## UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

## FORM 10-Q

OR

Commission File Number 1-10272

## ARCHSTONE-SMITH OPERATING TRUST

(Exact name of registrant as specified in its charter)

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.

---

# Table of
Contents

`Page
Item                                                     Description                                           Number


                                                        PART I

     1.   Financial Statements
          Condensed Consolidated Balance Sheets - September 30, 2004 (unaudited) and December 31, 2003......        3
          Condensed Consolidated Statements of Earnings - Three and nine months ended September 30, 2004
          and 2003 (unaudited)..............................................................................        4
          Condensed Consolidated Statement of Unitholders' Equity, Other Common Unitholders' Interest and
             Comprehensive Income - Nine months ended September 30, 2004 (unaudited)........................        5
          Condensed Consolidated Statements of Cash Flows - Nine months ended September 30, 2004 and 2003
             (unaudited)....................................................................................        6
          Notes to Condensed Consolidated Financial Statements (unaudited)..................................        7
          Independent Accountants' Review Report............................................................       19
     2.   Management's Discussion and Analysis of Financial Condition and Results of Operations.............       20
     3.   Quantitative and Qualitative Disclosures About Market Risk........................................       34
     4.   Controls and Procedures...........................................................................       34


                                                        PART II
     1.   Legal Proceedings.................................................................................       35
     2.   Changes in Securities, Use of Proceeds and Issuer Purchases of Equity.............................       36
     6.   Exhibits..........................................................................................       36`

---

# PART I
 FINANCIAL INFORMATION
Item 1.
Financial Statements

# Archstone-Smith
Operating Trust

# Condensed
Consolidated Balance Sheets

# (In
thousands, except unit data)

`September 30,      December 31,
                                         ASSETS                                                  2004              2003
                                                                                           -----------------  ----------------
                                                                                             (Unaudited)
Real estate...........................................................................     $     8,885,846    $    8,638,954
Real estate - held for sale...........................................................             428,804           360,226
Less accumulated depreciation.........................................................             744,898           648,982
                                                                                           -----------------  ----------------
                                                                                                 8,569,752         8,350,198
Investments in and advances to unconsolidated entities................................              95,811            86,367
                                                                                           -----------------  ----------------
     Net investments..................................................................           8,665,563         8,436,565
Cash and cash equivalents.............................................................             179,642             5,230
Restricted cash in tax-deferred exchange escrow.......................................              83,357           180,920
Other assets..........................................................................             149,215           298,980
                                                                                           -----------------  ----------------
     Total assets.....................................................................     $     9,077,777    $    8,921,695
                                                                                           =================  ================
                                 LIABILITIES AND EQUITY

Liabilities:
   Unsecured credit facilities........................................................     $             -     $     103,790
   Long-Term Unsecured Debt...........................................................           2,119,913         1,871,965
   Mortgages payable..................................................................           1,931,363         1,866,252
   Mortgages payable - held for sale..................................................              60,810            61,373
   Accounts payable, accrued expenses and other liabilities...........................             313,203           281,212
                                                                                           -----------------  ----------------
     Total liabilities................................................................           4,425,289         4,184,592
                                                                                           -----------------  ----------------

Minority interest.....................................................................               2,050            11,510
                                                                                           -----------------  ----------------
    Other common unitholders' interest, at redemption value (A-1 and B Common Units:
    23,330,417 in 2004 and 25,301,069 in 2003)........................................             738,174           707,924
                                                                                           -----------------  ----------------

Unitholders' equity:
   Convertible Preferred Units........................................................              25,000            50,000
   Perpetual Preferred Units..........................................................              79,090           160,120
   Common unitholders' equity (A-2 Common Units: 197,224,705 in 2004 and 194,762,263
     in 2003).........................................................................           3,815,765         3,793,314
    Accumulated other comprehensive (loss)/income.....................................              (7,591)           14,235
                                                                                           -----------------  ----------------
     Total unitholders' equity........................................................           3,912,264         4,017,669
                                                                                           -----------------  ----------------
     Total liabilities and unitholders' equity........................................     $     9,077,777    $    8,921,695
                                                                                           =================  ================`

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

---

# Archstone-Smith
Operating Trust

# Condensed
Consolidated Statements of Earnings

# (In
thousands, except per unit amounts)
(Unaudited)

`Three Months Ended                Nine Months Ended
                                                                        September 30,                    September 30,
                                                                ------------------------------    -----------------------------
                                                                     2004             2003            2004             2003
                                                                -------------     ------------    ------------     ------------
Revenues:
     Rental revenues.........................................   $    224,497      $  198,894      $  649,193       $  586,454
     Other income............................................          4,930           3,833          13,836           14,690
                                                                -------------     ------------    ------------     ------------
                                                                     229,427         202,727         663,029          601,144
                                                                -------------     ------------    ------------     ------------
Expenses:
     Rental expenses.........................................         60,864          51,072         168,699          146,897
     Real estate taxes.......................................         20,900          17,459          63,388           52,851
     Depreciation on real estate investments.................         54,119          42,729         154,834          123,480
     Interest expense........................................         46,692          36,800         129,476          111,728
     General and administrative expenses ....................         12,898          12,558          37,423           38,200
     Other expenses..........................................          2,809           2,380           6,107           28,978
                                                                -------------     ------------    ------------     ------------
                                                                     198,282         162,998         559,927          502,134
                                                                -------------     ------------    ------------     ------------
Earnings from operations.....................................         31,145          39,729         103,102           99,010
     Minority interest.......................................            108             (10)            460              (17)
     Income from unconsolidated entities.....................          5,485           1,714          18,115            1,008
     Other non-operating income..............................          7,701               -          28,162                -
                                                                -------------     ------------    ------------     ------------
Earnings before discontinued operations......................         44,439          41,433         149,839          100,001
     Earnings from discontinued apartment communities........        115,184         136,274         214,817          249,970
                                                                -------------     ------------    ------------     ------------
Net earnings.................................................        159,623         177,707         364,656          349,971
     Preferred Unit distributions............................          5,706           6,128          14,612           21,737
                                                                -------------     ------------    ------------     ------------
Net earnings attributable to Common Units - Basic............   $    153,917      $  171,579      $  350,044       $  328,234
                                                                =============     ============    ============     ============

Weighted average Common Units outstanding - Basic............        219,234         214,195         219,516          210,431
                                                                -------------     ------------    ------------     ------------
Weighted average Common Units outstanding - Diluted..........        222,791         221,519         222,970          219,968
                                                                -------------     ------------    ------------     ------------
Earnings per Common Unit - Basic:
       Earnings before discontinued operations...............   $       0.18      $     0.16      $     0.61       $     0.37
       Discontinued operations, net..........................           0.52            0.64            0.98             1.19
                                                                -------------     ------------    ------------     ------------
       Net earnings..........................................   $       0.70      $     0.80      $     1.59       $     1.56
                                                                =============     ============    ============     ============
Earnings per Common Unit - Diluted:
       Earnings before discontinued operations...............   $       0.18      $     0.16      $     0.61       $     0.37
       Discontinued operations, net..........................           0.52            0.63            0.97             1.18
                                                                -------------     ------------    ------------     ------------
       Net earnings..........................................   $       0.70      $     0.79      $     1.58       $     1.55
                                                                =============     ============    ============     ============
                                                                $       0.43      $   0.4275      $     1.29       $   1.2825
Distributions paid per Common Unit..........................    =============     ============    ============     ============`

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

---

# Archstone-Smith
Operating Trust

# Condensed
Consolidated Statements of Unitholders' Equity, Other Common Unitholders' Interest and Comprehensive Income

# Nine Months Ended
September 30, 2004

# (In
thousands)
(Unaudited)

`Convertible   Perpetual
                                Preferred    Preferred
                                 Units at     Units at                  Accumulated
                                Aggregate    Aggregate      Common         Other         Total       Other Common
                               Liquidation  Liquidation  Unitholders'  Comprehensive  Unitholders'   Unitholders'
                                Preference   Preference     Equity     Income/(Loss)     Equity        Interest        Total
                               ------------ ------------ ------------ --------------- ------------- -------------- -------------

Balances at December 31, 2003   $  50,000    $  160,120   $3,793,314    $    14,235    $ 4,017,669   $  707,924     $ 4,725,593
Comprehensive income:
   Net earnings...............          -             -      321,359              -        321,359       43,297         364,656
   Change in fair value of
     cash flow hedges.........          -             -            -          1,970          1,970            -           1,970
     Change in fair value of
     marketable securities....          -             -            -        (23,796)       (23,796)           -         (23,796)
                                                                                                                   -------------
Comprehensive income
   attributable to Common
   Units......................                                                                                          342,830
                                                                                                                   -------------
Preferred Unit distributions..          -             -      (14,612)            -         (14,612)       1,727         (12,885)
Common Units distributions....          -             -     (253,933)            -        (253,933)     (31,378)       (285,311)
A-1 Common Units converted
   into A-2 Common Units......          -             -       46,920             -          46,920      (46,920)              -
A-2 Common Unit  repurchases..          -             -      (88,502)            -         (88,502)           -         (88,502)
Conversion of Preferred
   Units into Common Units....    (25,000)            -       25,000             -               -            -               -
Preferred Unit repurchases....          -       (81,030)           -             -         (81,030)           -         (81,030)
Exercise of options...........          -             -       35,795             -          35,795            -          35,795
Issuance of A-1 Common Units..          -             -            -             -               -       10,788          10,788
Issuance of A-2 Common Units..          -             -        4,502             -           4,502            -           4,502
Adjustment to redemption
   value......................          -             -      (52,736)            -         (52,736)      52,736               -
Other, net....................          -             -       (1,342)            -          (1,342)           -          (1,342)
                               ------------ ------------ ------------ --------------- ------------- -------------- -------------
Balances at September 30, 2004  $  25,000    $   79,090   $3,815,765    $   (7,591)    $ 3,912,264   $  738,174     $ 4,650,438
                               ============ ============ ============ =============== ============= ============== =============`

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

---

# Archstone-Smith
Operating Trust

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

`Nine Months Ended
                                                                                                         September 30,
                                                                                               ----------------------------------
                                                                                                     2004              2003
                                                                                               ----------------  ----------------
Operating activities:
   Net earnings..............................................................................   $     364,656     $    349,971
   Adjustments to reconcile net earnings to net cash flow provided by operating activities:
     Depreciation and amortization...........................................................         172,172          148,162
     Gains on dispositions of depreciated real estate, net...................................        (226,296)        (243,718)
     Gains on sale of marketable equity securities and property management business..........         (28,162)               -
     Provision for possible loss on real estate investments..................................               -            3,714
     Minority interest.......................................................................            (460)              17
     Equity in earnings/loss from unconsolidated entities....................................         (18,115)          (1,008)
   Change in other assets....................................................................            (586)           7,972
   Change in accounts payable, accrued expenses and other liabilities........................          13,133          (19,413)
   Other, net................................................................................          (6,087)           4,030
                                                                                               ----------------  ----------------
      Net cash flow provided by operating activities.........................................         270,255          249,727
                                                                                               ----------------  ----------------

Investing activities:
   Real estate investments, net..............................................................      (1,164,522)        (623,713)
   Change in investments in unconsolidated entities, net.....................................          16,508           20,548
   Proceeds from dispositions, net of closing costs..........................................       1,163,277        1,217,461
   Change in tax-deferred exchange escrow....................................................          97,563          (84,232)
   Other, net................................................................................         125,449          (47,061)
                                                                                               ----------------  ----------------
     Net cash flow provided by investing activities..........................................         238,275          483,003
                                                                                               ----------------  ----------------

Financing activities:
   Payments on Long-Term Unsecured Debt......................................................        (52,950)         (151,250)
   Proceeds from Long-Term Unsecured Debt, net...............................................        297,052           247,225
   Principal prepayment of mortgages payable, including prepayment penalties.................        (78,285)         (263,442)
   Regularly scheduled principal payments on mortgages payable...............................         (9,003)           (8,993)
   Proceeds from mortgage notes payable......................................................         44,241            52,299
   Repayments of borrowings from unsecured credit facilities, net............................       (103,790)         (363,578)
   Proceeds from Common Units issued under DRIP and employee stock options...................         35,795            87,885
   Repurchase of Common Units and Preferred Units............................................       (137,442)          (13,624)
   Repurchase of Series E and F Perpetual Preferred Units....................................        (32,090)                -
   Cash dividends paid on Common Units.......................................................       (285,311)         (271,128)
   Cash dividends paid on Preferred Units....................................................        (12,885)          (23,955)
   Other, net................................................................................            550            (1,819)
                                                                                               ----------------  ----------------
     Net cash flow (used in) financing activities............................................       (334,118)         (710,380)
                                                                                               ----------------  ----------------
Net change in cash and cash equivalents......................................................        174,412            22,350
Cash and cash equivalents at beginning of period.............................................          5,230            12,846
                                                                                               ----------------  ----------------
Cash and cash equivalents at end of period...................................................   $    179,642      $     35,196
                                                                                               ================  ================

Significant non-cash investing and financing activities:
   A-1 Common Units issued in exchange for real estate.......................................   $     10,788      $     33,355
   Common Units issued in exchange for real estate...........................................          4,502                 -
   A-1 Common Units converted to Common Units................................................         46,920            22,913
   Assumption of mortgages payable upon purchase of apartment communities....................        113,585                 -
   Conversion of Series K Preferred Units into Common Units..................................         25,000                 -
   Conversion of Series H Preferred Units into Common Units..................................              -            71,500`

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

---

# Archstone-Smith
Operating Trust

# Notes to
Condensed Consolidated Financial Statements

# September
30, 2004 and 2003

(Unaudited)

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

Business

Archstone-Smith is
structured as an UPREIT under which substantially all property ownership and
business operations are conducted through the Operating Trust. Archstone-Smith
is our sole trustee and owns approximately 89.4% of the Operating Trusts
outstanding Common Units; the remaining 10.6% 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 shareholders by acquiring, developing and operating
apartments in markets characterized by: (i) protected locations with limited
land on which to build new housing; (ii) expensive single-family home prices;
and (iii) a strong, diversified economic base and job growth potential.

Interim
Financial Reporting

The accompanying condensed
consolidated financial statements of the Operating Trust are unaudited and
certain information and footnote disclosures normally included in financial
statements have been omitted. While 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 2003 Form 10-K. See the glossary in our 2003 Form
10-K for all defined terms not defined herein.

In the opinion of
management, the accompanying unaudited financial statements contain all
adjustments necessary for a fair presentation of the Operating Trusts
financial statements for the interim periods presented. The results of
operations for the three and nine months ended September 30, 2004 are not
necessarily indicative of the results to be expected for the entire year.

Use
of Estimates

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

Moisture
Infiltration and Resulting Mold Remediation Costs

We estimate and accrue
costs related to the correction of moisture infiltration and related mold
remediation when we anticipate incurring such remediation costs because of the
assertion of a legal claim or threatened litigation. When we incur remediation
costs at our own discretion, the cost is recognized as incurred. Costs of
addressing moisture infiltration and resulting mold remediation issues are only
capitalized, subject to recoverability, when it is determined by management that
such costs also extend the life, increase the capacity, or improve the safety or
efficiency of the property relative to when the community was originally
constructed or acquired, if later. All other related costs are expensed.

---

# Archstone-Smith
Operating Trust

# Notes to
Condensed Consolidated Financial Statements  (Continued)

Loss Contingencies

We
accrue for loss contingencies when it is probable that a loss will be incurred
and that loss can by reasonably estimated consistent with the criteria
established in SFAS No. 5 Accounting for Contingencies. We also
record insurance recoveries up to the amount of the actual loss contingency when
the insurance recovery is both probable and can be reasonably estimated.

Legal Fees

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 cost
of settlement.

Real Estate Depreciation

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 estimate the value of land, building and fixtures
assuming the property is vacant, and then allocate costs to the intangible value
of the existing lease agreements. 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.

Income Taxes

We primarily incur income
taxes through our consolidated taxable REIT subsidiary Ameriton. Income taxes
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 basis, operating loss and tax credit
carry forwards. 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.

Stock-Based Compensation

As of September 30, 2004,
the company has one stock-based employee compensation plan. Effective January 1,
2003, the company adopted the fair value recognition provision of FASB Statement
No. 123, Accounting for Stock-Based Compensation,prospectively to all employee awards granted, modified or settled after
January 1, 2003, which results in expensing of options. During the nine months
ended September 30, 2004, we granted approximately 300,000 Restricted Share
Units and 648,000 stock options. Restricted Share Units are valued using the
current unit price at the date of grant and this amount is amortized over the
vesting period. For employee option awards granted prior to January 1, 2003, the
company accounted for this plan under the recognition and measurement provisions
of APB Opinion No. 25, Accounting for Stock Issued to
Employees, and related Interpretations. With respect to options
granted under the plan prior to January 1, 2003, no stock-based employee
compensation expense is reflected in the accompanying condensed consolidated
statements of earnings, as all options granted under those plans had an exercise
price equal to the market value of the underlying common stock on the date of
grant. The following table illustrates the effect on net earnings and earnings
per unit if the fair value based method had been applied to all outstanding and
unvested awards in each period (dollar amounts in thousands, except per share
amounts):

---

# Archstone-Smith
Operating Trust

# Notes to
Condensed Consolidated Financial Statements  (Continued)

`Three Months Ended              Nine Months Ended
                                                                      September 30,                   September 30,
                                                              ----------------------------   ----------------------------
                                                                   2004          2003             2004         2003
                                                              -------------- -------------   ------------- -------------
Net earnings attributable to Common Units - Basic............  $  153,917     $  171,579      $  350,044    $  328,234
Add:  Stock-based employee compensation expense included
   in reported net earnings..................................          73              -             218             -
Deduct:  Total stock-based employee compensation expense
   determined under fair value based method for all awards...        (534)          (429)         (1,604)       (1,394)
                                                              -------------- -------------   ------------- -------------
Pro forma net earnings attributable to Common Units - Basic..     153,456        171,150         348,658       326,840
                                                              ============== =============   ============= =============
Net earnings per Common Unit:
    Basic - as reported......................................  $     0.70     $     0.80      $     1.59    $     1.56
                                                              ============== =============   ============= =============
    Basic - pro forma........................................        0.70     $     0.80            1.59          1.55
                                                              ============== =============   ============= =============
    Diluted - as reported....................................  $     0.70     $     0.79      $     1.58    $     1.55
                                                              ============== =============   ============= =============
    Diluted - pro forma......................................  $     0.69     $     0.79      $     1.58    $     1.54
                                                              ============== =============   ============= =============

Weighted average risk-free interest rate.....................       3.48%          3.54%           3.48%         3.54%
Weighted average dividend yield..............................       6.92%          6.74%           6.92%         6.74%
Weighted average volatility..................................      15.33%         19.58%          15.33%        19.58%
Weighted average expected option life........................   5.0 years      5.0 years       5.0 years     5.0 years`

Reclassifications

Certain 2003 amounts have been reclassified to conform to the 2004 presentation.

Comprehensive Income

Comprehensive income, which
is defined as net earnings and all other non-owner changes in equity, is
displayed in the accompanying Statements 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 and changes in the fair
value of effective cash flow hedges.

Our accumulated other comprehensive income for the nine months ended September 30, 2004 was as follows (in thousands):

`Net
                                                                 Unrealized                      Accumulated
                                                                  Gains on                          Other
                                                                 Marketable      Cash Flow      Comprehensive
                                                                 Securities        Hedges       Income/(Loss)
                                                               ---------------  -------------  ----------------
Balance at December 31, 2003..................................  $    23,808      $  (9,573)       $   14,235
Change in fair value of cash flow hedges......................            -          4,379             4,379
Fair value of long-term debt hedge............................            -         (2,409)           (2,409)
Less: reclassification adjustments for realized net gains.....      (23,796)             -           (23,796)
                                                               ---------------  -------------  ----------------
Balance at September 30, 2004.................................  $        12      $  (7,603)       $   (7,591)
                                                               ===============  =============  ================`

---

# Archstone-Smith
Operating Trust

# Notes to
Condensed Consolidated Financial Statements  (Continued)

Per Unit Data

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

`Three Months Ended             Nine Months Ended
                                                                      September 30,                  September 30,
                                                                --------------------------   -------------------------
                                                                    2004          2003           2004          2003
                                                                ------------  ------------   -----------  ------------
    Reconciliation of numerator between basic and diluted net earnings per Common Unit (1):
Net earnings attributable to Common Units -- Basic............   $ 153,917     $  171,579     $ 350,044    $ 328,234
     Dividends on Convertible Preferred Units.................       1,061          2,782         3,269       11,692
                                                                ------------  ------------   -----------  ------------
Net earnings attributable to Common Units - Diluted...........   $ 154,978     $  174,361     $ 353,313    $ 339,926
                                                                ============  ============   ===========  ============
    Reconciliation of denominator between basic and diluted net earnings per Common Unit (1):
Weighted average number of Common Units
     outstanding - Basic......................................   $ 219,234        214,195       219,516      210,431
     Assumed conversion of Convertible Preferred Units into
      Common Units............................................       2,439          6,517         2,535        9,155
     Assumed exercise of options..............................       1,118            807           919          382
                                                                ------------  ------------   -----------  ------------
Weighted average number of Common Units                            222,791        221,519       222,970      219,968
     outstanding - Diluted....................................  ============  ============   ===========  ============`

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

## (2) Real Estate

Investments
in Real Estate

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

`September 30, 2004            December 31, 2003
                                                       --------------------------- ---------------------------
                                                         Investment    Units (1)     Investment     Units (1)
                                                       ------------- ------------- -------------- ------------
Operating Trust Apartment Communities:
   Operating communities (2)........................... $ 8,307,247      61,088     $  8,067,075     63,848
   Communities under construction......................     344,722       2,757          301,634      2,607
   Development communities In Planning:
     Owned (3).........................................      40,039       1,011           95,911      2,633
     Under control (4).................................           -         133                -        112
                                                       ------------- ------------- -------------- ------------
      Total development communities In Planning........     40,039        1,144           95,911      2,745
                                                       ------------- ------------- -------------- ------------
        Total Operating Trust apartment communities....   8,692,008      64,989        8,464,620     69,200
Ameriton apartment communities.........................     530,053       6,186          494,338      5,646
Land ..................................................      44,758           -            9,648          -
Other..................................................      47,831           -           30,574          -
                                                       ------------- ------------- -------------- ------------
        Total real estate.............................. $ 9,314,650      71,175     $  8,999,180     74,846
                                                       ============= ============= ============== ============`

(1) Unit information is based on management's estimates and has not been audited or reviewed by our independent auditors.
     (2) Excludes 350 units associated with an unconsolidated development project.
     (3) Excludes 432 units associated with an unconsolidated development project.
     (4) We had $1.0 million in developments Under Control as of September 30, 2004 and $1.1 million as of December 31, 2003, as is
reflected on the "Other assets" caption of our Balance Sheets.

---

# Archstone-Smith
Operating Trust

# Notes to
Condensed Consolidated Financial Statements  (Continued)

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

`Balance at December 31, 2003............................................................     $  8,999,180
     Acquisition-related expenditures...................................................        1,015,512
     Redevelopment expenditures.........................................................           26,680
     Recurring capital expenditures.....................................................           34,230
     Development expenditures, excluding land acquisitions..............................          245,135
     Dispositions.......................................................................         (990,789)
                                                                                            -----------------
        Net apartment community activity................................................        9,329,948
       Change in other real estate assets...............................................          (15,298)
                                                                                            -----------------
Balance at September 30, 2004...........................................................     $  9,314,650
                                                                                            =================`

At September 30,
2004, we had unfunded contractual commitments related to real estate investment
activities aggregating approximately $400.3 million, of which $367.2 million
related to communities under construction.

## (3) 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, income
taxes from taxable REIT subsidiary sales, depreciation expense and interest
expense (actual interest expense for encumbered properties and a pro-rata
allocation of interest expense for any unencumbered property up to our weighted
average leverage ratio), as well as the net gain or loss on the disposition of
properties.

---

# Archstone-Smith
Operating Trust

# Notes to
Condensed Consolidated Financial Statements  (Continued)

Consistent with our capital
recycling program, we had 12 operating apartment communities, representing 3,380
units, classified as held for sale under the provisions of SFAS 144, at
September 30, 2004. Accordingly, we have classified the operating earnings from
these 12 properties within discontinued operations for the three and nine months
ended September 30, 2004 and 2003. During the nine months ended September 30,
2004, we sold 23 REIT and Ameriton operating communities. The operating results
of these 23 communities and the related gain/loss on sale are also included in
discontinued operations for both 2004 and 2003. During the twelve months ended
December 31, 2003 we sold 48 operating communities. The operating results of
these 48 operating communities and the related gain/loss on the sale are also
included in discontinued operations for the three and nine months ended
September 30, 2003. The following is a summary of net earnings from discontinued
operations (in thousands):

`Three Months Ended              Nine Months Ended
                                                                      September 30,                  September 30,
                                                                -------------------------   ---------------------------
                                                                    2004          2003          2004           2003
                                                                -----------   -----------   ------------   ------------

Rental revenues.............................................     $  20,284     $  48,686     $   80,900     $  185,450
Rental expenses.............................................        (8,314)      (18,200)       (29,215)       (64,301)
Real estate taxes...........................................        (2,079)       (6,395)        (9,656)       (19,901)
Depreciation on real estate investments.....................        (1,579)       (6,652)        (9,173)       (27,886)
Interest expense (1)........................................        (6,873)      (14,731)       (25,042)       (49,595)
Income taxes from taxable REIT subsidiary sales.............       (19,068)       (8,063)       (18,172)       (11,005)
Provision for possible loss on real estate investments......             -             -              -         (3,714)
Debt extinguishment costs related to dispositions...........             -          (905)        (1,120)        (2,796)
Gains on disposition of taxable REIT subsidiary real estate
    investments, net........................................        55,417        23,641         69,930         31,260
Gains on dispositions of REIT real estate investments, net..        77,396       118,893        156,365        212,458
                                                                -----------   -----------   ------------   ------------
Earnings from discontinued apartment communities............     $ 115,184     $ 136,274     $  214,817     $  249,970
                                                                ===========   ===========   ============   ============`

(1)     The portion of
interest expense included in discontinued operations that is allocated to
properties based on the companys leverage ratio was $4.6 million and $11.5
million for the three months ended September 30, 2004 and 2003, and $17.0
million and all of $35.4 million for the nine months ended September 30, 2004
and 2003, respectively.

## (4)
Investments in and Advances to Unconsolidated Entities

Real Estate Joint Ventures

We have investments in
entities that we account for using the equity method. At September 30, 2004, the
investment balance consisted of $64.4 million in our joint ventures and $31.4
million in Ameriton joint ventures. At December 31, 2003, the investment balance
consisted of $42.9 million in our joint ventures and $43.5 million in Ameriton
joint ventures.

---

# Archstone-Smith
Operating Trust

# Notes to
Condensed Consolidated Financial Statements  (Continued)

## (5) Borrowings

Unsecured
Credit Facilities

The following table
summarizes our $600 million unsecured revolving credit facility borrowings (in
thousands, except for percentages):

`As of and for the
                                                                           Nine Months        As of and for the
                                                                              Ended              Year Ended
                                                                          September 30,         December 31,
                                                                              2004                  2003
                                                                        ------------------    ------------------
     Total unsecured revolving credit facility........................    $   600,000           $    600,000
     Borrowings outstanding at end of period..........................              -                 97,000
     Outstanding letters of credit under this facility................          4,329                  1,050
     Weighted average daily borrowings................................        107,372                231,354
     Maximum borrowings outstanding during the period.................        375,000                511,500
     Weighted average daily nominal interest rate.....................          1.56%                  1.95%
     Weighted average daily effective interest rate...................          2.20%                  2.55%`

We also have a short-term
unsecured borrowing agreement with JPMorgan Chase Bank, which provides for
maximum borrowings of $100 million. The agreement bears interest at an overnight
rate that ranged from 1.60% to 2.40% during the nine months ended September 30,
2004. There were no borrowings outstanding under the agreement at September 30,
2004 and $6.8 million outstanding at December 31, 2003.

Long-Term Unsecured Debt

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

`Effective     Balance at      Balance at       Average
                                         Coupon     Interest    September 30,    December 31,    Remaining
             Type of Debt               Rate (1)    Rate (2)        2004            2003        Life (Years)
-------------------------------------  ---------- ------------ --------------- --------------- -------------

Long-term unsecured senior notes....      6.22%       6.40%      $ 2,039,685     $  1,771,167        5.5
Unsecured tax-exempt bonds..........      1.69%       1.95%           80,228          100,798       18.9
                                       ---------- ------------ --------------- --------------- -------------
     Total/average..................      6.05%       6.23%      $ 2,119,913     $  1,871,965        6.0
                                       ========== ============ =============== =============== =============`

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

During August 2004, we
issued $300 million in long-term unsecured ten-year senior notes with a coupon
rate of 5.6% and an effective interest rate of 5.8% from its shelf registration
statement. The notes were issued pursuant to a supplemental indenture with
modified debt covenants, which are specific to these notes. The primary change
pertains to the leverage covenant, which limits total debt to 65% of the market
value of total assets as defined, using a capitalization rate of 7.5% to value
stabilized operating assets.

---

# Archstone-Smith
Operating Trust

# Notes to
Condensed Consolidated Financial Statements  (Continued)

Mortgages payable

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

`Principal Balance (2) at                Average
                                              Effective Interest   ---------------------------------------------      Remaining
            Type of Mortgage                       Rate (1)         September 30, 2004      December 31, 2003        Life (Years)
-------------------------------------------  --------------------  --------------------  -----------------------  ----------------
Conventional fixed rate (3)................         6.45%             $   1,508,687        $      1,511,277              5.3
Tax-exempt floating rate...................         2.02%                   391,467                 317,351             19.5
Conventional floating rate ................         2.91%                    21,705                  21,705              4.1
Construction loans.........................         4.14%                    49,874                  56,129              0.6
Other......................................         5.08%                    20,440                  21,163             18.8
                                             --------------------  --------------------  -----------------------  ----------------
     Total/average mortgage debt...........         5.45%             $   1,992,173        $      1,927,625              8.1
                                             ====================  ====================  =======================  ================`

(1)     Includes  the  effect of fair  value  hedges,  credit  enhancement  fees,  the  amortization  of fair  market  value  purchase
              adjustment, and other related costs, where applicable as of September 30, 2004.
     (2)     Includes net fair market value  adjustment  recorded in connection with the Smith Merger of $52.1 million and $58.5 million at
              September 30, 2004 and December 31, 2003, respectively.
     (3)     Includes a long-term  secured  debt  agreement  with Fannie Mae.  The Fannie Mae secured  debt  matures on dates  ranging from
              January  2006 to July  2009,  although  we have the  option to extend  the term of any  portion  of the debt for up to an
              additional 30-year period at any time, subject to Fannie Mae's approval.

The change in mortgages
payable, including properties classified as held for sale, during the nine
months ended September 30, 2004 consisted of the following (in thousands):

`Balance at December 31, 2003...................................      $ 1,927,625
         Regularly scheduled principal amortization.................           (9,003)
         Prepayments, final maturities and other....................          (84,276)
         Mortgage assumptions related to property acquisitions......          113,585
         Proceeds from mortgage notes payable.......................           44,242
                                                                        ----------------
     Balance at September 30, 2004..................................       $1,992,173
                                                                        ================`

Other

The book value of total
assets pledged as collateral for mortgage loans and other obligations at
September 30, 2004 and December 31, 2003 was $3.8 billion. Our debt instruments
generally contain certain covenants common to the type of facility or borrowing,
including financial covenants establishing minimum debt service coverage ratios
and maximum leverage ratios. We were in compliance with all financial covenants
pertaining to our debt instruments during the three and nine months ended
September 30, 2004.

For the nine months ended
September 30, 2004 and 2003, the total interest paid on all outstanding debt was
$189.7 and $175.3 million, respectively. We capitalize interest incurred during
the construction period as part of the cost of apartment communities under
development. Interest capitalized during the nine months ended September 30,
2004 and 2003 was $17.1 and $17.8 million, respectively.

---

# Archstone-Smith
Operating Trust

# Notes to
Condensed Consolidated Financial Statements  (Continued)

## (6)
Distributions to Unitholders

The following table
summarizes the quarterly cash distributions paid per unit on Common and
Preferred Units during the three months ended March 31, June 30, and September
30, 2004 and the annualized distributions we expect to pay for 2004:

`Annualized
                                                           Quarterly Cash           Cash
                                                           Distributions        Distributions
                                                              Per Unit            Per Unit
                                                          ----------------    ----------------
       Common Units and A-1 Units....................       $    0.4300          $    1.72
       Series D Perpetual Preferred Units (1) .......            0.5475               1.31
       Series E Preferred Units (2)................              0.5225               2.10
       Series F Preferred Units (3)................              0.5075               1.51
       Series G Preferred Units....................              0.5400               2.16
       Series I Perpetual Preferred Units (4)........             1,915              7,660
       Series K Convertible Preferred Units (5) .....            0.8500               1.70
       Series L Convertible Preferred Units .........            0.8500               3.40`

(1)     We redeemed the Series D Preferred Units in August 2004.
     (2)     In accordance with the terms of the securities, we repurchased 520 units of the Series E Preferred Units in August 2004.  We
intend to repurchase 400 units in November 2004 and 200 units on February 2005.
     (3)     In accordance with the terms of the securities, we repurchased the Series F Preferred Units in September 2004.
     (4)     Series I Preferred Units have a par value of $100,000 per unit.
     (5)     We converted the series K Preferred Units to Common Units in September 2004.

---

# Archstone-Smith
Operating Trust

# Notes to
Condensed Consolidated Financial Statements  (Continued)

## (7) Segment
Data

We define our garden
communities and high-rise properties each as individual operating segments. We
have determined that each of our garden communities and each of our high-rise
properties have similar economic characteristics and also meet the other GAAP
criteria, which permit the garden communities and high-rise properties to be
aggregated into two reportable segments. Net Operating Income (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 property 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                    Nine Months Ended
                                                              September 30,                        September 30,
                                                     --------------------------------     --------------------------------
                                                         2004              2003                2004              2003
                                                     --------------    --------------     --------------    --------------
Reportable apartment communities segment revenues:
Same-Store:
   Garden communities..............................    $  113,281        $  112,806         $  336,949        $  344,991
   High-rise properties............................        72,084            71,187            213,376           213,070
Non Same-Store:
   Garden communities..............................        27,123             8,601             65,851            11,565
   High-rise properties............................        10,968             5,324             30,441            14,380
Other non-reportable operating segment revenues....         1,041               976              2,576             2,448
                                                     --------------    --------------     --------------    --------------
     Total segment and consolidated revenues.......    $  224,497        $  198,894         $  649,193        $  586,454
                                                     ==============    ==============     ==============    ==============


                                                           Three Months Ended                    Nine Months Ended
                                                              September 30,                        September 30,
                                                     --------------------------------     --------------------------------
                                                         2004               2003               2004              2003
                                                     --------------    --------------     --------------    --------------
Reportable apartment communities segment NOI:
   Garden communities..............................    $   89,901        $  81,525          $  260,386        $  240,611
   High-rise properties............................        51,919           48,011             154,487           144,062
Other non-reportable operating segment NOI.........           913              827               2,233             2,033
                                                     --------------    --------------     --------------    --------------
     Total segment and consolidated NOI............       142,733          130,363             417,106           386,706
                                                     --------------    --------------     --------------    --------------
Reconciling items:
   Other income....................................         4,930            3,833              13,836            14,690
   Depreciation on real estate investments.........       (54,119)         (42,729)           (154,834)         (123,480)
   Interest expense................................       (46,692)         (36,800)           (129,476)         (111,728)
   General and administrative expenses.............       (12,898)         (12,558)            (37,423)          (38,200)
   Other expenses..................................        (2,809)          (2,380)             (6,107)          (28,978)
                                                     --------------    --------------     --------------    --------------
     Consolidated earnings from operations.........    $   31,145        $  39,729          $  103,102        $   99,010
                                                     ===============    ==============    ==============    ==============`

---

# Archstone-Smith
Operating Trust

# Notes to
Condensed Consolidated Financial Statements  (Continued)

`September 30,       December 31,
                                                              2004               2003
                                                        ----------------   ---------------
Reportable operating communities segment assets, net:
   Same-Store:
     Garden communities................................  $    3,058,377     $   3,104,977
     High-rise properties..............................       2,571,871         2,597,810
   Non Same-Store:
     Garden communities................................       1,867,830         1,415,434
     High-rise properties..............................         550,246           842,180
Other non-reportable operating segment assets..........          92,624            29,571
                                                        ----------------   ---------------
        Total segment assets...........................       8,140,948         7,989,972
        Real estate held for sale......................         428,804           360,226
                                                        ----------------   ---------------
          Total real estate assets.....................       8,569,752         8,350,198
                                                        ----------------   ---------------

Reconciling items:
   Investment  in and advances to unconsolidated
entities...............................................          95,811            86,367
   Cash and cash equivalents...........................         179,642             5,230
   Restricted cash in tax deferred exchange escrow.....          83,357           180,920
   Other assets........................................         149,215           298,980
                                                        ----------------   ---------------
          Consolidated total assets....................  $    9,077,777     $   8,921,695
                                                        ================   ===============`

Total capital expenditures
for garden communities, were $13.8 million and $27.0 million for the three and
nine months ended September 30, 2004, and $8.7 million and $19.5 million for the
same periods of 2003, respectively. Total capital expenditures for high-rise
properties, were $8.9 million and $16.0 million for the three and nine months
ended September 30, 2004 and $7.7 million and $21.9 million for the same periods
of 2003, respectively.

## (8) Litigation
and Contingencies

We
are party to alleged moisture infiltration and resulting mold lawsuits at
various apartment properties. We have negotiated a settlement with the
plaintiffs in certain of these lawsuits and have recorded accruals related to
these claims based on estimated legal fees associated with known and anticipated
costs for our counsel and plaintiffs counsel. Additionally, we have
estimated costs related to the negotiated settlements, additional resident
property repair and replacement costs and temporary resident relocation
expenses. It is possible that these estimates could increase or decrease as
better information becomes available. Our accruals represent managements
best estimate of the probable and reasonably estimable costs and are based, in
part, on the status of settlement discussions, estimates obtained from
third-party contractors and actual costs incurred to date. Not all plaintiffs
have accepted the negotiated settlement, and further court proceedings and
additional legal fees and damages may be required to fully resolve these claims.

We
are aggressively pursuing recovery of a significant portion of these costs from
our insurance carriers. During the nine months ended September 30, 2004, we
received $5.1 million in insurance recoveries pertaining to ongoing moisture
infiltration and resulting mold litigation. Of this amount, approximately $1.3
million was recorded to other income as it pertains to legal and professional
fees previously expensed; the remaining $3.8 million was a reduction of
previously capitalized costs. We are in litigation with our insurance providers,
and therefore we have not recorded an estimate for future insurance recoveries.
In addition, we will continue to pursue potential recoveries from third parties
whom we believe bear responsibility for a considerable portion of the costs we
have incurred. We cannot make assurances that we will obtain these recoveries or
that our ultimate liability associated with these claims will not be material to
our results of operations.

---

# Archstone-Smith
Operating Trust

# Notes to
Condensed Consolidated Financial Statements  (Concluded)

During
the three months ended September 30, 2004, we incurred estimated losses
associated with multiple hurricanes in Florida. As a result of this damage, we
recorded a loss contingency in other expense of approximately $4.9 million
associated with both wholly owned and unconsolidated apartment communities. We
are currently in the process of determining what amounts associated with these
losses will be recovered by insurance. Given the unique nature of these losses,
we were unable to reasonably estimate the amount of any insurance recoveries as
of September 30, 2004. Accordingly, the $4.9 million does not include any of the
insurance recoveries we expect to receive as the outstanding claims are resolved over
the next several quarters.

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.

## (9)
Derivatives and Hedging Activities

We are exposed to the
impact of interest rate changes and will occasionally utilize interest rate
swaps and interest rate caps as hedges with the objective of lowering our
overall borrowing costs. These derivatives are designated as either cash flow or
fair value hedges. We are also exposed to price risk associated with changes in
the fair value of certain equity securities. We have entered into forward sale
agreements to protect against a reduction in the fair value of these securities,
the last of which settled in July 2004. We have designated these forward sales
as fair value hedges. We do not use these derivatives for trading or other
speculative purposes. Further, as a matter of policy, we only enter into
contracts with major financial institutions based upon their credit ratings and
other factors. When viewed in conjunction with the underlying and offsetting
exposure that the derivatives are designed to hedge, we have not, nor do we
expect to sustain a material loss from the use of these hedging instruments.

We formally assess, both at
inception of the hedge and on an ongoing basis, whether each derivative is
highly effective in offsetting changes in fair values or cash flows of the
hedged item. We measure hedge effectiveness by comparing the changes in the fair
value or cash flows of the derivative instrument with the changes in the fair
value or cash flows of the hedged item. We exclude the hedging instruments
time value component when assessing hedge effectiveness. If it is determined
that a derivative is not highly effective as a hedge or if a derivative ceases
to be a highly effective hedge, we will discontinue hedge accounting
prospectively.

To determine the fair
values of derivative and other financial instruments, we use a variety of
methods and assumptions that are based on market value conditions and risks
existing at each balance sheet date. These methods and assumptions include
standard market conventions and techniques such as discounted cash flow
analysis, option pricing models, replacement cost and termination cost. All
methods of assessing fair value result in a general approximation of value, and
therefore are not necessarily indicative of the actual amounts that we could
realize upon disposition. During 2003, we entered into forward sale agreements
with an aggregate notional amount, which represents the fair value of the
underlying marketable securities, of approximately $128.5 million and an
aggregate fair value of the forward sale agreements of approximately $486,000.
During the nine months ended September 30, 2004, we settled all of the forward
sales agreements for approximately 2.8 million shares and sold 308,200 shares of
marketable securities, which were not subject to forward sales agreements,
resulting in an aggregate gain of approximately $24.9 million. The total net
proceeds from the sale were $143.0 million, with the marketable securities basis
determined using the average costs of the securities.

During June 2004, we
entered into swap transactions to mitigate the risk of changes in the
interest-related cash outflows on a forecasted issuance of long-term unsecured
debt. At inception, these swap transactions had an aggregate notional amount of
$144 million and a fair value of zero. The long-term unsecured debt these swap
transactions related to was issued in August 2004. At the time of the debt
issuance, the fair value of the cash flow hedge was a liability of approximately
$2.5 million. The termination fees associated with these cash flow hedges are
included in comprehensive income and are being amortized over the term of the
underlying debt as additional interest expense.

# 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 September 30, 2004, and the related condensed
consolidated statements of earnings for the three and nine month periods ended
September 30, 2004 and 2003, the condensed consolidated statement of
unitholders equity, other common unitholders interest and
comprehensive income for the nine month period ended September 30, 2004 and the
condensed consolidated statements of cash flows for the nine month periods ended
September 30, 2004 and 2003. 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, 2003, and the related consolidated statements of
earnings, unitholders equity, other common unitholders interest and
comprehensive income, and cash flows for the year then ended (not presented
herein); and in our report dated February 9, 2004, 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, 2003 is fairly stated, in all material respects, in relation
to the consolidated balance sheet from which it has been derived.

KPMG LLP

Denver, Colorado
October 18, 2004

---

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 2003 Form 10-K as well as the financial statements and notes
included in Item 1 of this report.

Forward-Looking
Statements

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

Our operating results
depend primarily on income from apartment communities, which is substantially
influenced by supply and demand for apartment units, operating expense levels,
property level operations and the pace and price at which we can develop,
acquire or dispose of apartment communities. Capital and credit market
conditions, which affect our cost of capital, also influence operating results.
See Archstone-Smith Operating Trusts 2003 Form 10-K Item 1.
Business for a more complete discussion of risk factors that could impact
our future financial performance.

The
Company

We are engaged primarily in
the operation, development, redevelopment, acquisition, management and long-term
ownership of apartment communities throughout the United States. Archstone-Smith
is structured as an UPREIT, under which all property ownership and business
operations are conducted through the Operating Trust and our subsidiaries and
affiliates. Archstone-Smith is our sole trustee and owns 89.4% of our Common
Units at September 30, 2004.

Results of Operations

Overview

In conjunction with our
capital recycling strategy, rental revenues and rental expenses, including real
estate taxes, will fluctuate based upon the timing and volume of dispositions,
acquisitions and development lease-ups. Accordingly, our results are not only
driven by the performance of our operating portfolio, but also by gains/losses
from the disposition of real estate, the corresponding loss of ongoing income
from assets sold, and increased income generated from acquisitions and
developments. These factors all contribute to the overall financial performance
of the company.

Quarter-to-Date Net Earnings Analysis

Basic net earnings
attributable to Common Units decreased $17.7 million, or 10.3%, for the three
months ended September 30, 2004 as compared to the same period in 2003. This
decrease is primarily attributable to:

- A $9.7 million decrease in gains from
the sale of depreciable real estate during the three months ended September 30,
2004;
- The loss of rental revenues and a corresponding decrease in rental
expenses due to $990.8 million and $1.6 billion in total
dispositions, including Ameriton, in the nine months ended September 30, 2004 and the twelve
months ended December 31, 2003, respectively;
- A 3.7% increase in expenses from our Same-Store portfolio for the three months
ended September 30, 2004, primarily due to higher personnel and utility costs;
- An $8.8 million increase
in Ameriton taxes consistent with increased gains during the quarter; and
- A
$4.9 million expense associated with damage from hurricanes in Florida.

---

These decreases were
partially offset by:

- Increased revenues partially offset by a corresponding increase in operating
expenses associated with $1.0 billion and $508.9 million in asset acquisitions
that occurred during the nine months ended September 30, 2004 and the twelve
months ended December 31, 2003, respectively;
- Increased income from the continued lease-up of new development projects;
- A 0.6% increase in revenues from our Same-Store portfolio for the three months
ended September 30, 2004, primarily due to increases in revenues in the high
rise division;
- A $3.8 million increase in income from unconsolidated entities, primarily
related to increased gains from the sale of joint venture operating assets
during the three months ended September 30, 2004;
- Non-operating income from the settlement of a forward contract on marketable
equity securities resulting in a gain of $7.7 million; and,
- A $1.2 million reduction in Preferred Unit distributions due to the conversion
of Series A and H Preferred Units during 2003, the conversion of Series K
Preferred Units in September 2004 and the redemption of Series D Preferred Units
in August 2004. These conversions and the redemption also eliminated the impact
of the related preferred unit distributions on our fixed charge coverage ratio.

Year-to-Date Net Earnings Analysis

Basic net earnings
attributable to Common Units increased $21.8 million, or 6.6%, during the nine
months ended September 30, 2004 as compared to the same period in 2003. This
increase is primarily attributable to:

- Increased revenues partially offset by
a corresponding increase in operating expenses associated with $1.0 billion and
$508.9 million in asset acquisitions that occurred during the nine months ended
September 30, 2004 and the twelve months ended December 31, 2003, respectively;
- Increased income from the continued lease-up of new development projects;
- A $17.1 million increase in income from unconsolidated entities, primarily
related to the recognition of contingent proceeds associated with the expiration
of certain indemnifications related to the sale of CES, which was sold in 2002,
and increased gains from the sale of joint venture operating assets during the
nine months ended September 30, 2004;
- Non-operating income of $28.2 million, from the sale and settlement of forward
contracts on marketable equity securities resulting in a gain of $24.9 million,
and the disposition of our property management business, resulting in a $3.3
million gain, during the nine months ended September 30, 2004;
- The collection and
recognition of $3.1 million related to the settlement of an ongoing CES lawsuit
during 2004;
- A $14.6 million decrease in other expenses primarily due to
moisture infiltration and resulting mold- related expenses recognized during 2003; and,
- A $7.9 million reduction in Preferred Unit distributions due to the conversion
of Series A and H Preferred Units during 2003, the conversion of Series K
Preferred Units in September 2004 and the redemption of Series D Preferred Units
in August 2004. These conversions and the redemption also eliminated the impact
of the related preferred unit distributions on our fixed charge coverage ratio.

These increases were partially offset by:

- A 0.2% decrease in Same-Store rental revenues during the nine months ended
September 30, 2004 primarily due to revenue declines in non-core markets in
addition to the San Francisco Bay area and Chicago;
- A 4.0% increase in expenses from our Same-Store portfolio for the nine months
ended September 30, 2004, primarily due to increases in personnel costs and real
estate taxes;
- The loss of rental revenues and a corresponding decrease in rental expenses due
to $990.8 million and $1.6 billion in total dispositions, including Ameriton, in
the nine months ended September 30, 2004 and the twelve months ended December
31, 2003, respectively;
- A $17.4 million decrease
in gains from the sale of depreciable real estate during the nine months ended
September 30, 2004;
- A $6.6 million increase in Ameriton taxes consistent with
increased gains during the year; and
- A $4.9 million expense associated with
damage from hurricanes in Florida.

Apartment Community Operations

We
utilize net operating income (NOI) as the primary measure to evaluate the
performance of our operating communities. NOI is defined as rental revenues less
rental expenses and real estate taxes for each of our operating properties. 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 period-to-period property performance. The following is a
reconciliation of NOI to earnings from operations (in thousands):

`Three Months Ended               Nine Months Ended
                                                            September 30,                    September 30,
                                                   ------------------------------------------------------------------
                                                        2004            2003              2004             2003
                                                   --------------  --------------   ---------------  ----------------
Net operating income............................    $   142,733     $   130,363      $    417,106     $     386,706
   Other income.................................          4,930           3,833            13,836            14,690
   Depreciation on real estate investments......        (54,119)        (42,729)         (154,834)         (123,480)
   Interest expense.............................        (46,692)        (36,800)         (129,476)         (111,728)
   General and administrative expenses..........        (12,898)        (12,558)          (37,423)          (38,200)
   Other expense................................         (2,809)         (2,380)           (6,107)          (28,978)
                                                   --------------  --------------   ---------------  ----------------
Earnings from operations........................    $    31,145     $    39,729      $    103,102     $      99,010
                                                   ==============  ==============   ===============  ================`

At September 30, 2004,
investments in operating apartment communities comprised over 99% of our total
real estate portfolio, based on NOI. The following table summarizes the
performance of our operating portfolio (in thousands, except for percentages):

`Three Months Ended September 30,        Nine Months Ended September 30,
                                              --------------------------------------- ---------------------------------------
                                                  2004          2003        Variance      2004           2003       Variance
                                              ------------  ------------  ----------- -------------  ------------ -----------
Rental revenues:
   Garden communities.......................   $  140,404    $  121,407    $  18,997   $   402,800    $  356,557   $  46,243
   High-rise properties.....................       83,052        76,510        6,542       243,816       227,449      16,367
   Non-multifamily..........................        1,041           977           64         2,577         2,448         129
                                              ------------  ------------  ----------- -------------  ------------ -----------
   Total revenues...........................      224,497       198,894       25,603       649,193       586,454      62,739
                                              ------------  ------------  ----------- -------------  ------------ -----------

Operating expenses:
   Garden communities.......................       50,503        39,882       10,621       142,414       115,945      26,469
   High-rise properties.....................       31,133        28,499        2,634        89,329        83,387       5,942
   Non-multifamily..........................          128           150          (22)          344           416         (72)
                                              ------------  ------------  ----------- -------------  ------------ -----------
   Total operating expenses.................       81,764        68,531       13,233       232,087       199,748      32,339
                                              ------------  ------------  ----------- -------------  ------------ -----------

Net operating income:
   Garden communities.......................       89,901        81,525        8,376       260,386       240,612      19,774
   High-rise properties.....................       51,919        48,011        3,908       154,487       144,062      10,425
   Non-multifamily..........................          913           827           86         2,233         2,032         201
                                              ------------  ------------  ----------- -------------  ------------ -----------
   Total net operating income...............      142,733       130,363       12,370       417,106       386,706      30,400
                                              ------------  ------------  ----------- -------------  ------------ -----------

NOI classified as discontinued operations...        9,891        24,091      (14,200)       42,029       101,248     (59,219)
                                              ------------  ------------  ----------- -------------  ------------ -----------
NOI including discontinued operations.......   $  152,624    $  154,454    $  (1,830)  $   459,135    $  487,954   $ (28,819)
                                              ============  ============  =========== =============  ============ ===========

Operating margin (NOI/rental revenues):
   Garden communities......................         64.0%         67.2%        (3.2%)        64.6%         67.5%       (2.9%)
   High-rise properties....................         62.5%         62.8%        (0.3%)        63.4%         63.3%        0.1%

Average occupancy during period:
   Garden communities.....................          94.5%         95.6%        (1.1%)        94.9%         95.0%       (0.1%)
   High-rise properties...................          95.1%         93.2%         1.9%         95.2%         92.8%        2.4%`

The following table
reflects revenue, expense and NOI growth/(decline) for Same-Store communities
that were fully operating during the three and nine months ended September 30
for each respective comparison period (our Same-Store population excludes
Ameriton properties, as they are acquired or developed to achieve short-term
opportunistic gains and therefore, the average holding period is typically much
shorter than the holding period of assets operated by the REIT):

`Same-Store             Same-Store
                                              Revenue                Expense               Same-Store
                                          Growth/(Decline)       Growth/(Decline)     NOI Growth/(Decline)
                                        ---------------------  ---------------------  ---------------------

     Q3 2004 vs. Q3 2003.............           0.6%                   3.7%                  (1.0%)
     YTD 2004 vs. YTD 2003............         (0.2%)                  4.0%                  (2.4%)`

Quarter-to-Date NOI Analysis

NOI increased by $12.4
million, or 9.5%, during the three months ended September 30, 2004 as compared
to the same period during 2003. Of this increase, $8.4 million was derived from
our garden communities and $3.9 million resulted from our high-rise portfolio.

The $8.4 million increase
in garden NOI during the three months ended September 30, 2004 as compared to
September 30, 2003 was primarily attributable to:

- The acquisition of 20 garden
communities for approximately $1.3 billion since the third quarter of 2003;
- The ongoing lease-up and stabilization of development communities.

This increase was partially
offset by a 1.5% decline in our garden Same-Store NOI on a quarter-to-date basis
primarily due to:

- Continued weakness primarily in non-core markets in addition
to the San Francisco Bay area and Chicago; and
- A decline in garden operating
margins, resulting from a 4.0% increase in Same-Store operating expenses. This
expense increase resulted principally from higher personnel and utility costs,
offset by lower insurance costs.

The $3.9 million increase
in high-rise NOI during the three months ended September 30, 2004 as compared to
September 30, 2003 was caused by:

- The acquisition of four high-rise properties
for approximately $380 million since the third quarter of 2003;
- The continued
lease-up and stabilization of a new Chicago high-rise development property in
the prior year; and

This increase was partially
offset by a 0.2% decline in high-rise Same-Store NOI on a quarter-to-date basis
primarily due to:

- Lower effective rent per unit resulting from ongoing market
weakness in Chicago; and
- A decline in high-rise operating margins resulting
from a 3.4% increase in Same-Store operating expenses primarily due to
higher personnel and utility costs partially offset by lower insurance costs.

Year-to-Date NOI Analysis

NOI increased by $30.4
million, or 7.9%, during the nine months ended September 30, 2004 as compared to
the same period during 2003. Of this increase, $19.8 million was derived from
our garden communities and $10.4 million resulted from our high-rise portfolio.

---

The $19.8 million increase
in garden NOI during the nine months ended September 30, 2004 as compared to
September 30, 2003 was primarily attributable to the garden acquisitions and
lease-ups described above, partially offset by a 3.0% decline in garden
Same-Store NOI. This decline in Same-Store NOI was due to:

- Lower effective rent per
unit resulting from continued weakness in non-core markets and the San Francisco
Bay area; and
- A 4.8% increase in Same-Store operating expenses primarily due
to higher personnel costs and real estate taxes.

The $10.4 million increase
in high-rise NOI during the nine months ended September 30, 2004 as compared to
September 30, 2003 was attributable to the high-rise acquisitions and lease-ups
described above, partially offset by a 1.2% decline in high-rise Same-Store NOI.
This decline in Same-Store NOI was due to:

- Lower effective rent per unit resulting from continued weakness primarily in Chicago; and
- A 2.8% increase in Same-Store operating expenses primarily due to higher
personnel costs and real estate taxes partially offset by lower ground lease
expense resulting from the favorable outcome on a lease interpretation.

NOI including Discontinued Operations

NOI for our entire
portfolio, including properties classified within discontinued operations,
decreased by $1.8 million and $28.8 million during the three and nine months
ended September 30, 2004 as compared to the same periods during 2003,
respectively. This net decrease in NOI was primarily attributable to:

- The loss of NOI from the disposition of $990.8 million in operating assets,
including Ameriton, during the nine months ended September 30, 2004;
- The loss of NOI from the disposition of $1.6 billion of operating assets,
including Ameriton, during the twelve months ended December 31, 2003; and
- A decline in Same-Store NOI of 1.0% and 2.4% for the three and nine months ended
September 30, 2004 compared to the same periods in prior year, respectively.

This decrease was partially
offset by increased NOI from the acquisitions, lease-ups and redevelopments
described above, as well as an increase in NOI associated with assets classified
as held-for-sale, as certain of these assets were either under redevelopment or
in lease-up during the prior year.

Other
Income

Other income increased $1.1
million, or 28.6%, for the three months ended September 30, 2004 as compared to
the same period in 2003, principally due to a $2.4 million gain on sale of land.
This was partially offset by a decrease in the collection of indemnified CES
accounts receivable over 120 days during 2004 as compared to 2003, and the loss
of dividend income on stock investments recognized during the three months ended
September 30, 2003.

The $0.9 million, or 5.8%
decrease during the nine months ended September 30, 2004 as compared to the same
period in 2003 is principally attributable to a decrease in the collection of
indemnified CES accounts receivable over 120 days during 2004 as compared to
2003, and the loss of dividend income on stock investments recognized during the
nine months ended September 30, 2003. This was partially offset by the
collection and recognition of $3.1 million from the settlement of an ongoing CES
lawsuit, recognition of $1.3 million in insurance recoveries and a $2.4 million
gain on sale of land during the nine months ended September 30, 2004.

---

Depreciation
Expense

Depreciation expense
increased $11.4 million, or 26.7% and $31.4 million, or 25.4%, during the three
and nine months ended September 30, 2004 as compared to the same periods in
2003, respectively. These increases are primarily due to a greater number of
operating assets classified within discontinued operations during the prior year
resulting in a greater depreciation allocation of $5.1 million and $18.7 million
during the three and nine months ended September 30, 2003, respectively, as
compared to the same periods in 2004.

Including depreciation
expense on properties classified within discontinued operations, depreciation
expense increased $6.3 million, or 12.8%, and $12.6 million, or 8.4%, during the
three and nine months ended September 30, 2004 as compared to the same periods
in 2003, respectively. These increases are principally attributable to the
amortization of the intangible value of lease agreements obtained in connection
with apartment community acquisitions, which are amortized over the average life
of the underlying lease. During the three and nine months ended September 30,
2004, amortization of these intangible assets were $4.2 million and $12.4
million, respectively. Depreciation expense also increased due to our overall
depreciable basis associated with the disposition of real estate assets with
lower depreciable basis and the reinvestment of these proceeds into assets with
a higher depreciable basis.

Interest
Expense

Interest expense increased
$9.9 million, or 26.9%, and $17.7 million, or 15.9%, for the three and nine
months ended September 30, 2004 as compared to the same period in 2003,
respectively. These increases are principally attributable to a greater number
of operating assets classified within discontinued operations during the prior
year, which resulted in a greater allocation of interest expense to discontinued
operations during 2003 as compared to 2004.

Including interest expense
on properties reflected in discontinued operations, interest expense increased
$2.0 million, or 3.9% and decreased $6.8 million, or 4.2%, during the three and
nine months ended September 30, 2004, as compared to the same period in 2003,
respectively. The increase for the three months ended September 30, 2004 is
consistent with an increase in the average debt outstanding during the three
months ended September 30, 2004 as compared to the same period in 2003. The
decrease for the nine months ended September 30, 2004 is primarily the result of
a reduction in the weighted average debt rates during the nine months ended
September 30, 2004 and a reduction in our average debt balances during 2004 as
compared to 2003 consistent with an overall reduction in our leverage levels.

Other Expenses

Other expense increased
$0.4 million, or 18.0%, for the three months ended September 30, 2004, as
compared to the same period in 2003 due to a $3.8 million expense associated
with damage from hurricanes in Florida. These increases were partially offset by
moisture infiltration costs of $1.3 million during 2003.

Other expense decreased
$22.9 million, or 78.9%, for the nine months ended September 30, 2004 as
compared to the same period in 2003 primarily due to a $27.8 million moisture
infiltration charges in 2003 compared to $1.0 million in 2004. This increase was
partially offset by a $3.8 million loss contingency associated with damage from
hurricanes in Florida.

Income
from Unconsolidated Entities

Income from unconsolidated
entities increased $3.8 million and $17.1 million during the three and nine
months ended September 30, 2004 as compared to the same periods during 2003,
respectively, primarily due to gains from the sale of joint venture operating
communities recognized during the three and nine months ended September 30, 2004
and the recognition of contingent proceeds from the expiration of certain
indemnifications related to the sale of CES during the second quarter of 2004.
This was partially offset by $1.1 million in hurricane losses from damage to
unconsolidated communities.

---

Other Non-Operating Income

Other non-operating income
increased by $7.7 million and $28.2 million during the three and nine months
ended September 30, 2004 as compared to the same periods in 2003 due to the
recognition of $7.7 million and $24.9 million in gains from the sale and
settlement of marketable securities during the three and nine months ended
September 30, 2004, respectively. The nine months ended September 30, 2004 also
include a $3.3 million gain from the sale of our property management business.
We had no non-operating income during the three or nine months ended September
30, 2003.

Preferred
Unit Distributions

The $0.4 million and $7.1
million decrease in Preferred Unit distributions for the three and nine months
ended September 30, 2004, respectively, is primarily due to the conversion of
Series H Preferred Units into Common Units in May 2003, the conversion of Series
A Preferred Units into Common Units in December 2003, the conversion of Series K
Preferred Units into Common Units in September 2004 and the redemption of our
Series D Preferred Units in August 2004. These savings were partially offset by
the recognition of $1.7 million of issuance costs related to the Series D
Preferred Units.

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, income taxes and interest expense (actual interest expense
for encumbered properties and a pro-rata allocation of interest expense for any
unencumbered property up to our weighted average leverage ratio), as well as the
net gain or loss on the disposition of properties.

Consistent with our capital
recycling program, we had 12 operating apartment communities, representing 3,380
units, classified as held for sale under the provisions of SFAS 144, as of
September 30, 2004. Accordingly, we have classified the operating earnings from
these 12 properties within discontinued operations for the three and nine months
ended September 30, 2004 and 2003. During the nine months ended September 30,
2004, we sold 23 REIT and Ameriton operating communities. The operating results
of these 23 communities and the related gain/loss on sale are also included in
discontinued operations for both 2004 and 2003. During the twelve months ended
December 31, 2003, we sold 48 operating communities. The operating results of
these 48 operating communities and the related gain/loss on the sale are also
included in discontinued operations for the three and nine months ended
September 30, 2003. The following is a summary of earnings from discontinued
operations (in thousands):

`Three Months Ended           Nine Months Ended
                                                                    September 30,                September 30,
                                                              ---------------------------------------------------------
                                                                 2004          2003           2004           2003
                                                              ------------  ------------  -------------  -------------
Rental revenues.............................................   $   20,284    $   48,686    $   80,900     $  185,450
Rental expenses.............................................      (8,314)       (18,200)      (29,215)       (64,301)
Real estate taxes...........................................      (2,079)        (6,395)       (9,656)       (19,901)
Depreciation on real estate investments.....................      (1,579)        (6,652)       (9,173)       (27,886)
Interest expense (1)........................................      (6,873)       (14,731)      (25,042)       (49,595)
Income taxes from taxable REIT subsidiary sales.............     (19,068)        (8,063)      (18,172)       (11,005)
Provision for possible loss on real estate investment.......           -              -             -         (3,714)
Debt extinguishment costs related to dispositions...........           -           (905)       (1,120)        (2,796)
Gains on disposition of taxable REIT subsidiary real
    estate investments, net.................................      55,417         23,641        69,930         31,260
Gain on dispositions of REIT real estate investments, net...      77,396        118,893       156,365        212,458
                                                              ------------  ------------  -------------  -------------
Earnings from discontinued apartment communities............   $ 115,184     $  136,274    $  214,817     $  249,970
                                                              ============  ============  =============  =============`

(1)     
The portion of interest expense included in discontinued operations that is allocated
to properties based on the company's leverage ratio was $4.6 million and $11.5
million for the three months ended September 30, 2004 and 2003, and $17.0 million
and $35.4 million for the nine months ended September 30, 2004 and 2003, respectively.

---

## Liquidity and
Capital Resources

We are committed to
maintaining a strong balance sheet and preserving our financial flexibility,
which we believe enhances our ability to capitalize on attractive investment
opportunities as they become available. As a result of the significant cash flow
generated by our operations, current cash positions, the available capacity
under our unsecured credit facilities, gains from the disposition of real
estate, and proceeds from the July 2004 settlement of marketable equity
securities, we believe our liquidity and financial condition are sufficient to
meet all of our reasonably anticipated cash flow needs during 2004.

Operating
Activities

Net cash flow provided by
operating activities increased $20.5 million, or 8.2%, for the nine months ended
September 30, 2004 as compared to the same period of 2003. This increase was
principally due to: (i) lower moisture infiltration and resulting mold-related
expenses during the nine months ended September 30, 2004 and (ii) lower interest
expense due to a reduction in the weighted average debt rates and a reduction in
the average debt balances during the nine months ended September 30, 2004. See
Results of Operations for a more complete discussion of the factors impacting
our operating performance.

Investing
and Financing Activities

For the nine months ended
September 30, 2004, cash flows from investing activities decreased by $244.7
million, or 50.7%, as compared to the same period in 2003. This was due to a
$280.6 million decrease in net proceeds from the disposition of real estate
assets during 2004 as compared to the same period of 2003. Additionally, we
spent an additional $132.6 million for acquisitions and development activity
during 2004 as compared to 2003. The disposition, acquisition and development
amounts are net of tax-deferred exchange proceeds. The decrease is partially
offset by proceeds from the sale of marketable securities during the nine months
ended September 30, 2004, which is included in Other, net in the
accompanying Condensed Consolidated Statement of Cash Flows.

Cash flows used in
financing activities decreased by $376.3 million, or 53.0%, as compared to the
same period in 2003. This decrease is primarily due to increased borrowings to
finance a net increase in real estate investments during the nine months ended
September 30, 2004 as compared to the prior year, partially offset by an
increase in cash used to repurchase Common and Preferred Units.

Our most significant
non-cash investing and financing activities during the nine months ended
September 30, 2004 and 2003 included: (i) the issuance of A-1 Common Units and
Common Units in exchange for real estate in 2004, (ii) the conversion of A-1
Common Units to A-2 Common Units in both 2004 and 2003, (iii) the assumption of
mortgages payable upon the purchase of apartment communities in 2004 and 2003,
and (vi) the conversion of the Series K Preferred Units to Common Units in 2004.

Scheduled Debt Maturities and Interest Payment Requirements

We have structured the
repayments of our long-term debt to create a relatively level principal maturity
schedule to avoid significant repayment obligations in any year, which would
impact our financial flexibility. As of September 30, 2004, we have
approximately $25.4 million of long-term debt maturing during the remainder of
2004, $323.3 million maturing during 2005 and $359.7 million maturing during
2006.

At November 3, 2004, we
had $910.0 million of liquidity, including cash, restricted cash in tax-deferred
escrows and capacity on our unsecured credit facilities. Our unsecured credit
facilities, Long-Term Unsecured Debt and mortgages payable had effective average
interest rates of 2.11%, 6.23% and 5.45%, respectively, during the three months
ended September 30, 2004. These rates give effect to the impact of interest rate
swaps and caps, as applicable.

We were in compliance with
all financial covenants pertaining to our debt instruments during the period
ended September 30, 2004.

---

Unitholder
Distribution Requirements

Based on anticipated
distribution levels for 2004 and the number of units outstanding as of September
30, 2004, we anticipate that we will pay distributions of $393.3 million in the
aggregate during 2004, which includes the effect of the redemption of our Series
D Preferred Units, Series F Preferred Units, and a portion of our Series E
Preferred Units, during the third and fourth quarter of 2004. This amount
represents distributions on our Common Units and all our Preferred Units.

Planned
Investments

Following is a summary of
unfunded planned investments as of September 30, 2004, including amounts for
Ameriton (dollar amounts in thousands). The amounts labeled
Discretionary represent future investments that we plan to make,
although there is not a contractual commitment to do so. The amounts labeled
Committed represent the approximate amount that we are contractually
committed to fund for properties under construction.

`Planned Investments
                                                                                   ---------------------------------
                                                                      Units         Discretionary      Committed
                                                                  ---------------  ----------------  ---------------
Communities under redevelopment................................        2,201         $     6,238        $   33,131
Communities under construction (1).............................        4,064                   -           367,202
Communities In Planning and owned (2)..........................        2,713             410,486                 -
Communities In Planning and Under Control......................          133              69,054                 -
Community acquisitions under contract..........................        1,343             253,352                 -
                                                                  ---------------  ----------------  ---------------
     Total.....................................................       10,454         $   739,130        $  400,333
                                                                  ===============  ================  ===============`

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 during the remainder of 2004 and 2005. We
expect to start construction on approximately $73 million, based on Total
Expected Investment, of REIT communities that are currently classified as In
Planning during the remainder of 2004. We expect to fund the costs of these
development projects over a two-to-three year period following the date
construction commences. No assurances can be given that communities we do not
currently own will be acquired or that planned developments will actually occur.
In addition, actual costs incurred could be greater or less than our current
estimates.

Funding
Sources

We anticipate financing our
planned investment and operating needs primarily with cash flow from operating
activities, disposition proceeds from our capital redeployment program and
borrowings under our unsecured credit facilities, prior to arranging long-term
financing. We anticipate that net cash flow from operating activities and gains
on dispositions during 2004 will be sufficient to fund anticipated distribution
requirements and debt principal amortization payments. To fund planned
investment activities, we had $695.0 million in available capacity on our
unsecured credit facilities, $20.0 million of cash in tax-deferred exchange
escrow and $195.0 million of cash on hand at November 3, 2004.In
addition, we expect to complete the disposition of $1.1 - $1.4billion of
REIT operating communities during 2004.

In April 2004, the
Operating Trust filed a shelf registration statement on Form S-3 to register an
additional $450 million in unsecured debt securities. This registration
statement was declared effective in April 2004. At November 3, 2004,
Archstone-Smith and the Operating Trust had $900 million available in shelf
registered debt and equity securities which can be issued subject to our ability
to affect offerings on satisfactory terms based on prevailing market conditions.

---

Other
Contingencies and Hedging Activities

We
are party to alleged moisture infiltration and resulting mold lawsuits at
various apartment properties. We have negotiated a settlement with the
plaintiffs in certain of these lawsuits and have recorded accruals related to
these claims based on estimated legal fees associated with known and anticipated
costs for our counsel and plaintiffs counsel. Additionally, we have
estimated costs related to the negotiated settlements, additional resident
property repair and replacement costs and temporary resident relocation
expenses. It is possible that these estimates could increase or decrease as
better information becomes available. Our accruals represent managements
best estimate of the probable and reasonably estimable costs and are based, in
part, on the status of settlement discussions, estimates obtained from
third-party contractors and actual costs incurred to date. Not all plaintiffs
have accepted the negotiated settlement, and further court proceedings and
additional legal fees and damages may be required to fully resolve these claims.

We
are aggressively pursuing recovery of a significant portion of these costs from
our insurance carriers. During the nine months ended September 30, 2004, we
received $5.1 million in insurance recoveries pertaining to ongoing moisture
infiltration and resulting mold litigation. Of this amount, approximately $1.3
million was recorded to other income as it pertains to legal and professional
fees previously expensed; the remaining $3.8 million was a reduction of
previously capitalized costs. We are in litigation with our insurance providers,
and therefore we have not recorded an estimate for future insurance recoveries.
In addition, we will continue to pursue potential recoveries from third parties
whom we believe bear responsibility for a considerable portion of the costs we
have incurred. We cannot make assurances that we will obtain these recoveries or
that our ultimate liability associated with these claims will not be material to
our results of operations.

During
the three months ended September 30, 2004, we incurred estimated losses
associated with multiple hurricanes in Florida. As a result of this damage, we
recorded a loss contingency in other expense of approximately $4.9 million
associated with both wholly owned and unconsolidated apartment communities. We
are currently in the process of determining what amounts associated with these
losses will be recovered by insurance. Given the unique nature of these losses,
we were unable to reasonably estimate the amount of any insurance recoveries as
of September 30, 2004. Accordingly, the $4.9 million does not include any of the
insurance recoveries we expect to receive as the outstanding claims are resolved over
the next several quarters.

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.

As a general matter,
concern about indoor exposure to mold has been increasing, as such exposure has
been alleged to have a variety of adverse effects on health. There has been an
increasing number of lawsuits in our industry against owners and managers of
apartment communities relating to moisture infiltration and resulting mold.
Whenever we receive a resident complaint concerning moisture infiltration,
condensation or mold problems and/or become aware that an air quality concern
exists, we implement corrective measures in accordance with guidelines and
protocols we have developed with the assistance of indoor air quality experts.
We are working proactively with all of our residents to resolve all moisture
infiltration and mold-related issues. However, we can make no assurance that
additional material legal claims relating to moisture infiltration and the
presence of, or exposure to, mold will not arise in the future.

The terms of our property
and general liability policies after June 30, 2002, may exclude certain
mold-related claims. Should an uninsured loss arise against the company, we may
be required to use our own funds to resolve the issue, including litigation
costs.

We are exposed to the
impact of interest rate changes and will occasionally utilize interest rate
swaps and interest rate caps as hedges with the objective of lowering our
overall borrowing costs. These derivatives are designated as either cash flow or
fair value hedges. We are also exposed to price risk associated with changes in
the fair value of certain equity securities. We have entered into forward sale
agreements to protect against a reduction in the fair value of these securities,
the last of which settled in July 2004. We have designated these forward sales
as fair value hedges. We do not use these derivatives for trading or other
speculative purposes. Further, as a matter of policy, we only enter into
contracts with major financial institutions based upon their credit ratings and
other factors. When viewed in conjunction with the underlying and offsetting
exposure that the derivatives are designed to hedge, we have not, nor do we
expect to sustain a material loss from the use of these hedging instruments.

---

We formally assess, both at
inception of the hedge and on an ongoing basis, whether each derivative is
highly effective in offsetting changes in fair values or cash flows of the
hedged item. We measure hedge effectiveness by comparing the changes in the fair
value or cash flows of the derivative instrument with the changes in the fair
value or cash flows of the hedged item. We exclude the hedging instruments
time value component when assessing hedge effectiveness. If it is determined
that a derivative is not highly effective as a hedge or if a derivative ceases
to be a highly effective hedge, we will discontinue hedge accounting
prospectively.

To determine the fair
values of derivative and other financial instruments, we use a variety of
methods and assumptions that are based on market value conditions and risks
existing at each balance sheet date. These methods and assumptions include
standard market conventions and techniques such as discounted cash flow
analysis, option pricing models, replacement cost and termination cost. All
methods of assessing fair value result in a general approximation of value, and
therefore are not necessarily indicative of the actual amounts that we could
realize upon disposition. During 2003, we entered into forward sale agreements
with an aggregate notional amount, which represents the fair value of the
underlying marketable securities, of approximately $128.5 million and an
aggregate fair value of the forward sale agreements of approximately $486,000.
During the nine months ended September 30, 2004, we settled all of the forward
sales agreements for approximately 2.8 million units and sold 308,200 units of
marketable securities, which were not subject to forward sales agreements,
resulting in an aggregate gain of approximately $24.9 million. The total net
proceeds from the sale were $143.0 million, with the marketable securities basis
determined using the average costs of the securities.

During June 2004, we
entered into swap transactions to mitigate the risk of changes in the
interest-related cash outflows on a forecasted issuance of long-term unsecured
debt. At inception, these swap transactions had an aggregate notional amount of
$144 million and a fair value of zero. The long-term unsecured debt these swap
transactions related to was issued in August 2004. At the time of the debt
issuance, the fair value of the cash flow hedge was a liability of approximately
$2.5 million. The termination fees associated with these cash flow hedges are
included in comprehensive income and are being amortized over the term of the
underlying debt as additional interest expense.

## Critical
Accounting Policies

We define critical
accounting policies as those accounting policies that require our management to
exercise their most difficult, subjective and complex judgments. Our management
has discussed the development and selection of all of these critical accounting
policies with our audit committee, and the 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 prepare them for their intended use. The
amount of interest capitalized is based upon the average amount of accumulated
development expenditures 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.

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.

---

When determining if there
is an indication of impairment, 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 assets fair value.

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 asset type, age,
and quality. 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. Historically we have had limited and infrequent impairment
charges, and the majority of our apartment community sales have produced gains.
We evaluate a real estate asset for potential impairment when events or changes
in circumstances indicate that its carrying amount may not be recoverable.

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 estimate value of the land, building and fixtures assuming the property is
vacant and then allocate costs to the intangible value of the existing lease
agreements. 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 significant
accounting estimate.

Pursuit
Costs

We
incur costs relating to the potential acquisition of real estate, 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.

Moisture
Infiltration and Resulting Mold Remediation Costs

Accounting for correction
of moisture infiltration and mold remediation costs is considered a
critical accounting estimate because significant judgment is
required by management to determine when to record a liability, how much should
be accrued as a liability, and whether such costs meet the criteria for
capitalization.

We estimate and accrue
costs related to correcting the moisture infiltration and remediating resulting
mold when we anticipate incurring costs because of the threat of litigation or
the assertion of a legal claim. When we incur costs at our own discretion, the
cost is recognized as incurred. Moisture infiltration and resulting mold
remediation costs are only capitalized when it is determined by management that
such remediation costs also extend the life, increase the capacity, or improve
the safety or efficiency of the property relative to when the community was
originally constructed or acquired, if later. All other related costs are
expensed.

There are considerable
uncertainties that affect our ability to estimate the ultimate cost of
correction and remediation efforts. These uncertainties include, but are not
limited to, assessing the exact nature and extent of the issues, the extent of
required remediation efforts and the varying costs of alternative strategies for
addressing the issues. Any accrual represents managements best estimate of
the probable and reasonably estimable costs and is based, in part, on estimates
obtained from third-party environmental contractors and actual costs incurred to
date. It is possible that these estimates could increase or decrease as better
information becomes available.

We accrue for litigation
settlement costs when a loss contingency is both probable and the amount of loss
can be reasonably estimated. Estimating the likelihood and amount of a loss
contingency requires significant judgment by management and is therefore
considered a critical accounting estimate. We base these estimates
on the best information available as of the end of the period, which includes,
but is not limited to, estimates obtained from third-party contractors as well
as actual costs incurred to date. It is possible that these estimates could
increase or decrease as better information becomes available. We generally
recognize legal expenses as incurred; however, if such fees are related to the
accrual for a known legal settlement, we accrue for the related incurred and
anticipated legal fees at the same time we accrue the cost of settlement.

## Off Balance
Sheet Arrangements

Investments in entities that
are not controlled through majority economic interest are not consolidated and
are reported as investments in unconsolidated entities. Our investments in
unconsolidated entities at September 30, 2004, consisted of $95.8 million in
real estate joint ventures, which generally consist of our percentage ownership
in the equity of the joint ventures.

Consolidated Engineering
Services is a service business that we acquired during the Smith Merger in 2001,
which prior to its sale had been reported as an unconsolidated entity in our
financial statements. CES provides engineering services for commercial and
residential real estate across the country. On December 19, 2002, CES was sold
to a third party for $178 million in cash, and we recorded a $35.4 million net
gain on the sale of the business or $0.16 per unit on a fully diluted basis.
Excluded from the gain was approximately $6.7 million in contingent proceeds
related to indemnification of accounts receivable over 120 days. Also excluded
from the gain were liabilities for certain indemnifications that expired during
June 2004. During the nine months ended September 30, 2004 and 2003, we
recognized $923,000 and $5.1 million related to the collection of accounts
receivable over 120 days, respectively. During the nine months ended September
30, 2004, we also recognized $3.2 million related to the expiration of certain
indemnified liabilities recorded as part of the CES sale.

Smith Management
Construction is a service business that we acquired in the Smith Merger during
2001. We sold SMC during February 2003 to former members of SMCs senior
management. Prior to the sale, we reported SMC as an unconsolidated entity in
our financial statements. We received two notes receivable totaling $5.8 million
and bearing an interest rate of 7.0% as consideration for the sale. The first
note for $3.5 million has principal payments beginning in August 2003 with
payment in full by February 2008. The second note for $2.3 million was fully
repaid along with all accrued interest due during May 2003. During the second
quarter of 2004, we recognized the divestiture since our responsibilities under
the majority of outstanding performance guarantees, which pertain to ongoing
construction projects at the time of sale, expired.

---

## Contractual
Commitments

The following table
summarizes information contained in Managements Discussion and Analysis of
Financial Condition and Results of Operations and in our financial statements in
this Form 10-Q regarding contractual commitments (amounts in millions):

`2005          2007       2009 thru
                                                      2004         and 2006      and 2008        2095          Total
                                                  -------------  ------------- ------------- ------------- --------------
Scheduled long-term debt maturities...............  $   25.4       $   683.0     $   999.3     $ 2,404.4     $  4,112.1
Unsecured credit facilities (1)...................         -               -             -             -              -
Development and redevelopment expenditures........      80.4           319.9             -             -          400.3
Performance bond guarantees (2)...................      18.6            19.7             -           1.2           39.5
Lease commitments and other (3)...................       7.3            15.1          13.5         352.6          388.5
                                                  -------------  ------------- ------------- ------------- --------------
   Total..........................................  $  131.7       $ 1,037.7     $ 1,012.8     $ 2,758.2     $  4,940.4
                                                  =============  ============= ============= ============= ==============`

(1)     The $600  million  unsecured  facility  matures  on October  30,  2006,  with a one-year  extension  option  available  at our
discretion.
     (2)     The  Operating  Trust,  our  subsidiaries  and  investees  have not been  required to perform on these  guarantees,  nor do we
          anticipate  being required to perform on such  guarantees.  Since we believe that our risk of loss under these  contingencies
          is remote, no accrual for potential loss has been made in the accompanying  financial statements.  We are still obligated for
          performance  bond guarantees for CES and SMC subsequent to their sale, but there are recourse  provisions  available to us to
          recover any potential future payments from the new owners of CES and SMC.
     (3)     Lease commitments relate principally to ground lease payments as of September 30, 2004.

---

## Item 3.
Quantitative and Qualitative Disclosures About Market Risk

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

As a result of our balance
sheet management philosophy, we have managed our debt maturities to create a
relatively level principal maturity schedule, without significant repayment
obligations in any year. If current market conditions do not permit us to
replace maturing debt at comparable interest rates, we are not exposed to
significant portfolio level interest rate volatility due to the management of
our maturity schedules. There have been no material changes to our market risk
profile since December 31, 2003. See Item 7a in our 2003 Form 10-K for detailed
information about the qualitative and quantitative disclosures about our market
risk.

## Item 4.
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-14(c) 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, to the best of their knowledge, effective as of September
30, 2004, to ensure that information required to be disclosed in reports that
are filed or submitted under the Securities Exchange Act are recorded,
processed, summarized and reported within the time periods specified in
Securities and Exchange Commission rules and forms. Subsequent to September 30,
2004, there were no significant changes in the Operating Trusts disclosure
controls or in other factors that could significantly affect these controls,
including any corrective actions with regard to significant deficiencies and
material weaknesses.

---

# PART II
 OTHER INFORMATION

## Item 1. Legal
Proceedings

We
are subject to the following claims in connection with moisture infiltration and
resulting mold issues at high-rise properties in Southeast Florida.

Henriques,
et al. v. Archstone-Smith Operating Trust, et al., filed on August 27, 2002
(the Henriques Claim), in the Circuit Court of the Eleventh Judicial
Circuit in and for Miami-Dade County, Florida, on behalf of a class of residents
at Harbour House. We have reached a court-approved settlement with the
plaintiffs in this matter. The case alleged that water infiltration and
resulting mold contamination at the property had been caused by faulty
air-conditioning and had resulted in both personal injuries to the plaintiffs
and damage to their property. Based on the settlement, we have recorded a
liability for estimated legal fees associated with known and anticipated costs
for our counsel and plaintiffs counsel, as well as estimated settlement
costs. Not all plaintiffs have accepted the court-approved settlement, and some
of these individuals have filed separate lawsuits. We are in the process of
determining the merits of their claims and therefore, potential legal fees and
damages associated with these claims are not contemplated in our current
accrual. See Managements Discussion and Analysis of Financial Conditions
and Results of Operations in this Quarterly Report for further discussion
regarding this accrual.

Santos,
et al. v. Archstone-Smith Operating Trust, et al., filed on February 13,
2003, in the Circuit Court of the Eleventh Judicial Circuit in and for
Miami-Dade County, Florida, on behalf of a class of residents at Harbour House.
The plaintiffs in this case make substantially the same allegations as those
made in the Henriques claim and seek both injunctive relief and
unspecified monetary and punitive damages. We believe this case to be without
merit, and given our evaluation of the claims with the individuals actually
represented by opposing counsel, we have recorded a liability for estimated
legal fees associated with known and anticipated costs for our counsel and
plaintiffs counsel, as well as estimated settlement costs. See
Managements Discussion and Analysis of Financial Conditions and Results of
Operations in this Quarterly Report for further discussion regarding this
accrual.

Michel,
et al., v. Archstone-Smith Operating Trust, et al., was filed on May 9,
2003, in the Circuit Court of the Eleventh Judicial Circuit in and for
Miami-Dade County, Florida, on behalf of the class of residents at the property.
The plaintiffs in this case make substantially the same allegations as those
made in the Henriques claim and seek both injunctive relief and
unspecified monetary and punitive damages. In connection with the sale of this
asset on August 31, 2004, the purchaser assumed any liabilities arising from
this action and ASN and its affiliates have been dismissed with prejudice from
this action.

Semidey,
et al., v. Archstone-Smith Operating Trust, et al., was filed on June 9,
2003, in the Circuit Court of the Eleventh Judicial Circuit in and for
Miami-Dade County, Florida, on behalf of the class of residents at the property.
The plaintiffs in this case made substantially the same allegations as those
made in the Henriques claim and sought both injunctive relief and
unspecified monetary and punitive damages. Although we were never served with
this complaint, we have reached a settlement with a majority of the represented
residents and therefore this complaint was dismissed without prejudice. We have
recorded a liability consistent with the settlement reached in this claim.

Although
we continued discussions with the remaining represented residents in the
Semidey case, plaintiffs counsel elected to re-file a class action
suit on behalf of these individuals (Sullivan, et al., v. Archstone-Smith
Operating Trust, et al.) on July 6, 2004 in the Circuit Court of the
Eleventh Judicial Circuit in and for Miami-Dade County, Florida. This is based
upon the same allegation as the Semidey action and seeks the same relief,
with the exception of damages for bodily injury, which are excluded.
Plaintiffs counsel advised us that they intended to seek recovery for any
bodily injury claims through individual lawsuits. We have since settled the
claims of all of the named plaintiffs in this action as well as with all but
eleven of the individuals represented by opposing counsel. On October 27, 2004, Plaintiff's
counsel amended the Semidey complaint to name new class representatives inBercovits et al., v. Archstone-Smith Operating Trust, et al.

We
are 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 and
litigation, individually or in the aggregate, will have a material adverse
effect on our business, financial position or results of operations.

---

Item 2.  Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

The following table summarizes the A-1 Common Units that were repurchased for either cash or A-2 Units:

`Total Number
                                                                          of Units                Maximum
                                                                        Purchased as         Approximate Dollar
                                       Number of       Average       Part of Publicly        Value That May Yet
                                         Units        Price Paid         Announced           Be Purchased Under
                Period                 Purchased       per Unit            Plan                  the Plan
     ----------------------------    ------------    ------------    -----------------    ---------------------
     7/1/04 - 7/31/04                   530,791       $   30.38                    -                       -
     8/1/04 - 8/31/04                     2,000           30.11                    -                       -
     9/1/04 - 9/30/04                    42,538           31.12                    -                       -
                                     ------------                    -----------------
     Total.......................       575,329                                    -
                                     ============                    =================`

## Item 6.
Exhibits

(a)     Exhibits:

          12.1     Computation of Ratio of Earnings to Fixed Charges

          12.2     Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Unit Distributions

          15.1     Consent of Independent Public Accounting Firm

          31.1     Certification of Chief Executive Officer

          31.2     Certification of Chief Financial Officer

           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

---

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 TRUST

                                    BY:/S/ R. SCOT SELLERS
                                                 R. Scot SellersChairman and
                                            Chief Executive Officer



                                    BY:/S/ CHARLES E. MUELLER, JR.
                                                 Charles E. Mueller, Jr.Chief Financial Officer
                                               (Principal Financial Officer)



                                    BY:/S/ MARK A. SCHUMACHER
                                                     Mark A. SchumacherController and Senior Vice President
                                                  (Principal Accounting Officer)

Date: November 8, 2004

---

# EXHIBIT 12.1

# ARCHSTONE-SMITH
OPERATING TRUST

COMPUTATION
OF RATIO OF EARNINGS TO FIXED CHARGES

# (Dollar
amounts in thousands)

# (Unaudited)

`Nine Months Ended
                                    September 30,                         Twelve Months Ended December 31,
                               -------------------------   ---------------------------------------------------------------
                                2004 (1)     2003 (1)        2003 (1)     2002 (1)    2001 (1)    2000 (1)     1999 (1)
                               ------------ ------------   ------------ ------------ ----------- ----------- -------------
Earnings from operations......  $ 103,102    $  99,010      $  138,758    $ 121,545   $  90,646   $ 105,220    $ 131,219
Add:
   Interest expense...........    129,476      111,728         163,105      169,357      82,599      88,045       96,777
                               ------------ ------------   ------------ ------------ ----------- ----------- -------------
Earnings as adjusted..........  $ 232,578    $ 210,738      $  301,863    $ 290,902   $ 173,245   $ 193,265    $ 227,996
                               ============ ============   ============ ============ =========== =========== =============

Fixed charges:
   Interest expense...........  $ 129,476    $ 111,728      $  163,105    $ 169,357   $  82,599   $  88,045    $  96,777
   Capitalized interest.......     17,110       17,753          26,854       32,377      29,186      37,079       41,099
                               ------------ ------------   ------------ ------------ ----------- ----------- -------------
     Total fixed charges......  $ 146,586    $ 129,481      $  189,959    $ 201,734   $ 111,785   $ 125,124    $ 137,876
                               ============ ============   ============ ============ =========== =========== =============

Ratio of earnings to fixed
charges......................         1.6          1.6             1.6          1.4         1.5         1.5          1.7
                               ============ ============   ============ ============ =========== =========== =============`

(1)     Net earnings from discontinued operations have
been reclassified for all periods presented.

---

# EXHIBIT 12.2

# ARCHSTONE-SMITH
OPERATING TRUST

COMPUTATION
OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES

AND
PREFERRED UNIT DISTRIBUTIONS

# (Dollar
amounts in thousands)

# (Unaudited)

`Nine Months Ended                 Twelve Months Ended December 31,
                                                            September 30,
                                                       ----------------------- ------------------------------------------------------------
                                                         2004 (1)    2003 (1)    2003 (1)    2002 (1)    2001 (1)    2000 (1)     1999 (1)
                                                       ----------- ----------- ----------- ----------- ----------- ----------- ------------
Earnings from operations............................    $ 103,102   $  99,010   $ 138,758   $ 121,545   $  90,646   $ 105,220   $  131,219
Add:
    Interest expense................................      129,476     111,728     163,105     169,357      82,599      88,045       96,777
                                                       ----------- ----------- ----------- ----------- ----------- ----------- ------------
Earnings as adjusted................................    $ 232,578   $ 210,738   $ 301,863   $ 290,902   $ 173,245   $ 193,265   $  227,996
                                                       =========== =========== =========== =========== =========== =========== ============

Combined fixed charges and Preferred Unit
distributions:
    Interest expense................................    $ 129,476   $ 111,728   $ 163,105   $ 169,357   $  82,599   $  88,045   $  96,777
    Capitalized interest............................       17,110      17,753      26,854      32,377      29,186      37,079      41,099
                                                       ----------- ----------- ----------- ----------- ----------- ----------- ------------
     Total fixed charges............................      146,586     129,481     189,959     201,734     111,785     125,124     137,876
                                                       ----------- ----------- ----------- ----------- ----------- ----------- ------------
    Preferred Unit distributions....................       14,612      21,737      26,153      34,309      25,877      25,340      23,733
                                                       ----------- ----------- ----------- ----------- ----------- ----------- ------------
Combined fixed charges and Preferred Unit
distributions.......................................    $ 161,198   $ 151,218   $ 216,112   $ 236,043   $ 137,662   $ 150,464   $ 161,609
                                                       =========== =========== =========== =========== =========== =========== ============
Ratio of earnings to combined fixed charges and
    Preferred Unit distributions....................          1.4         1.4        1.4          1.2         1.3         1.3         1.4
                                                       =========== =========== =========== =========== =========== =========== ============`

(1)     Net earnings from discontinued operations have been reclassified for all periods presented.

---

# EXHIBIT 15.1

The Board of Trustees and Unitholders
Archstone-Smith Operating Trust:

Re: Registration Statements Nos. 333-89164 (Form S-3) and 333-1114394 (Form S-3).

With respect to the subject
registration statements, we acknowledge our awareness of the use therein of our
report dated October 18, 2004, related to our review of interim financial
information.

Pursuant to Rule 436 under
the Securities Act of 1933 (the Act), such report is not considered
a part of a registration statement prepared or certified by an accountant, or a
report prepared or certified by an accountant within the meaning of Sections 7
and 11 of the Act.

KPMG LLP

Denver, Colorado
November 8, 2004

---

EXHIBIT 31.1

CERTIFICATIONS

I, R. Scot Sellers, certify that:

1.        I have reviewed this quarterly report on Form 10-Q of Archstone-Smith Operating Trust (the "registrant").

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

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

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

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

            
b)
        Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report
             
           our
         conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
             
           covered by this
         report based on such evaluation; and
            
c)
        
         Disclosed in this report any change in the registrant's internal control over financial reporting that occurred
             
           during the
         registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to
             
           materially affect, the
         registrant's internal control over financial reporting; and

5.        The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal
            control over
     financial reporting, to the registrant's auditors and the audit committee of registrant's board of
            trustees (or persons
     performing the equivalent function);
            
a)        All significant deficiencies and material weaknesses in the design or operation of internal control over
             
          financial reporting
         which are reasonably likely to adversely affect the registrant's ability to record, process,
             
          summarize and report financial
         data; and

            
b)
        Any fraud, whether or not material, that involves management or other employees who have a significant role
             
           in the registrant's internal control over financial reporting.

BY:/S/ R. SCOT SELLERS
                                                            R. Scot Sellers
                                                             Chairman and
                                                        Chief Executive Officer

Date: November 8, 2004

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EXHIBIT 31.2

CERTIFICATIONS

I, Charles E. Mueller, Jr., certify that:

1.        I have reviewed this quarterly report on Form 10-Q of Archstone-Smith Operating Trust (the "registrant").

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

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

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

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

            
b)
        Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report
             
           our
         conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
             
           covered by this
         report based on such evaluation; and
            
c)
        
         Disclosed in this report any change in the registrant's internal control over financial reporting that occurred
             
           during the
         registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to
             
           materially affect, the
         registrant's internal control over financial reporting; and

5.        The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal
            control over
     financial reporting, to the registrant's auditors and the audit committee of registrant's board of
            trustees (or persons
     performing the equivalent function);
            
a)        All significant deficiencies and material weaknesses in the design or operation of internal control over
             
          financial reporting
         which are reasonably likely to adversely affect the registrant's ability to record, process,
             
          summarize and report financial
         data; and

            
b)
        Any fraud, whether or not material, that involves management or other employees who have a significant role
             
           in the registrant's internal control over financial reporting.

BY:/S/ CHARLES E. MUELLER, JR.
                                                            Charles E. Mueller, Jr.Chief Financial Officer
                                                        (Principal Financial Officer)

Date: November 8, 2004

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EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, being the
Chief Executive Officer of Archstone-Smith Operating Trust, a Maryland real estate
investment trust (the Issuer), hereby certifies that the Quarterly Report on
Form 10-Q (the Periodic Report) of the Issuer for the quarter ended
September 30, 2004, which accompanies this certification, fully complies with the
requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C.
§78m(a)) and that the information contained in the Periodic Report fairly
presents, in all material respects, the financial condition and results of
operations of the Issuer.

Date: November 8, 2004

By: /S/ R. SCOT SELLERS
R. Scot SellersChairman and Chief Executive Officer

---

EXHIBIT 32.2

CERTIFICATION
OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, being the
Chief Financial Officer of Archstone-Smith Operating Trust, a Maryland real estate
investment trust (the Issuer), hereby certifies, that the Quarterly
Report on Form 10-Q (the Periodic Report) of the Issuer for the
quarter ended September 30, 2004, which accompanies this certification, fully
complies with the requirements of Section 13(a) of the Securities Exchange Act
of 1934 (15 U.S.C. §78m(a)) and that the information contained in the
Periodic Report fairly presents, in all material respects, the financial condition
and results of operations of the Issuer.

/S/ CHARLES E. MUELLER, JR.
Charles E. MuellerChief Financial Officer

Date: November 8, 2004