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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

|ý                                                             | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 
|------------------------------------------------------------- | ----------------------------------------------------------------------------------------
|For the quarterly period ended June 30, 2007                 
|OR                                                           
|o                                                             | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
|For the transition period
from                             to

Commission File Number 1-10272

Archstone-Smith Operating Trust(Exact name of registrant as specified in its charter)

|Maryland(State or other jurisdiction of incorporation or organization)                                            |  | 90-0042860(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 ý            No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large
Accelerated filer ý        Accelerated
filer o        Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o            No ý

At August 1, 2007, there were approximately 26,663,000 of the Registrant's Class A-1 and Class B Common Units outstanding, held
by non-affiliates.



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Table of Contents



|Item |  | Description                                                                                                                                                      
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|1.   |  | Financial Statements                                                                                                                                             
|     |  | Condensed Consolidated Balance Sheets  June 30, 2007 (Unaudited) and December 31, 2006                                                                          
|     |  | Condensed Consolidated Statements of Earnings  Three and Six Months Ended June 30, 2007 and 2006 (Unaudited)                                                    
|     |  | Condensed Consolidated Statement of Unitholders' Equity, Other Common Unitholders' Interest and Comprehensive Income  Six Months Ended
June 30, 2007 (Unaudited)
|     |  | Condensed Consolidated Statements of Cash Flows  Six Months Ended June 30, 2007 and 2006 (Unaudited)                                                            
|     |  | Notes to Condensed Consolidated Financial Statements (Unaudited)                                                                                                 
|     |  | Report of Independent Registered Public Accounting Firm                                                                                                          
|2.   |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                                                                            
|3.   |  | Quantitative and Qualitative Disclosures about Market Risk                                                                                                       
|4.   |  | Controls and Procedures                                                                                                                                          
|
|1.   |  | Legal Proceedings                                                                                                                                                
|1A.  |  | Risk Factors                                                                                                                                                     
|2.   |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                      
|3.   |  | Defaults Upon Senior Securities                                                                                                                                  
|4.   |  | Submission of Matters to a Vote of Security Holders                                                                                                              
|5.   |  | Other Information                                                                                                                                                
|6.   |  | Exhibits                                                                                                                                                         

2

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PART I  FINANCIAL INFORMATION

Item 1. Financial Statements

Archstone-Smith Operating Trust    Condensed Consolidated Balance Sheets    (In thousands, except share data)

|                                                                                                                      |                                                                                                        | June 30,
2007                             |            | December 31,
2006 |           
|--------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------ | ----------------------------------------- | ---------- | ----------------- | ----------
|
|ASSETS                                                                                                                |                                                                                                        |                                           |            |                   |           
|Real estate                                                                                                           |                                                                                                        | $                                         | 11,996,862 |                   | $         
|Real estate  held-for-sale                                                                                           |                                                                                                        |                                           | 933,485    |                   |           
|Accumulated depreciation                                                                                              |                                                                                                        |                                           | (1,013,528 | )                 |           
|                                                                                                                      |                                                                                                        |                                           |            |                   |           
|                                                                                                                      |                                                                                                        |                                           | 11,916,819 |                   |           
|Investments in and advances to unconsolidated entities                                                                |                                                                                                        |                                           | 491,810    |                   |           
|                                                                                                                      |                                                                                                        |                                           |            |                   |           
|                                                                                                                      | Net investments                                                                                        |                                           |            | 12,408,629        |           
|Cash and cash equivalents                                                                                             |                                                                                                        |                                           | 12,975     |                   |           
|Restricted cash in tax-deferred exchange and bond escrow                                                              |                                                                                                        |                                           | 158,905    |                   |           
|Other assets                                                                                                          |                                                                                                        |                                           | 445,533    |                   |           
|                                                                                                                      |                                                                                                        |                                           |            |                   |           
|                                                                                                                      |                                                                                                        | Total assets                              |            | $                 | 13,026,042
|                                                                                                                      |                                                                                                        |                                           |            |                   |           
|LIABILITIES AND UNITHOLDERS' EQUITY                                                                                   |                                                                                                        |                                           |            |                   |           
|Liabilities:                                                                                                          |                                                                                                        |                                           |            |                   |           
|                                                                                                                      | Unsecured credit facilities                                                                            |                                           | $          | 744,257           |           
|                                                                                                                      | Unsecured loans  International                                                                        |                                           |            |                  |           
|                                                                                                                      | Long-Term Unsecured Debt                                                                               |                                           |            | 3,301,972         |           
|                                                                                                                      | Mortgages payable                                                                                      |                                           |            | 2,054,510         |           
|                                                                                                                      | Mortgages payable  held-for-sale                                                                      |                                           |            | 59,245            |           
|                                                                                                                      | Accounts payable                                                                                       |                                           |            | 52,329            |           
|                                                                                                                      | Accrued interest                                                                                       |                                           |            | 62,696            |           
|                                                                                                                      | Accrued expenses and other liabilities                                                                 |                                           |            | 267,688           |           
|                                                                                                                      |                                                                                                        |                                           |            |                   |           
|                                                                                                                      |                                                                                                        | Total liabilities                         |            |                   | 6,542,697 
|                                                                                                                      |                                                                                                        |                                           |            |                   |           
|Other common unitholders' interest, at redemption value (A-1 Common Units: 26,750,612 in 2007 and 29,514,128 in 2006) |                                                                                                        |                                           | 1,581,229  |                   |           
|                                                                                                                      |                                                                                                        |                                           |            |                   |           
|Unitholders' equity:                                                                                                  |                                                                                                        |                                           |            |                   |           
|                                                                                                                      | Perpetual Preferred Units                                                                              |                                           |            | 50,000            |           
|                                                                                                                      | Common unitholders' equity (A-2 Common Units: 223,622,659 units in 2007 and 220,147,167 units in 2006) |                                           |            | 4,848,651         |           
|                                                                                                                      | Accumulated other comprehensive income                                                                 |                                           |            | 3,465             |           
|                                                                                                                      |                                                                                                        |                                           |            |                   |           
|                                                                                                                      |                                                                                                        | Total unitholders' equity                 |            |                   | 4,902,116 
|                                                                                                                      |                                                                                                        |                                           |            |                   |           
|                                                                                                                      |                                                                                                        | Total liabilities and unitholders' equity |            | $                 | 13,026,042
|                                                                                                                      |                                                                                                        |                                           |            |                   |           

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
June 30, |         | Six Months Ended
June 30,
|--------------------------------------------------- | --------------------------------------- | --------------------------- | ------- | -------------------------
|
|Revenues:                                           |                                         |                             |         |                          
|                                                    | Rental revenues                         |                             | $       | 279,929                  
|                                                    | Other income                            |                             |         | 13,409                   
|                                                    |                                         |                             |         |                          
|                                                    |                                         |                             | 293,338 |                          
|                                                    |                                         |                             |         |                          
|Expenses:                                           |                                         |                             |         |                          
|                                                    | Rental expenses                         |                             |         | 68,177                   
|                                                    | Real estate taxes                       |                             |         | 26,265                   
|                                                    | Depreciation on real estate investments |                             |         | 71,076                   
|                                                    | Interest expense                        |                             |         | 72,179                   
|                                                    | General and administrative expenses     |                             |         | 20,133                   
|                                                    | Other expenses                          |                             |         | 5,899                    
|                                                    |                                         |                             |         |                          
|                                                    |                                         |                             | 263,729 |                          
|                                                    |                                         |                             |         |                          
|Earnings from operations                            |                                         |                             | 29,609  |                          
|                                                    | Income from unconsolidated entities     |                             |         | 307                      
|                                                    | Other non-operating income/(expense)    |                             |         | (84                      
|                                                    |                                         |                             |         |                          
|Earnings before discontinued operations             |                                         |                             | 29,832  |                          
|                                                    | Earnings from discontinued operations   |                             |         | 39,190                   
|                                                    |                                         |                             |         |                          
|Net earnings                                        |                                         |                             | 69,022  |                          
|                                                    | Preferred Unit dividends                |                             |         | 958                      
|Net earnings attributable to Common Units  Basic   |                                         | $                           | 68,064  |                          
|                                                    | Interest on Convertible Debt            |                             |         |                         
|                                                    |                                         |                             |         |                          
|Net earnings attributable to Common Units  Diluted |                                         | $                           | 68,064  |                          
|                                                    |                                         |                             |         |                          
|Weighted average Common Units outstanding:          |                                         |                             |         |                          
|                                                    | Basic                                   |                             |         | 250,502                  
|                                                    |                                         |                             |         |                          
|                                                    | Diluted                                 |                             |         | 251,252                  
|                                                    |                                         |                             |         |                          
|Earnings per Common Unit  Basic:                   |                                         |                             |         |                          
|                                                    | Earnings before discontinued operations |                             | $       | 0.12                     
|                                                    | Discontinued operations, net            |                             |         | 0.15                     
|                                                    |                                         |                             |         |                          
|                                                    | Net earnings                            |                             | $       | 0.27                     
|                                                    |                                         |                             |         |                          
|Earnings per Common Unit  Diluted:                 |                                         |                             |         |                          
|                                                    | Earnings before discontinued operations |                             | $       | 0.11                     
|                                                    | Discontinued operations, net            |                             |         | 0.16                     
|                                                    |                                         |                             |         |                          
|                                                    | Net earnings                            |                             | $       | 0.27                     
|                                                    |                                         |                             |         |                          
|Distributions paid per Common Unit                  |                                         | $                           | 0.4525  |                          
|                                                    |                                         |                             |         |                          

The
accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

4

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Archstone-Smith Operating Trust    Condensed Consolidated Statement of Unitholders'  Equity, Other Common Unitholders' Interest and Comprehensive Income    Six Months Ended June 30, 2007    (In thousands)  (Unaudited)

|                                                          |                                                                                              | Perpetual Preferred Shares at Aggregate Liquidation Preference |        | Common Unitholders' Equity |   | Accumulated Other Comprehensive Income |         | Total Unitholders' Equity |       | Other Common Unitholders' Interest |   | Total     |        
|--------------------------------------------------------- | -------------------------------------------------------------------------------------------- | -------------------------------------------------------------- | ------ | -------------------------- | - | -------------------------------------- | ------- | ------------------------- | ----- | ---------------------------------- | - | --------- | -------
|Balances at December 31, 2006                             |                                                                                              | $                                                              | 50,000 |                            | $ | 4,530,801                              |         | $                         | 3,520 |                                    | $ | 4,584,321 |        
|Comprehensive income:                                     |                                                                                              |                                                                |        |                            |   |                                        |         |                           |       |                                    |   |           |        
|                                                          | Net earnings                                                                                 |                                                                |        |                           |   |                                        | 350,094 |                           |       |                                   |   |           | 350,094
|                                                          | Change in fair value of hedges                                                               |                                                                |        |                           |   |                                        |        |                           |       | 2,282                              |   |           | 2,282  
|                                                          | Reclassification adjustment for realized net gains on marketable securities                  |                                                                |        |                           |   |                                        |        |                           |       | (1,794                             | ) |           | (1,794 
|                                                          | Change in fair value of marketable securities                                                |                                                                |        |                           |   |                                        |        |                           |       | (4                                 | ) |           | (4     
|                                                          | Foreign currency exchange translation and partial reversal upon International Fund formation |                                                                |        |                           |   |                                        |        |                           |       | (539                               | ) |           | (539   
|                                                          |                                                                                              |                                                                |        |                            |   |                                        |         |                           |       |                                    |   |           |        
|Comprehensive income attributable to Common Units         |                                                                                              |                                                                |       |                            |   |                                       |         |                           |      |                                    |   |          |        
|                                                          |                                                                                              |                                                                |        |                            |   |                                        |         |                           |       |                                    |   |           |        
|Preferred Unit dividends                                  |                                                                                              |                                                                |       |                            |   | (1,916                                 | )       |                           |      |                                    |   | (1,916    | )      
|Common Unit dividends                                     |                                                                                              |                                                                |       |                            |   | (201,849                               | )       |                           |      |                                    |   | (201,849  | )      
|A-1 Common Units converted into A-2 Common Units          |                                                                                              |                                                                |       |                            |   | 55,378                                 |         |                           |      |                                    |   | 55,378    |        
|Issuance of Common Units under Dividend Reinvestment Plan |                                                                                              |                                                                |       |                            |   | 20,493                                 |         |                           |      |                                    |   | 20,493    |        
|Exercise of options                                       |                                                                                              |                                                                |       |                            |   | 10,232                                 |         |                           |      |                                    |   | 10,232    |        
|Equity-classified awards under Compensation Plans         |                                                                                              |                                                                |       |                            |   | 3,994                                  |         |                           |      |                                    |   | 3,994     |        
|Adjustment to redemption value                            |                                                                                              |                                                                |        |                            |   | 72,330                                 |         |                           |       |                                    |   | 72,330    |        
|Common Unit redemptions                                   |                                                                                              |                                                                |        |                            |   |                                       |         |                           |       |                                    |   |          |        
|Issuance of A-1 Common Units in exchange for real estate  |                                                                                              |                                                                |        |                            |   |                                        |         |                           |       |                                    |   |          |        
|Purchase accounting and fund formation adjustments        |                                                                                              |                                                                |       |                            |   | 6,131                                  |         |                           |      |                                    |   | 6,131     |        
|Other, net                                                |                                                                                              |                                                                |       |                            |   | 2,963                                  |         |                           |      |                                    |   | 2,963     |        
|                                                          |                                                                                              |                                                                |        |                            |   |                                        |         |                           |       |                                    |   |           |        
|Balances at June 30, 2007                                 |                                                                                              | $                                                              | 50,000 |                            | $ | 4,848,651                              |         | $                         | 3,465 |                                    | $ | 4,902,116 |        
|                                                          |                                                                                              |                                                                |        |                            |   |                                        |         |                           |       |                                    |   |           |        

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

5

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Archstone-Smith Operating Trust    Condensed Consolidated Statements of Cash Flows    (In thousands)  (Unaudited)

|                                                         |                                                                                          | Six Months Ended June 30,                             |        
|-------------------------------------------------------- | ---------------------------------------------------------------------------------------- | ----------------------------------------------------- | -------
|
|Operating activities:                                    |                                                                                          |                                                       |        
|                                                         | Net earnings                                                                             |                                                       | $      
|                                                         | Adjustments to reconcile net earnings to net cash flow provided by operating activities: |                                                       |        
|                                                         | Depreciation and amortization                                                            |                                                       |        
|                                                         | Gains on dispositions of depreciated real estate                                         |                                                       |        
|                                                         | Gains on sale of marketable equity securities                                            |                                                       |        
|                                                         | Change in swap value  DeWAG derivatives                                                 |                                                       |        
|                                                         | Provision for possible loss on investments                                               |                                                       |        
|                                                         | Equity in earnings from unconsolidated entities                                          |                                                       |        
|                                                         | Interest accrued on Mezzanine loans                                                      |                                                       |        
|                                                         | Change in other assets                                                                   |                                                       |        
|                                                         | Change in accounts payable, accrued expenses and other liabilities                       |                                                       |        
|                                                         | Other, net                                                                               |                                                       |        
|                                                         |                                                                                          |                                                       |        
|                                                         |                                                                                          | Net cash flow provided by operating activities        |        
|                                                         |                                                                                          |                                                       |        
|Investing activities:                                    |                                                                                          |                                                       |        
|                                                         | Real estate investments                                                                  |                                                       |        
|                                                         | Change in investments in unconsolidated entities, net                                    |                                                       |        
|                                                         | Investment in International Fund                                                         |                                                       |        
|                                                         | Proceeds from dispositions                                                               |                                                       |        
|                                                         | Change in restricted cash                                                                |                                                       |        
|                                                         | Change in notes receivable, net                                                          |                                                       |        
|                                                         | Other, net                                                                               |                                                       |        
|                                                         |                                                                                          |                                                       |        
|                                                         |                                                                                          | Net cash flow provided (used) by investing activities |        
|                                                         |                                                                                          |                                                       |        
|Financing activities:                                    |                                                                                          |                                                       |        
|                                                         | Proceeds from Long-Term Unsecured Debt, net                                              |                                                       |        
|                                                         | Payments on Long-Term Unsecured Debt                                                     |                                                       |        
|                                                         | Proceeds from (payments on) unsecured credit facilities, net                             |                                                       |        
|                                                         | Principal repayment of mortgages payable, including prepayment penalties                 |                                                       |        
|                                                         | Regularly scheduled principal payments on mortgages payable                              |                                                       |        
|                                                         | Proceeds from Unsecured loans  International                                            |                                                       |        
|                                                         | Principal repayments on Unsecured loans  International                                  |                                                       |        
|                                                         | Proceeds from Common Units issued under DRIP and employee stock options                  |                                                       |        
|                                                         | Cash dividends paid on Common Units                                                      |                                                       |        
|                                                         | Cash dividends paid on Preferred Units                                                   |                                                       |        
|                                                         | Other, net                                                                               |                                                       |        
|                                                         |                                                                                          |                                                       |        
|                                                         |                                                                                          | Net cash flow provided (used) by financing activities |        
|                                                         |                                                                                          |                                                       |        
|Net change in cash and cash equivalents                  |                                                                                          |                                                       | (35,680
|Cash and cash equivalents at beginning of period         |                                                                                          |                                                       | 48,655 
|                                                         |                                                                                          |                                                       |        
|Cash and cash equivalents at end of period               |                                                                                          | $                                                     | 12,975 
|                                                         |                                                                                          |                                                       |        
|Significant non-cash investing and financing activities: |                                                                                          |                                                       |        
|                                                         | Common Units issued in exchange for real estate                                          |                                                       | $      
|                                                         | A-1 Common Units converted to A-2 Common Units                                           |                                                       |        
|                                                         | Assumption of mortgages payable upon purchase of apartment communities                   |                                                       |        

In connection with the formation of the International Fund, we contributed assets and liabilities at book value. The assets consisted of real
estate of $1.0 billion and accounts receivable and other assets of $0.1 billion. The liabilities consisted of mortgages and unsecured credit facilities of $0.7 billion and other
accounts payable and accrued expenses of $0.1 billion.

These
Condensed Consolidated Statements of Cash Flows combine cash flows from discontinued operations with cash flows from continuing operations.

The
accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

6

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Archstone-Smith Operating Trust  Notes to Condensed Consolidated Financial Statements  June 30, 2007 and 2006  (Unaudited)

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



Archstone-Smith is structured as an UPREIT under which all property ownership and business operations are conducted through Archstone-Smith Operating Trust, which
we refer to herein as the "Operating Trust". Archstone-Smith is our sole trustee and owns approximately 89.3% of the Operating Trust's outstanding Common Units; the remaining 10.7% of the Common Units
are owned by minority interest holders. As used herein, "we," "our" and the "company" refers to the Operating Trust and Archstone-Smith, collectively, except where the context otherwise requires.
Archstone-Smith is an equity REIT organized under the laws of the State of Maryland. We focus on creating value for our unitholders by acquiring, developing, redeveloping and operating apartments in
markets characterized by protected locations with limited land for new housing construction, expensive single-family home prices, and a strong, diversified economic base with significant employment
growth potential.



On May 29, 2007, Archstone-Smith announced it had signed a definitive Merger Agreement, dated as of May 28, 2007 (as amended by Amendment
No. 1 thereto described below, the "Merger Agreement"),
whereby both Archstone-Smith and the Operating Trust would be acquired by subsidiaries of an entity jointly controlled by affiliates of Tishman Speyer Real Estate Venture VII, L.P., and Lehman
Brothers Holdings, Inc. (the "Buyer Parties"). Under the terms of the Merger Agreement, all outstanding Common Shares of Archstone-Smith will be acquired by a subsidiary of the Buyer
Parties for $60.75 in cash, without interest and less applicable withholding taxes, for each Common Share issued and outstanding immediately prior to the effective time of the merger. With respect to
the outstanding Series I Preferred Shares, the Buyer Parties may elect to replace them with substantially identical Series I Preferred Shares of the entity surviving the merger or redeem
them for the liquidation preference of $100,000 per share, plus all accrued and unpaid distributions through the redemption date without interest and less applicable withholding taxes. The Merger
Agreement and the related transactions were unanimously approved by the Board of Trustees of Archstone-Smith and are subject to certain conditions, including, among other things, compliance with
European anti-trust regulations and the approval of the Archstone-Smith merger by the affirmative vote of the holders of at least a majority of Archstone-Smith's outstanding Common Shares.
Archstone-Smith paid its regular quarterly dividend on May 31, 2007 to common shareholders of record as of May 16, 2007, but will not pay any additional dividends on its
Common Shares in accordance with the terms of the Merger Agreement.

As
part of the proposed transaction, the Operating Trust will be merged with a subsidiary ("MergerSub") of the Buyer Parties. Although the Operating Trust will be the surviving entity,
MergerSub will be viewed as the acquiror for accounting purposes. As a holder as of June 30, 2007 of approximately 89.3% of the Operating Trust's outstanding Common Units, Archstone-Smith's
approval is the only approval of the holders of the Operating Trust's Common Units that is necessary under the Merger Agreement to approve the merger. Each Class A-2 Common Unit
will remain outstanding whereas each Class A-1 Common Unit will be converted into the right to receive (a) one newly-issued Series O Preferred Unit, or (b) at the
election of the holder, cash consideration of $60.75 without interest and less applicable withholding taxes. Holders of Class A-1 Common Units may elect to receive a combination of cash
consideration and the Series O Preferred Units for their Class A-1 Common Units. Each Series O Preferred Unit will have a redemption price of $60.75 and will bear cumulative

7

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preferential
distributions payable quarterly at an annual rate of 6%. The distribution rate will increase to 8% per annum during any period when the ratio of total debt to total assets exceeds 0.85 to
1.00. The Series O Preferred Units, which will have only limited voting rights, will be redeemable by the holder or the Operating Trust under certain circumstances. The Series I
Preferred Units will, at the election of the Buyer Parties, either remain outstanding and unchanged or be redeemed for the liquidation preference of $100,000 per unit, plus all accrued and unpaid
distributions through the redemption date without interest and less applicable withholding taxes. Each Series M Preferred Unit and each Series N-1 and N-2
Convertible Preferred Unit will be converted into the right to receive one (1) newly issued Series P Preferred Unit, Series Q-1 Preferred Unit and
Series Q-2 Preferred Unit, respectively, of the Operating Trust.

On
August 5, 2007, Archstone-Smith and the Operating Trust entered into Amendment Number 1 to the Merger Agreement (the "Amendment") with the Buyer Parties. The Amendment does not
change the consideration to be received by the holders of Common Shares. Holders of Common Shares will continue to be entitled to receive in the merger $60.75 in cash, without interest and less
applicable withholding taxes, for each Common Share that they hold immediately prior to the effective time of the
Operating Trust merger. In addition, in connection with the merger of the Operating Trust, holders of the Operating Trust's Class A-1 Common Units will continue to receive, for each
such unit, one newly issued Series O Preferred Unit of the Operating Trust or, if they so elect, a cash payment equal to $60.75, without interest and less applicable withholding taxes, for each
Class A-1 Common Unit that they own or a combination of Series O Preferred Units and the cash consideration.

Under
the terms of the Amendment, among other things, the parties continue to be obligated to close the mergers as promptly as practicable (but in no event later than the third business
day) after all of the conditions to the closing of the mergers are satisfied or appropriately waived, but would not be required to complete the closing during the period beginning on August 15,
2007 and ending on October 4, 2007. Prior to the Amendment, the Buyer Parties would not have been required under the Merger Agreement to consummate the mergers between August 15, 2007
and August 31, 2007.

In
addition, Archstone-Smith has received communications on behalf of certain holders of Class A-1 Common Units in the Operating Trust alleging, among other things,
that the requirement that such unitholders release Archstone-Smith and the Buyer Parties from any claims under any of their previously existing tax protection agreements with Archstone-Smith in order
to be able to elect to receive the cash merger consideration was not permissible, and threatening to seek injunctive relief and monetary damages. Under the Amendment, Archstone-Smith and the Buyer
Parties have agreed that such release will no longer be required for Class A-1 Common Unitholders to elect to receive the cash merger consideration. Also pursuant to the Amendment,
the parties confirmed and acknowledged that, as of the date of the Amendment, to their knowledge, there was no fact, event, effect, notice, development, change, circumstance or condition that had
occurred and/or was continuing that would cause, or would reasonably be likely to cause, any of the conditions to the consummation of the mergers not to be satisfied on or before the
December 31, 2007, which is the outside date under the Merger Agreement.

The
closing of the mergers is not subject to a financing condition. Neither Archstone-Smith nor any of its affiliates can give any assurance that the Archstone-Smith merger will be
approved by Archstone-Smith Trust's common shareholders or that any of the other conditions to the closing of the mergers will be met.

The
Buyer Parties have informed us they intend to cause the Operating Trust to make certain material asset distributions to Archstone-Smith or related entities immediately after the
effective time of the Operating Trust merger. The intention of the Buyer Parties is subject to change with respect to such asset distributions and other assets may be sold or distributed from time
to time.

8

---





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 management believes that 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 the Operating Trust's Annual Report on Form 10-K, for the year ended December 31, 2006 ("2006
Form 10-K"). See the glossary in our 2006 Form 10-K for definitions of all initially-capitalized 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 three and six months ended June 30, 2007 are not necessarily indicative of the results to be expected for the
entire year.



The accounts of the Operating Trust and its controlled subsidiaries are consolidated in the accompanying financial statements. All significant inter-company
accounts and transactions have been eliminated. We use the equity method to account for investments that do not qualify as variable interest entities, variable interest entities where we are not the
primary beneficiary and entities that we do not control, or where we do not own a majority of the economic interest, but have the ability to exercise significant influence over the operating and
financial policies of the investee. We also use the equity method when we function as the managing member and our partner does not have substantive participating rights or we can be replaced by a
partner if we are the managing member. For an investee accounted for under the equity method, our share of net earnings or losses of the investee is reflected in income as earned and dividends are
credited against the investment as received.



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 management's estimates. Estimates and assumptions are
reviewed periodically and the effects of revisions are reflected in the period they are determined to be necessary.



We allocate the cost of newly acquired properties between net tangible and identifiable intangible assets. When allocating cost to an acquired property, we first
allocate costs to the estimated intangible value of the existing lease agreements and then to the estimated value of the land, building and fixtures assuming the property is vacant. We estimate the
intangible value of the lease agreements by determining the lost revenue associated with a hypothetical lease-up. We depreciate the building and fixtures based on the expected useful life
of the asset and amortize the intangible value of the lease agreements over the average remaining life of the existing leases. This amortization expense is included in depreciation on real estate
investments in our Condensed Consolidated Statements of Earnings.



Intangible assets consist of lease-related intangibles and certain intangibles associated with the DeWAG acquisition. The market value of above and below market
leases are based on our estimate of current market rents as compared to the rent that we are receiving and is recorded in either other assets or other liabilities. These assets are charged and
liabilities are credited to rental income over the

9

---



estimated
term of the lease. We also recognize the value of our in-place lease agreements and amortize these assets into depreciation on real estate investments over the estimated term of
the lease.

We
will perform an impairment test annually, or more frequently, if events or changes in circumstances indicate impairment of our intangible assets, which are included in
other assets.



We generally lease our apartment units under operating leases with terms of one year or less. Communities subject to the Oakwood Master Leases entered into in
2005 have a seven-year term, expiring between July 2012 and March 2013, subject to Oakwood's right
to terminate individual leases under certain circumstances. As of June 30, 2007, none of the Oakwood Master Lease Communities has been returned to the company. The aggregate annual contractual
base rent due under these leases is $74.1 million and is subject to annual adjustments on January 1st of each year equal to the percentage change in the average
same-store NOI growth for certain other specified properties. Rental income related to leases is recognized in the period earned over the lease term in accordance with Statement of
Financial Accounting Standards SFAS No.13, "Accounting for Leases." Rent concessions are recognized as an offset to revenues collected over the
term of the underlying lease. We use the full accrual method of profit recognition in accordance with SFAS No. 66 to record gains on sales of real estate. Accordingly, we evaluate
the related GAAP requirements in determining the profit to be recognized at the date of each sale transaction (i.e., the profit is determinable and the earnings process is complete). We
recognize deferred gains when a property is sold to a third party.



Rental expenses shown on the accompanying Condensed Consolidated Statements of Earnings include costs associated with on-site and property management
personnel, utilities, repairs and maintenance, property insurance, marketing, landscaping and other on-site and related administrative costs. Utility reimbursements from residents, which
are recorded as offsets to utility expenses, aggregated $6.0 million and $6.2 million for the three months ended June 30, 2007 and 2006, respectively, and $12.8 million and
$12.0 million for the six months ended June 30, 2007 and 2006, respectively, including amounts reclassified to discontinued operations for the respective periods.



We recognize insurance recovery proceeds as other income if the recovery is related to items that were originally expensed, such as legal settlements, legal
expenses and repairs that did not meet capitalization guidelines. For recoveries of property damages that were eligible for capitalization, we reduce the basis of the property or if the property has
subsequently been sold, we recognize the proceeds as an additional gain on sale. We recognize insurance recoveries at such time that we believe the recovery is probable and we have sufficient
information to make a reasonable estimate of proceeds, except in cases where we have to pursue recovery via litigation. In this circumstance, we recognize the recovery when we have a signed, legally
binding agreement with the insurance carrier.



We generally recognize legal expenses as incurred; however, if such fees are related to the accrual for an estimated legal settlement, we accrue for the related
incurred and anticipated legal fees at the same time we accrue the estimated cost of settlement.



Assets and liabilities of the company's foreign operations are translated into U.S. dollars at the exchange rate in effect at the balance sheet date.
Revenue and expenses are translated at average rates

10

---



in
effect during the period. The resulting translation adjustment is reflected as accumulated other comprehensive income, a separate component of unitholders' equity on the Condensed Consolidated
Balance Sheets. The functional currency utilized for these subsidiaries is the local foreign currency.



We utilize derivative financial instruments to manage our interest rate risk, foreign currency exchange risk, exposure to changes in the fair value of certain
investments in equity securities and exposure to volatile energy prices. The resulting assets and liabilities associated with derivative financial instruments are carried on our financial statements
at estimated fair value at the end of each reporting period. The changes in fair value of a fair value hedge and the fair value of the items hedged are generally recorded in earnings for each
reporting period. The change in the fair value of effective cash flow hedges and foreign currency hedges are carried on our financial statements as a component of accumulated other comprehensive
income. If effective, our hedges have little or no impact on our current earnings.



We have made an election to be taxed as a partnership under the Internal Revenue Code of 1986, as amended, and we believe we qualify as a partnership and have
made all required distributions of our taxable income.

Income
taxes for our taxable REIT subsidiaries are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period that includes the enactment date.



Comprehensive income, which is defined as net earnings and all other non-owner changes in equity, is displayed in the accompanying Condensed
Consolidated Statement of Unitholders' Equity, Other Common Unitholders' Interest and Comprehensive Income. Other comprehensive income reflects unrealized holding gains and losses on the
available-for-sale investments, changes in the fair value of effective cash flow hedges and gains and losses on long-term foreign currency transactions.

11

---



Our
accumulated other comprehensive income for the six months ended June 30, 2007 was as follows (in thousands):

|                                                                                             |  | Net Unrealized
Gains on
Marketable
Securities |        | Cash Flow
Hedges |   | Foreign
Currency
Translation |   | Accumulated
Other
Comprehensive
Income |      
|-------------------------------------------------------------------------------------------- |  | --------------------------------------------- | ------ | ---------------- | - | ---------------------------- | - | -------------------------------------- | -----
|Balance at December 31, 2006                                                                 |  | $                                             | 1,822  |                  | $ | (554                         | ) | $                                      | 2,252
|Change in fair value of hedges                                                               |  |                                               |       |                  |   | 2,170                        |   |                                        |     
|Change in fair value of long-term debt hedges                                                |  |                                               |       |                  |   | 112                          |   |                                        |     
|Change in fair value of marketable securities                                                |  |                                               | (4     | )                |   |                             |   |                                        |     
|Reclassification adjustment for realized net gains on marketable securities                  |  |                                               | (1,794 | )                |   |                             |   |                                        |     
|Foreign currency exchange translation and partial reversal upon International Fund formation |  |                                               |       |                  |   |                             |   |                                        | (539 
|                                                                                             |  |                                               |        |                  |   |                              |   |                                        |      
|Balance at June 30, 2007                                                                     |  | $                                             | 24     |                  | $ | 1,728                        |   | $                                      | 1,713
|                                                                                             |  |                                               |        |                  |   |                              |   |                                        |      



Following is a reconciliation of basic net earnings per Common Unit to diluted net earnings per Common Unit for the periods indicated (in thousands):

|                                                                                         |                                                          | Three Months Ended
June 30, |         | Six Months Ended
June 30,
|---------------------------------------------------------------------------------------- | -------------------------------------------------------- | --------------------------- | ------- | -------------------------
|
|Reconciliation of numerator between basic and diluted net earnings per Common Unit(1):   |                                                          |                             |         |                          
|Net earnings attributable to Common Units  Basic                                        |                                                          | $                           | 68,064  |                          
|                                                                                         | Interest on Convertible Debt                             |                             |         |                         
|                                                                                         |                                                          |                             |         |                          
|Net earnings attributable to Common Units  Diluted                                      |                                                          | $                           | 68,064  |                          
|                                                                                         |                                                          |                             |         |                          
|Reconciliation of denominator between basic and diluted net earnings per Common Unit(1): |                                                          |                             |         |                          
|Weighted average number of Common Units outstanding  Basic                              |                                                          |                             | 250,502 |                          
|                                                                                         | Assumed conversion of Convertible Debt into Common Units |                             |         |                         
|                                                                                         | Incremental options                                      |                             |         | 750                      
|                                                                                         |                                                          |                             |         |                          
|Weighted average number of Common Units outstanding  Diluted                            |                                                          |                             | 251,252 |                          
|                                                                                         |                                                          |                             |         |                          

---

To
calculate net earnings per Common Unit, we allocate the interest on the Convertible Debt on a pro-rata basis between continuing and discontinued operations.



In July 2006, the FASB issued Interpretation No. 48 (FIN 48),"Accounting for Uncertainty in Income
Taxes  An Interpretation of FASB Statement No. 109."FIN 48 defines a recognition threshold

12

---



and
measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on
derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The provisions of FIN 48 are effective for fiscal years beginning after
December 15, 2006. The adoption of FIN 48 as of January 1, 2007 by us did not have a material effect on our financial position, net earnings or cash flows.

We
recognize these tax positions and evaluate them using a two-step process. First, we determine whether a tax position is more likely than not (greater than
50 percent probability) to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Then, we measure to
determine the amount of benefit to recognize and record the amount of the benefit that is more likely than not to be realized upon ultimate settlement.

We
or one of our subsidiaries files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With few exceptions, we are not subject to
U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2001. As of June 30,
2007, no taxing authority had proposed any significant adjustments to our tax positions. We have no significant current tax examinations in process.

A
reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

Unrecognized Tax Benefits:Balance at January 1, 2007

$
2,021Current Period Interest


89Balance at June 30, 2007

$
2,110


We
are required to recognize interest and penalties accrued related to unrecognized tax benefits in tax expense. As of the date of adoption, the company has accrued interest of
approximately $228,000 and we have not recorded any penalties.

In
September 2006, the FASB issued SFAS No. 157,"Fair Value Measurements."SFAS No. 157 defines fair
value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. The statement does not require new fair value measurements, but is applied to the
extent other accounting pronouncements require or permit fair value measurements. The statement emphasizes fair value as a market-based measurement which should be determined based on assumptions
market participants would use in pricing an asset or liability. We will be required to disclose the extent to which fair value is used to measure assets and liabilities, the inputs used to develop the
measurements, and the effect of certain of the measurements on earnings (or changes in net assets) for the period. SFAS No. 157 is effective for fiscal years beginning after
November 15, 2007.

In
February 2007, the FASB issued SFAS No. 159,"The Fair Value Option for Financial Assets and Financial
Liabilities,"which gives entities the option to measure eligible financial assets, financial liabilities and firm commitments at fair value on an
instrument-by-instrument basis (i.e., the fair value option), which are otherwise not permitted to be accounted for at fair value under other accounting standards. The
election to use the fair value option is available when an entity first recognizes a financial asset or financial liability or upon entering into a firm commitment. Subsequent changes in fair value
must be recorded in earnings. Additionally, SFAS No. 159 allows for a one-time election for existing positions upon adoption, with the transition adjustment recorded to
beginning retained earnings. This statement is effective for fiscal years beginning after November 15, 2007. We do not anticipate the adoption of this statement will have a material impact on
our financial position, results of operations or cash flows.

13

---



(2)   Real Estate



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

June 30,
2007

December 31,
2006Investment

InvestmentOperating Trust Apartment Communities:Operating communities

$
11,640,655

$
11,208,052Communities under construction


360,989


406,881Development communities In Planning(1)


184,211


75,538Total Operating Trust apartment communities


12,185,855


11,690,471Ameriton(1)


603,834


585,524International


50,882


851,593Other real estate assets(2)


89,776


60,052Total real estate

$
12,930,347

$
13,187,640


---

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

Balance at December 31, 2006

$
13,187,640Acquisition-related expenditures


967,710Redevelopment expenditures


22,766Recurring capital expenditures


18,767Development expenditures, including initial acquisition costs


239,488Acquisition of land for development


167,256Dispositions


(596,574
)International Fund formation (See Note 3)


(1,034,524
)Other


520Net apartment community activity


(214,591
)Change in other real estate assets


(42,702
)Balance at June 30, 2007

$
12,930,347


At
June 30, 2007, we had unfunded contractual commitments of $429.9 million related primarily to communities under construction and under redevelopment. The purchase prices
of certain recent acquisitions in New York, California and Washington were allocated to land, buildings and other assets based on preliminary estimates and are subject to change as we obtain
more complete information regarding land, building and lease intangibles values.

(3)   DeWAG Acquisition and International Fund Formation

On July 27, 2006, we acquired 94% of the shares and 94% of an outstanding shareholder loan of DeWAG Deutsche WohnAnlage GmbH ("DeWAG"), a company
that specializes in the acquisition,

14

---



ownership,
operation and re-sale of quality residential properties in the major metropolitan areas of Southern and Western Germany, as well as West Berlin. Our purchase price consisted of
approximately $271 million plus the assumption of approximately $509 million in DeWAG liabilities, based on the exchange rate on the transaction date. During the three months ended
June 30, 2007, we finalized our purchase price allocation related to the acquisition and there were no significant adjustments to the original allocation.

Effective
June 29, 2007, we contributed our ownership in certain German real estate entities, including those in DeWAG, into a German real estate fund, at cost. The combined total
assets and third-party liabilities associated with the contribution were $1.1 billion and $0.8 billion, respectively. No gain or loss was recognized upon fund formation. In this report
we refer to the combined group of entities in which we have ownership interests as the "International Fund." As of June 30, 2007, approximately 56% of the International Fund's common equity was
owned by third party investors with the remainder owned by the Operating Trust. Although our economic interest is significant, the International Fund is structured such that we do not control it. We
will recognize our proportionate share of the earnings or losses. The accompanying Condensed Consolidated Balance Sheet as of June 30, 2007 reflects the International Fund on the equity method
as a result of deconsolidation, whereas the Condensed Consolidated Balance Sheet as of December 31, 2006 reflects our German real estate entities on a consolidated basis. The accompanying
Condensed Consolidated Statements of Earnings reflect all of our international operations on a consolidated basis through June 29, 2007. Please refer to Note 5 for further
information.

As
part of our DeWAG acquisition in 2006, we acquired a management company which is now known as Archstone Management Germany ("AMG"). The assets of AMG consist principally of the
goodwill created in the DeWAG transaction and non-compete agreements entered into with certain key officers of DeWAG. We concluded that the goodwill was primarily attributable to
the people and processes which comprise the investing and the operating platform we acquired in the DeWAG transaction, none of which were contributed to the International Fund. AMG will earn fees for
acting as the manager of the International Fund, and is expected to earn additional fees and incentives by providing other services including, but not limited to asset management, acquisition,
disposition, financing, accounting and administrative activities. We may also earn incentive performance fees if certain investor returns are achieved over a specified period.

As
of June 30, 2007, the non-compete agreements had a gross carrying amount of $20.1 million and accumulated amortization of $5.0 million. We are
amortizing these agreements over a three-year period.

The
changes in the carrying amount of goodwill are as follows (in thousands):

Balance at December 31, 2006

$
35,450Purchase accounting and fund formation adjustments


6,131Change in foreign currency translation


724Balance at June 30, 2007

$
42,305


15

---



(4)   Discontinued Operations

The results of operations for properties sold during the period or designated as held-for-sale at the end of the period are required to be
classified as discontinued operations. The property specific components of net earnings that are classified as discontinued operations include rental revenues, rental expenses, real estate taxes,
depreciation expense, minority interest, income taxes, a pro-rata allocation of interest expense and the net gain or loss on the disposition of properties.

We
had 12 operating apartment communities, representing 5,717 units (unaudited), classified as held-for-sale under the provisions of
SFAS No. 144, at June 30, 2007. Accordingly, we have reclassified the operating earnings from these properties to discontinued operations for the three and six months ended
June 30, 2007 and 2006. During the six months ended June 30, 2007, we sold 14 REIT and four Ameriton operating properties. The operating results of these communities and the
related gain on sale are also included in discontinued operations for 2007 and 2006.

The
following is a summary of net earnings from discontinued operations (in thousands):

|                                                                                   |  | Three Months Ended
June 30, |        | Six Months Ended
June 30, |  
|---------------------------------------------------------------------------------- |  | --------------------------- | ------ | ------------------------- | -
|
|Rental revenues                                                                    |  | $                           | 28,408 |                           | $
|Rental expenses                                                                    |  |                             | (6,722 | )                         |  
|Real estate taxes                                                                  |  |                             | (3,033 | )                         |  
|Depreciation on real estate investments                                            |  |                             | 149    |                           |  
|Interest expense(1)                                                                |  |                             | (6,789 | )                         |  
|Income taxes from taxable REIT subsidiaries                                        |  |                             | (2,891 | )                         |  
|Provision for possible loss on real estate investment                              |  |                             |       |                           |  
|Debt extinguishment costs related to dispositions                                  |  |                             | (248   | )                         |  
|Gains from the disposition of REIT real estate investments, net                    |  |                             | 21,711 |                           |  
|Internal disposition costs  REIT transactions(2)                                  |  |                             | (366   | )                         |  
|Gains from the disposition of taxable REIT subsidiary real estate investments, net |  |                             | 9,375  |                           |  
|Internal disposition costs  taxable REIT subsidiary transactions(2)               |  |                             | (404   | )                         |  
|                                                                                   |  |                             |        |                           |  
|Earnings from discontinued apartment communities                                   |  | $                           | 39,190 |                           | $
|                                                                                   |  |                             |        |                           |  

---

The
real estate and mortgage payable balances associated with operating communities classified as held-for-sale are reflected as "Real
estate  held-for-sale" and "Mortgages payable  held-for-sale" in the
accompanying Condensed Consolidated Balance Sheets.

The
disposition proceeds associated with the sales of individual rental units by our foreign subsidiaries are included in continuing operations as such sales do not meet the requirements
under SFAS 144,"Accounting for the Impairment or Disposal of Long-Lived Assets,"to be reflected as discontinued operations.

16

---



(5)   Investments in and Advances to Unconsolidated Entities

We have investments in real estate entities that we account for using the equity method. A summary of our investments in and advances to unconsolidated entities
follows (dollar amounts in thousands):

June 30,
2007

December 31,
2006Investment

Number of
Ventures

Investment

Number of
VenturesOperating Trust

$
213,319

13

$
199,705

13Ameriton


49,790

6


35,618

5Domestic


263,109

19


235,323

18International Fund


228,701

1




Total

$
491,810

20

$
235,323

18


Our
combined weighted average percentage of ownership in unconsolidated entities based on total assets at June 30, 2007 was 54.1%.

Combined
summary balance sheet data for our investments in unconsolidated entities presented on a stand-alone basis follows (in thousands):

June 30,
2007

December 31,
2006Assets:Real estate

$
2,636,068

$
1,530,659Other assets


373,573


213,569Total assets

$
3,009,641

$
1,744,228Liabilities and owners' equity:Inter-company debt payable to Operating Trust

$
99,909

$
1,519Mortgages payable(1)


1,813,951


1,063,451Other liabilities


301,952


126,048Total liabilities


2,215,812


1,191,018Owners' equity


793,829


553,210Total liabilities and owners' equity

$
3,009,641

$
1,744,228


---

17

---



Selected
combined summary results of operations for our unconsolidated investees presented on a stand-alone basis follows (in thousands):

|                                       |                    | Three Months Ended
June 30, |        | Six Months Ended
June 30,
|-------------------------------------- | ------------------ | --------------------------- | ------ | -------------------------
|
|Operating Trust Joint Venture revenues |                    | $                           | 39,787 |                          
|                                       | Net earnings(1)    |                             |        | (643                     
|Ameriton Joint Venture revenues        |                    | $                           | 300    |                          
|                                       | Net earnings(2)    |                             |        | (8                       
|International Fund revenues            |                    | $                           |       |                          
|                                       | Net earnings(3)    |                             |        |                         
|                                       |                    |                             |        |                          
|Total revenues                         |                    | $                           | 40,087 |                          
|                                       |                    |                             |        |                          
|                                       | Total net earnings |                             | $      | (651                     
|                                       |                    |                             |        |                          

---

(6)   Mortgage and Other Notes Receivable

The change in mortgage and other notes receivable, which are included in other assets, during the six months ended June 30, 2007 consisted of the following
(in thousands):

Balance at December 31, 2006

$
123,261Funding of additional notes


983Accrued interest


3,305Prepayments


(51,916
)Balance at June 30, 2007

$
75,633


We
have a commitment to fund an additional $16.2 million under existing agreements. Our rights to the underlying collateral on these notes in the event of default are generally
subordinate to the primary mortgage lender. We evaluate the collectibility of our mezzanine and other notes receivable on a quarterly basis. We recognized interest income associated with notes
receivable of $3.5 million and $4.3 million for the three months ended June 30, 2007 and 2006, respectively, and $6.2 million and $7.9 million for the six months
ended June 30, 2007 and 2006, respectively. The weighted average contracted interest rate on these notes as of June 30, 2007 was approximately 12.2%.

(7)   Borrowings



Our $600 million unsecured credit facility, which is led by JPMorgan Chase Bank, N.A., bears interest at the greater of the prime rate or the federal funds
rate plus 0.50% or, at our option, LIBOR

18

---



plus
0.40%. The spread over LIBOR can vary from LIBOR plus 0.325% to LIBOR plus 1.00%, based upon the rating of our long-term unsecured senior notes. The facility contains an accordion
feature that allows us to increase the size of the commitment to $1.0 billion at any time during the life of the facility, subject to lenders providing additional commitments, and enables us to
borrow up to $150 million in foreign currencies. The credit facility is scheduled to mature in June 2010, but may be extended for one year at our option.

On
May 29, 2007, we entered into an agreement with Morgan Stanley Senior Funding, Inc., that provides for a $500 million unsecured revolving line of credit. This
facility bears interest at the greater of the prime rate or the federal funds rate plus 0.50% or, at our option, LIBOR plus 0.40%. The spread over LIBOR can vary from LIBOR plus 0.325% to LIBOR plus
1.00%, based upon the rating of our long-term unsecured senior notes. The credit facility is scheduled to mature in December 2007.

The
following table summarizes our revolving credit facility borrowings under our lines of credit (in thousands, except for percentages):

|                                                                     |  | June 30,
2007 |           | December 31,
2006
|-------------------------------------------------------------------- |  | ------------- | --------- | -----------------
|Total unsecured revolving credit facilities                          |  | $             | 1,100,000 |                  
|Borrowings outstanding at end of period                              |  |               | 675,604   |                  
|Outstanding letters of credit under the JPMorgan Chase Bank facility |  |               | 14,261    |                  
|Weighted average daily borrowings                                    |  |               | 430,375   |                  
|Maximum borrowings outstanding during the period                     |  |               | 791,395   |                  
|Weighted average daily nominal interest rate                         |  |               | 5.3%      |                  
|Weighted average daily effective interest rate                       |  |               | 5.5%      |                  

We
also have a short-term unsecured borrowing agreement with JPMorgan Chase Bank, N.A., which provides for maximum borrowings of $100 million. The borrowings under the
agreement bear interest at an overnight rate agreed to at the time of borrowing and ranged from 5.6% to 5.8% during the six-month period ended June 30, 2007. There were
$68.7 million of borrowings outstanding under the agreement at June 30, 2007, and $4.7 million of borrowings outstanding at December 31, 2006.



A summary of our Long-Term Unsecured Debt outstanding at June 30, 2007 and December 31, 2006 follows (dollar amounts
in thousands):

|Type of Debt                     |                        | Coupon
Rate(1) |     | Effective
Interest Rate(1)(2) |     | Balance at
June 30, 2007 |           | Balance at
December 31, 2006 |   | Average
Remaining
Life (Years)
|-------------------------------- | ---------------------- | -------------- | --- | ----------------------------- | --- | ------------------------ | --------- | ---------------------------- | - | ------------------------------
|Long-term unsecured senior notes |                        | 5.4            | %   | 5.6                           | %   | $                        | 3,242,334 |                              | $ | 3,279,404                     
|Unsecured tax-exempt bonds       |                        | 4.0            | %   | 5.1                           | %   |                          | 59,638    |                              |   | 76,295                        
|                                 |                        |                |     |                               |     |                          |           |                              |   |                               
|                                 | Total/Weighted average |                | 5.4 | %                             | 5.6 | %                        | $         | 3,301,972                    |   | $                             
|                                 |                        |                |     |                               |     |                          |           |                              |   |                               

---

19

---





Our mortgages payable generally feature either monthly interest and principal payments or monthly interest-only payments with balloon payments due at
maturity. Early repayment of mortgages is generally subject to prepayment penalties.

A
summary of mortgages payable follows (dollar amounts in thousands):

|                            |                        | Outstanding Balance at(1) |   |          
|--------------------------- | ---------------------- | ------------------------- | - | ---------
|
|Secured floating rate debt: |                        |                           |   |          
|                            | Tax-exempt debt        |                           | $ | 837,679  
|                            | Conventional mortgages |                           |   | 40,546   
|                            |                        |                           |   |          
|                            |                        | Total Floating            |   |          
|Secured fixed rate debt:    |                        |                           |   |          
|                            | Tax-exempt debt        |                           |   | 84       
|                            | Conventional mortgages |                           |   | 1,217,065
|                            | Other secured debt     |                           |   | 18,381   
|                            |                        |                           |   |          
|                            |                        | Total Fixed               |   |          
|                            |                        |                           |   |          
|                            |                        | Total mortgages payable   |   | $        
|                            |                        |                           |   |          

---

The
change in mortgages payable during the six months ended June 30, 2007 consisted of the following (in thousands):

Balance at December 31, 2006

$
2,776,234Regularly scheduled principal amortization


(6,332
)Borrowings, prepayments, final maturities and other, net


(31,817
)International Fund formation (See Note 3)


(624,330
)Balance at June 30, 2007

$
2,113,755




The book value of total assets pledged as collateral for mortgage loans and other obligations at June 30, 2007 and December 31, 2006 was
$4.5 billion and $5.6 billion, respectively. Our debt instruments generally contain 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 at June 30, 2007.

The
total interest paid on all outstanding debt was $57.1 million and $66.3 million for the three months ended June 30, 2007 and 2006, respectively, and
$163.6 million and $148.3 million for the six months ended June 30, 2007 and 2006, respectively. We capitalize interest incurred during the construction period as part of the cost
of apartment communities under development. Capitalized

20

---



interest
was $12.5 million and $13.5 million for the three months ended June 30, 2007 and 2006, respectively, and $25.4 million and $26.3 million for the six months
ended June 30, 2007 and 2006, respectively.

(8)   Distributions to Unitholders

The following table summarizes the quarterly cash distributions paid per unit on Common and Preferred Units during the three months ended June 30, 2007 and
the annualized distribution for 2007. We will not pay any additional distributions on Common Units in accordance with the terms of the Merger Agreement. Please see Note 1 for a
discussion of the proposed merger of Archstone-Smith.

Quarterly
Cash
Distribution
Per Unit

Annualized
Cash
Distribution
Per UnitCommon Units

$
0.4525

$
1.81Series I Perpetual Preferred Units(1)


1,915


7,660


---

(9)   Benefit Plans and Implementation of SFAS 123R

Our long-term incentive plan was approved in 1997 and was modified in connection with the Smith merger. There have been seven types of awards under
the plan: (i) options with a DEU
feature (only awarded prior to 2000); (ii) options without the DEU feature (generally awarded after 1999); (iii) RSU awards with a DEU feature (awarded prior to 2006); (iv) RSU
awards with a cash dividend payment feature (awarded after 2005); (v) employee share purchase program with matching options without the DEU feature, granted only in 1997 and 1998;
(vi) performance units, which are convertible into Common Shares upon vesting, issued to certain named executives under a Special Long-Term Incentive Program; and (vii) stock
appreciation rights.

No
more than 20.0 million share or option awards in the aggregate may be granted under the plan, and no individual may be awarded more than 1.0 million share or option
awards in any one-year period. As of June 30, 2007, Archstone-Smith had approximately 9.6 million shares available for future issuance. Non-qualified options
constitute an important component of compensation for officers below the level of senior vice president and for selected employees.

A
summary of share option activity for the options and RSUs is presented below:

|                           |  | Option Awards |   | RSU Awards
|-------------------------- |  | ------------- | - | ----------
|
|Balance, December 31, 2006 |  | 1,831,355     |   | $         
|Granted                    |  | 388,017       |   | $         
|Exercised/Settled          |  | (165,369      | ) | $         
|Forfeited                  |  | (22,306       | ) | $         
|Expired                    |  |              |   | $         
|Balance, March 31, 2007    |  | 2,031,697     |   | $         
|Granted                    |  | 4,102         |   | $         
|Exercised/Settled          |  | (135,537      | ) | $         
|Forfeited                  |  | (26,935       | ) | $         
|Expired                    |  |              |   |           
|Balance, June 30, 2007     |  | 1,873,327     |   | $         

21

---



Certain
of the options and RSUs, included in the table above, have a DEU feature. The aggregate number of vested DEUs outstanding as of June 30, 2007 was approximately 240,000.
During the six months ended June 30, 2007, we recorded $140,137 as a charge to operating expense related to unvested DEUs and $1,156,650 of Common Share dividends related to vested DEUs.



During the six months ended June 30, 2007 and 2006, the share options granted to associates had a calculated fair value of $8.44 and $5.52 per option,
respectively. The historical exercise patterns of the associate groups receiving option awards are similar, and therefore we used only one set of assumptions in calculating fair value for each period.
For the three and six months ended June 30, 2007, the calculated fair value was determined using the Black-Scholes-Merton valuation model, using a weighted average risk-free rate
interest rate of 4.44%, a weighted average dividend yield of 3.39%, a volatility factor of 18.62% and a weighted average expected life of four years. For the three and six months ended June 30,
2006, the calculated fair value was determined using the Black-Scholes-Merton valuation model, using a weighted average risk-free interest rate of 4.66%, a weighted average dividend yield
of 4.57%, a volatility factor of 18.30% and a weighted average expected life of four years. The options vest over a three-year period and have a contractual term of 10 years. We
used an estimated forfeiture rate of 10% in recording option compensation expense for the three and six months ended June 30, 2007, based primarily on historical experience. The unamortized
compensation cost is $2.1 million, which includes all options previously granted but not yet vested. This amount will be recorded as compensation cost ratably through
December 31, 2009.

The
total intrinsic value of the share options exercised during the six-month periods ended June 30, 2007 and 2006 were $8.8 million and $24.1 million,
respectively. The intrinsic value is defined as the difference between the realized fair value of the share or the quoted fair value at the end of the period, less the exercise price of the option. We
had 1.1 million fully vested options outstanding at June 30, 2007 with a weighted average exercise price of $25.49. The weighted-average contractual life of the fully vested options is
5.15 years, and they have an intrinsic value of $37.3 million. In addition, we have 658,798 options outstanding that we expect to vest with a weighted average exercise price of
$51.81. The weighted-average contractual life of the unvested options is 9.46 years, and they have an intrinsic value of $4.8 million.



Also during the six months ended June 30, 2007 and 2006, we issued RSUs to senior officers and trustees of the company with an average grant date fair
value of $58.26 and $45.75, respectively per share. The units vest over a three-year period and the related unamortized compensation cost is $15.2 million, which includes all units
previously granted but not yet vested. This amount will be recorded as compensation cost ratably through December 31, 2009.

We
had 575,880 fully vested RSUs outstanding at June 30, 2007 with a weighted average grant date fair value of $28.50. The weighted-average contractual life for the fully
vested shares is 5.1 years and the intrinsic value is $34.0 million. In addition, we have 395,498 RSUs outstanding that we expect to vest with a weighted average grant date fair
value of $49.30. The weighted-average contractual life for the unvested shares is 9.2 years and the intrinsic value is $19.5 million. The total intrinsic value of the RSUs settled during
the six-month periods ended June 30, 2007 and 2006 were $8.3 million and $5.7 million, respectively.



Effective January 1, 2006, a special long-term incentive program related to the achievement of total shareholder return performance targets was
established for certain of our executive officers. We

22

---



would
issue approximately 300,000 performance units if all performance targets are ultimately met as of December 31, 2008. The calculated grant date fair value of approximately
$4.8 million is being charged to compensation expense ratably over the three-year term of the plan. The calculated fair value was determined by an independent third party using a
Monte Carlo simulation approach which yielded an estimated payout percentage of 41%. The related unamortized compensation cost at June 30, 2007 is $2.4 million.



The compensation cost associated with all awards for the six months ended June 30, 2007 was approximately $6.1 million, of which approximately
$4.3 million was charged to operating expenses, and approximately $1.8 million related to dedicated investment personnel and was capitalized with respect to development and other
qualifying investment activities. The compensation cost associated with all awards for the six months ended June 30, 2006 was approximately $6.4 million, of which approximately
$4.8 million was charged to operating expenses, and approximately $1.6 million related to dedicated investment personnel and was capitalized with respect to development and other
qualifying investment activities.

(10) Segment Data

We have determined that our garden communities and our High-Rise properties have similar economic characteristics and meet the other GAAP criteria,
which permit the garden communities and High-Rise properties to be aggregated into two reportable segments. Additionally, we have defined the activity from Ameriton as an individual
operating segment as its primary focus is the opportunistic acquisition, development and eventual disposition of real estate with a short-term investment horizon. NOI is defined as rental
revenues less rental expenses and real estate taxes. We rely on NOI for purposes of making decisions about resource allocations and assessing segment performance. We also believe NOI is a valuable
means of comparing year-to-year operating performance.

Following
are reconciliations, which exclude the amounts classified as discontinued operations, of each reportable segment's (i) revenues to consolidated revenues; (ii) NOI
to consolidated earnings from operations; and (iii) assets to consolidated assets, for the periods indicated (in thousands):

|                                                   |                                                                   | Three Months Ended
June 30,                    |  | Six Months Ended
June 30,
|-------------------------------------------------- | ----------------------------------------------------------------- | ---------------------------------------------- |  | -------------------------
|
|Reportable apartment communities segment revenues: |                                                                   |                                                |  |                          
|                                                   | Same-Store:                                                       |                                                |  |                          
|                                                   |                                                                   | Garden communities                             |  | $                        
|                                                   |                                                                   | High-Rise communities                          |  |                          
|                                                   | Non Same-Store and other:                                         |                                                |  |                          
|                                                   |                                                                   | Garden communities                             |  |                          
|                                                   |                                                                   | High-Rise communities                          |  |                          
|                                                   |                                                                   | Ameriton communities(1)                        |  |                          
|                                                   | International and other non-reportable operating segment revenues |                                                |  | 23,065                   
|                                                   |                                                                   |                                                |  |                          
|                                                   |                                                                   | Total segment and consolidated rental revenues |  | $                        
|                                                   |                                                                   |                                                |  |                          

23

---



|                                              |                                                                   | Three Months Ended
June 30,             |  | Six Months Ended
June 30, |        
|--------------------------------------------- | ----------------------------------------------------------------- | --------------------------------------- |  | ------------------------- | -------
|
|Reportable apartment communities segment NOI: |                                                                   |                                         |  |                           |        
|                                              | Same-Store:                                                       |                                         |  |                           |        
|                                              |                                                                   | Garden communities                      |  | $                         | 84,811 
|                                              |                                                                   | High-Rise communities                   |  |                           | 62,894 
|                                              | Non Same-Store and other:                                         |                                         |  |                           |        
|                                              |                                                                   | Garden communities                      |  |                           | 9,479  
|                                              |                                                                   | High-Rise communities                   |  |                           | 15,280 
|                                              |                                                                   | Ameriton communities(1)                 |  |                           | 446    
|                                              | International and other non-reportable operating segment revenues |                                         |  | 12,577                    |        
|                                              |                                                                   |                                         |  |                           |        
|                                              |                                                                   | Total segment NOI                       |  |                           | 185,487
|                                              | Reconciling items:                                                |                                         |  |                           |        
|                                              |                                                                   | Other income                            |  |                           | 13,409 
|                                              |                                                                   | Depreciation on real estate investments |  |                           | (71,076
|                                              |                                                                   | Interest expense                        |  |                           | (72,179
|                                              |                                                                   | General and administrative expenses     |  |                           | (20,133
|                                              |                                                                   | Other expenses                          |  |                           | (5,899 
|                                              |                                                                   |                                         |  |                           |        
|                                              |                                                                   | Consolidated earnings from operations   |  | $                         | 29,609 
|                                              |                                                                   |                                         |  |                           |        

---

24

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|                                                      |                 | June 30,
2007                                         |                           | December 31,
2006
|----------------------------------------------------- | --------------- | ----------------------------------------------------- | ------------------------- | -----------------
|Reportable operating communities segment assets, net: |                 |                                                       |                           |                  
|                                                      | Same-Store:     |                                                       |                           |                  
|                                                      |                 | Garden communities                                    |                           | $                
|                                                      |                 | High-Rise properties                                  |                           |                  
|                                                      | Non Same-Store: |                                                       |                           |                  
|                                                      |                 | Garden communities                                    |                           |                  
|                                                      |                 | High-Rise properties                                  |                           |                  
|                                                      |                 | Ameriton                                              |                           |                  
|                                                      |                 | FHA/ADA settlement accrual                            |                           |                  
|                                                      |                 | International                                         |                           |                  
|                                                      |                 | Other non-reportable operating segment assets         |                           |                  
|                                                      |                 |                                                       |                           |                  
|                                                      |                 |                                                       | Total segment assets      |                  
|                                                      |                 | Real estate held-for-sale, net                        |                           |                  
|                                                      |                 |                                                       |                           |                  
|                                                      |                 |                                                       | Total segment assets      |                  
|                                                      |                 |                                                       |                           |                  
|Reconciling items:                                    |                 |                                                       |                           |                  
|                                                      |                 | Investment in and advances to unconsolidated entities |                           |                  
|                                                      |                 | Cash and cash equivalents                             |                           |                  
|                                                      |                 | Restricted cash in tax-deferred exchange escrow       |                           |                  
|                                                      |                 | Other assets                                          |                           |                  
|                                                      |                 |                                                       |                           |                  
|                                                      |                 |                                                       | Consolidated total assets |                  
|                                                      |                 |                                                       |                           |                  

Total
capital expenditures for garden communities included in continuing operations were $16.4 million and $15.1 million for the three months ended June 30, 2007 and
2006, respectively, and $28.7 million and $22.8 million for the six months ended June 30, 2007 and 2006, respectively. Total capital expenditures for High-Rise
properties included in continuing operations were $10.1 million and $17.8 million for the three months ended June 30, 2007 and 2006, respectively, and $17.1 million and
$28.1 million for the six months ended June 30, 2007 and 2006, respectively. Total capital expenditures for Ameriton properties included in continuing operations were $0.2 million
for the three months ended June 30, 2007, and $0.6 million and $0.6 million for the six months ended June 30, 2007 and 2006, respectively.

(11) Litigation and Contingencies

On May 30, 2007, two separate purported shareholder class action lawsuits related to the Merger Agreement and the transactions contemplated thereby were
filed naming the company and each of the company's trustees as defendants. One of these lawsuits,Seymour Schiff v. James A. Cardwell, et al.
(Case No. 2007cv1135), was filed in the United States District Court for the District of Colorado. The other,Mortimer J. Cohen v. Archstone-Smith Trust,
et al. (Case No. 2007cv1060), was filed in the District Court, County of Arapahoe, Colorado. On May 31, 2007, two additional purported shareholder class
action lawsuits related to the Merger Agreement and the transactions contemplated thereby were filed in the District Court, County of Arapahoe Colorado. The first,Howard
Lasker v. R. Scot Sellers, et al.(Case No. 2007cv1073), names the company, each of the company's trustees and one of the company's senior officers as defendants.
The second,Steamship Trade Association/International Longshoremen's Association Pension Fund v. Archstone-Smith Trust, et al.(Case
No. 2007cv1070), names the company, each of the company's trustees, Tishman Speyer and Lehman Brothers as defendants. On June 11, 2007, an additional purported shareholder class action
lawsuit related to the Merger Agreement,Doris Staehr v. Archstone-Smith Trust, et al.(Case No. 2007cv1081), was filed in the District
Court, County of

25

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Arapahoe
Colorado, naming the company and each of the company's trustees as defendants. All five lawsuits allege, among other things, that the company's trustees violated their fiduciary duties to the
company's shareholders in approving the mergers.

All
five lawsuits purport to be brought as class actions and seek to enjoin the completion of the mergers and the related transactions. In addition, among other things, the complaints in
each ofSeymour Schiff v. James A. Cardwell, et al.andHoward Lasker v. R. Scot Sellers,
et al. seek compensation for all losses and damages allegedly suffered by class members as a result of the transactions
(theLaskercomplaint requests compensatory damages and/or rescission of the company merger) and the complaints in Mortimer J. Cohen v. Archstone-Smith Trust,
et al.andDoris Staehr v. Archstone-Smith Trustseek
an order directing the company to obtain a transaction which is in the best interests of the company's shareholders.

On
June 21, 2007, the District Court, County of Arapahoe Colorado entered an order consolidating theLasker, Steamship Trade Association/International
Longshoremen's Association Pension FundandStaehractions into theCohenaction, under the captionIn re Archstone-Smith Trust Shareholder Litigation. We intend to vigorously defend these actions.

During
the second quarter of 2005, we entered into a full and final settlement in the United States District Court for the District of Maryland with three national disability
organizations and agreed to make capital improvements in a number of our communities in order to make them fully compliant with the FHA and ADA. The litigation, settled by this agreement, alleged lack
of full compliance with certain design and construction requirements under the two federal statutes at 71 of the company's wholly-owned and joint venture communities, of which we still own or have an
interest in 40. As part of the settlement, the three disability organizations all recognized that the Operating Trust had no intention to build any of its communities in a manner inconsistent with the
FHA or ADA.

The
amount of the capital expenditures required to remediate the communities named in the settlement was estimated at $47.2 million and was accrued as an addition to real estate
during the fourth quarter of 2005. The settlement agreement approved by the court allows us to remediate each of the designated communities over a three year period, and also provides that we are not
restricted from selling any of our communities during the remediation period. We agreed to pay damages totaling $1.4 million, which included legal fees and costs incurred by the plaintiffs. We
had $21.2 million of the original accrual remaining on June 30, 2007.

We
are subject to various claims filed in 2002 and 2003 in connection with moisture infiltration and resulting mold issues at certain high-rise properties we once owned in
Southeast Florida. These claims generally allege that water infiltration and resulting mold contamination resulted in the claimants having personal injuries and/or property damage. Although certain of
these claims continue to be in various stages of litigation, with respect to the majority of these claims, we have either settled the claims and/or we have been dismissed from the lawsuits that had
been filed. With respect to the lawsuits that have not been resolved, we continue to defend these claims in the normal course of litigation.

We
are a party to various other claims and routine litigation arising in the ordinary course of business. We do not believe that the results of any such claims or litigation,
individually or in the aggregate, will have a material adverse effect on our business, financial position or results of operations.

26

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The
Trustee and Unitholders
Archstone-Smith Operating Trust:

We
have reviewed the accompanying condensed consolidated balance sheet of Archstone-Smith Operating Trust and subsidiaries as of June 30, 2007, and the related condensed
consolidated statements of earnings for the three and six months ended June 30, 2007 and 2006, condensed consolidated statement of unitholders' equity, other common unitholders' interest and
comprehensive income for the six months ended June 30, 2007, and condensed consolidated statements of cash flows for the six months ended June 30, 2007 and 2006. These condensed
consolidated financial statements are the responsibility of Archstone-Smith Operating Trust's management.

We
conducted our reviews in accordance with standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists
principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance
with the standards of the Public Company Accounting Oversight Board (United States), 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 reviews, 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 U.S. generally accepted accounting principles.

We
have previously audited, in accordance with standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Archstone-Smith
Operating Trust as of December 31, 2006, and the related consolidated statements of earnings, unitholders' equity, other common unitholders' interest and comprehensive income (loss), and cash
flows for the year then ended
(not presented herein); and in our report dated March 1, 2007, 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, 2006 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has
been derived.

/s/
KPMG LLP

Denver,
Colorado
August 9, 2007

27

---





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

The following information should be read in conjunction with Archstone-Smith Operating Trust's 2006 Form 10-K as well as the financial
statements and notes included in Item 1 of this report.



This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on current expectations, estimates and projections about the industry, markets in which Archstone-Smith
operates, management's beliefs, assumptions made by management and the transactions described in this Form 10-Q. While Archstone-Smith management believes the assumptions underlying
its forward-looking statements and information are reasonable, such information is necessarily subject to uncertainties and may involve certain risks, many of which are difficult to predict and are
beyond management's control. These risks include, but are not limited to, (1) the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger
Agreement; (2) the outcome of pending legal proceedings instituted against Archstone-Smith, its trustees and certain members of management; (3) the inability to complete the merger due
to the failure to obtain shareholder approval or the failure to satisfy other conditions to completion of the merger, including compliance with European anti-trust regulations;
(4) risks that the proposed transaction disrupts current plans and operations and the potential difficulties in employee retention as a result of the merger; (5) the ability to recognize
the benefits of the merger; (6) the amount of the costs, fees, expenses and charges related to the merger and the actual terms of certain financings that will be obtained for the merger; and
(7) the impact of the substantial indebtedness incurred to finance the consummation of the merger; and other risks that are set forth under "Risk Factors" in the Operating Trust's 2006
Form 10-K and Form 10-Q for the quarter ended March 31, 2007. All forward-looking statements speak only as of the date of this filing or, in the
case of any document incorporated by reference, the date of that document. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are
qualified by the cautionary statements in this section. We undertake no obligation to update or publicly release any revisions to forward-looking statements to reflect events, circumstances or changes
in expectations after the date of this Form 10-Q.



On May 29, 2007, Archstone-Smith announced it had signed a definitive Merger Agreement, dated as of May 28, 2007 (as amended
by Amendment No. 1 thereto described below, the "Merger Agreement"), whereby both Archstone-Smith and the Operating Trust would be acquired by subsidiaries of an entity jointly
controlled by affiliates of Tishman Speyer Real Estate Venture VII, L.P., and Lehman Brothers Holdings, Inc. (the "Buyer Parties"). Under the terms of the Merger Agreement, all
outstanding Common Shares in Archstone-Smith will be acquired by a subsidiary of the Buyer Parties for $60.75 in cash, without interest and less applicable withholding taxes, for each Common Share
issued and outstanding immediately prior to the effective time of the merger. With respect to the outstanding Series I Preferred Shares, the Buyer Parties may elect to replace them with
substantially identical Series I Preferred Shares of the entity surviving the merge or redeem them for the liquidation preference of $100,000 per share, plus all accrued and unpaid
distributions through the redemption date, without interest and less applicable withholding taxes. The Merger Agreement and the related transactions were unanimously approved by the Board of Trustees
of Archstone-Smith and are subject to certain closing conditions, including, among other things, compliance with European anti-trust regulations and the approval of the Archstone-Smith merger by the
affirmative vote of the holders of at least a majority of Archstone-Smith's outstanding Common Shares. Archstone-Smith paid its regular quarterly dividend on May 31, 2007 to common shareholders
of record as of May 16, 2007, but will not pay any additional dividends on its Common Shares in accordance with the terms of the Merger Agreement.

28

---



As part of the proposed transaction, the Operating Trust will be merged with a subsidiary ("MergerSub") of the Buyer Parties. As a holder as of June 30,
2007 of approximately 89.3% of the Operating Trust's outstanding Common Units, Archstone-Smith's approval is the only approval of the holders of the Operating Trust's Common Units that is necessary
under the Merger Agreement to approve the merger. Each Class A-2 Common Unit will remain outstanding whereas each Class A-1 Common Unit will be converted into the
right to receive (a) one newly-issued Series O Preferred Unit, or (b) at the election of the holder, cash consideration of $60.75, without interest and less applicable withholding taxes.
Holders of Class A-1 Common Units may elect to receive a combination of cash consideration and the Series O Preferred Units for their Class A-1 Common Units. Each Series O
Preferred Unit will have a redemption price of $60.75 and will bear cumulative preferential distributions payable quarterly at an annual rate of 6%. The distribution rate will increase to 8% per annum
during any period when the ratio of total debt to total assets exceeds 0.85 to 1.00. The Series O Preferred Units, which will have only limited voting rights, will be redeemable by the holder
or the Operating Trust under certain circumstances. The Series I Preferred Units will, at the election of the Buyer Parties, either remain outstanding and unchanged or be redeemed for the
liquidation preference of $100,000 per unit, plus all accrued and unpaid distributions through the redemption date. Each Series M Preferred Unit and each Series N-1
and N-2 Convertible Preferred Unit will be converted into the right to receive one (1) newly issued Series P Preferred Unit, Series Q-1 Preferred
Unit and Series Q-2 Preferred Unit, respectively, of the Operating Trust.

On August 5, 2007, Archstone-Smith and the Operating Trust entered into Amendment Number 1 to the Merger Agreement (the "Amendment") with the Buyer
Parties. The Amendment does not change the consideration to be received by the holders of Common Shares. Holders of Common Shares will continue to be entitled to receive in the merger $60.75 in cash,
without interest and less applicable withholding taxes, for each Common Share that they hold immediately prior to the effective time of the Operating Trust merger. In addition, in connection with the
merger of the Operating Trust, holders of the Operating Trust's Class A-1 Common Units will continue to receive, for each such unit, one newly issued Series O Preferred Unit
of the Operating Trust or, if they so elect, a cash payment equal to $60.75, without interest and less applicable withholding taxes, for each Class A-1 Common Unit that they own or
a combination of Series O Preferred Units and the cash consideration.

Under the terms of the Amendment, among other things, the parties continue to be obligated to close the mergers as promptly as practicable (but in no event later
than the third business day) after all of the conditions to the closing of the mergers are satisfied or appropriately waived, but would not be required to complete the closing during the period
beginning on August 15, 2007 and ending on October 4, 2007. Prior to the Amendment, the Buyer Parties would not have been required under the Merger Agreement to consummate the mergers
between August 15, 2007 and August 31, 2007.

In addition, Archstone-Smith has received communications on behalf of certain holders of Class A-1 Common Units in the Operating Trust
alleging, among other things, that the requirement that such unitholders release Archstone-Smith and the Buyer Parties from any claims under any of their previously existing tax protection agreements
with Archstone-Smith in order to be able to elect to receive the cash merger consideration was not permissible, and threatening to seek injunctive relief and monetary damages. Under the Amendment,
Archstone-Smith and the Buyer Parties have agreed that such release will no longer be required for Class A-1 Common Unitholders to elect to receive the cash merger consideration.
Also pursuant to the Amendment, the parties confirmed and acknowledged that, as of the date of the Amendment, to their knowledge, there was no fact, event, effect, notice, development, change,
circumstance or condition that had occurred and/or was continuing that would cause, or would reasonably be likely to cause, any of the conditions to the consummation of the mergers not to be satisfied
on or before the December 31, 2007, which is the outside date under the Merger Agreement.

The closing of the mergers is not subject to a financing condition. Neither Archstone-Smith nor any of its affiliates can give any assurance that the
Archstone-Smith merger will be approved by Archstone-Smith Trust's common shareholders or that any of the other conditions to the closing of the mergers will be met.

29

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The Buyer Parties have informed us they intend to cause the Operating Trust to make certain material asset distributions to Archstone-Smith or related entities
immediately after the effective time of the Operating Trust merger. The intention of the Buyer Parties is subject to change with respect to such asset distributions and other assets may be sold or
distributed from time to time.



We are engaged primarily in the acquisition, development, redevelopment, operation and long-term ownership of apartment communities in the
United States. Archstone-Smith is structured as an UPREIT, with all property ownership and business operations conducted through the Operating Trust. Archstone-Smith is the sole trustee and
owned approximately 89.3% of our Common Units at June 30, 2007. Archstone-Smith Common Shares trade on the New York Stock Exchange (NYSE: ASN).



Executive Summary

The major factors that influenced our operating results for the quarter ended June 30, 2007 as compared to the quarter ended June 30, 2006 were
as follows:



The
major factors that influenced our operating results for the six months ended June 30, 2007 as compared to the six months ended June 30, 2006 were as follows:



30

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Reconciliation of Quantitative Summary to Condensed Consolidated Statements of Earnings

The following schedules are provided to reconcile our Condensed Consolidated Statements of Earnings to the information presented in the "Quantitative Summary"
provided in the next section (in thousands):

|                                                                    |  | Three Months Ended June 30, 2007 |         | Three Months Ended June 30, 2006
|------------------------------------------------------------------- |  | -------------------------------- | ------- | --------------------------------
|
|Rental revenue                                                      |  | $                                | 279,929 |                                 
|Other income                                                        |  |                                  | 13,409  |                                 
|Property operating expenses (rental expenses and real estate taxes) |  |                                  | 94,442  |                                 
|Depreciation on real estate investments                             |  |                                  | 71,076  |                                 
|Interest expense                                                    |  |                                  | 72,179  |                                 
|General and administrative expenses                                 |  |                                  | 20,133  |                                 
|Other expense                                                       |  |                                  | 5,899   |                                 
|Income from unconsolidated entities                                 |  |                                  | 307     |                                 
|Other non-operating income (expense)                                |  |                                  | (84     | )                               
|Gains, net of disposition costs                                     |  |                                  |        |                                 
|                                                                    |  |                                  |         |                                 
|Net earnings                                                        |  | $                                | 29,832  |                                 
|                                                                    |  |                                  |         |                                 

31

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|                                                                    |  | Six Months Ended June 30, 2007 |         | Six Months Ended June 30, 2006
|------------------------------------------------------------------- |  | ------------------------------ | ------- | ------------------------------
|
|Rental revenue                                                      |  | $                              | 545,149 |                               
|Other income                                                        |  |                                | 29,163  |                               
|Property operating expenses (rental expenses and real estate taxes) |  |                                | 183,032 |                               
|Depreciation on real estate investments                             |  |                                | 137,303 |                               
|Interest expense                                                    |  |                                | 138,135 |                               
|General and administrative expenses                                 |  |                                | 39,131  |                               
|Other expense                                                       |  |                                | 7,538   |                               
|Income from unconsolidated entities                                 |  |                                | 1,002   |                               
|Other non-operating income                                          |  |                                | 1,942   |                               
|Gains, net of disposition costs                                     |  |                                |        |                               
|                                                                    |  |                                |         |                               
|Net earnings                                                        |  | $                              | 72,117  |                               
|                                                                    |  |                                |         |                               

Quantitative Summary

This summary is provided for reference purposes and is intended to support and be read in conjunction with the narrative discussion of our results of operations.
This quantitative summary includes all operating activities, including those classified as discontinued operations for GAAP reporting purposes. This information is
presented to correspond with the manner in which we analyze the business. We generally reinvest disposition proceeds into new operating communities and developments and therefore believe it is most
useful to analyze continuing and discontinued operations on a combined basis. The impact of communities classified as "discontinued operations" for GAAP reporting purposes is discussed separately in a
later section under the caption "Discontinued Operations Analysis" (dollar amounts in thousands).

|                                                                     |                                   | Three Months Ended June 30, |   | Six Months Ended June 30, | 
|-------------------------------------------------------------------- | --------------------------------- | --------------------------- | - | ------------------------- | 
|
|Rental revenues:                                                     |                                   |                             |   |                           | 
|                                                                     | Same-Store(1)                     |                             | $ | 237,732                   | 
|                                                                     | Non Same-Store and other          |                             |   | 44,456                    | 
|                                                                     | Ameriton                          |                             |   | 3,084                     | 
|                                                                     | Non-multifamily                   |                             |   | 1,911                     | 
|                                                                     | International                     |                             |   | 21,154                    | 
|                                                                     | Total rental revenues             |                             |   | 308,337                   | 
|Property operating expenses (rental expenses and real estate taxes): |                                   |                             |   |                           | 
|                                                                     | Same-Store(1)                     |                             |   | 72,886                    | 
|                                                                     | Non Same-Store and other          |                             |   | 19,584                    | 
|                                                                     | Ameriton                          |                             |   | 1,239                     | 
|                                                                     | Non-multifamily                   |                             |   | 130                       | 
|                                                                     | International                     |                             |   | 10,358                    | 
|                                                                     | Total property operating expenses |                             |   | 104,197                   | 
|                                                                     |                                   |                             |   |                           | 

32

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|Net operating income (rental revenues less property operating expenses)   |                      |   | 204,140 |        |   | 196,356 |         |   | 7,784    |         |   | 402,243 |         |   | 385,093 |         |   | 17,150  |        
|------------------------------------------------------------------------- | -------------------- | - | ------- | ------ | - | ------- | ------- | - | -------- | ------- | - | ------- | ------- | - | ------- | ------- | - | ------- | -------
|Margin (NOI/rental revenues):                                             |                      |   | 66.2%   |        |   | 67.7%   |         |   | (1.5     | )%      |   | 66.2%   |         |   | 66.9%   |         |   | (0.7    | )%     
|Average occupancy during period:(2)                                       |                      |   | 93.0%   |        |   | 94.8%   |         |   | (1.8     | )%      |   | 93.0%   |         |   | 94.8%   |         |   | (1.8    | )%     
|Other income                                                              |                      |   | 13,409  |        |   | 13,585  |         |   | (176     | )       |   | 29,163  |         |   | 29,801  |         |   | (638    | )      
|Depreciation of real estate investments                                   |                      |   | 70,927  |        |   | 73,279  |         |   | (2,352   | )       |   | 145,073 |         |   | 142,853 |         |   | 2,220   |        
|Interest expense                                                          |                      |   | 91,453  |        |   | 77,623  |         |   | 13,830   |         |   | 178,660 |         |   | 152,145 |         |   | 26,515  |        
|Capitalized interest                                                      |                      |   | 12,485  |        |   | 13,537  |         |   | (1,052   | )       |   | 25,372  |         |   | 26,308  |         |   | (936    | )      
|                                                                          |                      |   |         |        |   |         |         |   |          |         |   |         |        
|                                                                          | Net interest expense |   |         | 78,968 |   |         | 64,086  |   |          | 14,882  |   |         | 153,288 |   |         | 125,837 |   |         | 27,451 
|General and administrative expenses                                       |                      |   | 20,133  |        |   | 15,912  |         |   | 4,221    |         |   | 39,131  |         |   | 31,297  |         |   | 7,834   |        
|Other expense                                                             |                      |   | 9,038   |        |   | 19,912  |         |   | (10,874  | )       |   | 11,097  |         |   | 33,751  |         |   | (22,654 | )      
|                                                                          |                      |   |         |        |   |         |         |   |          |         |   |         |        
|Earnings from continuing and discontinued operations                      |                      |   | 38,483  |        |   | 36,752  |         |   | 1,731    |         |   | 82,817  |         |   | 81,156  |         |   | 1,661   |        
|                                                                          |                      |   |         |        |   |         |         |   |          |         |   |         |        
|Equity in earnings from unconsolidated entities                           |                      |   | 307     |        |   | 10,518  |         |   | (10,211  | )       |   | 1,002   |         |   | 29,396  |         |   | (28,394 | )      
|Other non-operating income (expense).                                     |                      |   | (84     | )      |   | 243     |         |   | (327     | )       |   | 1,942   |         |   | 419     |         |   | 1,523   |        
|Gains on disposition of real estate investments, net of disposition costs |                      |   |         |        |   |         |         |   |          |         |   |         |         |   |         |         |   |         |        
|                                                                          | Taxable subsidiaries |   |         | 8,971  |   |         | 33,910  |   |          | (24,939 | ) |         | 12,355  |   |         | 47,526  |   |         | (35,171
|                                                                          | REIT                 |   |         | 21,345 |   |         | 111,331 |   |          | (89,986 | ) |         | 295,833 |   |         | 178,149 |   |         | 117,684
|                                                                          |                      |   |         |        |   |         |         |   |          |         |   |         |        
|Net earnings                                                              |                      | $ | 69,022  |        | $ | 192,754 |         | $ | (123,732 | )       | $ | 393,949 |         | $ | 336,646 |         | $ | 57,303  |        
|                                                                          |                      |   |         |        |   |         |         |   |          |         |   |         |        

---

Property-level operating results

We utilize NOI as the primary measure to evaluate our operating performance and for purposes of making decisions about resource allocations and assessing segment
performance. We also believe NOI is a valuable means of comparing period-to-period operating performance. In analyzing the performance of our operating portfolio, we evaluate
Same-Store communities separately from Non Same-Store communities and other properties.

33

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The following table reflects revenue, expense and NOI growth for Same-Store communities that were owned on June 30, 2007 and fully operating
during each of the respective comparison periods.

|          |  | Same-Store Revenue Growth |  | Same-Store Expense Growth |  | Same-Store NOI Growth
|--------- |  | ------------------------- |  | ------------------------- |  | ---------------------
|
|Garden    |  | 6.2%                      |  | 6.4%                      |  | 10.5%                
|High-Rise |  | 4.4%                      |  | 5.3%                      |  | 10.5%                
|          |  |                           |  |                           |  |                      
|Average   |  | 5.5%                      |  | 5.9%                      |  | 10.5%                
|          |  |                           |  |                           |  |                      

Same-store
revenues were up 5.5% for the quarter ended June 30, 2007 as compared to the same period in 2006 due primarily to an increase in average rental revenue per
unit, partially offset by lower occupancy. Same-store expenses were up 10.5% for the quarter ended June 30, 2007 as compared to the same period in 2006, primarily due to higher real
estate taxes, increased personnel costs that were primarily the result of a strategic staffing initiative announced during the first quarter of 2007, and a one-time favorable adjustment to
health insurance during 2006 and the resulting offset in 2007, an increase in property and other insurance expense attributable to the company's July 2006 policy renewal, and a utility expense
increase due primarily to higher rates and utilization in the Northeast. These changes in revenues and expenses resulted in an increase in
same-store NOI of 3.4% driven principally by strong growth in Southern California, the San Francisco Bay Area and Seattle, which represent 45% of the company's portfolio.

Same-store
revenues were up 5.9% for the six months ended June 30, 2007 as compared to the same period in 2006 due primarily to an increase in average rental revenue
per unit. Same-store expenses were up 8.0% for the six months ended June 30, 2007 as compared to the same period in 2006, primarily due to higher insurance costs, maintenance
expenses, real estate taxes and personnel costs. These changes in revenues and expenses resulted in an increase in same-store NOI of 5.1% driven principally by strong growth in Seattle,
San Francisco Bay Area and Southern California, which represent 45% of the company's portfolio.



The $6.0 million decrease in NOI in the Non Same-Store portfolio for the quarter ended June 30, 2007 as compared to the same period in
2006 is primarily attributable to a $22.0 million decrease related to community dispositions, offset by a $10.6 million increase related to acquisitions and a $6.0 million
increase related to recently stabilized development communities and communities in lease-up.

The
$12.2 million decrease in NOI in the Non Same-Store portfolio for the six months ended June 30, 2007 as compared to the same period in 2006 is primarily
attributable to a $45.6 million decrease related to community dispositions, offset by a $22.6 million increase related to acquisitions and a $10.5 million increase related to
recently stabilized development communities and communities in lease-up.



The decrease in NOI from Ameriton apartment communities for the three and six months ended June 30, 2007 as compared to the comparable period in the prior
year is primarily attributable to dispositions.

34

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The increase in NOI of $10.1 million for the quarter ended June 30, 2007 and $18.9 million for the six months ended June 30, 2007 as
compared to the same periods in the prior year is primarily attributable to the DeWAG acquisition that occurred in July 2006. The majority of our international operations were contributed to a
German real estate fund on June 29, 2007.

Other Income

Other income was slightly lower for the quarter and six months ended June 30, 2007 as compared to the same periods in 2006 due primarily to a
$2.6 million and $7.5 million reduction in insurance recoveries for the three and six months ended June 30, 2007, respectively, offset by higher interest income earned on higher
cash balances that resulted primarily from our 1031 exchange disposition transactions.

Depreciation Expense

The depreciation expense increase for the six months ended June 30, 2007 is primarily related to the increase in the size of the real estate portfolio as
compared to the six months ended June 30, 2006.

Interest Expense

The increase in gross interest expense during the three and six months ended June 30, 2007 is due to higher average debt levels associated with the
increased size of the real estate portfolio as compared to the same periods in 2006.

General and Administrative Expenses

General and administrative expenses were higher for the three and six months ended June 30, 2007 as compared to the same periods in 2006 due primarily to
higher personnel-related costs associated with
our international expansion that began material operations in July 2006 and higher payroll-related costs and professional fees.

Other Expense

Other expense for the quarter ended June 30, 2007 was lower as compared to the same period in 2006 due principally to $10.5 million of Ameriton
income tax expense and $5.8 million in debt extinguishment costs related primarily to prior year dispositions and a $2.1 million impairment charge related to an asset that we sold in
2006. These decreases were partially offset by a $5.8 million charge for transaction costs related to the proposed merger that were incurred in 2007.

Other
expense for the six months ended June 30, 2007 was lower as compared to the same period in 2006 due principally to $17.7 million of income tax expense and
$6.7 million in debt extinguishment costs related primarily to prior year dispositions and a $4.3 million impairment charge related to an asset that we sold in 2006. These decreases were
partially offset by a $5.8 million charge for transaction costs related to the proposed merger that were incurred in 2007.

Equity in Earnings from Unconsolidated Entities

Earnings from unconsolidated entities were lower for the three and six months ended June 30, 2007 primarily due to lower gains on the sale of joint
venture assets.

35

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Other Non-Operating Income

Non-operating income was higher for the six months ended June 30, 2007 due to higher gains on the sale of marketable securities.

Gains on Real Estate Dispositions

See "Discontinued Operations Analysis" below for a discussion of gains.

Discontinued Operations Analysis

Included in the overall results discussed above are the following amounts associated with properties which have been sold or were classified as
held-for-sale as of June 30, 2007 (dollar amounts in thousands):

|                                                                                                                  |                      | Three Months Ended
June 30, |        | Six Months Ended
June 30, |  
|----------------------------------------------------------------------------------------------------------------- | -------------------- | --------------------------- | ------ | ------------------------- | -
|
|Rental revenues                                                                                                   |                      | $                           | 28,408 |                           | $
|Rental expenses                                                                                                   |                      |                             | (6,722 | )                         |  
|Real estate taxes                                                                                                 |                      |                             | (3,033 | )                         |  
|Depreciation on real estate investments                                                                           |                      |                             | 149    |                           |  
|Interest expense(1)                                                                                               |                      |                             | (6,789 | )                         |  
|Income taxes from taxable REIT subsidiaries                                                                       |                      |                             | (2,891 | )                         |  
|Provision for possible loss on real estate investment                                                             |                      |                             |       |                           |  
|Debt extinguishment costs related to dispositions                                                                 |                      |                             | (248   | )                         |  
|Gains on disposition of real estate investments, net of disposition costs:                                        |                      |                             |        |                           |  
|                                                                                                                  | Taxable subsidiaries |                             |        | 8,971                     |  
|                                                                                                                  | REIT                 |                             |        | 21,345                    |  
|                                                                                                                  |                      |                             |        |                           |  
|Total discontinued operations                                                                                     |                      | $                           | 39,190 |                           | $
|                                                                                                                  |                      |                             |        |                           |  
|Number of communities sold during the period                                                                      |                      |                             | 6      |                           |  
|Number of sold communities included in discontinued operations NOI                                                |                      |                             | 6      |                           |  
|Number of communities classified as held-for-sale and included in discontinued operations NOI as of June 30, 2007 |                      |                             | 12     |                           |  

---

As
a result of the execution of our strategy of managing our invested capital through the selective sale of apartment communities and redeploying the proceeds to fund investments with
higher anticipated growth prospects, we had significant disposition activity in both 2007 and 2006. The resulting gains, net of disposition costs, including those from Ameriton, were the biggest
drivers of overall earnings from discontinued operations. NOI related to communities sold or classified as held-for-sale was higher in 2006 as compared to 2007 due primarily to
the longer holding period for communities we have sold. Direct operating expenses, depreciation and allocated interest expense are generally proportional to the net operating income of communities
included in discontinued operations for each period. For the quarter ended June 30, 2007, the number of REIT dispositions and the relative size of the corresponding gain were significantly
lower than the same period in 2006. The

36

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portion
of earnings from discontinued operations allocated to minority interest in 2007 was lower than 2006 due primarily to lower gains. For the six months ended June 30, 2007, although the
number of REIT dispositions was lower, the relative size of the gains was significantly higher than the same period in 2006. The portion of earnings from discontinued operations allocated to minority
interest for the six months ended June 30, 2007 was higher than 2006 due primarily to higher REIT disposition gains.



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 generally finance a portion of our long-term investing and operating activities with long-term debt. We recently entered
into a short-term bridge financing and may enter into other secured or unsecured bridge financings to meet our short-term borrowing needs, due to the proposed merger. As a
result of the significant cash flow generated by our operations, the available capacity under new or existing unsecured credit facilities and term loans, proceeds from the disposition of real estate
and our demonstrated ability to secure financing, we believe our liquidity and financial condition are sufficient to meet all of our reasonably anticipated cash flow needs during the next
12 months. Please refer to the Condensed Consolidated Statements of Cash Flows for detailed information of our sources and uses of cash for the six months ended June 30, 2007
and 2006.



We have structured our long-term debt maturities in a manner designed to avoid unmanageable repayment obligations in any year, which would negatively
impact our financial
flexibility. As of June 30, 2007, we had scheduled long-term debt maturities of $368.5 million, $510.2 million and $442.6 million during 2007, 2008 and 2009,
respectively.

On
August 1, 2007, we had $1.0 billion borrowed on our unsecured credit facilities, $14.2 million outstanding under letters of credit, and available borrowing
capacity on our unsecured credit facilities of $164.9 million.

Our
unsecured credit facilities, long-term unsecured debt and mortgages payable had effective weighted average interest rates of 5.6%, 5.6% and 5.7%, respectively, as of
June 30, 2007. All of these rates give effect to debt issuance costs, fair value hedges, the amortization of fair market value purchase adjustments and other fees and expenses,
as applicable.

Our
debt instruments generally contain 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 as of and for the six-month period ended June 30, 2007.



From January 1, 2007 to June 30, 2007, we have paid distributions and dividends of $229.2 million. This amount represents distributions on
our Common and Preferred Units. Pursuant to the Merger Agreement, we will not declare any more regular dividends or distributions in 2007.



Following is a summary of planned investments as of June 30, 2007, including Ameriton, but excluding joint ventures. 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

37

---



"Committed"
represent the approximate amount that we are contractually committed to fund for communities under construction in accordance with construction contracts with general contractors.

Planned Investments
(in thousands)Discretionary

CommittedCommunities under redevelopment

$
1,168

$
2,908Communities under construction





405,786Communities In Planning and owned


1,737,182


Communities In Planning and Under Control


585,929


Community acquisitions under contract


276,050


FHA/ADA settlement capital accrual





21,232Total

$
2,600,329

$
429,926


In
addition to the planned investments noted above, we expect to make additional investments relating to planned expenditures on recently acquired communities as well as recurring
expenditures to improve and maintain our established operating communities.

We
anticipate completion of most of the communities that are currently under construction and the planned operating community improvements by the end of 2010. 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.



We anticipate financing our planned investment and operating needs primarily with cash flow from operating activities, disposition proceeds and borrowings under
new or existing unsecured credit facilities and term loans. At August 1, 2007, we had $164.9 million in available capacity on our unsecured credit facilities. In addition, we expect the
proceeds from REIT dispositions to approximate our investment in new Operating Trust operating community acquisitions in 2007. We therefore do not believe that discontinued operations will have a
significant adverse impact on our liquidity in the foreseeable future.



On May 30, 2007, two separate purported shareholder class action lawsuits related to the Merger Agreement and the transactions contemplated thereby were
filed naming the company and each of the company's trustees as defendants. One of these lawsuits,Seymour Schiff v. James A. Cardwell, et al.
(Case No. 2007cv1135), was filed in the United States District Court for the District of Colorado. The other,Mortimer J. Cohen v. Archstone-Smith Trust,
et al. (Case No. 2007cv1060), was filed in the District Court, County of Arapahoe, Colorado. On May 31, 2007, two additional purported shareholder class
action lawsuits related to the Merger Agreement and the transactions contemplated thereby were filed in the District Court, County of Arapahoe Colorado. The first,Howard
Lasker v. R. Scot Sellers, et al.(Case No. 2007cv1073), names the company, each of the company's trustees and one of the company's senior officers as defendants.
The second,Steamship Trade Association/International Longshoremen's Association Pension Fund v. Archstone-Smith Trust, et al.(Case
No. 2007cv1070), names the company, each of the company's trustees, Tishman Speyer and Lehman Brothers as defendants. On June 11, 2007, an additional purported shareholder class action
lawsuit related to the Merger Agreement,Doris Staehr v. Archstone-Smith Trust, et al(Case No. 2007cv1081), was filed in the District
Court, County of Arapahoe Colorado, naming the company and each of the company's trustees as defendants. All five lawsuits allege, among other things, that the company's trustees violated their
fiduciary duties to the company's shareholders in approving the mergers.

38

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All
five lawsuits purport to be brought as class actions and seek to enjoin the completion of the mergers and the related transactions. In addition, among other things, the complaints in
each ofSeymour Schiff v. James A. Cardwell, et al.andHoward Lasker v. R. Scot Sellers,
et al. seek compensation for all losses and damages allegedly suffered by class members as a result of the transactions
(theLaskercomplaint requests compensatory damages and/or rescission of the company merger) and the complaints in Mortimer J. Cohen v. Archstone-Smith Trust,
et al.andDoris Staehr v. Archstone-Smith Trustseek
an order directing the company to obtain a transaction which is in the best interests of the company's shareholders.

On
June 21, 2007, the District Court, County of Arapahoe Colorado entered an order consolidating theLasker, Steamship Trade Association/International
Longshoremen's Association Pension FundandStaehractions into theCohenaction, under the captionIn re Archstone-Smith Trust Shareholder Litigation. We intend to vigorously defend these actions.

During
the second quarter of 2005, we entered into a full and final settlement in the United States District Court for the District of Maryland with three national disability
organizations and agreed to make capital improvements in a number of our communities in order to make them fully compliant with the FHA and ADA. The litigation, settled by this agreement, alleged lack
of full compliance with certain design and construction requirements under the two federal statutes at 71 of the company's wholly-owned and joint venture communities, of which we still own or have an
interest in 40. As part of the settlement, the three disability organizations all recognized that the Operating Trust had no intention to build any of its communities in a manner inconsistent with the
FHA or ADA.

The
amount of the capital expenditures required to remediate the communities named in the settlement was estimated at $47.2 million and was accrued as an addition to real estate
during the fourth quarter of 2005. The settlement agreement approved by the court allows us to remediate each of the designated communities over a three year period, and also provides that we are not
restricted from selling any of our communities during the remediation period. We agreed to pay damages totaling $1.4 million, which included legal fees and costs incurred by the plaintiffs. We
had $21.2 million of the original accrual remaining on June 30, 2007.

We
are subject to various claims filed in 2002 and 2003 in connection with moisture infiltration and resulting mold issues at certain high-rise properties we once owned in
Southeast Florida. These claims generally allege that water infiltration and resulting mold contamination resulted in the claimants having personal injuries and/or property damage. Although certain of
these claims continue to be in various stages of litigation, with respect to the majority of these claims, we have either settled the claims and/or we have been dismissed from the lawsuits that had
been filed. With respect to the lawsuits that have not been resolved, we continue to defend these claims in the normal course of litigation.

We
are a party to various other claims and routine litigation arising in the ordinary course of business. We do not believe that the results of any such claims or litigation,
individually or in the aggregate, will have a material adverse effect on our business, financial position or results of operations.



We define critical accounting policies as those accounting policies that require our management to exercise their most difficult, subjective and complex
judgments. Our management has discussed the development and selection of all of these critical accounting policies with our audit committee, and the

39

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audit
committee has reviewed the disclosure relating to these policies. Our critical accounting policies relate principally to the following key areas:

Internal Cost Capitalization

We have an investment organization that is responsible for development and redevelopment of apartment communities. Consistent with GAAP, all direct and certain
indirect costs, including interest and real estate taxes, incurred during development and redevelopment activities are capitalized. Interest is capitalized on real estate assets that require a period
of time to get them ready for their intended use. The amount of interest capitalized is based upon the average amount of accumulated development expenditures during the reporting period. Included in
capitalized costs are management's estimates of the direct and incremental personnel costs and indirect project costs associated with our development and redevelopment activities. Indirect project
costs consist primarily of personnel costs associated with construction administration and development accounting, legal fees, and various office costs that clearly relate to projects under
development. Because the estimation of capitalizable internal costs requires management's judgment, we believe internal cost capitalization is a "critical accounting estimate."

If
future accounting rules limit our ability to capitalize internal costs or if our development activity decreased significantly without a proportionate decrease in internal costs, there
could be an increase in our operating expenses.

Valuation of Real Estate

Long-lived assets to be held and used are carried at cost and evaluated for impairment when events or changes in circumstances indicate such an
evaluation is warranted. We also evaluate assets for potential impairment when we deem them to be held-for-sale.
Valuation of real estate is considered a "critical accounting estimate" because the evaluation of impairment and the determination of fair values involve a number of management assumptions relating to
future economic events that could materially affect the determination of the ultimate value, and therefore, the carrying amounts of our real estate. Furthermore, decisions regarding when a property
should be classified as held-for-sale under SFAS No. 144 requires significant management judgment. There are many phases to the disposition process ranging from
the initial market research to being under contract with non-refundable earnest money to closing. Deciding when management is committed to selling an asset is therefore highly subjective.

When
determining if there is an indication of impairment for assets intended to be held and used, we estimate the asset's NOI over the anticipated holding period on an undiscounted cash
flow basis and compare this amount to its carrying value. Estimating the expected NOI and holding period requires significant management judgment. If it is determined that there is an indication of
impairment for assets to be held and used, or if an asset is deemed to be held-for-sale, we then determine the fair value of the asset.

The
apartment industry uses capitalization rates as the primary measure of fair value. Specifically, annual NOI for a community is divided by an estimated capitalization rate to
determine the fair value of the community. Determining the appropriate capitalization rate requires significant judgment and is typically based on many factors including the prevailing rate for the
market or submarket, as well as the quality and location of the properties. Further, capitalization rates can fluctuate up or down due to a variety of factors in the overall economy or within local
markets. If the actual capitalization rate for a community is significantly different from our estimated rate, the impairment evaluation for an individual asset could be materially affected.

40

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Capital Expenditures and Depreciable Lives

We incur costs relating to redevelopment initiatives, revenue enhancing and expense reducing capital expenditures, and recurring capital expenditures that are
capitalized as part of our real estate. These amounts are capitalized and depreciated over estimated useful lives determined by management. We allocate the cost of newly acquired properties between
net tangible and identifiable intangible assets. The primary intangible asset associated with an apartment community acquisition is the value of the existing lease agreements. When allocating cost to
an acquired property, we first allocate costs to the estimated intangible value of the existing lease agreements and then to the estimated value of the land, building and fixtures assuming the
property is vacant. We estimate the intangible value of the lease agreements by determining the lost revenue associated with a hypothetical lease-up. We depreciate the building and
fixtures based on the expected useful life of the asset and amortize the intangible value of the lease agreements over the average remaining life of the existing leases.

Determining
whether expenditures meet the criteria for capitalization, the assignment of depreciable lives and determining the appropriate amounts to allocate between tangible and
intangible assets for property acquisitions requires our management to exercise significant judgment and is therefore considered a "critical accounting estimate."

Pursuit Costs

We incur costs relating to the potential acquisition of existing operating communities or land for development of new operating communities, which we refer to as
pursuit costs. To the extent that these costs are identifiable with a specific property and would be capitalized if the property were already acquired, the costs are accumulated by project and
capitalized in the Other Asset section of the balance sheet. If these conditions are not met, the costs are expensed as incurred. Capitalized costs include but are not limited to earnest money, option
fees, environmental reports, traffic reports, surveys, photos, blueprints, direct and incremental personnel costs and legal costs. Upon acquisition, the costs are included in the basis of the acquired
property. When it becomes probable that a prospective acquisition will not be acquired, the accumulated costs for the property are charged to other expense on the statement of earnings in the period
such a determination is made.

Because
of the inherent judgment involved in evaluating whether a prospective property will ultimately be acquired, we believe capitalizable pursuit costs are a "critical accounting
estimate."

Consolidation vs. Equity Method of Accounting for Ventures

From time to time, we make co-investments in real estate ventures with third parties and are required to determine whether to consolidate or use the
equity method of accounting for the venture. FASB Interpretation No. 46R, "Consolidation of Variable Interest Entities,"(as revised) and
Emerging Issues Task Force issued EITF No. 04-5, "Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership
or Similar Entity When the Limited Partners Have Certain Rights,"are the two primary sources of accounting guidance in this area. Appropriate application of these relatively
complex rules requires substantial management judgment, which we believe, makes the choice of the appropriate accounting method for these ventures a "critical accounting estimate."



Our real estate investments in entities that do not qualify as variable interest entities, variable interest entities where we are not the primary beneficiary and
entities we do not control through majority economic interest are not consolidated and are reported as investments in unconsolidated entities. Our investments in and advances to unconsolidated
entities at June 30, 2007 aggregated $491.8 million. Please refer to Note 5 to the financial statements included in this report,Investments in and
Advances to Unconsolidated Entitiesfor additional information.

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Please refer to "Scheduled Debt Maturities and Interest Payment Requirements" and "Planned Investments" above for further discussion of significant contractual
commitments.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There has been no material change in the qualitative or quantitative disclosures regarding our market risk. For detailed information about the qualitative and
quantitative disclosures of our market risk, see Item 7A in our 2006 Form 10-K.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

An evaluation was carried out under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer,
of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based on their evaluation, our Chief
Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective, to the best of their knowledge, as of June 30, 2007.

Changes in Internal Control over Financial Reporting

There has been no change to our internal control over financial reporting during the quarter ended June 30, 2007 that has materially affected or is
reasonably likely to materially affect our internal control over financial reporting.

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PART II  OTHER INFORMATION

Item 1. Legal Proceedings

We are party to various claims and routine litigation arising in the ordinary course of business. 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. See Note 12 to the financial statements
included in this report.

Item 1A. Risk Factors

See the factors discussed in Part 1, "Item 1.A. Risk Factors" in our 2006 Form 10-K and our Form 10-Q
for the quarter ended March 31, 2007. In addition to the risks identified in our 2006 Form 10-K, we are also subject to the following additional risks:



On May 28, 2007, Archstone-Smith entered into a definitive Merger Agreement whereby, subject to the approval of Archstone-Smith's common shareholders, both
Archstone-Smith and the Operating Trust would be acquired by subsidiaries of an entity jointly controlled by the Buyer Parties. A preliminary proxy statement in connection with this special meeting of
common shareholders was filed with the Securities and Exchange Commission ("SEC") on July 13, 2007 and may be obtained by visiting the SEC's website at www.sec.gov. The proxy statement contains
important information about us, the Buyer Parties, the proposed merger and other related matters, and the discussions below contain only limited
information about the mergers. As a result, you are encouraged to read the proxy statement in its entirety for additional information about the proposed merger.

In
connection with the proposed merger, we are subject to certain risks including, but not limited to, those set forth below.



The mergers are currently expected to be consummated on or about October 5, 2007. However, certain events may delay or prevent the consummation of the
mergers, including, without limitation, the failure of the company to obtain the requisite approval of its common shareholders and our failure to satisfy other closing conditions to which the mergers
are subject. If these events were to occur, the receipt of the consideration by Archstone-Smith's shareholders and the Operating Trust's unitholders would be delayed. Further, if these events were to
delay the closing past December 31, 2007, either we or the buyer parties may terminate the Merger Agreement in accordance with its terms.



Since the announcement of the proposed mergers on May 29, 2007 through the date of this prospectus/information statement, five purported class action
lawsuits have been filed by shareholders of the company in Colorado state and federal courts, seeking, among other things, to enjoin the proposed company merger. The plaintiffs assert claims of breach
of fiduciary duty against the company's trustees. It is possible that additional lawsuits may be filed against us, the company and/or the buyer parties, asserting similar or different claims. There
can be no assurance that we will be successful in the outcome of any of these pending or future lawsuits and any judgments in respect of these lawsuits adverse to us and the buyer parties may
adversely affect our ability to consummate, or delay or prevent the consummation of, the mergers.

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If the Merger Agreement is terminated under certain circumstances, we may be required to pay Parent a $235.0 million termination fee or reimburse Parent up
to $10.0 million of transaction expenses. The mergers are subject to customary conditions to closing, including the receipt of the required approval of the company's common shareholders. If any
condition to the mergers is not satisfied or, if permissible, waived, the mergers will not be completed. In addition, we and Parent may terminate the Merger Agreement in certain circumstances.
If the mergers are not completed for those or any other reasons, the market price of the company's common shares are likely to decrease to the extent that the current market price and value reflect an
assumption that the mergers will be completed. We have diverted significant management resources from our normal operations and implementation of our business strategy in an effort to complete the
mergers and are subject to restrictions contained in the Merger Agreement on the conduct of our business that prevent us from engaging in activities that we otherwise would under normal circumstances.
If the mergers are not completed, we will have incurred significant costs, for which we will have received little or no benefit, and such costs could have a material adverse effect on our results
of operation.



In the Merger Agreement, we agreed to pay a termination fee of $235.0 million in specified circumstances, including some circumstances where a third party
acquires or seeks to acquire us. These provisions could discourage other parties from trying to acquire us, even if those parties might be willing to offer a higher amount or different form of
consideration to the Class A-1 common unitholders than the buyer parties are offering in connection with the Merger Agreement.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the six months ended June 30, 2007, we issued 18,081 Common Units in reliance upon the exemption provided by Section 4(2) of the
Securities Act of 1933.

Item 3. Defaults Upon Senior Securities

None.

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

None.

Item 5. Other Information

No other information is required to be disclosed for the period ended June 30, 2007 that has not been disclosed in a Current Report on
Form 8-K. There has been no change to the procedures by which security holders may recommend nominees to our Board of Trustees.

Item 6. Exhibits

See Exhibits.

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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 SELLERSR. Scot Sellers Chairman and
Chief Executive Officer                                                    | 
|                     |  | BY:                             | /s/CHARLES E. MUELLER, JR.Charles E. Mueller, Jr. Chief Financial Officer
(Principal Financial Officer)                   | 
|                     |  | BY:                             | /s/MARK A. SCHUMACHERMark A. Schumacher Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer) | 
|Date: August 9, 2007 |  |                                 |                                                                                                                           | 

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Item 6. Exhibits

|2.1  |  | Agreement and Plan of Merger, dated as of May 28, 2007, by and among Archstone-Smith Trust, Archstone-Smith Operating Trust, River Holding, LP, River Acquisition (MD), LP, and River Trust Acquisition (MD),
 LLC (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by Archstone-Smith Trust with the SEC on June 1, 2007)                                                
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.2  |  | Amendment No. 1, dated as of August 5, 2007, to Agreement and Plan of Merger dated as of May 28, 2007, by and among Archstone-Smith Trust, Archstone-Smith Operating Trust, River Holding, LP, River Acquisition (MD), LP, and
River Trust Acquisition (MD), LLC (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by Archstone-Smith Trust with the SEC on August 6, 2007)
|3.1  |  | Amended and Restated Declaration of Trust of Archstone-Smith Operating Trust (incorporated by reference to Exhibit 4.1 to the Archstone-Smith Trust's Current Report on Form 8-K filed with the SEC on June 2, 2006)                                                                                                                                                                                       
|3.2  |  | Form of Archstone-Smith Operating Trust Second Articles of Amendment and Restatement of Trust (incorporated by reference to Exhibit 3.4 to Archstone-Smith Operating Trust's registration statement on Form S-4 (File No. 333-144717))                                                                                                                                                                     
|3.3  |  | Bylaws of Archstone-Smith Operating Trust (incorporated by reference to Exhibit 4.2 to Archstone-Smith Trust's Current Report on Form 8-K filed with the SEC on June 2, 2006)                                                                                                                                                                                                                              
|3.4  |  | Amendment No. 1 to Bylaws of Archstone-Smith Operating Trust (incorporated by reference to Exhibit 3.1 to the Archstone-Smith Trust's Current Report on Form 8-K filed with the SEC on June 1, 2007)                                                                                                                                                                                                       
|4.1  |  | Form of Designation of the Preferences, Redemption and other Rights, Voting Powers, Restrictions, and Limitations as to Series O Preferred Units (incorporated by reference to Exhibit 4.7 to Archstone-Smith Operating Trust's
registration statement on Form S-4 (File No. 333-144717))                                                                                                                  
|4.2  |  | Form of Designation of the Preferences, Redemption and other Rights, Voting Powers, Restrictions, and Limitations as to Series P Preferred Units (incorporated by reference to Exhibit 4.8 to Archstone-Smith Operating Trust's
registration statement on Form S-4 (File No. 333-144717))                                                                                                                  
|4.3  |  | Form of Designation of the Preferences, Redemption and other Rights, Voting Powers, Restrictions, and Limitations as to Series Q Preferred Units (incorporated by reference to Exhibit 4.9 to Archstone-Smith Operating Trust's
registration statement on Form S-4 (File No. 333-144717))                                                                                                                  
|10.1 |  | Amended and Restated Declaration of Trust of Archstone-Smith Trust (incorporated by reference to Exhibit 3.1 to Archstone-Smith Trust's Current Report of Form 8-K filed with the SEC on June 2, 2006)                                                                                                                                                                                                     
|10.2 |  | Restated Bylaws of Archstone-Smith Trust (incorporated by reference to Exhibit 3.2 to the Archstone-Smith Trust's Current Report on Form 8-K filed with the SEC on June 2, 2006)                                                                                                                                                                                                                           
|10.3 |  | Credit Agreement, dated May 29, 2007, by and among, Archstone-Smith Operating Trust, as Borrower, Archstone-Smith Trust, as Parent, Morgan Stanley Senior funding, Inc., as Administrative Agent, and the other lender parties thereto
(incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Archstone-Smith Operating Trust with the SEC on May 30, 2007)                 
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                            

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|10.4  |  | Guaranty, dated May 29, 2007, executed by Archstone-Smith Trust for the benefit of Morgan Stanley Senior Funding, Inc., as Administrative Agent, and the other lender parties signatory to the Credit Agreement (incorporated by reference to
Exhibit 10.2 to the Current Report on Form 8-K filed by Archstone-Smith Operating Trust with the SEC on May 30, 2007)                                                                                                                                                                                    
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.5  |  | Form of Restricted Share Unit Agreement for Archstone-Smith Trust Equity Plan for Outside Trustees (incorporated by reference to Exhibit 10.2 of Archstone-Smith Trust's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2004)                                                                                                                                                                                                                                                                                                       
|10.6  |  | Form of Omnibus Amendment to Existing Restricted Share Unit Agreements for Archstone-Smith Trust Equity Plan for Outside Trustees (incorporated by reference to Exhibit 10.8 to Archstone-Smith Operating Trust's registration statement on
Form S-4 (File No. 333-144717)                                                                                                                                                                                                                                                                             
|10.7  |  | Form of New Restricted Share Unit Agreement for Archstone-Smith Trust Equity Plan for Outside Trustees (incorporated by reference to Exhibit 10.9 to Archstone-Smith Operating Trust's registration statement on Form S-4 (File
No. 333-144717))                                                                                                                                                                                                                                                                                                       
|10.8  |  | Form of Change in Control Agreement between Archstone-Trust and certain of its officers (incorporated by reference to Exhibit 10.7 to Archstone-Smith's Annual Report on Form 10-K for the year ended December 31,
2002)                                                                                                                                                                                                                                                                                                                               
|10.9  |  | Form of Amendment to Change in Control Agreement between Archstone-Smith Trust and certain of its officers (incorporated by reference to Exhibit 10.12 to Archstone-Smith Operating Trust's registration statement on Form S-4 (File
No. 333-144717))                                                                                                                                                                                                                                                                                                  
|10.10 |  | Credit Agreement, dated as of June 6, 2007, by and among IWG 9. Objektgesellschaft B.V., IWG 10. Objektgesellschaft B.V., and IWG 11. Objektgesellschaft B.V., as borrowers, EuroHypo Aktiengesellschaft, as original
lender and original hedge counterparty, DeWAG Holdings S.à r.l. and DeWAG LT Holdings S.à r.l., as guarantors (incorporated by reference to Exhibit 10.12 of Archstone-Smith Trust's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2007)                                                                          
|10.11 |  | Credit Facility Agreement, dated as of June 20, 2007, by and among IWG Wohnen 1. Objektgesellschaft MbH, IWG Wohnen 2. Objektgesellschaft MbH, IWG Wohnen 3. Objektgesellschaft MbH, and IWG Wohnen 4. Objektgesellschaft MbH, as
borrowers, DeWAG Deutsche WohnAnlange GmbH, as parent and ABN AMRO Bank, N.V., as arranger, original lender, original hedge counterparty, facility agent and security agent (incorporated by reference to Exhibit 10.13 of Archstone-Smith
Trust's Quarterly Report on Form 10-Q for the quarter ended June 30, 2007)
|12.1  |  | Computation of Ratio of Earnings to Fixed Charges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|12.2  |  | Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Unit Distributions                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|15.1  |  | Independent Registered Public Accounting Firm Awareness Letter                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|31.1  |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|31.2  |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|32.1  |  | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|32.2  |  | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                     

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