 2000                     
|                                      |                                                          
|                                      | Consolidated Statements of Income for the three          
|                                      | month periods ended March 31, 2001 and 2000              
|                                      |                                                          
|                                      | Consolidated Statements of Cash Flows for the three      
|                                      | month periods ended March 31, 2001 and 2000              
|                                      |                                                          
|                                      | 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
|                                      |                                                          
|**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)**

|                                                                    |                                      |             
|------------------------------------------------------------------- | ------------------------------------ | ------------
|                                                                    | March 31,                            | December 31,
|                                                                    | 2001                                 | 2000        
|                                                                    | (in thousands, except share amounts)
|**ASSETS**                                                          |                                      |             
|Real estate assets                                                  |                                      |             
|Land                                                                | $   90,799                           | $  92,083   
|Buildings and improvements                                          | 797,405                              | 794,908     
|Furniture and fixtures                                              | 32,689                               | 32,248      
|                                                                    | 920,893                              | 919,239     
|Less:  accumulated depreciation                                     | (192,360)                            | (184,600)   
|                                                                    | 728,533                              | 734,639     
|Construction in progress                                            | 7,347                                | 7,543       
|Real estate, net                                                    | 735,880                              | 742,182     
|Properties held for sale, net of accumulated depreciation           | 27,895                               | 27,845      
|Cash and cash equivalents                                           | 3,732                                | 566         
|Restricted cash                                                     | 15,036                               | 14,784      
|Accounts and notes receivable                                       |                                      |             
|Rents                                                               | 739                                  | 864         
|Affiliates and joint ventures                                       | 14,227                               | 12,456      
|Other                                                               | 5,186                                | 3,886       
|Intangible and other assets, net                                    | 16,562                               | 16,976      
|                                                                    | $819,257                             | $819,559    
|**LIABILITIES AND SHAREHOLDERS' EQUITY**                            |                                      |             
|Secured debt                                                        | $572,128                             | $567,468    
|Unsecured debt                                                      | 709                                  | 709         
|Total indebtedness                                                  | 572,837                              | 568,177     
|Accounts payable and accrued expenses                               | 23,280                               | 24,198      
|Dividends payable                                                   | 4,858                                | -           
|Resident security deposits                                          | 5,272                                | 5,412       
|Funds held on behalf of managed properties                          |                                      |             
|Affiliates and joint ventures                                       | 10,722                               | 8,123       
|Other                                                               | 1,175                                | 1,380       
|Accrued interest                                                    | 2,927                                | 2,942       
|Accumulated losses and distributions of joint ventures in excess of |                                      |             
|investment and advances                                             | 1,713                                | 1,351       
|Total liabilities                                                   | 622,784                              | 611,583     
|                                                                    |                                      |             
|Operating partnership minority interest                             | 11,520                               | 11,520      
|                                                                    |                                      |             
|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; 22,995,764 issued and 19,430,716             |                                      |             
|and 19,349,584 outstanding at March 31, 2001                        |                                      |             
|and December 31, 2000, respectively                                 | 2,300                                | 2,300       
|Paid-in capital                                                     | 278,677                              | 279,618     
|Accumulated distributions in excess of accumulated net income       | (119,656)                            | (108,002)   
|Accumulated other comprehensive income                              | (2)                                  | (2)         
|Less: Treasury shares, at cost, 3,565,047 and 3,646,180 shares      |                                      |             
|at March 31, 2001 and December 31, 2000, respectively               | (32,616)                             | (33,708)    
|Total shareholders' equity                                          | 184,953                              | 196,456     
|                                                                    | $819,257                             | $819,559    





**ASSOCIATED ESTATES REALTY CORPORATION**

**CONSOLIDATED STATEMENTS OF INCOME**

**(UNAUDITED)**

|                                                                                | For the three months ended              
|------------------------------------------------------------------------------- | ----------------------------------------
|                                                                                | March 31,                               
|                                                                                | 2001                                    
|                                                                                | (In thousands, except per share amounts)
|Revenues                                                                        |                                         
|Rental                                                                          | $ 35,874                                
|Property management fees                                                        | 1,327                                   
|Asset management fees                                                           | 747                                     
|Painting services                                                               | 308                                     
|Other                                                                           | 1,382                                   
|Total revenues                                                                  | 39,638                                  
|Expenses                                                                        |                                         
|Property operating and maintenance                                              | 16,891                                  
|Depreciation and amortization                                                   | 8,470                                   
|Painting services                                                               | 249                                     
|General and administrative                                                      | 3,276                                   
|Interest expense                                                                | 10,955                                  
|Total expenses                                                                  | 39,841                                  
|(Loss) income before equity in net loss of joint ventures and minority interest | (203)                                   
|Equity in net loss of joint ventures                                            | (259)                                   
|Minority interest in operating partnership                                      | (126)                                   
|**Net (loss) income**                                                           | $     (588)                             
|                                                                                |                                         
|**Net (loss) income applicable to common shares**                               | $  (1,959)                              
|                                                                                |                                         
|**Earnings per common share - basic:**                                          |                                         
|Net (loss) income applicable to common shares                                   | $      (.10)                            
|                                                                                |                                         
|**Earnings per common share - diluted:**                                        |                                         
|Net (loss) income applicable to common shares                                   | $      (.10)                            
|                                                                                |                                         
|**Dividends declared per common share**                                         | $       .50                             
|                                                                                |                                         
|**Weighted average number of common shares outstanding	- basic**                | 19,378                                  
|**- diluted**                                                                   | 19,378                                  
|****                                                                            |                                         





**ASSOCIATED ESTATES REALTY CORPORATION**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

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

**(UNAUDITED)**

|                                                                    | 2001           | 2000     
|------------------------------------------------------------------- | -------------- | ---------
|                                                                    | (In thousands)
|Cash flow from operating activities:                                |                |          
|Net (loss) income                                                   | $    (588)     | $ (1,617)
|Adjustments to reconcile net (loss) income to net                   |                |          
|cash provided by operating activities:                              |                |          
|Depreciation and amortization                                       | 8,800          | 8,686    
|Minority interest in operating partnership                          | 126            | 89       
|Equity in net loss of joint ventures                                | 259            | 32       
|Earnings distributed from joint ventures                            | 94             | 398      
|Net change in assets and liabilities:                               |                |          
|- Accounts and notes receivable                                     | (375)          | 3,009    
|- Accounts and notes receivable of affiliates and joint ventures    | (817)          | (320)    
|- Accounts payable and accrued expenses                             | (1,701)        | (1,636)  
|- Other operating assets and liabilities                            | (360)          | 647      
|- Restricted cash                                                   | (252)          | 498      
|- Funds held for non-owned managed properties                       | (205)          | (1,269)  
|- Funds held for non-owned managed properties of affiliates         |                |          
|and joint ventures                                                  | 2,599          | (188)    
|Total adjustments                                                   | 8,168          | 9,946    
|Net cash flow provided by operations                                | 7,580          | 8,329    
|                                                                    |                |          
|Cash flow from investing activities:                                |                |          
|Real estate and fixed asset additions acquired or developed         | (1,928)        | (4,745)  
|Contributions to joint ventures                                     | (945)          | (594)    
|Net cash flow used for investing activities                         | (2,873)        | (5,339)  
|Cash flow from financing activities:                                |                |          
|Principal payments on secured debt                                  | (1,540)        | (1,265)  
|Proceeds from secured debt                                          | 4,200          | -        
|Line of credit borrowings                                           | 8,500          | -        
|Line of credit repayments                                           | (6,500)        | -        
|Common share dividends paid and operating partnership distributions | (4,837)        | (7,874)  
|Preferred share dividends paid                                      | (1,371)        | (1,371)  
|Exercise of stock options                                           | 7              | -        
|Purchase of treasury shares                                         | -              | (13,752) 
|Net cash flow used for financing activities                         | (1,541)        | (24,262) 
|Increase (decrease) in cash and cash equivalents                    | 3,166          | (21,272) 
|Cash and cash equivalents, beginning of period                      | 566            | 36,385   
|Cash and cash equivalents, end of period                            | $  3,732       | $15,113  
|                                                                    |                |          
|Supplemental disclosure of cash flow information:                   |                |          
|Dividends declared but not paid                                     | $  4,858       | $  7,354 
|Cash paid for interest (excluding capitalized interest)             | $10,759        | $10,843  





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

**NOTES TO FINANCIAL STATEMENTS**



**1.**	**BASIS OF PRESENTATION AND SIGNIFICANT 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.  The Company and
its affiliates receive certain property and asset management fees, acquisition, disposition and incentive
fees, supervisory fees, loan origination and consultation fees, and mortgage servicing fees.  MIG II
Realty Advisors, Inc. ("MIG"), an affiliate of the Company, is a registered investment advisor and serves
as a real estate advisor to pension funds.  MIG recognizes revenue primarily from client generated
acquisition, disposition and incentive fees, loan origination, mortgage  servicing, asset and property
management and construction lending activities.  MIG earns the majority of its mortgage servicing fee
revenue from two of its pension fund clients.  Additionally, the Company owns substantially all of the
economic interest in four corporations which provide management and other services for the Company
and third parties.  These corporations are referred to as "Service Companies".

The Company's portfolio currently consists of a total of 134 properties of which 82 (69 Market
Rate properties and 13 Affordable Housing properties) are owned, directly or indirectly, by the Company
or by a subsidiary of the Company; eight properties in which the Company is a joint venture partner (one
Market Rate property 66.67% owned; three Market Rate properties 33.33% owned; two Market Rate
properties 50.0% owned, one Affordable Housing property 50.0% owned and one Market Rate property
49.0% owned) and 44 non-owned properties (of which one is a commercial property) managed by the
Company or one of its subsidiaries or Service Companies which provide property and asset
management, investment advisory, painting and computer services to both owned and non-owned
properties.  Additionally, MIG provides asset management services for an additional seven properties,
six of which are commercial properties.

**Basis of Presentation**

The accompanying unaudited financial statements have been prepared by the Company's
management in accordance with generally accepted accounting principles 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 generally accepted
accounting principles ("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 Company's audited financial statements and notes thereto included in the Associated Estates
Realty Corporation Annual Report on Form 10-K for the year ended December 31, 2000.

**Recent Accounting Pronouncements**

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities, as amended by SFAS No. 137 and No. 138.  The provisions of this statement require
that derivative instruments be carried at fair value on the balance sheet.  The statement continues to
allow derivative instruments to be used to hedge various risks and sets forth specific criteria to be used
to determine when hedge accounting can be used.  For derivative instruments not accounted for as
hedges, changes in fair value are required to be recognized in earnings.  The provisions of this
statement became effective January 1, 2001.  The Company has adopted these provisions and the
impact on the Company's financial position, results of operations and cash flows is not material to the
Company as no derivative instruments were outstanding at March 31, 2001.  The FASB continues to
issue interpretive guidance that could require changes in the Company's application of the standard.

**Reclassifications**

Certain reclassifications have been made to the 2000 financial statements to conform to the
2001 presentation.

**2.	DEVELOPMENT OF MULTIFAMILY PROPERTIES**

Construction in progress, including the cost of land, for the development of multifamily properties
was $7.3 million and $7.5 million at March 31, 2001 and December 31, 2000, 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 ready for leasing.
Capitalized interest, real estate taxes and insurance aggregated approximately $244,000 and $304,000
during the three month periods ended March 31, 2001 and 2000, respectively.  For the three month
period ended March 31, 2001, the construction and leasing of 16 units at one property were completed
at a cost of $1.7 million.

**3.	PROPERTIES HELD FOR SALE**

Three Market Rate properties located in Ohio were sold on December 31, 1999.  To facilitate the
sale, the Company financed the sale with fixed rate debt maturing July 1, 2001.  Under the structure of
the transaction, the buyer may put the properties back to the Company, after March 1, 2001 but before
June 2, 2001, at a price equal to their fair market value less outstanding indebtedness then owing on the
purchase money financing.  The sale provided for the Company's continued management of the
properties.  These sales will not be recognized for GAAP purposes until the seller financing is repaid.
These three properties are presented as "Properties held for sale" in the Consolidated Balance Sheets
at March 31, 2001 and December 31, 2000.  Additionally, at March 31, 2001, the Company has contracts
to sell four Market Rate properties which are presented in the Consolidated Balance Sheets as
"Properties held for sale" at March 31, 2001 and December 31, 2001.  These seven properties had an
aggregate net income of $460,000 for the three months ended March 31, 2001.

**4.**	**SHAREHOLDERS' EQUITY**

The following table summarizes the changes in shareholders' equity since December 31, 2000:

|                                     |          |            |                        |          | 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    | Income        | (at cost)
|                                     |          |            |                        |          |               |               |          
|Balance, Dec. 31, 2000               | $196,456 | $56,250    | $ 2,300                | $279,618 | $(108,002)    | $(2)          | $(33,708)
|Net loss                             | (588)    |            |                        |          | (588)         |               |          
|Issuance of 80,133 restricted common |          |            |                        |          |               |               |          
|shares from treasury shares          | 696      |            |                        | (378)    |               |               | 1,074    
|Deferred compensation                | (552)    |            |                        | (552)    |               |               |          
|Exercise options on 1,000 shares     |          |            |                        |          |               |               |          
|from treasury shares                 | 7        |            |                        | (11)     |               |               | 18       
|Common share dividends declared      | (9,695)  |            |                        |          | (9,695)       |               |          
|Preferred share dividends declared   | (1,371)  |            |                        |          | (1,371)       |               |          
|Balance, March 31, 2001              | $184,953 | $  56,250  | $ 2,300                | $278,677 | $(119,656)    | $(2)          | $(32,616)

**5.	DEBT**

**Conventional**

In 2000, the Company caused to be 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 at which time principal and interest payments are required through the maturity date of October
15, 2005.

**Line of Credit**

At March 31, 2001, $2.0 million was outstanding under a $20.0 million secured line of credit.
Borrowings under this line of credit are currently restricted up to an amount of $12.6 million.  The
remaining $7.4 million may be available upon completion of certain requirements.  Borrowings under this
line of credit bear interest at a rate of LIBOR plus 1.5% which was 6.57% at March 31, 2001.  There
were no borrowings outstanding under this line of credit at December 31, 2000 nor the Company's $12.0
million line of credit.

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

**Management and Other Services**



The Company or one of its subsidiaries or service companies 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:

|                                            | Three months ended
|------------------------------------------- | ------------------
|                                            | March 31,         
|                                            | 2001              
|                                            | (In thousands)    
|Property management fee and other           |                   
|miscellaneous service revenues	- affiliates | $   832           
|- joint ventures                            | 238               
|Painting service revenues	- affiliates      | 117               
|- joint ventures                            | 177               
|Expenses incurred on behalf                 |                   
|of and reimbursed by (1)	- affiliates       | 1,154             
|- joint ventures                            | 789               
|Interest income 	- affiliates               | 66                
|Interest expense	- affiliates               | (54)              
|- joint ventures                            | (7)               

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

Property management fees and other miscellaneous receivables due from affiliates and joint
venture properties aggregated $5.7 million and $4.9 million at March 31, 2001 and December 31, 2000,
respectively.  Other miscellaneous payables due to affiliates and joint venture properties aggregated
$2.8 million and $2.9 million at March 31, 2001 and December 31, 2000, respectively.

**Advances to Affiliates and Joint Ventures**

In the normal course of business, the Company advances funds on behalf of, or holds funds for
the benefit of, affiliates and joint ventures.  Funds advanced to affiliates and joint ventures aggregated
$63,000 and $5.2 million at March 31, 2001, respectively, and $573,000 and $3.6 million at December
31, 2000, respectively.  The Company held funds for the benefit of affiliates and joint ventures in the
aggregate amount of $6.0 million and $1.9 million at March 31, 2001, respectively, and $4.3 million and
$950,000 at December 31, 2000, respectively.

As of March 31, 2001, the Company was negotiating an agreement to exchange its interest in
five of its joint venture properties.  Under the proposal, the Company would become the 100% fee owner
of three of the properties and relinquish its ownership in two of the properties (which includes the one
property where the Company is a 66.67% owner).

**Notes Receivable**

At March 31, 2001 and December 31, 2000, 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 three months ended March 31, 2001
and 2000, the interest rate charged on these notes  were approximately 7.6% and 7.3%, respectively,
with principal due May 1, 2002.  The Company recognized interest income of $66,000 and $61,000 for
the three month periods ending March 31, 2001 and 2000, respectively, relating to these notes.

**7.	SHARES**

On February 28, 2001, the Company issued 80,133 of restricted shares to executives of the
Company under the annual incentive plan.  These shares were issued from the Company's 2001 Equity
Incentive Plan which is comprised solely of 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.  This issuance
reduced Treasury Shares to 3,565,047 with a cost of $32.6 million.

**8.	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 loss and the number of common shares used in
the computation of basic EPS, which utilizes 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                    
|--------------------------------------------- | ----------------------------------------
|                                              | ended March 31,                         
|                                              | (In thousands, except per share amounts)
|                                              | 2001                                    
|**Earnings Per Common Share - Basic:**        |                                         
|                                              |                                         
|Net (loss) income                             | $    (588)                              
|Less:	Preferred share dividends               | 1,371                                   
|Net (loss) income applicable to common shares | $ (1,959)                               
|                                              |                                         
|**Earnings Per Share - Diluted:**             |                                         
|Net (loss) income                             | $    (588)                              
|Less:	Preferred share dividends               | 1,371                                   
|Net (loss)income applicable to common shares  | $ (1,959)                               
|                                              |                                         
|**Number of Shares:**                         |                                         
|Basic-average shares outstanding              | 19,378                                  
|Diluted-average shares outstanding            | 19,378                                  
|                                              |                                         
|**Earnings Per Common Share - Basic:**        |                                         
|Net (loss) income                             | $     (.10)                             
|                                              |                                         
|**Earnings Per Common Share - Diluted:**      |                                         
|Net (loss) income                             | $     (.10)                             
|                                              |                                         

Options to purchase 3.1 million and 1.7 million common shares were outstanding at March 31,
2001 and 2000, respectively, which has been reflected above using the treasury stock method.
Approximately 30,000 and 27,000 common share options were excluded from the dilutive calculation
under the treasury stock method as these shares are considered antidilutive due to the net loss incurred
for the three months ended March 31, 2001 and 2000, respectively.

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

**9.	INTERIM SEGMENT REPORTING**

The Company has four reportable segments: (1) Acquisition/Disposition multifamily properties,
(2) Same Store Market Rate ("Market Rate") multifamily properties, (3) Affordable Housing multifamily
properties, and (4) Management and Service Operations.  The Company has identified these segments
because the discrete information is the basis upon which management makes decisions regarding
resource allocation and performance assessment.  The Acquisition/Disposition properties represent
acquired or developed properties which have not yet reached 93% stabilization, and properties that have
been sold.  The Market Rate multifamily properties are same store conventional multifamily residential
apartments (the operations are not subject to regulation by HUD).  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
that are not owned, but are managed by the Company.   All of the Company's segments are located in
the United States.  Effective January 1, 2001, management revised its segments by showing
Acquisition/Disposition as a separate segment.  Previously Acquisition/Disposition was included within
the  Market Rate segment.  Also, the Unallocated Corporate Overhead segment has been eliminated
and the costs previously allocated to this segment have been reallocated to the other four segments.
Management has adjusted the segments because they believe that these four segments reflect a better
representation of the operations of the Company.  For comparability purposes, the presentation for the
three months ended March 31, 2000 has been restated to reflect these revisions to the Company's
reportable segments.

The accounting policies of the segments are the same as those described in the "Basis of
Presentation and Significant Accounting Policies".  The Company previously evaluated the performance
of its segments based on EBITDA; however, effective January 1, 2001, management changed its
evaluation performance measure to Net Operating Income ("NOI"), as they believe that NOI represents a
more accurate measure of the segment's activity.  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 Income, 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 months ended March 31, 2001 and 2000
is as follows:

|                                     | For the three months ended March 31, 2001
|------------------------------------ | -----------------------------------------
|                                     |                                          
|                                     | Acquisition/                             
|(In thousands)                       | Disposition                              
|                                     |                                          
|Total segment
revenues               | $1,805                                   
|Elimination of intersegment revenues | -                                        
|Consolidated revenues                | 1,805                                    
|                                     |                                          
|Equity in net
loss of joint ventures | (47)                                     
|                                     |                                          
|*NOI                                 | 625                                      
|                                     |                                          
|Total assets                         | 80,710                                   
|Capital expenditures, gross          | 577                                      

|                                              | For the three months ended March 31, 2000
|--------------------------------------------- | -----------------------------------------
|                                              |                                          
|                                              | Acquisition/                             
|(In thousands)                                | Disposition                              
|                                              |                                          
|                                              |                                          
|Total segment revenues                        | $2,233                                   
|Elimination of intersegment revenues          | -                                        
|Consolidated revenues                         | 2,233                                    
|                                              |                                          
|Equity in net
(loss) income of joint ventures | -                                        
|                                              |                                          
|*NOI                                          | 999                                      
|                                              |                                          
|Total assets                                  | 87,202                                   
|Capital expenditures, gross                   | 3,091                                    

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

A reconciliation of total segment NOI to total consolidated net (loss) income for the three months
ended March 31, 2001 and 2000 is as follows:

|                                           | For the three months ended March 31,
|------------------------------------------ | ------------------------------------
|                                           | 2001                                
|                                           | (In thousands)                      
|Total NOI for reportable segments          | $21,146                             
|Depreciation and amortization              | (8,470)                             
|Painting services expense                  | (249)                               
|General and administrative expense         | (1,675)                             
|Interest expense                           | (10,955)                            
|Equity in net loss of joint ventures       | (259)                               
|Minority interest in operating partnership | (126)                               
|Consolidated net (loss) income             | $    (588)                          

**10.	CONTINGENCIES**

The Company recently settled a lawsuit pending in the Harris County, Texas district court
against MIG Realty Advisors, Inc. ("MIGRA") (MIG's predecessor company) and others involving a claim
for contribution and indemnity arising out of MIGRA having served as an investment advisor to an
advisory client in connection with the acquisition of an apartment project located in Houston, Texas.  On
or about December 30, 1998, the advisory client that acquired the property filed suit against the seller,
the consulting engineer who performed the engineering due diligence and others seeking damages for
defective conditions discovered at the property that were allegedly concealed by the seller and not
discovered by the consulting engineer during the pre-purchase due diligence investigation conducted by
the engineer.  The consulting engineer filed a third party claim against MIGRA, alleging that MIGRA  was
responsible for the conduct of the due diligence investigation and consequently MIGRA, rather than the
engineer was responsible for any damages suffered by the advisory client.  Some of the other
defendants, including the seller and the general contractor filed cross actions against MIGRA under the
Texas contribution and proportionate liability statutes alleging that MIGRA was responsible in whole or in
part for the damages alleged to have been suffered by the plaintiff advisory client.  The consulting
engineer later amended its cross action to include similar claims against MIGRA for contribution and
determination of proportionate responsibility.  The advisory client and MIGRA entered into a tolling
agreement for the purpose of tolling any claims that the advisory client may have had against MIGRA in
connection with the apartment project.  The effect of the cross actions was to attempt to make MIGRA
potentially responsible for some or all of the claims of the advisory client irrespective of whether MIGRA
had been sued directly by the advisory client.  On March 28, 2001, the Company entered into a
settlement agreement, which had the effect of releasing MIGRA, the Company and others from all
liability in connection with the lawsuit.  The terms of the settlement agreement are confidential.  In
respect to the above settlement, the Company recorded a liability and a charge to its results of
operations to reflect the cash settlement.  In addition, the Company is entitled to indemnification from the
former MIGRA stockholders arising out of the Merger Agreement between the Company and MIGRA
dated April 16, 1998 which had the effect of offsetting a portion of the aforementioned costs recorded by
the Company.  The Company believes that the amounts not recovered under the aforementioned
indemnification, are covered under MIG's liability insurance policy.  Accordingly, the net amounts
charged to the Company's general and administrative expense in respect of the settlement were not
material.

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.

**11.	GUARANTIES**

The Company has guaranteed completion of certain improvements totaling $1.8 million in
connection with the refinancing of Americana Apartments, a 738 unit multifamily community located in
Euclid, Ohio, in which the Company is a 33.33% joint venture partner.  This obligation is secured by a
$1.8 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.

**12.	SUBSEQUENT EVENTS**

**Dividends Declared and Paid**

On March 26, 2001, the Company declared a dividend of $0.25 per common share which was
paid on May 1, 2001 to shareholders of record on April 6, 2001.

**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 appearing elsewhere in this report.  Historical results and percentage relationships set forth in
the Consolidated Statements of Income 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, changes in
economic conditions in the markets in which the Company owns properties, risks of a lessening of
demand for the apartments owned by the Company, changes in government regulations affecting the
Affordable Housing Properties, changes in or termination of contracts relating to third party management
and advisory business, and expenditures that cannot be anticipated such as utility rate and usage
increases, unanticipated repairs, additional staffing, insurance increases and real estate tax valuation
reassessments.

**Federal Income Taxes**

The Company has elected to be taxed as a real estate investment trust ("REIT") under Sections
856 through 860 of the Internal Revenue Code of 1986, as amended, commencing with its taxable year
ending December 31, 1993.  REITs are subject to a number of organizational and operational
requirements including a requirement that 90.0% of the income that would otherwise be considered as
taxable income be distributed to shareholders.  Providing the Company continues to qualify as a REIT, it
will generally not be subject to federal income tax on net income.  However, the Company's Service
Companies may be subject to federal income tax.

On December 17, 1999, as part of a larger bill, the President signed into law the REIT
Modernization Act ("RMA").  Effective beginning January 1, 2001, the RMA has amended the tax rules
relating to the composition of a REIT's assets.  Under prior law, a REIT was precluded from owning
more than 10.0% of the outstanding voting securities of any one issuer, other than a wholly owned
subsidiary or another REIT.  Beginning in 2001, a REIT will generally remain subject to this current
restriction and will also be precluded from owning more than 10.0% of the value of all securities of any
one issuer.

As an exception to this prohibition, a REIT will be allowed to own up to 100% of the securities of
a taxable REIT subsidiary ("TRS") that can provide non-customary services to REIT tenants and others
without disqualifying the rents that a REIT receives from its tenants.  However, no more than 20.0% of
the value of a REIT's total assets can be represented by securities of one or more TRS's.  The amount
of interest and other expenses from a TRS to a REIT will be limited to ensure that a TRS is subject to an
appropriate level of corporate tax.  The new 10.0% asset test will not apply to certain arrangements
(including third party subsidiaries) in place on July 12, 1999, provided that a subsidiary does not engage
in a "substantial new line of business" or acquire any "substantial asset", and a REIT does not acquire
any new securities in the subsidiary.  Under the RMA, a third party subsidiary will be able to convert tax
free into a TRS.  The Company has elected TRS status for all of its preferred stock subsidiaries for
2001.

**Liquidity and Capital Resources**

The Company expects to meet its short-term liquidity requirements generally through its net
cash provided by operations, secured borrowings and property sales proceeds.  The Company believes
that these sources will be sufficient to meet both operating requirements and the payment of dividends in
accordance with REIT requirements.  In November 2001, an $11.0 million first mortgage non-recourse
loan matures.  The Company is currently in discussions to refinance this maturing loan and anticipates
that the refinancing will occur.  Additionally, during 2001 and 2002, approximately $4.2 million and $6.0
million, respectively, of principal payments are required.  Also, two of the properties in which the
Company is a 33.33% joint venture partner, have first mortgage loans maturing.  One of the loans, of
which the Company's 33.33% share is approximately $4.4 million, matured on April 1, 2001.  The
Company and its joint venture partners are in negotiations with the present lender to extend the maturity
of this loan to May 30, 2001 when the Company and its joint venture partners plan to pay off this loan
with the proceeds of a new loan.  The second loan, of which the Company's 33.33% share is
approximately $3.9 million, matures in November 2001.

In 2000, the Company caused to be 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 at which time principal and interest payments are required through the maturity date of October
15, 2005.

At March 31, 2001, the Company had $2.0 million outstanding under a $20.0 million secured line
of credit.  Borrowings under this line of credit are currently restricted up to an amount of $12.6 million.
The remaining $7.4 million may be available upon completion of certain requirements.  Borrowings
under this line of credit bear interest at a rate of LIBOR plus 1.5%.  There were no borrowings
outstanding under this line of credit at December 31, 2000.

The Company has guaranteed completion of certain improvements totaling $1.8 million in
connection with the refinancing of Americana Apartments, a 738 unit multifamily community located in
Euclid, Ohio, in which the Company is a 33.33% joint venture partner.  This obligation is secured by a
$1.8 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.

**Acquisitions, Dispositions and Development**

Any future multifamily property acquisitions or developments would be financed with the most
appropriate sources of capital, which may include the assumption of mortgage indebtedness, bank and
other institutional borrowings, through the exchange of properties, secured debt financings, or the
issuance of shares or units exchangeable into common shares.

*Advisory Acquisitions:*   In January 2001 and March 2001, MIG acquired two multifamily
properties in Florida containing 319 units and 364 units, respectively.  Both acquisitions were made on
behalf of MIG advisory clients.  MIG was retained to provide asset property management services for
both properties and a Company subsidiary was hired to provide property management services.

***Potential Dispositions:*The Company is marketing 18 properties.  These 18 properties are
comprised of three of the Company's joint venture properties, one of its Affordable Housing properties
and 14 Market Rate properties (ten located in Ohio and four located in Michigan).  As of March 31, 2001,
the Company had entered into contracts to sell four of these properties.

In the short run, the sale of properties will likely result in a reduction in net income and portfolio
size for the Company; however, it is expected that sale proceeds will either be redeployed into new
growth opportunities or the Company will continue to alter its capital structure.  Investment alternatives
are chosen based on whether they are anticipated to be accretive to earnings per share in the long run.
The proceeds from sales will be allocated to investment alternatives with the highest projected marginal
returns.

*Development:*  For the three month period ended March 31, 2001, the Company completed the
construction and leasing of 16 units at one of the Company's development properties.

The Company is in the process of constructing or planning the construction of an additional
1,016 units as follows:

|                                               |                    | Additional | Anticipated
|---------------------------------------------- | ------------------ | ---------- | -----------
|Property                                       | Location           | Units      | Completion 
|Boynton Beach-Land                             | Boynton Beach, FL  | 229        | TBD(1)     
|Berkley Manor (49.0% owned Joint Venture)      | Cranberry Twp., PA | 252        | 2001       
|Idlewylde-Phase II (49.0% owned Joint Venture) | Atlanta, GA        | 535        | 2003       
|                                               |                    | 1,016      |            

(1)To Be Determined

**Management Contract Cancellation**

During 2001, the Company's management contracts associated with the following properties
were terminated:

|Effective                          |            |                    | Approximate        | Approximate Annualized
|---------------------------------- | ---------- | ------------------ | ------------------ | ----------------------
|Date of                            | Management | Management         | Management Fees    | Loss of Management    
|Termination                        | Company    | Contract Canceled  | Earned During 2001 | Fees During 2001      
|                                   |            | (In thousands)    
|                                   |            |                   
|**Affordable Housing Properties:** |            |                   
|3/08/01                            | AERC       | Jaelot             | $16                | $ 80                  
|3/21/01                            | AERC       | Spring Hill Villa  | 11                 | 33                    
|3/21/01                            | AERC       | Warrensville Manor | 11                 | 33                    
|                                   |            |                    |                    |                       
|**Advisory Properties:**           |            |                    |                   
|1/02/01                            | MIG        | Park Place         | -                  | 474                   
|1/25/01                            | MIG        | Kensington Square  | 3                  | 123                   

Additionally, the Company anticipates that the following management contracts on certain
managed joint venture properties may be canceled during 2001 because of proposed sales:

|                            |            |                                           |                       
|--------------------------- | ---------- | ----------------------------------------- | ----------------------
|                            |            |                                           | Approximate Management
|                            |            |                                           | Fees Earned During    
|Effective Date              | Management |                                           | the three months      
|of Termination              | Company    | Management Contract Canceled              | ended March 31, 2001  
|                            |            | (In thousands)                           
|                            |            |                                           |                       
|**Market Rate Properties:** |            |                                          
|Undetermined                | AERC       | Americana (33.33% Joint Venture)          | $31*                  
|Undetermined                | AERC       | Gates Mills Towers (33.33% Joint Venture) | 47*                   
|Undetermined                | AERC       | Watergate (33.33% Joint Venture)          | 63*                   
|Undetermined                | AERC       | College Towers (50.00% Joint Venture)     | 23*                   

*Net fees

*Dividends*:  On March 26, 2001, the Company declared a dividend of $0.25 per common share
which was paid on May 1, 2001 to shareholders of record on April 16, 2001.  On February 19, 2001, the
Company declared a quarterly dividend of $0.60938 per depository share on the Company's Class A
Cumulative Preferred Shares which was paid on March 15, 2001 to shareholders of record on March 1,
2001.

*Cash Flow Sources and Applications:*  Net cash provided by operating activities decreased
$749,000 from $8.3 million to $7.6 million for the three months ended March 31, 2001 when compared
with the three months ended March 31, 2000.  This decrease was primarily due to an increase in
accounts and notes receivable, a decrease in accounts payable and accrued expenses net of an
improvement in net loss and an increase in funds held for non-owned managed properties.

Net cash flows used for investing activities of $2.8 million for the three months ended March 31,
2001 were primarily used for the development of multifamily real estate and other capital expenditures
and advances made to joint venture properties for capital expenditures.  It is anticipated that for 2001
capital improvements will be approximately $8.0 million plus an additional $8.0 million in investment
capital resulting from the proposed exchange of its interest in five joint venture properties.

Net cash flows used for financing activities of $1.5 million for the three months ended March 31,
2001 were primarily used to pay dividends on the Company's common and preferred shares and to
make required principal payments on secured debt.  Additionally, the Company received proceeds of
$4.2 million representing the balance of a $14.0 million loan on which $9.8 million was funded in 2000
and had net borrowings under a line of credit of $2.0 million at March 31, 2001.

***RESULTS OF OPERATIONS***

***Comparison of the quarter ended March 31, 2001 to the quarter ended March 31, 2000***

In the following discussion of the comparison of the quarter ended March 31, 2001 to the quarter
ended March 31, 2000, Market Rate properties refers to the Same Store Market Rate property portfolio.
Market Rate properties represents 66 wholly owned properties and one property which is 66.67%
owned.  Acquired/Disposed properties represents two recently constructed properties that have not yet
reached 93% stabilization, one property in which the Company was a 33.33% owner and purchased the
remaining 66.67% ownership in December 2000 and properties which have been sold.  Affordable
Housing represents 13 properties subject to HUD regulations.

The Company uses Net Operating Income ("NOI") as a measure of the performance of its
properties.  NOI is determined by deducting property operating and maintenance expenses and service
companies expense for the Management and Service Operations segment from total revenues.  For the
three months ended March 31, 2001, NOI was $21.1 million, an increase of $130,000 when compared to
the NOI of $21.0 million for the three months ended March 31, 2000.  The NOI for the four segments of
the Company for the three months ended March 31, 2001 and 2000 were: Acquisition/Disposition
$625,000 and $999,000, Market Rate $17.9 million and $17.6 million, Affordable Housing $1.2 million
and $1.4 million and Management and Service Operations $1.4 million and $1.0 million .  The
components of NOI together with an explanation of the variances are described as follows:

Overall, total revenue increased $1.3 million or 3.5% and total expenses increased $56,000 or
less than 1.0% for the quarter.  Net loss applicable to common shares after deduction for the dividends
on the Company's preferred shares decreased $1.0 million or 34.4%.

During the quarter ended March 31, 2001, the Market Rate properties generated total revenues
of $32.4 million while incurring property operating and maintenance expenses of $14.5 million.  The
Acquired/Disposed properties contributed total revenues of $1.8 million, while incurring property
operating and maintenance expenses of $1.2 million.  The Affordable Housing properties generated total
revenues of $2.4 million while incurring property operating and maintenance expenses of $1.2 million.
The Management and Service Companies generated total revenue of $3.0 million.

*Rental Revenues*:  Rental revenues increased $513,000 or 1.5% for the quarter.  Rental
revenues from the Acquired/Disposed properties decreased $444,000 for the quarter primarily as a
result of the $1.1 million of rental revenues contributed in 2000 by the six properties that were sold
during 2000.  An increase in both economic occupancy and average monthly unit rents at the Market
Rate properties resulted in an increase of $972,000 or 3.2% in rental revenue from these properties.

*Other Revenues*:  Other income increased $536,000 or 63.4% for the quarter.  The increase was
due primarily to a $363,000 supervisory fee earned at the time of the sale of a non-owned managed
Affordable Housing property.  In addition, revenues earned in connection with the residential utility
billings ("RUBS") program increased $370,000.  The RUBS program will continue to provide quarter over
quarter increases until it levels off in the fourth quarter.

The Company recognized property and asset management fees of $2.1 million and $1.8 million
for the quarters ended March 31, 2001 and 2000, respectively.  The increase in property and asset
management fee revenues was primarily due to the addition of client management contracts (five added
during 2000 and two during 2001).

*Property Operating and Maintenance Expenses:*  Property operating and maintenance expenses
increased $1.2 million or 7.8% for the quarter.  Property operating and maintenance expenses at the
Acquired/Disposed properties decreased $54,000 for the quarter due primarily to the operating and
maintenance expenses incurred at the properties sold in 2000 which totaled $554,000, net of an
increase in expenses incurred at a recently acquired property and the properties which came out of
development of $498,000 for the three months ended March 31, 2001.  Property operating and
maintenance expenses at the Market Rate properties increased $1.1 million or 8.2% when compared to
the three months ended March 31, 2000, primarily due to increases in personnel and utility expenses.
Property operating and maintenance expenses at the Affordable Housing properties increased $172,000
or 17.1% for the quarter primarily due to increased utility expense.  It is anticipated that utility costs will
level off during the balance of the year.

*Other Expenses:*General and administrative expenses decreased $801,000 or 19.6% for the
quarter.  This decrease was primarily attributable to a decrease in payroll and related expenses and a
decrease in consulting and professional fees incurred by the Company.  During 2000, the Company
identified and eliminated approximately $3.0 million on an annualized basis in general and administrative
expenses.  The decrease in comparing the First Quarter 2001 to the First Quarter 2000 reflects this
effort.  The general and administrative expenses for the second, third and fourth quarters of 2001 are
anticipated to be lower than the comparable quarters of 2000; however, the difference between the
comparable quarters should decrease as the effects of cost reductions made during 2000 took effect.

Interest expense decreased $340,000 or 3.1% for the quarter primarily due to $180,000 of
interest incurred on a senior unsecured note which was repaid in April 2000 and $70,000 related to the
amortization of the termination fee received relating to the Company's termination of a $65.0 million
interest rate swap which occurred in December 2000.  The Company  had entered into the interest rate
swap in March 2000.

*Net (loss) Income Applicable to Common Shares:*  Net (loss) income applicable to common
shares is equal to net (loss) income less dividends on the preferred shares of $1.4 million for both 2001
and 2000.

**Equity in Net Loss of Joint Ventures**

The combined equity in net loss of joint ventures increased $226,000 or 684.8% for the three
months ended March 31, 2001 when compared to the three months ended March 31, 2000.  The
increased loss was due primarily to an increase in the costs of operations, principally utilities.

The following table presents the historical statements of operations of the Company's beneficial
interest in the operations of the joint ventures for the three months ended March 31, 2001 and 2000.

|                                                 | For the three 
|------------------------------------------------ | --------------
|                                                 | months ended  
|                                                 | March 31,     
|                                                 | 2001          
|                                                 | (In thousands)
|                                                 |               
|Beneficial interests in joint venture operations |               
|Rental revenue                                   | $1,951        
|Cost of operations                               | 1,457         
|                                                 | 494           
|Interest income                                  | 35            
|Interest expense                                 | (544)         
|Depreciation                                     | (232)         
|Amortization                                     | (12)          
|Net loss                                         | $  (259)      

**Strategy**

**Overall Portfolio Strategy**

The Company is a fully integrated multifamily real estate company engaged in property
acquisition, advisory, development, management, operation and ownership activities of multifamily
properties.

The Company seeks to maximize shareholder value by growing the magnitude and quality of
earnings generated by the Company's assets and activities.  Management believes this value is realized
in two principal ways: first, through skilled acquisition and disposition driven by investment research; and
secondly, through operations with a focus on quality of service supported by sophisticated technological
systems.

The Company offers a unique structure which combines a public operating company with an
institutional advisory business.  This combination affords the Company the opportunity to focus its
expertise in either the public or private multifamily investment market allowing continuity and dedication
to the investment process.  This efficiency maximizes shareholder value with active portfolio
management resulting in the continuous measurement of assets offering the greatest risk-adjusted
return to shareholders and clients.

The Company applies a disciplined approach to achieving portfolio balance through
diversification in deep economic markets.  The portfolio is actively managed through the ownership of
assets which provide the highest risk-adjusted rate of return to the portfolio.

The Company's disciplined business planning for each property and its annual budgeting
process, complemented by its capital expenditure program, allow the Company to identify opportunities
across the portfolio, thereby maximizing long term wealth creation.  A key element of this regimen is the
annual hold-sell analysis which challenges the continued investment in any one asset which is not
expected to produce specific benchmark yields.

In the short term, the sale of properties, if any, will result in a reduction in net income and
portfolio size for the Company; however, it is expected that the proceeds will either be redeployed into
new growth opportunities or the Company will continue to alter its capital structure, either through
retirement of debt or the repurchase of its common shares.  Investment alternatives are chosen based
on whether they are anticipated to be accretive to earnings per share in the long run.  The proceeds from
sales will be allocated to investment alternatives with the highest projected risk adjusted marginal
returns

Implementation of the Company's strategy includes 1) enhancement of the owned portfolio
through strategic allocation of capital improvements in existing assets, 2) investment in portfolio
enhancing multifamily communities through acquisition and development, including strategic alliances
with others, and 3) expansion of the advisory business through both separate account and co-investment with institutional investors.

**Market Rate**

The consistent goal for the owned portfolio of multifamily assets is income and value
enhancement through optimal property level performance and acquisition of new properties primarily
through yield enhancing co-investments.  Internal growth is achieved through realization of all marginal
revenue opportunities, contained operational expenses and efficient management.  Management
believes new acquisitions (generally suburban, grade A-B properties) and development opportunities
available to the Company will enhance the income potential to the Company.  The general investment
goals include institutional quality properties in rent growth locations of major metropolitan markets.

To achieve the goal of holding a portfolio of economically and geographically diversified
institutional quality multifamily assets, the Company plans to reduce exposure in the Midwest while
reinvesting in more strategically consistent dynamic markets, which offer greater revenue growth, such
as Atlanta, metro Washington D.C., Orlando, South Florida and Tampa.  The Company expects very
limited acquisitions on behalf of the Market Rate portfolio in the upcoming year; however, the Company
expects to have some co-investment acquisition opportunities.  While the portfolio stability offered in the
Midwest markets is expected to be maintained with the retention of certain assets, the ultimate goal is to
own and operate significant units in multiple markets across the nation.

**Affordable Housing**

The Company's portfolio currently includes 13 owned properties (comprised of 1,335 units)
which are subject to regulation by HUD and which have been in the portfolio since prior to the IPO.

Although rent growth in these properties is limited due to regulatory restrictions, these properties
have provided a stabilizing influence to the portfolio.  Additionally, the Company has developed detailed
systems and processes to effectively operate these properties, which by their nature, exist within a
complex, highly regulated environment.  Economic efficiencies are realized in conjunction with the
management of another 22 properties (4,035 units), on behalf of others, making the affordable housing
area potentially lucrative across segments.

Notwithstanding the potential profitability associated with the efficient management in the
regulated environment, the Company continuously examines its ownership of all properties within the
context of its overall portfolio strategy.  There are no assurances that government policies affecting
these properties will not change causing the future results to differ materially from the historical results.

**Management and Service Companies**

*Fee Management:*  Over the years, the Company has applied its management approach to the
management of properties for third parties.  The Company believes that third party property
management broadens the Company's knowledge of a market, creates opportunities for future
acquisitions, enhances purchasing power, provides a network for new personnel and generates fee
income.

*Advisory Business:*  MIG's, an affiliate of the Company, advisory business comprises a major
component of the Company's overall growth strategy.  A focus of this business will be the acquisition of
properties for separate account clients with discretionary and non-discretionary funds.  The Company's
investment capabilities are expanded by increasing assets acquired and managed on behalf of pension
fund clients.  Furthermore, the advised assets increase the operational efficiency in markets where the
Company may have limited penetration with its own assets, while requiring less in capital resources from
the Company than direct investment.

Another aspect of the advisory strategy is the opportunity to co-invest with institutional partners.
This form of investment not only diversifies the owned portfolio across markets while creating
operational efficiency, but also allows the Company to extend its investment and operational expertise to
MIG's institutional clients.  This distribution of experience and expertise provides acquisition, asset
management, property management and incentive fees to the Company which benefits its shareholders.

*Other:*  The Company will continue to explore ways to capitalize on its access to the significant
purchasing power of its broad resident base as an "e-commerce gatekeeper".  Currently, the Company
is analyzing certain opportunities that will allow it to further exploit its already advanced technological
infrastructure within its current property management platform.

**Strategic Initiatives**

The Company 's strategic initiatives for 2001 include:

1.	**Increase risk-adjusted performance of the portfolio**.  Performance improvement will
be sought through active portfolio management including dispositions of non-strategic
assets.  Heavy emphasis will be placed on rebalancing the portfolio.

*Dispositions:*The Company is marketing 18 properties of which contracts are pending on
five of them.  These 18 properties are comprised of three of its Market Rate joint venture
properties, one of its Affordable Housing and 14 Market Rate properties.  In the short run,
the sale of properties will likely result in a reduction in net income and portfolio size for the
Company, but proceeds will be redeployed to increase the long term yield of the assets;
however, it is expected that the proceeds will either be redeployed into new growth
opportunities or the Company will continue to alter its capital structure, either through
retirement of debt or repurchase of its common stock.  Investment alternatives are chosen
based on whether they are anticipated to be accretive to earnings per share in the long
run.  The proceeds from sales will be allocated to investment alternatives with the highest
projected marginal returns.

*Co-investment:*The Company will continue to increase emphasis on MIG's advisory
business, which includes co-investment opportunities with pension fund clients.  These
co-investments will include both purchase and development opportunities with
discretionary and non-discretionary funds.  Co-investment in the purchase of stabilized
assets is expected to offer low volatility and immediate cash flow.  The development
program allows the Company and its institutional partners to seek higher yields
anticipated from development.  The expected equity investment is approximately 25-50%
from the Company and approximately 50-75% from institutional investors.  In addition to
the co-investment plans with pension fund clients, the Company is in various stages of
planning co-investments with other groups including private organizations and high net
worth investors.

Management believes this co-investment program may allow the Company to increase
operational efficiency in growth markets at a more rapid pace than direct individual
investments because it allows the Company to apply its expertise in multifamily
investment across both owned and advised assets.

*Capital Expenditures:*In 1999, the Company undertook and initiated a plan to improve
the properties in order to increase value and move price points.  During 1999,
approximately $13.0 million in capital improvements were performed.  During 2000,
approximately $12.4 million was spent on capital improvements of which approximately
$4.0 million was investment capital.  During 2001, capital improvements consist of $8.0
million plus an additional $8.0 million in investment capital resulting from the proposed
exchange of its interest in five joint venture properties.

2.	*Technology:*The Company is currently in the process of moving its reporting systems
and application processes to a web based system which will result in a more seamless
integration of all business processes and wider, quicker dissemination of corporate and
property information.  It is further anticipated that the corporate Intranet, which currently is
primarily used by employees, will be further developed to provide controlled public access
to current and prospective residents, clients and vendors and thereby provide more
efficient ways to execute transactions and share information.

****

****3.**Grow assets under management in the advisory business.**  In addition to the co-investment opportunities described in the portfolio performance strategy that arise from
our  institutional relationships, the Company is focused on expanding the portfolio of
advised clients.  Growth in this aspect of the Company requires limited incremental
capital.

**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 market for the Affordable Housing properties is unique in that the residents of these
properties receive assistance under the Rental Assistance Program.  At many of the Affordable Housing
properties, waiting lists of qualified applicants are maintained which minimize the need to advertise
these units.  The average Economic Occupancy of these properties consistently exceeds 98%.
However, changes in these Government Programs could potentially create decreased rental revenues,
additional vacancies, require more marketing costs and in some cases, these properties may be
converted to Market Rate properties.

**CONTINGENCIES**

**Environmental**

There are no recorded amounts resulting from environmental liabilities and there are no known
material contingencies with respect thereto.  Future claims for environmental liabilities are not
measurable given the uncertainties surrounding whether there exists a basis for any such claims to be
asserted and, if so, whether any claims will, in fact, be asserted.  Furthermore, no condition is known to
exist that would give rise to a liability for site restoration, post closure and monitoring commitments, or
other costs that may be incurred with respect to the sale or disposal of a property.  Phase I
environmental audits have been completed on all of the Company's wholly owned and joint venture
properties.

**Pending Litigation**

The Company recently settled a lawsuit pending in the Harris County, Texas district court
against MIG Realty Advisors, Inc. ("MIGRA") (MIG's predecessor company and others ) involving a claim
for contribution and indemnity arising out of MIGRA having served as an investment advisor to an
advisory client in connection with the acquisition of an apartment project located in Houston, Texas.  On
or about December 30, 1998, the advisory client that acquired the property filed suit against the seller,
the consulting engineer who performed the engineering due diligence and others seeking damages for
defective conditions discovered at the property that were allegedly concealed by the seller and not
discovered by the consulting engineer during the pre-purchase due diligence investigation conducted by
the engineer.  The consulting engineer filed a third party claim against MIGRA, alleging that MIGRA  was
responsible for the conduct of the due diligence investigation and consequently MIGRA, rather than the
engineer was responsible for any damages suffered by the advisory client.  Some of the other
defendants, including the seller and the general contractor filed cross actions against MIGRA under the
Texas contribution and proportionate liability statutes alleging that MIGRA was responsible in whole or in
part for the damages alleged to have been suffered by the plaintiff advisory client.  The consulting
engineer later amended its cross action to include similar claims against MIGRA for contribution and
determination of proportionate responsibility.  The advisory client and MIGRA entered into a tolling
agreement for the purpose of tolling any claims that the advisory client may have had against MIGRA in
connection with the apartment project.  The effect of the cross actions was to attempt to make MIGRA
potentially responsible for some or all of the claims of the advisory client irrespective of whether MIGRA
had been sued directly by the advisory client.  On March 28, 2001, the Company entered into a
settlement agreement, which had the effect of releasing MIGRA, the Company and others from all
liability in connection with the lawsuit.  The terms of the settlement agreement are confidential.  The
Company believes that the settlement will not have a material adverse effect on its financial position or
the results of operations.  (See Note 10 of the Notes to the Financial Statements presented in Part 1,
Item 1 of this report for additional discussion).

Any damages in excess of $200,000 and $500,000 are expected to be covered by professional
liability insurance or third party indemnities, respectively, and accordingly, any adverse outcome is not
expected to have a material adverse effect on the financial condition of the Company.

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.

**Expected Property Sales**

Three Market Rate properties located in Ohio were sold on December 31, 1999.  To facilitate the
sale, the Company financed the sale with fixed rate debt maturing July 1, 2001.  Under the structure of
the transaction, the buyer may put the properties back to the Company, after March 1, 2001 but before
June 2, 2001, at a price equal to their fair market value less outstanding indebtedness then owing on the
purchase money financing.  The sale provided for the Company's continued management of the
properties.  These sales will not be recognized for GAAP purposes until the seller financing is repaid.
These three properties are presented as "Properties held for sale" in the Consolidated Balance Sheets
at March 31, 2001 and December 31, 2000.

The following tables present information concerning the Multifamily Properties owned by Associated Estates Realty Corporation. 					C:\2001q\marq01.wpd

|                                      |          |                  |              |       |          |           | For the three months ending | For the three months ending
|------------------------------------- | -------- | ---------------- | ------------ | ----- | -------- | --------- | --------------------------- | ---------------------------
|                                      |          |                  |              |       |          |           | March 31, 2001              | March 31, 2000             
|                                      |          |                  |              |       | Year     | Average   | Average                     |                            
|                                      | Date     |                  | Type of      | Total | Built or | Unit Size | Economic                    | Physical                   
|The Multifamily Properties            | Acquired | Location         | Construction | Units | Rehab.   | Sq. Ft.   | Occupancy                   | Occupancy                  
|                                      |          |                  |              |       |          |           |                             |                            
|MARKET RATE                           |          |                  |              |       |          |           |                             |                            
|Acquired Properties                   |          |                  |              |       |          |           |                             |                            
|Ohio                                  |          |                  |              |       |          |           |                             |                            
|Euclid House (formerly a JV
property) | 12/01/00 | Euclid           | Mid Rise     | 126   | 1969     | 654       | 94.0%                       | 89.7%                      
|                                      |          |                  |              |       |          |           |                             |                            
|CORE PORTFOLIO PROPERTIES             |          |                  |              |       |          |           |                             |                            
|Market rate                           |          |                  |              |       |          |           |                             |                            
|Phoenix, Arizona                      |          |                  |              |       |          |           |                             |                            
|20th & Campbell Apartments            | 06/30/98 | Phoenix          | Garden       | 204   | 1989     | 982       | 90.3%                       | 93.6%                      
|                                      |          |                  |              |       |          |           |                             |                            
|Central Ohio                          |          |                  |              |       |          |           |                             |                            
|Arrowhead Station                     | 02/28/95 | Columbus         | Townhomes    | 102   | 1987     | 1,344     | 93.6%                       | 98.0%                      
|Bedford Commons                       | 12/30/94 | Columbus         | Townhomes    | 112   | 1987     | 1,157     | 93.7                        | 94.6                       
|Bolton Estates                        | 07/27/94 | Columbus         | Garden       | 196   | 1992     | 687       | 94.3                        | 98.5                       
|Bradford at Easton                    | 05/01/98 | Columbus         | Garden       | 324   | 1996     | 1,010     | 93.3                        | 96.6                       
|Colony Bay East                       | 02/21/95 | Columbus         | Garden       | 156   | 1994     | 903       | 96.0                        | 97.4                       
|Heathermoor                           | 08/18/94 | Worthington      | Gdn/Tnhms    | 280   | 1989     | 829       | 93.9                        | 95.4                       
|Kensington Grove                      | 07/17/95 | Westerville      | Gdn/Tnhms    | 76    | 1995     | 1,109     | 89.3                        | 90.8                       
|Lake Forest                           | 07/28/94 | Columbus         | Garden       | 192   | 1994     | 788       | 88.0                        | 89.1                       
|Muirwood Village at Bennell           | 03/07/94 | Columbus         | Ranch        | 164   | 1988     | 769       | 90.5                        | 93.9                       
|Muirwood Village at London            | 03/03/94 | London           | Ranch        | 112   | 1989     | 769       | 92.1                        | 91.1                       
|Muirwood Village at Zanesville        | 03/07/94 | Zanesville       | Ranch        | 196   | 1991-95  | 769       | 94.3                        | 96.4                       
|Oak Bend Commons                      | 05/30/97 | Canal Winchester | Garden/Tnhm  | 102   | 1997     | 1,110     | 98.0                        | 100.0                      
|Pendleton Lakes East                  | 08/25/94 | Columbus         | Garden       | 256   | 1990-93  | 899       | 94.5                        | 99.6                       
|Perimeter Lakes                       | 09/20/96 | Dublin           | Gdn/Tnhms    | 189   | 1992     | 999       | 94.7                        | 96.8                       
|Residence at Christopher Wren         | 03/14/94 | Gahanna          | Gdn/Tnhms    | 264   | 1993     | 1,062     | 89.6                        | 95.5                       
|Residence at Turnberry                | 03/16/94 | Pickerington     | Gdn/Tnhms    | 216   | 1991     | 1,182     | 95.4                        | 95.4                       
|Saw Mill Village                      | 04/22/97 | Columbus         | Garden       | 340   | 1987     | 1,161     | 81.6                        | 89.1                       
|Sheffield at Sylvan                   | 03/03/94 | Circleville      | Ranch        | 136   | 1989     | 791       | 97.9                        | 100.0                      
|Sterling Park                         | 08/25/94 | Grove City       | Garden       | 128   | 1994     | 763       | 84.1                        | 92.2                       
|The Residence at Newark               | 03/03/94 | Newark           | Ranch        | 112   | 1993-94  | 868       | 98.0                        | 98.2                       
|Wyndemere                             | 09/21/94 | Franklin         | Ranch        | 128   | 1991-95  | 768       | 98.9                        | 99.2                       
|                                      |          |                  |              | 3,781 |          | 942       | 92.1%                       | 95.4%                      
|                                      |          |                  |              |       |          |           |                             |                            
|Cincinnati, Ohio                      |          |                  |              |       |          |           |                             |                            
|Remington Place Apartments            | 03/31/97 | Cincinnati       | Garden       | 234   | 1988-90  | 830       | 92.8%                       | 94.0%                      
|                                      |          |                  |              |       |          |           |                             |                            

|                              |          |                  |              |       |          |           | For the three months ending | For the three months ending
|----------------------------- | -------- | ---------------- | ------------ | ----- | -------- | --------- | --------------------------- | ---------------------------
|                              |          |                  |              |       |          |           | March 31, 2001              | March 31, 2000             
|                              |          |                  |              |       | Year     | Average   | Average                     |                            
|                              | Date     |                  | Type of      | Total | Built or | Unit Size | Economic                    | Physical                   
|The Multifamily Properties    | Acquired | Location         | Construction | Units | Rehab.   | Sq. Ft.   | Occupancy                   | Occupancy                  
|                              |          |                  |              |       |          |           |                             |                            
|Florida                       |          |                  |              |       |          |           |                             |                            
|Cypress Shores Apartments     | 02/03/98 | Coconut Creek    | Garden       | 300   | 1991     | 991       | 93.9%                       | 98.0%                      
|Windsor Pines                 | 10/23/98 | Pembroke Pines   | Garden       | 368   | 1998     | 1,132     | 94.4                        | 98.1                       
|                              |          |                  |              | 668   |          | 1,069     | 94.2%                       | 98.1%                      
|**Atlanta, Georgia**          |          |                  |              |       |          |           |                             |                            
|The Falls Apartments          | 02/03/98 | Atlanta          | Garden       | 520   | 1986     | 963       | 83.3%                       | 87.1%                      
|Morgan Place Apartments       | 06/30/98 | Atlanta          | Garden       | 186   | 1989     | 679       | 82.7                        | 86.0                       
|                              |          |                  |              | 706   |          | 888       | 83.1%                       | 86.8%                      
|**Indianapolis, Indiana**     |          |                  |              |       |          |           |                             |                            
|The Gables at White River     | 02/06/97 | Indianapolis     | Garden       | 228   | 1991     | 974       | 87.2%                       | 91.2%                      
|Steeplechase Apartments       | 08/11/98 | Indianapolis     | Garden       | 264   | 1998     | 929       | 84.7                        | 90.9                       
|Waterstone Apartments         | 08/29/97 | Indianapolis     | Garden       | 344   | 1997     | 984       | 92.7                        | 95.1                       
|                              |          |                  |              | 836   |          | 964       | 88.8%                       | 92.7%                      
|**Maryland**                  |          |                  |              |       |          |           |                             |                            
|Reflections Apartments        | 02/03/98 | Metro D.C.       | Garden       | 184   | 1985     | 1,020     | 98.3%                       | 98.9%                      
|The Gardens at Annen Woods    | 06/30/98 | Metro D.C.       | Garden       | 132   | 1987     | 1,269     | 96.0                        | 97.0                       
|Hampton Point Apartments      | 06/30/98 | Metro D.C.       | Garden       | 352   | 1986     | 817       | 97.6                        | 99.1                       
|                              |          |                  |              | 668   |          | 962       | 97.5%                       | 98.7%                      
|**Michigan**                  |          |                  |              |       |          |           |                             |                            
|Arbor Landings Apartments     | 01/20/95 | Ann Arbor        | Garden       | 168   | 1990     | 1,116     | 94.4%                       | 95.8%                      
|Arbor Landings                | 01/01/00 | Ann Arbor        | Garden       | 160   | 1999     | 1,113     | 93.5                        | 96.9                       
|Aspen Lakes                   | 09/04/96 | Grand Rapids     | Garden       | 144   | 1981     | 789       | 95.3                        | 100.0                      
|Central Park Place            | 12/29/94 | Grand Rapids     | Garden       | 216   | 1988     | 850       | 94.8                        | 98.1                       
|Clinton Place                 | 08/25/97 | Clinton Twp.     | Garden       | 202   | 1988     | 954       | 93.6                        | 95.0                       
|Country Place Apartments      | 06/19/95 | Mt. Pleasant     | Garden       | 144   | 1987-89  | 859       | 94.8                        | 96.5                       
|Georgetown Park Apartments    | 12/28/94 | Fenton           | Garden       | 480   | 1987-96  | 1,071     | 88.2                        | 91.3                       
|The Landings at the Preserve  | 09/21/95 | Battle Creek     | Garden       | 190   | 1990-91  | 952       | 90.5                        | 95.3                       
|The Oaks and Woods at Hampton | 08/08/95 | Rochester Hills  | Gdn/Tnhms    | 544   | 1986-88  | 1,050     | 94.8                        | 97.2                       
|Spring Brook Apartments       | 06/20/96 | Holland          | Gdn/Tnhms    | 168   | 1986-88  | 818       | 95.1                        | 94.6                       
|Spring Valley Apartments      | 10/31/97 | Farmington Hills | Garden       | 224   | 1987     | 893       | 97.4                        | 97.8                       
|Summer Ridge Apartments       | 04/01/96 | Kalamazoo        | Garden       | 248   | 1989-91  | 960       | 98.0                        | 98.0                       
|                              |          |                  |              | 2,888 |          | 977       | 93.8%                       | 96.0%                      
|**North Carolina**            |          |                  |              |       |          |           |                             |                            
|Windsor Falls Apartments      | 06/30/98 | Raleigh          | Garden       | 276   | 1994     | 979       | 86.5%                       | 92.4%                      
|                              |          |                  |              |       |          |           |                             |                            
|Northeastern Ohio             |          |                  |              |       |          |           |                             |                            
|Bay Club                      | IPO      | Willowick        | Garden       | 96    | 1990     | 925       | 97.7%                       | 99.0%                      
|Residence at Barrington       | 06/30/99 | Aurora           | Gdn/Tnhms    | 288   | 1999     | 1,131     | 83.6                        | 88.2                       
|Edgewater Landing             | 04/20/94 | Cleveland        | High Rise    | 241   | 1988r    | 585       | 95.8                        | 94.2                       
|Gates Mills III               | IPO      | Mayfield Hts.    | High Rise    | 320   | 1978     | 874       | 70.8                        | 70.3                       

|                                  |          |                  |              |        |          |           | For the three months ending | For the three months ending
|--------------------------------- | -------- | ---------------- | ------------ | ------ | -------- | --------- | --------------------------- | ---------------------------
|                                  |          |                  |              |        |          |           | March 31, 2001              | March 31, 2000             
|                                  |          |                  |              |        | Year     | Average   | Average                     |                            
|                                  | Date     |                  | Type of      | Total  | Built or | Unit Size | Economic                    | Physical                   
|The Multifamily Properties        | Acquired | Location         | Construction | Units  | Rehab.   | Sq. Ft.   | Occupancy                   | Occupancy                  
|                                  |          |                  |              |        |          |           |                             |                            
|                                  |          |                  |              |        |          |           |                             |                            
|Mallard's Crossing                | 02/16/95 | Medina           | Garden       | 192    | 1990     | 998       | 81.2%                       | 88.5%                      
|Portage Towers                    | IPO      | Cuyahoga Falls   | High Rise    | 376    | 1973     | 869       | 97.6                        | 97.1                       
|Woodlands of North Royalton       |          |                  |              |        |          |           |                             |                            
|fka Somerset West (a)             | IPO      | North Royalton   | Gdn/Tnhms    | 197    | 1982     | 1,038     | 84.8                        | 88.8                       
|The Triangle (b)                  | IPO      | Cleveland        | High Rise    | 273    | 1989     | 616       | 99.2                        | 93.4                       
|Village at Western Reserve        | 08/01/98 | Streetsboro      | Ranch        | 108    | 1998     | 999       | 96.3                        | 95.4                       
|Westchester Townhouses            | IPO      | Westlake         | Townhomes    | 136    | 1989     | 1,000     | 91.5                        | 97.1                       
|Williamsburg at Greenwood Village | 02/18/94 | Sagamore Hills   | Townhomes    | 260    | 1990     | 938       | 85.6                        | 90.4                       
|Westlake Townhomes                | IPO      | Westlake         | Townhomes    | 7      | 1985     | 1,000     | 94.3                        | 100.0                      
|Winchester Hills I  (c)           | IPO      | Willoughby Hills | High Rise    | 362    | 1972     | 822       | 73.8                        | 76.5                       
|Winchester Hills II               | IPO      | Willoughby Hills | High Rise    | 362    | 1979     | 822       | 71.6                        | 73.8                       
|                                  |          |                  |              | 3,218  |          | 875       | 85.4%                       | 86.6%                      
|**Toledo, Ohio**                  |          |                  |              |        |          |           |                             |                            
|Country Club Apartments           | 02/19/98 | Toledo           | Garden       | 316    | 1989     | 811       | 92.7%                       | 94.3%                      
|Hawthorne Hills Apartments        | 05/14/97 | Toledo           | Garden       | 88     | 1973     | 1,145     | 96.1                        | 100.0                      
|Kensington Village                | 09/14/95 | Toledo           | Gdn/Tnhms    | 506    | 1985-90  | 1,072     | 97.0                        | 94.3                       
|Vantage Villa                     | 10/30/95 | Toledo           | Garden       | 150    | 1974     | 935       | 91.9                        | 97.3                       
|                                  |          |                  |              | 1,060  |          | 981       | 94.9%                       | 95.2%                      
|**Pittsburgh, Pennsylvania**      |          |                  |              |        |          |           |                             |                            
|Chestnut Ridge                    | 03/01/96 | Pittsburgh       | Garden       | 468    | 1986     | 769       | 82.3%                       | 88.7%                      
|                                  |          |                  |              |        |          |           |                             |                            
|Texas                             |          |                  |              |        |          |           |                             |                            
|Fleetwood Apartments              | 06/30/98 | Houston          | Garden       | 104    | 1993     | 1,019     | 88.6                        | 95.2                       
|Core Market Rate                  |          |                  |              | 15,111 |          | 937       | 90.5%                       | 93.0%                      
|                                  |          |                  |              |        |          |           |                             |                            
|AFFORDABLE HOUSING-ELDERLY        |          |                  |              |        |          |           |                             |                            
|Ellet Development                 | IPO      | Akron            | High Rise    | 100    | 1978     | 589       | 99.7%                       | 100.0%                     
|Hillwood I                        | IPO      | Akron            | High Rise    | 100    | 1976     | 570       | 99.1                        | 100.0                      
|Puritas Place (d)                 | IPO      | Cleveland        | High Rise    | 100    | 1981     | 518       | 98.9                        | 98.0                       
|Riverview                         | IPO      | Massillon        | High Rise    | 98     | 1979     | 553       | 99.2                        | 100.0                      
|State Road Apartments             | IPO      | Cuyahoga Falls   | Garden       | 72     | 1977 r   | 750       | 99.8                        | 100.0                      
|Statesman II                      | IPO      | Shaker Heights   | Garden       | 47     | 1987 r   | 796       | 96.5                        | 97.9                       
|Sutliff Apartments II             | IPO      | Cuyahoga Falls   | High Rise    | 185    | 1979     | 577       | 99.7                        | 99.5                       
|Tallmadge Acres                   | IPO      | Tallmadge        | Mid Rise     | 125    | 1981     | 641       | 99.8                        | 100.0                      
|Twinsburg Apartments              | IPO      | Twinsburg        | Garden       | 100    | 1979     | 554       | 100.0                       | 100.0                      
|Village Towers                    | IPO      | Jackson Twp.     | High Rise    | 100    | 1979     | 557       | 100.0                       | 100.0                      
|West High Apartments              | IPO      | Akron            | Mid Rise     | 68     | 1981 r   | 702       | 95.4                        | 100.0                      
|                                  |          |                  |              | 1,095  |          | 602       | 99.1%                       | 99.6%                      

|                              |          |                  |              |        |          |           | For the three months ending | For the three months ending
|----------------------------- | -------- | ---------------- | ------------ | ------ | -------- | --------- | --------------------------- | ---------------------------
|                              |          |                  |              |        |          |           | March 31, 2001              | March 31, 2000             
|                              |          |                  |              |        | Year     | Average   | Average                     |                            
|                              | Date     |                  | Type of      | Total  | Built or | Unit Size | Economic                    | Physical                   
|The Multifamily Properties    | Acquired | Location         | Construction | Units  | Rehab.   | Sq. Ft.   | Occupancy                   | Occupancy                  
|                              |          |                  |              |        |          |           |                             |                            
|AFFORDABLE HOUSING-FAMILY     |          |                  |              |        |          |           |                             |                            
|Jennings Commons              | IPO      | Cleveland        | Garden       | 50     | 1981     | 823       | 97.4%                       | 100.0%                     
|Shaker Park Gardens II        | IPO      | Warrensville     | Garden       | 151    | 1964     | 753       | 95.3                        | 100.0                      
|                              |          |                  |              | 201    |          | 770       | 95.9%                       | 100.0%                     
|                              |          |                  |              | 1,296  |          | 628       | 98.6%                       | 99.7%                      
|**CONGREGATE CARE**           |          |                  |              |        |          |           |                             |                            
|Gates Mills Club              | IPO      | Mayfield Heights | High Rise    | 120    | 1980     | 721       | 79.0%                       | 78.3%                      
|The Oaks                      | IPO      | Westlake         | Garden       | 50     | 1985     | 672       | 70.6                        | 70.0                       
|                              |          |                  |              | 170    |          | 707       | 76.4%                       | 75.9%                      
|                              |          |                  |              | 16,577 |          | 911       | 90.9%                       | 93.4%                      
|                              |          |                  |              |        |          |           |                             |                            
|Joint Venture Properties      |          |                  |              |        |          |           |                             |                            
|Northeastern Ohio             |          |                  |              |        |          |           |                             |                            
|Market Rate                   |          |                  |              |        |          |           |                             |                            
|Americana                     | IPO      | Euclid           | High Rise    | 738    | 1968     | 803       | 73.9%                       | 72.9%                      
|College Towers                | IPO      | Kent             | Mid Rise     | 380    | 1969     | 662       | 97.3                        | 98.4                       
|Gates Mills Towers            | IPO      | Mayfield Hts.    | High Rise    | 760    | 1969     | 856       | 79.8                        | 81.8                       
|Highland House                | IPO      | Painesville      | Garden       | 36     | 1964     | 539       | 99.0                        | 97.2                       
|Watergate                     | IPO      | Euclid           | High Rise    | 949    | 1971     | 831       | 83.2                        | 87.6                       
|                              |          |                  |              | 2,863  |          | 804       | 81.6%                       | 83.8%                      
|**AFFORDABLE HOUSING-FAMILY** |          |                  |              |        |          |           |                             |                            
|Lakeshore Village             | IPO      | Cleveland        | Garden       | 108    | 1982     | 786       | 98.0%                       | 100.0%                     
|Total Joint Venture           |          |                  |              | 2,971  |          | 804       | 82.3%                       | 84.4%                      
|Core                          |          |                  |              | 19,708 |          | 887       | 89.8%                       | 92.1%                      
|Portfolio average             |          |                  |              | 19,868 |          | 889       | 89.9%                       | 92.1%                      

(a)	Woodlands of North Royalton (fka Somerset West) has 39 Contract Units and 158 Market-rate units.

(b)	The Triangle also contains 63,321 square feet of office/retail space.

(c)	The Company acquired a noteholder interest entitling the Company to substantially all cash flows from operations.  The Company has certain rights under a security agreement to foreclose on the

property to the extent that the unpaid principal and interest on the underlying notes exceed seven years equivalent principal and interest payments.

(d)	The property was developed in 1981 subject to a warranty deed provision which states that the assignment of fee simple title of the property to the Company shall expire in 2037.

R = 	Rehabilitated

**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 National Association of Real Estate Investment
Trusts ("NAREIT") defines FFO generally as net income (loss) applicable to common shareholders,
excluding gains (losses) on the disposition of properties and extraordinary items under GAAP, adjusted
for depreciation on real estate assets and amortization of intangible assets and adding the Company's
proportionate share of FFO of its unconsolidated joint ventures.  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.  Certain
other real estate companies may define FFO in a different manner.

FFO and Funds Available for Distribution ("Distributable Cash Flow") for the three month periods
ended March 31, 2001 and 2000 are summarized in the following table:

|                                                      | For the three months
|----------------------------------------------------- | --------------------
|                                                      | ended March 31,     
|                                                      | 2001                
|                                                      | **(In thousands)**  
|                                                      |                     
|**Net (loss) income** **applicable to common shares** | $ (1,959)           
|                                                      |                     
|Depreciation on real estate assets                    |                     
|Wholly owned properties                               | 7,652               
|Joint venture properties                              | 204                 
|Amortization of intangible assets                     | 289                 
|**Funds From Operations**                             | 6,186               
|                                                      |                     
|Depreciation - other assets                           | 556                 
|Amortization of deferred financing fees               | 342                 
|Fixed asset additions                                 | (2,074)             
|Fixed asset additions - joint venture properties      | (1,855)             
|**Distributable Cash Flow**                           | $  3,155            
|                                                      |                     
|**Weighted average shares	- Basic**                   | 19,378              
|**- Diluted**                                         | 19,378              
|                                                      |                     

**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 we do not expect to use them 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.  As of March 31, 2001, the fair market
value of the Company's debt has increased approximately $17.0 million or 3.0% as a result of the
decline in interest rates since December 31, 2000.  There have been no other material changes in the
fair value of assets and liabilities since the date of the Company's Form 10-K.



**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 January 25, 2000, Associated Estates Management Company ("AEMC") filed suit in the
Cuyahoga County, Ohio Court of Common Pleas against Euclid Medical and Commercial Arts, an Ohio
limited partnership and its general partner, Metro City No. 1, an Ohio general partnership, seeking
damages in excess of $729,000.  Euclid Medical and Commercial Arts formerly owned the Euclid
Medical and Office Building located in Euclid, Ohio.  AEMC was the property manager of that property
until on or about March 23, 1999.  Metro City No. 1 is 56.0% owned by the Company's Chairman of the
Board and CEO, his wife and his brothers-in-law, one of whom is a director of the Company.  In the
normal course of business, the Company had followed a practice for many years of advancing funds on
behalf of, or holding funds for the benefit of, affiliates, which owned real estate properties managed by
the Company.  Euclid Medical and Office Building was one of those properties for which the Company so
advanced funds.  The suit seeks reimbursement for the funds advanced by the Company for the benefit
of this property.  Metro City No. 1 made a capital call to its partners requesting funds to pay this
obligation.  The Chairman of the Board, his wife and brothers-in-law have paid the Company their
proportionate share of the capital call; however, the remaining non-affiliated partners of Metro City No. 1
have refused to do so.  The Company believes the recorded amount of the receivable is stated at its net
realizable value.

The Company recently settled a lawsuit pending in the Harris County, Texas district court
against MIG Realty Advisors, Inc. ("MIGRA") (MIG's predecessor company and others ) involving a claim
for contribution and indemnity arising out of MIGRA having served as an investment advisor to an
advisory client in connection with the acquisition of an apartment project located in Houston, Texas.  On
or about December 30, 1998, the advisory client that acquired the property filed suit against the seller,
the consulting engineer who performed the engineering due diligence and others seeking damages for
defective conditions discovered at the property that were allegedly concealed by the seller and not
discovered by the consulting engineer during the pre-purchase due diligence investigation conducted by
the engineer.  The consulting engineer filed a third party claim against MIGRA, alleging that MIGRA  was
responsible for the conduct of the due diligence investigation and consequently MIGRA, rather than the
engineer was responsible for any damages suffered by the advisory client.  Some of the other
defendants, including the seller and the general contractor filed cross actions against MIGRA under the
Texas contribution and proportionate liability statutes alleging that MIGRA was responsible in whole or in
part for the damages alleged to have been suffered by the plaintiff advisory client.  The consulting
engineer later amended its cross action to include similar claims against MIGRA for contribution and
determination of proportionate responsibility.  The advisory client and MIGRA entered into a tolling
agreement for the purpose of tolling any claims that the advisory client may have had against MIGRA in
connection with the apartment project.  The effect of the cross actions was to attempt to make MIGRA
potentially responsible for some or all of the claims of the advisory client irrespective of whether MIGRA
had been sued directly by the advisory client.  On March 28, 2001, the Company entered into a
settlement agreement, which had the effect of releasing MIGRA, the Company and others from all
liability in connection with the lawsuit.  The terms of the settlement agreement are confidential.  The
Company believes that the settlement will not have a material adverse effect on its financial position or
the results of operations.  (See Note 10 of the Notes to the Financial Statements presented in Part 1,
Item 1 of this report for additional discussion).

******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   | Loan Agreement between Associated Estates Realty Corporation and
National City Bank                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | Exhibit 4.13 to Form
10-K filed March 15,
2000.                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|4.13a  | First Amendment to Loan Agreement between Associated Estates Realty
Corporation and National City Bank                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | Exhibit 4.13a to Form
10-Q filed August 8,
2000.                                 
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|4.13b  | Second Amendment to Loan Agreement between Associated Estates
Realty Corporation and National City Bank.                                                                                                                                                                                                                                                                                                                                                                                                                                              |  | Exhibit 4.13b to Form
10-K filed March 13,
2001.                                 
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|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                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.14  | 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.                                   
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.19  | 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.                                 
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|10.21  | 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 filed
herewith.                                                    
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                  
|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.

None

**SIGNATURES**

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

|             | ASSOCIATED ESTATES REALTY CORPORATION
|------------ | -------------------------------------
|             |                                      
|             |                                      
|May 15, 2001 | /s/ Lou Fatica                       
|(Date)       | Lou Fatica, Vice President,          
|             | Chief Financial Officer and Treasurer

**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              
|------ | ---------------------------------------------------
|       |                                                    
|       |                                                    
|       | Lou Fatica, Vice President, Chief Financial Officer
|(Date) | and Treasurer