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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

[X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

OR

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from  to .

Commission File Number 1-10272

ARCHSTONE-SMITH OPERATING TRUST

(Exact name of registrant as specified in its charter)


|                                                                        |  |                                                
|----------------------------------------------------------------------- |  | -----------------------------------------------
|Maryland
(State or other jurisdiction of
incorporation or organization) |  | 74-6056896
(I.R.S. employer
identification no.)

9200 E Panorama Circle, Suite 400
Englewood, Colorado 80112
(Address of principal executive offices and zip code)

(303) 708-5959
(Registrants telephone number, including area code)

(Former name, former address and former fiscal year,
if changed since last report)

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 for the past 90 days.

| |     |  |   |  |    |  |  |  |  |  |  | 
| | --- |  | - |  | -- |  |  |  |  |  |  | 
| | Yes |  | X |  | No |  |  | 
| |     |  |   |  |    |  | 

At August 8, 2002, there were approximately 25,136,000 Class A-1 Common
Units held by non-affiliates.





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TABLE OF CONTENTS



|                                                   |                                                                                               |                                                                                                |  |  |  |  |  | 
|-------------------------------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------- |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION                    
|                                                   | Item 1. Financial Statements                                                                 
|                                                   |                                                                                               | Condensed Consolidated Balance Sheets                                                         
|                                                   |                                                                                               | Condensed Consolidated Statements of Earnings                                                 
|                                                   |                                                                                               | Condensed Consolidated Statement of Unitholders Equity and Other Common Unitholders Interest
|                                                   |                                                                                               | Condensed Consolidated Statements of Cash Flows                                               
|                                                   |                                                                                               | Notes to Condensed Consolidated Financial Statements                                          
|                                                   |                                                                                               | INDEPENDENT ACCOUNTANTS REVIEW REPORT                                                        
|                                                   | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                   | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|PART II  OTHER INFORMATION                       
|                                                   | Item 2. Changes in Securities and Use of Proceeds                                            
|                                                   | Item 6. Exhibits and Reports on Form 8-K                                                     
|EX-12.1 Ratio of Earnings - Fixed Charges         
|EX-12.2 Ratio of Earnings - Combined Fixed Charges
|EX-15.1 Letter from KPMG LLP                      
|EX-99.1 Certification of the CEO                  
|EX-99.2 Certification of the CFO                  



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##### Table of Contents



Table of Contents

|     |  |                                                                                                                                             |  |       
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------- |  | ------
|     |  |                                                                                                                                             |  | Page  
|Item |  | Description                                                                                                                                 |  | Number
|     |  |                                                                                                                                             |  |       
|     |  | PART 1                                                                                                                                      |  |       
|1.   |  | Financial Statements                                                                                                                        |  |       
|     |  | Condensed Consolidated Balance Sheets  June 30, 2002 (unaudited) and December 31, 2001                                                     |  | 3     
|     |  | Condensed Consolidated Statements of Earnings  Three and six-months ended June 30,
2002 and 2001 (unaudited)                               |  | 4     
|     |  | Condensed Consolidated Statement of Unitholders Equity and Other Common Unitholders
Interest  Six-months ended June 30, 2002 (unaudited) |  | 5     
|     |  | Condensed Consolidated Statements of Cash Flows  Six-months ended June 30, 2002 and
2001 (unaudited)                                       |  | 6     
|     |  | Notes to Condensed Consolidated Financial Statements (unaudited)                                                                            |  | 7     
|     |  | Independent Accountants Review Report                                                                                                      |  | 16    
|2.   |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                       |  | 17    
|3.   |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                  |  | 24    
|     |  | PART II                                                                                                                                     |  |       
|2.   |  | Changes in Securities and Use of Proceeds                                                                                                   |  | 25    
|6.   |  | Exhibits and Reports on Form 8-K                                                                                                            |  | 25    

2



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PART I  FINANCIAL INFORMATION
Item 1. Financial Statements

Archstone-Smith Operating Trust

Condensed Consolidated Balance
Sheets
(In thousands, except per share amounts)

|                                                                                                                       |                                                          |                              |                        |           |             |   |              |           |           |  | 
|---------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | ---------------------------- | ---------------------- | --------- | ----------- | - | ------------ | --------- | --------- |  | 
|                                                                                                                       |                                                          |                              |                        |           | June 30,    |   | December 31,
|                                                                                                                       |                                                          | 2002                         |                        | 2001     
|                                                                                                                       |                                                          |                              |                        |          
|                                                                                                                       |                                                          |                              |                        |           | (Unaudited) |   |              |           |          
|ASSETS                                                                                                                 |                                                          |                              |                        |           |             |   |              |          
|Real estate                                                                                                            |                                                          | $                            | 8,707,304              |           |             | $ | 8,276,004    |          
|Less accumulated depreciation                                                                                          |                                                          |                              | 488,428                |           |             |   | 406,784      |          
|                                                                                                                       |                                                          |                              |                        |           |             |   |              |          
|                                                                                                                       |                                                          |                              | 8,218,876              |           |             |   | 7,869,220    |          
|Investments in and advances to unconsolidated entities                                                                 |                                                          |                              | 476,043                |           |             |   | 437,365      |          
|                                                                                                                       |                                                          |                              |                        |           |             |   |              |          
|                                                                                                                       |                                                          | Net investments              |                        |           | 8,694,919   |   |              |           | 8,306,585 | 
|Cash and cash equivalents                                                                                              |                                                          |                              | 10,808                 |           |             |   | 7,027        |          
|Restricted cash in tax-deferred exchange escrow                                                                        |                                                          |                              | 58,657                 |           |             |   | 120,421      |          
|Other assets                                                                                                           |                                                          |                              | 133,151                |           |             |   | 115,882      |          
|                                                                                                                       |                                                          |                              |                        |           |             |   |              |          
|                                                                                                                       |                                                          | Total assets                 |                        | $         | 8,897,535   |   |              | $         | 8,549,915 | 
|                                                                                                                       |                                                          |                              |                        |           |             |   |              |          
|                                                                                                                       |                                                          |                              | LIABILITIES AND EQUITY |           |             |   |              |           |           |  | 
|Liabilities:                                                                                                           |                                                          |                              |                        |           |             |   |              |          
|                                                                                                                       | Unsecured credit facilities                              |                              | $                      | 480,714   |             |   | $            | 188,589   |          
|                                                                                                                       | Long-Term Unsecured Debt                                 |                              |                        | 1,523,516 |             |   |              | 1,333,890 |          
|                                                                                                                       | Mortgages payable                                        |                              |                        | 2,158,064 |             |   |              | 2,330,533 |          
|                                                                                                                       | Distributions payable                                    |                              |                        | 4,368     |             |   |              | 89,326    |          
|                                                                                                                       | Accounts payable, accrued expenses and other liabilities |                              |                        | 237,890   |             |   |              | 212,030   |          
|                                                                                                                       |                                                          |                              |                        |           |             |   |              |          
|                                                                                                                       |                                                          | Total liabilities            |                        |           | 4,404,552   |   |              |           | 4,154,368 | 
|                                                                                                                       |                                                          |                              |                        |           |             |   |              |          
|Minority interest                                                                                                      |                                                          |                              | 94,527                 |           |             |   | 94,527       |          
|                                                                                                                       |                                                          |                              |                        |           |             |   |              |          
|Other common unitholders interest, at redemption value
(A-1 Common Units: 25,147,397 in 2002, and 25,456,336 in
2001) |                                                          |                              | 671,434                |           |             |   | 669,502      |          
|                                                                                                                       |                                                          |                              |                        |           |             |   |              |          
|Unitholders equity:                                                                                                   |                                                          |                              |                        |           |             |   |              |          
|                                                                                                                       | Convertible Preferred Units                              |                              |                        | 220,646   |             |   |              | 225,351   |          
|                                                                                                                       | Perpetual Preferred Units                                |                              |                        | 148,633   |             |   |              | 148,763   |          
|                                                                                                                       | Common unitholders equity (A-2 Common Units:            |                              |                        |           |             |   |              |           |          
|                                                                                                                       | 176,832,471 in 2002 and 174,516,969 in 2001)             |                              |                        | 3,369,337 |             |   |              | 3,267,363 |          
|                                                                                                                       | Accumulated other comprehensive loss                     |                              |                        | (7,841    | )           |   |              | (5,517    | )        
|                                                                                                                       | Employee share purchase notes                            |                              |                        | (3,753    | )           |   |              | (4,442    | )        
|                                                                                                                       |                                                          |                              |                        |           |             |   |              |          
|                                                                                                                       |                                                          | Total unitholders equity    |                        |           | 3,727,022   |   |              |           | 3,631,518 | 
|                                                                                                                       |                                                          |                              |                        |           |             |   |              |          
|                                                                                                                       |                                                          | Total liabilities and equity |                        | $         | 8,897,535   |   |              | $         | 8,549,915 | 
|                                                                                                                       |                                                          |                              |                        |           |             |   |              |          

The accompanying notes are an integral part of these condensed consolidated financial statements.

3



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Archstone-Smith Operating Trust

Condensed Consolidated Statements of Earnings

(In thousands, except per share amounts)
(Unaudited)

|                                                                    |                                                                     |                |         |                    |         |                  |         |         |         |      |         |         |         |   |         |         |         | 
|------------------------------------------------------------------- | ------------------------------------------------------------------- | -------------- | ------- | ------------------ | ------- | ---------------- | ------- | ------- | ------- | ---- | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                                                    |                                                                     |                |         | Three Months Ended |         | Six Months Ended
|                                                                    |                                                                     |                |         | June 30,           |         | June 30,        
|                                                                    |                                                                     |                |         |                    |         |                 
|                                                                    |                                                                     |                |         | 2002               |         | 2001             |         | 2002    |         | 2001
|                                                                    |                                                                     |                |         |                    |         |                  |         |         |         |     
|Revenues:                                                           |                                                                     |                |         |                    |         |                  |         |         |         |      |         |         |         |   |         |        
|                                                                    | Rental revenue                                                      |                | $       | 263,233            |         |                  | $       | 153,552 |         |      | $       | 519,895 |         |   | $       | 322,033 |        
|                                                                    | Income from unconsolidated entities                                 |                |         | 7,814              |         |                  |         | 992     |         |      |         | 12,590  |         |   |         | 1,748   |        
|                                                                    | Other income                                                        |                |         | 1,499              |         |                  |         | 3,543   |         |      |         | 3,008   |         |   |         | 6,745   |        
|                                                                    |                                                                     |                |         |                    |         |                  |         |         |         |      |         |         |         |   |         |         |        
|                                                                    |                                                                     | Total revenue  |         |                    | 272,546 |                  |         |         | 158,087 |      |         |         | 535,493 |   |         |         | 330,526 | 
|                                                                    |                                                                     |                |         |                    |         |                  |         |         |         |      |         |         |         |   |         |         |        
|Expenses:                                                           |                                                                     |                |         |                    |         |                  |         |         |         |      |         |         |         |   |         |        
|                                                                    | Rental expenses                                                     |                |         | 69,301             |         |                  |         | 35,359  |         |      |         | 135,132 |         |   |         | 74,078  |        
|                                                                    | Real estate taxes                                                   |                |         | 24,517             |         |                  |         | 13,161  |         |      |         | 48,929  |         |   |         | 28,467  |        
|                                                                    | Depreciation on real estate investments                             |                |         | 50,008             |         |                  |         | 28,649  |         |      |         | 96,787  |         |   |         | 60,513  |        
|                                                                    | Interest expense                                                    |                |         | 50,900             |         |                  |         | 31,833  |         |      |         | 99,151  |         |   |         | 65,883  |        
|                                                                    | General and administrative expenses                                 |                |         | 10,400             |         |                  |         | 6,128   |         |      |         | 20,285  |         |   |         | 11,806  |        
|                                                                    | Provision for possible loss on investments                          |                |         |                   |         |                  |         | 500     |         |      |         |        |         |   |         | 9,909   |        
|                                                                    | Other expenses                                                      |                |         | 704                |         |                  |         | 455     |         |      |         | 2,516   |         |   |         | 1,032   |        
|                                                                    |                                                                     |                |         |                    |         |                  |         |         |         |      |         |         |         |   |         |         |        
|                                                                    |                                                                     | Total expenses |         |                    | 205,830 |                  |         |         | 116,085 |      |         |         | 402,800 |   |         |         | 251,688 | 
|                                                                    |                                                                     |                |         |                    |         |                  |         |         |         |      |         |         |         |   |         |         |        
|Earnings from operations                                            |                                                                     |                | 66,716  |                    |         |                  | 42,002  |         |         |      | 132,693 |         |         |   | 78,838  |        
|                                                                    | Less: Minority interest                                             |                |         | 1,937              |         |                  |         | 1,956   |         |      |         | 3,874   |         |   |         | 3,912   |        
|                                                                    | Plus: Gain on dispositions of real estate investments               |                |         | 23,263             |         |                  |         | 35,470  |         |      |         | 24,544  |         |   |         | 70,521  |        
|                                                                    |                                                                     |                |         |                    |         |                  |         |         |         |      |         |         |         |   |         |         |        
|Net
earnings before discontinued operations and extraordinary items |                                                                     |                | 88,042  |                    |         |                  | 75,516  |         |         |      | 153,363 |         |         |   | 145,447 |        
|                                                                    | Plus:
Earnings from discontinued operations, net                    |                |         | 17,034             |         |                  |         | 820     |         |      |         | 18,088  |         |   |         | 1,584   |        
|                                                                    | Less: Extraordinary items  loss on early
extinguishments of debt   |                |         | 10,373             |         |                  |         |        |         |      |         | 10,373  |         |   |         |        |        
|                                                                    |                                                                     |                |         |                    |         |                  |         |         |         |      |         |         |         |   |         |         |        
|Net earnings                                                        |                                                                     |                | 94,703  |                    |         |                  | 76,336  |         |         |      | 161,078 |         |         |   | 147,031 |        
|                                                                    | Less: Preferred Unit distributions                                  |                |         | 8,681              |         |                  |         | 4,904   |         |      |         | 17,440  |         |   |         | 11,211  |        
|                                                                    |                                                                     |                |         |                    |         |                  |         |         |         |      |         |         |         |   |         |         |        
|Net earnings attributable to Common Units  Basic                   |                                                                     | $              | 86,022  |                    |         | $                | 71,432  |         |         | $    | 143,638 |         |         | $ | 135,820 |        
|                                                                    |                                                                     |                |         |                    |         |                  |         |         |         |      |         |         |         |   |         |         |        
|Weighted average Common Units outstanding  Basic                   |                                                                     |                | 201,413 |                    |         |                  | 120,984 |         |         |      | 200,907 |         |         |   | 121,569 |        
|                                                                    |                                                                     |                |         |                    |         |                  |         |         |         |      |         |         |         |   |         |         |        
|Weighted average Common Units outstanding  Diluted                 |                                                                     |                | 217,127 |                    |         |                  | 126,724 |         |         |      | 202,419 |         |         |   | 127,306 |        
|                                                                    |                                                                     |                |         |                    |         |                  |         |         |         |      |         |         |         |   |         |         |        
|Net
earnings per Common Unit  Basic:                               |                                                                     |                |         |                    |         |                  |         |         |         |      |         |         |         |   |         |        
|                                                                    | Net earnings before discontinued operations and
extraordinary items |                | $       | 0.39               |         |                  | $       | 0.58    |         |      | $       | 0.68    |         |   | $       | 1.10    |        
|                                                                    | Discontinued
operations, net                                        |                |         | 0.09               |         |                  |         | 0.01    |         |      |         | 0.08    |         |   |         | 0.02    |        
|                                                                    | Extraordinary items                                                 |                |         | (0.05              | )       |                  |         |        |         |      |         | (0.05   | )       |   |         |        |        
|                                                                    |                                                                     |                |         |                    |         |                  |         |         |         |      |         |         |         |   |         |         |        
|                                                                    |                                                                     | Net earnings   |         | $                  | 0.43    |                  |         | $       | 0.59    |      |         | $       | 0.71    |   |         | $       | 1.12    | 
|                                                                    |                                                                     |                |         |                    |         |                  |         |         |         |      |         |         |         |   |         |         |        
|Net earnings per Common Unit  Diluted:                             |                                                                     |                |         |                    |         |                  |         |         |         |      |         |         |         |   |         |        
|                                                                    | Net earnings before discontinued operations and
extraordinary items |                | $       | 0.39               |         |                  | $       | 0.57    |         |      | $       | 0.67    |         |   | $       | 1.09    |        
|                                                                    | Discontinued
operations, net                                        |                |         | 0.08               |         |                  |         | 0.01    |         |      |         | 0.09    |         |   |         | 0.01    |        
|                                                                    | Extraordinary items                                                 |                |         | (0.05              | )       |                  |         |        |         |      |         | (0.05   | )       |   |         |        |        
|                                                                    |                                                                     |                |         |                    |         |                  |         |         |         |      |         |         |         |   |         |         |        
|                                                                    |                                                                     | Net earnings   |         | $                  | 0.42    |                  |         | $       | 0.58    |      |         | $       | 0.71    |   |         | $       | 1.10    | 
|                                                                    |                                                                     |                |         |                    |         |                  |         |         |         |      |         |         |         |   |         |         |        
|Distributions paid per Common Unit                                  |                                                                     | $              | 0.425   |                    |         | $                | 0.410   |         |         | $    | 0.850   |         |         | $ | 0.820   |        
|                                                                    |                                                                     |                |         |                    |         |                  |         |         |         |      |         |         |         |   |         |         |        

The accompanying notes are an integral part of these condensed consolidated financial statements.

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##### Table of Contents






Archstone-Smith Operating Trust

Condensed Consolidated Statement of Unitholders Equity
and Other Common Unitholders Interest

Six Months Ended June 30, 2002

(In thousands)
(Unaudited)

|                              |                                                          |   |             |        |             |   |              |      |               |   |             |         |              |   |              |        |       |   |        |     |  |   |           |         |   |   |         |         |   |   |           |         |  
|----------------------------- | -------------------------------------------------------- | - | ----------- | ------ | ----------- | - | ------------ | ---- | ------------- | - | ----------- | ------- | ------------ | - | ------------ | ------ | ----- | - | ------ | --- |  | - | --------- | ------- | - | - | ------- | ------- | - | - | --------- | ------- | -
|                              |                                                          |   | Convertible |        | Perpetual   |   |              |      |               |   |             |         |              |   |              |        |       |   |        |     |  |   |           |         |   |   |         |         |  
|                              |                                                          |   | Preferred   |        | Preferred   |   |              |      |               |   |             |         |              |   |              |        |       |   |        |     |  |   |           |         |   |   |         |         |  
|                              |                                                          |   | Units at    |        | Units at    |   |              |      |               |   | Accumulated |         | Employee     |   |              |        |       |   | Other  |     |  |   |          
|                              |                                                          |   | Aggregate   |        | Aggregate   |   | Common       |      | Other         |   | Share       |         | Total        |   | Common       |        |       |   |       
|                              |                                                          |   | Liquidation |        | Liquidation |   | Unitholder's |      | Comprehensive |   | Purchase    |         | Unitholders' |   | Unitholders' |        |       |   |       
|                              |                                                          |   | Preference  |        | Preference  |   | Equity       |      | Loss          |   | Notes       |         | Equity       |   | Interest     |        | Total
|                              |                                                          |   |             |        |             |   |              |      |               |   |             |         |              |   |              |        |      
|Balances at December 31, 2001 |                                                          | $ | 225,351     |        |             | $ | 148,763      |      |               | $ | 3,267,363   |         |              | $ | (5,517       | )      |       | $ | (4,442 | )   |  | $ | 3,631,518 |         |   | $ | 669,502 |         |   | $ | 4,301,020 |        
|                              | Comprehensive earnings:                                  |   |             |        |             |   |              |      |               |   |             |         |              |   |              |        |       |   |        |     |  |   |           |         |   |   |         |         |   |   |           |         |  
|                              | Net earnings                                             |   |             |       |             |   |              |     |               |   |             | 143,025 |              |   |              |       |       |   |        |    |  |   |           | 143,025 |   |   |         | 18,053  |   |   |           | 161,078 |  
|                              | Preferred unit distributions                             |   |             |        |             |   |              |      |               |   |             | (17,440 | )            |   |              |       |       |   |        |    |  |   |           | (17,440 | ) |   |         |        |   |   |           | (17,440 | )
|                              | Change in fair value of cash flow hedges                 |   |             |       |             |   |              |     |               |   |             |        |              |   |              | (2,153 | )     |   |        |    |  |   |           | (2,153  | ) |   |         |        |   |   |           | (2,153  | )
|                              | Unrealized holding loss on available-for-sale securities |   |             |       |             |   |              |     |               |   |             |        |              |   |              | (171   | )     |   |        |    |  |   |           | (171    | ) |   |         |        |   |   |           | (171    | )
|                              |                                                          |   |             |        |             |   |              |      |               |   |             |         |              |   |              |        |       |   |        |     |  |   |           |         |   |   |         |         |   |   |           |        
|                              | Comprehensive earnings attributable to Common Units      |   |             |        |             |   |              |      |               |   |             |         |              |   |              |        |       |   |        |     |  |   |           |         |   |   |         |         |   |   |           | 141,314 |  
|                              |                                                          |   |             |        |             |   |              |      |               |   |             |         |              |   |              |        |       |   |        |     |  |   |           |         |   |   |         |         |   |   |           |        
|                              | Common Unit distributions                                |   |             |       |             |   |              |     |               |   |             | (75,556 | )            |   |              |       |       |   |        |    |  |   |           | (75,556 | ) |   |         | (10,279 | ) |   |           | (85,835 | )
|                              | Proceeds from dividend reinvestment plan                 |   |             |       |             |   |              |     |               |   |             | 18,526  |              |   |              |       |       |   |        |    |  |   |           | 18,526  |   |   |         |        |   |   |           | 18,526  |  
|                              | Other, net                                               |   |             | (4,705 | )           |   |              | (130 | )             |   |             | 33,419  |              |   |              |       |       |   |        | 689 |  |   |           | 29,273  |   |   |         | (5,842  | ) |   |           | 23,431  |  
|                              |                                                          |   |             |        |             |   |              |      |               |   |             |         |              |   |              |        |       |   |        |     |  |   |           |         |   |   |         |         |   |   |           |        
|Balances at June 30, 2002     |                                                          | $ | 220,646     |        |             | $ | 148,633      |      |               | $ | 3,369,337   |         |              | $ | (7,841       | )      |       | $ | (3,753 | )   |  | $ | 3,727,022 |         |   | $ | 671,434 |         |   | $ | 4,398,456 |        
|                              |                                                          |   |             |        |             |   |              |      |               |   |             |         |              |   |              |        |       |   |        |     |  |   |           |         |   |   |         |         |   |   |           |        

The accompanying notes are an integral part of these condensed consolidated financial statements.

5



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##### Table of Contents






Archstone-Smith Operating Trust

Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

|                                                         |                                                                                                                                                 |                                                              |        |                  |          |      |        |          |          |  
|-------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------ | ------ | ---------------- | -------- | ---- | ------ | -------- | -------- | -
|                                                         |                                                                                                                                                 |                                                              |        | Six Months Ended
|                                                         |                                                                                                                                                 |                                                              |        | June 30,        
|                                                         |                                                                                                                                                 |                                                              |        |                 
|                                                         |                                                                                                                                                 |                                                              |        | 2002             |          | 2001
|                                                         |                                                                                                                                                 |                                                              |        |                  |          |     
|Operating activities:                                    |                                                                                                                                                 |                                                              |        |                  |          |      |        |         
|                                                         | Net earnings before discontinued operations and extraordinary items                                                                             |                                                              | $      | 153,363          |          |      | $      | 145,447  |         
|                                                         | Adjustments
to reconcile net earnings before discontinued operations and
extraordinary items to net cash flow provided by operating activities: |                                                              |        |                  |          |      |        |          |         
|                                                         |                                                                                                                                                 | Depreciation and amortization                                |        |                  | 94,720   |      |        |          | 65,110   |  
|                                                         |                                                                                                                                                 | Earnings from discontinued operations, net                   |        |                  | 18,088   |      |        |          | 1,584    |  
|                                                         |                                                                                                                                                 | Extraordinary item  loss on early extinguishments of debt   |        |                  | (10,373  | )    |        |          |         |  
|                                                         |                                                                                                                                                 | Gains on dispositions of depreciated real estate investments |        |                  | (41,218  | )    |        |          | (70,521  | )
|                                                         |                                                                                                                                                 | Provision for possible loss on investments                   |        |                  |         |      |        |          | 9,909    |  
|                                                         |                                                                                                                                                 | Minority interest                                            |        |                  | 3,874    |      |        |          | 3,912    |  
|                                                         | Change in other assets                                                                                                                          |                                                              |        | (18,316          | )        |      |        | (7,869   | )       
|                                                         | Change in accounts payable, accrued expenses and other liabilities                                                                              |                                                              |        | 8,345            |          |      |        | (5,343   | )       
|                                                         | Other, net                                                                                                                                      |                                                              |        | 3,285            |          |      |        | (1,924   | )       
|                                                         |                                                                                                                                                 |                                                              |        |                  |          |      |        |          |         
|                                                         |                                                                                                                                                 | Net cash flow provided by operating activities               |        |                  | 211,768  |      |        |          | 140,305  |  
|                                                         |                                                                                                                                                 |                                                              |        |                  |          |      |        |          |         
|Investing activities:                                    |                                                                                                                                                 |                                                              |        |                  |          |      |        |         
|                                                         | Real estate investments                                                                                                                         |                                                              |        | (320,262         | )        |      |        | (127,410 | )       
|                                                         | Change in investments in and advances to unconsolidated entities, net                                                                           |                                                              |        | (30,732          | )        |      |        | 18,774   |         
|                                                         | Proceeds from dispositions, net of closing costs                                                                                                |                                                              |        | 134,296          |          |      |        | 806,615  |         
|                                                         | Change in tax-deferred exchange escrow                                                                                                          |                                                              |        | 61,764           |          |      |        | (257,661 | )       
|                                                         | Other, net                                                                                                                                      |                                                              |        | (7,947           | )        |      |        | (7,367   | )       
|                                                         |                                                                                                                                                 |                                                              |        |                  |          |      |        |          |         
|                                                         |                                                                                                                                                 | Net cash flow provided by (used in) investing activities     |        |                  | (162,881 | )    |        |          | 432,951  |  
|                                                         |                                                                                                                                                 |                                                              |        |                  |          |      |        |          |         
|Financing activities:                                    |                                                                                                                                                 |                                                              |        |                  |          |      |        |         
|                                                         | Proceeds from long term unsecured debt, net of issuance costs                                                                                   |                                                              |        | 198,570          |          |      |        |         |         
|                                                         | Payments on long term unsecured debt                                                                                                            |                                                              |        | (12,500          | )        |      |        | (12,500  | )       
|                                                         | Principal prepayment of mortgages payable                                                                                                       |                                                              |        | (356,559         | )        |      |        | (28,808  | )       
|                                                         | Regularly scheduled principal payments on mortgages payable                                                                                     |                                                              |        | (5,150           | )        |      |        | (2,301   | )       
|                                                         | Proceeds from (payments on) unsecured credit facilities, net                                                                                    |                                                              |        | 292,125          |          |      |        | (193,719 | )       
|                                                         | Proceeds from Common Units issued under dividend reinvestment plan                                                                              |                                                              |        | 18,526           |          |      |        | 10,606   |         
|                                                         | Repurchase
of Common Units                                                                                                                      |                                                              |        |                 |          |      |        | (50,000  | )       
|                                                         | Redemption of Series B Preferred Units                                                                                                          |                                                              |        |                 |          |      |        | (104,670 | )       
|                                                         | Cash distributions paid on Common Units                                                                                                         |                                                              |        | (170,776         | )        |      |        | (99,844  | )       
|                                                         | Cash distributions paid on Preferred Units                                                                                                      |                                                              |        | (17,440          | )        |      |        | (11,211  | )       
|                                                         | Cash distributions paid to minority interests                                                                                                   |                                                              |        | (3,874           | )        |      |        | (3,912   | )       
|                                                         | Other, net                                                                                                                                      |                                                              |        | 11,972           |          |      |        | 3,188    |         
|                                                         |                                                                                                                                                 |                                                              |        |                  |          |      |        |          |         
|                                                         |                                                                                                                                                 | Net cash flow used in financing activities                   |        |                  | (45,106  | )    |        |          | (493,171 | )
|                                                         |                                                                                                                                                 |                                                              |        |                  |          |      |        |          |         
|Net change in cash and cash equivalents                  |                                                                                                                                                 |                                                              | 3,781  |                  |          |      | 80,085 |         
|
|Cash
and cash equivalents at beginning of period         |                                                                                                                                                 |                                                              | 7,027  |                  |          |      | 9,077  |         
|                                                         |                                                                                                                                                 |                                                              |        |                  |          |      |        |          |         
|Cash and cash equivalents at end of period               |                                                                                                                                                 | $                                                            | 10,808 |                  |          | $    | 89,162 |         
|                                                         |                                                                                                                                                 |                                                              |        |                  |          |      |        |          |         
|Significant non-cash investing and financing activities: |                                                                                                                                                 |                                                              |        |                  |          |      |        |         
|                                                         | Assumption of mortgages payable upon purchase of apartment communities                                                                          |                                                              | $      | 195,637          |          |      | $      |         |         
|                                                         | Apartment communities exchanged for ownership interest in a joint venture                                                                       |                                                              | $      |                 |          |      | $      | 23,808   |         
|                                                         | Transfer of mortgage payable to a joint venture upon disposition of
apartment communities                                                       |                                                              | $      |                 |          |      | $      | 17,321   |         
|                                                         | A-1 Common Units redeemed for Common Shares                                                                                                     |                                                              | $      | 15,422           |          |      | $      |         |         
|                                                         | B Common Units issued for real estate                                                                                                           |                                                              | $      | 8,730            |          |      | $      |         |         

The accompanying notes are an integral part of these condensed consolidated financial statements.

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##### Table of Contents






Archstone-Smith Operating Trust

Notes to Condensed Consolidated Financial Statements

June 30, 2002 and 2001
(Unaudited)

(1)  Description of the Business and Summary of Significant Accounting Policies

Smith Merger

In October 2001, Archstone Communities Trust (Archstone) converted into
an UPREIT structure, changed its name to Archstone-Smith Operating Trust (the
Operating Trust) and became a wholly owned subsidiary of Archstone-Smith
Trust (Archstone-Smith). Through a series of transactions, Archstone-Smith
and Archstone merged with Charles E. Smith Residential Realty, Inc. and Charles
E. Smith Residential Realty, L.P., respectively. Archstone-Smith is the
successor registrant to Archstone. See Note 1 in our 2001 Annual Report on
Form 10-K (2001 Form 10-K) for a more complete description of the
reorganization and the Smith Merger.

Business

We are structured as
an UPREIT, under which all property ownership and
business operations are conducted through the Operating Trust. Archstone-Smith
is our sole trustee and owns approximately 87.6% of the Operating Trust. As
used herein, we, our and the company refers to the Operating Trust and
Archstone-Smith, collectively, except where the context otherwise requires.

Interim Financial Reporting

The accompanying condensed consolidated financial statements of the
Operating Trust are unaudited and certain information and footnote disclosures
normally included in financial statements have been omitted. While our
management believes the disclosures presented are adequate for interim
reporting, these interim financial statements should be read in conjunction
with the financial statements and notes included in our 2001 Form 10-K. See
the glossary in our 2001 Form 10-K for all defined terms not defined herein.

In the opinion of management, the accompanying unaudited financial
statements contain all adjustments necessary for a fair presentation of the
Operating Trusts financial statements for the interim periods presented. The
results of operations for the six-month periods ended June 30, 2002 and 2001
are not necessarily indicative of the results to be expected for the entire
year.

Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect amounts reported in
the financial statements and the related notes. Actual results could differ
from those estimates. Estimates and assumptions are reviewed periodically and
the effects of revisions are reflected in the period they are determined to be
necessary.

Discontinued Operations

In October 2001, the FASB issued SFAS 144, Accounting for Impairment or
Disposal of Long-Lived Assets which became effective on January 1, 2002. For
properties accounted for under SFAS 144, the results of operations for
properties sold during the period or classified as held for sale at the end of
the current period are required to be classified as discontinued operations in
the current and prior periods. The property specific components of net
earnings that are classified as discontinued operations include net operating
income, depreciation expense and interest expense (actual interest expense for
encumbered properties and a pro-rata allocation of interest expense for any
unencumbered portion up to our weighted average leverage ratio). The net gain
or loss on the eventual disposal of the held for sale properties are also
required to be classified as discontinued operations. Properties classified as
held for sale at December 31, 2001 continue to be accounted for in accordance
with the provisions of SFAS 121 and APB 30 and are not included in discontinued
operations.

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##### Table of Contents



Archstone-Smith Operating Trust

Notes to Condensed Consolidated Financial Statements  (Continued)

New Accounting Pronouncements

In April 2002, the FASB issued SFAS 145 Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.
We are required to adopt SFAS 145 on January 1, 2003. SFAS 145 significantly
limits the treatment of losses associated with early extinguishment of debt as
an extraordinary item. SFAS 145 also impacts certain sale-leaseback
transactions. Upon adoption, we do not believe any future early extinguishments will qualify
for extraordinary item treatment and we do not anticipate that SFAS 145 will have a material impact on our financial position, net earnings or
cash flows.

In July 2002 the FASB issued SFAS 146 Accounting for Costs Associated
with Exit or Disposal Activities.We are required to adopt SFAS 146 on
January 1, 2003. SFAS 146 requires that expenses associated with restructuring
charges be accrued as liabilities in the period in which the liability is
incurred. We do not anticipate the adoption of SFAS 146 will have a material
impact on our financial position, net earnings or cash flows.

Reclassifications

Certain 2001 amounts have been reclassified to conform to the 2002
presentation.

Per Unit Data

Following is a reconciliation of basic earnings attributable to Common
Units to diluted earnings attributable to Common Units for the periods
indicated (in thousands):

|                                                              |                                                                                          |   |                    |        |                  |   |         |       |      |   |         |       |  |   |         |       | 
|------------------------------------------------------------- | ---------------------------------------------------------------------------------------- | - | ------------------ | ------ | ---------------- | - | ------- | ----- | ---- | - | ------- | ----- |  | - | ------- | ----- | 
|                                                              |                                                                                          |   | Three Months Ended |        | Six Months Ended
|                                                              |                                                                                          |   | June 30,           |        | June 30,        
|                                                              |                                                                                          |   |                    |        |                 
|                                                              |                                                                                          |   | 2002               |        | 2001             |   | 2002    |       | 2001
|                                                              |                                                                                          |   |                    |        |                  |   |         |       |     
|                                                              | Reconciliation of numerator between basic and
diluted net earnings perCommon Unit (1):  
|Net earnings attributable to Common Units  Basic             |                                                                                          | $ | 86,022             |        |                  | $ | 71,432  |       |      | $ | 143,638 |       |  | $ | 135,820 |      
|                                                              | Distributions on Convertible Preferred Units                                             |   |                    | 5,581  |                  |   |         | 1,773 |      |   |         |      |  |   |         | 3,563 | 
|                                                              | Minority interest  convertible operating partnership units                              |   |                    | 458    |                  |   |         | 389   |      |   |         | 135   |  |   |         | 778   | 
|                                                              |                                                                                          |   |                    |        |                  |   |         |       |      |   |         |       |  |   |         |      
|Net earnings attributable to Common Units  Diluted           |                                                                                          | $ | 92,061             |        |                  | $ | 73,594  |       |      | $ | 143,773 |       |  | $ | 140,161 |      
|                                                              |                                                                                          |   |                    |        |                  |   |         |       |      |   |         |       |  |   |         |      
|                                                              | Reconciliation of denominator between basic and
diluted net earnings perCommon Unit (1):
|Weighted average number of Common Units outstanding  Basic   |                                                                                          |   | 201,413            |        |                  |   | 120,984 |       |      |   | 200,907 |       |  |   | 121,569 |      
|                                                              | Assumed conversion of Convertible Preferred Units into
Common Units                      |   |                    | 13,187 |                  |   |         | 4,339 |      |   |         |      |  |   |         | 4,360 | 
|                                                              | Assumed conversion of convertible operating partnership units                            |   |                    | 871    |                  |   |         | 949   |      |   |         |      |  |   |         | 949   | 
|                                                              | Assumed exercise of options                                                              |   |                    | 1,656  |                  |   |         | 452   |      |   |         | 1,512 |  |   |         | 428   | 
|                                                              |                                                                                          |   |                    |        |                  |   |         |       |      |   |         |       |  |   |         |      
|Weighted average number of Common Units outstanding  Diluted |                                                                                          |   | 217,127            |        |                  |   | 126,724 |       |      |   | 202,419 |       |  |   | 127,306 |      
|                                                              |                                                                                          |   |                    |        |                  |   |         |       |      |   |         |       |  |   |         |      



| | (1) |  | Excludes the impact of potentially dilutive equity securities during periods in which they are anti-dilutive.
| | --- |  | -------------------------------------------------------------------------------------------------------------

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Archstone-Smith Operating Trust

Notes to Condensed Consolidated Financial Statements  (Continued)

(2)  Real Estate

Investments in Real Estate

Equity investments in real estate, at cost, were as follows (dollar
amounts in thousands):

|                        |                                         |                   |                                           |                             |         |               |           |                   |       |            |        |           |        |        |           |        |       |       |        | 
|----------------------- | --------------------------------------- | ----------------- | ----------------------------------------- | --------------------------- | ------- | ------------- | --------- | ----------------- | ----- | ---------- | ------ | --------- | ------ | ------ | --------- | ------ | ----- | ----- | ------ | 
|                        |                                         |                   |                                           |                             |         | (Unaudited)   |           |                   |       |            |        |           |        |       
|                        |                                         |                   |                                           |                             |         | June 30, 2002 |           | December 31, 2001
|                        |                                         |                   |                                           |                             |         |               |           |                  
|                        |                                         |                   |                                           |                             |         | Investment    |           | Units             |       | Investment |        | Units    
|                        |                                         |                   |                                           |                             |         |               |           |                   |       |            |        |          
|Apartment Communities:  |                                         |                   |                                           |                             |         |               |           |                   |       |            |        |           |        |        |           |       
|                        | Operating communities                   |                   | $                                         | 8,240,828                   |         |               |           | 77,200            |       |            | $      | 7,809,444 |        |        |           | 77,170 |      
|                        | Communities under construction (1)      |                   |                                           | 294,782                     |         |               |           | 2,120             |       |            |        | 358,367   |        |        |           | 2,812  |      
|                        | Development communities In Planning (1) |                   |                                           |                             |         |               |           |                   |       |            |        |           |        |        |           |        |      
|                        |                                         | Owned             |                                           |                             | 132,581 |               |           |                   | 3,902 |            |        |           | 76,611 |        |           |        | 1,402 |      
|                        |                                         | Under control (2) |                                           |                             |        |               |           |                   | 536   |            |        |           |       |        |           |        | 991   |      
|                        |                                         |                   |                                           |                             |         |               |           |                   |       |            |        |           |        |        |           |        |      
|                        |                                         |                   | Total development communities In Planning |                             |         | 132,581       |           |                   |       | 4,438      |        |           |        | 76,611 |           |        |       | 2,393 |       
|                        |                                         |                   |                                           |                             |         |               |           |                   |       |            |        |           |        |        |           |        |      
|                        |                                         |                   |                                           | Total apartment communities |         |               | 8,668,191 |                   |       |            | 83,758 |           |        |        | 8,244,422 |        |       |       | 82,375 | 
|                        |                                         |                   |                                           |                             |         |               |           |                   |       |            |        |           |        |        |           |        |      
|Retail, hotel and other |                                         |                   | 39,113                                    |                             |         |               |           |                   |       |            | 31,582 |           |        |        |           |       
|                        |                                         |                   |                                           |                             |         |               |           |                   |       |            |        |           |        |        |           |        |      
|                        |                                         |                   |                                           | Total real estate           |         | $             | 8,707,304 |                   |       |            |        |           |        | $      | 8,276,004 |        |       |       |        | 
|                        |                                         |                   |                                           |                             |         |               |           |                   |       |            |        |           |        |        |           |        |      



| | (1) |  | Unit information is based on managements estimates and has not been
audited or reviewed by our independent auditors.                                                                                        
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (2) |  | Our investment as of June 30, 2002 and December 31, 2001 for
developments Under Control was $2.3 million and $4.9 million,
respectively and is reflected on the other assets caption of our
Balance Sheets.

The change in investments in real estate, at cost, consisted of the
following (in thousands):

|                             |                        |                                                       |           |  |          |  
|---------------------------- | ---------------------- | ----------------------------------------------------- | --------- |  | -------- | -
|Balance at December 31, 2001 |                        | $                                                     | 8,276,004 | 
|                             | Apartment communities: |                                                       |           |  |         
|                             |                        | Community acquisitions                                |           |  | 328,226  |  
|                             |                        | Acquisition-related capital expenditures              |           |  | 5,873    |  
|                             |                        | Redevelopment capital expenditures                    |           |  | 77,955   |  
|                             |                        | Recurring capital expenditures                        |           |  | 14,098   |  
|                             |                        | Development expenditures, excluding land acquisitions |           |  | 113,964  |  
|                             |                        | Dispositions                                          |           |  | (108,816 | )
|                             |                        |                                                       |           | 
|                             |                        | Net apartment community activity                      |           |  | 431,300  |  
|                             |                        |                                                       |           | 
|Balance at June 30, 2002     |                        | $                                                     | 8,707,304 | 
|                             |                        |                                                       |           | 

At June 30, 2002, we had unfunded contractual commitments related to real
estate investment activities aggregating approximately $120.1 million, of which
$101.1 million related to communities under construction.

At June 30, 2002, we had one property held for sale with aggregate
carrying value of $39.5 million that was accounted for under SFAS 121 since it
was held for sale at December 31, 2001. The estimated proceeds less
anticipated costs to sell were greater than the net book value and therefore no
provision for possible loss was recorded. The property-level earnings, after
mortgage interest and depreciation and minority interest, from the community at June 30, 2002, which
is included in our earnings from operations for the six-month periods ended
June 30, 2002 and 2001 were $1.8 million and $1.3 million, respectively.

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Archstone-Smith Operating Trust

Notes to Condensed Consolidated Financial Statements  (Continued)

(3)  Discontinued Operations

At June 30, 2002, we had one operating apartment community, one parcel of
land and one retail property classified as held for sale under the provisions
of SFAS 144. Accordingly, the net earnings for these properties are classified
as discontinued operations. The following is a summary of net earnings from
discontinued operations (in thousands):

|                                               |  |                    |        |                  |  |      |       |      |  |   |        |   |  |   |        |  
|---------------------------------------------- |  | ------------------ | ------ | ---------------- |  | ---- | ----- | ---- |  | - | ------ | - |  | - | ------ | -
|                                               |  | Three Months Ended |        | Six Months Ended
|                                               |  | June 30,           |        | June 30,        
|                                               |  |                    |        |                 
|                                               |  | 2002               |        | 2001             |  | 2002 |       | 2001
|                                               |  |                    |        |                  |  |      |       |     
|Net Operating Income                           |  | $                  | 1,021  |                  |  | $    | 1,910 |      |  | $ | 3,251  |   |  | $ | 3,759  |  
|Depreciation on real estate investments        |  |                    | (196   | )                |  |      | (493  | )    |  |   | (696   | ) |  |   | (982   | )
|Interest expense                               |  |                    | (465   | )                |  |      | (597  | )    |  |   | (1,141 | ) |  |   | (1,193 | )
|Gain on disposition of real estate investments |  |                    | 16,674 |                  |  |      |      |      |  |   | 16,674 |   |  |   |       |  
|                                               |  |                    |        |                  |  |      |       |      |  |   |        |   |  |   |        |  
|                                               |  | $                  | 17,034 |                  |  | $    | 820   |      |  | $ | 18,088 |   |  | $ | 1,584  |  
|                                               |  |                    |        |                  |  |      |       |      |  |   |        |   |  |   |        |  

Assets classified as held for sale, pursuant to both SFAS 121 and SFAS 144
at June 30, 2002, had aggregate carrying value of $64.0 million with $12.7
million of secured debt. For assets held for sale pursuant to SFAS 144, the
estimated proceeds less anticipated costs to sell were greater than the net
book value and therefore no provision for possible loss was recorded.

We sold two operating communities during the three and six-month period
ended June 30, 2002 that were not classified as held for sale at December 31, 2001 and are
accounted for under SFAS 144. Accordingly, the gain on sale is included in
discontinued operations. Additionally, we sold four operating communities
during the six-month period ending June 30, 2002, which were held for sale at
December 31, 2001 and, in accordance with SFAS 144, the gains on these
dispositions are not classified as discontinued operations.

(4)  Investments in and Advances to Unconsolidated Entities

We have investments in entities that we account for using the equity
method. Following is a summary of these investments (in thousands):

|                           |  |          |         |              |  |   |         | 
|-------------------------- |  | -------- | ------- | ------------ |  | - | ------- | 
|                           |  | June 30, |         | December 31,
|                           |  | 2002     |         | 2001        
|                           |  |          |         |             
|Ameriton                   |  | $        | 278,342 |              |  | $ | 244,654 | 
|CES                        |  |          | 134,845 |              |  |   | 133,878 | 
|SMC                        |  |          | 5,518   |              |  |   | 1,894   | 
|Real estate joint ventures |  |          | 57,338  |              |  |   | 56,939  | 
|                           |  |          |         |              |  |   |         | 
|                           |  | $        | 476,043 |              |  | $ | 437,365 | 
|                           |  |          |         |              |  |   |         | 

We have a $10 million committed unsecured credit facility with Ameriton to
facilitate working capital advances, with $8.7 million available at June 30,
2002. We also have an uncommitted unsecured credit facility with Ameriton,
with $119.1 million of available capacity at June 30, 2002. Advances to
Ameriton under this uncommitted facility are made solely at our discretion.

We have an uncommitted unsecured credit facility with CES, with $59.0
million of available capacity at June 30, 2002. Advances to CES under this
facility are made solely at our discretion.

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Archstone-Smith Operating Trust

Notes to Condensed Consolidated Financial Statements  (Continued)

(5)  Borrowings

Unsecured Credit Facilities

The following table summarizes our $700 million unsecured revolving credit
facility borrowings (in thousands, except for percentages):

|                                                   |  |                   |         |                   |  |   |         |  
|-------------------------------------------------- |  | ----------------- | ------- | ----------------- |  | - | ------- | -
|                                                   |  | As of and for the |         | As of and for the
|                                                   |  | Six Months Ended  |         | Year Ended       
|                                                   |  | June 30,          |         | December 31,     
|                                                   |  | 2002              |         | 2001             
|                                                   |  |                   |         |                  
|Total unsecured revolving credit facility          |  | $                 | 700,000 |                   |  | $ | 700,000 |  
|Borrowings outstanding at end of period            |  |                   | 465,000 |                   |  |   | 173,000 |  
|Weighted average daily borrowings                  |  |                   | 180,383 |                   |  |   | 52,575  |  
|Maximum borrowings outstanding during the period   |  | $                 | 465,000 |                   |  | $ | 250,000 |  
|Weighted average daily nominal interest rate       |  |                   | 2.14    | %                 |  |   | 5.31    | %
|Weighted average daily effective interest rate (1) |  |                   | 3.56    | %                 |  |   | 9.76    | %



| | (1) |  | The higher effective interest rate during 2001 was due to the
amortization of fixed credit facility fees over the relatively low
average outstanding balance during the year.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We also have a short-term unsecured borrowing agreement which provides for
maximum borrowings of $100 million. The agreement bears interest at an
overnight rate that ranged from 2.44% to 2.87% during the six months ended June
30, 2002. At June 30, 2002 and December 31, 2001, there were $15.7 million and
$15.6 million of borrowings outstanding under this agreement, respectively.

Long-Term Unsecured Debt

During February 2002, we issued $200 million of long-term unsecured senior
notes due in February 2012 for net proceeds of $198.6 million. These notes
bear interest at a coupon rate of 6.5% annually, with an effective interest
rate of 6.6%. The net proceeds were used to repay outstanding balances on our
unsecured credit facilities.

Following is a summary of our Long-Term Unsecured Debt (dollar amounts in
thousands):

|                                 |               |          |        |          |          |      |           |                   |             |              |           |           |  |   |           |           |  |  |      |     | 
|-------------------------------- | ------------- | -------- | ------ | -------- | -------- | ---- | --------- | ----------------- | ----------- | ------------ | --------- | --------- |  | - | --------- | --------- |  |  | ---- | --- | 
|                                 |               |          |        |          |          |      | Effective |                   | Balances at |              |           |           |  |   | Average  
|                                 |               |          | Coupon |          | Interest |      | June 30,  |                   | Balances at |              | Remaining
|Type of Debt                     |               | Rate (1) |        | Rate (2) |          | 2002 |           | December 31, 2001 |             | Life (Years)
|                                 |               |          |        |          |          |      |           |                   |             |             
|Long-term unsecured senior notes |               |          | 7.38   | %        |          |      | 7.55      | %                 |             | $            | 1,442,882 |           |  | $ | 1,255,537 |           |  |  | 6.4  |    
|Unsecured tax-exempt bonds       |               |          | 1.98   | %        |          |      | 2.20      | %                 |             |              | 80,634    |           |  |   | 78,353    |           |  |  | 27.0 |    
|                                 |               |          |        |          |          |      |           |                   |             |              |           |           |  |   |           |           |  |  |      |    
|                                 | Total/average |          |        | 7.10     | %        |      |           | 7.27              | %           |              | $         | 1,523,516 |  |   | $         | 1,333,890 |  |  |      | 7.5 | 
|                                 |               |          |        |          |          |      |           |                   |             |              |           |           |  |   |           |           |  |  |      |    



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

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Archstone-Smith Operating Trust

Notes to Condensed Consolidated Financial Statements  (Continued)

Mortgages Payable

Our mortgages payable generally feature either monthly interest and
principal payments or monthly interest-only payments with balloon payments due
at maturity. Following is a summary of our mortgages payable (dollar amounts
in thousands):

|                                   |                             |          |                    |               |   |                   |                          |           |  |   |           |           | 
|---------------------------------- | --------------------------- | -------- | ------------------ | ------------- | - | ----------------- | ------------------------ | --------- |  | - | --------- | --------- | 
|                                   |                             |          |                    |               |   |                   | Principal Balance (2) at
|                                   |                             |          | Effective Interest |               |  
|Type of Mortgage                   |                             | Rate (1) |                    | June 30, 2002 |   | December 31, 2001
|                                   |                             |          |                    |               |   |                  
|Fannie Mae secured debt            |                             |          | 5.98               | %             |   | $                 | 541,406                  |           |  | $ | 661,764   |          
|Freddie Mac secured line of credit |                             |          |                   |               |   |                   |                         |           |  |   | 163,768   |          
|Conventional fixed rate            |                             |          | 6.60               | %             |   |                   | 1,262,345                |           |  |   | 1,266,569 |          
|Tax-exempt fixed rate              |                             |          | 7.18               | %             |   |                   | 7,116                    |           |  |   | 7,216     |          
|Tax-exempt floating rate           |                             |          | 2.27               | %             |   |                   | 324,105                  |           |  |   | 207,716   |          
|Other                              |                             |          | 5.12               | %             |   |                   | 23,092                   |           |  |   | 23,500    |          
|                                   |                             |          |                    |               |   |                   |                          |           |  |   |           |          
|                                   | Total/average mortgage debt |          |                    | 5.78          | % |                   | $                        | 2,158,064 |  |   | $         | 2,330,533 | 
|                                   |                             |          |                    |               |   |                   |                          |           |  |   |           |          



| | (1) |  | Includes the effect of fair value hedges, credit enhancement
fees, and other related costs, where applicable, as of June 30, 2002.                                            
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (2) |  | Includes net fair market value adjustment recorded in connection
with the Smith Merger of $77.9 million and $83.5 millionat June 30,
2002 and December 31, 2001, respectively.

The change in mortgages payable during the six months ended June 30, 2002
consisted of the following (in thousands):

|                             |                                                       |   |           |          |  
|---------------------------- | ----------------------------------------------------- | - | --------- | -------- | -
|Balance at December 31, 2001 |                                                       | $ | 2,330,533 |         
|                             | Regularly scheduled principal amortization            |   |           | (5,150   | )
|                             | Mortgage assumptions related to property acquisitions |   |           | 195,637  |  
|                             | Prepayments, final maturities and other               |   |           | (362,956 | )
|                             |                                                       |   |           |         
|Balance at June 30, 2002     |                                                       | $ | 2,158,064 |         
|                             |                                                       |   |           |         

We repaid or
refinanced an aggregate of $348.4 million in mortgages
payable during the six-month period ended June 30, 2002 in order to release the
mortgages and free up $683.2 million of previously encumbered
assets and increase our unencumbered asset pool. Due to
the costs associated with early retirement of this debt, we recorded an
extraordinary item of $10.4 million, for the three and six-month periods ended
June 30, 2002.

Other

Our debt instruments generally contain certain covenants common to the
type of facility or borrowing, including financial covenants establishing
minimum debt service coverage ratios and maximum leverage ratios. We were in
compliance with all financial covenants pertaining to our debt instruments
during the six-month period ended June 30, 2002.

For the six-month
periods ended June 30, 2002 and 2001, the total interest paid
on all outstanding debt was $107.6 million and $75.0 million, respectively. We
capitalize interest incurred during the construction period as part of the cost
of apartment communities under development. Interest capitalized during the
six-month periods ended June 30, 2002 and 2001 was $11.9 million and $10.2 million,
respectively.

12



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##### Table of Contents



Archstone-Smith Operating Trust

Notes to Condensed Consolidated Financial Statements  (Continued)

(6)  Minority Interest

Minority interest consists of the following at June 30, 2002 and December 31,
2001 (in thousands):

|                                   |  |          |              |      |  |   |        | 
|---------------------------------- |  | -------- | ------------ | ---- |  | - | ------ | 
|                                   |  | June 30, | December 31,
|                                   |  | 2002     |              | 2001
|                                   |  |          |              |     
|DownREIT Perpetual Preferred Units |  | $        | 73,180       |      |  | $ | 73,180 | 
|DownREIT OP Units                  |  |          | 18,747       |      |  |   | 18,747 | 
|Other minority interests           |  |          | 2,600        |      |  |   | 2,600  | 
|                                   |  |          |              |      |  |   |        | 
|                                   |  | $        | 94,527       |      |  | $ | 94,527 | 
|                                   |  |          |              |      |  |   |        | 

Operating Trust Units

As of June 30,
2002 and December 31, 2001, Archstone Smith owned an 87.6% and 87.3%
majority interest in the Operating Trust, respectively. During the six-month
period ended June 30, 2002, 700,632 A-1 Common Units were redeemed for
Archstone-Smith Common Shares. In April 2002, the Operating Trust
issued 339,727 Class B common units of beneficial interest ("B Common
Units") as partial consideration for a community acquisition. B
Common Units have identical rights and preferences at A-1 Common
Units with the exception of the accrual of distributions. B Common
Units are only entitled to a partial distribution payment for the
pro-rata number of days in the quarter for which such units are
outstanding. B Common Units automatically convert to A-1 Common Units
after the distribution record date for the quarter in which the B
Common Units were issued. In April 2002, Archstone-Smith issued
60,000 unregistered Common Shares in exchange for 60,000 B Common
Units previously issued.

(7)  Distributions to Shareholders

The following table summarizes the quarterly cash distributions paid per
share on Common and Preferred Units during the three-months ended March 31 and
June 30, 2002 and the annualized distributions we expect to pay for 2002:

|                                     |  |                    |          |                    |  |   |          | 
|------------------------------------ |  | ------------------ | -------- | ------------------ |  | - | -------- | 
|                                     |  | Quarterly          |          | Annualized        
|                                     |  | Cash Distributions |          | Cash Distributions
|                                     |  | Per Share          |          | Per Share         
|                                     |  |                    |          |                   
|Common Units                         |  | $                  | 0.425    |                    |  | $ | 1.70     | 
|Series A Convertible Preferred Units |  | $                  | 0.572    |                    |  | $ | 2.29     | 
|Series C Preferred Units (1)         |  | $                  | 0.539    |                    |  | $ | 2.16     | 
|Series D Preferred Units             |  | $                  | 0.547    |                    |  | $ | 2.19     | 
|Series H Preferred Units             |  | $                  | 0.839    |                    |  | $ | 3.36     | 
|Series I Preferred Units             |  | $                  | 1,915.00 |                    |  | $ | 7,660.00 | 
|Series J Preferred Units (2)         |  | $                  | 0.839    |                    |  | $ | 3.36     | 
|Series K Preferred Units             |  | $                  | 0.839    |                    |  | $ | 3.36     | 
|Series L Preferred Units             |  | $                  | 0.839    |                    |  | $ | 3.36     | 



| | (1) |  | We expect to redeem all Series C Preferred Shares in the third
quarter of 2002 (See Note 9).
| | --- |  | --------------------------------------------------------------------------------------------
|
| | (2) |  | Series J Preferred Units
were converted into A-2 Common Units on
July 13, 2002 (See Note 9).

13



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##### Table of Contents



Archstone-Smith Operating Trust

Notes to Condensed Consolidated Financial Statements  (Continued)

(8)  Segment Data

We define our garden communities and high-rise properties each as
individual operating segments. We have determined that each of our garden
communities and each of our high-rise properties have similar economic
characteristics and also meet the other criteria, which permit the garden
communities and high-rise properties to be aggregated into two reportable
segments. We rely primarily on NOI for purposes of making decisions about
allocation of resources and assessing segment performance.

Following are reconciliations of each reportable segments (i) revenues to
consolidated revenues; (ii) Net Operating Income to consolidated earnings from
operations; and (iii) assets to consolidated assets, for the periods indicated
(in thousands):

|                                                   |                                         |  |                    |         |                  |  |       |         |      |  |        |         |  |  |        |         | 
|-------------------------------------------------- | --------------------------------------- |  | ------------------ | ------- | ---------------- |  | ----- | ------- | ---- |  | ------ | ------- |  |  | ------ | ------- | 
|                                                   |                                         |  | Three Months Ended |         | Six Months Ended
|                                                   |                                         |  | June 30,           |         | June 30,        
|                                                   |                                         |  |                    |         |                 
|                                                   |                                         |  | 2002               |         | 2001             |  | 2002  |         | 2001
|                                                   |                                         |  |                    |         |                  |  |       |         |     
|Reportable apartment communities segment revenues: |                                         |  |                    |         |                  |  |       |         |      |  |        |         |  |  |        |        
|                                                   | Garden communities                      |  | $                  | 166,632 |                  |  | $     | 152,582 |      |  | $      | 332,504 |  |  | $      | 320,055 | 
|                                                   | High-rise properties                    |  |                    | 95,655  |                  |  |       |        |      |  |        | 185,994 |  |  |        |        | 
|Other non-reportable operating segment revenues    |                                         |  | 10,259             |         |                  |  | 5,505 |         |      |  | 16,995 |         |  |  | 10,471 |        
|                                                   |                                         |  |                    |         |                  |  |       |         |      |  |        |         |  |  |        |         | 
|                                                   | Total segment and consolidated revenues |  | $                  | 272,546 |                  |  | $     | 158,087 |      |  | $      | 535,493 |  |  | $      | 330,526 | 
|                                                   |                                         |  |                    |         |                  |  |       |         |      |  |        |         |  |  |        |         | 

|                                              |                                            |  |                    |         |                  |  |      |         |      |  |       |         |   |  |       |         |   | 
|--------------------------------------------- | ------------------------------------------ |  | ------------------ | ------- | ---------------- |  | ---- | ------- | ---- |  | ----- | ------- | - |  | ----- | ------- | - | 
|                                              |                                            |  | Three Months Ended |         | Six Months Ended
|                                              |                                            |  | June 30,           |         | June 30,        
|                                              |                                            |  |                    |         |                 
|                                              |                                            |  | 2002               |         | 2001             |  | 2002 |         | 2001
|                                              |                                            |  |                    |         |                  |  |      |         |     
|Reportable apartment communities segment NOI: |                                            |  |                    |         |                  |  |      |         |      |  |       |         |   |  |       |        
|                                              | Garden communities                         |  | $                  | 111,528 |                  |  | $    | 104,062 |      |  | $     | 222,975 |   |  | $     | 217,510 |  
|                                              | High-rise properties                       |  |                    | 56,983  |                  |  |      |        |      |  |       | 111,503 |   |  |       |        |  
|Other non-reportable operating segment NOI    |                                            |  | 904                |         |                  |  | 970  |         |      |  | 1,356 |         |   |  | 1,978 |        
|                                              |                                            |  |                    |         |                  |  |      |         |      |  |       |         |   |  |       |         |  
|                                              | Total segment NOI                          |  |                    | 169,415 |                  |  |      | 105,032 |      |  |       | 335,834 |   |  |       | 219,488 |  
|                                              |                                            |  |                    |         |                  |  |      |         |      |  |       |         |   |  |       |         |  
|Reconciling items:                            |                                            |  |                    |         |                  |  |      |         |      |  |       |         |   |  |       |        
|                                              | Income from unconsolidated entities        |  |                    | 7,814   |                  |  |      | 992     |      |  |       | 12,590  |   |  |       | 1,748   |  
|                                              | Other income                               |  |                    | 1,499   |                  |  |      | 3,543   |      |  |       | 3,008   |   |  |       | 6,745   |  
|                                              | Depreciation on real estate investments    |  |                    | (50,008 | )                |  |      | (28,649 | )    |  |       | (96,787 | ) |  |       | (60,513 | )
|                                              | Interest expense                           |  |                    | (50,900 | )                |  |      | (31,833 | )    |  |       | (99,151 | ) |  |       | (65,883 | )
|                                              | General and administrative expenses        |  |                    | (10,400 | )                |  |      | (6,128  | )    |  |       | (20,285 | ) |  |       | (11,806 | )
|                                              | Provision for possible loss on investments |  |                    |        |                  |  |      | (500    | )    |  |       |        |   |  |       | (9,909  | )
|                                              | Other expenses                             |  |                    | (704    | )                |  |      | (455    | )    |  |       | (2,516  | ) |  |       | (1,032  | )
|                                              |                                            |  |                    |         |                  |  |      |         |      |  |       |         |   |  |       |         |  
|                                              | Consolidated
earnings from operations      |  | $                  | 66,716  |                  |  | $    | 42,002  |      |  | $     | 132,693 |   |  | $     | 78,838  |  
|                                              |                                            |  |                    |         |                  |  |      |         |      |  |       |         |   |  |       |         |  

|                                                  |                                                                |  |          |           |              |  |        |           | 
|------------------------------------------------- | -------------------------------------------------------------- |  | -------- | --------- | ------------ |  | ------ | --------- | 
|                                                  |                                                                |  | June 30, |           | December 31,
|                                                  |                                                                |  | 2002     |           | 2001        
|                                                  |                                                                |  |          |           |             
|Reportable operating communities segments assets: |                                                                |  |          |           |              |  |        |          
|                                                  | Garden communities                                             |  | $        | 4,659,481 |              |  | $      | 4,649,564 | 
|                                                  | High-rise properties                                           |  |          | 3,520,282 |              |  |        | 3,188,074 | 
|Other non-reportable operating segment assets     |                                                                |  | 39,113   |           |              |  | 31,582 |          
|                                                  |                                                                |  |          |           |              |  |        |           | 
|                                                  | Total segment assets                                           |  |          | 8,218,876 |              |  |        | 7,869,220 | 
|                                                  |                                                                |  |          |           |              |  |        |           | 
|Reconciling items:                                |                                                                |  |          |           |              |  |        |          
|                                                  | Investment in and advances to unconsolidated entities entities |  |          | 476,043   |              |  |        | 437,365   | 
|                                                  | Cash and cash equivalents                                      |  |          | 10,808    |              |  |        | 7,027     | 
|                                                  | Restricted cash in tax deferred exchange escrow                |  |          | 58,657    |              |  |        | 120,421   | 
|                                                  | Other assets                                                   |  |          | 133,151   |              |  |        | 115,882   | 
|                                                  |                                                                |  |          |           |              |  |        |           | 
|                                                  | Consolidated
total assets                                      |  | $        | 8,897,535 |              |  | $      | 8,549,915 | 
|                                                  |                                                                |  |          |           |              |  |        |           | 

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##### Table of Contents



Archstone-Smith Operating Trust

Notes to Condensed Consolidated Financial Statements  (Continued)

(9)  Subsequent Events

We have publicly announced our intention to redeem our Series C Preferred
Units. The Series C Preferred Units will be redeemed at liquidation value plus
accrued dividends on August 20, 2002. Additionally, we converted 684,931
Series J Preferred Units into 1,352,739 A-2 Common Units on July 13,
2002.

On August 9, 2002, we priced a $300 million offering of long-term
unsecured senior notes that is expected to close on August 15,
2002. When issued, the notes will have a five-year maturity and are
expected to bear a coupon rate of 5.0% annually with an
effective interest rate of 5.2%. We will use the proceeds
to repay outstanding balances on our unsecured credit facilities.

15



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##### Table of Contents






INDEPENDENT ACCOUNTANTS REVIEW REPORT

The Trustee
of Archstone-Smith Operating Trust:

We have reviewed the accompanying condensed consolidated balance sheet of
Archstone-Smith Operating Trust (formerly known as Archstone Communities Trust)
as of June 30, 2002, and the related condensed consolidated statements of
earnings for the three and six-month periods ended June 30, 2002 and 2001, the
condensed consolidated statement of unitholders equity and other unitholders
interests for the six-month period ended June 30, 2002 and the condensed
consolidated statements of cash flows for the six-month periods ended June 30,
2002 and 2001. These condensed consolidated financial statements are the
responsibility of Archstone-Smith Operating Trusts management.

We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with auditing standards generally accepted in the United States
of America, the objective of which is the expression of an opinion regarding
the financial statements taken as a whole. Accordingly, we do not express such
an opinion.

Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred to
above for them to be in conformity with accounting principles generally
accepted in the United States of America.

We have previously audited, in accordance with auditing standards
generally accepted in the United States of America, the consolidated balance
sheet of Archstone-Smith Operating Trust as of December 31, 2001, and the
related consolidated statements of earnings, unitholders equity and other
common unitholders interest, and cash flows for the year then ended (not
presented herein); and in our report dated February 6, 2002, except as to Note
17, which is as of February 15, 2002, we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the information set
forth in the accompanying condensed consolidated balance sheet as of December
31, 2001 is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.



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

Chicago, Illinois
July 26, 2002,
     except as to Note 9,
     which is as of August 9, 2002

16



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##### Table of Contents






Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with our 2001 Form
10-K as well as the financial statements and notes included in Item 1 of this
report.

Forward-Looking Statements

Certain statements in this Form 10-Q that are not historical facts are
forward-looking statements as that term is defined under the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
based on our current expectations, beliefs, assumptions, estimates and
projections about the industry and markets in which we operate. Words such as
expects, anticipates, intends, plans, believes, seeks, estimates
and variations of such words and similar expressions are intended to identify
such forward-looking statements. Information concerning expected investment
balances, expected funding sources, planned investments, forecasted dates and
revenue and expense growth assumptions are examples of forward-looking
statements. These statements are not guarantees of future performance and
involve certain risks, uncertainties and assumptions, which are difficult to
predict and many of which are beyond our control. Therefore, actual outcomes
and results may differ materially from what is expressed, forecasted or implied
in such forward-looking statements. We undertake no obligation to update
publicly any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by applicable law.

Our operating results depend primarily on income from apartment
communities, which is substantially influenced by supply and demand for
apartment units, operating expense levels, property level operations and the
pace and price at which we can develop, acquire or dispose of apartment
communities. Capital and credit market conditions, which affect our cost of
capital, also influence operating results. See our 2001 Form 10-K Item 1.
Business for a more complete discussion of risk factors that could impact our
future financial performance.

The Company

We are engaged primarily in the acquisition, development, management and
operation of apartment communities throughout the United States. The company
is structured as an UPREIT, under which all property ownership and business
operations are conducted through the Operating Trust and our subsidiaries and
affiliates. Archstone-Smith is our sole trustee and owns 87.6% of our Common
Units.

Results of Operations

Overview

Our basic net earnings attributable to Common Units increased 20.4% and
5.8% for the three and six-month periods ended June 30, 2002, respectively, as
compared to the same periods in the prior year. In addition to changes in
earnings from operations, our basic net earnings attributable to
Common Units were impacted by increases in discontinued operations, extraordinary items as
well as distributions on preferred units issued in the Smith Merger.

Earnings from operations increased 58.8% and 68.3% for the three and
six-month periods ended June 30, 2002, respectively, as compared to the same
periods in 2001. These increases are primarily attributable to:



| | (i)   |  | An increase in overall NOI due to the acquisition of
properties in the Smith Merger;                                                       
| | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii)  |  | Increased NOI due to the acquisition of operating communities
and the continued lease-up and Stabilization of development
communities; and,
|
| | (iii) |  | Increased income from Ameriton as well as from unconsolidated
entities acquired in the Smith Merger.                                       

These increases were partially offset by:



| | (i)   |  | The loss of garden community NOI in the three and six-month
periods ended June 30, 2002 due to the $1.2 billon of apartment
community dispositions in 2001 and $140 million of dispositions in
2002.
| | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii)  |  | Same-Store NOI reduction of (2.8%) and (1.0%) during the
three and six-month periods ended June 30, 2002, respectively,
as compared to the same periods in 2001;                                    
|
| | (iii) |  | Higher depreciation, interest, real estate taxes and general
and administrative expenses due principally to the Smith Merger;
and,                                                                  
|
| | (iv)  |  | One-time merger-related costs of $1.4 million incurred during
the first quarter of 2002.                                                                                                            

17



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##### Table of Contents



Our strongest markets during the current periods include the Greater
Washington D.C. Metropolitan Area and Southern California. The San Francisco
Bay Area and Chicago will continue to present the greatest challenges in NOI
growth in the near term.

Apartment Community Operations

The following tables summarize the performance of our garden and high-rise
apartments for each period (in thousands, except for units and percentages):

Garden Communities

|                                                        |  |                    |         |                  |  |      |         |      |  |   |         |   |  |   |         |  
|------------------------------------------------------- |  | ------------------ | ------- | ---------------- |  | ---- | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                        |  | Three Months Ended |         | Six Months Ended
|                                                        |  | June 30,           |         | June 30,        
|                                                        |  |                    |         |                 
|                                                        |  | 2002               |         | 2001             |  | 2002 |         | 2001
|                                                        |  |                    |         |                  |  |      |         |     
|Rental revenues                                         |  | $                  | 166,632 |                  |  | $    | 153,552 |      |  | $ | 332,504 |   |  | $ | 322,033 |  
|Property operating expenses                             |  |                    | 55,104  |                  |  |      | 48,520  |      |  |   | 109,529 |   |  |   | 102,545 |  
|                                                        |  |                    |         |                  |  |      |         |      |  |   |         |   |  |   |         |  
|Net Operating Income                                    |  | $                  | 111,528 |                  |  | $    | 105,032 |      |  | $ | 222,975 |   |  | $ | 219,488 |  
|                                                        |  |                    |         |                  |  |      |         |      |  |   |         |   |  |   |         |  
|Operating margin (Net Operating Income/rental revenues) |  |                    | 66.9    | %                |  |      | 68.4    | %    |  |   | 67.1    | % |  |   | 68.2    | %
|                                                        |  |                    |         |                  |  |      |         |      |  |   |         |   |  |   |         |  
|Average occupancy during period                         |  |                    | 96.0    | %                |  |      | 95.4    | %    |  |   | 95.6    | % |  |   | 95.6    | %
|                                                        |  |                    |         |                  |  |      |         |      |  |   |         |   |  |   |         |  
|Average number of operating units                       |  |                    | 55,391  |                  |  |      | 52,524  |      |  |   | 55,802  |   |  |   | 56,768  |  
|                                                        |  |                    |         |                  |  |      |         |      |  |   |         |   |  |   |         |  

High-Rise Properties (1)

|                                                        |  |                    |        |                  |  |      |     |      |  |   |         |   |  |  |     | 
|------------------------------------------------------- |  | ------------------ | ------ | ---------------- |  | ---- | --- | ---- |  | - | ------- | - |  |  | --- | 
|                                                        |  | Three Months Ended |        | Six Months Ended
|                                                        |  | June 30,           |        | June 30,        
|                                                        |  |                    |        |                 
|                                                        |  | 2002               |        | 2001             |  | 2002 |     | 2001
|                                                        |  |                    |        |                  |  |      |     |     
|Rental revenues                                         |  | $                  | 95,655 |                  |  |      | n/a |      |  | $ | 185,994 |   |  |  | n/a | 
|Property operating expenses                             |  |                    | 38,672 |                  |  |      | n/a |      |  |   | 74,491  |   |  |  | n/a | 
|                                                        |  |                    |        |                  |  |      |     |      |  |   |         |   |  |  |     | 
|Net Operating Income                                    |  | $                  | 56,983 |                  |  |      | n/a |      |  | $ | 111,503 |   |  |  | n/a | 
|                                                        |  |                    |        |                  |  |      |     |      |  |   |         |   |  |  |     | 
|Operating margin (Net Operating Income/rental revenues) |  |                    | 59.6   | %                |  |      | n/a |      |  |   | 60.0    | % |  |  | n/a | 
|                                                        |  |                    |        |                  |  |      |     |      |  |   |         |   |  |  |     | 
|Average occupancy during period                         |  |                    | 95.8   | %                |  |      | n/a |      |  |   | 95.6    | % |  |  | n/a | 
|                                                        |  |                    |        |                  |  |      |     |      |  |   |         |   |  |  |     | 
|Average number of operating units                       |  |                    | 21,679 |                  |  |      | n/a |      |  |   | 21,475  |   |  |  | n/a | 
|                                                        |  |                    |        |                  |  |      |     |      |  |   |         |   |  |  |     | 



| | (1) |  | High-rise properties were acquired in the Smith Merger on October 31,
2001. As a result, they are not included in Archstone-Smiths results of
operations for periods presented in 2001.
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following table reflects revenue, expense and NOI growth for
Same-Store communities (representing 57,240 units) that were fully operating
during the six months ended June 30 for each respective comparison period:

|        |           |       |  |                     |     |                     |  |                     |     |   |  |      |      |   
|------- | --------- | ----- |  | ------------------- | --- | ------------------- |  | ------------------- | --- | - |  | ---- | ---- | --
|        |           |       |  | Same-Store          |     | Same-Store          |  | Same-Store Net     
|        |           |       |  | Revenue             |     | Expense             |  | Operating Income   
|        |           |       |  | Growth/ (Reduction) |     | Growth/ (Reduction) |  | Growth/ (Reduction)
|        |           |       |  |                     |     |                     |  |                    
|2002(1) |           |       |  |                     |     |                     |  |                     |     |   |  |     
|        | Garden    |       |  | (0.6                | )%  |                     |  | 4.5                 | %   |   |  | (2.8 | )%  
|        | High-Rise |       |  | 4.0                 | %   |                     |  | 5.2                 | %   |   |  | 3.4  | %   
|        |           | Total |  |                     | 0.8 | %                   |  |                     | 4.7 | % |  |      | (1.0 | )%
|2001    |           |       |  |                     |     |                     |  |                     |     |   |  |     
|        | Garden    |       |  | 7.1                 | %   |                     |  | 5.0                 | %   |   |  | 8.2  | %   
|        | High-Rise |       |  | n/a                 |     |                     |  | n/a                 |     |   |  | n/a  |     
|        |           | Total |  |                     | 7.1 | %                   |  |                     | 5.0 | % |  |      | 8.2  | % 



| | (1) |  | Same-Store includes results for assets acquired in the Smith Merger
for the six-month period ended June 30, 2001.
| | --- |  | -----------------------------------------------------------------------------------------------------------------

18



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##### Table of Contents



NOI for the entire apartment portfolio increased for the three and
six-month periods ended June 30, 2002 compared to the same period in 2001.
This increase in NOI results principally from the inclusion of the NOI from
properties acquired in the Smith Merger in our consolidated results of
operations.

NOI for our garden communities increased $6.5 million and $3.5 million,
for the three and six-month periods ended June 30, 2002, respectively,
primarily due to:



| | (i)  |  | The inclusion of NOI from the 13 garden communities acquired in the
Smith Merger; and,
| | ---- |  | --------------------------------------------------------------------------------------
|
| | (ii) |  | The continued successful lease-up and Stabilization of apartment communities.         

These increases were partially offset by:



| | (i)  |  | The loss of garden community NOI due to dispositions of operating
communities in 2001 and 2002; and                                                                                                                                                                                                                                                                 
| | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii) |  | Same-Store NOI declined during the three-month and six-month periods
ended June 30, 2002, as compared to the same periods in the prior year
principally as a result of our declining Same-Store revenue growth, an
increase in real estate taxes, and an increase in property insurance
costs incurred upon renewal of our property insurance policies in June
2001.

The 2.8% decline in Same-Store NOI for the three-months ended June 30,
2002 as compared to the same period in the prior year is primarily due to a
continued deterioration experienced in the broader economy. This decrease
resulted from both flat revenues and higher expenses therefore lowering our
overall operating margins. This second quarter 2002 Same-Store NOI decline
also contributed to our negative Same-Store NOI results for the six-months
ended June 30, 2002 compared to the same period in the prior year.

We have experienced a 0.8% increase in Same-Store NOI growth during the
three-months ended June 30, 2002 as compared to the three-month period ended
March 31, 2002. This quarter over quarter increase is primarily a result of
increased revenue in certain core markets.

As a result of the financial challenges experienced by property and
casualty insurance companies, the property and casualty insurance markets have
continued to impose significant premium increases. In connection with the
renewal of our insurance policies in July 2002, we have reviewed our overall
risk management strategy in order to optimize our coverage, while
managing our overall costs and our portfolio wide risk profile. As a result of effectively managing
the policy renewal process, we anticipate that our total property and casualty
insurance costs will increase by approximately 25% for the remainder of 2002
and the first two quarters of 2003 as compared to the same periods in the
previous years.

Income from Unconsolidated Entities

Income from unconsolidated entities increased for the three and six-month
periods ended June 30, 2002 as compared to same periods in 2001 primarily due
to:



| | (i)   |  | Equity in the earnings from Ameriton increased approximately $3.2
million and $3.9 million for the three and six-month periods ended June
30, 2002, respectively, as compared to the same periods in 2001
principally due to higher NOI from operating communities and a gain from
the sale of an operating community;                             
| | ----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii)  |  | We recorded $3.1 million and $4.3 million in income from CES and SMC
for the three and six-month periods ended June 30, 2002, respectively.
These entities were acquired in the Smith Merger; and,                                                                                                                                                 
|
| | (iii) |  | We had a $0.6 million and $2.7 million increase in our share of the
income from real estate joint ventures for the three and six-month
periods ended June 30, 2002, respectively. These increases are
primarily due to the formation of three operating community joint
ventures during 2001 and three joint ventures acquired in the Smith
Merger.

Other Income

Other income decreased for the three and six-month periods ended June 30,
2002 as compared to the same periods in 2001, principally as a result of lower
interest income due to lower cash account balances because of reduced
disposition activity, coupled with lower interest rates.

Depreciation Expense

The increase in depreciation expense for the three and six-month periods
ended June 30, 2002 as compared to the same period in 2001 is principally
attributable to the additional depreciation expense associated with the
properties acquired in the Smith Merger. This increase was partially offset by
a reduction in depreciation expense associated with the significant disposition
volume of garden communities during 2001 and 2002.

19



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##### Table of Contents



Interest Expense

The increase in net interest expense for the three and six-month periods
ended June 30, 2002 as compared to 2001 is primarily attributable to the
incremental debt assumed in the Smith Merger. These increases are partially
offset by our relatively low average cost of variable rate debt during 2002 as
compared to recent years.

General and Administrative Expenses

The increase in general and administrative expenses for the three and
six-month periods ended June 30, 2002 as compared to the same period in 2001
relates primarily to the incremental overhead incurred in connection with the
Smith Merger. In addition, the amortization of capitalized costs associated
with our new revenue management program called Lease Rent Optimizer, which began
in December 2001, increased these expenses in 2001.

Preferred Unit distributions

Preferred unit distributions increased for the three and six-month periods
ended June 30, 2002 as compared to the same period due to preferred units
issued in the Smith Merger.

Discontinued Operations

In October 2001, the FASB issued SFAS 144, Accounting for Impairment or
Disposal of Long-Lived Assets which became effective on January 1, 2002. For
properties accounted for under SFAS 144, the results of operations for
properties sold during the period or classified as held for sale at the end of
the current period are required to be classified as discontinued operations in
the current and prior periods. The property specific components of net
earnings that are classified as discontinued operations include net operating
income, depreciation expense, and interest expense (actual interest expense for
encumbered properties and a pro-rata allocation of interest expense for any
unencumbered portion up to our weighted average leverage ratio). The net gain
or loss on the eventual disposal of the held for sale properties are also
required to be classified as discontinued operations. The property classified
as held for sale at December 31, 2001 continues to be accounted for in
accordance with the provisions of SFAS 121 and APB 30 and is not included in
discontinued operations.

We had one operating apartment community, one retail property and one
parcel of land classified as held for sale at June 30, 2002 whose results are
included in discontinued operations. Additionally, we sold two properties
during the three and six-month periods ended June 30, 2002. The results of
operations and the gain on the sale of these properties are also included in
discontinued operations. We sold four operating properties during the
six-month period that were held for sale at December 31, 2001 and, in
accordance with SFAS 144, the results of operations and the gains on
sale of the properties are not included in discontinued operations.

Impact of Disposition Activities

We disposed of four and six apartment communities during the three and
six-month periods ended June 30, 2002, respectively. These dispositions
represented gross proceeds of $119.1 million and $139.4 million for the three
and six-month periods ended June 30, 2002, respectively. Aggregate net gains,
included in gain on disposition of real estate and discontinued operations, of
$39.9 million and $41.2 million were recorded for the three-month and six-month
periods ended June 30, 2002, respectively.

Our total anticipated disposition volume for all of 2002 is expected to be
approximately $300 to $500 million.

20



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##### Table of Contents



Liquidity and Capital Resources

We are committed to maintaining a strong balance sheet and preserving our
financial flexibility, which we believe enhances our ability to capitalize on
attractive investment opportunities as they become available. We believe our
liquidity and financial condition are sufficient to meet all of our cash flow
needs during 2002 and for the foreseeable future. See our Statements of Cash
Flows for a summary of operating, investing and financing activities for the
six-months ended June 30, 2002 and 2001.

Operating Activities

Net cash flow provided by operating activities increased $71.5 million
for the six-month period ended June 30, 2002 as compared to the same period in 2001.
This increase is principally due to a significant increase in earnings from
operations before gains on dispositions due to the Smith Merger, which was
partially offset by lost NOI from the significant disposition activity in 2001.
See Results of Operations for a more complete discussion of the factors
impacting our operating performance.

Investing and Financing Activities

For the six-months ended June 30, 2002, cash flows provided by (used in)
investing activities decreased $595.8 million as compared to the same period in
2001. The decrease is principally the result of a $672.3 million reduction in
the proceeds on disposition of apartment communities, a $192.9 million increase
in investments in real estate and a $49.5 million increase in advances to
unconsolidated investees. This was partially offset by a decrease
in cash flows from restricted cash in tax-deferred exchange escrows.

Cash flow used in
financing activities decreased by $448.1 million for the six months
ended June 30, 2002 as compared to the same period in 2001. The
decrease is primarily attributable to the issuance of $200 million in
senior unsecured notes in February 2002, the $485.8 million increase
in the net proceeds provided by our credit facilities and a $50.0
million repurchase of Common Shares during the six months ended June
30, 2001 compared to no shares repurchased during the same period in
2002. These increases were partially offset by principal payments on
mortgages payable that increased $330.6 million and dividends on
Common Shares, Preferred Shares and minority interests that increased
$77.1 million.

Included above in the cash flows from financing activities are the payment
of $170.8 million, $17.4 million and $3.9 million in distributions to Common
Units, Preferred Units and minority interests, respectively, during
the six-month period ended June 30, 2002.

Our most significant non-cash investing and financing activities during
the six-month periods ended June 30, 2002 and 2001 included: (i) the assumption of
mortgages payable upon the purchase of apartment communities; (ii) the
contribution of apartment communities and related transfer of a mortgage
liability in exchange for an ownership interest in a joint venture; and, (iii)
the redemption of minority interests for Common Shares.

Scheduled Debt Maturities and Interest Payment Requirements

Our long-term debt is structured to create a relatively level principal
maturity schedule, without significant repayment obligations in any year, to
mitigate future liquidity issues and refinancing risk. As of June 30, 2002, we
have approximately $96.8 million of long-term debt maturing during the
remainder of 2002, $246.7 million maturing during 2003 and $138.1 million
maturing during 2004.

We currently have $800 million in total borrowing capacity under our
unsecured credit facilities, with $400.9 million outstanding and $399.1 million
of available capacity at August 8, 2002. Archstones unsecured credit
facilities, Long-Term Unsecured Debt and mortgages payable had effective
interest rates of 7.27%, 3.36% and 5.78%, respectively, as of June 30, 2002.
These rates give effect to the impact of interest rate swaps and caps, as
applicable.

We were in compliance
with all financial covenants pertaining to our debt
instruments during the six-month period ended June 30, 2002.

Unitholder Distribution Requirements

Based on anticipated distribution levels for 2002 and the number of shares
and units outstanding as of June 30, 2002, we anticipate that we will pay
distributions of $190.7 million in the aggregate during the remainder of 2002.
This amount represents distribution and dividends on our Common Units, all
Preferred Units and all minority interests.

21



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##### Table of Contents



Planned Investments

Following is a summary of unfunded planned investments as of June 30, 2002
(dollar amounts in thousands). The amounts labeled Discretionary represent
future investments that we plan to make, although there is not a contractual
commitment to do so. The amounts labeled Committed represent the
approximate amount that we are contractually committed to fund for communities
under construction and redevelopment.

|                                          |       |  |       |        |               |   |                     |         |  |   |         |         | 
|----------------------------------------- | ----- |  | ----- | ------ | ------------- | - | ------------------- | ------- |  | - | ------- | ------- | 
|                                          |       |  |       |        |               |   | Planned Investments
|                                          |       |  |       |        |               |   |                    
|                                          |       |  | Units |        | Discretionary |   | Committed          
|                                          |       |  |       |        |               |   |                    
|Communities under redevelopment           |       |  | 4,008 |        |               | $ | 24,853              |         |  | $ | 18,989  |        
|Communities under construction            |       |  | 2,120 |        |               |   |                    |         |  |   | 101,074 |        
|Communities In Planning and owned         |       |  | 3,902 |        |               |   | 749,028             |         |  |   |        |        
|Communities In Planning and Under Control |       |  | 536   |        |               |   | 70,396              |         |  |   |        |        
|Community acquisitions under contract     |       |  | 623   |        |               |   | 87,000              |         |  |   |        |        
|                                          |       |  |       |        |               |   |                     |         |  |   |         |        
|                                          | Total |  |       | 11,189 |               |   | $                   | 931,277 |  |   | $       | 120,063 | 
|                                          |       |  |       |        |               |   |                     |         |  |   |         |        

In addition to the planned investments noted above, we expect to make
smaller capital investments relating to planned expenditures on recently
acquired communities and on redevelopment and recurring expenditures to improve
and maintain our more established operating communities.

We anticipate completion of most of the communities that are currently
under construction and the planned operating community improvements during the
remainder of 2002 and 2003 and expect to start construction on approximately
$350 to $450 million, based on Total Expected Investment, during 2002. No
assurances can be given that communities we do not currently own will be
acquired or that planned developments will actually occur. In addition, actual
costs incurred could be greater or less than our current estimates.

Funding Sources

We anticipate financing our planned investment and operating needs
primarily with cash flow from operating activities, disposition proceeds from
our capital recycling program and borrowings under our unsecured credit
facilities, prior to arranging long-term financing. Consistent with our
performance in 2001, we anticipate that net cash flow from operating activities
during 2002 will be sufficient to fund anticipated distribution requirements
and scheduled debt principal payments. To fund planned investment activities,
we had $399.1 million in available capacity on our unsecured credit facilities
and $58.3 million of cash on hand at August 8, 2002. In addition, we expect
to complete a total of $300 to $500 million of operating community dispositions
during 2002.

In February 2002, we issued $200 million in long-term unsecured senior
notes from our shelf registration statement. In May 2002, we filed a shelf
registration statement on Form S-3 to register an additional $422.8 million
(for a total of $800 million) in debt securities that can be issued in the form
of long-term unsecured senior notes. In May 2002, Archstone-Smith filed a
shelf registration statement on Form S-3 to register $500 million in equity
securities, which can be issued in the form of Common or Preferred Shares.
These registration statements were declared effective in June 2002. On August
9, 2002, the Operating Trust priced a $300 million offering of long-term
unsecured senior five-year notes that is expected to close on
August 15, 2002.
Upon closing the offering on August 15, 2002, the Operating Trust and
Archstone-Smith will collectively have $1.0 billion available in shelf
registered securities which can be issued subject to our ability to effect
offerings on satisfactory terms based on prevailing market conditions.

Other Contingencies and Hedging Activities

We are party to various claims and routine litigation arising in the
ordinary course of business. When considering the companys insurance coverage
and other aspects of our risk management program, we do not believe that the
results of any such claims and litigation, individually or in the aggregate,
will have a material adverse effect on our business, financial position or
results of operations.

Our involvement with derivative financial instruments is limited and we do
not use them for trading or other speculative purposes. We occasionally
utilize interest rate swaps and caps as interest rate hedges to lower our
overall borrowing costs.

22



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##### Table of Contents



Critical Accounting Policies

We define critical accounting policies as those accounting policies that
require our management to exercise their most difficult, subjective and complex
judgments. Our critical accounting policies are described in our 2001 Form
10-K.

Off Balance Sheet Arrangements

Investments in entities that are not controlled through majority voting
interest are not consolidated and are reported as investments in unconsolidated
entities. Our investments in unconsolidated entities include a
$57.3 investment million
in real estate joint ventures, $278.3 investment million in Ameriton,
$134.8 investment million in
CES and $5.5 investment million in SMC at June 30, 2002. In connection with our
investments in Ameriton, we have extended a $10 million committed unsecured
credit facility with $8.7 million of available capacity at June 30, 2002.
Additionally, we have extended uncommitted unsecured credit facilities with
Ameriton and CES whereby advances are made solely at our discretion. Ameriton
and CES had $119.1 million and $59.0 million, respectively, of available
capacity as of June 30, 2002.

We have extended guarantees of certain obligations (such as performance
bonds), which are customary to the type of business in which we engage.
Archstone-Smith, our subsidiaries and investees have not been required to
perform on these guarantees, nor do we anticipate being required to perform on
such guarantees. Since we believe that our risk of loss under these
contingencies is remote, no accrual for potential loss has been made in the
accompanying financial statements. See Contractual Commitments for a summary
of the performance bonds we have guaranteed.

Contractual Commitments

The following table summarizes information contained in Managements
Discussion and Analysis and in our financial statements in this Form 10-Q
regarding contractual commitments at June 30, 2002 (amounts in millions):

|                                           |       |   |       |       |          |   |          |       |      |   |           |       |  |   |         |         |  |   |         |         | 
|------------------------------------------ | ----- | - | ----- | ----- | -------- | - | -------- | ----- | ---- | - | --------- | ----- |  | - | ------- | ------- |  | - | ------- | ------- | 
|                                           |       |   |       |       |          |   | 2003     |       | 2005 |   | 2007 thru |       |  |   |        
|                                           |       |   | 2002  |       | and 2004 |   | and 2006 |       | 2083 |   | Total    
|                                           |       |   |       |       |          |   |          |       |      |   |          
|Scheduled long-term debt maturities        |       | $ | 96.8  |       |          | $ | 384.8    |       |      | $ | 669.1     |       |  | $ | 2,530.8 |         |  | $ | 3,681.5 |        
|Unsecured credit facilities                |       |   | 15.7  |       |          |   | 465.0    |       |      |   |          |       |  |   |        |         |  |   | 480.7   |        
|Ameriton credit facility                   |       |   | 8.7   |       |          |   |         |       |      |   |          |       |  |   |        |         |  |   | 8.7     |        
|Development and redevelopment expenditures |       |   | 120.1 |       |          |   |         |       |      |   |          |       |  |   |        |         |  |   | 120.1   |        
|Performance bond guarantees (1)            |       |   | 60.6  |       |          |   | 68.8     |       |      |   |          |       |  |   |        |         |  |   | 129.4   |        
|Lease Commitments (2)                      |       |   | 4.4   |       |          |   | 7.8      |       |      |   | 6.7       |       |  |   | 105.3   |         |  |   | 124.2   |        
|                                           |       |   |       |       |          |   |          |       |      |   |           |       |  |   |         |         |  |   |         |        
|                                           | Total |   | $     | 306.3 |          |   | $        | 926.4 |      |   | $         | 675.8 |  |   | $       | 2,636.1 |  |   | $       | 4,544.6 | 
|                                           |       |   |       |       |          |   |          |       |      |   |           |       |  |   |         |         |  |   |         |        



| | (1) |  | Archstone-Smith, our subsidiaries and investees have not
been required to perform on these guarantees, nor do we anticipate
being required to perform on such guarantees. Since we believe
that our risk of loss under these contingencies is remote, no
accrual for potential loss has been made in the accompanying
financial statements.
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (2) |  | Lease commitments relate principally to ground lease
payments as of December 31, 2001. There have been no material
changes since that date.                                                                                                                                                                                                

23



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##### Table of Contents






Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our capital structure includes the use of both fixed and floating rate
debt and we are exposed to the impact of changes in interest rates. We also
use interest rate swap and interest rate cap derivative financial instruments
in order to modify interest rate characteristics of our debt in an effort to
minimize our overall borrowing costs. We do not utilize these derivative
financial instruments for speculative purposes. We use the services of third
party consultants to assist us in evaluating our interest rate risk and
counter-party credit risk.

As a result of our balance sheet management philosophy, we have managed
our debt maturities to create a relatively level principal maturity schedule,
without significant repayment obligations in any year. Additionally, if market
conditions do not permit us to replace maturing debt at comparable interest
rates, we are not exposed to significant portfolio level interest rate
volatility due to the management of our maturity schedules. There have been no
material changes to our market risk profile since December 31, 2001. See Item
7a in our 2001 Form 10-K for detailed information about the qualitative and
quantitative disclosures about our market risk.

24



---



##### Table of Contents












PART II  OTHER INFORMATION

Item 2. Changes in Securities and Use of
Proceeds

In June 2002, the Operating Trust issued 339,727
B Common Units as partial consideration for the purchase of an
operating community in a transaction exempt from registration under
Section 4(2) of the Securities Act and the rules thereunder. The B
Common Units automatically convert into A-1 Common Units on
August 16, 2002. In April 2002, Archstone-Smith issued 60,000 Common Shares under Section
4(2) of the Securities Act and the rules thereunder in exchange for
60,000 B Common Units previously issued.

Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits:



| | 12.1 |  | Computation of Ratio of Earnings to Fixed Charges                                                 
| | ---- |  | --------------------------------------------------------------------------------------------------
|
| | 12.2 |  | Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Unit Dividends           
|
| | 15.1 |  | Letter from KPMG LLP dated August 13, 2002 regarding unaudited financial information              
|
| | 99.1 |  | Certification of Chief Executive Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
| |      | 
| | 99.2 |  | Certification of Chief Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002

(b)  Reports on Form 8-K: None

25



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##### Table of Contents



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.

| |  |                                 |  |                                                                                      
| |  | ------------------------------- |  | -------------------------------------------------------------------------------------
| |  | ARCHSTONE-SMITH OPERATING TRUST
| |  |                                 |  |                                                                                      
| |  |                                 |  |                                                                                      
| |  | BY:                             |  | /s/ R. SCOT SELLERS                                                                  
| |  |                                 |  |                                                                                      
| |  |                                 |  | R. Scot SellersChairman andChief Executive Officer                                   
| |  |                                 |  |                                                                                      
| |  |                                 |  |                                                                                      
| |  | BY:                             |  | /s/ CHARLES E. MUELLER, JR.                                                          
| |  |                                 |  |                                                                                      
| |  |                                 |  | Charles E. Mueller, Jr.Chief Financial Officer
(Principal Financial Officer)         
| |  |                                 |  |                                                                                      
| |  |                                 |  |                                                                                      
| |  | BY:                             |  | /s/ MARK A. SCHUMACHER                                                               
| |  |                                 |  |                                                                                      
| |  |                                 |  | Mark A. SchumacherSenior Vice President and Controller
(Principal Accounting Officer)

Date: August 14, 2002

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##### Table of Contents



INDEX TO EXHIBITS

|        |  |                                                                                                   
|------- |  | --------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                   
|Number  |  | Description                                                                                       
|        |  |                                                                                                   
|12.1    |  | Computation of Ratio of Earnings to Fixed Charges                                                 
|        |  |                                                                                                   
|12.2    |  | Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Unit Dividends           
|        |  |                                                                                                   
|15.1    |  | Letter from KPMG LLP dated August 13, 2002 regarding unaudited financial information              
|        |  |                                                                                                   
|99.1    |  | Certification of Chief Executive Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
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|99.2    |  | Certification of Chief Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002